STUDY ON ASSESSING ECONOMIC VULNERABILITY OF SMALL ISLAND REGIONS

L. ADRIANTO, and Y. MATSUDA

Department of Marine Social Sciences, Faculty of Fisheries, Kagoshima University, Shimoarata 4-50-20, Kagoshima City 890-0056, Japan ( Corresponding author, e-mail: adriant.luky@angel.sh.kagoshima-u.ac.jp; fax: (81)-99-286-4297; tel.: (81)-99-286-4270) ( Permanent address: Department of Socio-Economics, Faculty of Fisheries and Marine Sciences, Bogor Agricultural University, Lingkar Kampus 1, Darmaga Campus, Bogor City 16680, Indonesia (tel/fax: (62)-251-627-935)). (Received 23 October 2002; accepted 27 May 2003)

Abstract. The main purpose of this study is to assess economic vulnerability of small island development regions as part of their sustainability constraints. By combining economic and environmental time series data, we assessed a composite index of economic vulnerability which is constructed from three exogenous variables, namely economic exposure, economic remoteness, and economic impact of environmental and natural disasters. We used the Amami Islands, Kagoshima Prefecture, Japan as the case studies for this paper. The results indicated that using a gross island products based valuation index, Kikaijima is the most vulnerable island in the Amami Islands with a composite economic vulnerability index (CEVI) value of 0.678, while by using a per capita based index, Okinoerabujima is considered the most vulnerable island with a CEVI value of 0.680. From the results we also revealed that smaller islands have relative higher vulnerability than the bigger one, which also conrms some previous country-level vulnerability studies. However, it is matter of fact that some islands that have relatively high vulnerability also have good economic performance as shown by their per capita income. In this regard, it can be argued that the success of these small islands could have been achieved in spite of and not because of their inherent vulnerability conditions as an indicator of sustainability constraint. Regarding these ndings, we also examined a comparison between vulnerability results and the preliminary concept of an islands resilience in order to capture another perspective on sustainability assessment in a small island region. Key words: Amami Islands, composite economic vulnerability index, economic exposure, economic of natural disasters, economic remoteness, exogenous impacts, resilience.

1. Introduction

It is widely known in nissology (island studies) that islands or more specically small islands share many problems and needs with certain continental areas for their development process (Brookeld, 1990). This is because small islands in many respects face special disadvantages associated with small size, insularity, remoteness and proneness to natural disasters. These factors lead to the characterization of small islands as being fragile due to their vulnerable ecology and economic systems (Beller et al., 1990; Briguglio, 1995).
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Moreover, from the environmental point of view, McLean (1980) has pointed out that there are several respects in which small islands are specialized environments. As McLean (1980) identied, small islands are open to ocean wave action from all sides, so that they are prone to sea activity. Small islands also have a small catchment area so that a high proportion of eroded materials are usually lost into the sea. Furthermore, it is also widely known that small islands are more prone to natural and environmental disasters than bigger islands or the mainland. Environmentally, even more than economically, small islands are very exposed to external forces (Beller, 1990). From an economic perspective, small islands have their advantages as well as disadvantages. The advantages of small islands in terms of economy are mostly encompassed by their capability to produce specialized goods and services such as sheries and tourism. In addition, countries pay more attention to small islands as a means of protecting their sovereignty by using them as military bases (Briguglio, 1995). On the other hand, a number of economic disadvantages for small islands can be identied in that they are more related to smallness, economic scale and remoteness. Even when small size alone is not disadvantageous, for example, when producers and consumers are local (Brookeld, 1990), there are still several economic disadvantages related to this smallness, that is, (1) limited natural resources and high import content, (2) limitations on import-substitution possibilities, (3) small domestic market and dependence on export markets, etc. (Briguglio, 1995, 2000). The problem of remoteness or insularity is also important for small island development policies (Cross and Nutley, 1999). From this factor, several economic implications can be shown including (1) specic transport and communication problems, (2) monopolistic environment problems, (3) the important role of service industries, etc. (Hein, 1990). Meanwhile, small islands nancial dependence on the mainland central government could be considered as another important factor that reects their exposure to external factors (Briguglio, 1995; Hein, 1990). In this respect, economically, small islands are also vulnerable. Based on the above descriptions, the need for special strategies to achieve sustainable development in small islands has been considered an important issue (Beller et al., 1990). Regarding these sustainability issues, we used one important concept of sustainability, namely the concept of resilience (Holling, 1973; Perrings, 1998; Carpenter et al., 1999; Reggiani et al., 2001). According to Perrings (1998), there are two rather different denitions of resilience. The rst denition refers to the properties of the system near some stable equilibrium, while the second, promoted by Holling (1973), is dened as the perturbation that can be absorbed before the system is displaced from one state to another. Using the second concept of resilience, this paper focuses on estimating the level of perturbation (or external shocks according to Walker et al., 2002) as represented by the vulnerability indices. Therefore, consistent with the literature (e.g. Briguglio, 1995), vulnerability in this study is dened as the potential attribute of a system to be damaged by exogenous impacts. In this study, we estimated the level of external shocks (i.e. vulnerability) by using economic and environmental variables

