Are agricultural conservation easements associated with farm investment?

Conservation easements have become an increasingly popular tool for safeguarding agricultural land from development. To the extent that capitalized future development returns embodied in the value of farmland are illiquid or inaccessible to the landowner for farm financing purposes, easements may also promote on‐farm investment. In this paper, we conduct an observational empirical study of the association between county‐level easement activity and various farm investment outcomes. We first document a robust and negative within‐state correlation between farmland debt‐to‐asset ratio and two measures of urban pressure. This is consistent with our premise that capitalized future net returns to development are illiquid for farm‐related loan collateral purposes. In the primary analysis, we consider the relationships between easement activity and investment outcomes concerning land tenure and ownership, borrowing behavior, machinery use, and labor use. County‐level panel regression results suggest that past easement activity is associated with greater land ownership, tractor use, and, to a lesser extent, labor use. We do not find evidence for easements having a distinguishable relationship with borrowing behavior. Overall, our results provide descriptive evidence suggesting that easements may promote on‐farm investment, a finding that aligns with previous survey work on this topic.