**3.1.3 New activity and background**

This area, including the cooperative forest site, is among the model areas for promoting rapid and intensive timber production. In 2009, an association of which the forest producer cooperative is a member began a project to stabilize timber production.

The new initiative of the cooperative included the introduction of a Japan Verified Emission Reduction (J-VER) Scheme, which is a public certification scheme for carbon offsetting managed by the Ministry of the Environment. In July 2011, there were four J-VER projects related to forest management in progress in Hyogo Prefecture. The representative business operator and the holder of the offset credits was the Hyogo Prefectural Federation of the Forest Owners' Cooperative Association22. This association founded a company that provides offset credits in 2008. This prefectural association can sell the offset credit to private companies by way of the offset provider company.

The total area of forest for offset is 97 ha, and the credit period is from 2008 to 2012. The total CO2 sink for emission reduction is assumed to be 2,657 tons in CO2 over 5 years, which is 531 tons CO2 per year. The project was already registered and a field investigation was conducted in 2011. Due to declines in the log price and other reasons, forestry profitability is not expected to be regained, and the CO2 sink funds are expected to be utilized as part of the future cost of forest management and logging. Under these difficult economic circumstances, the cooperative expects income from their CO2 business.

The J-VER Scheme, started in 2008, certifies the greenhouse gas reduction or carbon sink realized by domestic projects as a credit. In March 2009, with collaboration between the Ministry of the Environment and the Forestry Agency, the forest management project, in which project CO2 sink by doing forest practices such as thinning and planting, was added to the list of domestic projects which will act as a carbon sink. The forest management projects23 in J-VER Scheme are divided into two types, those that will promote thinning, and those that will promote sustainable forest management. This case is the former type.

### **3.1.4 Characteristics of and evaluation of the new activities**

At the time of our investigation, the carbon credit sales produced from the forest owned by the forest producer cooperative was not determined; the direct financial contribution is unclear. As the cooperative expects income from carbon credits, how these profits are to be distributed between the offset provider company, the cooperative, and other related organizations will be determined is the most important. The new relationships that the cooperative wants to build are evaluated from the following three points of view.

First, this cooperative is the first among 3,224 cooperatives that challenged joining the J-VER Scheme24. The forerunner of many forest producer cooperatives is common forest originating from the Edo Period, and the common forest had been utilized among a limited number of residents. Generally, the management policy of such forests seems to be limited, thus, the cooperative is isolated from global environmental issues. As there are many forest producer cooperatives, future expansion of the J-VER Scheme might be expected, but it is difficult to rapidly increase forest for carbon offset in cooperatives, due to the current complex and cumbersome procedures and the fact that most cooperatives do not have full-time staff.

Second, the introduction of the carbon offset program is related to the relationship between the younger generation in the community and forest owned by the cooperative. The profits from timber production and the direct or indirect distribution of the profit are tangible results to residents, including the younger generation. The past common forest had brought various tangible results to the rights holders of the forest. However, younger people tended to work outside of their community, and were far removed from agriculture and forestry. As a result, their concern for the forest owned by the cooperative has been decreasing. One important challenge is to renew the involvement of younger people in the forest. Despite the stagnation in timber production, the forest resources owned by the cooperative will contribute to the carbon offset program under the J-VER Scheme, and thus younger people might turn to the forest owned by the cooperative.

A third activity is to enhance the partnership between forest owners among districts. Carbon credits based on the forest owned by the cooperative and jointly owned private forest located next to the cooperative's forest are for sale as one credit. After their sale, the profit will be distributed among those involved25. The cooperative and the jointly owned private forest participate in the same forestry promotion group and recently planned the construction of a new skidding road that passes both forests. The jointly owned forest was certified by the Sustainable Green Ecosystem Council (SGEC)26, which is a Japanese forest certification organization, and now the cooperative is considering obtaining forest certification. This new movement could lead to collaboration with the credit purchaser for the purpose of carbon offset in city areas. According to a newspaper report27, the profit from carbon credit sales would be used for forest management in the area where the cooperative is located. Thus, the number of people concerned with the forest is expected to grow.
