By Jesse J. Richardson - Published January 12, 2011

Much of the perversity with respect to perpetual conservation easements comes from the tax breaks. The Internal Revenue Code/land use policy is
much more nuanced than democracy/voter fraud. The Internal Revenue Code fails to recognize the nuances of land use planning, and that's one of the
problems in a long list. Donating a conservation easement is much different than donating cash to a church or a painting to a museum.
In general, I think taxes are a horribly ineffective and inefficient way to try to influence policy. The exception would be Pigouvian taxes to internalize externalities (if we could accurately estimate the correct amount of tax to impose).
The home mortgage interest deduction is a horribly distorting tax that increases the cost of housing and exacerbates sprawl so, yes, I oppose it (although I admit that I exploit it as much as possible, just as I purchase state conservation income tax credits in Virginia).
As for the charitable deduction in general, it indeed distorts the market. As with just about everything, direct payments by the government to charitable organizations would be be effective and more efficient. However, I think the deduction for conservation easements (and for donations of land that is then taken off the market for development) is much, much worse than the general charitable deduction for several reasons. First, it's very easy to value a cash contribution, and relatively easy to value most other contributions that have a an easily ascertainable fair market value. Conservation easements are difficult to value.
Secondly, even if we can estimate the fair market value, we desire donations of conservation easements for the conservation value, not the fair market value for development. There is no relationship between fair market value and conservation value. Third, to the extent that we calculate conservation value (which is difficult to calculate and which we generally do not calculate, except in only the most general of ways), we use gross conservation benefit instead of net conservation benefit. The Internal Revenue Code and Regulations presume, incorrectly, that prevention of development always (or almost always) yields a net public benefit. In other words, the IRS seems to think that conservation easements make development magically disappear. They don't. The development occurs across the street or down the road, somewhere in the region. The accurately determine the net conservation benefit of the donation, we would have to calculate the conservation benefit of not development the easement parcel, then subtract the conservation detriment of development the alternative site, where the development actually occurs. We would also need to discount many donations, since development would not occur in many years, if at all, on many conservation easement properties.
Like other charitable contributions, the public pays more for the donations of high income earners than of lower income donees. However, this effect is more distorting in the conservation easement context, given the fact that we base the deduction on fair market value for development as opposed to conservation values. We pay high income taxpayers more for conservation easements, even though there is no evidence that the land of high income earners yields more conservation value than the land of low income earners. In fact, high income earners are probably less likely to develop their property than low income earners.
The Internal Revenue Code also requires that the easements be perpetual. Not sure how the IRS has the expertise to determine that perpetual easements are "better" than term easements. I know that most on this listserv adamantly believe that perpetual is better, but land use planning theory and practice says otherwise. Comprehensive plans look 20 years into the future. Land use (and nature) is dynamic, conservation easements are static. Perpetual conservation easements inhibit or prevent adaptive management. Effects of global climate change, as well as other dynamic changes in nature, indicate that perpetuity is probably not a good idea. However, the IRS says that it has to be perpetual.
Unique to charitable contributions, many donations of conservation easements result in net public detriment instead of public good. It just makes no sense to incentivize donations of perpetual conservation easements with income tax deductions or credits.
I could go on, but I'll leave it at this. I am consistent in my opposition to the use of the tax code to effect social policy, but I think that deductions and credits for conservation easements are even worse due to the dynamics of land use. In an ideal world, we would use the tax code to raise revenue only. The tax code at present doesn't even do that very well.

Jesse J. Richardson, Jr.
Associate Professor
Urban Affairs and Planning
Virginia Tech