Conservation Easements in Alberta

This website was created by the Environmental Law Centre and Miistakis Institute to help landowners, land trusts, municipalities and others find answers to questions related to conservation easements in Alberta. You can browse our top ten questions below or type into the search bar to see what other questions are answered on the site.

What are the financial benefits?

A conservation easement will not make you rich; it is first and foremost a tool to help landowners accomplish their long-term conservation objectives.

In the past, conservation-minded landowners had no opportunity to receive any financial benefit for seeking long-term protection of the ecological, scenic or agricultural values of their property outside of selling their land to a conservation buyer or government agency. For landowners wishing to retain ownership and use of their land, this was not a viable option. Conservation easements changed that. For those landowners who are already stewarding their land for long-term conservation, the benefit is straightforward - keep doing what you are doing AND receive a financial benefit for doing it.

In fact, the financial benefits of granting a conservation easement can be quite significant. Broadly speaking, there are three kinds of financial incentive for granting a conservation easement: a tax receipt, a cash payment or beneficial consideration (from a municipal council) of a development proposal.

Tax Receipts for Donations

Tax receipts are the most common form of compensation for the grant of a conservation easement. Because both land trusts and government agencies can issue tax receipts, donations of conservation easements are eligible for a federal and provincial tax receipt. For the most part, the tax implications are the same as for any other type of charitable donation, though certification under the federal Ecological Gifts program greatly augments these benefits.

For a corporation, taxable income is reduced by an amount equal to the value of the donation. For individuals, a non-refundable tax credit is applied to their tax payable. The tax credit is 29% of the value of the donation (but 15% of the first $200). The tax receipt can be used in the year of the donation, and then in as many as five (5) additional years, though this can be extended if the gift is certified as an Ecological Gift.

It is important to recognize that only “gifts” are eligible for a tax receipt. This means that any conservation easement that is provided in exchange for something is not considered to be a gift given ”freely and without consideration.” For example, conservation easements provided to secure special development considerations from a municipality or conservation easements provided to a land trust in exchange for grazing rights on another property would not be considered ”gifts” and would not be eligible for a tax receipt.

A mythology has arisen about the tax receipt being of no use to Alberta landowners, one which comes from both a lack of creative thinking around tax receipts and a misunderstanding of the point above – conservation easements will not make you rich. See Tax and Estate Planning for some examples of creative use of a conservation easement tax receipt.

Payments for Conservation Easements

Cash payments are by far the most lucrative and versatile form of compensation for a conservation easement … and by far the most rare! Land trusts and government agencies rarely have cash to pay for conservation easements, and when they do they are rarely able to compensate the full value.

Two notable exceptions exist. Land trusts, through their conservation planning, may identify areas that are of particular importance to them, or that are particularly threatened, then approach various funding sources to raise money for the purchase of land or conservation easements. Landowners with parcels in these areas may be eligible. In general, payments are for a much-reduced percentage of the value (commonly around 20%). In these cases, the qualified organization will often use ‘Split Receipting.’ [Link: Split Receipting]

As well, the Government of Alberta initiated the Land Trust Grants Program in 2011, which uses funds from the sale of public lands to secure perpetual protection of conservation lands deemed important by the provincial government. The program seeks land trusts with candidate parcels whose conservation potential matches the Government’s prescribed conservation criteria and priorities. In these cases, funding can be used for the purchase of conservation easements.

Special Development Considerations

In the municipal context, the compensation available for granting a conservation easement is generally not a specific dollar value, but rather a favourable consideration of a development proposal. In these cases, a proponent is provided with an opportunity – at the municipality’s discretion – to grant a conservation easement that supports the municipality’s conservation goals.

That special consideration could take many forms, including relaxation of municipal reserve requirements, allowing higher density than the land use bylaw prescribes for the area, accommodating different development forms, streamlining of the approval process, etc.

