Economic Development and Forest Conservation

Amit Kumar1

Abstract

India has a vast forest wealth that plays an important role in environment and livelihood security of the

country. However development imperatives continue to put pressure on large forest tracts. This paper

analyses various arguments in the debate between forest conservation and economic growth. The paper

also discusses the impact of economic processes on forests and the institutional arrangement for forest

land diversion. Taking an extreme position in the debate which calls for a clear tradeoff scenario between

economic activity and conservation is an inadequate solution for the problem. The emerging economic

scenario provides opportunity for interventions in the process of forest land diversion through policy and

institutional changes, integration of the sector beyond the traditional administrative domain, financial

initiatives and capacity enhancement. This will require a shift in paradigm from being a regulator of

forest land to a more holistic natural resource manager. A case for contributions from other sections of

the society and the government will also have to be made out. Diversion of forest land cannot be viewed

in isolation. Given this scenario, the paper describes some of the principles which should govern the

process of forest land diversion in India to achieve the balance between economic growth and forest

conservation in the country.

Key Words

Forest diversion, net present value, inclusive development, ecosystem services.

1. Introduction

Although India has witnessed recent decades of strong growth, a vast majority of the people are still

deprived of basic necessities posing a great challenge for the policy planners. About 68 % of the

1
Amit Kumar is a member of the Indian Forest Service and currently working as Director in the Ministry of Rural Development,
Dept. of Land Resources, Government of India.
pg. 1
population lives on less than 2 $ per day2. About 18% of the people live in absolute poverty on less than

$1.25 (PPP) at day. As per World Health Organization report, 97 million do not have access of improved

sources of water. About 80% of rural population is dependent on heavily depleting ground water.

Universal access of health services is another area of great challenge for the country. Indian is ranked a

low 136 among 186 countries on its human development index (HDI) - a composite measure of life

expectancy, access to education and income levels (UNDP, 2013). Coupled with arising middle class,

improved awareness is raising the expectation of the people and development is finding place in agenda

of political discourse in the country. Planning Commission has set a target of 9% growth for the 12 Five

Year Plan period (2012-13 to 2017-18). It is estimated that 8-9 % of growth will be required for the next

25 years to bring the bottom 40% of the people to an acceptable level of economic and social well being.

Better access to health and education, skill development and creation of gainful employment, is an

important imperative for the country if it is to realize the demographic dividend. India will also have to

ensure a fair and equitable distribution of wealth to take care of the socio-economically and vulnerable

sections of the societies, the tribals, landless and the extremely poor.

To achieve this target of raising the living conditions of people, the country will require more resources

like coal, iron ore and hydel power to fuel its growth most of which lies in the forest areas. Land

resources outside forest areas are also getting scarce. Given that 90.0 per cent of our coal, more than 50.0

per cent of most minerals and most prospective dam sites are in tribal regions where the forest wealth of

the country also lies, there are considerable conflicts over land acquisition in these areas. There are

allegations of mega development projects being held up due to lack of forest clearance. The Forest

(Conservation) Act, 19803 (FCA) is a strong Act that has remarkably reduced the rate of forest land

diversion in the country. But at the same time the Act is also viewed as an impediment to growth and

branded as “anti-development”. Whether economic development should be achieved at the cost

environment protection is already a strongly growing debate because of the increasingly active role of

2
Source: The World Bank
3
The Forest (Conservation) Act, 1980 (Act 69 of 1980)

pg. 2
media and the judiciary. The issue has been seized by the policy planners as is obvious by the mid path

proposed by the approach paper to the Twelfth Plan ( Planning Commission, 2011) which speaks of trade

off as we achieve the objectives of environmental protection, energy security, requirements of expanding

industry, urban centres and transportation also need to be realized and these will require careful balancing

and a proactive search for solutions and additional financial allocation for the sector.

It is important that this dichotomy is viewed from all the perspectives, lest the society is forced to make a

choice at either extreme. The paper discusses this conflict and the possible solutions that are available to

for a balanced development of the country.

2. Material and Methods

The paper is based on review of current policies and analysis of information regarding development as

well as forest conservation. Inputs are taken from various documents published by the Government of

India, other national and global institutions, published literature and media reports which has been

collated and analyzed to identify and understand the nature and realm of the conflict between

development and forest conservation. The present system of forest land diversion is critically analyzed.

The paper offers suggestions of various options that can be made the basis of principles and policies of

the government in future and how the concerns of growth and forest conservation can be taken care of

together as a best outcome.

