The Story of Yanagawa's Canals is a live-action documentary film produced by Nibariki, Miyazaki's personal office, using revenue from Nausicaä. Originally planned as an animated film set in Yanagawa, the success of Nausicaä led to Tokuma wanting another animated movie, possibly a sequel. Miyazaki, after visiting Yanagawa and being inspired by its canals, proposed a film about high school students in the town, with Takahata as director.
However, during Takahata's research in Yanagawa, he became more interested in the town's history, particularly the community's efforts to preserve and clean up the canals. This shift in focus led to the film becoming a live-action documentary, with Miyazaki funding the project personally. It took three years for Takahata to complete the film, showcasing the importance of the canals to the local community.