It is important to be clear that in these cases the grantor of the conservation easement is not “donating” the easement. They are receiving special development consideration, and therefore not providing it “free and without consideration.” In this circumstance, the grantor is not eligible for a tax receipt.

Split Receipting

Financial benefits for conservation easements are often characterized as cash OR a tax receipt, but there is a third option that splits the difference: split receipting.

In “split receipting” (also called a “bargain sale” in the U.S.) the landowner receives a combination of a cash payment and a tax receipt that add up to the full value of the conservation easement.

This option arose in response to the reality that cash payments for conservation easements are extremely rare and tend to happen only with certain land trusts, in very specific locations, at very specific times when cash is uncharacteristically available. At the same time, landowners who received a tax receipt faced not being able to use its full value in the time allotted.

For example (and using completely fictional numbers!), a landowner with a conservation easement worth $150,000 could be compensated by a $20,000 cash payment and a $130,000 tax receipt.

In 2002, the Canada Revenue Agency issued a policy bulletin proposing guidelines for split receipting, which have since become their operating policy (the Canada Revenue Agency tends not to amend the Income Tax Act and regularly uses these bulletins as de facto policy). Those guidelines contain some restrictions, a key one being that there must be clear “donative intent.” This means the landowner receiving the combined tax receipt/payment must be able to show that there was a clear intent to make a gift (freely and without consideration). The guideline offered to satisfy this is that the cash cannot make up more than 80% of the value of the conservation easement.

For more detail on the Canada Revenue Agency’s and the Ecological Gift Program’s consideration of “split receipting” see:

Tax Benefits of Ecological Gifts

One of the most significant advantages of certifying a conservation easement as an Ecological Gift (EcoGift) is augmented tax benefits.

First, in a normal charitable donation, the maximum receipt value you can use in any one year is 75% of your income, whereas an EcoGift-certified receipt can be applied against 100% of your income. Also, any property can generate a capital gain over the period it is owned, which is taxable. When a property (or interest in that property) is disposed of through a donation, 50% of the gain is taxable; however, when that donation occurs through the EcoGifts program, no portion of the capital gain is taxable. Finally, the time limit on the tax receipt is relaxed with an EcoGift. Rather than having five (5) years after the year of donation to use up the tax receipt, as of 2014 donors have ten (10) years.

For more detailed information on the EcoGifts program, see How is a conservation easement certified as a federal EcoGift

Tax and Succession Planning

How many of your friends and neighbours know the details of your financial, tax and succession planning circumstances? Are your circumstances likely to be the same as those of your friends and neighbours?

It is common to hear blanket statements that a tax receipt is of no value for landowners who make their living from working landscapes. Everyone’s situation is different, and tax and succession planning is complex. When you hear that tax receipts are of no use, take that with a grain of salt.

Here are a few actual examples that surprised Alberta landowners who went on to grant a conservation easement:

  • successive CE donations on different parcels, staggered over time to ensure full value of tax receipts used over time;
  • tax receipt from CE donation used to lower the adjusted cost base and decrease the ultimate tax burden on heirs;
  • tax-deferred savings liberated (tax-free) and applied to a mortgage to reduce monthly payments; and
  • (the obvious one) tax receipt used to reduce total taxable income to zero for eleven years.

Remember, only a creative financial advisor with specific knowledge of your situation and goals can say how a tax receipt would or would not benefit you.

How is a conservation easement valued?

It likely goes without saying that determining the tax and financial implications of a conservation easement starts with financially valuing the conservation easement. This process is complex, and requires the services of a qualified appraiser. However, at a conceptual level, it is relatively straightforward.

The “Before and After” Valuation Method

The most common valuation process is known as the "before and after" process. This process assumes that the value of a property is heavily determined by the uses to which it can be put and the marketability of those uses and associated products. Because a conservation easement places restrictions on several land uses, the property is deemed to have an associated decrease in value.

