The Saskatchewan Stock Growers Foundation teamed up with the Saskatchewan Stock Growers Association on a new report looking at Term Conservation Easement Compensation.
A term conservation easement is a specific block of time that a landowner agrees to, where the land will not be broken up for annual cropping.
The SSGF's Communication Specialist Mindy Hockley says TCE compensation rewards those landowners for keeping their grasslands intact, through financial incentives that better account for the loss of potential revenue of annual crop production.
"We enlisted the help of Dr (Jared) Carlsberg to help us with that he was able to find some key differences between the fair market value approach that we currently use for conservation easements as well as a new approach which looks at income based differences."
Dr Jared Carlsberg is a Professor of Agribusiness and Agricultural Economics at the University of Manitoba.
Carlsberg looked at the income differences between annual cropping systems and cow-calf systems based on models in southwestern Saskatchewan.
In a press release they note that Dr. Carlberg looked at a per-acre return basis for the time periods of 10, 25, 50 and 100 years with consideration of a discount rate to account for inflation, risk and time preference.
"In his findings with the 50 year time period the difference can reach up to $508/acre between annual crop income and cow-calf production. Using an income approach to Term CE Compensation may increase uptake of native grassland conservation programs since loss of grasslands are still widely influenced by basic economics. Even with increased cattle market prices, the margins are extremely tight and still favor grassland conversion. This new approach using income differences can be used as a tool to assess how much to pay for conservation easements. "
Ray McDougald, SSGF Chairmen indicates enabling generational transition, often done over 25-30 years, is a key element for ranching stability that is overlooked.
"The lack of viability of range land operations is especially troubling for the next generation and this report highlights the importance of the SSGF working towards Term CE compensation options. Term CE’s can be a tool to help take us towards that goal of successful transition into the next generations."
Hockley says the report will be helpful in finding new ways to determine fair compensation for conservation easements.
"With the cow calf system, it seemed like in the last five years based on our models that of Southwest Saskatchewan, they were barely breaking even. Whereas with annual crop production, it seemed like they were able to actually profit and somewhat get ahead on average. So we want to highlight the difference in that because it's pretty enticing for a landowner to look at that and want to break up their grasslands. But we're looking at conserving those native grasslands and protecting them as an ecological investment."
SSGA President Garner Deobald says there needs to be a compensation formula or mechanism based on the alternate use value for the land to ensure the landowners are compensated appropriately.
"I'm now convinced more than ever that term easements are the best and fairest way to move forward with grasslands conservation."
To check out the full report click here.