The Union Environment Ministry has transferred ₹47,436 crore to 27 States for afforestation. These funds are part of the Compensatory Afforestation Fund (CAF).
The CAF comprises of the money paid by developers who have cut down forest for construction and other activities. The fund is used for afforestation and regeneration activities as a way of compensating for forest land diverted to non-forest purposes.
The amount to be paid depends on the economic value of the goods and services that the razed forest would have provided. These include timber, bamboo, firewood, carbon sequestration, soil conservation, water recharge, and seed dispersal.
This is in accordance to the Forest (Conservation) Act 1980, which says that whenever a forest land is to be diverted for non-forestry purposes, the equivalent non forest land has to be identified for compensatory afforestation and funds for raising compensatory afforestation are to be imposed..
The CAF Act 2016 established an independent authority called the Compensatory Afforestation Fund Management and Planning Authority to execute the fund. Earlier, ad hoc National Compensatory Afforestation Fund Management and Planning Authority was set up to manage the fund.
In 2018, Compensatory Afforestation Fund (CAF) Rules were put forward. The rule had been criticised on the grounds that it undermined several aspects of the Forest Rights Act (FRA) and the Panchayats (Extension to Scheduled Areas) Act (PESA).