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The Welfare Impacts of a Conservation Easement

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  • Vercammen, James

Abstract

The welfare impacts of a conservation easement are examined in a real options model. The size of the easement payment to the landowner largely determines the efficiency of the easement outcome. An inefficiently small payment results in states where rejection of the easement by the landowner reduces welfare. In contrast, an inefficiently large payment results in states where acceptance of the easement reduces welfare. This latter outcome emerges because the easement reduces the flow of municipal property tax payments, and the corresponding reduction in the provision of public goods is large relative to the environmental externality. A higher level of development value uncertainty raises the value of the real option to defer the land development decision, which in turn decreases the range of states for which acceptance of the easement by the landowner is socially desirable.

Suggested Citation

  • Vercammen, James, 2014. "The Welfare Impacts of a Conservation Easement," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 169813, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea14:169813
    DOI: 10.22004/ag.econ.169813
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    References listed on IDEAS

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    Keywords

    Environmental Economics and Policy; Land Economics/Use;

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