Key Considerations for Incorporating Conservation in Land Leases

November 15, 2024

Written By University of Missouri Extension

Despite the benefits of conservation practices on farmland, differing goals and expectations can create tension between landowners and tenants when talking about incorporating them into land leases.

According to University of Missouri Extension agribusiness specialist Jacob Hefley, thoughtful conversations and clearly outlined provisions between the two parties can ease this tension.

“Often, both the landowner and the tenant want what is best for the leased ground and its productivity,” Hefley said. “Landowners are often more focused on long-term productivity, while tenants are more concerned about short-term productivity. When considering incorporating a conservation practice into a farmland lease, the landowner and the tenant need to come to the table with an open mind about how the practice can be beneficial to all involved.”

Hefley noted that there are three major topics to discuss before incorporating conservation practices into land leases:

1. Outside contracts with government agencies or ecosystem markets. Several agencies at the local, state, and federal levels, as well as ecosystem markets and nongovernmental organizations, have programs that may incentivize farmers to incorporate conservation practices. These programs often require contracts that specify what conservation practices are allowable, as well as payment provisions and timelines for activities. To avoid financial penalties or compliance violations, landowners and tenants should discuss potential or existing outside contracts, including their terms and obligations.

2. The responsibilities of each party to incorporate a successful plan. Conservation practices often involve an initial investment and subsequent maintenance activities, which can vary in required labor and cost. Landowners and tenants should discuss who is responsible for the costs associated with these activities, what is permissible in the lease agreement, and the potential liability held by each party. These details should be agreed upon and documented in the lease agreement.

3. The life of the conservation practice relative to the duration of the lease. Activities and responsibilities might require a multiyear commitment depending on the type of conservation practice and structural changes required. This commitment can evoke hesitation from both parties as they weigh the impact on production and return on investment. A written lease is critical to avoid misunderstandings and clarify how a conservation practice will affect production each year as well as during extenuating circumstances such as death or land sales.

“By discussing contractual obligations, each party’s responsibilities, and the timeline of implementing conservation practices relative to lease duration, landowners and tenants can walk away feeling informed and more prepared to develop a lease agreement desirable to both parties,” Hefley said.

MU Extension has a new guide to help landowners and tenants navigate these conversations along with legal considerations. “Incorporating Conservation Provisions in Leases” is available for free download at https://extension.missouri.edu/publications/g433.