The Japanese government is considering establishing a biodiversity offsetting scheme similar to the biodiversity net gain (BNG) law in England to compensate for habitat degradation driven by flood control, a chief researcher close to the infrastructure ministry has told Carbon Pulse.

A source from the Water Environment Research Group at the Public Works Research Institute (PWRI), a body closely related to the infrastructure ministry, said that the government is working on a compensation mechanism as part of a wider commitment to protect the country’s biodiversity.

The intensification of nature disasters driven by climate change has led to an increase in river management activities and infrastructure, the source said, making it impossible to implement efforts for restoring connectivity in some of them.

“Japan’s rivers have been historically engineered for flood control, causing connectivity loss and habitat degradation within the habitats”.

“But in Japan flood control is a serious matter, and we cannot implement restoration activities inside every river. So the government is considering establishing an offsetting scheme to improve the environment in other areas.”

Earlier this year, the government launched several initiatives for enhancing nature protection, including releasing a Nature Positive Economy Transition Strategy to align with the Kunming-Montreal Global Biodiversity Fund’s targets and establishing a committee on river environment measures.

“The offsetting mechanism is regarded as an additional tool to protect the environment,” the source said.

THE SCHEME

The scheme will involve the generation of biodiversity credits within newly designed habitat banks, following the example set by England.

Under the BNG rules, which came into force on Feb. 12, development projects in England need to achieve a net biodiversity improvement of at least 10%.

When on-site enhancements are insufficient to meet the target, developers can generate off-site gains elsewhere or purchase them in a new market.

“In Japan, there are many abandoned farms that can be transformed into wetlands and fit the biodiversity credit market the government is devising,” the source noted.

The discussion is still in its early stages, with most of the details yet to be hashed out – such as the percentage of net gain that companies must achieve under the scheme – but it “could soon be a reality”.

“Japan joined the carbon credit market late, and it now aims to be a pioneer in the biodiversity space.”

As for the demand side, the source said there’s growing interest towards ‘nature positive’ among Japanese companies, as they are increasingly committing to report on their impacts and dependencies on nature.

To date, Japanese companies and financial institutions make up over a quarter of the Taskforce on Nature-related Financial Disclosures (TNFD) recommendations’ adopters with 113 signatories, followed by British and Taiwanese organisations with 59 and 21, respectively.

Blue carbon is also gaining traction, with numerous projects providing biodiversity co-benefits, such as in the case of seaweed and kelp-forest aquaculture farms.

The river committee also promoted in its recommendations the implementation of green financing mechanisms, including green bonds, to engage businesses and other private actors in conservation and restoration efforts.

Japan has already put in place a mechanism that allows companies that provides funding or other help to Other Effective land-based Conservation Measures (OECMs) earn so-called biodiversity support certificates, especially designed for use in TNFD or similar biodiversity impact reporting mechanisms.

By Giada Ferraglioni – giada@carbon-pulse.com

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