In May this year, the Indian Parliament saw a very interesting Bill introduced in the Lok Sabha. Titled as The Compensatory Afforestation Fund Bill, 2008, it seeks to institutionalise and legislate a mechanism to collect and manage the huge amounts of money collected from projects cleared under the Forest Conservation Act (FCA), 1980. Section 2 of the FCA sets out a procedure under which permission needs to be sought from the Union Ministry of Environment and Forests (MoEF), in case any activity or project seeks to divert forest land for non-forest use. In official and popular parlance this procedure has come to be known as forest 'clearance'.

A little over a decade back, this procedure saw judicial intervention; on 12 December 1996 the Supreme Court of India passed an overarching order through which the definition of forests was expanded from officially declared forest land to its dictionary meaning. This implied that an area in the country which satisfied the dictionary meaning of forests would come into the purview of the Forest Conservation Act. This order was passed under the T N Godavarman Thirumulpad vs. Union of India, a case still ongoing in the court.

Over the last 12 years, judicial activism in the Godavarman case - which is also known as the 'forest' case - has led to the passing of several other interim orders and judgements, both project specific as well as those setting the policy discourse around forest management. One such critical judgement was issued by the Supreme Court on 26 September 2005, which to a large extent created a basis for the draft Bill to be introduced in Parliament. The judgement raised a question. It asked whether "before diversion of forest land for non-forest purposes ... should not the user agency of such land be required to compensate for the diversion? If so, should the user agency not be required to make payment of the Net Present Value (NPV) of such diverted land so as to utilise the amounts so received for getting back in long run the benefits which are lost by such diversion?"

In other words, whatever the value of the benefit from the forest that is taken away by a new project, the promoters would need to compensate this loss.

Establishing the CAMPA

The 2005 judgement contained the essence of the discussions and decisions which had taken place in the court room and in the corridors of bureaucracy since early 2000. That year, the MoEF had provided to the court data on cases approved for diversion of forest land - for which compensatory afforestation was required - and also the funds to be collected and utilised from project promoters. The Ministry had also provided the actual afforestation figures and funds collected, and the Court noted a shortfall of 36 per cent in afforestation. The court also noted that although the states had received funds from project authorities, a very large number of them had spent less than 50 per cent or less on afforestation. Therefore, the court demanded to know why the money collected had not been spent on carrying out afforestation.

Once the states had filed their responses, it became clear that project authorities or 'user agencies' had paid the state governments for compensatory afforestation, but the utilisation of this money was incomplete. As a result, the MoEF was asked to develop a scheme, wherein payment would need to be made by the concerned agency seeking diversion of forest land and the state government would alongside need to make land available for afforestation. The MoEF submitted its scheme in March 2002. Following detailed deliberation on the scheme, the stage was set for setting up of the Compensatory Afforestation Management and Planning Authority (CAMPA) which would manage the funds received as part for payment of compensatory afforestation, and Net Present Value (NPV) for the diversion or forest land. (see here).

Until May 2006 the CAMPA had not been set up. Therefore, the Supreme Court directed that an ad hoc CAMPA be constituted.

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In April 2004, an order had been issued for the setting up of the CAMPA, the validity and scope continued to be debated in the Supreme Court. Some of the final recommendations of the 2005 judgement justified the reasons both for setting up of the CAMPA as well as why all payments need to be made to this centralised body rather than the state governments. Many states had actually demanded that payments be made to them, especially as the 'forest' sector is in the concurrent list of the Constitution, giving both the Centre and the States jurisdiction. But the 2005 judgement held, "we hold that the natural resources are not ownership of any one State or individual, [the] public at large is its beneficiary and, therefore, the contention ... that the amount of NPV shall be made over to the State Government cannot be accepted."

Until May 2006 there was no conclusion on the matter and the CAMPA had not been set up. Therefore, on 5 May 2006, the Supreme Court directed that an ad hoc CAMPA be constituted, and all the money collected by States and Union Territories on behalf of the CAMPA should be transferred to this ad hoc body. The 2008 Bill in Parliament observes that following this order, over Rs.5000 crores have since been placed under the ad hoc CAMPA, and deposited in nationalised banks.

Inadequacy of current approach

While the nitty-gritties of the Bill are important, along with the fact that state governments can now seek money from the authority for natural regeneration, afforestation and conservation measures in the state; there are some critical trends that need to be understood. The introduction of the 2008 Bill in Parliament towards the management of the huge amounts of money is symbolic of a fast-strengthening monetised regime of management for the loss of natural forests. The notion of 'compensation' is itself deeply disputed within the conservation and livelihoods discourse. There is a larger issue of whether the intrinsic value of an ecosystems can ever be measured or the loss of livelihoods quantified. Spiritual and cultural associations are clearly out of this economic paradigm.

