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Stewardship and Incentives Overview

Photo: courtesy of USDA NRCS

This overview describes the basic categories of conservation incentives and gives examples. For a more complete list of programs, click here.

Private landowners are key participants as the Washington Biodiversity Council develops its 30-year Strategy to conserve, steward, and restore Washington’s biodiversity.

Many plant and animal species, riparian zones, wetlands, native plant communities, and sensitive habitats occur on the more than 60% of the Washington’s land that is privately owned.

Landowner incentives, conservation markets, and stewardship tools such as conservation easements and transfer of development rights are some of the avenues that hold the most promise to encourage landowner participation.

What do we mean by landowner incentives, conservation markets, and stewardship tools? It’s useful to think of three broad categories, while recognizing that they can overlap.

• Landowner Incentive Programs offer awards or services that support conservation actions by individual landowners.



• Conservation Markets encourage the production and sale of conservation products from private lands.



• Stewardship Tools include land sale or exchange, conservation easements, and transfer or purchase of development rights.

Incentive Programs

More than 70 governmental and foundation programs offer some form of incentive to private landowners in Washington to promote conservation activities on their land. Incentive programs are typically categorized as:

• Direct financial incentives, including grants, subsidized loans, cost-shares, and leases.
  
  
• Indirect financial incentives such as property or sales tax relief.



• Technical assistance, including referral services, education and training, and design assistance.



• Recognition and certification for products or operations.

Direct financial incentives provide monies to protect, restore, and enhance fish and wildlife habitat, to improve water quality, or to improve land management. They may be grants, subsidized loans, cost-shares, or leases.

In Washington State, the following programs supply the highest dollar amounts of direct financial incentives.

Farm Bill Programs

This suite of programs offered by the federal government was authorized in the 2002 Farm Bill. The programs provide direct payments to farm and forest owners for conservation practices.

Administered by the Natural Resources and Conservation Service and the Farm Services Agency, these programs are collectively funded at more than $100 million per year in Washington. They support hundreds of projects annually.

Many Farm Bill programs focus on taking land out of production (via long-term leases) and providing cost-share funding to restoration projects.

Salmon Recovery Funding Board

The Salmon Recovery Funding Board (SRFB) provided $26.6 million in its most recent funding cycle. Local and regional citizen groups develop plans to protect and restore salmon habitat. SRFB reviews the projects and provides funding that comes from state general obligation bonds and the federal Pacific Coast Salmon Recovery Fund.

Washington Wildlife and Recreation Program

The Washington Wildlife and Recreation Program provides grants for the acquisition and development of local and state parks, water access sites, trails, critical wildlife habitat, natural areas, and urban wildlife habitat. It also provides funding for the protection of farmland and riparian areas and the improvement of state lands.

U.S. Fish and Wildlife Service

The U.S. Fish and Wildlife Service administers several programs aimed at implementing habitat conservation plans for endangered species.

The Western Washington office supplies a fact sheet (pdf) on available grants. The Eastern Washington office lists grants on its website.

Indirect financial incentives include tax assessment programs that reduce property taxes for landowners participating in conservation programs, and income tax credits or deductions.

The following tax programs are among the most commonly used indirect financial incentives in Washington State:

Current Use Taxation (CUT)

Current Use Taxation (CUT) is authorized in Washington State law (RCW 84.34), and allows counties to assess open space, farms, and forest parcels at their current use value rather than highest and best use.

In 2005, more than 50,000 parcels were enrolled in current use taxation programs, resulting in a decrease in the taxed value of enrolled property of more than $9 billion.

Public Benefit Rating System (PBRS)

The Public Benefit Rating System (PBRS) is a tax reduction program specifically directed to conservation. The PBRS statute in Washington State law (RCW 84.34.055) allows counties to provide property tax relief on a sliding scale for landowners participating in conservation actions. Participating landowners receive tax reductions of up to 90% of land value in the 16 of Washington’s 39 counties that participate.

Federal Tax Credits or Deductions

Federal tax credits or deductions are available under certain conditions for landowners who wish to donate or sell their land for conservation purposes to a land trust or a government. Many options exist; a common strategy is a conservation easement. See also Stewardship Tools.

Technical Assistance may include help with developing conservation plans, applying for permits or programs, and understanding regulations.

The following supply the most far-reaching technical assistance programs in the state.

Conservation Districts

Conservation Districts distribute information on the Farm Bill programs and other financial incentives. Staff of the 48 districts provide technical advice and assistance on the design and implementation of conservation projects. Activities are coordinated by the Washington Conservation Commission.

NRCS Technical Assistance

The Natural Resource Conservation Service (NRCS) provides on-the-ground technical assistance that can help inventory natural resources and apply conservation practices to protect and enhance those resources. The main directive of the NRCS is to provide technical assistance to landowners, groups, organizations, tribes, and local and state government for the purpose of conserving and managing soil, water, and natural resources.

