Measuring Regional Wealth and Assessing Sustainable Development: An Application to a Disaster-Torn Region in Japan

We construct a regional comprehensive wealth as an indicator of sustainability in Miyagi Prefecture, Japan. Of particular interest is the change in wealth before and after a natural disaster, since the index could serve as a benchmark of investment into post-disaster reconstruction. We first discuss an optimum spatial unit of wealth accounting and sustainability analysis. The resultant regional wealth index had already been slightly declining during the 2000s due to stagnant investment into capital assets, oil capital loss, and budget deficit burden, until a natural disaster made the region significantly unsustainable. This wealth trend also differs from what emerges from the figures in Inclusive Wealth Report 2012. Including population decrease makes the wealth per capita look better, whose interpretation warrants caution due to the neglected forward-looking demographic change in a developed nation.