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Economics in urban conservation

Economics in
urban conservation
Nathaniel Lichfield

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Cambridge University Press 1988
This publication is in copyright. Subject to statutory exception
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no reproduction of any part may take place without the written
permission of Cambridge University Press.
First published 1988
This digitally printed version 2009
A catalogue record for this publication is available from the British Library
Library of Congress Cataloguing in Publication data
Lichfleld, Nathaniel.
Economics in urban conservation/Nathaniel Lichfleld.
p. cm.
Bibliography.
Includes index.
ISBN 0 521 32851 9
1. Urban renewal Economic aspects.
2. Cultural property, Protection of Economic aspects.
3. Urban economics.
4. Architecture - Conservation and restoration.
I. Mekhon Yarushalayia le-heker Yisra 'el.
II. Title. III. Title: Urban conservation.
HT170.L54 1988
3 3 3 . 7 7 - d e 19 88-2845 CIP
ISBN 978-0-521-32851-7 hardback
ISBN 978-0-521-10530-9 paperback

Contents
List of diagrams, tables and plans

page xi

Preface

xiii

Acknowledgements

xv

Introduction

The evolution of conservation and its economics

Part I Planning and management in the conservation of the


urban system
Summary

Life cycle in the urban system


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1 2
1 3
1 4
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1 6
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1 7
1 8
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A concept of the urban system


Interaction between people's activities and the physical stock
The urban system as a resource
Categorisation of urban resources
1 Natural
2 Human
3 Man-made
Life cycle of urban resources
1 Overview
2 Natural
3 Human
4 Man-made
Obsolescence, renewal and conservation in the life cycle of
the built environment
1 Overview
2 Obsolescence
3 Renewal and conservation
4 Summary over the life cycle
Why develop or conserve urban resources?
Logic of conservation in the various categories of urban
resources
1 Natural
2 Human

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Contents
1 8 3 Man-made
1 8 4 Overall

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Planning and management of urban resources


2 1 From resource to property and commodity
2 1 1 Overview
2 1 2 The built environment as resource, property and commodity
2 2 What is management?
2 3 What is urban management?
2 4 Management for urban conservation
2 4 1 Focus
2 4 2 Natural resources
2 4 3 Human resources
2 4 4 Man-made
2 5 The process of planning and management for change
2 5 1 Change through development and conservation
2 5 2 The management process
2 5 3 Planning for management
2 5 4 Management in urban and regional planning
2 5 5 Management and planning

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Planning for urban conservation


3 * 1 Role of planning in the evolution of the urban and regional
system
3 1 1 The general planning process
3 1 2 Plan making
3 1 3 Plan implementation
3 1 4 Monitoring and review
3 2 Role of conservation in urban planning
3 3 Role of planning in deferring obsolescence
3 4 Role of planning in urban conservation

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Part II Conservation of the cultural built heritage


Summary
4

The nature of the cultural built heritage


4 1 Man's heritage
4 2 Proprietary rights in the heritage
4 3 The general and cultural heritage
4 4 The cultural built heritage
4 5 The CBH as property and commodity
4 6 Why conserve the cultural built heritage?
4 7 Conservation of the cultural built heritage as a special case of
renewal
4 8 Property management for the conservation of the CBH
Appendix 4.1 A description of the cultural and natural heritage
Appendix4.2 Adescriptionof mo veable cultural property

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Contents

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Identification and protection of the CBH


5 1 The issue
5 2 Content of inventory or list
5 2 1 What kind of artifact is to be included?
5 2 2 What are the criteria for inclusion or exclusion?
5 2 3 How to grade conservation quality?
5 3 Machinery for protection of list or inventory
5 3 1 What kind of listing mechanism?
5 4 The effects of listing
5 5 Securing permission to alter or demolish objects on the list

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Management and planning in the conservation of the urban


cultural heritage

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Part III

1
2
3
4
4
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5
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Relation of planning and management


Role of the CBH in urban planning
Role of the cultural heritage in urban planning
Plan making in the conservation of the CBH
1 Macro planning
2 Micro planning
Plan implementation in the conservation of the CBH
The conservation programme
Project implementation in the conservation of the CBH
Project execution
Some planning and management questions in the conservation of the CBH

Economics in the management of the built environment


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Economics in urban conservation


Introduction
Summary

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1 Conservation in economic life


1 1 What is economic life?
1 2 Economic life and conservation
2 Economics of proprietary interests in conservation
3 Economics in management for urban conservation
3 1 Natural resources
3 2 Human resources
3 3 Man-made resources
4 Economics decisions in the life cycle of the built environment
4 1 Introduction
4 2 The model over the life cycle
4 3 The model notation
5 Application of the model
5 1 Use of open land
5 2 Development on unbuilt land
5 3 Use of the built fabric
5 4 Economic obsolescence

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Contents
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5 5 Rehabilitation
5 6 Redevelopment
5 7 Rehabilitation versus redevelopment
5 8 Heritage value
5 9 The private and public sector
5 10 Incidence of costs and benefits on property interests
6 The implications of borrowing money
7 Taking account of the future
8 Land use and value in the life cycle of the built environment
9 Life of property
10 Effect of planning control

Economics in the conservation of the CBH


8-1
8 2
8 3
8 3
8 3
8 3
8 3
8 3
8 4

The CBH as a resource


The CBH as property
Economics in the life cycle of the CBH
1 Economics in use
2 Economics of obsolescence
3 Economics of renewal
4 New uses for old
5 Financial aids to meet the viability shortfall
Land use and land value in the life cycle of the CBH

Economics in planning for conservation of the CBH


9 1 The similarity and distinction of purpose in economics
and planning
9 2 Planning and the market
9 3 Role of economist in urban and regional planning
9 4 Some economic principles in plan making for conservation of
the CBH
9 5 Economic feasibility of plans for conservation of the CBH
9 6 Economic evaluation of plans for conservation of the
CBH
9 7 Economics in the CBH conservation programme
9 8 Priorities in the conservation programme of CBH
9 9 Economics in project implementation

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Valuation of the cultural built heritage

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10 1 The issue
10 2 What is value?
10 3 What is being valued in the CBH ?
10 4 By whom is the valuation being made?
10-4-1 An individual
10 4-2 Agroup
10-4-3 Society
10 4 4 Government
10 5 Market value and the CBH
10 6 Approaches to valuing the CBH

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Contents
10 7 Approaches to grading heritage quality in preparing the
inventory/list
10 8 Role of economics in cultural valuation
10 9 Opportunity cost and the CBH
10 9 1 The concept
10 9 2 Private
10 9 3 Social
10 10 How can economics help in the social decision on conservation?
10 11 The valuation in its decision context
10 11 1 Approach
10 11 2 Valuing conservation quality for plan and project evaluation: worth whileness
10 11 3 Ranking of priority in conservation with given budget
10 11 4 Project implementation
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Screening of the inventory or list


1 1 1 The issue
1 1 2 Nature and purpose of the list
11 3 Screening the inventory
11 3 1 Prior consultation
11 3 2 Planning proposals
1 1 3 3 Economics
1 1 4 Economic criteria for development affecting heritage quality
1 1 4 1 The issue
1 1 4 2 The owner/developer
1 1 4 3 The community

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12 Who benefits and who loses from conservation of the CBH?

