Sikkim Introduces Rules for Payment for Ecosystem Services to Fund Environmental Conservation

The Government of Sikkim issued the Sikkim Payment for Ecosystem Services Rules, 2022, through a notification dated July 15, 2022, which came into force upon its publication in the Official Gazette on July 18, 2022. These rules were enacted under the powers conferred by section 31 read with section 83 of the Sikkim Forests and Water Courses and Road Reserve (Preservation and Protection) Act, 1988. The primary reason for their enactment stemmed from the recognition that ecosystems provide vital services essential for human well-being and survival, yet freshwater ecosystems globally are facing degradation. The legislation acknowledged that land management in upstream areas significantly impacts services delivered downstream, and valuing these ecosystem services can foster collective interest among upstream stewards and downstream users.

Under the new rules, the State Government established a framework for demanding payment for ecosystem services from users of natural water for commercial purposes. The Conservator of Forests (Territorial) was empowered to determine and demand these payments based on rates specified in a Schedule appended to the rules. These rates vary for hydropower projects based on the 'head' (water pressure) in meters, and for consumptive uses such as industrial purposes, industrial construction, and dust suppression systems, with charges levied per kilolitre or per tonne per hour of crusher capacity. Any user seeking to utilize natural water commercially is now required to submit an application in Form-I to the Conservator of Forests (Territorial), accompanied by necessary documents, details, and an application fee. Upon approval, the Conservator communicates the annual payment and mandates an interest-free security deposit equivalent to six months' payment, to be deposited in the name of the Principal Chief Conservator of Forests-cum-Secretary. A permission, valid for two years and renewable upon compliance, is subsequently issued in Form-III. The rules also stipulate that the State Government may, by notification, exempt users consuming water below a specified quantity from these payments. In cases of non-payment, the Conservator of Forests (Territorial) can issue a 15-day notice, and upon continued default, cancel the permission and halt further water use. Outstanding dues can be recovered by forfeiting the security deposit and treating them as arrears of land revenue. The revenue generated from these payments is earmarked for utilization in furtherance of the objectives of the parent Act and for State welfare activities.

The legislative intent behind the Sikkim Payment for Ecosystem Services Rules, 2022, was to address the critical need for fiscal resources to manage ecology, environment, and climate change in a manner consistent with sustainable development. The earlier legal position, while providing for forest and water course protection, did not explicitly establish a mechanism for commercial users to contribute financially towards the maintenance of the very ecosystem services they utilized. The rules aim to bridge this statutory gap by introducing a system where the economic value of ecosystem services, particularly freshwater resources, is recognized and monetized. This policy rationale is clearly articulated in the legislation, which provided: “Whereas, in order to manage ecology, environment and climate change consistent with sustainable development, the State will need fiscal resources by which the State may undertake various activities for maintaining ecosystem services.” By imposing a payment obligation on commercial users, the rules seek to ensure a sustainable funding stream for conservation efforts, thereby promoting responsible resource management and internalizing the costs associated with environmental impact. The enforcement mechanisms, including application procedures, security deposits, and provisions for disconnection and recovery of dues, are designed to ensure compliance and effective implementation of this new financial obligation.

Keywords: Sikkim, Ecosystem Services, Environmental Protection, Water Resources, Commercial Use, Forest Department, Sustainable Development, Fiscal Resources, Hydropower, Industrial Water

Geo Tags: India, Sikkim District: Not Applicable