Washington State University Cooperative Extension

Washington State University Cooperative Extension has offices in all 39 counties. Faculty conduct education programs that include topics in agriculture and natural resources. Conservation oriented programs include agricultural best management practices, the role of wetlands in water quality, wildlife and fisheries management, and forestry and rangeland management.

Regional Fisheries Enhancement Groups (RFEGs)

Regional Fisheries Enhancement Groups work to recover salmon in their own communities across the state. The 14 RFEGs create partnerships with local, state, and federal agencies; Native American tribes; local businesses; community members; and landowners. RFEGs help with restoration, education and monitoring projects.

Conservation and land trust organizations

Numerous organizations in Washington provide technical assistance and education for biodiversity conservation. Most Washington State land trusts are members of the Land Trust Alliance.

Local governments and private organizations may also supply technical assistance.

Recognition and Certification programs reward producers for pursuing conservation activities. Some local governments have these types of programs. Several private organizations administer certification programs for forestry and agriculture, and a few private recognition programs exist.

The following are among the best known statewide recognition and certification programs in Washington.

Food Alliance

Food Alliance operates a voluntary certification and eco-labeling program based on standards developed to define socially and environmentally responsible agricultural practices.

Northwest Certified Forestry

Northwest Certified Forestry is a program of the Northwest Natural Resource Group. It connects buyers of wood products to foresters who have achieved Forest Stewardship Council (FSC) certification—the highest standard in sustainable forest management.

Organic Certification

Organic certification is one of the most well known programs. Administered by the Washington State Department of Agriculture, it requires producers to integrate cultural, biological, and mechanical practices that foster the cycling of resources, promote ecological balance, and conserve biodiversity.

The Salmon-Safe Label

Organized by Stewardship Partners, the Salmon-Safe label shows consumers that an agricultural product was grown with salmon in mind. Stewardship Partners works with farmers to promote sustainable practices that protect water quality and habitat for native salmon as well as other fish and wildlife. Dozens of agricultural products from now carry this label.

Stewardship Forests

Photo: Department of Natural Resources

The Forest Stewardship Program of the Department of Natural Resources offers a “Stewardship Forest” recognition sign and certificate for those who are actively implementing their Forest Stewardship Plan.

Vim Wright Stewardship Award

The Vim Wright Stewardship Award is sponsored by Farming and the Environment to honor farmers and ranchers whose stewardship practices are protecting the quality of our food and the long-term health of Washington's ecosystems. The award publicly recognizes and financially rewards Washington state stewardship farmers.

Conservation Markets

Conservation markets are financial markets for restoration and conservation “products” produced on private land. The demand often originates with a regulation or mandate that requires a conservation action to compensate for environmental damages.

For example, the largest conservation market in the world—although not yet a market in Washington—is that for carbon credits. It is driven by regulations on greenhouse gas emissions under the Kyoto protocol. Other markets are driven by water quality compliance and environmental mitigation requirements.

Several types of conservation markets exist. Among them are:

• Environmental mitigation



• Mitigation and conservation banks



• Biodiversity offsets



• Payment for ecosystem services



• Tourism

Environmental mitigation. Projections point to a substantial demand for environmental mitigation. The best opportunities for large-scale restoration projects are concentrated on rural private land, so Washington farmers and forest owners will be in a favorable position for creating conservation and restoration products.

The most familiar type of environmental mitigation is wetland mitigation, and recently there has been a renewed interest in wetland mitigation banking.

Mitigation and conservation banks. Wetland mitigation banking creates an economic incentive for restoring, creating, enhancing and/or preserving wetlands. Wetland mitigation banks typically involve the consolidation of many small wetland mitigation projects into a larger, potentially more ecologically valuable site. Wetland banks require up-front compensation prior to affecting a wetland at another site.

Washington State’s first wetland bank was approved in late 2005 by state, local and federal agencies under a Department of Ecology pilot wetland mitigation bank program. They signed a memorandum of agreement with Habitat Bank LLC for a 225-acre project located near the Snoqualmie River just north of the King County line.

The privately funded project is open for business. Developers of certain smaller tracts in nearby locations will have the option of buying credits to set aside some of the bank's wetland to satisfy their own obligations to mitigate—or offset—the loss of wetlands resulting from their developments.

Conservation banking broadens the idea of a bank beyond wetlands, to consider other types of environmentally important lands.

Biodiversity offsets. Biodiversity offsets are another type of environmental mitigation. The City of Bainbridge Island is working with the international Business and Biodiversity Offset Program to explore the use of biodiversity offsets as it wrestles with the impacts of increasing development pressure.

Payment for Ecosystem Services. An innovative market approach is Payment for Ecosystem Services (PES). PES schemes reward those whose lands provide ecosystem services, with subsidies or market payments from those who benefit.

