"States like Madhya Pradesh (mp) must be compensated at least in proportion to the forest cover that it has protected, which is far more than the national average", said Digvijay Singh, ex-chief minister, at a National Development Council meeting in 2002. The question was raised again in November 2004, when the Planning Commission held consultations with state governments as part of its mid-term appraisal of the Tenth Five-Year Plan.
Conserving forests has been India's key priority for some time now. In colonial times and after, the State appropriated resources from local communities. Over years, logging or mining led to rampant degradation. If the British stripped the forests of Ratnagiri in coastal Maharashtra to make ships and railway lines, independent India sold its forests for a pittance to the pulp and paper industry. This was the extractive phase.
Then the country changed tack. It passed the Forest Conservation Act, 1980; this act centralised decision-making over forests, only the central government could now sanction the diversion of forest land for non-forest purposes (making roads or power stations or dams). The hitherto rampant 'diversion of land' stopped, but deforestation couldn't be adequately controlled. So, in the 1990s, the Supreme Court stepped in, imposing checks on how forests were to be 'worked' (see box: Fell blow). But most states did not really understand what conservation-oriented forestry was all about. Consequently, revenue generation from forests has virtually dried up.
Consider India's export and import of forest products. In 2000-2001, India exported wood and forest-based products worth Rs 4,459 crore; major export earners were rubber and its products, paper, paperboards and printed books. In that year, imports stood at Rs 12,177 crore, including Rs 2,000 crore spent on importing raw wood. In other words, imports were 3 times higher than exports; the country spent precious foreign exchange on buying wood and other forest-based products from other countries. The trend is revealing (see graph: Peculiar process). Till the early 1990s, the exports and imports of forest produce were steadily increasing, but since 1998-1999 the gap between imports and exports has increased exponentially.
This skew is but one aspect of a many-layered crisis forest-rich states are today facing (see infographic: Hydra-headed crisis). The urgency is such that the 12 th Finance Commission -- set up to look into the allocation of resources between states and the Centre -- has taken cognisance of the need to compensate forest-rich states. It has set aside Rs 1,000 crore as grants-in-aid, to be given to states over five years in proportion to the forest cover they possess. According to B D Suyal, conservator of forests (policy and law), Himachal Pradesh, the grants-in-aid are a nominal amount compared to what forest-rich states are actually asking as compensation.
Nevertheless, the commission has accorded recognition to an important fact: someone is bearing the costs of keeping forests intact. Also, for the first time in India, a tangible -- economic -- value has been put on the many, intangible, benefits a forest provides.
Elsewhere, too, evaluating forests is an established practice (see box: Real conservation). In the late 1980s, New York, usa, realised it had to act to safeguard the quality of its drinking water. They could set up water filtration plants, at a whopping us$4 billion to us$6 billion, and spend another us $300 million annually in maintenance costs. So they went for another option: paying a mere us$1.4 billion to protect the forests the water came from.
New York's nine million residents get 90 per cent of their drinking water from the Catskill and Delaware watersheds close by. The smaller and more industrialized Croton watershed supplies the rest. The quality of water they provided was historically very good but subsequently concern arose about microbial contamination. In 1989 the United States Environmental Protection Agency said that all surface water supplies had to be filtered, if not treated naturally.
This led the city water authority to address the changing agricultural practices of farmers in the Catskill/Delaware catchment, the cause of the problem. A Watershed Protection and Partnership Programme was created. It pays landowners to introduce soil and water conservation practices. People are given incentives to 'retire' buffer areas near streams from production through cost-sharing agreements; farmers are paid us$100 million a year to minimise water pollution -- a pittance compared to the treatment plant option. Within five years, 93 per cent of farmers in the watershed had chosen to participate.
When there is a direct link between providers of services and those who benefit from them, the reason for paying and receiving incentives is very clear. The International Institute for Environment and Development and Winrock have been working on setting up such systems in India, focusing on hp and Madhya Pradesh, to facilitate arrangements for payments for watershed services in three sites -- two at the micro level and one at the macro level -- by mid 2006.
Another example of where a new system could be established is the Greater Himalayan National Park (ghnp), which comprises the catchment of four rivers and numerous downstream hydroelectric project beneficiaries. Hydropower companies are aware of the link between upstream catchment protection and silt flowing into their systems. They incur huge expenses in de-siltation. Control of silt flow and sedimentation, which considerably reduce the life of projects, can be an essential watershed service for them. The Bhakra Beas reservoir in hp silted up in nine years instead of the projected twenty-eight; the Larji project would have to spend over Rs 50 crore on desilting; for Nathpa-Jhakri it is 200 crore. Thus, their interest in forest protection upstream is high.
gnhp also has high recreational and ecotourism value. hp has adopted a new ecotourism policy in 2001 with the forest department as the nodal agency. It aims to involve local people in tourism, create a direct stake in the park's conservation.