There are four factors contributing the inadequacy of this approach:

  • MoEF has been granting permission for conversion of forest lands at a furious pace of late. Of the 11,40,176 hectares of forest land cleared for conversion this 1980, more than a quarter - 3,11,220 hectares - has been diverted in the last four years (See here). One begins to understand now why this has become known as the 'clearance' process; permission is hardly ever denied, even for projects that would have huge impacts.

  • The NPV determined for compensation is invariably very low compared to the profits sought by project promoters. Not too long ago, Rs.300 crores as compensation was not a deterrent for National Hydro Power Corporation executing the construction of the Lower Subansiri Hydro Electric Project in Arunachal Pradesh.

  • Project promoters routinely ask for NPV amounts to be waived or re-determined. Every month there are several orders passed in the court asking the project authorities to pay the requisite NPV. At the same time there are arguments by Public Sector Undertakings (PSUs) and private players to re-determine, reduce or wave off the NPV costs (see here).

  • The issues around environment impacts invariably remain unaddressed. The latest in the list is the permission granted to Sterlite Industries in the controversial Niyamgiri Mining case, Orissa. The court in its final order dated 8.8.2008 has stated that, "M/s SIIL shall pay NPV of Rs.55 crores and Rs.50.53 crores towards Wildlife Management Plan for conservation and management of wildlife around Lanjigarh Bauxite mine and Rs. 12.20 crores towards tribal development. In addition, M/s SIIL shall also bear expenses towards compensatory afforestation." The impacts of the project and its tarred history are internationally known today, and the above mentioned amounts are a paltry compensation for the loss of a extremely fragile ecosystem and the cultural and livelihood of the Dongaria Kondh tribals of the area (see here).

Encroaching beyond compensation

There is another deep malaise in the Bill. While the stated objective is afforestation, in important ways the Bill encroaches - an apt pun, perhaps - into territories that are clearly outside this objective. For instance, the Bill specifies that funds collected by CAMPA will be used for the implementation of the Green India Programme, a massive afforestation exercise proposed for the degraded forest lands in the country. But apart from CAMPA providing part of the funds, it is also proposed that that the rest of the funds will be "mobilised from the market, development partner associations, carbon credits, income from tree felling at ecologically appropriate intervals and to augment funds, and service debts."

These are hardly within the realm of afforestation itself; instead these measures introduce market mechanishm and public-private partnerships to the management of forests in the country. It would not be an exaggeration to state that market instruments will look at commercially viable specifies, trade and profit interests embedded within the noble agenda of greening India. Any Bill that explicitly set out to do that would face tremendous opposition from conservationists, local communities, and many other quarters, but with this intent now being pushed under the umbrella of compensatory afforestation, some of that opposition is sought to be diluted.

It is almost a double whammy. First, the country loses vast tracts of natural forests to industrial or infrastructural (supporting industry) take-over. Then the loss of these pristine environments are sought to be 'compensated' through small amounts spent on afforestation of degraded areas. And to cap this off, market mechanisms will be explored to profit from even this afforestation.

The Bill has been referred to the Parliamentary Standing Committee on Science & Technology, Environment and Forest headed by Dr V Maitreyan (an AIADMK Rajya Sabha MP from Tamilnadu) for its examination and report (see here). What logic this esteemed body will follow remains to be seen.

And finally, here's a quick look at the proposed governing body of CAMPA, as envisioned in the Bill - apart from token representation outside government, it is a who's-who of bureaucrats who should have protected the forests in the first place, but are instead now being asked to watch over 'compensatory afforestation'.


  • Minister of Environment and Forests- Chairperson;
  • Minister of Finance - Member;
  • Minister of Science and Technology - Member;
  • Minister of Rural Development - Member;
  • Minster of Panchayati Raj - Member;
  • Deputy Chairman, Planning Commission- Member;
  • Secretaries of the Ministries of Environment and Forests, Finance, Department of Expenditure), Science and Technology, Rural Development, Panchayati Raj, Government of India - Members;
  • Director General of Forests and Special Secretary, Ministry of Environment and Forests, Government of India - Member;
  • Additional Director General of Forests (Wild Life) Ministry of Environment and Forests, Government of India - Member;
  • Financial Advisor, Ministry of Environment and Forests, Government of India - Member;
  • Principal Chief Conservator of Forests, one from six regions, to be nominated every year by the Ministry of Environment and Forests on rotation basis - Member;
  • Inspector General of Forests (Forest Conservation), Ministry of Environment and Forests, Government of India - Member;
  • 3 eminent non-government organization experts, one each in the field of forestry, wildlife and ecology, for a period of two years subject to not more than two consecutive terms - Member.

The Bill also suggests that the Central Government may appoint an officer of the rank of an Inspector General of Forests as the Chief Executive Officer who shall be the Member-Secretary of the Governing Body and the Executive Body.