Tourism. Ecotourism and agri-tourism can provide markets for landowners and enhance rural vitality.

Stewardship Tools

These tools are primarily ownership and management options that can be applied to address stewardship needs. They include:

• Land sale or exchange



• Conservation easements



• Transfer or purchase of development rights

Land sale or exchange. Outright sale of land to a government body or a conservation organization is well known way of conserving land. With this option, full price is paid for the property and the buyer takes possession of the property upon completion of the deal.

This gives the purchaser the most flexibility in implementing a conservation plan. Such plans might include habitat restoration or enhancement and provisions for public access. However, many landowners don’t wish to sell their land or to take it out of forestry or agricultural production. In addition, it is often challenging for government agencies or conservation organizations to obtain funds for direct acquisition.

Variations on land sales provide some alternatives. Sale and exchange options include: bargain sale, full market value, installment, option to buy, reserved life estate, right of first refusal, and self finance.

Land exchanges are another option that provides the landowner full compensation for transfer. They involve swapping of “like kind” properties with an interested party such as a government agency or conservation organization. The exchange may be for equal values or may be equalized by cash payment.

Conservation Easements. Conservation easements can provide considerable protection for lands with high biodiversity value. They are most commonly used when outright donation or sale of property to an appropriate entity is not preferred.

Conservation easements allow the property owner to retain ownership of the land and often receive property tax deductions, while legally assuring that the land will be preserved. Conservation easements can either be donated or sold.

A conservation easement is a binding agreement and transfer of certain property rights between the private landowner and another party, the “holder.” Conservation easements restrict the type and amount of development that can take place on the land, often extinguishing development rights completely.

Easements are recorded on the deed and therefore “run with the land,” applying to both the present and all future owners.

Restrictions are placed on the property to retain the natural, scenic, historical, or open space characteristics of the land.

Conservation easements work by separating the development rights of the land from the land itself. Easements are a highly flexible conservation option. Restrictions placed on the property can be tailored to the needs of the landowner and the unique natural attributes of the property.

To set up a conservation easement, a “holder” or “grantee” must be identifiedas the willing recipient responsible for oversight of the terms. This needs to be a government agency or a private conservation organization such as a non-profit land trust that is interested in preserving the land.

It is the holder’s responsibility to ensure that present and subsequent owners of the property abide by the terms of the easement. They monitor the property and enforce the easement restrictions if necessary.

An easement may be placed on all or part of the property. For example, an easement may be used to protect only the wetlands portion of a property, while the property owner retains the ability to develop the rest of the land.

Often easements are used to acquire a particular feature or enhance the protection of privately owned land adjacent to parks or other protected natural, scenic, or wildlife areas. Conservation easements for wetlands are most effective when they include some adjacent property to form a buffer against non-compatible uses and impacts.

The property owner retains full right to sell the property. The land under easement is transferred with the title of the property when the land is sold or otherwise changes ownership. To the extent that subdivision is allowed, the conservation easement will continue to affect all the land.

Even if land use regulations change, conservation easements and their accompanying restrictions remain in place. While political administrations come and go, easements remain.

There are economic benefits for entering into an easement. A conservation easement may reduce the market value of the land to the extent that it limits development and potential use. A reduction in the market value will reduce the land’s assessed value, which may reduce property and estate taxes.

In addition, in the case of a donated easement, the landowner would be able to claim the donated value as a charitable contribution for income tax purposes.

Read about how two Thurston County landowners used a conservation easement to help preserve their family farm.

More information about conservation easements can be found on the websites of the Land Trust Alliance and The Nature Conservancy.

The American Farmland Trust has recently released two reports about what makes a successful agricultural easement program.

Federal programs that encourage conservation easements include:

> Farm and Ranchlands Protection Program (FRPP)
> Grassland Reserve Program (GRP)
> Wetlands Reserve Program (WRP)
> Forest Legacy Program

State programs that encourage conservation easements include:

> Farmland Preservation Grant Program
> Riparian Habitat Protection Grant Program
> Salmon Recovery Funding Board (SRFB)
> Washington Wildlife and Recreation Program (WWRP)
> Forest Riparian Easement Program (FREP)
> Riparian Open Space Program

Local programs that encourage conservation easements include:

> Conservation Futures

Transfer or Purchase of Development Rights. Transfers or Purchase of Development Rights (TDRs or PDRs) relocate potential development rights from an area where resources are environmentally sensitive to an area where increased development will not harm the landscape. This is done by actually transferring the right to develop from one location to another.

TDRs allow land to remain in the private sector while avoiding development on environmentally significant sites. The TDR works by assigning credits to property owners in an area of ecological significance or a conservation area experiencing strong development pressure. These credits can then be transferred to designated growth areas.

Developers in designated growth areas can purchase the necessary credits from the owners of the conservation area and thus build to a higher density than is usually allowed.

