Masters Thesis

Economic analysis of a conservation easement in the Jacoby Creek watershed

One of the greatest threats to forestland today is the increasing presence of people and houses creating potentially incompatible adjacent land uses — forestry and residential. Keeping large tracts of forest intact is beneficial for water quality, wildlife, aesthetics, general ecosystem health, and sustainable timber harvesting. A conservation easement is one tool available to landowners to ensure the perpetuation of forestland, open space, or other agricultural land. A conservation easement is a long term estate planning and land conservation tool whereby a landowner can voluntarily donate or sell the development rights associated with a particular piece of property. My study attempts to determine the economic benefits and costs resulting from the establishment of a conservation easement. Four alternatives are outlined and a cash flow diagram is constructed over a 10 year period for each option. A net present value is also calculated for each alternative. Land management options range from maintaining the current situation to maximizing profit from the land through timber harvesting and subdividing the land. A 50 acre piece of property in the Jacoby Creek watershed in Humboldt County, California is used as a case study for the four hypothetical situations. For the subject property and its owners, benefits such as income tax and estate tax savings are not great enough to make the creation of a conservation easement financially attractive. Perhaps if the property were larger and (or) more valuable, or if the owners had a larger annual income, the net present value for the easement alternatives would be greater.