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6
7

The issue
How to assess the true costs and benefits?
Who benefits and who loses?
The sectoral distribution of the costs and benefits
Who should pay the cost?
1 The issue
2 Compensation
3 Betterment
How much should be paid? - pricing for conservation
Conservation and tourism

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Part IV Selected tools of economic analysis for project evaluation


Introductory

13

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Financial impact: financial analysis

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1
2
2
2

Context
An illustration offinancialanalysis
1 Where the refurbishment is viable
2 Where the refurbishment is non-viable

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Contents
13 2 3 Effect of taxation relief on financial viability
13 3 Social financial analysis
13 4 Illustration of social financial analysis

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Economic impact: social cost benefit analysis

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1
2
3
4

Context
Origins of method
Method and technique of SCB A
The social rate of discount

Community impact: community impact analysis

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15-1
15 2
15 3
15 4

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15

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Context
Evolution of the method of PBSA/CIA
Some features of CIE
Concepts of efficiency, equity and trade off in community
impact evaluation
The method of CIE
The method applied
1 The case
2 The options
3 The method in summary
4 The community impact analysis and evaluation
5 Conclusions on efficiency

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Appendix 15 1 Selected published examples of planning balance sheet/


community impact studies
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Part V Case studies in the economics of conservation of the CBH


Summary

16 The case studies


16 1 Case study 1: Viability for occupation
16 2 Case study 2: The Royal Holloway Sanatorium, Virginia
Water, Surrey
16 3 Case study 3: The Old Sha'arey Tsedek Hospital, Jerusalem
16 4 Case study 4: Covent Garden, London: redevelopment or
conservation over an area
16 5 Conclusion for all cases
Appendix 16 1 Criteria for listed building consent
Notes
Bibliography
Index

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303
314
315
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332
354

Diagrams

1.1
1.2
1.3
2.1
9.1
10.1
10.2
10.3
12.1

Activity of people in a community through their life cycle


page
Way of life in community
Obsolescence, renewal and conservation in the life cycle of urban fabric
Development plan/operational plan relationships
Assessing priori ties of conservation projects in fixed budget
Evaluation of cultural quality in buildings by points scoring
Private opportunity costs to proprietor of conservation of the heritage
Social opportunity costs to community of conservation of the heritage
Schematic model of circulation of spending on tourism related activity

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13
28
42
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214

Tables

1.1 The stock in the urban and regional system: past, present, or future
7.1 Maximum cost of improvement per dwelling as proportion of cost of
new building
12.1 Distribution of benefits and costs of conservation
IV. 1 Frame work for change visualised by a development project
IV. 2 Difference between the tools for analysis of costs and benefits
IV.3 Comparison of inputs of Department of Transport social cost-benefit
analysis with community impact model
13.1 Development appraisal: refurbishment of listed building within constraints
13.2 Development appraisal: refurbishment with listed building consent
outside constraints
13.3 Development appraisal: redevelopment
13.4 Effect on viability of listed building refurbishment (Table 13.1) on
revised assumptions on significant items
13.5 Social financial analysis
15.1 Comparison of land uses in Sha'arey Tsedek: options A and B
15.2 Master table ofCIE showing source ofinput to Table 15.9
15.3 Framework for change: option A (rehabilitation)
15.4 Framework for change: option B (redevelopment)

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264

xii
15.5
15.6
15.7
15.8
15.9
15.10
16.1
16.2
16.3
16.4
16.5
16.6
16.7

List of diagrams, tables and plans


Impacts from project variables: option A (conservation)
Impacts from project variables: option B (redevelopment)
Community sectors and options in which they are involved
Summary of impacts on completion of options A and B
Evaluation of options (on completion)
Conclusion on options from Table 15.9 (on completion)
Royal Holloway Sanatorium: rehabilitation: financial viability of
scheme (1): office/residential
Royal Holloway Sanatorium: rehabilitation: financial viability of most
profitable residential scheme (Y)
Royal Holloway Sanatorium: evaluation of office/residential and residential options
Royal Holloway Sanatorium: summary of evaluation in Table 16.3:
O/R against R options
Covent Garden: redevelopment: investment costs and returns on land
transaction
Covent Garden: redevelopment: annual surplus/deficit to parties on
land transaction
Covent Garden: comprehensive versus piecemeal redevelopment: a
planning balance sheet appraisal

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309
309
313

Plans

15.1 The old Sha'arey Tsedek Hospital: Jerusalem: location plan


15.2 The old Sha'arey Tsedek Hospital site: Jerusalem: rehabilitation
scheme
15.3 The old Sha'arey Tsedek Hospital site: Jerusalem: redevelopment
scheme
16.1 The Royal Holloway Sanatorium: Virginia Water: current block plan
16.2 Covent Garden, London: location plan
16.3 Covent Garden, London: redevelopment opportunity

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306

Preface
This book is a sequel of joint research in 1982-84 by the writer and
Professor Joseph Schweid with a grant from the Jerusalem Institute for
Israel Studies*. The Research Report, The Role of Economics in the Conservation of the Cultural Built Heritage: Policy Conclusions for Israel, was
presented in English in four parts:
I Planned Conservation of the Built Environment
II Economics in the Conservation of the Built Environment
III Two Jerusalem Case Studies
IV Application to Israel: Principles, Practice and Procedures
The Jerusalem Institute asked that the Report be published in two
versions: in Hebrew for the Israeli audience and in English for Israel and
abroad.
Since the Israeli audience would be primarily concerned with Parts III
and IV, these were highlighted in the Israeli version with the remainder
being presented as summaries. This version, edited by Joseph Schweid,
appeared under the title Conservation of the Built Heritage (Jerusalem: The
Jerusalem Institute for Israel Studies, 1986).
By the same token the English version required adaptation of the
Research Report, in this instance the omission of Parts III and IV, and
concentration on Parts I and II. In addition there was a further significant
enlargement of scope. This arose from the experience of writing the
Research Report, namely, that it was not practicable to discuss the
economics of conservation without first presenting as a context the subject
matter of conservation; and not practicable to present the conservation of
the cultural built heritage without discussing as a context the conservation

* The Institute set up a Stealing Committee (Chairman, Professor Morris Hill)


who helped us through successive drafts.

xiv

Preface

of the built heritage in general.* This approach is adopted here. But the
general built heritage has been presented in greater depth, and the scope
has been broadened beyond the general built heritage into 'urban conservation' as a whole, to take in also the national and human resource content
of towns.
In the process, considerable additional material has been added in
relation to urban conservation, conservation of the cultural built heritage,
and the economic aspects. These include four case studies in Chapter 16,
one being derived from the Jerusalem case studies, with the others from
consultancy practice in Britain.
Thus the subject has been considerably broadened in scope since the
initial research study, as shown in the following outline of contents.
Part I sets the scene for urban conservation in general, including its management and planning.
Part II sets the scene for conservation management and planning for the cultural built heritage, first showing its relation to
the general cultural heritage, and then how it is identified,
managed and planned.
Part III introduces economics into the planning and
management of urban conservation before going into depth on
the economics of the conservation of the cultural built heritage.
Part IV introduces four tools of economic analysis needed for
applying the economics of Part III.
Part V presents four case studies which demonstrate the use of
the tools in Part IV and the conclusions that can be drawn from
them for answering a series of relevant questions.
This is the skeleton of the treatment of our theme. Its fleshing out is
contained in the summary introducing each of the five parts so that the
flavour of the book as a whole can be obtained from their prior perusal.
* The 'cultural built heritage' (CBH) is used below to indicate that part of the
built environment (the general built heritage, GBH) which is intended for
protection and conservation. But, for the Israeli version, it was argued, the
word 'heritage' itself is sufficient to make the distinction, for in popular usage it
denotes that part of the past which is to be protected: in brief, 'cultural built
heritage' and 'built heritage' can be taken as synonymous. But since this book
deals, more with the general built heritage, it retains for contrast, 'cultural built
heritage'.

