A model carbon-finance project in tsunami-hit Miyagi Prefecture is attempting to make managing Japan’s degraded plantation forests profitable again, with local foresters chasing internationally certified credits at a moment when falling prices and an ageing workforce are pushing more owners to walk away from their land.
That is according to Akio Abe, associate director of the Ishinomaki District Forestry Association, who said the collapse in forest values had become so severe that owners were giving up their holdings altogether. “The value of forests has dropped so much,” Abe said.
Years of population decline and cheap imported timber have driven down prices across the sector, whilst fragmented, small-scale ownership has eroded what little profitability remained. The result is that many stands planted decades ago — when timber returns still looked secure — now sit under-managed, abandoned, or unreplanted after clear-felling.
Roughly 40 per cent of Japan’s total forest area has been planted, much of it in dense, monoculture stands of cedar or cypress that risk ecological decline without thinning and other intervention. Low returns have left foresters and owners unable either to manage the woods for timber or to restore them as self-sustaining ecosystems, a bind the Ishinomaki team is now trying to break with carbon credits.
The initiative was conceived in 2022 by Hitachi Systems after the company sent employees to work remotely in the neighbouring town of Onagawa on local revitalisation ideas. Hitachi brought in French startup Everimpact for its expertise in measuring carbon and accessing climate finance, and the team selected 900 hectares of forest — 72 per cent of it planted conifers — for the first phase.
Drawing on two decades of satellite data, Everimpact chief technology officer and co-founder Alain Retierez mapped changes in the forest’s living biomass to assess how much carbon it was storing. He found the planted conifers in decline, their photosynthesis slowing as they aged, whilst respiration and decomposition rose, turning the forest into a net emitter for a growing portion of the year.
The density of the planting was the cause, Retierez said, with foresters lacking the means to thin at the scale the forest needed. “Was climate finance a solution?” he said, recalling the moment the association decided to try something new.
Koumei Maruyama, chief executive and co-founder of Japanese startup iForest, said dense unthinned stands blocked light, suppressed undergrowth and broadleaf regrowth, and left tree roots underdeveloped and prone to failure. “Without thinning, light can’t penetrate,” Maruyama said, warning the shallow roots also raised landslide risk.
Accessing carbon finance for forestry hinges on additionality — proving a new practice benefits the climate more than business as usual would. A spokesperson for the Integrity Council for the Voluntary Carbon Market (ICVCM) said high-integrity methodologies required robust evidence that management changes were genuinely driven by carbon finance, rather than already required by law, financially attractive on their own, or standard practice locally.
Working with Hitachi and Everimpact, the foresters developed a plan to thin the older conifers and plant younger trees, including broadleaf species, raising biodiversity, carbon storage and resilience to a hotter, drier climate. Abe said the ultimate goal was a mixed forest of conifers and broadleaf trees that would also deliver a significant biodiversity dividend.
The project aims to generate carbon credits worth up to ¥260 million, according to a 2023 Hitachi Systems press release, with the proceeds intended to fund the very management the forest has gone without. Akihito Kitade, a Hitachi Systems member involved in the work, said owning and managing forests could once again generate revenue comparable with the past, money that would then be reinvested into environmental value.
Getting a forest certified is far from simple, however, with prospective projects forced to weigh competing domestic and international programmes and methodologies before settling on a fit. “There isn’t a clear-cut answer as to which program is best,” Kitade said, adding that whichever the team chose, the value of the forest had to be properly assessed.
Higher-integrity credits — those that rigorously demonstrate genuine emission reductions or removals — command stronger prices, according to Maruyama, who said global data showed prices rising by about 38 to 60 per cent when biodiversity was built into a project, compared with credits based on carbon alone.
The Ishinomaki team ultimately chose the Verified Carbon Standard (VCS) Programme’s Improved Forest Management methodology, certified by industry giant Verra, which calculates credits by comparing a project’s emissions and carbon-stock changes with a dynamic, country-wide baseline. Abe said the team had aimed for the certification because satellite technology could supply accurate carbon data and because VCS credits were high-quality and widely traded worldwide.
Active only since 2025, the VCS methodology remains relatively new and is being revised to widen its global reach, prompting the Ishinomaki members to rework their application using Japan’s national forest inventory data. They remain confident of eventual certification.
The Japanese government is also banking on forest carbon credits, with Forestry Agency figures showing the nation’s forests removed roughly 45 million tonnes of CO2 in 2023, a figure counted in national net emissions. Tokyo hopes forests will remove 72 million tonnes annually by 2040, a roughly 60 per cent increase unlikely to materialise without significant activity from foresters nationwide.
To get there, the government is deploying its own J-Credit system, a programme launched in 2013 that covers a range of emission-reduction activities and had 356 forestry-related projects registered as of March. Maruyama said J-Credits were in effect being used to implement government policy, with recent moves to fold biodiversity value into the scheme as well.
The programme carries a key limitation, however, with the only eligible forests being those also certified under the government’s Forest Management Planning System — just 27 per cent of non-national forests as of March 2024. International programmes carry their own baggage, with recent investigations, including into Verra, concluding that many credits did not represent genuine reductions or change how forests were managed.
Even so, many still see carbon finance as an important tool for mobilising resources against the climate crisis, provided the rules are tight enough to ensure integrity. Retierez said that without action to improve Japan’s degraded plantation forests, they risked becoming net carbon emitters, and that modern forestry was shifting towards more selective, cautious management — one that hoped to “create an impulse, show a route, and give confidence.”