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and made them into economic indices. In short, the purpose of a vulnerability index is to estimate the level of perturbation or external shocks of a system, that is, a small island economy. In this study, exogenous factors, both economic and environmental are used to estimate the economic vulnerability of small islands. Briguglio (1995) pioneered the study of economic vulnerability by using small island developing states (SIDSs) as case studies. Other studies on the same topic and level can be found in Chanders (1999) and Wells (1996, 1997). The general conclusion of their studies, all at country level, is that SIDSs have relatively higher vulnerability than non-island developing states, especially to exogenous factors. There are still few case studies on small islands at regional or local level. Nijkamp and Vreeker (2000) point out that there is a shift in interest away from global sustainability analysis towards empirical policy-relevant research at regional and local level. The present paper aims to explore the use of vulnerability analysis applied to a local level (small islands as a region within national jurisdiction) and therefore it may contribute to local-based study instead of national or country level. Japan is an archipelagic country that throughout its area consists of islands. The total number of islands in Japan is 6852 including the main islands of Honshu, Hokkaido, Kyushu and Shikoku (NIJI, 2000). In Japan, there is no special denition of a small island. The Japanese government recognizes the term remote islands (the literal meaning of ritou in Japanese) for islands around the mainland (Hasegawa, 2000). This paper, however, uses an international denition of small islands as those having a population of 500,000 or less and a land area of approximately 10,000 km2 or less (Beller et al., 1990; Debance, 1999) Small islands in Japan are also associated with disadvantages and limitations such as depopulation problems, poor local economic activity due to their smallness and remoteness (Akiyama, 1999) and also being prone to natural disasters (Hasegawa, 2000). In order to deal with these disadvantages and limitations, Japan enacted a special national law on small island development called the Remote Islands Promotion and Development Act (RIDA) in 1953 (Act. No 72/1953), revised by Act No 8/1993. The basic objective of this act is to improve island economies by developing basic facilities and infrastructure so that there will be no difference in conditions between the mainland and the islands (NIJI, 1996). Due to their special conditions compared with the other islands in Japan, there are three special national laws enacted to promote particular small islands, namely the Amami Islands Promotion and Development Act (AIDA), established in 1954, the Ogasawara Islands Promotion and Development Act (OIDA) in 1969 and the Okinawa Islands Promotion and Development Act (ODPA) in 1972. The small island development and management regime in Japan is similar to those that are practiced in developing rather than in developed countries. Because of their high dependency on central and/or prefectural governments, a semi top-down policy is often undertaken by the Japanese government (Hasegawa, 2000). In this paper, we used the Amami Islands, an island chain located in the southern part of Kagoshima Prefecture, Japan, as our case studies. The Amami Islands

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TABLE I. Baseline data of small islands in the Amami Islandsa . Island Amami Oshima Kikaijima Tokunoshima Okinoerabujima Yoronjima
a All

Area (km2 ) 719.9 56.9 247.9 93.6 20.5

Population (people) 75,832 9,268 29,156 15,325 6,210

GIP (000 yen) 151,450,436 16,059,313 48,983,017 30,425,084 8,967,320

GIP per capita (yen) 1,757,871 1,619,706 1,421,474 1,852,623 1,386,453

gures are for 1998. Source: Kagoshima Prefecture (1998).

have been chosen because they have special characteristics and conditions such as remoteness, low economic performance compared with other islands, which are especially mentioned and regulated by a national law called AIDA No 892/1954, which was revised in 1994 (Aoyama, 2001). This paper analyses the economic vulnerability of ve small islands within the Amami Islands, namely Amami Oshima (719.9 km2 ), Kakeromajima (77.15 km2 ), Yoroshima (9.48 km2 ), Ukeshima (13.70 km2 ), Kikaijima (56.9 km2 ), Tokunoshima (247.9 km2 ), Okinoerabujima (93.6 km2 ) and Yoronjima (20.5 km2 ) (NIJI, 2000). However, administratively, Kakeromajima, Yoroshima and Ukeshima are included in the Amami Oshima. Therefore, in this paper, the Amami Islands refers to the ve small islands of Amami Oshima, Kikaijima, Tokunoshima, Okinoerabujima and Yoronjima (see Figure 1 and Table I).
2. Vulnerability indices and small island sustainable development

The issue of vulnerability is generally related to the topic of sustainable development. As Nijkamp and Vreeker (2000) have discussed, the concept of vulnerability is part of the constraints on sustainability, for example, the concept of safe minimum standards, quality standards, carrying capacity, eco-capacity, maximum sustainable yield, critical loads, environmental utilization space, etc. Moreover, Nijkamp and Vreeker (2000) mentioned that sustainability constraint has at least four attributes: (1) it is expressed in one or more measurable parameters; (2) these parameters are linked to sustainability targets; (3) the parameters have a proper geographical scale; (4) these parameters also have relevant time dimensions. It also stated that ideally these parameters should be mapped out as quantitative factors, but in reality they are often presented as qualitative, fuzzy and incomplete information (Nijkamp and Vreeker, 2000). In the last decade, the number of studies on the issue of small island sustainable development has been increasing (see Beller, 1990, Hein, 1990 and some other authors). Most of them are based on the idea that small islands provide a special case in development, largely due to special characteristics of their natural resources, economies and, in many cases, their cultures. Hein (1990) identied some characteristics of small islands especially from an economic point of view,