Acknowledgements
My thanks are due to many people, notably in Britain, Israel and Italy, from
whom I have learned about conservation in work, lectures and discussions.
In relation to this particular book my special thanks go to the following who
have read the manuscript in draft and made comments which enabled me to
improve the content: Donald Denman, Professor Emeritus in the Department of Land Economy, University of Cambridge; Sir Bernard Feilden,
Conservation Architect; Luigi Fusco Girard, Professor in Department of
Urban Economics, Faculty of Architecture, University of Naples; David
Pearce, Professor of Economics, University College London; David
Warren, Conservation Architect, English Heritage.
Then come those with whom I have discussed at length particular aspects
within the text, namely: Michael Beesley, Professor of Economics, Graduate School of Business Studies, London; Eric Cohen, Professor in
Department of Sociology and Anthropology, The Hebrew University,
Jerusalem; Almerico Realfonzo, Professor of Estimo, University of Bari;
Joseph Schweid, Professor in Bezalel Academy of Art and Design, Jerusalem; Roberto Di Stefano, Professor, Head of School of Reconstruction of
Monuments, University of Naples; Roger Suddards, Solicitor, Bradford.
Then come those too numerous to mention, from whom I have learned, in
discussion and in practice.
In addition my thanks are due to my firm, Nathaniel Lichfield &
Partners, in so many ways. To my partners, Geoffrey Smith and Dalia
Lichfield, for their benign tolerance to my academic self-indulgence. To
them and other colleagues, notably Nick Thompson, with whom I have
worked on, and benefited from, our conservation studies. To Annabelle
Disson for wordprocessing impeccable text in impeccable humour from the
innumerable alterations I have imposed on her. To Sutchinda Rangsi for
her elegant illustrations. To our librarians for their relentless pursuit of
material and references.

xvi

Acknowledgements

Finally I wish to thank the following for permission to use illustrative


material or text:
Her Majesty's Stationery Office for Diagram 2.1, which is Crown copyright
and reproduced with the permission of the Controller of Her Majesty's
Stationery Office.
The Minister of Supply and Services, Canada, for Diagram 10.1.
The Jerusalem Institute of Israel Studies and Mr. Yaacov Allon for Plans
15.2 and 15.3.
Hunter & Partners for Plan 16.1.
The London Residuary Body for Plan No. 16.3.
Pergamon Press for Table 16.7.

Introduction
The evolution of conservation
and its economics
It would have been helpful, to author and reader alike, if our treatment of
the subject could have been placed from the outset in some recognisable
wider context, within which our particular approach could be pursued. But
this is not so. The elements in the subject which are expressed in our title
are in themselves diffuse and not clear cut, while the approach to and
understanding of them have changed vastly. We therefore need to start
with an Introduction which places them in some perspective from their
evolution over this century. From this it will be apparent that the wider
context touches upon great variety in our lives. This very variety means
that the brief Introduction can be only sketchy. A guide to its further
exploration is given in the footnotes and Bibliography.
The scene for our detailed study of economics in conservation is broadly
sketched out in Part I. From the various meanings of the term urban (1.1)
we choose the most familiar: the parts of the earth's surface which are built
up as opposed to rural and open. Within this we see not just bricks and
mortar but also the areas left to nature, the people themselves and their
mobile goods as well as the immobile bricks and mortar (1.4). But while
this concept of the urban area has remained, its size, distribution and
functioning has changed violently over the century (through change in
transportation, communication, distribution of income and wealth, etc.,
leading to widespread and damaging obsolescence) (1.6). And with the
change has grown the awareness of the need for conservation (1.8) and the
role of management and planning in achieving it (Chapters 2 and 3).
It is against this scene that we now consider the evolution of conservation
and its economics.

Introduction

The modern conservation movement and its philosophy originated about


the turn of the century, around two related but distinct fields which are
pertinent to our theme: natural resources, largely in rural areas, and
monuments and historic buildings, largely in urban areas. But while
originating about much the same time, they have each since taken different
paths.
In the first, natural resource conservation has retained much of the focus
of its United States origins,1 but has taken on additional dimensions since
World War II in the concerns for conservation of the natural environment
against pollution.2 In the second, the early limited essays have spread
enormously beyond monuments and archaeology to buildings and objects
of much more recent origin and also to extensive urban tracts, the
'conservation areas'. 3 But while this conservation of the historic parts of our
towns has attained strength, conservation of the remainder has lagged
behind.
In its evolution, the movement has received stimuli from many sources.
Very early on it became identified with the 'progressive political reform
programme' of the United States,4 which is seeing its contemporary
equivalent in the political movement of the 'greens', a movement which has
become accepted in varying degrees by all parties. 5 Then there was the
shock delivered by the Club of Rome sponsored studies which enlarged the
conservation concern from limited areas to the global scale,6 and the United
Nations Conference on the environment in 1972 which highlighted
environmental pollution.7 The conservationists have met spirited resistance. 8 The controversy has crystallised into the searching and fundamental
question of whether mankind can continue to pursue the growth ethic of
the past two centuries or whether it must accept limitations on such
growth, with its grim implications for the lagging development of huge
areas and populations of the Third World, because of the potentially
disastrous consequence to 'spaceship earth' and to mankind itself.9
With this huge growth in concern for 'conservation' there has been an
enrichment in analysis and policy from a variety of sources. 10 Some are:
technological/scientific/ecological, in respect of the impact of man's growth
and development on nature; 11 ethical, which emphasises that the contradictions give rise to a need to adapt human values;12 aesthetic, which asks
for amelioration of the horrors of ill-considered rural development, for
prevention of demolition of historic buildings, and protests against
'modern architecture'; 13 social, which registers the impact of growth on
society, the protest against comprehensive redevelopment and dislocation

Introduction

from the older neighbourhoods and against the erosion of established


culture by tourists; 14 and economic, which argues that there is no black and
white answer and offers a rationale for approaching a balance. 15
The emergence of this deeper and wider concern has been accompanied
by the emergence not only of the conviction that countries individually and
in combination ought to do something about the problems rather than
drift, but also that they can do so with the post-World War II tools of
government intervention and planning. 16 In practise this has led to friction
at the three levels: national, regional and local. At each the conservation
issues have become critical, at for example the national level in terms of new
development and rural conservation; at the regional level in terms of equity
in spatial balance; and at the local level in terms of protection of amenity
and environment. And issues are being seen differently in the First, Second
and Third Worlds. In the First, the balance recognises the high average
levels of prosperity and the history of damage which has been inflicted in
reaching it through the first industrial revolution. In the Second, the
balance is seen in the need to increase development and growth in order to
improve distribution; in the Third, there is seen the need for development
to catch up, but hesitation in following the brutal exploitation of the first
world in its path to development. Within all this there is a fundamental
question of 'growth or no growth' 17 and given the wish to control growth,
how to do so. 18
Despite all the dramatic and traumatic changes, the term 'conservation',
coined in the early days of the United States movement, 19 has persisted. It
is an umbrella word covering both the rural and urban scene. But it clearly
means something very different from its origin, as the following indicates.20
The concept of conservation can therefore be visualised as an amalgam of
interacting forces which are embodied in the viewpoints of a number of disciplines.
There is no central focus to this philosophy, no concrete issue around which it
coalesces and becomes operational. Rather it is an ambiguous vaguely conceived
notion which reflects great disparities in the views of its proponents. Furthermore,
it is subject to subtle yet important shifts in emphasis over time, which further
reduce the clarity and consistency of its expression.
So far we have considered only the 'conservation' of our title and we now
come to the 'economic'. This aspect has also been affected by the search to
find the intellectual basis for conservation, in particular in relation to
natural resources, in its analytical, descriptive and also policy aspects. 21
Stimulated in part by this search, there have been significant changes in the

