PROPERY TAX DISTORTIONS AND PARTICIPATION IN FEDERAL EASEMENT PROGRAMS: AN EXPLORATORY ANALYSIS OF THE WETLANDS RESERVE PROGRAM

Higher property taxes and uncertainty about post-easement tax levels may create a disincentive for landowners to participate in federal easement programs such as the Wetlands Reserve Program, and thus may distort participation levels in a manner inconsistent with the environmental benefits associated with individual parcels. Support for this hypothesis is provided in an exploratory analysis of state level participation in the Wetlands Reserve Program. If such distortions prove to be policy relevant, then either they should be accounted for in the bid acceptance process of future federal easement programs, or individual states and localities should correct property tax differentials and post-easement tax uncertainty.