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Ikarajima Island

KAGOSHIMA PREFECTURE

Kagoshima City

Koshikijima Islands

Tanengashima Island Kuroshima Island Yakushima Island

Takeshima Islands

Tairajima Island

Nakanoshima Island Suwanosejima Island

Takarajima Island

Amami Islands

Kikaijima Island

AMAMI ISLANDS

Amami Oshima Island

Tokunoshima Island

Okierabujima Island

Yoronjima Island Okinawa Prefecture

Figure 1. Location of the case study (not to scale; inset: Map of Japan).

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including: (1) they have few options on economically and ecologically sustainable development, (2) provision of utilities and public services is difcult and costly, (3) human resources are scarce, especially for very small islands whose area is less than 1000 km2 and under 10,000 population, (4) little economic development has occurred without outside intervention. In addition, Briguglio (1995) also identied and elaborated some economic disadvantages associated with small islands and SIDSs, especially those that related to (1) small size; (2) insularity and remoteness; (3) proneness to natural disasters; and (4) environmental factors. Apart from the economic pressure on development, some authors focused more on another perspective, namely that small islands and SIDSs also have problems associated with their geographical position, natural characteristics and environmental disadvantages. McLean (1980), for example, mentioned that there are several respects in which small islands are specialized environments. Small islands are open to wave action from all sides and have small catchment areas so that a high proportion of eroded material is commonly lost into the sea. In cyclone-prone regions, islands too small either to deect cyclones or to entrain less moisture-charged air and thus modify the circulation are particularly vulnerable. Environmentally, even more than economically, small islands are very exposed to external forces (Brookeld, 1996). In terms of island sustainability these forces could be included in the concept of stresses and shocks to the system (Atkinson et al., 1997). Some other authors who dealt with vulnerability issues from a social and environmental point of view are Bohle et al. (1994), Adger and Grohs (1994) and Adger (1995). There is, moreover, one class of small islands that is particularly vulnerable to the effects of long-term climatic change also now expected as consequence of the anthropogenic addition of carbon dioxide and other gases to the atmosphere. Coral atolls and sand cays, and the low-lying littorals of many small islands, for example, are very vulnerable to a rise in sea level. The United Nations (1999) concluded that environmental change, whether the result of present-day variability or future problems such as global warming and sea level rise (SLR), presents a serious threat to the sustainable development of small island regions. Small islands and SIDSs are also vulnerable to environmental disasters because their population, agricultural land and infrastructure tend to be concentrated in the coastal zone. Their vulnerability has increased over time due to anthropogenic activities. In this context, studies on vulnerability assessment have become an essential topic for policy analysis for regions such as small islands. Lonergan and Kavaragh (1991), for example, studied the climate change and water resources related to local security for the case of the Middle East. The other example is Dow and Cutter (2000), who focused household strategies on hurricane risk assessment from the view of public orders and personal opinions. In the policy eld, up to 1990 there were no attempts to present the disadvantages faced by small islands and SIDSs in a composite index that could serve as a yardstick to measure the degree of overall vulnerability of these regions (Briguglio, 1995). The issue of economic vulnerability indices for small islands and SIDSs then was raised and discussed in some length during the International Conference on Islands and

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Small States which was held in Malta on 2325 May 1991 (Briguglio, 1995). In its nal statement, the conference encouraged the construction of a vulnerability index from an economic point of view to supplementing the GDP per capita index characterized from special problems related to islands and small states (Briguglio, 2000).

3. Material and methodology: a case study approach

In this study, we develop a composite vulnerability index which was constructed from three external economic and environmental variables, namely (1) economic exposure, (2) economic remoteness (ER) and (3) economic impact of environmental and natural disasters. It is hypothesized that the higher the incidence of each single variable in a given island, the higher the degree of vulnerability, cateris paribus. The methodology for estimating each single variable of economic vulnerability is explained as follows. 3.1. Economic Exposure According to Briguglio (1995), in vulnerability analysis the degree of economic exposure is an important variable because the higher such exposure the more development within the island becomes determined by external conditions, thereby decreasing the islands capacity to control its own destiny. In this study, the index for economic exposure is estimated by using two measurements, namely (1) the ratio of external trading (ET) activities, to reect an islands degree of openness (Briguglio, 1995; Nijkamp and Vreeker, 2000) and (2) the ratio of external nance (EF) to reect the degree of dependence of a small island on external institutions such as central and/or prefectural government (Briguglio, 2000). The use of EF in this analysis is also encouraged by the fact that EF schemes have a signicant role in small island development policy in Japan. For measuring ETi , we used the ratio of average total inow and outow trading values of small island i to the total of the islands GDP or GIP Gross Island Products (GIP) at time t or ETit = Mit + Xit 2GIPit 100 (1)

where ETit is the degree of economic exposure in small island i from ET at year t , Mit is the total inow trading value of small island i in for year t , Xit is the total outow trading of small island i in year t , GIPit is the GIP of small island i in year t . To obtain the single value for ETi or ET index for small island i , we used the average value of ETit from 19881997 time series data. In EFi measurement, we examined the GIP elasticity subject to changes in EF (subsidies). To estimate this elasticity, a simple log-regression model represents a relationship between GIP and EF is used as could be seen in the following