Introduction

content of economics over this century, in the need to comprehend many


new phenomena apart from conservation. Again a number of strands can
be seen of which a few are noted.
At the turn of the century, economics was dominated by attention to the
private sector and its market, and it was only in the thirties, regarded as
the turning point in economic analysis,22 that public sector economics
received its major stimulus leading to its considerable present status. 23
One significant and far reaching element in this economics has been the
recognition and treatment of 'externalities', also called 'diseconomies',
'side effects' and 'spillovers', which have attempted to apply to social
(non-market) costs and benefits the analytical treatment accorded to
private costs and benefits of the market place. 24 Linked with this has been
the need to consider how choice is to be made by the public sector where
because of externalities reliance cannot be placed on the market. 25
With the growth of government's role since World War I, greatly
stimulated by World War II, there is the further controversy over how
government can and should introduce and manage economic policy.26
There is some doubt as to whether it is possible or proper for the economist to go beyond 'positive' descriptions of the working of the economy
(what is, was or will be, independent of any particular ethical position or
normative judgement) in order to enter into normative economics, i.e.
advice on what ought to be and the prescription of policy.27 Within the
latter, some think it inevitable and desirable that values should be treated
with care. 28 Some go beyond this to argue that it is indeed values (be they
of government or the economist) which in themselves influence the
content of economics.29 Then amongst those who are in favour of economists assisting with normative or regulative policies, there are the controversies over which policies and how to implement them. Here the
controversy ranges from those who as a reaction against dirigisme are
reluctant to tamper with the market beyond what is essential30 and those
who deprecate the market in favour of centralised state planning. 31 And
between the two are those who consider the way forward to be the
management of a mixed economy32 and the greater use of markets in a
socialist economy.33
Within this changing scene there has been uneven development in the
economics relating to our theme. Again, natural, rural and environmental
resources have received very rich and advanced treatment. 34 But, historic
buildings apart, the topic of urban conservation in general, in urban
planning and management, has advanced only modestly,35 although one

Introduction

aspect, the management of large urban estates comprising historic buildings, was pioneered early in Britain and has become sophisticated.36
In general, the economic aspects have lagged behind, providing only for
the scattered and partial treatment. One reason has been the sub-division of
the subject between different academic and practitioner skills: mainstream
economics; urban economics; land economics; land economy, management
and administration; and financial appraisal.37 While each skill could
supplement the other they have in general been pursued without adequate
mutual enrichment.

Parti
Planning and
management in the
conservation of the
urban system

Planning and management in conservation

Summary
Urban conservation aims to restrain the rate of change in the urban system
(1.7) which embraces the regional systems within which it functions, with a
view to achieving a better balance between conservation and development
than would otherwise prevail. To assist our understanding of how to do so
leads us to formulate a concept of the urban system (1.1) and how this
changes through the interaction between people's activities and the
physical stock (1.2). In this the urban system is seen as a resource to satisfy
human needs, wants and desires (1.3). The resource can be categorised into
three interacting components: natural, human and man-made (1.4). It is in
relation to each of these that the life cycle is sketched out (1.5) and then
discussed in greater depth in respect of the man-made fabric with which we
are primarily concerned (1.6). This leads to the general question of why we
develop or conserve urban resources (1.7) and to taking into depth the logic
of conservation of the three components (1.8).
If a better balance is to be kept between conservation and development
there needs to be management of urban resources (Chapter 2). But since
management is a function of the proprietary interest in a resource,
controlled by the manager on behalf of the owner, we start with a
description of the relationship between resource, property and commodity
(2.1). This leads to the discussion of the nature of management in general
(2.2) and then to the question: what is urban management (2.3) leading to
the focus of the study, management for urban conservation (2.4). We then
enter into the process of planning and management for change, bringing
out the relationship between the two (2.5).
Having seen the role of management we next concentrate on planning,
not for all elements in the urban system but for those relating to its
conservation (Chapter 3). This requires an introduction of the general role
of planning in the evolution of the urban and regional system (3.1) leading
to the role of conservation in urban planning (3.2). We then consider how
planning can help in urban conservation, first in terms of deferring urban
obsolescence (3.3) and then in advancing conservation (3.4).

1.1

Life cycle
in the urban system

A concept of the urban system1

We use the term 'urban' to convey a simple image: the familiar concentration
of bricks and mortar, varying enormously in scale from the village to the
metropolis and conurbation, which contrasts with the rural. But the image
is over simple. Webber has pointed out a second meaning: the relatively
sophisticated urban life-style which can be obtained in the rural area by
those having a high, i.e. urban, standard of living (television, radio, cars,
private planes, etc.). 2
There is a further dimension to the term which is significant for us. No
urban area, except perhaps the remotest jungle-bound or desert village, is
self-contained in that only residents use it. In contrast, the typical town is
used in part by residents and in part by others who visit for various
activities (work, education, recreation, etc.); and some of the town's
residents will travel outside for their activities (work, recreation, etc.).
Thus any town can be defined in relation to this functional criss-crossing of
'urban activities'. This definition in itself must bring in the 'regional
system' in which the town functions. In this sense, the 'urban' embraces
the 'regional' system within which it functions.
Any town or region thus comprises a diverse array of physical elements
(buildings of all kinds and spaces between them, parks, roads, etc.) and of
diverse human activities (shopping, production, recreation, etc.). In the
diversity there is some order, for otherwise people would not get to work on
time, they would not have the milk bottle on the doorstep each morning,
and they would not meet in groups for religion, culture, etc. Diagrams 1.1
and 1.2 give one version of this order.
Within any community, from village to metropolis, each individual will
participate in activities according to his/her stage in the life cycle (Diagram
1.1). Some of the activities will be purely individual, others as members of

12

Economics in urban conservation


ACTIVITIES

PEOPLE AS
INDIVIDUALS

HOME
WORK
EDUCATION
RECREATION
ENTERTAINMENT
SHOPPING
ETC.

Diagram 1.1
Activity of people in a community through their life cycle
families and others as members of wider ranging groups (clubs, associations, youth organisations, etc.). In sum the activities make up the way of
life in the community, be it limited or full. A concept of how people achieve
a particular way of life within the external constraints over which they have
little control, such as the economy, national policies, etc., is shown in
Diagram 1.2, by reference to the box numbers.
At the top of the diagram are the people (1), not at any one moment in
time but as they change over their life cycle.
People's activities (2) require their own institutions (organisations and
style of management) (5). The nature of such institutions has implications
for the way of life, ranging from highly centralised direction to considerable
freedom for initiative, innovation, self-management, etc.
People engaged in these activities require an appropriate physical
environment, both natural and man-made (3) with its institutions for
organisation and management (6). This will interact with the activities (2).
Good housing will help good family living. The absence of schools and
community centres will stultify education and recreation. Correspondingly, the management of the activities (5) and environment (6) will interact
with government (7).
All these influences will affect the way of life and thereby people's
perception of the quality of that life (8). They are concerned not simply
with what is being done but how it is done. In this a critical factor is the way
in which that life is managed (5 and 6) and governed (7). The greater the
degree of self-management, the greater the likelihood of people responding

Life cycle in the urban system

13

PEOPLE THROUGH
LIFE CYCLE

ACTIVITIES

INTERACTION

PHYSICAL
ENVIRONMENT

MANAGEMENT OF
ACTIVITIES

GOVERNMENT

MANAGEMENT OF
ENVIRONMENT

WAY OF LIFE OF
DIFFERING QUALITY

Diagram 1.2
Way of life in community
quickly to external changes and adopting solutions which suit their own
perception of their needs and values. A high standard of life under a
dictatorship is quite different in quality from a poor standard of life
with freedom in law and self-management in an open democracy. A
high standard of housing and landscaping can be coupled with a low
level of personal fulfilment and a poor quality of social relationships.
In essence a high quality of life gives people, whether as individuals, in
families or groups, the opportunity to fulfil themselves as human beings.
For this they need not only an appropriate material standard of life but also
appropriate management of their environment in all spheres (social,
economic, institutional, physical) and appropriate administration by
central and local government.

