Compensatory Afforestation Fund Bill, 2015

The Forest (Conservation) Act, 1980 (FCA) governs diversion or use of forest land for non-forest purposes such as industrial or infrastructure projects. A company diverting forest land must provide alternative land for taking up compensatory afforestation. The company should pay for planting new trees in the alternative land provided to the state. The loss of forest ecosystem must also be compensated by paying for net present value of forest (NPV).

In 2002, the Supreme Court of India observed that collected funds for afforestation were underutilised by the states and it ordered for centrally pooling of funds under Compensatory Afforestation Fund. The court had set up the National Compensatory Afforestation Fund Management and Planning Authority (National CAMPA) to manage the Fund. In 2009, states also had set up State CAMPAs that receive 10% of funds form National CAMPA to use for afforestation and forest conservation. However, in 2013, a CAG report identified that the funds continued to be underutilised. The Compensatory Afforestation Fund Bill 2015 was introduced by the government in Lok Sabha on May 8, 2015 to regulate collected funds. The bill is presently under examination by a standing committee.

Salient features of the bill

1. It seeks to establish the National Compensatory Afforestation Fund under the Public Account of India, and a State Compensatory Afforestation Fund under the Public Account of each state.
2. The payments into the funds include compensatory afforestation, NPV, and any project specific payments. The National Fund will get 10% of funds collected and the remaining 90% will go to respective State Fund.
3. The collected funds will be utilised for afforestation, regeneration of forest ecosystem, wild life protection and infrastructure development.
4. The bill also seeks to establish National and State Compensatory Afforestation Fund Management and Planning Authorities to manage the funds.
5. The determination of NPV will be delegated to an expert committee constituted by the central government.

NPV quantifies the services provided by the forest. It includes goods and services (tourism and timber); regulating services (climate change); and none-material benefits (recreation).