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equation (Katz, 1982): ln(GIP)it = + ln(EF)it + it (2) where is the ln , a constant, is the elasticity, GIPit is the gross islands product of small island i at year t , EFit is the EF received by small island i at year t , it is the degree of error. Consistently, it is assumed that the higher the value of , the more elastic the GIP of an island to EF and nally the more vulnerable that island is in terms of economic exposure. We used 19881997 time series data on GIP and EF data as input for the model. To obtain single value of economic exposure of small island i (EEi ), rst we standardize ETi (ET index of small islands i ) and i (EF elasticity of small island i ) and then average them by using 19881997 time series data. 3.2. Economic Remoteness The second variable of the economic vulnerability index is ER. In general, not all islands are remote, but remoteness renders the problem of insularity more pronounced (Hein, 1990; Conley and Ligon, 1998; Cross and Nutley, 1999). Remoteness and insularity are associated with vulnerability because, among other things, they introduce uncertainties, delays and cost indivisibilities in external trade (Briguglio, 1995). One method that can be used to estimate the remoteness of small islands is by using transportation costs (Conley and Ligon, 1998). Adopting this approach, we used total transportation costs (TTC) from the mainland to the ve small islands of the Amami Islands. Equation (3) was intended to capture the distance price for transporting embodied human capital and physical capital which is given as follows:
2

TTCi =
m=1

TCm ,

m = 1, 2

(3)

where TTCi is the TTC for small island i (yen/per human-physical capital unit), TCm is the transportation cost of m modes, 1 stands for human capital (yen/unit human capital), 2 stands for product capital (yen/unit physical capital). The transportation cost for human capital is the average value of the cost by air and by sea (yen/unit human capital). The transportation cost for physical capital is measured per 20 foot unit container by sea (yen/unit container). We only used the sea fare to capture the distance cost of physical capital because of its domination in the trans-shipment industry for the case of the Amami Islands. Degree of remoteness is then measured as the ratio of TTCi to the GIP transportation sector for the respective year (1997) and small island i or ERi = TTCi GIPtr,i 100 (4)

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where ERi is the ER of small island i , TTCit is the TTC for small island i , GIPtr,i is the GIP transportation sector for small island i . For consistency, it is also assumed that the higher degree of TTC of a given small island (also reects the price of remoteness), the higher the degree of ER.

3.3. Environmental and Natural Disasters For consistency with the denition of vulnerability we used, in this study we employed exogenous environmental variables, that is, SLR and natural disasters rather than endogenous variables such as resource degradation and environmental quality. The methodology is started by the calculation of the economic impact of (1) environmental disasters (SLR) and (2) natural disasters (typhoon, storm, heavy rain, etc.). The potential impact of SLR and at the same time the actual impact of natural disasters need to be evaluated in terms of their potential economic implications because much of a coastal islands economic activity and population occurs near the coast. For this reason, the economic impact of environmental and natural disasters is considered to be one of the important variables of economic vulnerability of small islands. The impact of SLR is evaluated by employing the GIP-based valuation model suggested by Edwards (1987). The general formula to estimate the SLR real value (RV) impact is given as follows (Edwards, 1987): RV(SLR)it = t T Git (1 + gi )t (5)

where RV(SLR)it is the real value of SLR impact at year t for island i , t is the year t (1, 2, . . ., T ); t = 1 for the base year 1990, T is the the estimated years of 0.3 m SLR (19902100), Git is the the estimated GIP at year t impacted by SLR for island i , gi is the the economic growth rate of island i . In this study, we use the scenario of CGER (1996), which estimated a 0.3 m SLR during 19902100 (therefore T = 110, 1990 = base year). The GIP affected value (Gj t ) was taken from Matsui et al. (1995), and was calculated to be 11.88% for area-based economic activities, 2.96% for population-based economic activities and 2.37% for industrially based economic activities for the potential economic impact of SLR in the islands of southern Japan (Pacic Ocean). We followed Edwards (1987) in dening area-based economic activities as the agriculture, forestry and sheries sectors, population-based activities as the construction and power and water supply sectors, and industrially based activities as the manufacturing, nancal and services sectors in the structure of the GIP. In this term, the SLR is a gradual and cumulative process so that in the rst year (1990), a small percentage of economic activity will be affected, and so on as reected by equation (5) (Edwards, 1987; Oritz, 1994). To reveal the effect of

