The Dollars and Sense of SSGF Term Conservation Easements
The Dollars and Sense of SSGF Term Conservation Easements
The Saskatchewan Stock Growers Foundation (SSGF) is working to change the landscape both literally and economically when it comes to conservation programming. Their historic Term Conservation Easement (Term CE) program brought a new definition to flexible grassland programming and is changing the way landowners can value the ecological goods and services that their rangelands provide.
When considering a Term Conservation Easement, there are numerous factors to take into account before moving forward. For ranchers and landowners, the program needs to fit both their short- and long-term goals for their operation, allowing continued use of their rangelands under easement. From the SSGF perspective, the conservation goal of a Term CE is to protect the natural integrity and ecological health of native grasslands, preventing destructive activities while maintaining the land as a working landscape. SSGF understands that sustainable grazing is integral to maintaining native grasslands in good condition and the partnership between the rancher and the SSGF represents the shared value in keeping grasslands healthy and resilient with responsible grazing management principles.
A Term CE comes with 3 restrictions, no break, no drain and no development. Essentially, you are selling your development rights and putting a restriction on the potential land use for the length of the term easement. It’s important to note that if the land is sold while under easement, the future landowner is subject to the restrictions and conditions until the term easement expires. Because of this, you are potentially reducing the value of your land if you were to sell it while the easement is still active. This is what SSGF attempts to compensate for in the payment for the easement.
Getting to the dollar value of easements, the SSGF uses a fair market value approach to determine compensation, where a 3rd party appraisal is completed and determines the value of the land with and without an easement placed on the land. The difference between these two numbers is the value of the easement. With a Term CE, the actual compensation will change depending on the length of the term. A longer term easement increases the amount you will be compensated, as you are committing to protecting the grassland for a longer period of time.
SSGF also considers additional factors when determining easement value. Considerations like proximity to urban centers, areas that are at high risk of development like annual cropping or oil and gas, and areas with identified Critical habitat for Species at Risk, are in greater need of protection and may receive higher compensation.
Payments for Term CE’s are paid out in a lump sum once the easement is signed. From the valuations we have completed so far, payment for easements can range drastically depending on the term length, land value and the other factors. It is important to note each easement valuation is entirely site specific. This payment can be a nice boost whether you are looking to pay down debt, re-invest it or set something aside for retirement and the next generation. While this payment can be used for many things, it can also have tax implications for that operation. It is important that the landowner consults their financial advisor to ensure that this payment doesn’t put them in a risky position come tax season.
Once the term of the easement is over, the landowner then has the option to re-assess their land value and sign another easement, triggering another payment, or walk away and have all the land use restrictions lifted. At the end of the easement, SSGF is removed from the land title and the landowner once again has full flexibility to decide how their land is used. This program structure is unique because it allows multiple landowners and potentially, generations, to benefit financially from easements. Perpetual easement structure only pays the initial landowner and then every landowner afterwards still has to abide by the restrictions and not receive monetary compensation for the easement.
The Saskatchewan Stock Growers Foundation is continually working to deliver programs that work for Saskatchewan landowners. For many ranchers, Term CEs offer a flexible conservation option that provides financial return while maintaining ownership, grazing rights, and control of their land. Landowners that move forward with a Term Conservation easement showcase a strong commitment to grassland stewardship without permanently affecting future land use decisions which can fit well into succession planning for their operation. To learn more visit: Term Conservation Easements