Note #7: The Business of Open Space:  What’s Next??  And I Really Mean It!!

The point of my latest book, The Business of Open Space: What’s Next??, is very simple. For the past thirty years, private land conservation in this country has grown and thrived and has relied on conservation easements and government funding. There have been, and will continue to be, enormous successes. But continued growth, with reliance on conservation easements and government funding, is simply not sustainable. We need a bigger toolbox. We need more ways to save land.

But somebody out there has to pick this up and run with it.

I had a former law partner who used to quote a law school professor of his, who said, “If there is a really important provision in an agreement, at the end of the paragraph you should put, ‘And I really mean it.’”

In The Business of Open Space, I discuss a number of ideas about how to build the bigger toolbox, including creating very large new pots of money for land acquisitions and what I call leveraging acquisition dollars. But those are not new concepts. Here is part of what I say about where the work and the thinking needs to be done, adapted from Chapter 2 of The Business of Open Space:

We need to create new techniques and new “commodities” that rely on natural values or natural assets that are inherent in land but have not yet been tapped. This will create new markets for capitalist conservation. We need to bring together sophisticated financial wisdom and land conservation experience to create new investments. This will ultimately attract huge pools of institutional money.

We are starting at almost zero here.

There are thousands of people around the country who understand certain types of sophisticated financial transactions: buying a package of economic rights – like mortgages, for example – and breaking them into different parts and selling off those parts and making a profit.

There are thousands of people around the country who understand the importance of open space, wildlife habitat, aquifer protection, productive farmland and ranchland and forestland.

And ne’er the twain shall meet. These disciplines – these skill sets – almost never cross.   They do not intersect. They do not talk to each other.

Imagine what could happen if we could bring these disciplines together. The emphasis of this book is narrow: the business of open space. But things are changing on a much broader scale in this country. Shareholders and corporate boards and executives are beginning to understand the economic and market benefits of sound stewardship of environmental assets and resources. Investors, large and small, are searching for corporate accountability and for investments that are financially sound and meet social and environmental benchmarks. The theme of this book is “only” the business of open space, but the potential scope of this challenge for interdisciplinary progress on all fronts is enormous.

But, at the start, right now, we are facing a different challenge.

There is almost no one out there who combines sophisticated financial experience and a strong and knowledgeable interest in land conservation.

I say almost no one.

Let me introduce you to my friends at C2I in The Plains, Virginia, and some of what they are doing.

First, Some Background

First, here is some background.

For centuries, one of the more fundamental yet arcane principles of property law is that ownership of land involves the ownership of a bundle of rights, or a bundle of sticks. Each right or stick can be exercised separately or sold to others.

You can build a house on your property. You can allow a neighbor to cross your property to get to the river, and you can give them that right or sell them that right, usually in the form of an easement for access.

You can cut your timber and sell it, or you can lease or sell timber-cutting rights to someone else. You can use your water rights, or your oil and gas rights, or you can sell or lease them to others. In the case of development rights, you can use them or even extinguish them with a conservation easement. A “new” right that can be separated from your property and sold is a carbon sequestration right (more on that below).

Think about this point. There are landowners all over the United States who own all of the rights associated with their land but are not using all of them, and in many cases these unused rights can be exercised in a positive, and profitable, and conservation-benign (or even conservation-positive) way. We need more creative thinking from more financially creative people on how to combine capitalism with land protection. We need to create a marketplace in “environmental commodities,” or “natural capital,” as Teddy Roosevelt thought when he looked into the future. There are almost no “environmental commodities” in existence today; some are imagined or foreseen in the eyes of some small few who are thinking about this; more, for sure, have not even yet been contemplated….

C2I’s “Package”

Carey Crane and Dutch and Chandler Van Voorhis, at C2I out of The Plains, Virginia, put together an investment package that I think is stunning and way ahead of its time.

Under the Conservation Reserve Program run by the federal Department of Agriculture, a landowner receives cash payments, for 15 years, for agreeing to a restriction that is a lot like a conservation easement. The biggest difference, of course, is that the CRP restriction expires, and the cash payments stop, after 15 years. The CRP restriction prohibits commercial agriculture and forestry and subdivision but allows recreational activities, such as hunting and fishing. So, obviously, the CRP starts with a landowner who is willing to have certain restrictions on his land, for a limited period of time, in return for some financial incentive. The CRP is particularly popular in the southeast and midwest.

