Cutting losses?

Compensatory afforestation in trouble

By Ruksan Bose
Published: Monday 15 August 2005

-- (Credit: Shyamal)Since the Forest Conservation Act, 1980 (fca) came into force, the Centre has been in charge of sanctioning approvals of forestland diversion, the objective being to keep deforestation minimal. Yet, between 1980 and 2005, about 11 thousand projects have been cleared -- and 9.88 lakh hectares (ha) of forests diverted (see table: Diversion). At the Union ministry of environment and forests (moef), papers inexorably pile up -- 'requests' from state governments, industrial houses -- to divert more forests for development. To make up for such losses, moef can take recourse to compensatory afforestation -- tree planting in non-forest areas equivalent to the forest cut. If such areas are not available, planting occurs on degraded forestland. The state provides the land and user agencies pay.

Court steps in Do the conditions governing diversion of forestland to non-forest uses exist only on paper? In 2001, Kirit Rawal, additional solicitor general of India, informed the Supreme Court (sc) that the compensatory afforestation mechanism was virtually dysfunctional; many states hadn't utilised funds and were defaulting to the tune of Rs 200 crore.

To resolve this, the sc advised the creation of a central body to ensure proper use of afforestation funds received in lieu of forests cut down for projects. In April 2004, moef responded by notifying the Compensatory Afforestation and Management Planning Agency (campa). Fifteen months and many affidavits later (see 'Doubts sown', Down To Earth, June 30, 2004), mostly filed by moef, campa is yet to get to work.

State to business, all use forests

Main users (1980-2003) Forestland diverted in ha
Hydroelectric 259,309
Defence 99,254
Irrigation 77,279
Mining      77,655
Transmission lines        21,849
Roads           14,063
Railway lines           4,039
Thermal power 3,340
Schools   2,305
Drinking water 926
Dispensaries/Hospitals 56
Others 48,395
Source: Union ministry of environment and forests (MoEF)

Faced with mounting evidence of official inability to reverse deforestation, the sc has had to become increasingly proactive about forest conservation, using forest laws and the doctrine of public trust to justify its intervention. The apex court has had regular hearings on campa in the last 6 months. The court has advised the Centre and states on how to spend the money collected for afforestation, and ways to generate funds for forest conservation: users must pay not only for forest loss, but also for intangible benefits like watershed services, biodiversity and climate regulation. Thus, users also have to pay the net present value (npv) of the forest cover lost, ranging from Rs 5.8 lakhs to 9.2 lakhs per ha (see 'Too cut and dried', Down To Earth, July 31, 2005), apart from undertaking compensatory afforestation and paying for catchment area treatment.

Despite this potential resource, it's apparent that funds are short. States don't collect all the money due as compensation. Even of the amount garnered, less than 60 per cent is actually spent: in most states, compensatory afforestation funds first go into consolidated state funds before being allocated for the forest department, entailing delays in fund release. Worse, money is routinely diverted to pay salaries in many cash-strapped states.

As a result, forest cover has fallen to about 23 per cent. Since 1947, India has lost over 43 million ha of forest -- or 1.5 lakh ha a year. Since fca 1980, diversions have come down to 20,000 ha per year, but equivalent afforestation still covers only half the area lost (see table: Not enough).Even with compensatory planting, trees may not survive.

Not enough
Compensatory afforestation 1980-2002

Money paid Amount used Forest area diverted Stipulated afforestation Actual
Rs 860 crore
Rs 500 crore 8.7 lakh ha 6.73 lakh ha 4.27 lakh ha Funds diverted from state coffers
Source: Compiled from Forestry Statistics India, Indian Council for Forestry Research, 2003; MoEF and Interlocutary Application, No 566
V K Bahuguna, then inspector general, forests, moef, says, "We now feel there should be more assisted natural regeneration, instead of blind plantation."

Banking on the Centre
In court, an interlocutory application that underlined the need to streamline, and make transparent, the process of afforestation and payments triggered the idea of a single central fund where each state has a ledger. As Mahendra Vyas of the sc's Central Empowered Committee (cec), that recommended a central body to manage this fund, explains, "The idea was to put in checks and balances."

