Compensatory Afforestation Fund Bill: Significance & Challenges


“The environment and the economy are really both two sides of the same coin if we cannot sustain the environment we cannot sustain ourselves”-Wangari Mathai

Why in News

Recently Rajya Sabha passed The Compensatory Afforestation Fund Bill, 2016.   The Bill had earlier been passed by Lok Sabha in May 2016.


  1. India is one of the ten most forest-rich countries of the world along with the Russian Federation, Brazil, Canada, United States of America, China, Democratic Republic of the Congo, Australia, Indonesia and Sudan.
  2. The 2013 Forest Survey of India states its forest cover increased to 69.8 million hectares or more than 21% of the country’s area.
  3. For the past two decades concern for climate change and sustainable development is the talk over all major international platform but on the other side there is increasing deforestation, forest fires, encroachments etc.
  4. For sustainable development ecological balance should also be given due importance along with the economic development.
  5. In 2002, the Supreme Court of India observed that collected funds for afforestation were underutilized by the states and it ordered for centrally pooling of funds under Compensatory Afforestation Fund.
  6. The court had set up the National Compensatory Afforestation Fund Management and Planning Authority (National CAMPA) to manage the Fund.
  7. In 2009, states also had set up State CAMPAs that receive 10% of funds form National CAMPA to use for afforestation and forest conservation.
  8. However, in 2013, a CAG report identified that the funds continued to be underutilized.



 What is Compensatory Afforestation?

  1. The simple principle at work here is that since forests are an important natural resource and render a variety of ecological services, they must not be destroyed.
  2. However, because of developmental or industrial requirements, forests are routinely cut, or, as it is said in official language, “diverted for non-forest purposes”.
  3. In such cases, the Forest (Conservation) Act of 1980 requires that non-forest land, equal to the size of the forest being “diverted”, is afforested.
  4. But since afforested land does not become a forest overnight, there is still a loss of the goods and services that the diverted forest would have provided in the interim period.
  5. These goods and services include timber, bamboo, fuel wood, carbon sequestration, soil conservation, water recharge, and seed dispersal.
  6. Afforested land is expected to take no less than 50 years to start delivering comparable goods and services.
  7. To compensate for the loss in the interim, the law requires that the Net Present Value (NPV) of the diverted forest is calculated for a period of 50 years, and recovered from the “user agency” that is “diverting” the forests.
  8. So in short, Compensatory afforestation is defined as afforestation done in lieu of the diversion of forest land for non-forest use.

Working of CAMPA

  1. An expert committee calculates the NPV for every patch of forest. Currently, the NPV ranges from Rs 4.38 lakh per hectare in case of poor quality forests to Rs 10.43 lakh/ha for very dense forests. An expert committee has recently recommended that this be revised to Rs 5.65 lakh and Rs 55.55 lakh respectively.
  2. “User agencies”, which are often private parties, are not expected to undertake afforestation work themselves.
  3. This work has to be done by the state government. But the entire expenditure to be incurred on creating this new ‘forest’, including purchase of land for the purpose, has to be borne by the user.
  4. The state government eventually has to transfer this land to the forest department for maintenance and management.
  5. Thus, if any user agency wants to divert forest land for non-forest purposes, it has to deposit money for compensatory afforestation as well as pay the NPV, besides a few other charges.
  6. Since forests are being diverted routinely (at the rate of about 20,000-25,000 ha per year according to the Ministry of Environment and Forests) a large sum of money is accruing to the government. Currently, more than Rs 40,000 crore has accumulated from these sources, and the fund is increasing at the rate of about Rs 6,000 crore every year.

Need of Compensatory Afforestation fund Management and Planning Authority (CAMPA)

It is to manage this money, and to use it for the designated purposes that CAMPA is proposed to be set up.

The compensatory afforestation money and NPV are supposed to be collected from the user agency by the government of the state in which the project is located, and deposited with the central government.

The money will eventually flow back to the state to be used for afforestation or related works

Key Features of Legislation

  1. The Bill establishes 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. These Funds will receive payments for: (i) compensatory afforestation, (ii) net present value of forest (NPV), and (iii) other project specific payments.  The National Fund will receive 10% of these funds, and the State Funds will receive the remaining 90%.
  3. These Funds will be primarily spent on afforestation to compensate for loss of forest cover, regeneration of forest ecosystem, wildlife protection and infrastructure development.
  4. The Bill also establishes the National and State Compensatory Afforestation Fund Management and Planning Authorities to manage the National and State Funds.

Merits of Legislation

  1. The passing of the Bill has ended the long era of ad-hocism and will help the Centre and State Governments to utilise these amounts in a planned manner.
  2. It will facilitate make available more than Rs. 6,000 crores per annum to the States/UTs for conservation, protection, improvement and expansion of forest and wildlife resources of the country.
  3. Availability of these amounts will not only help the States/UTs and local communities to ensure better management of their forest resources but will also result in creation of more than 15 crores man-days of direct employment.
  4. A major part of these amounts will be used to restock and improve quality of degraded forests, which constitutes more than 40 % of the total forest cover of the country.
  5. Rules to be framed by the Central Government in consultation with the States/ UTs will provide for use of native species in afforestation activities to be undertaken from these funds.
  6. Majority of the employment will be generated in tribal dominated and backward areas of the country.
  7. Apart from creation of direct employment, utilisation of these amounts will result in increased availability of timber and various other non-timber forest products, and will thus help in improvement of the overall living standards of the forest dependent communities.

Key Issues

  1. The Bill establishes the Funds for compensatory afforestation and forest conservation. However, there are several factors (other than administration of funds) which affect compensatory afforestation and forest conservation. These factors are mentioned below.
  2. A 2013 CAG report noted that state forest departments lack the planning and implementation capacity to carry out compensatory afforestation and forest conservation. With the share of funds transferred to states increasing from 10% to 90%, effective utilisation of these funds will depend on the capacity of state forest departments.
  3. Procuring land for compensatory afforestation is difficult as land is a limited resource, and is required for multiple purposes, such as agriculture, industry, etc. This is compounded by unclear land titles, and difficulties in complying with procedures for land use.
  4. A High Level Committee on Environment Laws observed that quality of forest cover has declined between 1951 and 2014, with poor quality of compensatory afforestation plantations being one of the reasons behind the decline.
  5. The Bill delegates the determination of NPV (value of loss of forest ecosystem) to an expert committee constituted by the central government. As NPV constitutes about half of the total funds collected, its computation methodology would be important.
  6. Loss of biodiversity: – Since it leads to diversion of original forests, the result is fragmentation, that is, the breaking up of large forest blocks into smaller and more vulnerable patches. Fragmentation in turn leads to biodiversity loss. Moreover, non-native species planted in the name of artificial plantation often have served as a threat to even the existing ecosystem.
  7. .Artificial vs original: –Natural ecosystems take thousands of years to develop over a place. Raising artificial plantations elsewhere such as those along the flanks of railway lines, highways, and so on can’t be supposed to have the same biodiversity value as the original ones. Often, they have a poor survival rate.
  8. .Unavailability of land for planting new forests: –which has often led to use of CAMPA funds for purchasing forest department vehicles or repairing buildings defeating the original purpose.

Conclusion/Way forward

What is required is actually an ecosystems approach with focus on climate justice and the rights and role of local communities. It should also address biodiversity and poverty effectively and challenge the underlying causes of deforestation directly, resolving governance, poverty and land tenure issues.


What do you understand by Compensatory Afforestation? Critically comment on the provisions of Compensatory Afforestation Fund Bill.


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