James Vercammen, Professor of Food and Resource Economics at The University of British Columbia's Sauder School of Business, will present on November 12th in Room 246 of the Agricultural Administration Building (2120 Fyffe Road) as part of the AEDE Applied Economics Seminar Series. His presentation will focus on his recent research: "A Welfare Analysis of Conservation Easement Tax Credits."
Abstract: The use of conservation easements to protect farmland, wetlands and forests has grown rapidly in recently years. Landowners who sign easements and thus forfeit their lands’ development rights are often provided generous tax benefits and may also receive a sizeable lump sum payment from the conservation agency. This paper uses a dynamic real option framework to theoretically examine the welfare implications of conservation easements. At the heart of the results are two offsetting features, one which makes the easement socially desirable because it eliminates the premature development externality, and a second which makes the easement socially undesirable because the conservation agency fails to fully account for landowner welfare and the land’s development value when the easement price is chosen. A number of unexpected results emerge, including a relatively ineffective easement tax credit scheme due to a capturing of the tax benefits by the conservation agency (i.e., pass-through), and an inefficiently high number of easement outcomes when the land’s future development value is highly uncertain.
The event is open to the Ohio State community and RSVPs are not required.