WRI Issue BRIef Gaining Ground Increasing Conservation easements in the u.s. south Logan Yonavjak and Todd gaR TneR SUMMARY A “conservation easement” is a voluntary, legally enforceable land preservation agreement between two parties wherein a landowner sells or donates the development rights to a tract of land to a qualified holding organization, such as a land trust, effectively preventing forest conversion or other stipulated activities, usually in perpetuity. Conservation easements are attractive to conservation organiza- tions and funders because such agreements often offer a more cost-effective means of securing land under some of conservation status. Easements typically cost at least 40 percent less per acre than outright land purchases. Conservation easements have four major benefits to landown- ers 1 they allow the retention of private ownership, 2 they provide a high degree of flexibility in terms of meeting land- owner management and conservation objectives, 3 they allow active forest management, and 4 they offer financial benefits via income, estate and property tax reductions, and potential revenues from existing and emerging ecosystem service markets. Conservation easements have become an increasingly popular land conservation approach in the United States. The amount of land nationwide under conservation easement has grown from approximately 500,000 acres in 1990 to more than 30 mil- lion acres in 2011. However, the southern United States currently has a dispropor- tionately low share of the nation’s private land under conserva- tion easement. Although the South constitutes approximately 37 percent of the private land area in the United States, to date it has only 18 percent of the country’s total conservation ease- ment acres. The south also has a disproportionately low share of the total number of easements in the U.S.; only approximately 9 percent of the total number of easements in the country are located in the South. Key barriers to greater uptake of easements in the South and elsewhere include 1 landowner misconceptions about what easements are and what easement agreements entail, 2 landowner perceptions that the financial costs of easements outweigh the benefits, 3 landowner concerns about the per- petual nature of most conservation easement agreements, and 4 limited financial and staffing resources by holding entities or land trusts to purchase easements, in addition to the small number of institutional buyers. There are three main ways these barriers can be overcome 1 increase resources and capabilities of land trusts, 2 increase fi- nancial benefits and contract length flexibility, and 3 strength- en landowner education in order to correct misconceptions. This issue brief is intended to provide an overview for con- servation professionals and conservation funders in the South of the current status of conservation easements in the region relative to the rest of the United States, and how easement use can be increased. It is also intended for landowners interested in exploring conservation easements for their own properties. Although this brief is part of a series dedicated to southern U.S. forests, the ideas presented here could be applied to a spec- trum of ecosystems throughout the United States. Southern Forests for the Future Incentives Series Issue Brief 7 www.wri.org/publications 10 G Street, NE Washington, DC 20002 Tel 202-729-7600 Fax 202-729-7610 www.wri.org augusT 2011 Printed on recycled paper Conservation Easements A Good Investment for the South As profiled in Southern Forests for the Future Hanson et al. 2010, the forests of the southern United States face a number of threats to their extent and health, including permanent conversion to suburban development. Unabated, these threats will impact the ability of southern forests to provide a wide range of ecosystem services to people and to support the region’ s biodiversity . American Forest Foundation2 Issue BrIef Gaining Ground August 2011 World r esources Inst Itute Over the coming decades, several direct drivers of change are expect- ed to affect the forests of the southern United States and their ability to provide ecosystem services. These direct drivers include suburban encroachment, unsustainable forest management practices, climate change, surface mining, pest and pathogen outbreaks, invasive spe- cies, and wildfire. In light of these drivers of change, what types of incentives, markets, and practices---collectively called “measures”--- could help ensure that southern U.S. forests continue to supply needed ecosystem services and the native biodiversity that underpins these services The Southern Forests for the Future Incentives Series, available at www.SeeSouthernForests.org/issue-brief, explores several such measures. The series follows the U.S. Forest Service convention of defining “the South” as the states of Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, and Virginia. Furthermore, the series is premised on the fact that southern U.S. forests provide a wide variety of benefits or “ecosystem services” to people, communities, and busi- nesses. For example, these forests filter water, control soil erosion, help regulate climate by sequestering carbon, and offer outdoor recreation opportunities. This series follows and builds upon Southern Forests for the Future, a publication that profiles the forests of the southern United States, providing data, maps, and other ination about their distribution and makeup, condition, and trends. It explores questions such as Why are southern forests important What is their history What fac- tors are likely to impact the quantity and quality of these forests going forward The publication also outlines a wide variety of measures for conserving and sustainably managing these forests. The Southern Forests for the Future Incentives Series delves deeper into some of these measures. For additional ination about southern U.S. forests, visit www. seesouthernforests.org. Developed by WRI, this interactive site provides a wide range of ination about southern forests, includ- ing current and historic satellite images that allow users to zoom in on areas of interest, overlay maps that show selected forest features and drivers of change, historic forest photos, and case studies of in- novative approaches for sustaining forests in the region. Box 1 About the Southern Forests for the Future Incentives Series A variety of land use instruments are available to prevent forest conversion. One such instrument is the “conservation easement. ” A conservat ion easement is a voluntary agreement wherein a landowner sells or donates the development rights to a tract of landeffectively preventing forest conversion or other stipulated activities, typically in perpetuityin return for a direct monetary payment and/or tax benefit of some . Over the past several decades, conservation easements have begun to rival some of the more traditional land conservation s, such as park designations and government acquisition or “fee simple” purchases of land. An easement is an especially attractive tool for land conservation in the South, given that 87 percent of southern forest acreage is currently under private ownership Hanson et al. 2010. However , the utilization of conservation easements on private land in the southern United States lags behind