Compensatory afforestation

Indian Economy glossary

Topic: Environment and Sustainable Development · NCERT: Beyond NCERT

Meaning

Compensatory afforestation is a legal rule in India. When forest land is diverted to non-forest use, such as a mine, dam or road, the user must grow new forest. It must be planted on an equal area of non-forest or degraded land. The money is managed by CAMPA under the Compensatory Afforestation Fund Act 2016. The aim is to replace the lost green cover.

Example

Suppose a highway project takes 100 hectares of forest. The project agency must pay to raise forest on 100 hectares of non-forest or degraded land elsewhere. It must also pay the net present value (NPV) of the forest it destroyed.

Don't confuse with

  • Net present value (NPV) of forests: this is a separate charge, paid in addition. It is the money value of ecosystem services lost when the old forest is cut. Compensatory afforestation pays for planting new trees.

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