Can environment damage be mitigated? An analysis of schemes to compensate for the loss of forests in India

India’s Constitution lists “Forests” in its Concurrent list, making it subject to the administration and management of both wings of a federal structure: the State and Central Governments. At both the national and state levels there are a range of laws and policies that have determined forest ownership and have put forth mechanisms that restrict or release forests to its “potential” users.

However, it is the Forest (Conservation) Act (FCA), 1980 implemented at the Central level which lays down the procedural requirements to be followed in case any user agency is to divert forest land for non-forest use, and/or if any tree felling is to take place. The FCA makes a distinction between forest ‘management’ and what signifies ‘non-forest purpose’ such as industrial activities, infrastructure expansion or de-reservation of the land to another administrative category. In order to use forests for an explicit non-forest purpose say mining or road construction, or dereserve it (from its Reserved Forest status), an approval needs to be sought from the Ministry of Environment and Forests (MoEF).

The law defines non-forest purpose broadly as the breaking up or clearing of any forest land for the cultivation of tea, coffee, spices, rubber, palms, oil-bearing plants, horticultural crops or medicinal plants and for any purpose other than reafforestation. The law envisages that the change of land use should be compensated for. The requirement for compensatory afforestation is considered to be one of the most important conditions stipulated when forests are ‘diverted’ for non-forest use or when felling of trees is to be done or forests are to be de-reserved. All proposals for diversion are made with a comprehensive scheme for compensatory afforestation. The Forest (Conservation) Rules, 2003 (unamended version was in 1981) requires forms to be filled by the Forest Department, the agency that proposes diversion on behalf of the user agency. The MoEF has also issued specific guidelines related to how compensatory afforestation is to be carried out and monitored.

As stipulated by the MoEF, compensatory afforestation is to be done over an equivalent area of non-forest land. Eg. for 100 hectares ‘lost’ to non-forest purpose, another 100 hectares of non-forest land is to be afforested. Exceptions to this are made in case of non-availability of non forest land, in which case afforestation needs to be taken up on the same extent of degraded forest land. However, projects undertaken by the Central Government can take up compensatory afforestation on degraded forest land that is twice the extend of forest land diverted for its projects. The guidelines also allow for other category of forests which are recognised by the The Indian Forest Act, 1927 and on which FCA, 1980 is applicable to be also used for compensatory afforestation. These lands may be revenue lands or categories of land such as zudpi jungle/Chhote/ Bade jhar ka jungle/ jungle-jhari land/civil – soyam lands. These categories have their own unique ownership and management practices. Looking for a distant site for afforestation outside the district or state should be done only if land in that particular state is not available.

The role of the Supreme Court of India

Since 1995, the Supreme Court of India began playing a proactive role in matters of forest policy and governance. This was the beginning of the ongoing matter being heard in the apex court as T.N. Godavarman Thirumulpad v/s Union of India [W.P. (Civil) No.202 of 1995], popularly known as the Forest Case or the Godavarman Case. Its history can be traced back to the time when the Supreme Court took action against large scale illegal felling of timber and denuding of forests in Gudalur Taluk, Tamil Nadu.

One of the initial orders in this case substantially changed the manner in which forests had been viewed and managed. The order of 12.12.1996 expanded the meaning of the word “forests” to its dictionary meaning in the Forest (Conservation) Act (FCA), 1980. Following this, any area which attracted this definition, whether officially recorded as forest or not, would need an approval under the FCA and its corresponding Rules, if it were to be diverted for non-forest use (1) (see Forest Case Update).

Until the interventions of the Supreme Court (SC) in the Godavarman case, the subject of compensatory afforestation and the money for this exercise was all dealt with by the State Government. The guidelines allowed the setting up of a Special Fund for this purpose. The responsibility of a person or project proponent responsible for forest land diversion would end once the amount required to carry out this activity is transferred to the State Government.

Ever since the early observations of the SC in 1998-99 it was understood while forest land was systematically and officially being diverted for non-forest use, the condition by which this loss was to be compensated for remained largely in-operational. This was almost two decades after the FCA was put into place with a set of compensatory practices that sought to maintain forest cover by the controversial conversion of revenue land into forest. The revenue land which was to be forested would already have had multiple human and ecological uses in place.

As the debate progressed in Court, an order dated 30.10.2002 directed that a body shall be constituted to manage funds received for the diversion of forest land for non forest purposes. The body was to manage the money being collected for compensatory afforestation, Net Present Value (NPV- a new methodology to be developed for this additional pricing for forest land diversion through subsequent processes) (2) and any other money recoverable under the FCA in the form of fines or penalties. A notification to this effect was issued by the MoEF on 23.4.2004 to set up the Compensatory Afforestation Fund Management and Planning Authority (CAMPA).

While the mechanisms that were devised through this legal process present a rather simple and unproblematic picture of how compensatory afforestation is to take place, it is not the case on the ground. In September 2010, the Gujarat High Court has sought explanation from the Mundra Port & Special Economic Zone (MPSEZ), the Gujarat Forest Department, the Ministry of Defence, the National Biodiversity Authority and the district collector of Kutch about the allotment of 2000 hectares of land. This land was in possession of the Border Security Force (BSF) and was now marked for carrying out afforestation in lieu of the diversion for the company’s operations in Mundra region of Kutch district in Gujarat. This land was to be acquired and transferred to the State Forest Department within six months of the grant of clearance. As a result of the controversy, no compensatory afforestation work could be carried out on BSF land. Meanwhile it was reported that a total of Rs. 96,59,33,159, was paid by the company the CAMPA Fund.