In recent years, Bhopal has been facing an increasing water crisis with the drying up of the Upper lake, a part of the Bhoj wetlands, during summer. Winrock has undertaken a study of Bhopal, where over 200,000 households depend on water mainly from this lake and the Kolar dam. Increased siltation of the lake was traced to intensification of agriculture in the catchment area -- which comprised almost entirely of forests about 30-40 years ago. The Bhoj Wetlands project attempted to tackle the problem of siltation and eutrophication of the lake, but nothing was done to change the land-use practices of poor farmers.
The Kolar dam supplies nearly 60 per cent of Bhopal's water. The dam itself receives water from the Kolar river, which originates from a thickly forested area 70 kilometres upstream. About 60-70 villages in this catchment area put significant biotic pressure on these forests -- they are largely poor tribal communities dependent on the forests for their fuelwood, fodder and non-timber forest produce.
Municipal water supply agencies depend on upstream catchments for water supply. To maintain watershed protection services in the long run, an incentive-based system is what would motivate the communities in the catchment areas to protect the forests. Also, providing incentives to farmers to shift from pesticide based farming to horticulture and organic farming, for example, would be so much cheaper than bringing water to Bhopal from the Narmada. Bhopal currently makes no payments at all for the watershed protection services it receives from these forests. Water tariffs in the city are highly subsidised.
Madhu Verma, in her valuation of the Bhoj wetlands, found that consumers were willing to make additional payments if reliable water supply was ensured. Potential beneficiaries in Bhopal were the water supply agencies, fisherfolk, boatmen, washermen and the people of the city. Livelihood benefits were calculated using incomes or the market price of products. On the other hand, it costs Rs 9.5 crore to supply drinking water -- this is how much is being paid for lack of forest services. She estimated the value of preventive measures people use to avoid water borne diseases: Rs 12 lakh, borne for cost of illness, and Rs 1.24 crore for purification. Verma's study shows Bhopal was willing to pay Rs 4.8 crore to enjoy better recreational facilities from the Bhoj Wetland. The presence of the Upper Lake was found to increase property values by 50 per cent for lake front homeowners.
The example of the participatory watershed management programme in India is particularly relevant here. Improved irrigation and increased agricultural productivity were immediate benefits of the programme. But these were benefits that only landholders enjoyed; the main incentive for the landless was employment as labour while work related to project lasted. Once this got over, they no longer had a stake in protecting the watershed, or the forests in them. Also the value of marginal lands improving led to more powerful groups putting a claim on it.
Lack of secure rights to land or even to forest produce makes forest conservation extremely complex. There are many examples in India where people protect forests, but for this communities need -- at least -- access and withdrawal rights, and management rights. But it is also true that incentives do not have to be land-based, nor do they have to be direct cash payments, as was shown in Sukhomajri, where water rights were delinked from land. The pani panchayats in Maharashtra also work this way. Such innovative approaches to expand rights -- including rights to environmental benefits, for example -- are needed.
To move ahead, J Rao Matta and John Kerr, who did an empirical study of Joint Forest Management (jfm) -- also about giving people incentives to protect forests -- in Tamil Nadu say that "there is no discussion on compensating those who live on forest fringes for environmental services they provide through improved protection and ecological restoration". jfm in India has faltered because incentives to people, tied just to forest produce, were too small to make it sustainable. The strategy was that local communities would manage forests if they were compensated with resultant forest produce; many states elaborately talked of 'benefit sharing'. In reality, either the highly degraded forests provided little by way of tangible benefits, or the 1996 ban on felling came in the way of gaining from harvesting timber. And various rules in different states -- that keep changing -- restrict access to non-timber forest produce.
This points to the fact that the process needs to be accompanied by enabling policy. One that ensures benefits also go to the poorest, and one that takes into account certain subsidies -- for example those that encourage agriculture to the extent that it becomes more profitable to cut forests to grow crops -- as well as conflicting forest regulations and other blind spots that would riddle holes in any attempts to move in a new direction.
Putting a true value to forests could transform the way forest conservation is done. Methods exist. But does the political will exist that trusts local communities?