1.2

Interaction between people's activities and the physical stock

In Diagram 1.2 is shown the interaction between people's activity and their
physical environment in the urban system. In this section we amplify that
interaction.

14

Economics in urban conservation

Table 1.1 The stock in the urban and regional system: past, present, or future

Physical elements

Supply
Demand
Physical stock
Flow of activities
Natural
Man-made Man-made
resources Fabric
moveables Producers Consumers
(Built Environment)

1 Human population
2 Natural resources
Land, water,
minerals, etc.
Fauna
Flora
Air
Sun
Rain
3 Utilities infrastructure
Gas
Electricity
Water/sewerage, etc.
4 Transportation
Train
Bus
Car
Cycle
Foot
Parking (various)
5 Telecommunications
Telephone
Radio
Television
Cable
6 Buildings & sites
Residential
Industrial
Commercial
Shopping
Administrative
Recreation/leisure
Educational
7 Open spaces
City-wide
District
Neighbourhood

x
x
x
x
x

Life cycle in the urban system

15

Table 1.1 shows a representation of the urban system which is suitable


for our purpose. It is made up on the one hand of the supply of physical
stock and on the other of the human population who in their various
activities (work, recreation, education, etc.) exercise the demand on that
stock. The physical stock can be divided into: natural resources and the
built environment (fabric and moveables). The former comprise the land
(water, minerals, etc.), the product of the land (fauna andflora)and the life
giving air, sun, rain, etc. The latter comprises the infrastructure in utility
services (water, sewerage, gas, electricity, etc.) on which the utilisation of
the buildings and places depend; the buildings and open places which are
used for residential purposes on the one hand (homes, hotels, barracks,
etc.) and for social activities on the other (work, education, leisure,
recreation, etc.); the means of transportation between buildings used for
these various purposes (private automobile, buses, trains, etc.); and also in
substitute, the means of telecommunication between them (telephone,
radio, television, etc.).
The activities take place within the framework of Diagrams 1.1 and 1.2.
There is a flow of people with their activities, from within the town and
surrounding area, which uses this physical stock as producers and consumers; for part of the time people enjoy their dwellings (homes, hotels,
etc.) and for part of the time they are engaged in social activities (of work,
recreation, leisure, education, etc.). As linkages between the activities
there are the means of transportation and communication.
The situation at any moment in time, as shown in Table 1.1, changes
through the interaction between the physical stock and human demands on
that stock, growth or decline in the numbers of population and their
requirements for work, etc. (Diagram 1.1) will give rise to growth or
decline in the numbers of dwellings, work places, etc. which are needed.
These changes will come about not only from forces within an urban area
but also from outside, in the particular region supporting a particular urban
area, or in the wider system of urban areas of which the particular urban
area is part. Conversely, the availability or non-availability of a stock of
man-made fabric of various kinds will attract to itself or deny human
activities, as a stimulant or a constraint to socio-economic life. Thus it is
through this interaction of the man-made fabric and human activities that
cities, towns and villages change, grow and decline.
The urban fabric tends to last a long time (varying from decades to
centuries) owing to the relative durability of construction materials. By
contrast, human activities which have to be accommodated within the

16

Economics in urban conservation

fabric can change much more rapidly (e.g. the size of families, modes of
production, abandonment of cinemas for television, dislocation through
war or earthquake). Thus changes in human activities will tend in the first
instance to be accommodated within the existing urban fabric, adapted as
appropriate through refurbishment or other kinds of renewal, perhaps for a
brief time and perhaps over a long period. At that time the physical stock
reflects the then current demands on it. But it may not do so later, with
changes in location of activities or in means of accessibility of people to the
physical stock.
Beyond a certain point in time the interaction cannot be quantitatively
accommodated in the existing or adapted urban fabric, giving rise to the
need for new physical stock on open land, either infill within the urban
fabric or more commonly on its edge, which we call new urbanisation. The
adaptation of the current stock and the new development are in competition with each other in satisfying the common need for the matching of
the fabric to contemporary requirements. The competition is not even, for
the provision of new stock on open land is generally easier than renewal, so
giving rise to a basic issue in urban conservation: the syphoning of demand
from the established fabric to open land.

1.3

The urban system as a resource

Diagram 1.2 shows how the urban area provides a foundation for a people's
way and quality of life throughout their life cycles. Thus the urban system
can be regarded as a resource^ in that it potentially provides the means to
produce goods and services for consumption which can favourably satisfy
human need, want or desire. 4 More precisely, the resource has characteristics or attributes, objective properties which are relevant to consumer
choice, which provide consumers with the means of reaching these
objectives.5
The activity can be for production or consumption, the latter relating not
only to material goods and services (standard of life) but also to psychological, emotional and religious experiences (quality of life). To people in a
town other people can also be considered as a resource. The existence of the
other sex leads to friendship, cohabitation and marriage; the existence of a
group devoted to mountaineering can attract other people to this activity,
so adding to their satisfaction from participatory leisure.

Life cycle in the urban system


1.4

17

Categorisation of urban resources

The preceding shows that the urban resource available to people has three
components: natural, man-made and human.
1.4.1

Natural

These are derived from nature or, as many believe, from God, although
man has often adapted them by 'improvement', in drainage, etc.
Depending on the objective, natural resources can be categorised in a
number of ways.6 Since we are primarily concerned with conservation, our
categorisation relates to renewability of stock rather than other attributes:
(a) exhaustible and non-renewable (irreplaceable): land as space,
topography, landscape, minerals;
(b) exhaustible but renewable: vegetation, wild life animals,
water in place, soils;
(c) non-exhaustible but pollutable, when they are 'renewable5 by
removing the pollutants: sun, air, rain, climate.
The levels of exhaustion, renewal and pollution is affected by the
management of the stock in terms of its flow.

1.4.2

Human

There is little need here to dwell on the human resource except to note the
obvious. As a human animal, man is comparable to natural resources which
are 'exhaustible but renewable'. As with other animals, the exhaustibility
comes for individuals from death but the species is renewable through birth
of others.
People as a resource have great variety in their characteristics, derived
from the interaction of nature (innate) and nurture (acquired). From the
former might come qualities of character, personality, intelligence, etc. But
in contrast to other animals, the human has a long learning curve; he acquires
much more from nurture, for example as a growing child from the accumulated reservoir of knowledge, technology, ethics, etc. of human society.
1.4.3

Man-made

In the urban area this comprises what is called the built environment (Table
1.1) made up of the built fabric which is attached to the land (including

18

Economics in urban conservation

space around which is used with the fabric, the roads, utility services, etc.)
and the moveables which are not (motor cars, clothes, furniture, etc.),
being made in particular localities and transported to their place of
use/consumption. The land apart, these resources clearly come under the
category of exhaustible but renewable.
The immoveables comprise a special kind of resource as the following
brings out: 7
1 It is man-made, as a result of the production process in the
building and civil engineering industry.
2 It has a terminable (though lengthy) life compared with the
land itself, which is non-exhaustible as building sites.
3 During its life it is attached to the 'land unit' of which it
forms part. This is defined spatially (for definition in terms of
property see 2.2) and can therefore be adjusted in extent
during the life of the property. By being joined to the relevant
'land unit' the man-made resource enjoys, during its life, or
location on the site if mobile, the unique qualities attaching to
that particular parcel of land (its location, linkage with
surrounding land, soil, slope, orientation, etc.).
4 Over the joint life, the resource will produce a flow of services
for one or other kind of urban activity. The services can be
for production or consumption, or intermediate in both
respects (the source of raw materials for a factory or retailing
food for consumption at home or in restaurants).
5 The services need not be constant (in kind, in quantity or
quality) throughout the life of the joint product, for there can
be continuing adaptation to contemporary needs.
6 During the life, any particular kind of service will fluctuate
through obsolescence (1.6). This can be in absolute terms (for
example, the difficulty of running a hotel with a leaking roof);
or temporary (a house past which a new road under
construction undermines the residential amenity).
7 Its services can continue only for the life of the man-made
fabric. Should this life come to an end (e.g. overnight
through an earthquake or slowly through physical
deterioration) the services will be terminated.
8 During the life of the joint product the associated 'land unit'
is inhibited from any other use.
9 All the while the joint product is being used for some urban

Life cycle in the urban system

19

activity there will be avoided the need to enter on fresh land


to duplicate that particular activity.
Coming to 'moveables', they are essentially an aid to the use and enjoyment of the 'immoveables'. As such they are not part of the joint product
except where they are 'fixtures' (the plant and machinery built into the structure) as opposed to 'fittings', furniture, etc. Fixtures take on the characteristics of the immoveable to which they are attached. Fittings do not.