In October 2002, the sc had ordered that user agencies make a one-time payment of npv, based on the quality and density of forests . Going by the 'polluter pays principle', funds were to be mobilised to regenerate existing degraded forests or to protect vulnerable ones. This mandatory payment was also supposed to deter frequent use of forestland, much cheaper and less complicated than using land belonging to people. Ritwick Dutta, environmental lawyer at the sc , explains why. "States aren't willing to give up agricultural land. It's politically easier to use forest land for projects since it has less of an impact on powerful groups." Harish Salve, amicus curiae advising the sc, says the interest-bearing fund would be held in trust by campa, its interest used for greening: "forest benefits accrue to the entire country and its loss is on a larger scale than the state's."

This rationale was also used to explain why money was not given directly to states, but put into a central fund -- under campa, chaired by the Union minister, moef, with an executive body headed by the director general, forests.

The states, obviously, aren't happy. Affidavits seeking modifications have poured in. Even in Himachal Pradesh, a state making the right noises about conservation recently, forest department officials feel this is unfair -- especially since state government projects are not exempt from paying npv. As the land belongs to it -- the forest department holds 67 per cent -- the state feels it has forgone a lot to preserve its forest wealth. "We compromised on development to save our forests and now the Centre says we can't use them. If we do, we pay, and give the Centre the money to look after!" says B D Suyal, conservator of forests (policy and law).

Can't figure it out
Debates over npv have grown more complex over the last year, with many grey areas. According to T R Manoharan, Worldwide Fund for Nature (wwf), "There is not only a need for clarification, but also a mechanism to review the process and have social auditing. Arbitrary setting of a value and blanket application to all types of forestland is not the best way to go about it."

Following the court order, when the moef issued directions for charging npv, various user agencies began to appeal for exemption. Lobbies swung into action. Affidavits contesting the order burgeoned; in these, two issues emerged: questioning the basis for npv figures sc had set, and requests for exemption of payment on the grounds that the projects were in public interest.

How did sc come up with the figure of Rs 5.8 lakh to Rs 9.2 lakh per ha as npv charges? According to M K Jeevarajika of the cec, as states like Madhya Pradesh had already been charging npv, the number was simply picked up from there. But Bahuguna feels "the figure given for npv by the sc is an arbitrary one. There is no scientific basis for it. The amount should be calculated on economic principles." Opinions also differ over the amount; many experts feel it is too low, while user agencies complain it's too high. Since 1991, Bihar has been charging for forestland diversion and depending on the class of forest diverted, the rate was Rs 2.56 lakh, Rs 8.14 lakh and 14.52 lakh per ha. Kanchan Chopra, Institute of Economic Growth, Delhi finds the range too narrow. "Valuations already done in India show a range of Rs 4,200 to 42 lakh per ha. While values for protected areas might be in the range of Rs 26 lakh to Rs 42 lakh per ha, those for degraded areas would be closer to Rs 4,200 to Rs 16,000 per ha." Besides different types of forests, there are also types of users of forestland, who fall into three groups. The main is the private sector and commercial public sector utilities like the National Hydroelectric Power Company and mining companies. But forestland is also used for community needs like schools or hospitals, or for resettling tribals.

While the court was clear about not exempting the commercial sector from making payments, it did make a distinction between commercial use and non-commercial community or government ventures, saying they would not have to pay. As for the rest, "the claims of tribals and other forest dwellers fall in a totally different category and should be kept out of npv 's purview. Plus, in their case, destruction of good forests is highly unlikely, as they won't be given good forest cover land," says natural resource management expert, Madhu Sarin.

Redressal blues
To address issues raised in various affidavits, three days -- May 4-6, 2005 -- were set aside in sc. The special session stressed the need for an expert committee, with academics as well as economists from the finance and commerce ministries on board. The moef was to suggest frames of reference and the sc would direct the economic group to update npv figures, with representative regional figures. This would provide an illustrative range of values for different forest types or ecological zones.

The hearing, incidentally, raised questions on the legitimacy of the campa fund itself: set up not by law but only a government notification.

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