FOR more than 50 years, Merv Zimmerman has run a dairy farm on the fog-wisped hills of western Marin County. But each year it gets harder for him to stay in business. Larger dairies in the California Central Valley threaten a way of life that has persisted here amid the bull thistle and scrub oak for generations. Yet the longevity of his farm holds even broader implications. The farms and ranches on the eastern rim of Tomales Bay abut the Point Reyes National Seashore. They act as a buffer against urban encroachment. To prevent more development, a coalition of public and private interests is pushing an enduring plan to expand the seashore and help ranchers like Mr. Zimmerman stay on the farm. All he has to do is sell his development rights. He keeps milking. The land stays rural. The approach is being hailed as one of the most ambitious initiatives of its kind to conserve land without curbing economic activity. Yet the scheme isn't without its barbed wire. Some ranchers balk at the price conservationists want to pay them for their development rights, and there is no guarantee organizers can raise the public funds to match private contributions. The plan is seen as a test of whether an environmental initiative, even an innovative one, can garner support from a penurious Congress. It also underscores how complicated it can be to balance environmental and economic interests, even when most sides agree on the general approach and it is being carried out in laid-back Marin. ''This is a groundbreaker,'' says John Reynolds, deputy director of the National Park Service. ''It takes into account both economic and conservation interests, and recognizes the best of both. It is a very important evolution in how people with interests in conservation can do so without the heavy hand of the federal government.'' Under the seashore expansion plan, a local organization known as the Marin Agricultural Land Trust (MALT) would use federal and matching private funds to purchase what are called conservation easements from the ranchers, voluntarily. The easements transfer roughly 90 percent of the development rights on a parcel of land to MALT, where they are held in perpetuity. The agreement restricts use of the land to agricultural activity. The issue, one of the largest land conservation initiatives in the country, is about to begin climbing the legislative ladder in Congress. It came up last session, too, but the bill was set aside pending a study of the expansion by the National Park Service. That report was completed in July, and Rep. Lynn Woolsey (D) of California is now trying to rally support for a revised bill. It won't be easy. The measure requests $10 million in federal matching funds to help MALT purchase conservation easements and to monitor compliance. Rep. Jim Hansen (R) of Utah, chairman of the House Resouces Subcommittee on National Parks, Forests, and Lands, to which the Woolsey bill will be referred, says finding that kind of money amid GOP budget-balancing efforts will be difficult. Although he has not seen the bill yet, he says the public-private approach sounds consistent with Republican ideals. ''We will be very particular about what we expand,'' he says. ''It will take fertile minds, coming up with creative ideas,'' to persuade Congress to spend more on parks. The seashore-expansion plan is the latest move in a conservation drive that has been under way for 15 years. Tomales Bay is one of the most pristine water systems in northern California, and a crucial habitat for dozens of ''at-risk'' plant and animal species. Some 130 species of birds have been observed in the marshes and waterways. The bay is also a vital mariculture center, accounting for 18 percent of California's commercial oyster crop. Recognizing the vital role family farming has had in keeping the bay clean and underdeveloped - about 80 percent of the watershed is in agricultural use - a group of local ranchers and environmentalists established MALT in 1980. Using various private grants and public bonds, it has acquired the easements to 38 farms - including about a third of the total area of the expansion. Bob Berner, president of MALT, says the easement purchases provide vital benefits to participating ranchers. They conteract the trend of rising land prices. In recent years, the value of agricultural land in Marin County has escalated far above the value based on justifiable agricultural uses. Those inflated values are a windfall to current owners, he says, but are prohibitive for new owners or inheritors. Since the easements remove the development rights, Mr. Berner says, they help deflate the value of the land, which in turn lowers both property and estate taxes. Further, the easements provide ranchers with capital to modernize and diversify their operations. But Zimmerman isn't convinced. His family started ranching in northern California in 1848. His sons have ranches nearby. He'd like his grandson to take over his operation. Selling off the development rights for a one-time cash payment may help him upgrade his operation - but only once. After that, the land is less valuable. ''What are we doing?'' he asks, leaning up against his manure-splattered pickup. ''Are we giving up the right to make money on our property, or just making open space?'' Zimmerman argues that, through strict zoning laws, Marin County already makes it difficult to develop the land around Tomales. Any effort to do so, he says, would probably involve a long and expensive lawsuit. But the rancher holds out the prospect of some day consenting to MALT, if the price or other circumstances are right. He might also be willing to accept a deal that gives him tax exemptions in exchange for the development rights, or a land swap. ''The park isn't the issue,'' he says. ''The value of the land is the issue. If there is a way to block the expansion until land prices are jacked up, we'll do it.'' Berner says that isn't likely. MALT assesses land at market values for each parcel at the time the easement is acquired. Meanwhile, down the road from Zimmerman, Ellen Straus shows off the benefits she says she's gotten out of the easements. A former co-founder of MALT, she sold her development rights after resigning in 1990. The funds from the easement allowed her to transform her operation into the first and only organic dairy in California. She bottles her milk, and makes such value-added products as cream, yogurt, and butter. That's the secret, she says. ''Dairies in the Bay Area must look for diversity.''