1.5.

1.5.1

Life cycle of urban resources

Overview

From what has been said above it is apparent that most urban resources
have limited life and go through life cycles from inception to exhaustion.
But the nature of the life cycle differs as between various resources as we
now bring out.
1.5.2

Natural

Prior to the intervention of man, natural resources would spell out their
lives on the dictates of nature. The exhaustible but non-renewable (irreplaceable) would continue indefinitely; the exhaustible but renewable
would follow paths dictated by ecology; and the non-exhaustible might be
pollutible (e.g. earthquake, flood).
Urbanisation clearly displaces natural resources, which before the
man-made development could be found in the primal state, e.g. Brasilia in
the natural forest. But the urbanisation will not necessarily displace them
completely. If properly planned it will leave a residue as part of the urban
resource: open space with its vegetation and animals, water with its plant
life and fish, soils for gardens, etc. And if properly managed new 'natural'
resources can be created, e.g. an amenity lake in a worked out gravel pit,
making new landscapes, urban wildlife parks.
But some natural resources must disappear as a result of the urbanisation, as for example soils with their vegetation and insect life which
become building sites. They could be reclaimed (greened as opposed to
renewed) once the urban activity ceases, as in the gold and silver shanty
towns of former mining exploitation, or following open cast coal workings
or land made derelict through obsolete industrial plant and buildings.

20

Economics in urban conservation

Certain natural resources will not be displaced in this way: the nonexhaustible sun, air, rain and climate. But urbanisation could and normally
does give rise to their pollution, to a lesser or greater degree. Rain can
become acid. Air can be assailed by impurities from traffic combustion and
noise. In extreme cases conditions of atmospheric inversion can lead to
'smog5 with its irritation to eyes and throat.

1.5.3

Human

The life cycle of human beings is clearly more standardised than that of the
diverse natural resources. Generally speaking there is the allotted span of
three score years and ten. But while life expectancy has scarcely increased
over this century for those over forty years old, the proportion of people
dying before reaching seventy has fallen considerably. In brief, improved
medical services significantly affect morbidity but not mortality. 8
There is also standardisation over the life cycle itself, as described in
Shakespeare's seven ages of man. 9 But while this is reasonably uniform for
lives of common duration, the life cycle of particular individuals varies
enormously. There is the waste of the stillborn baby or cot death. There are
the young combatants cut down in their prime in wars, and babies or the
elderly equally cut down when the war is carried to the civilians. There are
the random interruptions by death through traffic accidents, disease,
terrorism, etc.
The life cycle just indicated for man as the human animal must
necessarily apply to the attributes acquired by any individual as a result of
both nature and nurture. But such attributes can also have a life cycle of
their own, independent of the morbidity or mortality of the individual who
carries them. A culture can be throttled and terminated under the heel of
dictatorship or foreign conquest and oppression; or more benignly,
through the absence of funds and institutions to keep it alive.
1.5.4

Man-made

Moveables tend to have a life cycle of steady deterioration of physical


quality (the wearing out of clothes and furniture) or through functional
obsolescence, whether planned (the notorious light-bulb) 10 or unplanned
(the main frame computer displaced by the micro). As to the latter, a
striking contradiction is that at a time of rapid change the more advanced
the technology the more speedy the unplanned obsolescence.

Life cycle in the urban system

21

This kind of life cycle is echoed in the immoveable built environment


(1.4.3) with which we are here more concerned, and on which more detail
is now given.

1.6

1.6.1

Obsolescence, renewal and conservation in the life cycle of the


built environment

Overview

The built environment typically comes into existence on open land on the
edge of a town, which is used for some form of agriculture, or perhaps
some transition between agricultural and urban use (for the parking of
cars, storage of materials, etc.). Then the earlier use is displaced so that
vacant land becomes a development site. On completion, the first life
cycle of the built fabric starts, with a use which is associated with the
purpose for which it was designed (dwellings, manufacturing, retailing,
etc.).
In the nature of the material typically used for the urban fabric its life
tends to be long, exceptions being: the cane huts of an African village, tins
and board of a Latin American squatter or the readily demountable tents
of the nomadic Arab. This apart, the life will vary: relatively short (the
ten years design life of 'temporary housing'), or lasting over centuries (the
monumental palazza of medieval Italy). But whether the life be short or
long, in due course the built fabric itself calls for replacement by new
fabric (in the process we call reconstruction or redevelopment).
Over this life the use and the conditions of the fabric, as a whole or in
its separate parts, or within parts, do not remain constant. Maintenance
and renovation lengthens physical life but after a certain point, before it
reaches 'exhaustion', the fabric becomes 'obsolescent' (1.6.2). Then some
form of renewal (in the form of 'rehabilitation or remodelling') is carried
out, enabling the fabric to enter a new stage of life. This process will be
repeated, once or more, before the degree of obsolescence is such that a
different line of renewal takes place, that of redevelopment, the
replacement of the fabric by new construction, for a similar or different
use. This is the beginning of a life of new built fabric on that site, the
second life cycle on the original site.
But it could be that instead of 'renewal' taking place at the stage indicated there is some resistance because of the objectives of conservation

22

Economics in urban conservation

(1.7). In this case the process of renewal, and the uses which would flow
from the works of construction, would be different.
We now amplify in turn each of the three processes just described,
namely obsolescence, renewal and conservation. In so doing we leave for
later the economic aspects (Chapter 7).

1.6.2

Obsolescence

When a part of the built fabric is newly completed it must be suited to the
activities of contemporary society as seen by contemporary eyes rather than
the future or past (1.2); otherwise it would fail to attract the generality of
occupiers or purchasers, being too 'dated' or too 'advanced'. This is
reflected in the typical lending policy of financing institutions which is
conservative, wishing to protect its loans in the 'resale value', and so does
not favour developers and architects who deliberately aim for a minority
market, which is ahead of or behind the times.
The built fabric lasts a long time during which there can be many
changes in contemporary needs. It follows that during its life the fabric will
appear as no longer suited to the later contemporary eyes. Clearly the
mismatch will not be uniform between all parts of the fabric, even of a
particular building (e.g. walls and electrical services), and certainly not
throughout the town. And it will be perceived differently by different
generations. Thus in any moment of time there will be varying degrees of
what will be perceived by occupiers as 'obsolescence' in buildings, that is
approaching the 'obsolete' when they have become 'completely useless with
respect to all uses that they might be called upon to support'. 11 Thus
'obsolescence' is a relative term with regard to the terminal state, the
'obsolete', which may never be reached.
Obsolescence is an elusive term. Following a valuable review of concepts
from 1917 to 196912 the authors conclude that while the ' . . . comprehensive notion of obsolescence is becoming established at a general conceptual
level there is no integrated theory on which to build'. They then proceed to
build a model for housing obsolescence.13 For our purpose we find it more
useful to use one of the concepts in the review just mentioned because it was
devised for conservation.14
In this concept, the state of obsolescence of the built fabric at any
particular time can be seen from a survey of each of four elements, which
are independent of each other but also interdependent; they do not include
economic obsolescence, which is introduced below (7.5.4).

