A Case Study in Green
The utility of land is a primary factor in measuring land value. By utility, I mean what can you do “on or with” a land tract. Clearly, land use zoning also plays a critical role in this equation. Fundamentally, we study the intersection of land use and land utility in determining land value. This is the essence of the work we do for each client and it underwrites the knowledge The Land Group provides.
While there are many land uses in the Chesapeake Bay watershed, A primary land use is land conservation or protected lands. Today, approximately 9.2 million acres of protected lands exist in the watershed. Protected lands are defined as those land tracts encumbered with a permanent conservation easement. Overall, this accounts for nearly 22 percent of the total land area in the 5 state Chesapeake watershed. To put this in perspective, protected lands encompass nearly twice the landmass that developed land includes throughout the watershed. Less than 12 percent of the watershed land use is developed. This is not to say land-use change is not creating challenging situations to protect natural habitats in the Chesapeake, but it does provide the proper lens through which to review land use and land-use change.
The act of protecting or conserving land can take a myriad of forms beyond permanent land protection. Additional conservation programs offered are short-term,10-15-year programs provided through USDA Farm Bill programs and other private conservation organizations focused on private lands. Through these practices, programs pay for land conservation through annual or one-time financial payments to restore, conserve and protect natural resources and ecological function in the watershed.
Since 1997, I have worked with federal, state, and private organizations on behalf of private landowners. Today, natural resource professionals refer to the concept of “monetizing ecosystem services” as a manner to properly align incentives to encourage landowners to act on behalf of wildlife and natural resources to provide clean water, clean air, and a sustainable environment for future generations. No matter the word choice, these efforts have been ongoing since the first Farm Bill was passed to conserve soil after the Nation’s Dust Bowl period of the early 1930s. As an advocate for land and resource conservation over the past 20 years, my work has been witness to countless examples of how conservation programs aimed at “greening the landscape” assist landowners in creating a “financial greening” as well.
Below is a “Case Study in Green”. The specific land parcel and landowner’s personal information is not shared in order to protect their privacy. While there are many examples of larger farms where these practices are applied the case study is being demonstrated through an 80-acre farm on the Eastern Shore. The resource management decision is described for each step the landowner made as well as each financial outcome of those decisions.
Subject Farm: 80 Acres
Initial Land Use: 40 acres Tillable and 40 Acres Woodland – Mix Hard and Soft Wood, Farm Improved By Small Turn Century Farm House and Barns
Resource Management – Timberland and Forest Management: Timberland sale was conducted focused on the sale of saw log size yellow pine while leaving some “keystone” yellow pines as seed trees per acre and virtually all hardwood species to manage long term for upland wildlife.
Resource Outcome: Targeted hardwood forestland management strategy while allowing for some yellow pine regeneration long term. Long-term goal to manage for diverse timberland species mix.
Financial Outcome: Net $70,000 Income.
Resource Management – Farmland and Farm Bill Programs: In review of the farmland soils it was determined the heavy silt loam soils were at best marginal farmland and better suited to wildlife habitat. To maximize the value of the habitat created, wetland restoration practices were designed for the land to create both managed and natural wetland systems. These habitats create restore lands for wintering waterfowl, wetland-dependent wildlife, as well as whitetail deer and wild turkey. Nearly 10 acres of shallow water managed impoundments were constructed in addition to more than 20 acres of upland and natural wetland pools were put back on the landscape.
Financial Outcome: The Farm Bill program utilized provided cost share for approximately 90% of the installation cost of the habitat restoration and through bonuses offered by the program reduced the total financial commitment to less than $5,000 for project construction costs that exceeded $75,000. Additionally, farm income was increased from $50 per acre or approximately $2000 annually to over $4,000 annually. Farmland income therefore more than doubled.
Resource Management – Residential Use & Conservation Easement: It was determined by the landowner residential use for the farm was limited due to the rural nature of the area and together with their goals for the farm, concluded only one residential home was required for the farm. Through work with local land trust a conservation easement program was identified that fit the goals of the landowner to reduce the development rights to one residential unit while creating a permanency to the habitat restoration measures put in place on the farm. Through this practice, the landowner received a conservation easement payment.
Financial Outcome: Net $160,000 Income. Additionally, the landowner conducted some improvements to the property requiring an appraisal at the completion of the habitat work and land conservation easement. The farm appraisal completed yielded a $420,000 value. Clearly, the habitat improvements, conservation easement and timberland management did nothing to reduce the farm value long term and it is arguable the habitat improvements added value to the farm thus overcoming any impact of the forest management or removal of development rights through the conservation easement.
Financial Outcomes
Acquisition Price: $360,000
Net Income from Management Practices: $160,000
Adjusted Basis of Farm Acquisition: $130,000
Return on Investment (ROI) = $290,000 Appraised Basis/$360,000 Initial Acquisition x 100
Return on Investment (ROI) = 81%
In conclusion of the case study, it is overwhelmingly clear the conservation measures and practices placed on the farm created only positive financial outcomes while increasing the natural wildlife habitats on the landscape. In fact, the return on investment exceeded 80% on the initial investment after only 4 years. As a result, the landowner benefits from improved opportunities for hunting while managing the farm long term for wildlife with the knowledge they have added financial value and net income to the farm as well.
These practices can be completed on nearly any farm on both smaller and larger scales throughout the Chesapeake Bay region. I have provided guidance to assist landowners on obtaining the necessary technical services to accomplish this work and in some cases provided the technical services personally. Several of our team members a The Land Group are seasoned in the implementation of conservation programs and we would welcome the opportunity to assist you or guide you to the proper conservation professional to help you accomplish your goals for your land.
