Understanding the Wetland Reserve Program
Posted By
Bill Winke
at
1/31/2009 12:00:00 AM
Filed under:
articleshunting land
As a landowner, or someone considering a real estate investment, you may have options available that will help you pay for your purchase or improve your return. In a future article I’ll get into conservation easements – what they are and how you can make them work for you. They are especially attractive in areas where development pressure is high. However, other government easements apply to undeveloped areas such as rural farmland.
One of the most popular among the farmland programs is the Wetlands Reserve Program (WRP). Whereas a conservation easement provides tax incentives to those who forego the development value of their land, WRP is a one-time payment from the USDA that creates an easement for wetlands restoration on land that is currently being farmed.
When you purchase a property with an existing WRP easement on it, you need to know what you are getting into. WRP funding may also provide a nice windfall with very little downside for land you already own. The USDA has allocated more than 222 million dollars for new WRP easements in the United States this year. Here’s how the program works.
A WETLAND EASEMENT
The intent of the WRP is to curb farming practices on hydric soils and restore areas that farmers have manipulated (through diversion ditches, drainage tile, levees, etc) back to their natural waterlogged state. There are two types of WRP easements: permanent and 30 year. According to Randy Robb, Wetland Restoration Specialist for southern Iowa (Iowa receives approximately 10 million dollars annually in WRP funding), most applicants opt for the permanent easement.
If you are accepted, the government pays you a one-time fee (based on an agricultural-value appraisal of the land). In exchange, you agree to stop farming certain areas and to allow specialists from the Natural Resources Conservation Service (NRCS), a branch of the USDA, to restore that area to its natural wetland state. There is considerable flexibility in the WRP plan. In some cases, you may even be able to the use pumps to flood areas annually for enhanced waterfowl hunting, for example. However, once in the program, you must abide by the plan.
The USDA controls what happens on these acres but you have all rights to undeveloped recreation, you control access to the land and you retain the deed to the acres. The WRP requirements transfer with the title; anyone purchasing the land later must live by the same plan.
The amount the USDA pays you for the easement is not based on a pure appraisal driven only by comparable sales and market prices. Instead, it attempts to estimate the present value of future income from farming practices. Generally, however, the WRP payment per acre is very close to what that kind of land sells for in an undeveloped setting.
If you are accepted for permanent easement, the USDA pays 100 percent of the expenses of the project. If you are accepted for a 30-year easement, the government pays 70 percent of the appraised value and foots 70% of the project costs. 
Properties with embedded WRPs are considered encumbered real estate – there are restrictions on the use of at least a portion of the property. In most cases, encumbered real estate commands a lower price, but not always. I have done some research into the resale value of WRP land. While, I wouldn’t buy one myself without looking for comparable sales in the general area, it is not uncommon for a farm with WRP acres embedded to sell for nearly as much as comparable ground without these easements. Randy Robb says typical resale prices on WRP projects that he has seen (he doesn’t track this specifically) runs anywhere from roughly 75% to 100% of the value of similar but unencumbered land.
Resale strength only exists when the potential buyer’s number one reason for owning the land is recreation. Properties with embedded WRPs won’t hold their value in a purely farming-oriented market.
WHO GETS IN?
Priority areas include those that were once wetlands but have been altered to make them farmable. The government is willing to pay to make sure that a percentage of these go back into wetlands each year.
Typically, the USDA allocates the biggest portion of WRP money to 15 states. These are all states with a strong farming tradition that also play a key role in the life cycles of migratory waterfowl. Minnesota, California, Arkansas, Louisiana and Mississippi lead the way. Wisconsin, Michigan, Iowa, Illinois, Indiana, Missouri, Nebraska, Oregon, Washington and Florida rank a close second in dollars allocated per state.
If you feel like your land might meet the requirements for a WRP, contact your county NRCS office and they will send a technician out to rank your proposed site. Your application (along with the score sheet the technician fills out) will then go on the state’s waiting list. Projects with the highest scores go to the top of the list. You will find a detailed overview of the WRP program go to the NRCS’s website.