Life cycle in the urban system

23

Physical or structural deterioration.15 The fabric has deteriorated


through time, weather, earth movement, traffic vibration, poor maintenance, etc. so that it needs repair and improvement beyond that offered by
normal ongoing maintenance. Otherwise the physical condition interferes
with occupation.
Functional quality. The fabric is no longer suited for the function for
which it was designed, or is used, in accordance with contemporary
standards or requirements of the occupier or potential occupiers. This
inadequacy can relate to the fabric itself: the hotel which is not offering
adequate hot water, central heating, lifts to upper floors, etc. or, more
dramatically, to the recent office buildings made obsolete through not
having modern telecommunication facilities; to the recently and expensively built trading floor of the London Stock Exchange made superfluous
by change in function of brokers and jobbers and the use of computer
terminals in dispersed offices; or the nuclear power station which could be
closed down in the aftermath of the Chernobyl power station accident. The
obsolescence could arise from external factors on which the function of the
fabric relies (inadequate car parking on site and the surrounding streets, or
difficulties of access through traffic congestion). This unsuitability can
arise also institutionally through the supply side. Examples here are by
'legal obsolescence',16 the introduction of new standards by legislation,
administrative decision, etc.; or 'lease obsolescence',17 or 'landlord and
tenant obsolescence',18 where the parties find that their relationship affects
the use they would like to make of the property.
Locational change. When originally built the location was presumably
decided in relation to the links with the surroundings, in terms of
accessibility to other uses, transportation, etc. It is the change here which
could introduce the locational obsolescence, as where shops were built
around a railway station or a bus terminal which has become defunct, or a
rural population leaves the land for the towns and no longer has use for the
village church which was built to serve them.
Environmental unsuitability.19 The human, social, economic or natural
environment has changed, so making the fabric less suitable in contemporary eyes for the needs it served. Examples abound in the inner areas of our
towns where air pollution, noise, vibration, etc. makes unattractive the
occupation of dwellings erected in former times; or where the social change

24

Economics in urban conservation

in the population groups, income levels, mores, etc. means less attraction
to former occupiers.
An obsolescence survey of the four elements shows the stage of 'current
obsolescence' at any particular time. 20 In this, it follows from the above,
that the degree of obsolescence under the four heads will not be uniform
for any one building. A functionally and environmentally obsolete electricity generating station could have low structural deterioration and
indeed represent a major terminal cost in its removal. And the degree of
obsolescence will not be uniform within any one head. The mechanical
services of a building could be obsolete long before the walls and foundations.
But it does not follow that the rate of obsolescence over the years will
be uniform: functional obsolescence clearly speeds up at times of rapid
technological innovation. Nor does it follow that the degree of obsolescence in later years will be on a continuing downward curve. The kind
of changes which have produced the mismatch will continue, and the
later survey could show less rather than more obsolescence. An example
is the change in attitude of commuters as commuting times and costs
grow, so that they begin to place more value on location nearer work
place, etc. and less value on the environment of the dwellings. The
change in their 'trade off will lead them to seek to live in the inner area
rather than the suburbs. The result is less locational and environmental
obsolescence in the inner city. Or conversely, changes in technology,
which enable former city centre workers to operate from rural areas with
the use of computer linkages, could increase locational obsolescence in
central city offices and give rise to office values in remote towns and
villages.
All these causes of obsolescence could clearly be influenced by government action, of one kind or another. For example:
physical: stipulating minimum standards in new construction will defer
obsolescence while the imposition of rent control (reducing the prospects
of repairs by the landlords) will advance it;
functional: imposition of standards in planning control over the internal
and external layout of new developments could defer obsolescence, but
could advance it where there is restriction on forward looking design which
proves to be acceptable in the future;
locational: planning controls which tend to ensure that new development is
well located in relation to its needs will clearly defer obsolescence;

Life cycle in the urban system

25

environmental: environmental control will defer obsolescence through


nuisance by ameliorating poor conditions as they arise.
As the preceding examples show, as the mismatch develops between the
services offered by the fabric (the supply) and the needs seen through
contemporary eyes (the demand), there will be adjustment by the users of
the fabric. Dwellings which lose their attractions through obsolescence will
also lose their rental value. Should they be offered at lower rents then they
will attract poorer people, to whom the attraction of lower rents offsets the
disadvantage of obsolescence in the fabric, in what is called the filtering
down process.21 Obsolete offices will in the same way attract businesses
where profit margins are low, and to whom therefore the poorer premises at
lower rents will be acceptable. Obsolete areas will attract those in society
who are at the lower ends of the socio-economic scale, typically 'the
underprivileged'. From this it follows that a measure of obsolescence can
also be obtained by social survey of the occupiers since there will be some
correlation between socio-economic levels and degrees of obsolescence.22

1.6.3

Renewal and conservation

As the obsolescence grows in the fabric there emerges the question: what
should be done about the mismatch? It can either be left, in the knowledge
that while it will grow in the physical aspects it might not in the others; or
some action could be taken to retard or halt its growth in one or more of the
four constituents. This action to cope with actual or potential obsolescence,
ranging from varying degrees of amelioration in the existing fabric to its
complete replacement, we call 'urban renewal'. 23 Its nature and degree is
clearly influenced by the kind of obsolescence. A building which is well
constructed or maintained will require less work in rehabilitation than one
which is not; as will a building which is contingency designed with an eye to
possible prospective change of function, that is with a 'loose fit, long life,
low energy'. 24 A building which is very well constructed could be costly to
demolish (e.g. an atomic power station). Since any renewal decision implies
a commitment of economic resources, such factors are accordingly brought
into the decision to review via economic analysis. To this we turn below
(7.5).
Since the mismatch has its source in either the urban fabric and its
environment, or the change in activities in the fabric (1.2), the renewal can
stem from either end.
At the first end, the fabric is adapted to contemporary requirements,

26

Economics in urban conservation

either by using the existing structure, including by extension or reduction,


as a base for adaptation, or by sweeping it away for replacement (redevelopment) (1.6.1). In the former the work can be tackled in many different
ways.25 For our purpose, the following is adopted; it was devised for
conserving the cultural built heritage but can be used for renewal generally
outside redevelopment,26 so showing how conservation can be regarded as
a special case of renewal (4.7):
(1) prevention of deterioration (indirect conservation): by for
example a sound maintenance programme and controlling
environmental pollution;
(2) preservation: keeping the object in its existing state of repair
to prevent further decay;
(3) consolidation (direct conservation): adding or applying
supportive materials into the actual fabric in order to ensure
its continued durability and structural integrity;
(4) restoration: reviving the original concept, either or both in
relation to the fabric or use (also called restitution);
(5) rehabilitation: adapting the building to a contemporary use
which will be capable of sustaining it (also called
reconditioning, renovation, remodelling, adaptive use);
(6) reproduction: copying an existing artifact in order to replace
some missing or decaying parts; or in extreme circumstances
moving the object to a more suitable environment;
(7) reconstruction: rebuilding anew in imitation of the old, as
necessitated by disasters such as fire, earthquake or war. The
reconstruction could take place on the same site or in extreme
cases, another.
Some interventions are more capable of tackling the first two kinds of
obsolescence (physical/structural by repair and maintenance or functional
by internal adaptation) than the latter (locational or environmental) where
there clearly are stricter limits on what can be done. The demise of shops
near the defunct railway station can hardly be remedied without replacing
the attraction of the former station; retarding residential obsolescence by
change in the physical environment is difficult, but reduction of air
pollution or noise less so; change in the social mores of neighbours is
particularly difficult.
At the second, human activity end, the renewal can arise from changes in
occupation, with or without a significant amount of structural works. Clear
examples are new uses or activities replacing the former ones (i.e. 'new uses