3. Results and Discussion

3.1 Indicator of growth and environment sustainability

GDP is the universally acceptable indicator of economic growth. But GDP has some limitations as it does

not truly capture all the important indicators of social and economic progress. There is also a difference

between statistical measurement of the growth phenomena and the citizens perception of the same.

Market failures are a reality and that exemplifies with the inability of the economic system to take care of

the environment. Society in general discounts the ill effects of economic growth, climate change being

one of them (Stern, 2006). The Commission on the Measurement of Economic Performance and Social

Progress” (CMEPSP) chaired by Joseph E. Stiglitz, Amartya Sen and Jean-Paul Fitoussi in their report

pg. 3
have said that the time is ripe for our measurement system to shift emphasis from measuring economic

production to measuring people’s well-being (Stiglitz et al, 2006).

Costs of goods and services produced by any economic processes does not include all the economic and

social costs. The unaccounted cost of these economic activities is borne by the society. Public institutions

play an important role in such cases to ensure, as far as possible, that such costs are not indiscriminately

socialized because indiscriminate socialization of such costs is often inequitable and burdens the poor and

vulnerable more than the rich. Such a development model cannot be a sustainable model.

The Environmental Kuznets Curve hypothesis (EKC) (Panayotou, 1993) based on Kuznets’ hypothesis

(Kuznets, 1955) postulates that countries in their development process will see their levels of

environmental degradation increase until some income threshold is met and then afterwards decrease

which suggests an inverted U-shaped relationship between different pollutants and per capita income.

Presuming this hypothesis to be true in all cases, may allow for an unbridled economic growth with the

hope that as the income rises beyond the threshold, the society will start taking care of the environment.

However the EKC does not appear to fit for countries which are in early stages of development and have

relatively finite resource base for economic growth (Kamande, 2010).

Equitable and inclusive development should be one of the most important goals of the government. But

degradation of natural resources as a result of economic growth had led to various viewpoints leading to

conflict of development versus environment protection. There are extreme views that all environment

ought to be protected at all costs with economic development allowed only if it does not negatively

impact the environment to that the environment ought to be protected and businesses which negatively

impact the environment should be allowed to operate provided that they pay heavy taxes or fines. There

are others that propound a strong regulatory role for the government to protect environment while

allowing development. Some question the short time frames for development goals keeping in view the

fact that protection of the environment is a long-term effort. Sustainable economic development

paradigm, now more acceptable, is a concept which emphasizes economic growth as long as it is
pg. 4
sustainable, meaning that it does not negatively impact the environment while maintaining intra and

intergenerational equity in use of natural resources. In the economic development versus forest

conservation debate also, sustainability is the only possible option that is available to the society.

3.2 Forest Resources in India:

India has 76.9 million ha of recorded forest area which is 23.41 % of the geographical area of the country.

The country also has 78.29 million ha of forest and tree cover4 which is 23.81 % of the geographical area

as against a target of 33% envisaged by the National Forest Policy 1988. Bamboo bearing area of the

country is estimated to be 13.96 million ha. The total growing stock of the country’s forests and tree

outside forest is estimated at 6047.15 million cum which comprises of 4498.73 million cum inside the

forests and 1548.42 million cum outside the forests. The total carbon stock in the country’s forest is 6663

m tones (Forest Survey of India, 2011). Forests produce 3.175 m cum of timber and 1.23 m tonnes of

firewood5 annually. The total annual consumption of fuelwood for the country is estimated at 216.42 m

tonnes out of which 58.75 m tonnes comes from forests. Of the total population using fuel wood, 23%

obtain fuel wood from the forests. It is estimated that about 200 million people live in and around forests,

and fully depend for their livelihood on forest resources. Further, of the 530 million livestock population

in India, about 190 million fully depend on forests either by direct grazing or by harvesting of fodder

causing additional burden on the forests (ICFRE, 2010). Apart from being a repository of valuable bio-

diversity, forests are the source of most of the rivers and play a major role in water availability of the

country. While on a global level there is a net loss of 7.3 mha of forest per year6, the forest and tree cover

of the country has stabilized which is an achievement keeping in view the demographic pressure on its

forests. Forests play a key role in providing ecological security and resilience to the living conditions of

millions of people in the country. However the vital contribution is not adequately reflected in the low

contribution to the GDP at 1.7%.