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projected future SLR, we examine the present value (PV) of its impact by employing the following equation for small island i and year t PV(SLR)it = RVit (1 + r)t (6)

where PVit is the present value of SLR impact at year t and for island i , RVit is the real value of sea level impact at year t for island i , t is the year t (1, 2, . . ., n); t = 1 for the base year 1990. We used a set of data on the natural disasters in Amami Islands, provided by Kagoshima Prefectures Small Islands Promotion and Development Ofce (Kagoshima Prefecture, 19882000) to calculate the economic impact of natural disasters. The total value of impacts is derived by the simple formula as
n

NDti =
t =1

Snti

(7)

where NDti is the total impact of natural disasters for small island i at year t , Snti is the impact of natural disasters on n sector (agriculture, economic facilities, etc.) for small island i at year t . From these two measurements, the index of the economic impact of environmental and natural disasters for small island i (ENDit ) is then calculated by using the equation (8). Finally, we averaged ENDit value for 19881997 time series data in order to have a single index of ENDi ENDit = (PV(SLR)it + NDit ) 100 GIPit (8)

where PV(SLR)it is the the present value of indirect (SLR) impact on small island i for year t , NDIit is the economic impact of natural disasters on small island i for year t , GIPit is the total GIP of the small island i for year t . In order to make an adjustment for the islands population and for GIP-based value comparison, we also use a per capita-based estimation for all the single variables mentioned above (economic exposure, ER and environmental and natural disasters). To do this, we simply substituted the value of GIP in equations (1), (4) and (8) with the value of population level in small island i and by GIP per capita for equation (2). 3.4. Standardization and Composite Vulnerability Indices The next step is to standardize the three variables to render the index insensitive to the scale of measurement used, since the variables that compose the index are measured in different units (Briguglio, 1995; Atkinson et al., 1997). The standardization formula was given as follows: SVij = Xij Min Xj , 0 < SVij < 1, Max Xj Min Xj j = 1, 2, 3(EEi , ERi , ENDi )

(9)

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where SVij is the standardized j th variable for small island i , Xij is the value of the j th variable included in the vulnerability index for small island i , Min Xj is the minimum value of the j th variable for all the small islands in the index, Max Xj is the maximum value of the j th variable for all the small islands in the index, EEi is the index of economic exposure of the small island i (EE), ERi is the index of remoteness of the small island i , ENDi is the index of economic impact of environmental and natural disasters of the small island i . In order to make a CEVI for small island i (CEVIi ), we adopted a regime for testing variance weight values due to the importance of the three vulnerability variables of small islands (Vreeker et al., 2001). The variance weighted values was taken from Briguglio (1995) and given as follows: CEVIi = (EEi 0.5) + (ERi 0.4) + (ENDi 0.1) (10)

where CEVIi is the composite economic vulnerability index of the small island i , EEi is the index of economic exposure of the small island i (EE), ERi is the index of remoteness of the small island i , ENDi is the index of economic impact of environmental and natural disasters of the small island i .
4. Results

4.1. Single Variables This section presents the results of calculation for three single variables of islands vulnerability, that is, economic exposure (ETi and i ), (ERi ) and economic impact of environmental and natural disasters (ENDi ) (Table II). In terms of ET, the economic exposure of the Amami Islands can be described as follows. Tokunoshima has the highest volume of outow trade, which is recorded as 360,829 tons in 1997 and Amami Oshima has the highest volume in terms of inow trading, calculated at a level of 373,320 tons in the same year. The average value of ET volume in the Amami Islands is 51,044 tons/year for outow trading and 185,230.20 tons/year for inow trading. From this, we can see that a decit trading
TABLE II. Single variable of economic vulnerability. Island ETi G AMO KIKA TOKU OKI YOR 20.82 64.57 59.62 70.51 51.71 P 347.63 930.37 849.21 1234.05 655.13 i G 0.63 0.59 0.16 0.40 0.27 P 0.75 0.72 0.27 0.50 0.43 ERi G 1.67 3.37 3.86 4.59 6.73 P 212.79 307.42 321.25 362.48 466.97 ENDi G 2.52 2.58 1.65 1.77 0.95 P 40.45 36.85 24.02 33.76 12.59

Notes: ETi = external trading measure AMO = Amami Oshima, i = external nance measure (elasticity), ERi = economic remoteness, ENDi = economic of environmental and natural disasters, G = GIP based value, P = per capita based value, AMO = Amami Oshima, KIKA = Kikaijima Island, TOKU = Tokunoshima, OKI = Okinoerabujima, YOR = Yoronjima.

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TABLE III. Trend of government subsidies in the Amami Islandsa . Year 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
a All

Central 11,254,611 11,530,017 12,385,139 14,000,863 16,611,896 18,805,470 17,673,451 18,476,626 16,769,917 17,176,173

Province 7,709,420 8,226,081 8,762,334 8,596,378 10,122,243 9,679,885 9,994,419 11,145,824 11,325,023 9,124,490

Total 18,964,031 19,756,098 21,147,473 22,597,241 26,734,139 28,485,355 27,667,870 29,622,450 28,094,940 26,300,663

gures are in thousand yen. Source: Kagoshima Prefecture (19982000).

