Investigating agricultural land protection: a theoretical case study on conservation easement valuation and tenure

Abstract

This research explores agricultural land valuation as related to conservation easement agreements. Conventional approaches and previous studies have relied on agricultural land’s market price urban residual growth value to represent both landowner and land agent conservation easement reservation prices for permanent conservation easement valuation. This dissertation shows that each accounting stance’s valuation is driven by differing market and non-market factors. Further, by recognizing that convertible agricultural land holds differing social, market and individual landowner prices, unique WTA and WTP valuation models are developed that enhance appraisal and understanding of the motivation to accept and pay for placement of voluntary land-use restriction agreements.

Central to understanding agricultural land’s valuation is the recognition of a future date of conversion for both the landowner and land agent. Conventional permanent conservation easement placement holds a land agent’s conversion date at infinity. While permanent specification may be optimal for certain unique socially desired PIVs, without allowance for temporary agreements, land-use flexibility and choice are lost with these unique dual-interest agreements. Permanent specification may not always be optimal when faced with physical and economic constraints. Allowances for less than permanent conservation easement agreements are introduced through a portfolio investment approach to land-use protection policy that enhances optimal public interest value (PIVs) acquisitions and ultimately social welfare.

The results of this analysis provide for enhanced land use policy recommendations that actively include term specified conservation easement agreements. Since conservation easements are unique in their recognition of dual public and private interests, their functions are best served by recognizing the goals of both accounting stances. Thus, conservation easements by themselves may best serve to influence a landscape’s land-uses rather than used strictly for impeding development. Both accounting stances have something to gain with a fair agreement and more to lose with an overly restrictive imposition.