Developers should pay a higher Net Present Value for cutting forests
- April 26, 2022
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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Developers should pay a higher Net Present Value for cutting forests
Subject: Environment
Section : Biodiversity
Context- In January 2022, a Supreme Court-appointed committee criticised the current method of evaluating forests, calling it outdated. It recommended a substantial revision of the Net Present Value (NPV) of forests, fixing compensatory afforestation practices, and the creation of a new body to regulate forest diversion.
Concept-
- Under the Forest Conservation Act, 1980 (FCA), developers who use forest land for their projects are required to pay a one-time monetary valuation, called Net Present Value (NPV), to the government in lieu of cutting down forests.
- This is then transferred to a fund set up under the Compensatory Afforestation (CAMPA) Act, 2016, which the states have to use for afforestation on non-forest or degraded forest lands.
- It depends on factors such as the quality and type of forests.
- Since 2009, the government has been charging between Rs. 438,000 and Rs. 1.04 million as the NPV for diverting every hectare of forest.
- According to a 2008 Supreme Court order, the NPV was supposed to be revised by the Indian government in three years. But it failed to do so despite recommendations from several committees.
- In January 2021, the Union Ministry of Environment, Forest and Climate Change (MoEFCC) proposed to hike the NPV by 1.51 times which was based on the Wholesale Price Index (WPI). However, while doing so, it set aside the recommendation of a four-time increase in the NPV by another expert group the ministry had constituted earlier in 2014.
- Subsequently, in March 2021, the Supreme Court appointed an expert committee chaired by M.K. Ranjitsinh, wildlife expert and former chairman of the Wildlife Trust of India. Other members included environment ministry officials and renowned environmentalists. Its report was submitted to the apex court on January 4, 2022.
- The MoEFCC informed all the states that a 1.53 times increase of the NPV would now be applicable for all types of forests.
Net Present Value of Forests:
- It is a mandatory one-time payment that a user has to make for diverting forestland for non-forest use, under the Forest (Conservation) Act, 1980.
- This is calculated on the basis of the services and ecological value of the forests.
- It depends on the location and nature of the forest and the type of industrial enterprise that will replace a particular parcel of forest.
- These payments go to the Compensatory Afforestation Fund (CAF) and are used for afforestation and reforestation.
- The CAF is managed by the Compensatory Afforestation Management and Planning Authority (CAMPA).
- The Forest Advisory Committee constituted by the Ministry of Environment, Forest and Climate Change (MoEF&CC) decides on whether forests can be diverted for projects and the NPV to be charged.
- It is a statutory body constituted by the Forest (Conservation) Act 1980.
- Exemptions: Some projects have been provided exemption from paying NPV like construction of Schools, Hospitals, village tanks, laying down of optical fibre etc. Projects like underground mining and wind energy plants have been given a 50% exemption from NPV.
- In the Godavarman Thirumulpad v. Union of India case, 2008, the Supreme Court mandated the payment of NPV.
- The Kanchan Gupta Committee developed the concept of NPV after this case.
Forest Conservation Act, 1980:
- The Forest Conservation Act, 1980 stipulated that the central permission is necessary to practice sustainable agro-forestry in forest areas. Violation or lack of permit was treated as a criminal offence.
- It puts a restriction on the use of forest-land for non-forest purposes.
- It targeted to limit deforestation, conserve biodiversity and save wildlife.