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Conservation Easements – promises in perpetuity

What are Conservation Easements?

Conservation easements are a tool to allow you to permanently protect natural and cultural features of private land, without giving up ownership or use. The Alberta Environmental Protection and Enhancement Act is the enabling legislation.

If you think of owning land, you can think of the land as having a “bundle of rights”. This may allow you to do a variety of things – commercial development, cultivate land, construct buildings or fences, harvest timber or other crops, modify wetlands, irrigate, drill, subdivide, etc. With a conservation easement, a landowner grants certain rights in that bundle to a qualified organisation, in order to guard the environmental, biological, or aesthetic values of all or part of their land. The landowner keeps all the other rights and continues to be landowner. The conservation easement holder has an ‘interest’ in the land.

You sign a conservation easement with a qualified organization, such as EALT. The easement places limits on land use or development which would damage the natural or cultural features of your property. With an easement, you still own the land and retain title, and can continue to live on and use it, restrict public access to it, and sell, gift or Will your property on to whomever you wish. An easement helps you control future use and development on your land and enlists a conservation organization to help in this, even after the property changes hands.

Conservation agreements are usually tailored to meet your own needs, the land’s unique natural and cultural values, and the goals of the conservation organization signing it.

Conservation easements are voluntary, but binding legal agreements between a land owner and a land trust (the easement holder) with restrictions and/or allowances regarding land use, and an allowance for the land trust to inspect the property to ensure compliance (the ‘easement’). This is intended to protect the land’s conservation, agricultural or built heritage values. The land can continue to be inhabited by the landowner and sold or passed on over generations. The conservation agreement remains forever in place and development of the land must always follow the intent of the conservation agreement.

Since the conservation easement is typically negotiated to last forever, it is registered on the land title and remains in effect even when the land is transferred or sold. In this way, the landowner’s wishes regarding conservation of the lands are fulfilled forever.

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Various Ways Conservation Easements are Applied

Conservation easements can be used by landowners in a number of situations. They:

  • can apply to all or only a portion of a property
  • can be donated or sold
  • can be created now, or later through a Will

Easements may also be granted by developers to guarantee protection of part of a site or certain features of an entire site (e.g., mature trees) before development occurs.

The terms of conservation easements vary:

  • each agreement is tailored to the specific landowner’s needs and desires
  • each agreement is negotiated round the objectives of the land trust, but all preclude subdivision and environmentally damaging forms of development
  • protection can be provided for both the property’s environmental and agricultural features

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Changing a Conservation Easement

Changes or amendments can be made to the easement by mutual consent, but would likely occur only if the changes achieved the original intent or strengthened the easement’s conservation value. The land trust (or other conservation organization) with which you sign an easement will take on the responsibility to occasionally monitor the property, usually through an annual, scheduled visit with you. If a future landowner or someone else violates the terms of the easement, the organization will normally approach the person to correct the problem, and has the right and responsibility to uphold the terms of the agreement, if necessary.

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Dollar Value of a Conservation Easement

Land and easement values vary greatly, depending on the location, and the agreement’s terms.
Generally, in areas of more development pressure, the dollar value of the easement donation can be greater.

The value of the conservation easement is determined by a qualified appraiser using the “before and after” method. The appraiser assesses the value of the land before the easement and after the easement. Thus the value of the conservation easement is the difference between the land’s value with, and without, the easement.

A proper appraisal is usually required to get a tax receipt.

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Benefits of Conservation Easements

Conservation easements provide benefits from preserving some of the natural areas and open spaces and healthy environments as described above. They conserve watersheds and habitat, and preserve natural landscapes that provide regional residents with clean air, clean water, agricultural products and scenic beauty.

