About: Compensatory Afforestation Fund (CAF)

About: Compensatory Afforestation Fund (CAF)

  • A company diverting forest land must provide alternative land to take up compensatory afforestation.
  • The amount to be paid by industry depends on the economic value of the goods and services that the razed forest would have provided.
  • These include timber, bamboo, firewood, carbon sequestration, soil conservation, water recharge, and seed dispersal.
  • Industrialists pay this money and this is eventually transferred to the States concerned to carry out afforestation.

Spending of the Funds: Funds are to be spent by the States on

  • Afforestation to compensate for loss of forest cover
  • Regeneration of forest ecosystem
  • Wildlife management
  • Forest fire prevention
  • Soil and moisture conservation work in the forest
  • Infrastructure development
  • Note: It cannot be used for payment of salary, travelling allowances, making buildings and buying office equipment for forest officers.

News Summary

  • Under Compensatory Afforestation Fund (CAF), an amount of Rs 54,000 crore has been collected for nearly a decade as environmental compensation from industry, in compensation of razing forest land for its business plans.
  • The Fund will be used as per provisions of the CAF Act and Rules.
  • The Centre would use electronic repositories, geographic tagging technology to keep a tab on whether States were using their allotted funds appropriately.

About: The Compensatory Afforestation Fund Act, 2016

  • It 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.
  • These Funds receives payments for:
    • compensatory afforestation,
    • net present value of forest (NPV), and
    • other project specific payments.
  • 10% of these funds is received by National Fund and the remaining 90% is received by State Funds.
  • Mangament of the Funds: The Act also establishes the Compensatory Afforestation Fund Management and Planning Authority (CAMPA) at both central and state level to ensure expeditious and transparent utilization of amounts realised in lieu of forest land diverted for non-forest purpose.

Cost-benefit analysis of funds and forest cover

  • The FSI collected data on total money allocated by the central government to the state government and forest cover in India between 2009-10 and 2016-17.
  • Its analysis showed that funding by the central government increased at a rate of 84.67 per cent in the period, but the forest cover increased by only 2.42 per cent.
  • So, increase in CAMPA funding by the central government has clearly not resulted in significant increase in forest cover.

Factors which affect compensatory afforestation and forest conservation:

  • Lack of Planning and Implementation Capacity: The state forest departments lack the planning and implementation capacity to carry out compensatory afforestation and forest conservation.
  • Issues in Land Procurement: Land Procurement for compensatory afforestation is difficult as land is a limited resource, compounded by unclear land titles, and difficulties in complying with procedures for land use.
  • Poor quality of compensatory afforestation plantations: The 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.
  • Determination of NPV: The computation of NPV (value of loss of forest ecosystem) is complex , which constitutes about half of the total funds collected.
  • Limited Distribution to states: Only a fraction of this corpus had actually been disbursed to States, due to the lack of a legal framework and instances of States using it for non-forestry purposes.


Way ahead

  • The proposed objective of the CAMPA Act must be fulfilled by utilising the CAMPA funds only for the purpose it is meant for.
  • Also, a closer look at the state government activities using CAMPA funding is needed.
  • The central government should adopt the concept of outcome budgeting for allocation of funds to the state government in which funding will be done on installment basis by checking the outcome of previous funds.
Section : Environment & Ecology