DESIGNING A CONSERVATION EASEMENT: MAKE SURE THE JUICE IS WORTH THE SQUEEZE
Financial and tax ramifications of conservation easements. By Burt Rutherford
One of the strong incentives for farm and ranch families to consider a conservation easement on their property is the one-time cash infusion it can produce. That cash can come from any of the many and varied funding entities that have an interest in keeping rural land as it presently exists, rather than succumbing to development.
Here’ s the thing, however: there’ s no such thing as free money. That’ s why Erik Glenn, CEO of the Colorado Cattlemen’ s Agricultural Land Trust( CCALT) and president of the Partnership of Rangeland Trusts( PORT), advises folks to choose their funding partners carefully when designing a conservation easement. In other words, make sure the money from various funding sources is worth the restrictions accompanying the money.
“ You’ ve got to understand who your partners in this transaction are going to be, both your land trust partner( an organization like CCALT that helps design and administer the easement) and then who the funding partners are going to be. And that’ s important to know— can you live with the restrictions in exchange for that cash infusion? Is the juice worth the squeeze, so to speak,” Glenn asked. Funding Sources There are multiple economic and tax incentives available to fund a conservation easement. Those incentives will vary by state and even by county and municipality.
There’ s the federal charitable tax deduction for conservation easements which allows a qualified farmer or rancher, as defined by Schedule F on the federal tax form, to deduct the full value of the conservation easement at 100 % of adjusted gross income.
“ If you don’ t have enough tax liability to utilize the full amount of that deduction, you can carry it forward for 16 years,” Glenn added.“ For most farmers and ranchers, that tax deduction isn’ t all that great. But it’ s an incentive that’ s there and can often be paired with other incentives to maximize the economic outcome for a conservation easement contribution.”
However, by its nature, a conservation easement will devalue the property.“ You’ re putting a set of restrictions on that property that will last forever, which is intentional,” Glenn said. The original idea of a conservation easement was to devalue the property to make it easier to transfer to the next generation by bringing the value of the property below estate tax exemptions.
“ Given where the estate tax exemptions are today, we don’ t see many landowners using easements as part of the estate planning toolbox,” he added. But the reduced property value does reduce the overall value of the estate in terms of estate tax planning. Then, the federal government provides an extra $ 500,000 of estate tax exemptions for conveying an easement.
Beyond tax incentives, several federal agencies can be a funding source in a conservation easement. Under the Conservation Title of the existing 2018 Farm Bill, USDA administers the Agricultural Conservation Easement Program, or ACEP. Under ACEP are the Agricultural Land Easements( ALE) and the Wetland Reserve Easements( WRE).
When the 2018 Farm Bill was constructed, PORT, a consortium of state agricultural land trusts, negotiated that the requirement to match the federal money with cash from non-federal sources be removed. Instead, landowners can match the federal contribution with their landowner donation contribution. Glenn said,“ That enabled states like Texas, Kansas and South Dakota to better participate in easement programs because those states, by and large, don’ t have robust state easement programs.”
The U. S. Fish & Wildlife Service also offers conservation easement funding.“ They’ re going to be very focused on species conservation. They’ ve got a program that’ s focused on migratory birds and preserving migratory bird habitat,” Glenn emphasized, as well as a wetlands easement program.
And the Department of War funds easements through its Readiness and Environmental Protection Integration( REPI) program. REPI is primarily designed to buffer land around military installations from development.
What’ s more, the newly announced Make America Beautiful Again executive order has the potential to add to the federal money available to support conservation easements.“ We’ re optimistic about some of the stuff that’ s coming out of these initiatives that can reform and improve easement programs at the federal level in a really meaningful way for ag producers,” Glenn said.
That optimism stems from the involvement of NCBA, PORT and others, working with the White House and federal agencies, have stressed that such tools are important to farm and ranch families but must be structured to help ensure land is available to produce food and fiber, Glenn explained.“ I think the Trump administration understands this is how we should use these tools and is trying to push the agencies to make sure the programs that already exist work well, but also to look at new programs,” Glenn said. Part of the push from agriculture is to implement a federal transferrable tax credit, like one existing in Colorado, Virginia and other states,
16 APRIL 2026 www. NCBA. org