The Ecological Project was established in 1981 through the Federation Account Act of 1981 on the recommendation of the Okigbo Commission while the Ecological Project Office was established in 1985. It is an Office under the Office of the Secretary to the Government of the Federation (OSGF) headed by a Permanent Secretary. The Fund constitutes 1% of the Federation Account and it is known as Derivation and Ecology Fund.

The Prime objective of the initiative was to have a pool of fund that would be solely devoted to the funding of ecological projects to mitigate serious ecological problems.

It should be noted that the States and Local Governments receive their share of the Derivation and Ecology Fund as part of their monthly allocation at the Federal Account Allocation Committee (FAAC) monthly meetings.