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Tax Incentives and the Price of Conservation

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  • Dominic P. Parker
  • Walter N. Thurman

Abstract

We study the role of tax incentives in promoting a fast-growing and novel type of conservation: voluntary, permanent restrictions on private land use through conservation easements. In the United States, easements represent the largest charitable gift on a per-donation basis, but skeptics wonder if their tax preference merely subsidizes wealthy landowners rather than inducing conservation. We incorporate federal and state income tax codes into a calculator to quantify the after-tax donation price and demonstrate its sensitivity to landowner income and state and federal policies. Using a 1987–2012 panel, we measure the response of state-level easements to the price. Our large elasticity estimates, spanning −2.4 to −6.1, indicate that tax incentives induce conservation and do not merely subsidize it. We find no evidence that generous tax benefits have caused less strategic patterns of land conservation.

Suggested Citation

  • Dominic P. Parker & Walter N. Thurman, 2018. "Tax Incentives and the Price of Conservation," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 5(2), pages 331-369.
    • Handle: RePEc:ucp:jaerec:doi:10.1086/695615
    DOI: 10.1086/695615
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    Cited by:

    1. Chuan Yang & Mingfeng Li & Ziqi Wang, 2022. "A Bibliometric Analysis on Conservation Land Trust and Implication for China," IJERPH, MDPI, vol. 19(19), pages 1-18, October.
    2. repec:ags:aaea22:335832 is not listed on IDEAS
    3. repec:ags:aaea22:335462 is not listed on IDEAS
    4. Kalinin, Alexey V. & Sims, Katharine R.E. & Meyer, Spencer R. & Thompson, Jonathan R., 2023. "Does land conservation raise property taxes? Evidence from New England cities and towns," Journal of Environmental Economics and Management, Elsevier, vol. 119(C).
    5. Rissman, Adena R. & Morris, Amy W. & Kalinin, Alexey & Kohl, Patrice A. & Parker, Dominic P. & Selles, Owen, 2019. "Private organizations, public data: Land trust choices about mapping conservation easements," Land Use Policy, Elsevier, vol. 89(C).

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