How conservation easements affect farm values

Posted by Preston Bristow on July 11th, 2007 filed in Farm Real Estate Market

I am often asked why farms subject to conservation easements seem to sell for prices similar to farms that are unencumbered by restrictions. After all, it only seems logical that farms that have had their subdivision and development rights removed or greatly limited should sell for less than farms that can be subdivided and developed.

In my experience conservation easements do definately have an effect on value, but the reason why that change in value isn’t always clear or obvious has to do with land use and location. For instance, a high quality working farm subject to a conservation easement in a farming area without development pressure is going to sell at a price similar to an unrestricted farm because the purchaser is a farmer who wants the productivity and is not paying for the development value. Similarly, a high-end ”estate” farm subject to a conservation easement is going to sell at a price similar to an unrestricted ”estate” farm because the purchaser is principally buying the buildings and doesn’t intend to develop the land.

Where conservation easements make the most difference is in areas where development pressures are high. For example, I rarely see a farm of 100 acres or more come on the market in southern Vermont unless it’s subject to a conservation easement. That restricted southern Vermont farm may be priced higher than other farms elsewhere in the state, and the easement may appear not to be lowering its value. However, the problem is that unrestricted southern Vermont farms rarely make it to the market. They get broken up into lots first. They actually sell for quite a bit more than a restricted farm but we don’t see it because they’re often parcelized slowly, piecemeal, over time. They don’t show up on the market in a way that we can easily recognize them and compare values.

This discussion of conservation easements doesn’t include a newer companion tool the Vermont Land Trust is promoting called the Option to Purchase at Agricultural Value. These “Ag Options” or OPAV’s do significantly lower the value of affected farms but they may have other drawbacks. Time will tell!

If you want to know more about land conservation and the ins and outs of conservation easements, the Vermont Land Trust website contains lots of good reading. And this year is the Vermont Land Trust’s 30th birthday! Vermont would not be as special a place without the Land Trust. Check it out at:

www.vlt.org