Compensatory Afforestation Fund

The Compensatory Afforestation Fund Act, 2016 has established National Compensatory Afforestation Fund under the Public Account of India, and State Compensatory Afforestation Fund under the Public Account of each state.

The Funds will receive payments for-

1. Compensatory afforestation
2. Net present value of forest (NPV)
3. Other project specific payments

The National Fund will receive 10% of these funds, and the State Funds will receive the remaining 90%.

What is Compensatory Afforestation?

• Whenever forest land is diverted for non-forest purposes, it is mandatory under the Forest (Conservation) Act, 1980 for the user agency to pay for planting forests over an equal area of non-forest land.
• It is issued before issuing forest clearances to a mine, dam or industry.
• The Ministry fixes a monetary value for the forest that is to be destroyed and collects this as “compensation”.
• The funds are used for treatment of catchment areas, assisted natural generation, forest management, wildlife protection and management, relocation of villages from protected areas.
• Present Disbursal: The Compensatory Afforestation Fund Management and Planning Authority (CAMPA) has disbursed Rs. 48,606 crore to 32 States as of December 2021, according to the statement of Minister of Environment in Lok Sabha.

Why has Compensatory Afforestation not worked properly?

• Diversion of the CA lands for other uses is a challenge. Audits have also indicated delays in fund disbursements by agencies seeking change in land use, and poor utilisation of funds by the forest department that is tasked with ensuring the viability of plantations.
• The afforestation overdrive by government departments is done in floodplains, grasslands and other ecosystems that are often not suitable for tree cover, which results in dumping of saplings in sites that are empty and where trees are not appropriate. Also, growing trees on an alternative land is not a substitute for a fully developed forest ecosystem.