Conservation easements allow you, as a landowner, to meet your conservation goals, as well as addressing your financial wellbeing. Benefits that may particularly interest you might include:

  • maintaining rural character and values
  • maintaining agricultural opportunities for future generations
  • increase the value of nearby properties, as well as conserving scenery and quality of life
  • opportunity to work with a private, regional land trust, who may be able to bypass unintended delays often associated with government agencies
  • avoiding developments that are likely to be costly to municipalities or other agencies to service (e.g., with roads, sewers, school buses, etc.)
  • Financial or tax benefits

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Tax Benefits of Donations of Land or Conservation Easements

A summary of financial benefits from donations of land or conservation easements may include any of the following:

  • Outright cash or land gifts to land trusts may entitle the donor to a charitable deduction on their income taxes depending on the circumstances
  • Property owners may be able to reduce their property taxes due to the fact that the purchase price of these properties are frequently unrecorded.
  • Landowners who donate conservation easements may qualify for an income tax deduction if it is a charitable donation
    Property tax assessments may be based on the development potential of the land. The appraised value of the property on which an easement has been placed may be lowered if the easement restricts future development of the land.
  • Reduced property tax liability can reduce the land transfer taxes upon sale, and reduce any probate fees for transfers of property through a Will, and reduce capital gains when the land is sold or transferred or passed on through a Will
  • In certain circumstances, conservation easements can be sold to an eligible organization to reduce debt and to provide return for non-farming heirs.

Besides helping you conserve your land, a conservation easement can also relieve you of certain land taxes and income taxes, depending upon your particular circumstances. When a conservation easement (or other property) is donated to a conservation charity such as EALT, we will issue a tax receipt. You would then use the receipt to claim a credit (or a deduction for a company) to reduce your income tax. Under new tax rules, you can get full credit for a donated easement’s value.

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Tax Benefits for Ecologically Sensitive Donated Lands

You may be able to claim your donation against a larger portion of your income if an easement protects lands that qualify as “ecologically sensitive” under the Federal Income Tax Act. In 2006, such donations of ecologically sensitive lands made under the Ecogift program were exempt from capital gains tax. Such tax advantages can result in significant benefits, and could be spread over 5 years.

When a conservation easement is donated, such a donation may qualify as an ecological gift – the easement holder is considered to be the recipient organization.

The federal “Ecological Gifts Program“http://www.cws-scf.ec.gc.ca/egp-pde/ provides tax incentives for gifts of land or conservation easements that qualify as ecologically sensitive.

  • What is an Eco-gift?: A donation of land or conservation easement that has been certified as ecologically sensitive according to criteria”.
  • Income Tax Benefits: The Income Tax Act allows a tax credit or deduction to donors, and reduction in taxable capital gains from sale of the property. Example of benefits are provided as scenarios.
  • How do the tax benefits work?: corporate donors may deduct the amount of their gift directly from their taxable income; and individual’s gift is converted to a non-refundable tax credit. Unused portions of this credit/deduction may be carried forward for up to 5 years, and has no tax on capital gain.
  • Split Receipting: Split Receipting is where a donee (a qualified agency such as a land trust) may issue a tax receipt to the landowner for the eligible portion of a land donation (the difference in total value of the gift and the value of any consideration received by the donor for that gift).

Further information on these and other related topics can be found on the Ecological Gifts Program website

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Conservation Easement Monitoring

Appropriate monitoring is one of the requirements stipulated in the Canadian Land Trust Alliance’s (CLTA) Standards and Practices.

When EALT accepts the donation of a conservation easement from a land owner, one of the obligations we take on, is the responsibility of protecting the land’s conservation values over time. We ensure the terms agreed upon in the easement are maintained, even as landowners change. We accomplish this task by monitoring the property on an annual basis.

More information is available about Conservation Easements is available in Conservation Easements in Alberta Programs and Possibilities.

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Further Information

Although landowners considering donating a Conservation Easement will want to consult a lawyer before they sign a CE agreement, there are some excellent papers on various aspects of Conservation Easements provided by the Environmental Law Center. These include:

Additional papers and discussions which may be of interest are listed below.

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Less than 10% of Canada’s land, and 1% of its water is protected