Private Conservation Easements
A commonly used property rights approach to conserving the environment is private conservation easements. Gerald Korngold discusses the benefits of this policy and proposes methods to mediate some of his concerns about the program. In essence, a conservation easement gives a nonprofit entity or government a perpetual right to restrict changing the present use of the land. If the easement is donated to a nonprofit, the landowner receives tax benefits at the federal, state, and local levels.
Korngold argues that conservation easements have added tremendous value to land preservation in the United States. The method alleviates the government’s need to spend scarce public resources on land conservation. It reduces the cost of acquiring land for conservation, because a nonprofit needs only to purchase the right to develop land, and the other attributes of the bundle of rights remain privately owned. An easement will not remove the property from the tax roll, thus allowing the municipality to collect taxes from the owner. The easement program is based on voluntary changes that could help government avoid controversy generated by land use regulation.
Despite the benefits of conservation easements, there are concerns. A tax subsidy is involved in donated conservation easements, and abuses of the tax code have been reported. According to Korngold, nonprofits do not always consider public benefits when they establish easements, making it hard to know whether forgoing the tax revenue is justified. Because the establishment of private conservation easements is based largely on the initiatives of landowners and nonprofits, the location of easements may not be in accord with the community-wide preservation plan. Although the creation of easements involves public subsidy and land use planning, nonprofits are not subject to special regulatory processes to ensure that their actions are in conformity with the public interest. Korngold notes that monitoring of easement stewardship by nonprofits is modest (and sometimes absent). Conservation easements are sometimes perceived as a program designed for high-income households, because large land sites owned by individuals are normally involved. Comprehensive data about the total number, location, ownership, and acreage of conservation easements are lacking. Finally, perpetual easements may add rigidity to land use. When economic and social conditions of a neighborhood change, more land may be needed for development. The control over the modification and termination of restriction on large tracts of land by nonprofits could create legal difficulty and uncertainty to land use planning.
Korngold suggests the following solutions. The tax code should be amended to allow federal tax deductions only if an easement has received prior federal, state, or local certification as having a significant public preservation benefit. States should legally require counties to establish separate records for conservation easements. To ensure the stewardship of nonprofits, a voluntary accreditation program can be established. Alternatively, state attorneys general could supervise the nonprofits. To increase the flexibility of conservation easements to adjust to future land use needs, legal changes are required, including clarifying nonprofit law, applying the rule that prohibits enforcement of covenants violating public policy to the case of conservation easement reversal, relying on a cy pres proceeding to permit easement modification and termination, and exercising the power of eminent domain to condemn easements.
This paper was presented at the Lincoln Institute’s annual Land Policy Conference in 2008 and is Chapter 14 of the book Property Rights and Land Policies.