New project examines economic aspects of this popular land-preservation tool For conservation easements set up to protect working forests, 30 may be a magic number. While nearly all conservation easements now in place are designed to last “in perpetuity,” researchers at the University of Georgia Warnell School of Forestry and Natural Resources say 30-year agreements may be a better deal for both the landowner and the organization holding the easement when considering benefits of carbon sequestration. This is just the first proposal to emerge as part of a new collaboration between UGA and Mississippi State University. The goal is to get a better understanding of the restrictions landowners face, as well as the economics behind conservation easements on forestland—which are often in place for 50 years or more. “This has implications on policy design or conservation program design for stakeholders—instead of a permanent agreement, you can sign a certain term and then later on you can make a different decision,” said Yanshu Li, associate professor of forest economics and taxation with Warnell. Conservation easements offer tax savings for landowners in exchange for protection of the land over the long term. This tax savings could come from a state or federal agency or a nonprofit. By studying the economics of the arrangement from several angles, the researchers’ goal is to create a menu of options that could account for carbon offsets, water quality or wildlife benefits, for example, that working forests provide. Already, the researchers have determined one recommendation: If your goal is calculating for the carbon captured in forestland, the optimal conservation easement would be in place for 30 years starting from bare land. “Everybody is talking about carbon, and forest carbon is a natural solution to climate change,” said Richard Mei, Warnell’s Hargreaves professor of forest finance. “We figured that the conservation easement does not need to be a permanent contract—with a Southern pine plantation, we figured out that for 30 years, that is good enough to achieve those goals within a reasonable conservation budget.” By capping the easement’s timeframe and adjusting the payments to landowners, the trade-offs for entering into the easement may be more palatable for all parties, said Mei. Developed by Changyou “Edwin” Sun of Mississippi State University, Yi and Mei, the 30-year timeframe is the first model developed through the project and was published earlier this year. The team will continue to work on additional options. “The objective is the total benefit of the government and landowners combined, including economic and environmental benefits,” said Li. “For this first paper we just assumed the environmental benefit was only carbon, but in reality there are multiple environmental benefits. And we can use that model to model those benefits as well, such as wildlife benefits or providing water quality benefits.” Eventually, the team plans to create a menu of options that account for tax savings or payouts to landowners in return for a variety of environmental benefits that go along with keeping forests as forests. And this is just one aspect of the multi-year, $600,000 project. Sun, the project’s lead researcher, has conducted a review of more than 1,000 court cases concerning conservation easements to understand the legal ramifications of the restrictions on land use. Working with Cathy Clutter, an instructor at the UGA School of Law, the team is also analyzing how the management of working forests might be restricted through easements, and the costs to taxpayers as a result of conservation easement programs. Much analysis has been done on easements for agricultural land, said Yi and Mei, and those timeframes are much shorter in comparison. But conservation easements on forestland is under-studied. They hope to change that, they said. “From our first review, we found that about 90% of conservation easements are permanent. So, is that too restrictive? That’s what motivates us,” said Mei. “As economists, we talk about the trade-off between decisions. Maybe there could be some variation in the design of the contract without hurting the conservation goal too much.”