4
Forest cover refers to all land more than 1 ha of area having a tree canopy density of more that 10%. Tree cover excludes forest
areas of more than 1 ha which have less than 10% tree cover but includes areas outside which are more than 1 ha and have more
than 10% tree cover.
5
Extracted by the forest department through execution of working plans.
6
http://www.unep.org/vitalforest/Report/VFG-02-Forest-losses-and-gains.pdf
pg. 5
3.3 Role of institutions in forest land diversion

3.3.1 Experience of forest land diversion in India

Diversion of forest land in India is regulated by the Forest (Conservation) Act, 1980. As per the

provisions of the Act, forest land cannot be diverted for any non forestry use except with the prior

approval of the Central Government. The Act provides for Forest Advisory Committee to advise the

Central Government for diversion of forest land. There are provisions of compensatory afforestation on

non-forest land which has to be subsequently transferred to the forest department, Environment Impact

Assessment, Cost benefit analysis, Catchment Area Treatment Plan and payment of Net Present Value

(NPV) of the forest land diverted. In certain cases instead of compensatory afforestation on non-forest

land, afforestation on double the area of degraded land is permitted. Similarly diversions in certain

circumstances are exempted from the requirements of NPV.

Supreme Court of India in its order dated 29-10-2002 in the Interlocutary Application (IA) No 566 in

Writ Petition (Civil) 202 of 1995 T. N. Godavarman Thirumalpad vs Union of India, ordered that funds

collected for diversion of forest land from user agencies must be deposited in the Compensatory

Afforestation Fund Management and Planning Authority (CAMPA). The money was so collected

primarily with the intention that it could be utilized for afforestation purpose and also to take remedial

measures to see that whatever damage that has been done to the forests should be restored (Dutta et al,

2011). Subsequently CAMPA was created by the Ministry of Environment & Forests7. As of 2014, Rs

35000 Crores is the balance deposit in the CAMPA funds8.

Diversion of forest land is approved by the Central Government in two stages. The second and final

approval is granted after the fulfillment of conditions stipulated in the first stage. Completion of the

process for recognition of forest rights as per the provisions of the Scheduled Tribes and Other Traditional

Forest Dwellers (Recognition of Forest Rights) Act, 20069 (FRA) is a prerequisite for diversion of forest

land. During 1950-80, the rate of diversion of forest land for non-forestry purposes was 1,50,000 hectares

7
http://pib.nic.in/newsite/erelease.aspx?relid=50440
8
Source: CAMPA website- Ministry of Environment and Forests, Govt. of India
9
The Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006 (Act 2 of 2007)
pg. 6
per annum. After enactment of the FCA the rate of diversion of forest land has came down to about

35,000 ha per annum. However in the post 1980 period, there has been an increasing trend of annual

diversion of forest land.

Figure 1: Forest land diversion

0.36%
9.91%
21.64% Thermal
Hydel 2.34%
Others (0.04 Lakh ha)
(1.1 Lakh ha) Transmission Line
(Rehabilitation, (0.26 Lakh ha) 9.73%
Drinking Water, Mining
School, Hospital (1.08 Lakh ha)
Rural Elec. etc.)
0.09%
(2.403 Lakh ha)
Wind Power
0.63% (0.01 Lakh ha)
Railway
9.37%
(0.07 Lakh ha)
Irrigation
(1.04 Lakh ha)
10.90%
33.14% Defence
Encroachment (1.21 Lakh ha)
1.89%
Regularization
Road
(3.68 Lakh ha)
(0.21 Lakh ha)

Figure 2: Sector wise forest land diverted under FC Act, 1980

The data on the diversion of forest land presents some interesting observation. Regularization of

encroachment is a substantial portion of forest land diverted. Development of utilities is the second

biggest chunk. Defence, hydel power, mining and irrigation are the next sectors in that order.

pg. 7
Pressure on forest land for diversion can be categorized into two broad groups: 1. demand due to

livelihood and facility needs and 2. demand due to business/ industrial needs. As economic development

improves the lives of people, pressure on forest land should decrease over time, a necessary pre condition

being that economic growth should be inclusive and sustainable. If development does not reach the

millions of people living inside and on the fringes of forest who continue to be engaged in subsistence

agriculture or seasonal employment, pressure on the forests will not reduce. In the absence of balanced

growth, more damage to forests may be caused as people continue to occupy forest land in the hope of

further regularization in future.

