Tim Hayden had planned to enroll 150 acres of his western Minnesota farm in a permanent conservation easement, planting it to grassland that would reduce flooding and erosion while providing wildlife habitat — forever.

Hayden would have received a lump-sum payment, and his property taxes likely would have fallen, reflecting the reduced value of the agricultural land that no longer could be farmed.

But today, the deal is dead.

"I'd have to be nuts to do it now,'' said Hayden, 53, of rural Canby, Minn.

That's because a little-known change to state law made by the Legislature last session says values of property enrolled in conservation easements "shall not" be reduced by county assessors, except in some cases. So Hayden's land would continue to be valued — and taxed — as prime agricultural land, worth perhaps $6,300 an acre, instead of roughly $1,200 an acre as recreational hunting land.

State conservation leaders for state agencies and nonprofit conservation groups say the change is a deal-breaker — a major blow to conserving Minnesota's natural resources — and will discourage both agricultural landowners in the south and forest landowners in the north from enrolling in such easements.

"It will have significant ramifications,'' said Bill Penning, a conservation easement manager with the Minnesota Board of Water and Soil Resources (BWSR). "There will be less financial incentive for landowners to enroll because they won't get the tax break, and there also will be a philosophical reason they don't want to do it. They'll say 'I'm devaluing my land, giving up some of my rights, but they're going to tax me for rights I don't have any more?' They'll say that's not fair.''

But Sen. Rod Skoe, DFL-Clearbrook, one of the bill's authors, said the change will make the property tax burden more fair. The law went into effect May 23 and covers new easements, not existing ones, Skoe said.

"The conservation easement pays them [landowners] for the reduction in value,'' said Skoe. "To then get a reduction in property taxes is like double-dipping. I've never understood why [owners of] conservation easement land should shift their property tax burden onto their neighbor. I think it's more fair this way.''

However, Minnesota is the only state to have such a policy. And the new law, passed as part of the huge tax bill, is a 180-degree turnaround in state policy. In 1981, language was enacted saying that land with conservation restrictions "shall'' be entitled to reduced valuation. In 2008, the language was changed to say the value of such lands "may be adjusted'' by assessors. The new law says values "shall not be reduced.''

"The other 49 states have not gone in this direction,'' said John Curry, associate director at Minnesota Land Trust, which has used easements to protect forest, prairie, shore land and wetlands with about 460 landowners covering 42,000 acres. Other groups, including Ducks Unlimited and Pheasants Forever, and other government agencies, including BWSR, the U.S. Fish and Wildlife Service and cities and counties, utilize easements to protect sensitive lands. In all, state-funded conservation easements protect about 600,000 acres.

And some landowners aren't paid for their easements, said Curry.

"We work with landowners who are primarily motivated by conservation, and wanting to pass on the beauty of nature to the next generation. If they see potential tax advantages, it's really helpful. We're really concerned it [the new law] will have a chilling effect on signing up landowners.''

Among the biggest programs that will be affected, officials say, are the state Reinvest in Minnesota (RIM) and federal Wetland Reserve Program (WRP), which often are used in combination to purchase permanent conservation easements. Since RIM started in 1986, the state has acquired about 6,000 easements covering about 250,000 acres.

"It very likely will be a deterrent,'' said Sarah Strommen, assistant director for BWSR. She said the agency signs about 300 easements a year, covering about 12,000 acres.

Others who work closely with landowners say the same.

"It's our major program that is actually having a significant impact on water quality, quantity and wildlife habitat,'' said Tom Kalahar, a technician with the Renville County Soil and Water Conservation District. "You take that out of our toolbox, and we don't have much left. This will stop most if not all wetland and prairie restorations in Minnesota.''

Said Jon Schneider, Ducks Unlimited manager of conservation programs in Minnesota: "We are very concerned about it. We need to limit the number of barriers there are to enrolling people in conservation programs.''

The new law does have two exceptions: Easements covering riparian buffers along lakes, rivers and streams that are used for water quantity or quality control, and easements under a Dakota County program approved by a referendum to protect farmland and natural areas.

Penning said each county assessor will have to determine what lands qualify under the riparian buffer exception.

"The law is pretty vague: What is a riparian buffer? There's no definition,'' he said. "Let's say you have 100 acres, with a stream on one edge: Is the entire 100 acres riparian, or just 100 feet, and do you carve that 100 feet out for tax purposes?''

Curry and others are hoping to go back to the Legislature next session to change the law.

Meanwhile, Hayden, the Canby landowner, said he had been willing to enroll his land in an easement, even though he could have made more money selling it. But the change in law will have long-lasting impact on his land, if he accepts an easement.

"I'm going to be paying way more in taxes, I'm generating zero income, I'm spending money to maintain [the grasslands]. Even if I was willing to absorb that cost during my lifetime, it is unlikely that anyone else would. In 30 or 40 years I won't be able to give that land away; it would be too much of a financial burden.

"There's absolutely no way I can do the easement now.''