When a landowner donates a conservation easement, the easement does not transfer development rights to the land trust or government agency or other easement holder; the easement extinguishes the development rights, it terminates them.

A different option is available in some few parts of the country where a “transferable development rights” (TDR) program is in place. With a TDR program, if the landowner and the buyer agree, it is possible for the landowner to “sell” some or all of the development and/or ownership rights, and for a buyer to acquire those.

It was C2I’s idea to put together a group of investors that would purchase a bundle of rights from landowners in the Mississippi Alluvial Plain (the “MAP”) – generally, that’s the flatlands that run from Cairo, Illinois, to Baton Rouge, Louisiana. These landowners had already signed up for CRP. C2I’s original plan was to tie up 1,000,000 acres in the MAP.

As C2I initially conceived of the program, landowners would commit to the long-term availability of their forestland, and those landowners would receive payments for carbon credits as the trees grow, as well as cash from periodic timber thinnings (in years 10, 17, 25, and 35, and every ten years after that).   A variation of this plan might include some cash up front to the landowner, as well as hunting and fishing income as the forest grows and good habitat matures. Interplanting, that is, the planting of slower-growing and faster-growing trees, encourages forest growth and maximizes the income stream. The long-term permanence of the forest is protected by a cutting limitation based on basal area, which is a measurement of tree size, and this guarantees the availability of carbon sequestration credits. [A discussion of carbon sequestration credits is beyond the scope of this Note.]

For their investment, in return, the investors would acquire from the landowner a bundle of ecological rights that, as C2I puts it, could be “disaggregated and sold off in the marketplace,” that is, broken up into different rights, and sold depending on the demands of the marketplace. These rights included the right to receive income from timber sales, the right to plant and harvest timber under certain circumstances, and the right to sell carbon sequestration credits. The investors also retained and could “bank” all the other rights in the bundle of rights for which no current market exists but for which markets are likely to exist in the future.

Where Can We Take This Thinking?

Those of us who have been in the open space business have been thinking in terms of conservation easements terminating most development rights on a particular piece of property. But most of us (including me) have not been thinking about all the other ownership rights associated with land, and what can be done with those. I was blown away when I heard about the C2I plan and its creativity. This original C2I plan has been adapted to changing marketplace forces, but here is the point: land itself has value beyond its current use.

Land Has Value Beyond Its Current Use

We have mitigation credits in this country, not on a large scale but these programs exist.   In some development situations, developers who destroy wetlands or other natural values are required to save or enhance other environmentally important areas. In some of those cases developers are required to purchase mitigation credits. Wetland mitigation banking has raised billions of dollars. Wetland preservation credits can also appeal to landowners.

In some few parts of this country, we have Transferable Development Rights programs. Landowners can transfer “development rights” from certain areas of open space, such as agricultural lands or areas overlaying aquifer, where planners are discouraging development, to other land where development is encouraged, such as urban or suburban areas, and those transferable development rights are bought and sold in the marketplace.

They have something like biodiversity credits in the U.K. and in New Zealand – these are small programs but they are a start.

We have nitrogen credits in Massachusetts – so far I have found one person who understands a lot about Massachusetts nitrogen credits.

The Nature Conservancy has been involved in a Forest Bank program, under which forest management rights have been purchased from landowners in exchange for payments from revenue from sustainable forest management.

They have Green Water Credits in Kenya, China, and Morocco – Green Water Credits enable upstream farmers to practice water management activities.

Monterey County has water credits, and many people, particularly in the southwest, see the development of water credits programs in the near-term future.

Land itself has value beyond its current use. Why not credits that recognize the open space, economics, and other values of ranchland and farmland? Why not urban garden credits?

Let’s think small first. Where do the “resources” come from on which these credits are based, whether they are in Louisiana, or Florida, or Massachusetts, or New Mexico, or Kenya? They come from an acre of land.


The good news and the bad news is that C2I is way ahead of the curve. This is good news for C2I because when they look in the rear-view mirror they don’t see much competition. This is bad news for the rest of us because I think these concepts are nothing short of brilliant and, so far, they are just barely beginning to get noticed. The business of open space around the country could use so much more of this!

