Compensatory Afforestation Fund (CAF) Act, 2016 and CAMPA

When a road, mine, dam or factory needs forest land, the forest is cut down. Compensatory afforestation is the rule that says: if you take forest land, you must pay for a new forest to be grown somewhere else. The Compensatory Afforestation Fund (CAF) Act, 2016 is the law that collects this money and decides how it is spent. The bodies that manage this money are called CAMPA (Compensatory Afforestation Fund Management and Planning Authority), one at the national level and one in each state.

Why does this rule exist?

India needs roads, railways, power lines and mines. Many of these can only be built on forest land. But forests give us clean air, water, soil protection and homes for wildlife. Compensatory afforestation tries to balance both needs. Think of it like this: if you borrow your neighbour's bicycle and break it, you must replace it. The project that "breaks" a forest must pay to "replace" it. Without this rule, forest land would be used freely and India's green cover would keep shrinking.

Where did it come from?

• 1980: The Forest (Conservation) Act, 1980 said that forest land cannot be used for non-forest purposes (like a road or mine) without the Central Government's prior approval (Section 2). Compensatory afforestation became a standard condition attached to such approvals.
• 2002: The money collected from projects was lying scattered with state governments, and much of it was not used for forests. In the long-running forest case T.N. Godavarman Thirumulpad v. Union of India, the Supreme Court in 2002 directed the Centre to set up a body and a fund to manage this money.
• 2004: The Union Environment Ministry notified CAMPA in April 2004. But this body had no proper law behind it and did not really start working.
• 2006: In May 2006, the Supreme Court ordered an ad-hoc CAMPA (a temporary body) to be set up. All the money lying with states was moved into its bank accounts.
• 2013: The Comptroller and Auditor General (CAG), India's top government auditor, checked this system in its Report No. 21 of 2013. It found that the fund had grown from about ₹1,200 crore (2006) to about ₹23,600 crore (2012), but the money was badly used. Only about 61% of the funds released were actually spent, and only about 27% of the non-forest land due for planting was actually received.
• 2016: Parliament passed the Compensatory Afforestation Fund Act, 2016 to give the whole system a firm legal base.
• 2018: The Compensatory Afforestation Fund Rules, 2018 were notified on 10 August 2018. The Act came into force on 30 September 2018.
• 2019: In August 2019, the Centre handed over about ₹47,436 crore of long-pending CAF money to 27 states.

How does compensatory afforestation work, step by step?

1. A user agency (the body that wants the land, for example NHAI or a mining company) applies to use forest land.
2. The state forest department examines the proposal, and the Centre grants approval with conditions.
3. The user agency must give or pay for replacement land. Normally this is non-forest land equal in area to the forest land taken. If such land is not available, planting can be done on degraded forest land (forest that has lost most of its trees) of twice the area.
4. The user agency pays the cost of planting trees on that land, plus a Net Present Value (NPV) for the forest it destroys. NPV is the money value of everything the lost forest would have given over about 50 years, like timber, water, carbon storage and soil protection. Rates depend on the type and density of the forest; one commonly cited range is about ₹4.38 lakh to ₹10.43 lakh per hectare [Unverified: current revised rates].
5. All this money goes into the CAF funds, and the forest department uses it to grow and protect the new forest.

The key parts of the CAF Act, 2016

• It creates a National Compensatory Afforestation Fund under the Public Account of India, and a State Compensatory Afforestation Fund under the Public Account of each State.
• Both funds are non-lapsable (unspent money does not go back at the end of the year) and interest-bearing (the money earns interest).
• Money collected from user agencies is split: 90% goes to the State Fund and 10% to the National Fund.
• National CAMPA (Section 8) has a Governing Body chaired by the Union Minister of Environment, Forest and Climate Change, an Executive Committee, and a Monitoring Group. Each state has its own State CAMPA.
• Under Rule 5 of the CAF Rules, 2018, at least 80% of the NPV money must be spent on forest and wildlife management (planting, natural regeneration, protecting forests, improving wildlife habitat). Not more than 20% can go to strengthening forest infrastructure and training staff.
• The money cannot be used for salaries, travel allowances, office equipment or building offices.

