Some questions over compensating for lost
forests
The Union government has drafted the Compensatory Afforestation Bill,
2008 to establish a compensatory afforestation fund. Revenues collected
from agencies that divert forests (even protected ones) for non-forest
use will be pooled into this corpus. Net present value (NPV) has been
adopted as an economic tool to calculate the compensatory fiscal value
of diverted forests. But there are two question marks over the move.
Firstly, can forests, especially the protected ones, which provide
vital ecological and cultural services, be assigned an economic value
in lieu of their diversion? Second, is NPV an appropriate fiscal tool
to calculate the ‘compensatory’ value of functioning physical entities
such as forests?
Let us first consider the issue of assigning economic value to forests.
The issue at hand here is assigning a monetary value to goods and
services provided by forests. Forest products mentioned in the bill
include non-timber forest produce and water, and the services mentioned
include grazing, wildlife protection; carbon sequestration and flood
control. The bill also takes note of the cultural and educational
services of forests. But can monetary compensation make up for the
diversion of these services? Take the Shola-grassland ecosystem of the
upper Nilgiri Plateau. Here evergreen forests occur amidst the folds of
vast undulating stretches of grasslands. Post monsoons these Sholas
release stored rainwater and regulate its flow to the Kongu plains
below. If these grasslands or sholas were diverted for development
could their complex structure and functions be compensated for by money
alone?
Past actions in diverting grasslands for eucalyptus plantations that
fed pulp for paper factories have irreversibly upset the hydrological
dynamics of the Nilgiri plateau. Wild grass and insect diversities have
declined remarkably. Since these grasslands also served for centuries
as material and cultural pastures for the Toda people, conversion into
plantations also had implications for their subsistence and rituals.
There are many such forests that continue to provide ecological and
cultural services. Take, for instance, the forests of Billigiri
Rangswamy Temple Wild Life Sanctuary in Karnataka. Its landscape is a
diverse mosaic of tropical habitats. Ecologists see the species
diversity of the forest and its functionality as adaptations to
centuries of shifting cultivation by Soliga tribals. The forests
continue to provide non-timber forest produce to the Soligas and water
to people in the Chamrajnagar plains below. The forests have tigers and
their prey base. How can the variety of creatures that rely on this
ecosystem be compensated, if these forests were diverted? Forests,
especially protected areas that contain biologically and culturally
diverse values need to be conceived as possessing incomparable values.
NPV: an appropriate tool?
NPV of an ecological system should indicate all the costs and benefits
involved in maintaining the system as such and in comparison to a next
best alternative. Once we know this value—a challenge given the variety
of scientific opinions about valuation methods—it could be calculated
for the entire area to be deforested and remitted to the fund as
required by the bill. But whether this amount will be enough to
generate an equivalent value to that of benefits foregone in the
diverted ecosystem is not under consideration. Compensatory funds
should ensure the same NPV in the ‘compensated forest’ areas. Spending
the fund on much less valuable land raises questions on the use of NPV.
NPV calculated with added weightage on infinite flow of ecological and
cultural services in the context of climate change, may in fact permit
conversion of the landscape. It may provide incentive for the
department to raise resources through diversion of forests while low
NPV of unit area diverted may trigger greater demand for diversion.
The NPV approach to compensating ecological loss has another problem: a
single consolidated value per unit area of a particular forest type
inadequately reflects the multiple ecological, socio-cultural and
financial costs and benefits. A segregated multi-criteria approach to
NPV can probably address the problem. Accepting this approach depends
on the political will to compensate for lost socio-ecological benefits.
http://www.downtoearth.org.in/full6.asp?foldername=20080815&filename=croc&sec_id=10&sid=1
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