Compensatory Afforestation and Net Present Value

In one line

When forest land is diverted, the user agency pays for a new forest somewhere else and pays again for the services the old forest was providing, and this Act says where that money goes.

In the wording a student can write in an exam: "compensatory afforestation" means afforestation done in lieu of the diversion of forest land for non-forestry use under the 1980 Act; "net present value" means the quantification of the environmental services provided for the forest area diverted, as determined by an expert committee appointed by the Central Government; "user agency" means any person, organisation, company or department of the Central or a State Government requesting diversion or de-notification of forest land, or using it for a non-forest purpose; and the Act establishes a National Fund under section 3 and a State Fund in each State under section 4, with ninety per cent to the States and ten per cent to the Centre.

Where the Act came from

Section 1 gives the short title and provides that the Act comes into force on a date the Central Government appoints by notification, and that its extent is stated in the section as it was passed.

Section 2(a) tells the story in a definition. "Ad hoc Authority" means the ad hoc Compensatory Afforestation Fund Management and Planning Authority constituted under the order dated the 5th May, 2006 of the Supreme Court in T.N. Godavarman Thirumulpad v. Union of India, Writ Petition (Civil) No. 202 of 1995.

So the fund existed for ten years before Parliament legislated, created by the Court in the same continuing matter that gave "forest" its dictionary meaning. States had been collecting money from user agencies as a condition of approval under the 1980 Act, and it sat, under the ad hoc Authority, deposited in nationalised banks. Section 3(3) transfers all of it to the National Fund, and section 32 validates the transfer notwithstanding any judgment, decree or order of any court.

That is a rare sequence and worth writing about. A court created a fund because a statute had no machinery for the money it required; Parliament then enacted the machinery and validated what the court had done.

The four payments

A user agency whose diversion is approved under section 2 of the Van Adhiniyam pays more than one thing, and the Act names them.

Compensatory afforestation, section 2(d): afforestation in lieu of the diversion, that is a new plantation raised to replace the forest that is going.

Penal compensatory afforestation, section 2(k): afforestation over and above the compensatory afforestation in the guidelines, in lieu of the extent of area over which non-forestry activities have been carried out without obtaining prior approval. So it is the charge for having gone ahead without approval.