The return of the king
is Fellow at the Council on Energy, Environment and Water is Senior Resident
Fellow, Vidhi Centre for Legal Policy
The Green Credit Programme, announced by the Environment Ministry in October 2023, is a market-based mechanism where individuals and companies can claim incentives called ‘green credits’ for contributions to environmental and ecological restoration. However, there is criticism that these initiatives may be used to circumvent existing laws, particularly those that deal with forest conservation. Can green credits bene t India’s forests? Vaibhav Chaturvedi and Debadityo Sinha discuss this in a conversation moderated by Edited excerpts:
Jacob Koshy. Vaibhav, how do you understand the green credit programme as it stands today? Vaibhav Chaturvedi:
The larger point is we have to incentivise green action and sustainable action and create a system where green actions are undertaken by many actors. You could do it in dierent ways such as having a ‘command and control’ policy that directs everybody to undertake action at the risk of penalties. But in policymaking, the role of incentives is important. Green credits t in as an incentive architecture to deliver on, for instance, water conservation and aorestation by involving individuals and corporations.
Debadityo Sinha:
This is a market-based incentive mechanism, and it has six or seven sectors, including forest and waste management. But it matters how you execute it on the ground. Are those implementing it aware of ground-level challenges? What is the expertise of the people implementing it? The scheme is not a bad one, but going by the guidelines alone, it could have been better. It is taking a very narrow view of only planting trees to earn credits. It has missed out on several other aspects of the ecosystem.
The guidelines aim to incentivise the restoration of degraded forest land. A forest can degrade for a variety of reasons, natural and man-made. Aorestation may seem like a positive end in itself, but couldn’t there be negative consequences too? Such as monocultures or promoting vegetation that is not suitable for the place? VC:
That’s a valid concern. But it is not speci c to the green credits programme. India has always promoted plantations and it has unfortunately promoted monocultures in several places. It is possible that the green credit programme could have similar fallouts and you have to be careful not to incentivise these monoculture plantations.
As Debadityo said, this is an incentive scheme in a market-based formulation. For example, the government could also incentivise planters by paying, say, ₹100 per tree. You get capital subsidies for solar plants. Being a market-based incentive approach, there has to be a demand and supply side. In carbon markets, the commodity is carbon crates. Here, it is green credits.
DS:
There are two aspects to it: the land where you’re going to have plantations and how you’re going to do the plantations. The guidelines require States to identify degraded forests within their jurisdiction. Now, a forest is not just trees; there can be open patches within it. We have more than 200 types of forests. The forests of the Central Indian landscape, the whole Deccan Peninsula, and Leh-Ladakh are not dominated by trees. There are bushes and many other things. What happens when plantations come up in these areas? There’s a huge incentive now; it’s not small like the Compensatory Aorestation schemes. Wherever these schemes have promoted plantations, we have seen disaster. We have seen forest departments promoting plantations by clearing existing vegetation, uprooting local trees, planting big ones using JCBs and tractors. Such approaches can impact local biodiversity, soil health... For regeneration, you don’t have to do any major intervention, you have to just protect the area from disturbances. And in 10-15 years, we can have a good natural forest supporting biodiversity and bene ting local communities.
Let’s say a 1,000 trees are planted. After two years, an independent body will do a veri cation. And let’s say growing 1,000
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VC:
It is important to look at the larger picture. The larger picture is we want to incentivise biodiversity conservation of endemic forests, promote local species, etc. There will always be measurement problems. Like, how do you measure the biodiversity impact of two trees that are, say, 200 meters apart? Of course, it is going to be very confusing, and that science is evolving. But let us take it that we will never be able to resolve that perfect scienti c measure and that is where social science comes in. The social science part is, do we have a reasonable measurement? An imperfect but reasonable measurement only means that a larger set of stakeholders, civil society, and the media are okay with that approach. I think the trap that we often fall into is trying to get to the perfect measure. Ideally, the government should have a lot of money and there should be no need for a market mechanism; the government can already give money for these kinds of programmes. We know there is a scal constraint in a developing economy. So, these kinds of instruments where you are leveraging money from especially the private sector are good.
VC:
That’s the biggest challenge with this market — fungibility. Let’s say in the carbon market, there are many dierent kinds of projects. There is a solar project, there is a cookstove project, there is a forestation project. Ultimately, whatever they do, they save one unit of carbon
But plantations and monocultures were also driven by incentives. Can you regenerate a forest ecosystem in a market mechanism without compromising on biodiversity?
This programme ends up bypassing the whole forest clearance process just to help the industries get green credits
trees in a particular patch earns you one green credit per tree. Now, the interesting thing is, this could be connected to voluntary carbon markets. In your experience in market-based mechanisms, we are familiar with carbon osets as they are measurable quantities. Can you actually devise a logical trading system around such a philosophy of green credit and carbon?
Let’s say you’re growing some forests for sequestering carbon. I can understand that. But let’s say in a desert or some other ecosystem trees don’t work and you need shrubs, for instance. Now, you can set a goal of reviving the ecosystem of this place. Can you say how many units of ecosystem revival is equal to the units of carbon that are captured? And extend that to groundwater recharge and air pollution? Do you think all these criteria are commensurable?
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