For land professionals like myself, a common question we encounter is: How much do easements, such as the U.S. Fish & Wildlife Service’s Wetland and Grassland Easements, affect property values? Similar programs exist across farm country, including Minnesota’s Reinvest in Minnesota (RIM) Program and the USDA’s Wetland Reserve Program (WRP), among others. These programs vary in duration and the degree to which they encumber a property. For example, WRP agreements typically last 30 years, whereas U.S. Fish & Wildlife easements are perpetual—meaning they last forever.
In the Dakotas, U.S. Fish & Wildlife easements are perhaps the most notorious of all, so let’s hone in on that particular program.
Understanding the Easements
These easements have been in place for generations, dating back to the 1950s. The intent is clear: to preserve the Prairie Pothole Region and protect breeding habitat for migratory birds. The U.S. Fish & Wildlife Wetland Easement prohibits draining, burning, or filling designated wetland areas. It also generally restricts building structures on these wetlands, further limiting potential land use. In dry years, farming through these areas is allowed.
The Grassland Easement, on the other hand, permanently restricts cultivation. Additionally, haying is prohibited before a certain date each year. Like the Wetland Easement, no structures can be built on land under a Grassland Easement. These restrictions effectively ensure the land remains in a natural or semi-natural state indefinitely. Land with this sort of easement is grassland forever.
They Pay Really Well
The federal government has historically offered good money for these easements relative to market conditions. However, hindsight hasn’t always been favorable. Early easements were often sold for just a couple thousand dollars per quarter section. Today, I’ve seen payments reach up to 75% of what I believe the land might sell for. That’s a significant sum.
But does that mean the land’s value drops by 75% once an easement is sold? Probably not. The real issue, in my eyes, is the future unknowns. Once you sell an easement, it’s tough to know today what future opportunities you’ve given up. What if a solar or wind energy company wants to lease your land? What if a future innovation requires access to your land or its underlying resources? What if a new agricultural technology emerges that makes previously unusable land highly productive? What if your land becomes valuable for recreational or commercial development? By selling these easements, for the most part, you’re locking yourself out of those possibilities forever, and there’s nothing you or your heirs can do about it.
The Farmer’s Perspective
Most farmers dislike these easements. From a practical standpoint, they prohibit drainage improvements such as tiling or ditching, which can be a major roadblock for landowners looking to improve farmability. While farming through wetlands may be possible in dry years, the inability to make long-term improvements can be frustrating.
The impact on land value depends on the specific property. If two tracts of land are being sold—one with an easement and one without—and both would be ideal candidates for drainage, the easement will likely result in a significant discount on the selling price. However, if neither property has an outlet for drainage, an easement may not be viewed as negatively by potential buyers.
My Advice to Landowners
If you don’t need the income, my advice is to avoid these easements. One of the biggest advantages of owning land—whether it’s tillable farmland, land near a growing city, or property with natural resources—is the unknown future potential that land ownership can provide.
What if a gravel deposit is discovered on your land? What if a developer wants to build a rural housing community? What if there’s a shift in government policy that increases land value for conservation, but only for land without existing easements? What if renewable energy storage or new agricultural industries make your land more desirable? What if infrastructure expansion leads to a need for land acquisitions? These scenarios may seem hypothetical, but history tells us far-fetched ideas have come to pass.
If you’ve encumbered your land with a perpetual easement, you have no way to capitalize on those opportunities. Other conservation programs, such as CRP and WRP, typically have end dates or buyout options—but U.S. Fish & Wildlife easements do not.
The Debate Over Easement Buyouts
Recently in North Dakota, legislation was introduced to explore the possibility of easement buyouts or a way for landowners to opt out. While this idea makes sense in theory, it would be difficult to apply retroactively. How do you determine a fair buyout price for an easement sold in the 1970s for $2,000? Would the federal government have to reimburse those funds? Surely, it would have to be more than what they were originally sold for. Any effort to change these easements would require complex negotiations and significant compromises.
Final Thoughts
Conservation easements have their place, but they shouldn’t be so permanent. The lack of a buyout option or flexibility for unforeseen opportunities is a major downside and, in my opinion, too restrictive on landowner rights.
While every circumstance is different and it may be the best route for some, I believe landowners should think carefully before entering into these agreements. Short-term gain may not be worth the long-term cost.
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