In the crowded landscape of the eastern United States, large uninterrupted tracts of forestland grow increasingly scarce. Yet large parcels offer the best opportunities to manage for wildlife habitat, as well as for remote recreation and commercial timber production. Advances in conservation biology have moved us beyond the assumption that isolated reserves can meet critical habitat needs and have instead underscored the importance of buffers, corridors, and other broad landscape-scale protections. Landscape-scale conservation means thinking big, in terms of both acres and dollars.
In the East, turnover of large forestland parcels has accelerated over the past few decades. Each transfer increases the risk that large parcels will be converted to other uses or divided into smaller lots. By the same token, land transfers present an opportunity to bring land or development rights into public ownership, thereby assuring the provision of important public values far into the future.
Public funding at federal, state, and local levels, described in Conservation Capital: Sources of Public Funding for Land Conservation, will continue to provide the bulk of funds for land protection. But paying for large-scale conservation projects requires creativity in tapping many different sources of funds. In many cases, private capital can help stretch available public funds.
Private Funding for Land Protection
This report describes a variety of approaches to using private funds to finance forest conservation. Foundation grants and private donations are the most straightforward way to increase funding for conservation land purchases. In addition to providing outright gifts, foundations and individuals may provide capital through investment-donation hybrids that earn a modest return while simultaneously advancing philanthropic goals. Several foundations also help lower land purchase costs through revolving loan funds that provide rapid response, low-cost capital for land purchase. Beyond providing funds for land purchases, individuals or organizations may also donate land or easements directly, or may voluntarily commit to land management practices that protect important public values.
Several federal, state, and local tax policies increase the incentives for taxpayers to donate land or easements for conservation purposes or to commit to keeping their forestland intact. These policies include income tax deductions and credits at the federal and state levels, estate tax exemptions and use-valuation at the federal level, and use-value property tax at the local level. Special federal income tax provisions facilitate two new tools for forest conservation financing: new markets tax credits and community forestry bonds.
Revenue from Conserved Lands
For "working lands" that buffer fully protected reserves, revenue from land-based products and services can help nonprofit or public owners cover a portion of land or easement purchase costs. When land remains in private hands, diversification of land-based revenue allows landowners to reduce the intensity of timber harvest to comply with the provisions of conservation easements. Some land-based products and services fill new niches within established markets: certified forest products, non-timber forest products, recreational leases, or limited conservation-compatible development. Other sources of forest-based revenue depend on government regulatory policies that promote markets for ecosystem services like habitat mitigation and carbon emissions offsets.
Given the overwhelming financial need for land protection funds, strategies that reduce the costs of conservation will be equally important as those that raise new funds. One way to reduce conservation costs is to cooperate with private investors on land purchases. Timber Investment Management Organizations (TIMOs) are proliferating, and many of them view development rights or public access easements as viable revenue sources. TIMOs with socially responsible investors (foundations, pension funds, college endowments, or individuals) might even forego maximum short-term returns to support public forest benefits and long-term forest productivity.
Few socially responsible investors are in a position to purchase and manage forestland directly or even to influence policy for an existing TIMO. These investors need mechanisms to pool funds and provide forest management services. Conservation-based TIMOs (sometimes called Forest Investment Management Organizations, or FIMOs) can specialize in long-term sustainable approaches to forest management, including maximizing revenue from non-timber services.
Partial Protection -- Lower Cost
In addition to cooperating with forest investors and forming new investment entities, conservation organizations have also developed creative land transaction strategies that minimize the cost of protecting vast forested acreages. These approaches, which commonly involve less-than-full-fee ownership of property, may separate timber rights, public access rights, or development rights from ownership of the underlying land to target conservation dollars to the highest priority values.
As economists are fond of saying, "there is no such thing as a free lunch." Less costly conservation methods usually imply lower levels of protection or higher long-term monitoring costs or both. Each compromise aimed at lowering initial costs requires careful thought and a determination to learn from past experience. Along with examples illustrating each financing tool, we have summarized some lessons learned along the way.
