Under a conservation easement, the landowner voluntarily agrees to limit or prohibit certain activities on their property to preserve its conservation values. These values can include protecting wildlife habitat, preserving open spaces, maintaining water quality, safeguarding agricultural land, or maintaining historical or cultural resources. Whether a landowner can benefit from a conservation easement and earn carbon credits from the same property is a potential point of uncertainty currently. The additionality requirement that many carbon programs require means that carbon credits can only be issued for projects that do more than what is legally required.
Since conservation easements generally have legal requirements to not develop the land or harvest timber, landowners could not claim going beyond what is legally required. Many argue against this, saying that it punishes landowners who were trying to conserve their land before options like carbon credits were available, and disincentivizes conservation easements.
Key Takeaways:
Conservation Easements: Landowners voluntarily limit certain activities on their property to preserve conservation values like wildlife habitat, open spaces, and water quality.
Carbon Credits and Easements: There's uncertainty about earning carbon credits on land under conservation easements due to the additionality requirement, which mandates that projects exceed legal conservation requirements.
Land Requirements for Carbon Credits: Typically, carbon credit projects require over 40 acres of forestland or several hundred acres of farmland or grassland, though smaller projects may need less land.
Legal and Financial Aspects: Conservation easements are legally binding and can offer financial benefits, including tax incentives and potential compensation from government programs or nonprofits.
Revenue from Carbon Credits: Payments for carbon credits depend on the amount of carbon dioxide sequestered by the land, with companies purchasing credits to offset emissions.
Long-term Agreements: Both conservation easements and carbon credit leases involve long-term commitments to preserve land, with agreements tailored to specific conservation goals.
Carbon Offset Projects for Landowners
Carbon offset project developers are always looking for lands that have lots of carbon credit potential. There are many different types of carbon credits, but the requirements of land for carbon credit opportunities are all the same:
Developers are looking for acreage above 40 acres of forestland, and over several hundred acres of farmland or grassland. However, smaller projects in the carbon markets could require smaller amounts of land acreage.
Carbon leases can range from 5 to 100 years depending on the type of offset credits and length of the project.
The requirements of landowners to uphold carbon credit leases match conservation easement agreements similarly. Both have goals of preserving the land so that there is no development.
Within a conservation easement agreement, the specific terms and conditions are negotiated between the landowner and the responsible organization or agency. They are typically tailored to the specific characteristics and conservation goals of the property. The agreement is legally binding and is recorded in the property's deed, ensuring that future owners must also comply with its terms.
Conservation easements are a widely used tool for land conservation, providing a balance between landowners' property rights and the protection of important natural, cultural, and historic resources. They allow landowners to ensure the preservation of their property's conservation values for future generations while often providing them with certain financial benefits and potential tax incentives.
While the landowner retains ownership of the property, the conservation easement "runs with the land," meaning that the restrictions and protections in the agreement remain in place even if the property is sold or transferred to new owners. The organization or agency responsible for overseeing the easement is responsible for monitoring and enforcing compliance with the terms of the agreement over the long term.
Revenue Streams With Conservation Easements
Some landowners who have a conservation easement agreement do have monetary benefits for participating in preservation. In many cases, however, it is important to note that compensation is not a guaranteed aspect of conservation easements and varies depending on several factors. Financial compensation for landowners with a conservation easement agreement can come from various sources:
Government programs: These incentives can take the form of grants, tax credits, or direct payments.
Nonprofit organizations: Conservation organizations or land trust alliances sometimes have funds available to compensate landowners for the development rights they are relinquishing through the conservation easement.
Tax benefits: Placing land under a conservation easement can result in significant tax benefits for landowners. The value of the easement donation may be eligible for income tax deductions or property tax reductions. The specifics of these benefits can vary based on local tax regulations and the landowner's financial situation.
Mitigation credits or offsets: These are typically associated with ecosystem restoration projects or activities that provide environmental benefits, such as wetland restoration or carbon sequestration.
For carbon credits, the payment for landowners depends on the amount of carbon dioxide the parcel of land captures. From there, companies looking to reduce their carbon emissions can purchase the carbon credits for a period of time, or lease the land. The payment will depend on the contract signed between the landowner and purchaser/lessor.
Interested in learning how much carbon your land is sequestering? Get a free estimate in LandGate's free property report for landowners today!