3.3.2 Role of the judiciary in forestry matters

The Godavarman Case10 has been refining and defining forestry in the country. The case has also resulted

in creation of a body The Centrally Empowered Committee (CEC) by the Supreme Court. The Committee

has been entrusted with the duty to oversee implementation of Courts Order within the Country. Various

orders of the Supreme Court and CEC have had far reaching consequence on forest administration and

governance in the country. The orders in IAs filed by various parties have touched upon various key

issues like: definition of forest, dereservation, wood based industry, working plans, encroachment,

ecologically sensitive areas, removal of forest produce, restrictions on clear felling and green felling,

economic role of forests such as forest land valuation including compensatory afforestation and net

present value, the role and constitution of Forest Advisory Committee etc. The establishment of the

National Green Tribunal has created a dedicated grievance redressal forum on environment matters in the

country.

3.3.3 Critique of the process of forest land diversion:

FCA has undoubtedly succeeded in reducing the rate of diversion of forest land. However, the Act has

been found to have some limitations also. The Act does not specify any criteria for forest diversion. It also

does not differentiate between quality or extent of forest land to be diverted. The Forest Advisory

Committee (FAC) has a lot of space to decide on details and criteria for forest land diversion. This allows

10
Writ Petition (Civil) 202 of 1995 T. N. Godavarman Thirumalpad vs Union of India and Othrs.
pg. 8
FAC with flexibility but at the same time leaves ample scope for discretion. The Act has been criticized

by various stakeholders within and outside the government for the lengthy process and the time it takes

for compliance of all the conditions before the proposal can be considered by the Ministry of

Environment & Forests. Environmentalists have also criticized the poor implementation of the Act. They

see the Act as a facilitator of forest land diversion. They also allege that the conditions stipulated for

diversion are not followed scrupulously by the project proponents and there is no institutional mechanism

for its enforcement either. The quality and manner in which the compensatory afforestation is being

implemented hardly compensates the value of the forest land diverted both in financial and ecological

terms. Most of these diversions are now being proposed in more dense ecologically sensitive forest

landscapes. The CAMPA11 which has a deposit of Rs 35000 Crores, has been releasing funds to states on

directions of the Supreme Court but a long term permanent arrangement is still to be found. Couple of

attempts of legislating a Bill on CAMPA have failed in the Parliament due to for multiple reasons,

including violations of federal principles, lack of procedures for respecting rights of forest dwellers, and

improper institutional arrangements (Dutta et al, 2011).

The criticism of the industry is that FCA is a major impediment in growth and development of the

country even as there is immense pressure for economic development. More and more forest land is

required for mining of coal, iron ore and other minerals. These mines are situated in virgin forest areas

which have substantial tribal populations. Major infrastructure projects like roads and railways are facing

delays due to compliance under this Act. In the hill states there is pressure to divert forest land to tap the

vast renewable energy source of hydel power. There is severe pressure to divert forest land for providing

basic services like village roads, schools, hospitals, electricity in many areas situated in the proximity of

forest land. It can be seen that these are competing concerns vis a vis ecological protection. As a result,

both the sides have extreme dissatisfaction with implementation of the Act.

3.4 Development versus forest conservation - preparing for the future

11
http://forestsclearance.nic.in/writereaddata/FAC_Agenda/AboutCAMPA.pdf
pg. 9
In the debate between economic development and forest conservation, a lot of emphasis is given to

deforestation due to diversion of forests for industries, mining, power plants etc. However, the effect of

poverty on the forests, which is causing “creeping diversion of forest land” is lost perspective of. The

imperatives of developments cannot allow us to take a completely pro forests policy and diversion of

forest land in urgent and unavoidable circumstances will always be a preferred executive action.

However, most of the acrimony from this debate can be taken away if there is change in paradigm under

which both forest conservation and development is viewed together as two sides of the same coin. Some

key policy initiatives for forest conservation and development are described here which can provide an

universally acceptable way forward.

3.4.1 Inclusive growth

Lack of inclusive growth is a bigger threat to forests than the diversion of forest land for industries, mines

etc. Forest diversion for businesses and industries effect a compact piece of forest land whereas

degradation due to overexploitation and encroachment of forest land causes wide spread devastation and

loss of forest often in small parcels. As a result fixing accountability for enforcement measures is harder

in the case of over- exploitation and encroachment.

Dependency of communities on forest land have increased over the years because of population growth

and also because development has not reached all the sections of the society in equitable manner. There

have been occasions when pre- 1980 encroachment on forest land has been regularized in some states.

