Both federal income tax law and local property tax assessment practice are premised on the "theory" that permanent conservation restrictions reduce property values, while shorter term restrictions do not. An analysis of 190 recent sales of Minnesota agricultural land with varying cropping rights restrictions supports only a portion of this theory. Both permanent and short-term restrictions were negatively and significantly associated with per-acre sales prices. The former effect is consistent with the theory and is statistically meaningful, but the dataset contained too few sales with permanent restrictions to warrant a strong conclusion. The latter effect is inconsistent with the theory, but is strongly supported by the data.


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