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CONSERVATION EASEMENTS

by Mary MacGregor

written 1995, published in Beef in B.C. May/June 95

The environmental community wants to use conservation easements to protect the environment and wildlife habitat on private land. So, what is a conservation easement anyway—how does it work?

Conservation easements are a transfer of some or all the development rights on private land to a separate organization like a conservation trust. The idea is that the existing use of the land, or something close to it, continues IN PERPETUTITY as the landowner and trustee describe, when they work out and write down the terms of the conservation easement.

Although at best a conservation easement or covenant preserves land for agriculture and/or environmental purposes, they are always a serious limitation on your ability to make future decisions about the use of your land.

Conservation easements may be either sold or gifted by a rancher to a conservation organization.

Use in the U.S.A.

In the U.S.A., conservation easements are used for tax planning. The U.S.A. levies federal estate taxes, and there is no family farm rollover provision as we have in Canada for capital gains. Thus when a ranch is passing to the next generation, estate taxes have to be dealt with.

In states like Colorado, increases of ranch values in more accessible areas have been staggering. These increased values are taxed on death. The consequent estate taxes can put ranchers out of business.

Selling the development rights through a conservation easement accomplishes several objectives:

• to the extent the ranch value has been inflated as a potential development site, the conservation easement reduces the value by transferring away the development potential. The ranch is then valued at its agricultural value alone. The value is reduced for all purposes, including estate taxes
• if the rancher sells the conservation easement to the environmental group, it gives him cash to use for other purposes
• if, as is more common, the rancher donates the conservation easement to an environmental group with charitable status, the rancher receives a substantial charitable donation which he can use to offset his taxable income. This could be useful when the ranch has special one-time income like a partial herd dispersal or logging income.

There must be a development component in the value of the ranch for a conservation easement to provide a U.S. tax advantage.

Use in Canada

You are going to be hearing more and more about conservation easements in Canada. They are one of the tools that environmental groups intend to use to induce landowners to be environmental stewards on their own land.

Environmental groups have decided that “voluntary private land stewardship” is the way to go. They want to accomplish their goals on private land though the landowners themselves.

Groups such as Wildlife Habitat Canada exist to help private landowners understand and protect environmental values on their own lands. One of the goals is to “help secure long term tenure on [privately owned] areas of ecological significance”.

Wildlife Habitat Canada wants to “work with the people on the land” to make sure that the “landscape that sustains us can provide ample, secure wildlife habitat”. Wildlife Habitat Canada says “[s]tewardship respects the rights of private landowners. Most people feel a deep attachment to their land. They take pride in its natural areas and wildlife, and feel a responsibility to use the land wisely. Stewardship programs build on this sense of pride and responsibility and focus on giving landowners the encouragement, information and practical assistance they need.” Wildlife Habitat Canada also says that “government support fronted by a credible non-government conservation group is the most effective delivery model” for “delivering” conservation initiatives to the landowner.

The methods by which Wildlife Habitat Canada intends to protect ecological values on your land are as follows:

• landowner awareness or education – voluntary, no cost
• handshake agreements - voluntary, no cost
• written agreements - voluntary, no cost
• management agreements – voluntary, no cost
• licences and leases – acquired with consideration
• easements and covenants – acquired with consideration.

You’re going to be hearing a lot more from the environmental movement, because they see voluntary private land stewardship as the best way to accomplish their objectives. For example, the West Coast Environmental Law Research Foundation has a whole special library collection on voluntary legal tools for protecting private land.

Comment

The sense that I get from the Stewardship Pledge and Wildlife Habitat Canada material, is:

• these are programs that are going to be done TO landowners
• people who own land are ignorant of ecological values and need to be educated by self-appointed environmental stewards—who are the ONLY people who know, certainly better than landowners, what is good for the environment.
• landowners must be induced, with honey, not vinegar, to manage for public values on private land—and for free wherever possible. It sounds like landowners are supposed to be suckered into the programs.
• the interests of environmental stewards are to have landowners mange their own land to serve the public’s environmental goals, with access to environmentalists and/or the public to environmental features and wildlife, all at the cost of the landowner.

Sounds like a great deal! —NOT

Recommendations

If anyone comes to you with suggestions or requests about management of your private land, remember that you can vary your management, if you choose to do so, to accommodate environmental goals without signing any agreements or making any permanent commitments to anyone else. Subject to existing regulation, you can just do it, if you decide that you want to.

Two important questions to ask are “what benefit do I get out of this?”, and “how do I get out of this agreement if I decide it is not right for me, or things change?”. Make sure the answers are clear, that there is a clear permanent record of the answers, and that you are completely satisfied with them.

I would be hard put to recommend a conservation easement, because it is a permanent constraint on your ability to decide what to do on the land. None of us can tell what the future holds and what our family’s future needs may be. Think about what your place was like 100 years ago—or even twenty years ago—and what it’s like now. Think about the pace of change and the uncertainties of the future. Think about what it would be like to involve a conservation trust (which will necessarily change over time) as a co-manager of all or part of your land.

I would be more likely to look favorably on agreements which at least have a defined term—five or ten or twenty years, and then end. I prefer agreements with a clear and substantial benefit to the landowner, like an annual payment, or improvement in water availability, or the right to sell hunting opportunities—or anything that the landowner judges is of real value to him or her.

I am opposed to landowners being asked to manage private land for public benefit, with the only benefit to the landowner being that he or she will be publicly acknowledged and will get to feel good about his or her donation to the public.

The ranchers of this province are already making a highly significant, and wholly unacknowledged, contribution to the province’s welfare by providing wildlife habitat on private land. Maybe it’s time to ask the public to pay for the public benefit that the ranching community has given to the province for the last hundred years—instead of being asked to do more.