FRA, 2006 was enacted with the objective of recognizing the forest rights of the individuals and

communities of Schedule Tribe and other forest dwelling communities. As in February 2014 titles on 22

lakh ha of forest land have been distributed for individuals and communities rights12 which is a significant

2.8% of the forest area of the country. Besides, there is an estimated 14-20 lakh hectare13 of forest land

under encroachment. What this information conveys is that if the drivers of degradation continue to exist,

further encroachment and occupation of forest land for satisfaction of livelihood needs or greed will

continue to take place.

12
http://tribal.nic.in/WriteReadData/CMS/Documents/201404280409127655859MPRforthemonthofFebruary2014forNIC.pdf
13
Data compiled by Ministry of Environment & Forests from various states
pg. 10
Forest based growth should necessarily entail investment in sustainable harvesting of forest produce, like

NTFP, bamboo etc. However, protecting forests based livelihoods in isolation cannot address the problem

of forest degradation. Economic development should spill over to those areas where there is higher

dependence of people on forests, improving their livelihoods in a sustainable way. Research and practical

experience has shown that a strong positive relationship exists between communities having sustainable

livelihoods and conservation of forests. Inclusive growth together with better compliance of regulations

for protecting forests will be one of the potent tools in reversing the creeping diversion of forests.

3.4.2 Transition to Green Economy

International negotiations on transiting to green economy have been challenging. This is partly due to the

lack of an internationally agreed definition or universal principles for green economy, the emergence of

interrelated but different terminology and concepts over recent years (such as green growth, low carbon

development, sustainable economy, steady-state economy etc.), a lack of clarity around what green

economy policy measures encompass and how they integrate with national priorities and objectives

relating to economic growth and poverty eradication, as well as a perceived lack of experience in

designing, implementing and reviewing the costs and benefits of green economy policies14.

UNEP defines a green economy as one that results in “improved human well-being and social equity,

while significantly reducing environmental risks and ecological scarcities” (UNEP 2010). In its simplest

expression, a green economy is low-carbon, resource efficient, and socially inclusive. The key aim for a

transition to a green economy is to enable economic growth and investment while increasing

environmental quality and social inclusiveness. Critical to attaining such an objective is to create the

conditions for public and private investments to incorporate broader environmental and social criteria. In

addition, the main indicators of economic performance, such as growth in Gross Domestic Product (GDP)

need to be adjusted to account for pollution, resource depletion, declining ecosystem services, and the

distributional consequences of natural capital loss to the poor (UNEP, 2011). The UN Summit Rio+20 has

acknowledged that green economy in the context of sustainable development and poverty eradication will

14
http://sustainabledevelopment.un.org/index.php?menu=1224
pg. 11
enhance our ability to manage natural resources sustainably and with lower negative environmental

impacts, increase resource efficiency and reduce waste (UNCSD, 2012).

It is necessary that the country gradually shifts to a green economy where economic progress will not be

measured by the traditional GDP only. That will allow required metrics to be in place to measure the

environmental effects and social inclusiveness and shift the cost-benefit of the decisions taken towards the

greener end of the spectrum of growth. Thus in such a regime, many cases of forest land diversions can be

avoided that will not be socially productive.

3.4.3 Optimal land utilization by businesses/industries

Both forests and non forest land is scarce and requires judicious and efficient use to fulfill the

requirements of food, habitation, industries and environment for sustainable development. Competing and

conflicting land uses are a major concern. Effective land use strategy has been envisaged by the Planning

Commission also (DoLR, 2013; Planning Commission, 2013).With this perspective, it is important that

the forest land that is diverted for other uses should be used most optimally. This will require the

industries and concerned users of the forest land to use the most efficient technology and management

methods for productions. It is important that non-economic and non-optimal use of forest land is

disincentivized by the government.

Arriving at the true social cost of forest land is of great importance for this perspective. The price of forest

land should reasonably factor in the current and future environment costs forgone, and should also reflect

the cost of the next best alternative, so that there should not be any incentive to go for forest land as it is

cheaper than other alternatives. Forest landscapes play an important role in improving availability of

water in the dry season as well as recharging groundwater. Loss of forests may compound the problem of

acute water shortage that the country is likely to face in future. Some of the critical ecosystem services

need to be prioritized and weighted higher while arriving at the price of ecosystem services. As the

country is preparing itself for international REDD+ mechanism, the potential cost of carbon sequestered

will have also to be included in the cost of the forest land. Such a cost as far as possible should be able to

reduce the socialization of cost of deforestation.

