In the first phase, Rs 60 lakh has already been released, official sources said.
While the ecosystem in the area will be restored through massive plantation under the project, de-siltation will be carried out to increase the water-holding capacity of the reservoir, said Divisional Forest Officer (DFO), Ghumusara North Division, Ramaswamy P.
Steps will be taken to improve the socio-economic standard of the people, mainly fishermen, under the wetland development programme, he said.
Over 5,000 people of nearby villages depend on fishing in the reservoir to eke out a living. The reservoir was constructed by making a 3.5-km dam.
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Expressing concern over its degradation, environmentalists had urged the government to improve its fragile ecosystem.
The project will involve other related departments like agriculture, horticulture, fisheries, panchayat raj and health. It should help improve the economic condition of the people who are dependent on the wetland. The main objective of the project is to develop the picturesque site as an ecotourism hotspot, he said.
Farmers and fishermen in the area will be trained in proper use of the wetland, he added. The state-owned Chilika Development Authority has agreed to provide technical support for the improvement of the ecosystem.
As many as 1,500 people from 12 Vana Sarankshana Samitis have been selected proper utilization of the wetland, the sources said.