Net present value of forests
Also called: NPV of forest land · Topic: Environment and Sustainable Development · NCERT: Beyond NCERT
Meaning
The net present value (NPV) of forests is the money value of the ecosystem services lost when forest land is diverted to other uses. These services include clean water, soil protection, carbon storage and biodiversity. "Present value" means the future stream of these benefits is added up in today's money. In India, the user agency pays NPV in addition to the cost of compensatory afforestation. The charge comes from the Supreme Court's T.N. Godavarman case, and the money goes to CAMPA.
Example
Suppose a mining company diverts forest land. It pays for new plantations on other land. It must also pay the NPV of the destroyed forest, because the new saplings will take decades to give the services the old forest gave.
Don't confuse with
- Compensatory afforestation: this pays for planting a replacement forest. NPV pays for the services lost in the meantime and beyond.
Related concepts
- Chipko and Appiko movements
- Development-induced displacement
- Environmental impact assessment
- Compensatory afforestation
- Green credit
- Biodiversity offset
- Biodiversity credits
- REDD+
- Nature-based solutions
- Polluter pays principle