TABLE IV. Transportation costs of human and physical capitala,b . Island Amami Oshima Kikaijima Tokunoshima Okinoerabujima Yoronjima
a From

Human capital (sea fare) 13,775 13,775 17,600 19,375 21,000

Human capital (air fare) 19,500 20,620 22,500 24,950 26,300

Physical capitalc (sea fare) 147,450 147,450 150,450 158,700 163,200

the Kagoshima mainland. (10 and 20 ft).

b All gures are in yen. c As average cost per container

balance (in term of volume) existed during the period of analysis. After calculating the value of trading and then employing equation (1), the degree of island exposure based on the trading measure (ETi ), both in GIP and per capita based values, is obtained (Table II). In the case of EF, we revealed that of the total development budget, the contribution of EF was calculated to be 8185% (Table III). The composition of EF sources remained constant at the level of 60% by central government and 40% by Kagoshima Prefecture. Using these data, we calculated the index of economic exposure by estimating the GIP elasticity (i ) to this EF in each island. The results are presented in Table II. The information of transportation costs for both human and physical capital is presented in Table IV. It can be seen that Yoronjima Island is the most expensive island in term of transportation costs. On an other hand, Kikaijima Island and Amami Oshima Island are the cheapest islands due to their geographical distance from the Kagoshima mainland. After employing the average human capita and physical data for a particular period of years to equations (4) and (5), we obtained the degree of island remoteness (ERi ), both in GIP and per capita based values (Table II). For the third variable of vulnerability analysis, namely the index of economic impact of environmental and natural disasters, we rst calculated the potential

ECONOMIC VULNERABILITY OF SMALL ISLAND REGIONS

100% 80% 60% 40% 20% 0%
industry based population based area based

329

potential impact (%)

AMO KIKA TOKU OKI

YOR

Figure 2. Percentage of GIP potentially affected by SLR.

impact of SLR on the aggregate GIP of small islands in the Amami Islands as can be seen in Figure 2. This gure shows the GIP potentially affected by relative SLR in the Amami Islands calculated under the scenario of a 0.3 m rise and by group of economic activity (area-based economic activities, population-based activities and industrially based activities). From this gure, we also revealed that each island has a different picture on SLR impact on their economic activities. For example, in Amami Oshima Island, the impact on industrially based economic activities dominates the total impact, accounting for about 60% of total impact. On the other hand, in Okinoerabujima Island, the impact on area-based activities such as agriculture, forestry and sheries is estimated as the highest impact compared with other economic activities. Since that SLR is a gradual or cumulative process, potential economic activity will be affected little during the rst year and will incrementally accumulate in other years during the estimated period (Edwards, 1987). Figure 3 shows the results of RV as the cumulative value of SLR impact calculated for the year of analysis and its PV. As depicted in Figure 3, the maximum RV is calculated as 402,781,026 yen in 1997 (Amami Oshima) and a minimum of 2,602,014 yen in 1988 (Yoronjima). The Amami Islands are well known as the most natural-disaster-prone area in Kagoshima Prefecture. In this region, typhoons (taifu) dominate the type of natural disaster, which usually occur yearly. Others are landslides (jisuberi), tornado (tatsumaki) and heavy rain (ooame) (Kagoshima Prefecture Ofce, 2000). According to the local government ofce for small islands studies, the frequency of typhoon in Amami Islands is about 20 times per year. In Japan, a typhoon disaster is numbered by order of its occurrence, so that there will be typhoon numbers 1, 2, 3 and so on. The typhoon season is usually SeptemberOctober annually. However, not all typhoon disasters have signicant impact on the islands economies. Table V presents a set of time series data on the frequency of natural disasters that occurred in the Amami Islands and their total damage values during 19802000. In detail, damage to public facilities is the highest, followed by damage to primary products such as agriculture, forestry and sheries products (Table VI).

330
450,000 400,000
real value (000 yen)

L. ADRIANTO AND Y. MATSUDA

350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 1986 1988

AMO KIKA TOKU OKI YOR

1990

1992

1994

1996

1998

year

(A) Real Value

400,000
present value (000 yen)

350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 1988 1990 1992 1994 1996 1998 2000 AMO KIKA TOKU OKI YOR

year

(B) Present Value

Figure 3. Real value and present value of SLR impacts.

By employing equation (8), a single index for the economic impact of environmental and natural disasters (ENDi ) is calculated and the results are presented in Table II. 4.2. Standardization and Composite Economic Vulnerability Table VII and Figure 4 show the results of variable standardization for each single variable of economic vulnerability and their CEVI values after employing equation (10). From the results, we can see that by using GIP-based valuation, Kikaijima is the most vulnerable island with a CEVI value of 0.678, followed by Okinoerabujima (0.659) and Yoronjima (0.613). Meanwhile, using per capita valuation, the three most vulnerable islands are Okinoerabujima with a CEVI value of 0.680, Kikaijima (0.635) and Yoronjima (0.570).
5. Vulnerability, resilience and policy implications

The results reveal that the smaller islands seem to be more vulnerable than the bigger islands. We can reveal that Okinoerabujima (93.6 km2 ), Yoronjima (20.5 km2 )