[this is the end of the adapted excerpt from Chapter 2 of The Business of Open Space: What’s Next??]

So that is part of what I say in The Business of Open Space. No one in the business has said, “I don’t agree.” People all around the country who have heard this message have said, “Yes!!! What do we need to do to get from here to there??”

Now, there’s the rub. When I wrote the first Preserving Family Lands book, in 1988, the goal for that book was much simpler. Congress had added to the tax code incentives for the donation of conservation easements, but there was really no good literature out there that explained to landowners, and to land trusts, and to lawyers, and to appraisers, what a conservation easement does, how the tax deduction works, the role of the holder of the conservation easement (usually a land trust), how to appraise a conservation easement, or the favorable estate tax consequences of putting a conservation easement on your property (the conservation easement lowers the value of the property, which in turn lowers the estate tax, if one is due). And these were just a few of the subjects on which the bookshelf was empty.

Preserving Family Lands was really a primer, an introduction, a how-to book, on the fundamentals of conservation easements. It answered a lot of questions and provided a lot of advice. In 1988 I knew I was on to something. There are now more than 150,000 copies of the three Preserving Family Lands books in circulation.   (You can go to for more information on the Preserving Family Lands books.) Over the next twenty years, I spent a great deal of time traveling around the country doing lectures, and workshops, and speeches, and continuing legal education programs, on the how-to of conservation easements.

The Business of Open Space: What’s Next?? is a completely different book. The book says we need a bigger toolbox, and offers a number of ideas, but this book does not tell the reader how to get from here to there. It does not tell the reader how we pull together smart people with a background in sophisticated financial transactions and smart people with a background in conservation matters. It does not tell people how we can create new financial products that will attract investment money AND save open space, and wildlife habitat, and forestland, and on and on. It does not tell people where to begin the process of creating new and viable and marketable and attractive environmental commodities.

I knew that when I wrote the book in 2013, but I strongly believed that the business badly needs a wakeup call and badly needs new ideas. In 2013, I knew I was on to something.

Now, there’s the rub. How do we get from here to there? There is no road that shows us how to get from here to there. There is no roadmap that shows us how to create the new products the financial and conservation industries are waiting for. And as I have also learned since I wrote the book, there are not yet even any treaded tires to get the traction to start the trip down the as yet non-existent road.

I am a tax lawyer, and I am talking about breaking new ground in what needs to become a multi-disciplinary field. In fact, reading what I’ve been reading over the past year, it is a stretch to say there is even a “field” at this point. People are really just now beginning to talk about this.

There are occasional news articles about interesting transactions that may fall under this heading.

The tax publication Tax Notes recently highlighted a three-part article by Patrick Dowdall entitled, “Like-Kind Exchanges and the Green Economy” (in fact, right there we have two concepts – “like-kind exchanges” and the “green economy” – that have likely never before appeared in the same sentence). The article was about possible tax-free like-kind exchanges under Section 1031 of the tax code with “property” like renewable energy certificates; see Note #1 and Note #2 for more on “like-kind exchanges.” More significantly for this Note, the third part of the article included a discussion of “Like-Kind Exchanges in the Carbon Markets”!! The IRS has also recently ruled that the sale of mitigation credits was not unrelated business income to the charity that sold the credits. Both the like-kind exchange article and the IRS ruling are very tax-technical and way beyond the scope of this Note, but they are both relevant to this Note because they highlight the concept of disaggregating or breaking up the traditional bundle of rights associated with land ownership, and converting these rights into something of value. (Certain current pending “tax reform” proposals would significantly reduce the benefits available under Section 1031.)

And just last month a consortium of for-profits and not-for-profits released “Investing in Conservation: A landscape assessment of an emerging market.” At, under Articles, there is a link to this publication. I was excited to see the appearance of the report, but for all the hard work and data-gathering that went into the report, my impression is that it is only a summary of some recent transactions that used more or less traditional financing techniques to do conservation projects that generate a profit. I am not really sure the report intended to do more than that.