The "before and after" process starts by valuing the property at the “fair market value” – an estimation of the price it would command on an open market with willing buyers and willing sellers. Subsequently, the appraiser estimates the price the land would command if its sale value was diminished by the loss of certain land use opportunities. The appraiser takes into account the specific restrictions proposed in the conservation easement and creates a second estimate of “residual” market value, presumably a decreased one.

The difference between these two estimates is considered to be the financial value of the conservation easement

There are no hard and fast guidelines on what those values might be, and the values of conservation easements can vary dramatically. However, the biggest determinant of value is usually local pressure for more intensive development. This pressure inflates the “fair market value” and thereby inflates the difference between fair market and residual value.


At the base of understanding a conservation easement’s value is the professional appraisal. In many ways these are similar to any other type of real estate appraisal, generally using comparable sales in the area to base the estimated value on.

However, there are few if any sales of properties with conservation easements on them in the area, so the procedure requires significant skill. It is important to use a certified appraiser – one with experience assessing the value of conservation easements. As well, the Ecological Gifts Program has certain requirements of the CE appraisal and of the appraiser, so it is important to consult their guidelines when choosing an appraiser.

What are the tax implications?

It is important to keep in mind that there are potential negative tax implications that must be weighed. The good news is these can often be avoided with some careful planning.

Capital Gains Taxes

Capital gains taxes will apply to conservation easements, but these can be mitigated through the provisions applicable to donations and the augmented tax benefits available through the Ecological Gifts Program.

Real property is generally subject to a potential capital gain at the time it is disposed of; in other words, an increase in value from the time it was acquired to when it was sold, willed, gifted or otherwise disposed of. That “gain” in value is taxable.

Most people are surprised to find out that even a donation is subject to capital gains taxes, which are generally more than offset by the tax receipt, but still vexing. For a normal donation, the taxes payable on the capital gain are 50% of what they would be in a non-donative disposition. The good news is that certifying the donation as an Ecological Gift means no portion of the capital gain is taxable.

Property Taxes

Virtually all privately held parcels of land in Alberta are subject to property tax. This is the case, regardless of the land use and - more specifically - regardless of whether they are conservation lands.

Within guidelines set out by the Province, municipalities can set their taxation rates and modify their assessment process, and each one does it somewhat differently. Because the tax you pay is a function of the assessment and taxation rate (or mill rate), relief in either one can be significant.

For the purposes of parcels that might be subject to a conservation easement, there are essentially two assessment categories: “fair market value” and “agricultural.” ”Fair market value” is essentially the price the property would fetch on an open market for its most economically advantageous use ("highest and best use"). ”Agricultural” value recognizes that agricultural parcels may have an inflated value based on their potential for more intensive development, but would garner a much lower price based purely on their agricultural-based economic productivity.

When it comes to property taxation of conservation lands - that is, lands either subject to a conservation easement or held by a conservation organization - the province has left property taxation rates up to the individual municipality. In response, various Alberta municipalities have either been silent on the issue, assessed conservation properties at a lower rate (generally the agricultural rate) or provided relief or complete waiver of the property taxation.

Landowners and qualified organizations working together on a given conservation easement will need to check with the local municipality to know how conservation lands in that area are taxed by the municipality.

What to Watch Out For

The world of taxation on income and property can be complex, and can vary depending on location and circumstances. It is important to consult your tax advisor about the specific implications of a conservation easement for you.

In the meantime, here are a few potential issues to be on the lookout for:

  • Only gifts can get tax receipts - A conservation easement given in exchange for something (development considerations, other land use options, etc.) is not considered a gift and is not eligible for a tax receipt.

  • Capital gains - Capital gains, and the taxes payable on them, accrue on property no matter what. Any disposition of land - even a donation - will trigger a capital gains calculation. That capital gains tax is waived if your donation is certified under the Ecological Gifts program, but 50% of the gain is taxable if it is a normal charitable donation.

