Academic journal article Contemporary Economic Policy

Managing Public and Private Land through Partial Interests

Academic journal article Contemporary Economic Policy

Managing Public and Private Land through Partial Interests

Article excerpt

I. INTRODUCTION

Land ownership involves a bundle of rights including rights to graze livestock, grow crops, and build houses. This bundle may remain intact when an individual landowner holds all rights in a parcel of land (excluding eminent domain, police power, and other rights generally reserved by the government), or it may be allocated among multiple parties, both public and private.

Land use depends on how the bundle of rights is allocated among parties. Through legislation, regulation, and market participation, government agencies historically have influenced the allocation of these rights in order to accomplish public objectives. For example, the government used federal land grants to states, railroad companies, and individual homesteaders to encourage westward expansion in the 19th century. People generally received these grants on the condition that they cleared, drained, plowed, or otherwise made the land suitable for productive use. In the 20th century, land use intensification and increasing environmental awareness have led to a gradual policy shift - first from disposition to retention of the remaining public lands and then toward strategies for balancing resource use and conservation on both public and private lands. These strategies have included both regulatory means (such as wetland regulations) and voluntary mechanisms (such as land purchases, commodity and conservation programs, and tax incentives).

In recent years anti-regulatory sentiment has increased even while budget constraints have reduced the scope of voluntary land acquisition programs. At the same time, one can expect federal leverage to encourage conservation of farmland to diminish as payments to farmers decline over the next several years under the terms of the 1996 farm bill. Simplification of the tax code remains a popular refrain. These constraints suggest that the acquisition and conveyance of partial interests in land may serve as alternative strategies to influence the use and conservation of public and private land.

II. PARTIAL INTERESTS IN LAND

Partial interests are the sticks in the bundle of rights that constitute land ownership. Because partial interests in a particular tract of land may be traded separately, public agencies have opportunities to influence resource use without incurring the political costs of regulation or the full financial costs of outright land acquisition. Four types of partial interests are as follows:

A. Conservation Easements

For centuries property owners have used easements to allow others to use their land for specified purposes. Conservation easements are a more recent phenomenon. While a conventional easement involves the conveyance of certain affirmative rights to the easement holder, "an easement for conservation or preservation purposes involves the relinquishment of some of these rights... and the power in the new holder of the rights to enforce the restrictions on the use of the property" (Small, 1990). Conservation easements can formally establish public interests in resources and allow the public to acquire these interests on a voluntary basis to ensure desired resource protection.

Government agencies and nonprofit organizations have used conservation easements to protect a variety of land resources including farmland and other open space, wildlife habitat, erodible soil, and wetlands. Generally, the full value to society of such resources may not be reflected in the stream of returns that private landowners consider when choosing among alternative land uses. Wetlands, for example, provide benefits in terms of groundwater quality and recharge, floodwater retention, fish and wildlife habitat, and recreation. However, only habitat and recreation may afford income-generating opportunities to private landowners, and returns to these activities are likely to be small in comparison with alternatives like agricultural production or urban development. …

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