Conservation Easements 101 - A Farmer’s Guide

August 4, 2022

Many landowners are aware that they can donate property, but fewer are aware that there are many other ways to enter into legal agreements and receive benefits for preserving their land. Learn how conservation easements can secure your agricultural land's future and even offer tax incentives for land preservation. 

What Is a Land Easement?

Let’s define what a land conservation easement is.

Easements are legal agreements negotiated between organizations and landowners to preserve land or maintain land for certain uses, especially for conservation purposes. 

Conservation easements are specific types of land easements that can help ensure land is used for agricultural purposes or to prevent certain development or construction on your property, even generations into the future. 

Landowners can enter agreements with conservancies, foundations, or other organizations to establish an easement for the land. Most conservation agreements include a pledge not to develop land in a certain way or to preserve it for agricultural uses only. Many easements can last beyond the lifetime of a single ownership, making it one of the most surefire ways to conserve land long-term. 

A common question: “Can I still build on or rent out land with a conservation easement?” As long as the activity on the land is consistent with what is outlined in the land agreement, you’re free to build on, sell, rent out, or farm on the land. 

Land Trusts Vs. Land Easements

There is a significant difference between a land trust and a land easement. In short, land trusts are organizations that obtain land and conserve it. Land easements are the legal agreements that a landowner and an entity or organization create. So a landowner could enter into a land easement with a land trust.

Benefits of Conservation Easements

There are numerous benefits of negotiating an easement for land. If you want your land to be used for agricultural purposes far into the future, negotiating an easement is an effective way to ensure that it will be conserved the way you’d like it to be even with future ownership.

Easements can also be used to get benefits from the agricultural work you may already be doing on your land. Many organizations encourage land to be used for agricultural purposes, so you would likely receive tax deductions without having to change much about the way you manage your land. 

Types of Conservation Easements

There are two common types of easements: Purchased easements and donated easements. They have important distinctions to consider as you plan for your land’s financial future. 

Purchased Easements: Financial Assistance to Preserve Land

Purchased easements provide landowners with cash in exchange for a conservation agreement. In this case, a landowner may be paid by an organization or trust for the promise that the land is only used in certain ways (e.g. for agriculture, pasture-land, etc). 

One example of a federal land conservation easement program is the Agricultural Conservation Easement Program (ACEP) run by the USDA’s Natural Resources Conservation Service (NRCS). This program focuses on both agricultural land easements (ALE) and wetlands reserve easements (WRE) to provide landowners financial assistance in exchange for conservation on their land. With an ALE for example, the NRCS may contribute “up to 50 percent of the fair market value of the agricultural land easement.

Donated Easements: How to Donate Land

Donated easements are one of the most common types of easements. They do not provide direct compensation to a landowner. Rather, they qualify for tax benefits that can be later redeemed. 

Donated easements are typically run through conservancies or private foundations. Landowners who are interested in donating land will often qualify for tax incentives, especially if their land is used for agricultural purposes. The easement would be considered a non-cash charitable donation when filing federal tax returns.

Other Types of Conservation Easements

Some easement programs are entirely unique and don’t fit into the “purchased” or “donated” easement categories. 

Many farmers have enrolled in what is known as the Conservation Reserve Program. Run by the Farm Service Agency (FSA), it contracts landowners on a yearly basis to preserve environmentally sensitive land. Farmers who are enrolled receive a yearly rental payment, and are typically engaged in the program for 10 to 15 years. The FSA bases those rental rates on the relative productivity of the soils within each county and on the average cash rent of the area using data provided by the National Agricultural Statistics Service. 

Your state may also have a “working lands” easement program. These programs generally protect vegetation and water quality on haying and grazing farmland. New York and Minnesota are great examples of states conservation easement program programs for agricultural producers on “working land.” 

How Can I Preserve My Land With an Easement?

If you are interested in conserving your land through an easement, one of the best places to look is through federal organizations. The USDA runs a variety of different programs through ACEP that support farmers and agricultural producers. 

Even if you are not involved in agriculture, donating land through easements is sometimes the most common way to preserve your property. Many foundations run on a state level, so searching land trusts or conservancies according to your state is the best way to find a program for your needs. 

Securing the future of your agricultural land can require coordination between a lot of moving parts. If you’re looking to improve the financial stability of your farmland, learn about the federal, state and private funding opportunities you may qualify for. 

FarmRaise has a database of programs that help you make your farm or ranch more profitable and we’ll even send you alerts so you never miss a deadline. See how FarmRaise can do some of the financial heavy lifting for you so you can get back to what matters most - farming again.

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