ECONOMIC VULNERABILITY OF SMALL ISLAND REGIONS

TABLE V. Historical impact value of natural disasters in the Amami Islands (thousand yen). Year 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Average SD Maximum Minimum AMO 870,518 1,799,068 1,679,556 2,202,346 1,891,852 827,756 1,231,782 1,647,079 723,363 611,494 13,347,474 3,790,973 4,622,640 2,384,461 793,707 984,094 1,692,670 1,891,519 1,152,894 1,312,558 993,155 2,211,950 2,738,346 13,347,474 611,494 KIKA 80,738 94,851 314,241 26,169 78,251 72,910 181,097 273,816 38,037 15,691 1,606,492 38,523 366,798 407,514 101,654 319,452 44,006 473,025 135,754 34,596 14,332 224,664 347,614 1,606,492 14,332 TOKU 1,042,515 1,508,597 522,532 94,595 1,338,232 640,954 827,599 686,056 114,766 63,661 1,313,471 604,901 524,504 2,042,916 320,739 194,500 407,366 986,431 295,718 537,991 1,043,519 719,598 521,065 2,042,916 63,661 OKI 288,029 418,257 107,364 62,153 611,266 59,449 609,298 742,061 85,617 68,853 301,223 185,380 119,197 105,573 61,318 0 986,714 2,661,730 46,261 669,910 682,889 422,502 590,155 2,661,730 0

331

YOR 62,682 186,547 15,007 83,807 69,108 12,690 156,318 162,447 29,496 2500 129,133 45,423 9485 61,650 11,633 0 214,631 156,265 16,132 87,410 296,732 86,147 82,452 296,732 0

Source: Kagoshima Prefecture Ofce (various years). Notes: SD = standard deviation, AMO = Amami Oshima, KIA = Kikaijima, TOKU = Tokunoshima, OKI = Okinoerabujima, YOR = Yoronjima.

TABLE VI. Economic impact of natural disasters in the Amami Islandsa . Island Damage House Amami Oshima Kikaijima Tokunoshima Okinoerabujima Yoronjima Total
a All

Primary products 506,574 500 77,300 800 503 585,677

Public facilities 768,760 10,000 165,440 20 0 944,220

Other facilities 3,390 0 3,855 2,500 400 10,145

Agriculture 22,124 24,096 286,296 47,660 69,707 449,883

Others 8,000 0 0 3,150 2,430 13,580

Total 1,312,558 34,596 537,991 66,910 87,410 2,039,465

3,710 0 5,100 12,780 14,370 35,960

gures are in thousand yen for year 1997. Source: Kagoshima Prefecture (2000).

and Kikaijima (56.9 km2 ), individually, have relatively higher vulnerability indices than Amami Oshima (719.9 km2 ) or Tokunoshima (247.9 km2 ) (Table VIII). These results concord with other previous similar studies such as Brigugulio (1995), Chander (1999) and Wells (1997), which concluded that SIDSs are relatively more vulnerable than non-island states. Is vulnerability itself a disadvantage for

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TABLE VII. Standardization results and composite vulnerability. Island ETi G AMO KIKA TOKU OKI YOR 0.00 0.87 0.77 1.00 0.62 P 0.00 0.66 0.57 1.00 0.35 i G 1.00 0.90 0.00 0.51 0.16 P 1.00 0.94 0.00 0.48 0.33 EEi G 0.50 0.89 0.39 0.75 0.43 P 0.50 0.79 0.28 0.74 0.34 ERi G 0.00 0.34 0.43 0.58 1.00 P 0.00 0.37 0.43 0.59 1.00 ENDi G 0.96 1.00 0.43 0.51 0.00 P 1.00 0.87 0.41 0.76 0.00 CEVIi G 0.346 0.678 0.410 0.659 0.613 P 0.350 0.635 0.353 0.680 0.570

Notes: ETi = external trading measure, i = external nance measure (elasticity), EEi = economic exposure (average value of ETi and i ), ERi = economic remoteness, ENDi = economic of environmental and natural disasters, CEVIi = composite vulnerability, G = GIP based value, P = per capita based value, AMO = Amami Oshima, KIKA = Kikaijima, TOKU = Tokunoshima, OKI = Okinoerabujima, YOR = Yoronjima.

0.7 0.6 0.5 CEVI 0.4 0.3 0.2 0.1 0 AMO KIKA TOKU OKI YOR

Island (A) GIP-based Value 0.7 0.6 0.5

CEVI

0.4 0.3 0.2 0.1 0

AMO KIKA TOKU Island
(B) Per capita-based Value

OKI

YOR

Figure 4. Composite economic vulnerability index for GIP-based value (A) and per capita value (B).

small islands? From a sustainability point of view, high vulnerability will associate with weak sustainability and vice versa, especially from exogenous factors. In this respect, a strategic policy could be assessed to deal with such vulnerability. As mentioned in the Amami Islands Development Plan 19942003, the principal objectives of development and promotion of this area are (1) to minimize income

