Compensatory Afforestation (CA) is a concept and a mechanism mandated as an environmental safeguard under the Forest (Conservation) Act, 1980, in India. It is defined as the process of afforestation and associated regeneration activities undertaken to compensate for forest land that has been diverted for non-forest purposes, such as mining or industry.
The origin of CA in India is traced to the enactment of the Forest (Conservation) Act, 1980, which sought to regulate the diversion of forest land. The mechanism was significantly shaped by the Supreme Court's intervention, particularly in the landmark case of T.N. Godavarman Thirumulpad v. Union of India (starting in 1995), which highlighted the ineffective utilization of collected funds. This led to the introduction of the Net Present Value (NPV) concept around 2002, recognizing that CA alone was insufficient to substitute for the destroyed natural forests.
The mechanism is operationalized by the Compensatory Afforestation Fund Act, 2016 (Act No. 38 of 2016). This Act requires a "user agency" diverting forest land to provide alternative non-forest land for afforestation, or pay for afforestation on twice the area of degraded forest land if non-forest land is unavailable. The user agency must also pay the NPV of the diverted forest land. The land identified for CA must be transferred and mutated in the name of the State Forest Department and notified as a Reserve Forest or Protected Forest.
The Compensatory Afforestation Fund Act, 2016, established the National Compensatory Afforestation Fund and State Compensatory Afforestation Funds under the Public Account of India and each state, respectively. It also created the Compensatory Afforestation Fund Management and Planning Authority (CAMPA) to manage and utilize these funds. This statutory framework replaced the earlier ad hoc CAMPA mechanism. The Act mandates that 90% of the fund is disbursed to the states, with 10% retained by the Centre. A recent development is the challenge to the Forest (Conservation) Amendment Act, 2023, in the Supreme Court, which issued an interim order on February 3, 2025, preventing any reduction in forest land without compensatory land being provided.