The Comptroller and Auditor General (CAG) has also carried out a comprehensive scrutiny of the utilisation of compensatory afforestation funds. In one such analysis of records related to 17 forest territorial divisions in the state of Madhya Pradesh, forest land was diverted for forest uses for ten years between 1997-98 to 2006-07. The CAG report of 2007 states that in this period a total 8915.214 hectares were diverted for 96 projects. It added that 7060.979 hectare land was stipulated for compensatory afforestation with Rs. 38.37 crore fund made available by user agencies. Out of 38.37 crores, only Rs. 2.31 crores was used for compensatory afforestation (CA), which is only 6% of the total fund made available. CAG reported that 67 projects and 5340.197 hectares were not at all covered under CA in this time period. The reasons for this shortfall were pointed out by the Divisional Forest Officer as lack of allotment of funds for 64 projects. Another reason was the non-transfer of non-forest land in one case and in two cases compensatory afforestation had not been carried out despite availability of funds with the divisions (CAG, 2007).

The years of debate around compensatory afforestation, setting up institutional mechanisms for funds and also setting into place new mechanisms for pricing forests needs to be looked at to understand how the agencies involved dealt with the question of loss of forest and its compensation. In an attempt to attend to the core problem at hand, the apex court, the executive and parliamentary processes lead to some specific outcomes:

1. One of the foremost issues relates to the debates that took place in the Supreme Court at the very initial stages when the matter was under discussion. Any compensatory afforestation activity needs to be time bound and there need to be timelines for the completion of compensatory afforestation, which were never put into place. The court had also said that there is a need to expand the responsibility of carrying out afforestation on the user agency rather than the forest department. In an earlier system, the user agency would deposit the money with the State Government, now it does so with the Ad-hoc CAMPA. Their responsibility ends here, and the onus once again is on the State Forest Department to carry out the compensatory afforestation and any other conservation related activity using the NPV funds. The court had also made a crucial mention for the need for a public environmental audit before the grant of forest clearance. This too was never followed through.

2. From the time the practice of compensatory afforestation (CA) was put into place, it appears that the only quantifiable parameter that was needed for the decision on CA was the “area” of forest land involved. It was based on this that the extent of CA to be undertaken was determined. Questions of biodiversity loss, livelihood and cultural impacts were not in question in the initial days and only peripherally later. The calculations that went into determining the cost of such CA were more or less fixed, with costs of seedlings, cost of labour and other such items being known due to its regular practice. However, through the deliberations in the SC, these calculations became more and more complex as newer parameters for tangible forest goods and intangible forest ‘services’ were identified. After identification they also had to be translated into units that would make billing of such goods and services in money terms possible.

3. The experience of CA and related debates also indicate that the valuation models for compensatory afforestation, NPV and such schemes neatly and somewhat disingenuously identifies the conservers and users of forests into two distinct groups. While the users are all those who seek to change the nature of the forest through construction or deforestation, the conservers are the forest departments, thereby making them eligible to receive the funds for CA and NPV to carry out afforestation activities. While none of the reports necessarily comment on this, their recommendations are implicit in the conclusion.

4. The most unique and stunning effect of the legal and executive intervention on CA has been the number of institutions it has spawned towards a singular purpose of management of funds collected from user agencies that require forest land for setting up of their projects. In the current system, there are three sets of institutions set up, starting with the Ad-hoc CAMPA which collects and disburses the money for diversion of forest land. In every State now, there is a State CAMPA exclusively set up for the purposes of seeking and further distributing the money to State Forest Departments. Finally there is the CAMPA Advisory Council which is set up to monitor the entire collection and disbursement exercise. But, the issue of transfer of money and its utilisation continues to be a bone of contention between state and central governments.

5. The deliberations on CAMPA and NPV have reduced the questions on implementation of CA to one that is essentially about the collection and disbursement of funds. During the course of the debates in the SC, the core point about afforestation not taking place at the field sites and the reasons for the same were almost entirely missing. None of the agencies, be it the forest departments, the Supreme Court and its empowered committee, the MoEF or the Parliamentary Committee paid attention to the social nature of an activity such as afforestation. The factors that make it necessary to bring more and more area under afforestation, the reactions and responses to such schemes by communities dependent on or living in these areas and the social consequences of such schemes have hardly been considered. We are therefore back to a situation where despite collections of huge amounts of money for CA and the establishment of mechanisms for disbursements, the factors that limit the scope of CA such as the activities for which money is allocated, the lack of land availability, limiting conservation to plantations and so on, exist.

The entire discussion in 1999 started around the fact that CA funds were not being collected and not being utilised by the States. With all this institutional reform, we have created a new form of administering funds. But the woes of disbursal and proper utilisation of these funds remain. NPV funds are being used for plantations, CA funds being for infrastructure building.

In recent times, both the judiciary and the executive have made observations about CA not being done in a satisfactory manner. Despite these observations, the core issue of the extent of diversion of forests through forest clearance has never been addressed. Availability of land for afforestation, social and economic factors determining the possibilities of afforestation, conflicting land tenure and various other ground realities are left to the field level staff to deal with entirely, as directives are issued from above.