ECONOMIC VULNERABILITY OF SMALL ISLAND REGIONS

TABLE VIII. Comparative analysis of vulnerability index, income per capita and size for islands in the Amami Islands. Island Area (km2 ) 719.9 56.9 247.9 93.6 20.5 Income per capita (yen/year) 1,757,871 1,421,474 1,852,623 1,619,706 1,386,453 CEVIi G 0.346 0.365 0.546 0.620 0.613 P 0.350 0.285 0.512 0.537 0.570

333

Amami Oshima Kikaijima Tokunoshima Okinoerabujima Yoronjima

Notes: G = Gross Island Products based value; P = per capita based value.

disparity between the island and the mainland; (2) to maintain the independence of basic development; and (3) to increase peoples awareness of the importance of staying in the islands. To achieve those objectives, a sustainable policy may be needed and the results of vulnerability analysis could have an effect in terms of attracting government awareness of any constraints on the small island sustainability process in the Amami Islands. However, Briguglio (2000) mentioned that exposure to economic and environmental conditions cannot really be considered a handicap, everything else remaining constant. This is because some highly vulnerable islands may have good economic performances, for example, in that reected by their per capita income. In the case of the Amami Islands, it is conrmed from Table VIII that the smaller islands such as Okinoerabujima and Yoronjima have a relatively higher GIP per capita than the other islands. However, high vulnerability scores also distinguish these islands from the others. The fact that particular smaller islands have a good economic performance has prompted some observers to argue that being small and insular is not a disadvantage after all (Briguglio, 2000). Regarding this matter, a line of argument may contain an element of truth in that smallness and insularity have their advantages, including a high degree of exibility in the face of changing circumstances. The vulnerabilities described above, however, are a reality for these small islands and as stressed by Briguglio (2000), it can be argued that the success stories of these small islands have been achieved in spite of and not because of their inherent vulnerability. A further discussion could be presented when we incorporate the term of resilience, another important term in sustainability assessment. Resilience is dened as the potential to minimize or absorb the effects of damaging impacts (Brigulio, 2000). In this regard, we applied a qualitative analysis to compare the vulnerability results and a small islands resilience. As an indicator of sustainability constraint, vulnerability should be interpreted as negative, while resilience is positive. By these conditions, high vulnerability of an island should be interpreted as having a negative value for that island or be marked by (). On the other hand, low vulnerability will be marked as having a positive value for such an island or (+). A reverse condition is made for the case of islands resilience. High resilience will be marked by (+) as

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TABLE IX. Qualitative analysis of vulnerability index and resilience of the Amami Islands. Island Amami Oshima Kikaijima Tokunoshima Okinoerabujima Yoronjima
a Analyzed b Analyzed

Vulnerabilitya (+) () (+) () ()

Resilienceb () () () (+) (+)

from Table VIII. from primary data (questionnaire).

having a positive value for such an island, and on the other hand, low resilience is marked by (). To examine the qualitative analysis of vulnerability, we used the results shown in Table VIII. For an islands resilience, we used a professional judgment method as suggested by Nijkamp and Vreeker (2000). In this case, we distributed a set of questionnaires to local and regional policy makers and experts who have expertise in the Amami Islands regional development process and policy. The results of the analysis can be seen in Table IX. From Table IX, we revealed that Okinoerabujima and Yoronjima independently have a high vulnerability index (), but they have relatively high resilience (+). It means that these islands have sufciently good resilience to absorb or minimize the potential high impact of external factors outside of their control as revealed by their high vulnerability values. A different picture has been found in the case of Kikaijima. This island has a high vulnerability index () but a low degree of resilience (). Meanwhile, Tokunoshima and Amami Oshima have a similar picture of lower vulnerability (+), but low resilience (). From the results, we may argue that a special strategic policy should made for the case of the three smaller islands of Kikaijima, Okinoerabujima and Yoronjima. This is due to their high vulnerability values and especially for Kikaijima, which also has low resilience. In this regard, we argue that the vulnerability indicator could be used to attract attention towards the issue of small islands or remote island development particularly that related to their sustainable development options. Regarding the vulnerability analysis we used in this paper, we should also inform that the vulnerability indices achieved by this study should be seen as a preliminary judgment due to some problems associated with islands sustainability constraints. There are three main problems associated with this methodology, that is, (1) their subjectivity mainly for the choice of compounding variables; (2) problems with measurement and (3) the weighting procedure (Briguglio, 1995). However, there are two principal benets that could be derived from the construction of this vulnerability index. First, this index can attract attention towards the issue of sustainability constraint in small islands, and second it can present a single-value measurement of vulnerability, which could be considered by central or prefectural government

ECONOMIC VULNERABILITY OF SMALL ISLAND REGIONS

335

when making decisions regarding the allocation of national resources to a small island development policy.

Acknowledgements

We would like to thank the editor and two anonymous reviewers for their constructive comments on an earlier version of this manuscript. The Marine Social Sciences Group of Kagoshima University contributed to this paper by reading and commenting on earlier drafts of the manuscript. This work was made possible largely through the generous support of the Japan Ministry of Education, Culture, Sports, Sciences and Technology and the authors relay their heartfelt gratitude to this organization. However, responsibility for the content rests solely with the authors.

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