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Compensatory Afforestation Management Fund


The CAF is a nationally constituted authority with a corpus of crores of money . This is money paid by developers who have destroyed forest land for construction projects, and the idea is that such land must be recovered by regenerating forest on non-forest land. The amount to be paid is determined by the economic value of the goods and services provided by the razed forest. Timber, bamboo, firewood, carbon sequestration, soil conservation, water recharge, and seed dispersal are examples of these. This money is paid for by industrialists and then transferred to the respective states to be used for afforestation. The CAF Act 2016, which came into effect after more than a decade of planning, now establishes an independent authority to execute the fund.

The Act established a National Compensatory Afforestation Fund under the Public Account of India and State Compensatory Afforestation Fund under the Public Account of each state. The CAF Act was passed by the Centre in 2016, and the corresponding rules were published in 2018. It was passed to manage funds collected for compensatory afforestation, which had previously been managed by an ad hoc Compensatory Afforestation Fund Management and Planning Authority (CAMPA).

  • Compensatory afforestation means that whenever forest land is diverted for non-forest purposes such as mining or industry, the user agency pays for planting forests over an equal area of non-forest land, or twice the area of degraded forest land if such land is not available.

  • According to the rules, 90 percent of the CAF funds must be distributed to the states, with the remaining 10 percent retained by the Centre.

  • The funds can be used for catchment area treatment, assisted natural generation, forest management, wildlife protection and management, village relocation from protected areas, managing human-wildlife conflicts, training and awareness generation, supply of wood saving devices, and other related activities.

  • The state budget for forests will be unaffected, and the transferred funds will be in addition to the state budget; it is expected that all states will use this fund for forestry activities in order to meet the objectives of the Nationally Determined Contributions (NDCs).

  • The Ministry of Environment announced in 2019 that states with forest land covering more than 75% of their geographical area are exempt from providing compensatory afforestation. Land can instead be taken up in states with less forest cover. Furthermore, if the land is not contiguous to a forest, the minimum area of compensatory land should be five hectares.

Nagar Van Scheme

The Nagar Van (Urban Forests) programme aims to create 200 Urban Forests across the country over the next five years. The Scheme requires people to participate and collaborate with the Forest Department, municipalities, non-governmental organisations (NGOs), companies, and local citizens. These urban forests will be established primarily on existing forest land in the City or on any other vacant land offered by local urban local bodies. The scheme's funding will come from the CAMPA (Compensatory Afforestation Fund (CAF) Act, 2016).


Underutilization and misuse of CA funds remains a pressing issue. The government must enhance the use of these funds to not only undertake afforestation activities but also to sustain the existing forests that are deteriorating.


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