Context

The Forest Advisory Committee has approved the ‘Green Credit Scheme’ that could allow “forests” to be traded as a commodity. If implemented, it allows the Forest Department to outsource one of its responsibilities of reforesting to non-government agencies.

What is the ‘Green Credit Scheme’?

• The proposed ‘Green Credit Scheme’, as it is called, allows agencies, they could be private companies, village forest communities, to identify land and begin growing plantations.
• After three years, they would be eligible to be considered as compensatory forest land if they met the Forest Department’s criteria.
• An industry needing forest land could then approach the agency and pay it for parcels of such forested land, and this would then be transferred to the Forest Department and be recorded as forest land.
• The participating agency will be free to trade its asset, that is a plantation, in parcels, with project proponents who need forest land.
• Once finalised, the scheme will overhaul the compensatory afforestation process by accrediting private or public-private partnership companies to raise plantations near reserved forests which can be bought in lieu of projects involving forest diversion.
• If the company raising the plantation doesn’t wish to trade it, it can retain it and harvest the timber once ready.

Understanding the current system:

• Under the Forest Conservation Act 1980, each time forest land is diverted for non-forest purposes like mining or industry, the project developer is supposed to identify land and pay for planting forests over an equal area of non-forest land, or when that is not available, twice the area of degraded forest land.
• It also must pay the State Forest Department the current economic equivalent, called Net Present Value, of the forest land.
• This money currently gets collected under the Compensatory Afforestation Fund. 
• It’s then the Forest Department’s responsibility to grow appropriate vegetation that, over time, would grow into 
• Industries have often complained that they find it hard to acquire appropriate non-forest land, which has to be contiguous to an existing forest.
• Nearly ?50,000 crores had been collected by the Centre over decades, but the funds were lying unspent because States were not spending the money on regrowing forests.
• The Supreme Court intervened, a new law came about with rules for how this fund was to be administered.
• About ?47,000 crores had been disbursed to States until August, but it has barely led to any rejuvenation of forests.

Concerns:

The proposed scheme has raised some concerns among green activists, as given below:

• The threat to agricultural land: The money involved will be discussed between the private agencies raising these plantations and the project proponent. If the economic value of these plantations becomes lucrative, it can pose a serious threat to agricultural land, by diverting the latter for plantations.   
• Uncontrolled circulation of money: In the scheme, the Compensatory afforestation (CA) money can be exchanged between the private agency and the project proponent. It can lead to a situation where money keeps circulating within a private company.
• Issues of ambiguity: The scheme does not provide details about the ownership over the land and where the land will be sourced from.
• Destruction: Concerns are also being raised that this would lead to the privatisation of forests and give impetus to their destruction.

Significance of the Scheme:

• Proper monitoring: There would be monitoring of plantations, which wasn’t done earlier and make it easy for individuals to plant and harvest trees, which earlier was difficult due to the provisions of the Forest (Conservation) Act, 1980. 
• Encouraging plantation: The scheme will encourage plantation by individuals outside the traditional forest area.
• Meeting environmental goals: Furthermore, it will help in meeting international commitments such as sustainable development goals and nationally determined contributions.