From a 1999 article:
TIME: What were you like as a kid?
Tajiri: The place where I grew up [in Machida, a western Tokyo suburb] was still rural back then. There were rice paddies, rivers, forests. It was full of nature. Then development started taking place, and as it grew, all the insects were driven away. I was really interested in collecting insects. [Later, Tajiri's father tells me the other kids used to call Satoshi "Dr. Bug" as a child.] Every year they would cut down trees and the population of insects would decrease. The change was so dramatic. A fishing pond would become an arcade center.
TIME: You liked bugs?
Tajiri: They fascinated me. For one thing, they kind of moved funny. They were odd. Every time I found a new insect, it was mysterious to me. And the more I searched for insects, the more I found. If I put my hand in the river, I would get a crayfish. If there was a stick over a hole, it would create an air bubble and I'd find insects there. I usually took them home. As I gathered more and more, I'd learn about them, like how some would feed on one another. So I stopped bringing them home. But I liked coming up with new ideas. Like how to catch beetles.
TIME: Did you get the idea for Pokemon from these insects?
Tajiri: Yes. Places to catch insects are rare because of urbanization. Kids play inside their homes now, and a lot had forgotten about catching insects. So had I. When I was making games, something clicked and I decided to make a game with that concept. Everything I did as a kid is kind of rolled into one--that's what Pokemon is.