How not to fix conservation easements
One of the most useful, cost-effective methods of conserving land in America is in serious crisis. A series of scandals has revealed major abuses of conservation easements a legal tool increasingly used to protect private land from development by compensating landowners for development rights.It is true that some landowners who donate easements to nonprofit land trusts have used inflated appraisals to take huge tax write-offs at the expense of taxpayers. Others have used easements to protect swamps and mountainsides that could never be developed, or golf courses and private lots that have little or no conservation value.Congress is now rightly considering how to crack down on these abuses. But rather than fixing the problems, some of the proposals could destroy a tool that in most cases has worked well. It has protected important wildlife habitat, open space, forests, ranch and farm lands on more than 17,000 properties totaling more than 5 million acres across the country.A Joint Committee on Taxation report proposes cutting the tax deduction that a landowner can take for donating a conservation easement from the full value of the development rights to just 33 percent of the value.But cutting tax incentives is the wrong way to prevent inflated appraisals.In the first place, reducing tax deductions would discourage some of the most valuable conservation easements, such as those used by ranchers to keep land in agriculture.Because most ranchers and farmers are not in a position to take large tax deductions in a short period of time, it actually makes sense to extend the period over which they can take tax deductions. A proposal to do this is before Congress, and it should be approved.If the goal is stopping inflated easement valuations, however, then the Internal Revenue Service, state tax departments, county tax assessors and appraisers need to police the appraisal process. Appraisers should be held accountable for their determinations, but now, the industry has no standards for appraising conservation easements. Standards need to be set. If that is not enough, it may be necessary to require certification for appraisers.If the appraisal industry cannot fix this problem, then stronger governmental policing may be necessary. That is already happening in South Carolina where the department of revenue is working with the IRS to audit conservation easements. The department has reviewed 51 conservation easements, covering 32,000 acres, valued at more than $255 million.Land trusts also can play a role in fixing the problem. They want nothing more than to help drive bad actors out of business before they take good conservation down with them. This explains why conservationists have applauded appraisal audits.Congress should recognize and encourage self-regulation among conservationists and land trusts. Recent research on conservation easements, conducted by Dominic Parker of the Property and Environment Research Center, shows that self-interest may be the most cost-effective way to curb abuses and encourage conservation.Parker studied conservation easements given to 1,250 land trusts around the country, and his results suggest that most land trusts are efficient conservation producers. Land trusts hold easements on properties for which the costs of enforcing such easements against violations are fairly low. For example, easements for open space and scenery are easily enforced, especially when ranchers and farmers own the land and want to preserve their heritage.On the other hand, land trusts tend to buy land for restoration, rare and endangered species habitat and recreational access. Easements for these purposes are costly to enforce.Parker also discovered that self-regulation is already working to some degree. He found that land trusts that are part of the Land Trust Alliance, an umbrella organization that encourages land trusts to adhere to standards and practices, generally are more efficient.Still, the Land Trust Alliance recognizes that it could help more by moving from voluntary compliance to an accreditation program. Congress could give a real boost to this approach by requiring landowners to donate easements to accredited land trusts if they want to qualify for tax deductions.The beauty of conservation easements is that they provide a way for the public to help pay for environmental goods produced by private organizations on private lands. Though there are problems that need to be fixed, Congress should be careful not to gut one of the few private initiatives that, for the most part, works well for grassroots conservation. VTJon Christensen and Terry Anderson are contributors to Writers on the Range, a service of High Country News (hcn.org) Christensen is a research fellow at the Center for Environmental Science and Policy at Stanford University in California; Anderson is a senior fellow at the Hoover Institution at Stanford, and the director of the Property and Environment Research Center in Bozeman, Montana.
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