Net Present Value of Forests

Net Present Value of Forests

The Mines Ministry of India has requested an expert advisory committee of the Environment Ministry to exempt it from the Supreme Court-mandated fees that prospectors pay when they dig exploratory boreholes in forests.

Key Points

The Net Present Value (NPV), as it is called, is a monetary approximation of the value that is lost when a piece of forest land has been razed. Net Present Value (NPV) is a mandatory one-time payment that a user has to make for diverting forestland for non-forest use, under the Forest (Conservation) Act, 1980.

This is on the basis of the services and ecological value and there are prescribed formulae for calculating this amount which depends on the location and nature of the forest and the type of industrial enterprise that will replace a particular parcel of forest.

All areas of exploration are not converted into mining. Only about 1% of cases are converted to mining.

While it was not possible to do away with NPV, it recommended that the MoEF&CC may consider charging NPV on a per borehole basis instead of the present practice of charging 2 or 5%.

Forest Conservation Act, 1980

Forest (Conservation) act was enacted by Parliament of India in 1980. It was further amended in 1988.

The Forest (Conservation) Act, 1980 provide for the conservation of forests and for matters connected therewith or ancillary or incidental thereto.

This law extends to the whole of India. It was enacted by Parliament of India to control further deforestation of Forest Areas in India. The act came into force on 25 October 1980. It has five sections.

In 1992, some amendment was made in the Act which made provisions for allowing some non-forest activities in forests, without cutting trees or limited cutting with prior approval of Central Govt.

These activities are setting of transmission lines, seismic surveys, exploration, drilling and hydroelectric projects.

The last activity involves large scale destruction of forest, for which prior approval of the Centre is necessary.