Farmers: Consider the tax and environmental benefits of a conservation easement

Increasingly, farmers and environmentalists are making efforts to meet challenges in farmland protection in new ways. Efforts are focused on the connections between traditional farmland protection, food security and economic development.

If you’re a farmer, it’s important to be aware of the ways you can help address the challenges faced in secure and affordable land access for food production, especially as a new generation of farmers shows greater interest in using environmental best practices to enable regional food security. One way is through a conservation easement.

The recently updated Green Legacies Guide, published by Give Green Canada, a project on the Tides Canada Shared Platform, describes pioneering giving options that can create foodland and farmland trusts. Although primarily directed for a B.C. audience, much of the content is applicable across the country.

Farmers increasingly face challenges in the transfer of land from one generation to another, and there are opportunities, through conservation easements, to combine land transfer with sustainability.

The Government of Canada provides the following example of such a donation:

Jack has been involved in mixed farming on a couple of sections of land in the aspen parkland region of Saskatchewan for the last 32 years. Although much of this land, which has been in his family for several generations, is in cultivation or used as hay land, two quarter sections remain in their original native prairie condition and include several aspen bluffs and wetlands.

Ducks, geese and other wildlife are abundant on these lands. Jack presently uses these native quarter sections for grazing cattle.

Jack has been captivated since childhood by the wildlife on this land and, like his ancestors, has always had a strong personal attachment to it. So, he manages his land in an environmentally sustainable manner.

In speaking with a local environmental group about proper habitat stewardship practices, he heard about the Ecological Gifts Program with Environment and Climate Change Canada.

He decides to give the group what’s known as a conservation easement on the two native quarter sections of land to protect the land from cultivation while still being able to use it for grazing.

A conservation easement is a legal agreement between a conservation body and a landowner that determines permissible and restricted land uses on that property. It is tied to the title of the land, sets out the terms of the easement, and is held and monitored by a conservation body. The conservation body can be a federal, provincial or municipal government body, an independent non-profit conservation organization, or a land trust.

The two quarter sections are in a rural area where there are no significant development pressures. The land, originally valued at $25,000, is now worth $60,000. (For capital gains purposes, in cases where a piece of property was owned prior to December 31, 1971, its adjusted cost base is determined as of that date.) The conservation easement has been appraised at $12,500. Taking into account the easement, the land is valued at $47,500. Jack’s annual income is $40,000.