the rest of the country . What can be done to address this lag As part of WRI’ s Southern Forests for the Future Incentives Series Box 1, this issue brief tackles this challenge by answering a series of related questions, including the following What is a conservation easement Why are conservation easements attractive How does the use of easements in the South compare to the rest of the United States What explains the low penetration of easements in the South What can be done to increase adoption of easements for the benefit of southern forests This issue brief is intended to provide an overview for con- servation professionals and conservation funders in the South of the current status of conservation easements in the region relative to the rest of the United States and how easement use can be increased. It is also intended for landowners interested in exploring conservation easements for their own properties. Although the brief is part of a series dedicated to southern U.S. forests, the ideas presented here could be applied to a spectrum of ecosystems throughout the United States. Please note that the term “easement” in this issue brief, unless otherwise specified, refers to a conservation easement. 3 World r esources Inst Itute August 2011 Issue BrIef Gaining Ground What Is a Conservation Easement A conservation easement, sometimes called a “conservation covenant” or a “conservation restriction,” is a legally enforce- able land preservation agreement between two parties for the purposes of conserving a tract of land, usually in perpetuity . Easements restrict certain activities on a propertysuch as real estate development, mineral extraction, and commercial and industrial usesto a mutually agreed upon level with the goal of maintaining or even improving the property’ s ecologi- cal integrity and/or ability to provide ecosystem services. The decision to place a conservation easement on a property is voluntary . The property remains privately held by the land- owner; the land does not become public. Once set in place, the restrictions for perpetual conservation easements are intended to be binding on all future owners of the property . 1Conservation easements are not, however , protected against eminent domain. 2A number of other legal considerations for perpetual conservation easements exist Box 2. Conservation easements are used to maintain agricultural land, timberland, wildlife habitat, and other s of open space and working lands. Easements achieve protection from development by separating the right to build on the land or subdivide it from other rights of ownership. The landowner who gives up these “development rights” continues to privately own and manage the land and may often receive significant state and federal tax advantages for having placed the land under a conservation ease- ment. Landowners either sell or donate conservation easements to entities such as private land trusts, nonprofit organizations, and federal, state, and local public bodies. 3The easement holder is responsible for monitoring future uses of the land to ensure compliance with the terms of the easement and to enforce the terms in cases of violations. 4Easements generally include declarations of rights that include what the owner , easement holder , and general public are allowed to do on the property if it is negotiated that the public is allowed on the property. 5 Although all easements are designed to protect the property’ s ecological or open space values, variations on their design exist. Some put in place restrictions on real estate development and any of resource extraction; most mineral resource extrac- tion is prohibited if landowners are to receive tax benefits. 6In short, some easements provide “strict” protection. Others allow sustainable resource extraction but still prevent conversion of the land to residential or commercial development “W orking forest conservation easements” are one such example, allowing for sustainable logging of timber or harvesting of nontimber forest products T alberth and Y onavjak 2011b. Why are Conservation Easements Attractive Conservation easements have emerged more prominently in recent decades as a conservation instrument that benefits conservation organizations, landowners, and forests. For in- stance, easements are attractive to conservation organizations and funders because they are a cost-effective means of placing land into some of protected status to achieve particular conservation goals. Acre per acre, an easement typically costs To effectively achieve their ecological and land management goals, conservation easements need to provide clear public benefits and be legally defensible. But achieving both can be difficult. First, there are issues regarding the nature of a permanent easement agreement if the nature of the public benefits changes. Essential- ly, if an easement holder is supposed to protect a specific purpose for the public e.g., forests for recreation or other ecosystem servic- es in perpetuity under the terms of an easement agreement, issues arise if the land cover changes e.g., the ranges of forest species shift because of climate change, the protected entity itself changes e.g., an endangered species goes extinct, or the public interest in the good/protected purpose changes. Second, with regard to the defensibility of perpetual easements, it is unclear under existing laws if and when easements can be terminated, and who, if anyone, has the right to challenge an easement’s termination. Because of the relatively recent use and development of perpetual conserva- tion easements, these issues have not yet been fully developed or presented in court or are just now reaching courts Jay 2011. To date, there have been relatively few legal challenges to perma- nent conservation easements, despite known easement violations. Usually, rather than take the issue to court to terminate an ease- ment, a landowner and easement holder will amend the terms of an easement if any changes to the public benefits occur. Another alter- native is that a landowner will knowingly or unknowingly violate the easement terms and then settle the issue with the land trust out of court i.e., pay a penalty. These amendments and settlements raise a host of ethical considerations for land trusts with regard to main- taining the agreed-upon terms of the easement to supply public benefits, given that they are in charge of protecting public goods. States do not offer clear and consistent guidance on negotiating ap- propriate settlement terms and spending settlement funds Holmes 2011. Also, there is inconsistent legal guidance on how to enforce terms of an easement agreement before the easement holder and landowner reach the settlement phase. To avoid court challenges, a state could theoretically amend its easement-enabling legislation to allow for terminations and penalties, require mitigation in the event of violations, and predetermine the role of the attorney general in these proceedings Holmes 2011. Box 2 Existing Legal Challenges Facing Perpetual Conservation Easements 4 Issue BrIef Gaining Ground August 2011 World r esources Inst Itute lessusually at least 40 percent lessthan the full value of outright or “fee simple” purchases of land Fishburn et al. 2009. 7As such, easements can be a cost-effective way to achieve conservation goals th