New Tools for Conserving Lands

When the owner of Hawaii’s fabled 57,300-acre Kai Malino Ranch died, he bequeathed to his heirs two things: one of the most ecologically important places in the United States and a whopping estate tax bill.

The heirs want to keep this property intact, but without the necessary cash to meet their tax obligations, they have little choice but to sell. As a result, this property could be sold, subdivided and intensely developed, with obvious consequences for the extraordinary diversity of rare plants and animals that live there.

The real tragedy is that this case is repeated in hundreds of communities across the U.S. every year. The combination of high estate taxes and rising property values, particularly in places like California where many rural areas are now threatened with urban sprawl, is forcing landowners to sell wildlife habitat to the highest bidder. All too often that means transforming pristine land into tract housing.

Although there are no simple solutions to this problem, at least part of the answer must involve reforming the tax structure. Instead of the current system, which discourages landowners from doing the right thing for the environment, the tax code should provide incentives to manage and maintain ecologically valuable habitat.

Congress is considering proposals that would use the tax code as a weapon both to combat sprawl and to help reduce conflicts over endangered species. These proposals represent a practical and preventive approach to safeguarding America’s imperiled natural heritage.

Any meaningful tax reform for conservation should include three major components.

First, it should eliminate or reduce estate taxes for individuals who give up development and subdivision rights to property they inherit. Like the owners of Kai Malino, many of the heirs to these properties want to keep them intact and continue to operate them as ranches, farms, or woodlands. Why not exempt these people from estate taxes if they agree to keep land in a natural state permanently through a conservation easement?

This would counter development pressures that are fragmenting the American landscape, not only near urban centers but also in more remote areas. Indeed, from a conservation perspective, the subdivision and development going on across the rural West--what ranchers call “lights coming up the valley”--may pose an even greater threat to the environment than urban sprawl.

California, already a battleground over endangered species with its high population density and large number of rare species, would particularly benefit from tax relief for conservation-minded landowners.

A second component of this legislation should provide incentives or tax credits for private landowners who take active measures to protect endangered species that live on their property.

At present, the opposite is the case. Landowners know that finding an endangered plant or animal on their land can spell trouble. Anecdotes abound about the restrictions and regulatory headaches that landowners have faced in dealing with endangered species. Little surprise then that some people even have been known to dispose of endangered species found on their property to avoid complying with the law.

Most rural landowners want to be responsible stewards of the land. And with half of all endangered species living on private lands, we need to encourage more private conservation to create a legal environment in which landowners welcome the presence of a globally rare plant or animal on their land. Tax credits for habitat restoration and other activities that benefit imperiled species is the best way to affect this change at relatively low cost.

A third tax incentive for conservation would lower the capital gains tax for people who voluntarily choose to sell their lands to nonprofit organizations or to federal, state or local government agencies. Only ecologically significant lands--habitat for rare and endangered species--would qualify for this exclusion.

Taken together, this package of tax incentives offers a positive, reward-driven strategy for addressing the key environmental issue in this age of sprawl: balancing the imperative of protecting our rarest plants and animals with the demands of economic development.