I was disappointed that the report did not include more information on, and/or thinking about, and/or narrative about, outside-the-box transactions that open up new worlds of opportunity. For example, the report covered new “TNC Conservation Notes,” new financial instruments that investors purchase to provide The Nature Conservancy with a ready source of funding for Conservancy projects. This is a great idea, of course; in The Business of Open Space I suggested raising huge pools of money (say $100 million), to be able to strike quickly and rescue endangered property. It is clever, smart, commendable. But it is not an outside-the-box transaction or idea.

I was also disappointed that the report did not mention the C2I work, or the work of Ecosystem Investment Partners. At, under Articles, there is a link to the New York Times story about that group’s restoration of Louisiana marshland to create and sell environmental restoration credits.

For all of the hard work and data-gathering that went into that report, and there is indeed a lot of data in there, from my own perspective here is the most important comment in the report: “When asked to look forward, the biggest challenge most survey respondents identified was the shortage of deals with the appropriate risk/return profiles. This opinion held for both for-profit and not-for-profit investors. In interviews, most investors reiterated this point and stated that there is no shortage of capital for good conservation deals. Another key challenge is the shortage of management teams with experience in the sector. All of these challenges are consistent with an immature market.”


So, given that, let’s see if we can put together a roadmap to create these deals and to create these management teams. I do not think this is magic, I do not think it is easy, I do not think we will get to the destination quickly, but at this point someone has to pick up the ball and run with it.

Let me make the mandate clear. The mandate is to start the process to create new deals and new commodities, to bring in new players, new landowners, new investment money, new management teams, new expertise, with the goal of creating new investments and investment vehicles that are based on profit, land conservation, and all of the marketable assets, all of the potentially marketable sticks, in the bundle of land ownership.

Here is what I suggest.

At least one person, or one group, or one business, or one foundation, or one conservation organization, has to pick this up and run with it. Piecemeal scattered attempts to grow this field will not do it. At least one person, or one group, or one business, or one foundation, or one conservation organization, needs to step up and say, “We will take the lead on this. We are prepared to put up the funding and provide the staff. We are prepared to put the multi-year framework together to develop the process to get to the results.”

The roadmap to get from here to an unknown result is difficult to draw. But here are what I believe are some essential ingredients, and steps, to get there.

We need to start with a list of maybe 15-30 participants, maybe more, at the very least from the worlds of finance, conservation, and government. I do not know who they are but there are at least a dozen people in finance, conservation, and government who have the kind of specialized expertise, and the desire to make a difference, who should be on the list.

In addition, here is a modest start at others who should be on the invitation list (please do not be offended if I do not mention your name or your group…). C2I should be represented. Ecosystem Investment Partners should be represented. The Land Trust Alliance and The Nature Conservancy should be represented. Lyme Timber should be represented, along with a few of the other pioneers in conservation finance. Maybe that initial group will add names to the list. This working group can have in-person meetings, and/or conference calls and web-based meetings, to start thinking outside the box. For simplicity, let’s call this “The Steering Group.”

Maybe if we are lucky there will be more than one such group; I can certainly envision, ultimately, programs with national reach, but I can also envision programs with regional and even local reach. The Steering Group might even decide early on that regional programs make more sense and reach out to establish such groups. But if there are many working groups, there really needs to be one Steering Group, or one group with national outreach, because without that a lot of interesting ideas that percolate up will not find their way into general circulation.

In the 1980s and 1990s, I often said that the strength of the land trust movement was its grass roots nature, and the weakness of the land trust movement was its grass roots nature. What I meant by the second part of that observation was that there could be great conservation deals taking place in Memphis that no one in Missoula or in Mobile or Manhattan would know about. A lot of that has changed with the internet and with the continuing efforts of the Land Trust Alliance to foster communication and idea exchange among land trusts around the country. But my point is that for this planning effort to succeed, I think we do need one focal point, one central office (or virtual office) to foster communication and idea exchange among working groups around the country.

I do not know where the Steering Group will go with this, but that is the whole point. If I knew I wouldn’t need to write this Note. But somebody out there has to pick up the ball, provide the staff and funding and develop an invitation list and an agenda and a planning strategy for the first few meetings.

And things will happen. And I will be happy to follow the progress of this effort in future Notes.

And I really mean it.

Any takers out there?