Do social benefits of preserving built heritage exceed the costs?

Case: Bryggen in Bergen

Ståle NavrudDepartment of Economics and Resource Management

Norwegian University of Life Sciences

E-mail: stale.navrud@umb.no

Contents

• Review of economic valuation studies

of cultural heritage = Social benefits of preservation

• Case:

Cost –Benefit Analysis (CBA) of the World Heritage Site – Bryggen in Bergen, Norway

Review of studies -.Ready and Navrud (eds.) 2002:

Valuing Cultural Heritage

• Mostly Stated Preference techniques used

(Contingent Valuation and Choice Experiments)• Use and Non use – values captured• 27 studies (by 2002); incl. 6 World Heritage sites • Developed/developing/transition countries• Span a wide range of physical assets, services,

quality and policy issues – attempt to classify studies

Lessons learned

i) Few empirical valuation studies

ii) Existing studies vary widely

difficult to compare

iii) People attribute significantly

positive value to CH (Cultural Heritage)

iv) Large proportion state zero WTP

- protesters

- genuine zero funding

Lessons learned (cont.)

v) Higher values for users

vi) Non-users benefits are positive

vii) Competing cultural goods

and Part-whole bias /Embedding

viii) Periodicity of elicited WTP values

iv) Accurate description of good

- match expert assessment and

understandable to people

Conclusion of review

• Experience from environmental valuation apply equally well to CH valuation • Potential for benefit transfer (i.e. transfer of from

study sites to new policy cases) ?Highly site- and project specific values “Book of values” not possible, but there might be similar values for groups of CH goods There is a large need for new valuation studies of cultural heritage for new policy uses

Policy Uses1) Project evaluation (protect/restore)

(e.g. Stonehenge, Split, Fes Medina)2) Level of investment in ongoing projects (e.g. Nidaros and Lincoln Cathedrals)3) Choices between competing uses

(e.g. Nidaros, Stonehenge; new studies of access and deterioration of buildings from access)

4) Decisions on funding mechanisms (Durham Cathedral, Napoli Musei Aperti)

Extent of Market – Number of ”affected” households

• Total benefits (B)

B = bi x N

Number of affected households (N) just as important as mean WTP/household (bi)

- for local, regional, national, global public goods

(i.e. World Heritage site = global public goods)

Case: CBA of Bryggen In Bergen

Benefits:Use Value: 500.000 visitors per yearNon Use Value: • Households (hh) in Bergen and rest of Norway;

Contingent Valuation of national, representative sample of 480 Norwegian households:

Average Willingness-to-pay (WTP) = 188 2003-NOK/hh one-time amount• Households in other countries worldwide could also

have WTP for this gobal good, but small

CBA (cont)

• Costs Restoration program200 – 300 million NOK in total for next 10 years

• Net Present Value (Discount rate r = 4 %, Time horizon = 10-20 y= 80 – 90 million NOK SOCIAL BENEFITS EXCEED COSTS

• Sensitivity:NPV=0 Critical Value for Benefits= 137-145 NOK/hh as a one-time amount

Further reading

• For an introduction to methods to find the

social benefits/economic value of cultural heritage, and an overview of empirical studies; see first and last chapter of Navrud & Ready (2002) at:http://www.nlh.no/ios/Bulletinen/Valuing%20Cultural%20Heritage.pdf