A game theoretic analysis of geothermal development consensus building in Japan

Abstract

Geothermal development in Japan has been stagnant because of high development costs, strict site regulations, and consensus-building difficulties with local stakeholders. The government has mitigated challenges related to costs and regulations by creating a feed-in tariff system and enforcing national park development deregulation. Therefore, consensus building remains the primary barrier to future geothermal development in Japan. In particular, geothermal development needs to be accepted by local hot spa owners who currently believe that such developments would have adverse effects on their businesses. This research seeks to identify the key factors that could improve the social acceptance of geothermal development. To this end, we applied game theory to model stakeholder behavior, which is assumed to be motivated by their interests. We examine three geothermal development case studies on Kyushu Island from the 1960s to 2017, revealing that stakeholders’ beliefs regarding the negative impacts of geothermal development are preventing the achievement of consensus. The application of game theory reveals that risk mitigation measures can positively affect consensus building. In addition, the game theory model implies that risk mitigation strategies are more effective for successful consensus than financial ones. This novel game theory analysis provides insights into the policy reforms needed to develop domestic geothermal energy projects, move toward a carbon-neutral society, and ensure harmony with Japan’s traditional hot spa culture.