Key Incentive Programs in Minnesota

In Minnesota, several state incentive programs stand out as a result of exceptional technical assistance, strategic approaches to conservation, and adequate funding. These strong characteristics have led the way for very effective conservation efforts in the state.

Minnesota's key conservation programs are described below along with a table comparing them to the ten criteria for an effective program proposed by Defenders of Wildlife.

Also included in the table is an assessment of the state's overall ability to meet the criteria given the current combined efforts of all programs in the state, including the five shown here.

The statewide assessment is not an average of the performance of programs in the state, but rather an evaluation of state-led efforts to provide effective incentive programs.

Minnesota Native Prairie Bank and Tax Exemption Programs

These programs provide property tax benefits, technical assistance, and direct payments to private landowners with native prairie vegetation. To be eligible for the programs, a landowner must have a tract of land that is covered mostly by native prairie vegetation and has never been plowed.

The programs were developed by the Minnesota Department of Natural Resources as an effort to protect the remaining areas of Minnesota's quickly disappearing native prairie habitats.

Native Prairie Tax Exemption Program

Participants enrolled in the Native Prairie Tax Exemption program apply by completing a form and having a representative from the Department of Natural Resources visit their land to ensure eligibility. All prairie lands in the program are exempt from property tax assessments. Once enrolled, the tax exemption is automatically renewed at the end of each year, as long as the land remains native prairie.

Native Prairie Bank Program

Participants enrolled in the Native Prairie Bank program enter their prairie lands into an easement contract ranging from 20 years to permanency in exchange for a one time payment. Payments are based on a percentage of the average assessed value of cropland in the townships. Parcels with permanent easements, high quality prairie land, a variety of plants and animals, and proximity to other prairie lands all receive priority for participating in this program. Currently all of the landowners in the program are enrolled in permanent easements.

Program Coordination

Both the Native Prairie Bank and Tax Exemption programs are easily coordinated with other conservation programs in the state such as the federal Landowner Incentive Program and various projects funded by the Legislative Commission on Minnesota Resources.

Cost-share and technical assistance is readily available to the participants who develop a prairie stewardship plan with help from prairie specialists funded by the Prairie Stewardship and Landowner Incentive Programs.

Once the plan is developed, the Scientific and Natural Areas program helps landowners carry out their management plans using seasonal prairie management crews or direct cost-share assistance.

One major challenge facing the program is its lack of funding. Staff resources are scarce and every year the bank receives more applications for easements than it can fund.

Participation is at its capacity with the current funding limitations, however, there is potential for a much more effective and widely used program if resources were to increase.

Reinvest In Minnesota (RIM) Reserve

The Reinvest in Minnesota Reserve program began in 1986 with the intent to improve water quality, reduce soil erosion, and enhance fish and wildlife habitat through permanent conservation easements.

Funds for the program come from a separate fund in the state treasury which receives money from state bonding and private donations. The program is administered by the Minnesota Board of Water and Soil Resources.

Program participants enroll in a conservation easement and manage it under a conservation plan for 20 years to permanency. Plans include retiring lands from agricultural production and performing various approved activities such as planting permanent native vegetation and restoring drained wetlands.

With a Reinvest in Minnesota Reserve easement, participants receive a lump sum payment of a percentage of the assessed value of their land once they enroll. The percentage of each payment varies with the duration of the easements. Permanent easements receive the highest payments.

The program was initially modeled after the federal Conservation Reserve Program, but with a permanent conservation focus. It is currently administered along with the Conservation Reserve Enhancement Program (CREP) in Minnesota.

Effectiveness of the Reserve Programs

Together the programs have been very effective in enrolling Minnesota lands in perpetual conservation easements in high priority areas of the state. Participants are required to enroll in both Conservation Reserve Enhancement Program contracts and Reinvest in Minnesota Reserve easements.

The Conservation Reserve Enhancement Program contracts last 15 years during which time the landowner is simultaneously enrolled in a Reinvest in Minnesota Reserve easement of either 45 year or perpetual duration.

The Reinvest in Minnesota Reserve easement is subordinate to the Conservation Reserve Enhancement Program contract for the 15 years the contract is in place. After the Conservation Reserve Enhancement Program contract expires, the land remains enrolled in the Reinvest in Minnesota Reserve easement for the remainder of its duration.

With this program coordination, participants receive the one-time Reinvest in Minnesota Reserve bonus payment as well as yearly Conservation Reserve Enhancement Program payments for that contract's 15 year duration.

This large-scale, private land conservation program has enrolled nearly 100,000 acres in permanent easements since 1999 and aims to enroll 90,000 acres in temporary easements and another 30,000 acres in perpetual easements by the year 2007. Thus far, the efforts have been aimed at high priority river watersheds.

Limitations

Though very effective thus far, this program has several limitations. For the past two years, the Minnesota legislature has failed to appropriate funds to the program. When funding for the program was available in the past, there was an adequate amount to fund the easements, but scarcely enough for program administration or to staff wildlife/habitat monitoring. This lack of funding has caused significant challenges for program implementation.

Another limitation to the program resulted from its coordination with the federal Conservation Reserve Enhancement Program. The Reinvest in Minnesota Reserve began with the goal of conservation through permanent easements across the state. It is the policy of the Minnesota Board of Water and Soil Resources to administer only perpetual easements in the Reinvest in Minnesota Reserve Program.

