NCPA - National Center for Policy Analysis


October 27, 2005

Conservation easements are an increasingly popular way to preserve open space. The easement is a legally binding agreement between a landowner and a nonprofit land trust or government agency that prohibits most development. Landowners are compensated for the easement through cash payments or tax breaks.

Most land trusts receive private donations and public monies. Public monies are channeled more directly to land trusts through ballot initiatives that authorize levying bonds or increasing property taxes for open space conservation.

However, Congress is considering reducing or eliminating the tax deductibility of conservation easements due to allegations that some are really abusive tax shelters, says Parker. Critics allege that some land trusts accept "wildly exaggerated" easement appraisals from developers.

Public funding mechanisms that encourage full accountability and transparency while also providing trusts with flexibility to use their discretion have the best potential, says Parker. This could be done by:

  • Increasing oversight of the easement appraisal process; the nonprofit Land Trust Alliance has proposed an accreditation system that would certify land trusts who want to receive donated conservation easements and certified land trusts would use accredited appraisers.
  • Replace federal tax breaks with a competitive grant program that requires trusts to raise matching funds from private sources and local government; ideally, 75 percent or more of the total cost of the conservation easement would be paid by the recipient organization.

Source: Dominic P. Parker, "Conservation Easements: A Closer Look at Federal Tax Policy," Property and Environment Research Center, PERC Policy Series, No. PS-34, October 2005.

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