The Conservation Easement Tax Credit:
20 Years of Conservation Success in Colorado

Colorado is known for its diverse and iconic landscapes. These lands fuel the state’s economy through outdoor recreation, tourism and agriculture. Because of the economic, social and ecological benefits it creates, conservation has long been a priority for Coloradans. Investment in conservation of Colorado’s natural areas, and the resulting protection of these lands into the future, have been and remain primary goals of sound public policy. Conservation easements and the conservation easement tax credit are the primary tools to achieve these goals.

What is a conservation easement?

A conservation easement is a voluntary legal agreement between a landowner and a qualified conservation organization, typically a land trust or a public agency. The conservation easement restricts use of the land (for example, prohibiting building on the land) in order to protect the property’s conservation, agricultural and scenic values in perpetuity. The landowner still owns the land and can use, sell or transfer it. Conservation easements are flexible and tailored to meet the landowner’s needs and wishes.

What is the conservation easement tax credit?

When a landowner protects property by donating a conservation easement to a qualified land trust, the landowner’s charitable act qualifies him or her for a transferable state income tax credit. The state’s program enables the landowner to turn a portion of the equity he or she has in the land into a marketable tax credit – and taxpayers seeking to lower their tax liability can purchase the tax credit from the landowner. The value of the credit is up to 90 percent of the donated property value. The credit cap is $5 million per easement. The state has allocated $45 million for the tax credit program.

Why does the conservation easement tax credit matter?

There is real public benefit that results from investing in conservation easements. To date, land trusts and their partners – aided by tools such as conservation easements and the tax credit – have helped families conserve more than 3 million acres across Colorado. The benefits are economic as well as environmental. A 2018 study found that for every $1 invested in conservation through the tax credit, the people of Colorado receive up to $12 in economic benefit through the conservation of prime farmland, habitat for Colorado’s wildlife, and land along streams, lakes and rivers.

Conservation easement tax credits help Colorado families stay in production on their farms and ranches, and maintain their land for future generations. The benefits are particularly apparent in rural communities whose economies are rooted in local agriculture. The tax credits also protect our state’s wildlife habitat, including protecting habitat necessary to support hunting and fishing. And they help sustain the natural open spaces that Colorado is known for, including providing access to that open space for outdoor recreation and tourism purposes.

Finally, a 2020 survey showed that 81 percent of Coloradans say that issues involving clean air and water, wildlife and public lands are important compared to other issues when deciding whether or not to support an elected official, and 69 percent consider themselves conservationists. The conservation easement tax credit program catalyzes conservation – a clear priority for Coloradans – by helping to ensure that more conservation takes place and that currently protected landscapes continue to stay that way.

Now more than ever.

The conservation easement program and the tax credit have helped Coloradans through a recession before. This critical tool is needed now more than ever as communities plan for economic recovery.

Between the 2008 recession and today, families have leveraged the conservation easement tax credit to stay on their land and keep local agriculture alive. Landowners have used the credit to conserve critical wildlife habitat and open spaces that define our state. Communities have been able to use conservation to acquire properties that would have been developed and instead turn them into thriving public open spaces for outdoor recreation. Now more than ever, the people of Colorado need conservation as a resource for a path forward. Through conservation, the lands, waters and wildlife that make Colorado so special will be here for future generations.

Sources:

CSU Study: Investing in Colorado; Colorado’s Return on Investments in Conservation Easements: Conservation Easement Tax Credit Program and Great Outdoors Colorado.

Colorado College’s State of the Rockies Project, 2020 Conservation in the West Poll.

Colorado Division of Conservation: Conservation Easement Oversight Commission: Learn more here.