The Conservation Reserve Enhancement Program program, on the other hand, has a more temporary focus that was not designed for permanency. This difference has forced the Board to move away from its perpetual easement policy in order to gain program approval from the United States Department of Agriculture.

The state did not want to abandon the program due to the politics surrounding perpetual easements at the federal level. It now uses a combination of federal and state funds to enroll participants in 45 year easements combined with a 15 year Conservation Reserve Enhancement Program contract. A small number of permanent easements are still funded each year for wetland restoration projects.

Sustainable Forest Incentive Act (SFIA)

This property tax incentive program was initiated by the Minnesota law called the Sustainable Forest Incentive Act to reduce the burden of property taxes on landowners with managed forest stands by sending them a reimbursement payment each year if they are enrolled in the program.

Landowners are eligible for the program if they meet the following six requirements:

1. Enroll at least twenty contiguous acres of forested land;
2. Obtain and follow a Forest Management Plan approved by the Department of Natural Resources;
3. Use Timber Harvesting and Forest Management Guidelines issued in 1998 by the Minnesota Forest Resources Council;
4. Enroll for at least eight years;
5. Have no delinquent property taxes;
6. Allow non-motorized public access if total area is more than 1,920 acres.

Participants enrolled in the program receive an annual payment based on the number of acres they have enrolled.

Funding for the program is very stable as it comes from an open-ended appropriation distributed by the Minnesota Department of Revenue. Payments are calculated by the Department of Revenue using three different methods. The method that produces the highest per acre payment is the one used that year. If enrollment in the program is terminated because the landowner violates its conditions, the landowner must pay back to the state all payments received plus interest.

Challenges

One major challenge facing this program is the lack of incentive for small private woodland owners. In many cases, the property tax on woodlands is already so low that the Sustainable Forest Incentive Act does not offer enough of an incentive for the landowner to enroll. Large industrial forestry companies, on the other hand, are more inclined to enroll because they own large amounts of land. In fact, the land owned by two forestry companies in the state makes up 78% of the total acres enrolled in the program.

According to agency staff, the small amount of private woodland owners enrolled in the program is mainly made up of retired staff from the Department of Natural Resources or hunting groups. In many cases, these people would perform habitat conservation practices with or without the property tax incentive.

Another limitation to the program is its lack of monitoring. Program participants are required to have a Woodland Stewardship Plan to enroll, however, once the participant has a plan, there is no monitoring system set up to see that the plan is being followed or that the landowner still meets the six criteria for eligibility.

Woodland Stewardship Plan

This extensive technical assistance program is a prerequisite for participation in many of Minnesota's forestry-related incentive programs.

A Woodland Stewardship Plan is a document that includes a detailed map of the landowner's parcel, management goals for the land, and a list of potential practices to accomplish these goals.

The plan also contains documents covering a variety of issues including ecology, wildlife, soils, recreation, water, and wetlands. The documents are provided as a way to assist landowners in implementing conservation practices on their land and learn more about how their practices impact natural resources.

The Minnesota Department of Natural Resources approves different plan-writers each year who visit property owners interested in developing a management plan for their land. The plan-writers talk with the landowners and identify management objectives. They inventory the woodlands on the property with the level of detail depending on the landowner's objectives.

The program streamlines the process for landowners making it easier for them to get involved with conservation incentive programs. Agencies have worked together to make cost-share rates the same between programs and to inform the Department of Natural Resource's foresters and plan-writers of what the funds will cover. When a forester or plan-writer meets with landowners, they know which programs the land will be eligible for and can explain the benefits of each program to the landowner as well as answer any questions. This serves as a way to increase participation in incentive programs while minimizing the efforts of the landowner to get involved.

Drawbacks

While the plan offers a great amount of technical assistance and education materials to forestland owners, it does not have a strategy to monitor whether or not the landowner actually implements the recommended practices.

Also, the plans provide the opportunity to conserve habitat, but it is not a required element. Unless the landowner has the goal of restoring or preserving habitat on their land, which many do, the plan does not focus on this topic.

Another limitation is that the program is aimed specifically towards forest lands, giving little attention to other important wildlife habitats in the state.

Wetlands Reserve Program (WRP)

The Wetlands Reserve Program, part of the federal Farm Bill, allows landowners to voluntarily retire farmed wetlands from production and protect, restore, and enhance the land for fish and wildlife habitat.

This program uses conservation easements to ensure long-term protection of the land, while retaining it in private ownership. The land can be used for hunting, fishing, and other uses that are compatible with providing wetland functions.

For landowners with a permanent conservation easement, the program covers the easement price and restoration costs. For landowners with a 30-year easement or restoration only, the benefits are reduced.

In Minnesota, the Wetlands Reserve Program is well-funded, with nearly $15 million distributed each year. The Minnesota program focuses its efforts on priority prairie areas as well as high priority waterfowl breeding areas. Projects have been funded in counties across the state to restore wildlife corridors, and wetland, woodland, and grassland habitats.

A Wetlands Reserve Enhancement Program is also available in the state with a structure similar to the federal/state partnership of the Conservation Reserve Enhancement Program and the Reinvest in Minnesota Reserve program. The program will be tailored to Minnesota's specific needs and bring additional money to Minnesota rather than diverting existing Wetlands Reserve funding. The new funding will be designated for strategic flood storage in conjunction with water quality and wildlife benefits in northwestern and southeastern Minnesota watersheds.