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Simultaneously Waste and Wasted Opportunity: The Inequality of Federal Tax Incentives for Conservation Easement Donations

18 Pages Posted: 26 Jun 2011 Last revised: 28 Feb 2015

Elliott Wolf

Stanford Law School

Date Written: July 5, 2011


In 2008, 3,095 taxpayers donated 3,158 conservation easements to non-profit organizations worth an aggregate $1.17 billion. For their generosity, these taxpayers have received and will receive myriad tax benefits, including federal income tax deductions for up to the full value of their easements, estate tax benefits for the amount their donations lowered the taxable values of their estates, and numerous other federal exemptions. Depending on where they reside, donors may also receive state income and property tax benefits.

This note examines the relationship between the peculiar financial circumstances of an easement donor (namely her income and wealth) and the ultimate value of her tax benefits. Consistent with deductions and exemptions generally, across two donors of identical easements, the Internal Revenue Code provides a greater aggregate subsidy to the donor with higher taxable income and the higher taxable estate. Unlike other deductions and exemptions, however, the differential far exceeds the difference in federal income tax brackets. For the “wealthiest” of donors, the aggregate subsidy approaches, if not exceeds, the full fair market value of the donated easement. For a donor with relatively little taxable income and no estate tax liability, however, the subsidy amounts to small fraction of the value of her easement.

Using studies of subjective preferences for non-use environmental goods (which establish that individuals’ interest in conservation does not decrease with their income or wealth), I argue that it is inefficient to grant larger incentives to wealthier donors of conservation easements than to poorer donors. I propose granting all donors a tax benefit worth a fixed percentage of the value of their donation and outline specific changes to the Internal Revenue Code that would bring about this change. I further argue that such a change is a prerequisite to the reform of the methodology for valuing conservation easements. I conclude with a discussion of the implications of equalizing incentives for the United States’ response to climate change.

Keywords: Conservation Easement, Internal Revenue Code, IRS, Tax

Suggested Citation

Wolf, Elliott, Simultaneously Waste and Wasted Opportunity: The Inequality of Federal Tax Incentives for Conservation Easement Donations (July 5, 2011). Stanford Environmental Law Journal, Vol. 31, No. 2, 2012. Available at SSRN: or

Elliott Wolf (Contact Author)

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States

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