MARGINAL PROPERTY TAX EFFECTS OF CONSERVATION EASEMENTS: A VERMONT CASE

Conservation easements allow landowners to transfer their land’s development rights to another entity, usually a nontaxable conservation organization. Conservation reduces the town’s tax base, necessitating a tax rate increase to maintain service levels. However, conserving land also decreases the supply of developable land and provides open space amenities that may be capitalized into the value of nearby properties. These effects may offset the decrease in the tax base caused by the easement. Using a sample of twenty-nine Vermont towns, we show that private conservation easements increase property tax rates in the short run, but are tax-neutral or tax-suppressing in the long run. Key words: conservation easements, generalized estimating equations, property taxes, time series. As our society urbanizes, open space preser-vation is an increasingly important regional and national policy issue. Nationally, 8.0 mil-lion acres of farmland and 5.2 million acres of forestland were converted to urban or sub-urban use between 1982 and 1992 (Vesterby et al.). In regions where land is scarce and population densities are high, the threat of congestion and loss of open space amenities leads to an increased desire for open space and farmland protection, and consequently to more organizations dedicated to land preser-vation (Albers and Ando). Public support for conservation programs has been registered at the ballot box, where three-quarters of ballot initiatives funding open space programs have been passed for amounts totaling $8.3 billion in 1998; $7.4 billion in 2000; and, despite a weak economy, $5.7 billion in 2002 (Land Trust Alliance, 2003). Conservation easements are a popular tool for preserving publicly valuable land because they allow municipalities to maintain contro