By Josh Eagle

Data on the average value of donated conservation easements reveal that donors are, on the surface, exceptionally generous in making gifts of easements. The only plausible explanation for these data is that donors’ incentive to donate is strongly linked to their subjective valuation of the costs of donating. Donating a dollar’s worth of easement is a much better deal than donating a dollar.

While it may be true that the public receives a benefit from easement donations, it also appears true that donors could be persuaded to donate for a much lower amount of tax benefit. In the absence of a market transaction,
there will never be accurate information on the price that the public ought to be paying. Overpaying for easements wastes public dollars that could otherwise be used for additional conservation.

While the exact amount of overpayment is unknown, there is no debating the fact that allowing deductions for easement donations provides inverse incentives to landowners. As between a landowner who is interested in developing his property and one who is not, the latter has a greater incentive to donate because his parting costs will be lower. Many years down the road, it may turn out that, when he made the donation, the donor underestimated the likelihood that he would later be interested in developing. In such cases, it is possible that the public will have made a good deal despite initially overpaying for the easement. However, the possibility that landowners will make such mistakes neither represents good policy nor is enough to justify the entire Section 170(h) program.

Cite as: Josh Eagle, Notional Generosity: Explaining Charitable Donors’ High Willingness To Part with Conservation Easements, 35 Harv. Envtl. L. Rev. 47 (2011).

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