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Gaining Ground
Economist and environmentalist Jeffrey Sundberg examines how tax incentives could improve land conservation efforts.

By Gary Wisby

Jeffrey Sundberg's interest in the environment extends beyond his economic analysis of tax incentives for land conservation. He developed this savanna on campus in 1993, which still thrives today. (Photo by Lindsay Beller)

Happily occupying what he calls “the interesting intersection between economics and the environment,” Associate Professor of Economics and Business Jeffrey Sundberg looks at financial incentives to help wildlife and wild places. “Land protection creates value for everyone by protecting water quality, wildlife, habitat, and the surroundings in which we live,” says Sundberg, who also chairs the environmental studies program. 
 
The longtime birdwatcher, who keeps a pair of binoculars within arm’s length on his desk to catch glimpses of the peregrines, ospreys, and tundra swans that fly by his office window, is convinced that the system of tax incentives for conservation could be far more efficient.
 
“I would like to preserve the most important land in the least expensive ways,” he says in his office filled with photos and art that include a rattlesnake screen saver. “But the system isn’t set up to encourage that.”
     
Sundberg’s research gives insight into why land owners choose to donate to conservation organizations and ways in which conservation benefits society. Specifically, he studies conservation easements — a partial giving up of property rights — and the tax incentives available to land owners who donate them.
     
Along with fellow Economics Professor Richard Dye, Sundberg compiled all available tax incentives to analyze which property owners benefit most from easement donations and how this impacts tax revenues. They found that a range of factors, such as the owner’s income and assets often determine the actual value of the deduction, but the amount of the deduction is based on the development value of the property. As a result, property owners may not have incentive to donate land with the highest conservation value.
     
Consider the following scenarios, which illuminate what Sundberg says is the biggest problem — no link exists between the value of the tax deduction and the quality of the land donated.
     
Say you’re a family farmer of limited means who is thinking about donating an easement on a piece of your acreage to a conservation group. It’s a patch of woods inhabited by a rare species of woodpecker, and the group wants to make sure nobody builds on it. You’d like to help. But because of your tax bracket, “what could be a million-dollar deduction might be worth $1,000 to you,” Sundberg says.
       
A variant example is the rancher who wants to give away an easement on some land that has “extraordinary ecological importance but little development value,” he says. “The tax deduction [for donating it] is minimal.”
 
The flip-side scenario, equally unattractive, sees a wealthy landowner reaping a sizeable tax deduction by donating an easement of limited environmental value.
 
Reform of the tax incentive system could have a big impact on the environment, and Sundberg says states like Illinois, Colorado, and Virginia are moving in the right direction. These states offer transferable tax credits, which benefit low-income land owners more than a tax deduction. “Say you’ve got a $100,000 tax credit,” he says. “You can apply it to your taxes and sell the balance to someone else to credit against their taxes. It’s potentially a great idea.”
 
He hopes to show in his research that a move to tax credits would provide more incentives to low-income landowners, although federal tax policy is moving in the opposite direction by increasing available tax deductions, which benefit high-income donors.
 
Sundberg’s interest in land conservation is not all academic. He leads bird walks for several groups after getting serious about bird watching 15 years ago. Around that time, he started work on some land on the edge of the ravine behind Johnson Science Center with now-retired Biology Professor Ken Weik. They converted three acres of land to a restored area called the Shooting Star Savanna, named after the white flowers that bloom along with more than 50 species of native wildflowers and grasses.
 
Sundberg also serves as president of Liberty Prairie Conservancy, a Lake County land trust, where he finds himself “in the awkward position of wanting to change easement policy while working to get donated easements.”
 
Building on his belief that “the value of our land conservation efforts today depend on issues such as climate change,” Sundberg is the lead organizer of the Deane Conference on the Future of Nuclear Power, which will take place on campus next March. It will address such questions as: Under what circumstance would people be willing to have an increase in nuclear power? This non-carbon based energy source is getting a second look because “global warming casts things in a different light,” he says.
 
Sundberg’s passion for land conservation carries into the classroom. His North American Wildlife course covers the effect of human interaction on creatures. He explores why some species — like grizzly bears — all but vanished, while others — like the bald eagle – are making a comeback. On a recent weekend he took his students to the Necedah National Wildlife Refuge in Necedah, Wisconsin, where the endangered whooping crane is being reintroduced.
 
The course is categorized under environmental studies while the other five subjects he teaches are under economics and business. Sundberg says he is often asked, “How can you do both?” To which he replies from his position at the intersection of the disciplines, “They’re the same thing.”  

Gary Wisby is a freelance writer based in Evanston, Illinois.