pg. 12
In 2002 the Supreme Court had passed an order for charging Net Present Value (NPV) of forest land

diverted. In 2008, the Supreme Court accepted the recommendation of the CEC for NPV at the rate of Rs

4.38 lakhs to Rs 10.43 lakhs per hectare depending on the category of forest land. Certain types of

projects were given partial or full exemption from payment of NPV. Public purpose projects such as

schools, hospitals, rural infrastructure, among others were granted full exemption based on certain

conditions. Other project categories which were also believed to result in public good benefits were given

partial exemptions. The NPV for diversion of forest land from protected area was fixed at 10 times the

normal NPV for such land. However, the NPV so calculated does not fully include the price of the forest

land. The Ministry of Environment & Forests has initiated an exercise to revise the rates. The committee

entrusted with the job has suggested to raise the rates ranging from Rs 9.87 to Rs 59.55 lakhs per ha15

depending on forest types involved. However, no final decision on the matter has been taken so far.

There is no reason why non site specific industries should be established on forest land. Forest land

should also not be diverted for projects where natural resources are sought to be exported. There should

be a policy to site industries on wastelands or private lands as far as applicable. This will entail an

extensive inventorisation of the wasteland available with the government, an initiative that has been also

envisaged in the Draft Land Use Policy (DoLR, 2013). There is further scope for rigorous application of

site suitability test in such forest diversion cases.

3.4.4 Development of Internal Carbon market

Forest is an important carbon sink. It will be an important part of the Low Carbon Strategy for inclusive

growth which is being recommended by the Planning Commission in the Twelfth Plan Document

(Planning Commission, 2013). The role of forests in climate change mitigation should also be recognized

while taking decisions regarding diversion of forest land. While there are investments in clean

technology, financing is almost entirely dominated by budgetary support of the government. International

mechanisms, for example CDM and REDD+ provide market mechanism for trade in carbon sequestered

by forests and tree plantations. However these mechanisms are contingent upon dynamics of international

15
Revision of rates of NPV applicable for different class/category of forests, Center for Ecological Services Management, Indian
Institute of Forest Management, Bhopal and Forest Survey of India, July 2013

pg. 13
climate change negotiations. With 2 Giga Tonnes of CO2 emission in the year 2010, India is already the

third largest emitter of GHG in the world16. This is 40% of the CO2 emissions of the US. Though per

capital emissions of the county is 1/10 th of the US, India’s emission will be very significant in

comparison to many developed countries in the future. As such some initiatives and commitments will be

expected from the country by the global community. In the circumstances, depending only on the

international initiatives for carbon trading may not be an effective option.

Large size of the Indian economy, presence of global corporations, and research efforts in clean

technology provide a good opportunity and a sound base for India to create a self sustaining model for

carbon financing within the country. One way could be creation of a repository of green belt, which is

tradable in the market by GHG emitters as compliance for the emissions reduction. This kind of a internal

market is already operational in the renewable energy sector in the form of Renewable Energy

Certificates which are freely tradable on the REC exchange. Such an internal carbon market, while aiding

forest and tree cover growth, will also act as a rationalizing factor for unavoidable diversion of forest

land.

3.4.5 Implementation of mitigation measures after forest land diversion

Diversion of forest land comes with a number of conditions, some of which are procedural but others aim

to ameliorate the loss caused by the forest land diversion. To instill faith in the process of forest diversion,

it is important that these conditions are complied with scrupulously. Non serious compliance of these

conditions, result in the ill effects of the diversion being borne by the local communities. This is one of

the reasons for the strong resistance to forest diversion by both environmentalist and now increasingly by

the forest dependent communities. The compliance mechanism of the government is very weak at present

as the institutional structure is more geared towards giving clearances rather than ensuring compliance.

It is suggested that a separate compliance institution be created by the government to ensure that projects

and user agencies implement proper mitigation measures. In a landmark judgment dated 6th January, 2014

in WP (Civil) 202 of 1995, the Supreme Court has directed the Central Government to appoint a regulator

16
Green House Emissions data, UNFCCC.
pg. 14
which can carry out an independent, objective and transparent appraisal and approval of the projects for

environmental clearances and which can also monitor the implementation of the conditions laid down in

the Environmental Clearances and implement the National Forest Policy 1988. An exercise has been

initiated by the government for creation of a National Environment Assessment & Monitoring Authority

(NEAMA) for improving the environment governance in the country17. At present the court has opined

that the said regulator cannot exercise the powers of the Central Government under Section 2 of the

Forest (Conservation) Act, 1980. However, the principles enunciated in the directions also apply to the

Ministry of Environment & Forests which is the forest regulator. It might well serve the purpose for

government to be proactive and appoint a forest regulator also. 18

There should also be a focus on improving the outcomes of the compensatory afforestation, EIA,

catchment area plans etc. The situation where lakhs of hactares of non-forest land will be provided for

urgent and “must do” forest diversion together will equally large areas for rehabilitation and improving

density of degraded forest land as compensation should be utilized as an opportunity for improve the

forest and tree cover of the country.