Purchasing transferable development rights has been frequently applied to protecting farmland. Programs are set up in local communities to compensate willing landowners with cash for some or all of the difference between their property’s urban development value and its agricultural value.

Use of this method may result in a reduction of property taxes of the “donor” after the transfer of the development credit.

More information about transfer of development rights can be found on the websites of King County and the Cascade Land Conservancy.

Two of the best known governmental programs in Washington State concerned with acquisition, easements, and development rights are:

Conservation Futures Programs

The Conservation Futures Programs are acquisition programs in counties applying the state Current Use Taxation law (RCW 84.34.200). It provides authority for local governments to raise funds for open space preservation through purchase of easements, development rights, or outright acquisition.

Counties are authorized to levy a property tax of up to $0.0625 per $1000 assessed valuation. These funds may be credited to a special Conservation Futures fund and are usually administered by county parks and recreation departments.

Counties in Washington with conservation futures levies supporting active preservation programs are: Clark, Ferry, Island, Jefferson, King, Kitsap, Pierce, Skagit, San Juan, Snohomish, Spokane, Thurston, and Whatcom.

Washington Wildlife and Recreation Program (WWRP)

The Washington Wildlife and Recreation Program provides grants to state agencies or local communities for a broad range of land protection, park development, farmland preservation, habitat conservation, and outdoor recreation activities.

It has two goals: to assist with rapid acquisition of the most significant lands for wildlife conservation and outdoor recreation before they are converted to other uses; and to develop existing public recreation lands and facilities to meet present and future needs.

Awards for acquisition or improvement of property fall into four categories: Habitat Conservation, Outdoor Recreation, Riparian Protection, and Farmlands Preservation. Tribal, state, and local governments are eligible for grants. Land trusts and other nonprofits have been successful partners with eligible public agencies.

WWRP requires prospective participants to complete an outdoor recreation/habitat conservation plan. Unless specifically excluded, all properties acquired and all lands developed must remain in the public domain in perpetuity or be replaced with a project of equal or greater value and utility.

The program can provide landowners with financial compensation and potential tax benefits in exchange for outright acquisition or long-term conservation easements by a government agency.

Definitions:

Bargain sale: The landowner agrees to sell the land to a conservation organization or government agency at a price below the full market value; the difference between the full market price and the selling price becomes a donation. >back

Conservation easement: A real property right and legal agreement between a property owner and a qualified conservation organization or government agency that restricts certain uses of the land. Only perpetual conservation easements can provide tax benefits. >back

Cost-share: The practice of sharing the cost of a project, usually between a program provider and a landowner. Cost-shares can require different percentages from participants. >back

Ecosystem services: Ecosystem services: Services that ecosystems such as wetlands, forests, grasslands, and oceans provide to human beings. These include water filtration, climate regulation, nutrient cycling, pollination, pest control, disease regulation, and flood control. >back

Full market value sale: The landowner receives full market value for the land. >back

Grant: Funds given for a specific purpose. >back

Habitat Conservation Plan (HCP): Landowners who wish to conduct activities on their land that might incidentally harm (or "take") wildlife that is federally listed as endangered or threatened must first obtain an incidental take permit from the U.S. Fish and Wildlife Service. To obtain a permit, the applicant must develop a Habitat Conservation Plan (HCP), designed to offset any harmful effects the proposed activity might have on the species. The HCP process allows development to proceed while promoting listed species conservation. >back

Highest and best use: This use results in the maximum market value for the property as well as being legally allowable, physically possible, and having demand in the marketplace.
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Installment sale: An outright sale of property where all or part of the purchasing price is deferred and paid in successive years. There are two types of installment sales: In one, a price is agreed on, title to the entire property is transferred, and payment is received in installments. In the other, a price for the entire property is agreed on, but the property is physically divided to transfer title in stages with payment. >back

Mitigation: Restoration, enhancement, or creation of functions and values that are lost on converted land. >back

Option to buy: A contract between the owner and a potential buyer that states the buyer may purchase the property at an agreed upon price within a certain period of time, often ninety days to a year. The buyer makes a payment for this option that if not exercised, is forfeited. >back

Reserved life estate: The landowner sells the property to an agency or conservation organization with the agreement that the owner, and/or specified heirs, may continue to use the land during their lifetimes. >back

Right of first refusal: This is a legally binding agreement which takes effect once the property is placed on the market. It specifies that a particular conservation organization or agency is given the right to match a bona fide purchase offer made by another buyer within a given period of time. >back

Self finance: Where the owner is in a position to do so, they may choose to assist the purchasing organization or agency finance all or part of the sale. Two approaches used are the balloon note and interest only financing. >back

Wetland bank: An existing wetland restoration project that developers whose projects require wetland mitigation may buy credits in, instead of doing the specialized work on their own. >back