The Compensatory Afforestation Fund Bill, 2008

When forest land is diverted for non -forest purposes, the user must provide money for compensatory afforestation (planting of trees on another piece of land). The user must also pay compensation for the loss of environmental services provided by the forest land due to the diversion.
The Bill creates a permanent Compensatory Afforestation Fund (CAF), under the Public Account of India, to receive the money collected as compensation for the diverted forest land. Money in the ad hoc fund (established by a Supreme Court order) shall be transferred to CAF.
The money in CAF shall be used for the development, maintenance and protection of for ests and wildlife, and the Green India programme.
Afforestation money collected from a state shall only be used within that state. If the diversion of forest land affects multiple states, the money allotted for one state may be used in adjoining states.
CAF shall be controlled by the central government and managed by the Compe nsatory Afforestation Fund Management and Planning Authority (CAMPA). CAMPA shall consist of a governing body, an executive body, and a monitoring group.

CAMPA shall release money to the states to carry out afforestation work. The Bill also requires CAMPA to ‘accomplish’ the afforestation work. Whereas CAMPA has the power to manage and monitor funds, it does not have any power to direct implementation agencies (which are state government bodies) to comply.
Of the total required afforestation, about 42% has been completed as of May 2008. Some states have completed less than 1% while other states have completed almost 90% of the required afforestation.
Net Present Value (NPV) is used to estimate the loss of environmental services that are provided by the forest area which is being diverted. The Bill states that NPV calculations may be revised periodically by an expert committee. The Bill does not make it mandatory for the government to revise NPV at periodic intervals.
The Bill states that all money collected for ‘additional compensatory afforestation’ and ‘catchment area treatment plan’ shall be deposited in CAF. The Bill does not provide a definition for either term.