3.4.6 Public private partnership in forestry

It is estimated that about 40 million ha of forest land is degraded. The degraded forest land has very low

productivity and may be significantly contributing to the carbon emission due to degradation and

deforestation. Although the FCA and the NFP prohibits use of forest land by private institutions for

raising plantations, this has been a subject of debate for some time. The 1998 report of a committee

constituted by the Planning Commission to look into this matter suggested unanimously not to lease forest

land to industries for creating plantations (Planning Commission, 1998). Apart from the controversial

subject matter of use of natural resources for profit of private organizations, there is also an apprehension

that once forest land is given away to communities or private organizations for plantations, it will be very

difficult to get it back. There are also doubts about what happens to the usufruct rights of the local

17
Twelfth Five Year Plan (2012–2017) Faster, More Inclusive and Sustainable Growth, Vol-1. Planning Commission, India
18
SUPREME COURT OF INDIA CIVIL ORIGINAL JURISDICTION I.A. NOs.1868, 2091, 2225-2227, 2380, 2568 AND 2937
IN WRIT PETITION (CIVIL) No. 202 OF 1995 T.N. Godavarman Thirumulpad Versus Union of India & Ors. …, order dated
6.1.2014
pg. 15
communities once such degraded forest land is put to intensive and exclusive use of industries or

corporations. However it is argued that that by keeping away judicious use of such a large resource, the

country is losing in terms of huge opportunity cost.

To be able to devise a policy for involvement of private organizations on forest land in a PPP mode, some

ground work is necessary. The ambiguity about what constitutes degraded forest land (tree density,

canopy cover, vegetation etc) should be clarified. There has to be a differentiation between barren land

and degraded land. Only land that is able to sustain tree crop may be useful as the industry may not be

interested in investing in rehabilitation of any degraded land especially if it entails high costs. Apart from

the technical issues, adequate institutional mechanisms to enforce contractual obligations strictly should

also be put in place. Corporate social responsibility obligation also opens another avenue for participation

of the corporate sector.

There can be a number of models according to which industries and private organizations together with

village panchayats, Forest Development Corporations, NGOs, Trusts, Co-operatives and financial

institutions can be involved in tree plantation on degraded forest land. It is important that each of the

parties has clear roles, responsibilities and obligations. For example, they can be technology providers,

financiers, labour co-operatives, project implementers, providers of market access, doing value addition

etc. Additionally some form of cess/incentive system can be built in to improve the feasibility of

rehabilitation of some of the more degraded land so that they can be put to such use. There should be

provisions for flow of economic benefits from the project, not limiting to only wage employment, to the

local communities which were earlier deriving some form of support from that land. The process should

be transparent and based on objective criteria for selection of the private sector partner. There is potential

for innovative financing by domestic institutions, international finance from multilateral institutions like

IFC, carbon investment by international companies etc. Suitable institutional framework will need to be

evolved which will require amendment and deviations from some of the current policies and legislations.

Efficiently managed degraded forest land can justify the price proposed for the offsetting cost of the

diverted forest land. Besides it will also provide additional mitigation for forest land diversion done in

pg. 16
past and anticipated in the future. These suggestions are not exhaustive but highlights the opportunity

which is there to be tapped in the interest of the nation as well as forest conservation.

3.5 Conclusion

Increasing pressure on the forest wealth of the country, which are ecologically as important as source of

livelihood for about 200 m people, has translated into an acute debate of economic development versus

forest conservation. There are increasingly higher number of cases of conflict with local communities

regarding forest land diversion. We are currently witnessing some extreme positions being taken by

competing interests, which is neither helping the followers of development agenda nor conservationists.

