The Compensatory Afforestation Fund (CAF) Act, 2016 was enacted in 2016 and Compensatory Afforestation Fund (CAF) Rules, 2018 were notified on 10.08.2018. The Act and Rules came into force w.e.f. 30.09.2018. Under the provisions of CAF Act, 2016, two special interest bearing funds, namely “National Compensatory Afforestation Fund” (National Fund) and “State Compensatory Afforestation Fund” (State Fund) under the Public Account of India and under Public Accounts of 33 States/UTs respectively have been established for depositing the monies. The CAF Act, 2016 also paved the way for establishment of the National CAMPA (National Authority) in place of the Ad-hoc CAMPA at the center and State Authorities in respective States/UTs. The National Fund is under the control of the Central Government and is managed by the National Authority. Similarly, the State Fund is under the control of the respective State Government/UT Administration and is managed by the State CAMPA. These funds are non-lapsable and get interest as per rate declared by the Central Government on year to year basis.

The Compensatory Afforestation Fund Act, 2016 aims to compensate the loss of ecosystem and forest land due to diversion of forests for non forest use through compensatory afforestation, restoration of degraded forest, improvement of wildlife habitats, enrichment of biodiversity, etc.