Newer ways of doing compensatory afforestation

• Accredited Compensatory Afforestation (ACA): Introduced through the Forest (Conservation) Rules, 2022. A person or company can grow a plantation on its own land in advance. A project developer can later "buy" this land to meet its compensatory afforestation duty. Official guidance requires a minimum of about 10 hectares, tree canopy density of at least 0.4, and plantations at least five years old.
• Land banks: States identify and keep ready areas of land that can be used for compensatory afforestation, so projects are not delayed.
• 2023 changes: The Forest (Conservation) Act, 1980 was amended in 2023 and renamed the Van (Sanrakshan Evam Samvardhan) Adhiniyam, 1980. Some projects were exempted from prior central approval, for example strategic linear projects (long, narrow projects like roads and railway lines) of national importance within 100 km of international borders, the LoC or the LAC. But conditions like compensatory afforestation still apply to them.

India's position and examples

India's National Forest Policy, 1988 sets a goal of one-third (33%) of the country under forest or tree cover. Compensatory afforestation is one of the main tools that is supposed to stop forest loss from development. States with very little forest, like Punjab and Haryana, find it hard to locate land for replacement planting. In such cases, courts have sometimes demanded much higher planting.

For example, for a defence road in Punjab, the Punjab and Haryana High Court required planting of ten times the number of trees cut.

Commonly confused concepts

• Compensatory afforestation vs afforestation: Afforestation means growing a forest on land that had no forest. Compensatory afforestation is a legal duty that comes as a price for taking forest land.
• Afforestation vs reforestation: Afforestation is planting where there was no forest earlier. Reforestation is replanting where a forest existed and was cut.
• CAF vs CAMPA: CAF is the fund (the money). CAMPA is the authority (the body that manages and spends the money).
• NPV vs compensatory afforestation cost: The cost of afforestation pays for planting new trees. NPV pays for the services the old forest would have given. A user agency pays both.
• Forest cover vs tree cover: Forest cover is any land of 1 hectare or more with tree canopy density above 10%, whatever its legal status. Tree cover means small patches of trees (under 1 hectare) outside recorded forest, like trees along roads and farms.

Issues, criticism and the way forward

• A young plantation is not an old forest. A natural forest has many layers of life built over decades or centuries. A new plantation of a few tree species cannot replace that quickly.
• Land is hard to find. Replacement land is often far from the cut forest, poor in quality, or not handed over at all. The CAG found only about 27% of due land was received in 2006-12.
• Poor use of money: Large amounts lay unused for years. When spent, some money went to unrelated things. Survival of planted saplings is often not tracked well.
• Monoculture plantations: Planting a single fast-growing species (like eucalyptus) gives "green cover" on paper but little benefit for wildlife and water.
• Rights of forest dwellers: Planting on common or forest land can affect tribal and forest-dwelling communities whose rights are protected by the Forest Rights Act, 2006.
• Way forward: Experts suggest better land banks, geo-tagging and satellite checks of plantations, planting native mixed species, tracking survival rates over many years, and involving local communities and Gram Sabhas in planning.

Concepts to Know

• User agency: The government body or company that wants to use forest land for a project, like a highway authority or a mining company.
• Degraded forest: Forest land that has lost most of its trees and is in poor condition, though it is still legally forest.
• Public Account: A government account that holds money which does not fully belong to the government, like provident funds or deposits. Money here does not need Parliament's yearly vote to be spent in the same way as the Consolidated Fund.
• Non-lapsable fund: A fund where unspent money stays in the fund instead of going back to the treasury at the end of the financial year.
• Hectare: A unit of land area. One hectare is 10,000 square metres, roughly the size of one and a half football fields.
• Canopy density: How much of the ground is covered by the tops (crowns) of trees when seen from above. A density of 0.4 means about 40% of the ground is shaded by tree crowns.