  • Conservation easements for Agriculture are not EcoGifts - Donations of conservation easements that have ONLY an agricultural conservation purpose are not eligible for the Ecological Gifts program. Your gift would be eligible for the regular charitable tax receipt, but it would not receive the additional beneficial tax treatment available under the EcoGifts program.

  • Municipalities determine property tax relief - Municipalities typically have two property tax categories: fair market value and agricultural. Some municipalities will waive the property tax on a conservation property, some will lower it to the agricultural rate, and some will provide no special considerations. You need to talk to your municipality to determine the situation in your area. Remember, if a property subject to a conservation easement is being used for agriculture, its property tax is already at the agricultural rate.

  • Appraisals outside of the EcoGifts program are subject to challenge by the CRA - Every appraisal done to support a tax deduction can be challenged by the Canada Revenue Agency at any point for three years. Appraisals done under the EcoGifts program are reviewed and then guaranteed by Environment Canada.

  • EcoGifts restrict changes in use - Conservation easement legislation allows the landowner and the holder of the conservation easement to re-negotiate the conservation easement and provide for changes in use. However, grantors and recipients of conservation easements certified under the EcoGifts program may be exposed to punitive clawback penalties for certain changes in use. Both parties should be aware of these limitations.

What are the costs of granting a conservation easement?

The costs associated with placing a conservation easement on a parcel of land can vary dramatically from parcel to parcel, landowner to landowner, qualified organization to qualified organization. Even the “donation” of a conservation easement has several associated costs. However, it is possible to identify what costs might be faced and enter the process prepared.


Although some land trusts use volunteer staff, most land trusts and all municipalities rely on paid staff to identify, negotiate, fund raise for, monitor and coordinate conservation easement acquisitions. It is important to have a sense of the time investment anticipated, and thus the associated cost. Even in the case of volunteer staff, knowing the “in-kind” value is critical in grant applications.

Baseline Reports

All future monitoring of a conservation easement is based on an initial report, cataloguing the character and features of the parcel (the Baseline Report, Baseline Documentation Report or BDR). Developing the report will require the involvement of reliable professionals who can provide a credible assessment of the ecological, agricultural or scenic value of the land. The qualified organization usually covers the cost of this document, though that cost may be offset by the information the landowner may already have collected.

Management Plans

Often conservation easements include a management plan, which prescribes the approach that will be taken in managing the land in support of identified conservation values. Like a Baseline Report, the management plan usually requires the involvement of professionals with skill in creating a plan that meets the needs of both the landowner and the qualified organization.


The value of the conservation easement  - established to inform compensation calculations - requires a professional appraisal conducted by an appraiser with experience assessing conservation easements. This is also required as part of the EcoGifts application process. The appraisal may be paid for by the landowner or the qualified organization, or the costs may be shared.

Advisor Fees

Both the landowner and the qualified organization will want to consult with their professional advisors before and during the process of negotiating a conservation easement, and will likely incur costs doing so. Those advisors could include legal, financial and/or conservation experts.

Stewardship Funds

Knowing that conservation easements generally represent a perpetual responsibility, most qualified organizations establish a Stewardship Fund, usually as an endowed fund intended to support anticipated costs of stewarding the organization’s conservation easement. These costs generally include ongoing personnel costs and a legal defence fund. The legal defence fund is usually a pooled fund that the qualified organization can use for any of its properties, invested to grow over time, and applied as needed to counter infractions or challenges to the easement.

Qualified organizations may fundraise for this fund, or may ask the grantor to provide part or all of this fund as an up-front endowment.


There are two main taxation costs to be aware of. Properties subject to conservation easements are still owned by the landowner and are still subject to assessment for property taxation purposes. As well, even a donation of a conservation easement represents the disposition of property, and is subject to capital gains taxes.

Both of these costs can be mitigated or even eliminated through the certification of a conservation easement as an EcoGift or preferential tax treatment by the municipality. It is important to understand these opportunities at the outset of the conservation easement acquisition/negotiation process (see Ecological Gifts  and Property Taxes for more information).

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