Any development model will be heavily dependent on availability of natural resources like water, land,

forests. The continued ad hoc exploitation of the natural resources due to population growth,

development, sub-optimal practices and wastage, besides climate change is going to severely impact the

sustainability of growth model of the country. It is important that growth should be inclusive and should

promote sustainable use of these resources for not only the future generations but also for the vast

majority of the deprived people of the current generation. The existing public institutions and legal

framework will continue to regulate diversion of forests for non forestry purposes and are expected to

play a larger role in future. The understanding that degradation of forests is due to unsustainable

livelihoods of forest dependent community should translate into public policy initiatives. The decision to

divert or not diver forest land can no longer be taken in isolation. Forests needs to be viewed in

conjunction with the ecological and social roles it plays in diversion of forest land cases.

Currently the system has little control on forest land diversion which is evident from the high proportion

of diversion application approved. Neither of the opposing positions in policy for development at the cost

of environment or total conservation at the cost of development are practicable and if practiced will cause

policy to swing back and forth which is not desirable. There is a need for a more strategic use of forest

land in the growth of the country. The paper discusses this issue in detail and steps that can be taken to

mitigate and compensate the effects of loss of forest for economic development. The paper then suggests

a new paradigm based on certain principles following a balanced path that will allow diversion of forests

pg. 17
in extremely urgent cases after firm inquiry and deep study, but at the same time empower and enable the

system to consolidate on all the opportunities that are available for mitigation and compensation of the

forest loss. The paper suggests that inclusive growth can be only solution to abate creeping diversion due

to encroachment and over-exploitation of forests. It also suggests transitioning to green economy to

provide the right metrics for measuring growth even at the cost of environmental degradation. There is a

need for promoting optimal utilization of forest land which can be done by ensuring that cost of forest

land diverted truly takes into account all the services that it provides including the cost of the next best

alternative land available to the project proponent. Accordingly there is a suggestion for reworking of the

NPV of forest land. It is also felt that India is adequately poised for establishment of domestic carbon

market. Such a market apart from providing strategic advantage in the field of climate change mitigation

will also give impetus to forest and tree cover in the country. The paper emphasizes that there should be

strict compliance of the conditions imposed during forest land diversion and suggests institutional

changes for the same. Finally, there is a suggestion for public private partnership in rehabilitation and use

of degraded forest land for raising trees to optimally use a huge resource in a beneficial manner for all the

stakeholders. This will also result in rationalizing the negative image of some departments and help them

reorient to a more holistic role in conservation and development of forests in the country.

References

Center for Ecological Services Management, Indian Institute of Forest Management, Bhopal, 2013.

Revision of rates of NPV applicable for different class/category of forests, Ministry of Environment

& Forests.

DoLR, 2013. Draft National Land Use Policy, Department of Land Resources, Government of India.Dutta

Ritwick, Yadav Bhupendra, 2011. Supreme Court on Forest Conservation. Universal Law

Publishing Company

Forest Survey of India, 2011. India State of Forests Report 2011.

ICFRE, 2010. Forestry Sector Report India 2010. Indian Council for Forestry Research and Education.

Kuznets, S. (1955) “Growth and Income Inequality”. American Economic Review vol.45 pp.1- 28.
pg. 18
Mercyline W. Kamande, 2010, Department of Economics, University of Dares Salaam, Environmental

Conservation as an Engine for Economic Growth: Testing the Validity of Environmental Kuznets

Curve on Carbon Emissions for Kenya.

Panayotou, T., 1993. “Empirical Tests and Policy Analysis of Environmental Degradation at Different

Stages of Economic Development”, Working Paper WP238 Technology and Employment

Programme, Geneva: International Labor Office.

Planning Commission, 1998. Report on Leasing of Degraded Forest Land by committee chaired by Shri

N C Saxena.

Planning Commission, 2011. Faster, Sustainable and More Inclusive Growth An Approach to the Twelfth

Five Year Plan (2012-17).

Planning Commission, 2013, Twelfth Five Year Plan (2012–2017) Faster, More Inclusive and Sustainable

Growth, Vol-1.

Stern Nicholas, 2006. The Economics of Climate Change, HM Treasury, Government of United

Kingdom.

Stiglitz Joseph E., Sen Amartya, Fitoussi Jean-Paul, 2006. Report by The Commission on the

Measurement of Economic Performance and Social Progress.

UNDP, 2013. The Human Development Report 2013.

UNEP, 2011. Towards a Green Economy- pathways to sustainable development and poverty eradication.

www.unep.org/greeneconomy

UNCSD, 2012. The Future we Want.

****

pg. 19