Life cycle in the urban system

27

for old') (4.8); or the kind of use or activity remaining with the kind of
people in the occupation changing.
Where the new occupiers have higher incomes there is 'gentrification'.
Or the reverse could take place, as where part of a large house occupied by a
high income family in war-time was 'requisitioned' by government in order
to house families which were made homeless through bombing.
1.6.4

Summary over the life cycle

The process of change over the life cycle is clearly both complex and
individual for any part of the built environment. And the process in any
particular part will affect others, as seen in the chain reaction in the
gentrification of individual houses in a street, and in city centres. 27
In order to summarise this complex process it is illustrated in a consistent
way in Diagram 1.3. This sets out at A the process of change on one
particular parcel of farmland which enters through development its first life
cycle in the built environment, and is then redeveloped into its second life
cycle. It then analyses diagrammatically the ingredients of the change.
At B is traced the obsolescence under the four heads introduced above.
In each case the completion of the initial development introduces the
building with hoped for zero obsolescence. Thereafter the change in
obsolescence under the four heads does not follow a uniform pattern. It
declines gradually in physical terms; it remains constant in functional
terms, then to fluctuate with changes in fashion, demand, etc.; locational
change is constant until there are introduced some external factors which
first increase and then ameliorate the obsolescence; and finally the environmental obsolescence is shown to be constant and then gently decline. In all
cases redevelopment removes the building and thereby the degrees of
obsolescence, only to start the cycle again on completion.
At C is shown the effect of renewal on the obsolescence during the initial
life cycle (rehabilitation, etc.). In the physical and functional obsolescence
the renewal action will reduce the obsolescence as a preliminary to further
decline; the effect on the locational and environmental obsolescence,
resulting not so much from the renewal as from the external change, will be
more random.
It is this last pattern which is affected when the conservation constraint
in D is introduced. The physical and functional may be little affected, since
the conservation will aim also at the management decisions in C which
maintain the value of the property. But both the locational and environ-

i FL i D i

31

I RD I LIFE CYCLE 2

LIFE CYCLE 1

j!

jjj! i i
I
I
I
I

I
I
I
I

D5

Abbreviations: FL : Farmland
D

: Development

RD: Redevelopment

P : Physical
F : Functional
L

Locational

Environmental

Diagram 1.3
Obsolescence, renewal and conservation in the life cycle of urban fabric

Life cycle in the urban system

29

mental obsolescence could be mitigated by control of the surrounding


conservation area or other measures to defer obsolescence. The big
difference arises in what would in C be the redevelopment phase into life
cycle 2. In D there is no redevelopment, with the degree of obsolescence in
life cycle 1 extending into life cycle 2.

1.7

Why develop or conserve urban resources?

Within the life cycle of resources just described we can see the place of both
'development' and 'conservation'.
As to the former, speaking generally, development of resources stems
from their fundamental characteristic: potential to give rise to an activity
which can satisfy human needs, wants or desires, be they material or
non-material (1.3). The application of the development process (2.5.1) to the
resources will generate the growth in goods and services (material and
non-material) which will be the basis for the growth in activities.
Since these appear to be limitless (the motor-car, home and holiday, soon
give rise to the desire for more) the stimulus for development also seems
limitless. But such development, in utilising resources, tends by definition
towards their exhaustion (in natural or human resources) or obsolescence
(in the man-made). Such growth in itself is beneficial if it has no adverse
impacts when satisfying human needs, wants and desires. But the adverse
impacts are only too familiar in the contemporary world: in exhausting
non-renewable or renewable resources; polluting the air or rain; or
blighting, eroding or wasting human life. Yet their occurrence is concealed
in the manner in which the indicators of growth are shown in national
economic accounts, which relate to direct production and consumption but
not the indirect. Then the harm becomes palpable, giving rise to the
pressures for conservation, whose aim in essence is to check the rate of
change (e.g. in progress of exhaustion in natural or human resources, and
in obsolescence in the man-made resource), in order to enable resources to
offer greater capacity over their life cycles for use and enjoyment by people.
This is 'sustainable development','... that meets the needs of the present
without compromising the ability of future generations to meet their own
needs' leading to the suggestion t h a t ' . . . the goals of economic and social
development must be defined in terms of sustainability in all countries'. 28
However aims for such sustainability produce the reaction: since growth is
needed to equalise between income groups in any society, and between the

30

Economics in urban conservation

First and Third Worlds over the globe, conservation can be socially
unjust. 29
These considerations apart, on the second question, why conserve,
there is a commonsense answer. The potential benefits from our urban
resources are inherited without specific payment, although there is
implied acceptance of the ongoing liability of funding past debts for the
heritage and of operating costs, both direct and indirect. Accordingly
there is every temptation to continue to use the established resources since
the alternative, of replacing entirely with new, would be out of the question for any particular generation: there would be inadequate real
economic resources yet responsibility for the accumulated debt.
But there could also be commonsense reasons for not accepting the gift
on these terms. The operating costs could be too high, as in an outmoded
hospital; no value is seen in the benefits to be derived, as in a vandalised
housing estate; a political revolution could demand a break with the past
and thereby the abandonment of assets associated with the former ruling
class.
These commonsense answers will be varied according to the nature of
the resource in question, as will now be described.

1.8

1.8.1

Logic of conservation in the various categories of urban


resources

Natural

The reasons for conservation have been most clearly seen in relation to
natural resources. Since they are not man-made, they are not so obviously
reproduceable and renewable, although they are substitutable to a large
degree by other minerals, 30 given adequate energy. And where exploitation has been profligate, e.g. in forests or farming, the evidence is only too
painfully apparent.
But failure to pursue conservation policy has rung alarm bells only in
comparatively recent times (Preface). The pressure on the resources has
grown remorselessly with the explosion in world population; the rising
standards of living and expectations of Third World countries; the
advances in technology which can be used for capturing resources to
satisfy demands; the rise of the capitalist profit-seeking ethic which drives
forward the exploitation without regard to social costs; the pollution of

Life cycle in the urban system

31

the non-exhaustible resources so that environmental conditions are


degraded.
Whilst factors such as these triggered off the conservation movement,
this of itself has been stimulated during this century by the other factors
described above (Preface) into the Green political parties, pressure for the
zero population growth society, etc. The alarms have been rung by those
who predict disaster through resource depletion and equally strongly
resisted (Preface). Whether or not the arguments against the approaching
doom be accepted there is general recognition that they cannot be ignored
and that conservation must be an important strand in our management and
planning ethos. There must be protection of the stock of non-renewable
resources; prudent management in the flow of exploitation of renewable
resources; environmental control over pollution. The concern is encapsulated in the statement that, 'We have not inherited the earth from our
fathers, but we are borrowing it from our children.' 31

1.8.2

Human

The reasons for the conservation of the human resource, people, would
hardly appear to need spelling out. While not all, even all Catholics, would
go along with the extreme view of the Vatican, that human life is sacred
from conception, and that contraception is sin, there is the general
presumption in the values of Judeo-Christian religion that each life is
sacred and should be capable of self-fulfilment.
These values are not however completely accepted in non-JudeoChristian cultures. In Japan and Africa the lives of the elderly are
terminated when they can no longer function; in India in some castes wives
are encouraged to join the husband's burial pyre; and in China population
control through one child per family has led to the killing off of female
children.
Where the individual life is considered sacrosanct, the general efforts of
medicine under the Hippocratic Oath are to extend the span of human life,
through eliminating mortality, and enriching its enjoyment through
decreasing morbidity. So far the progress of medicine has not advanced life
expectancy at birth but is certainly advancing that for the elderly approaching their three score years and ten. It is this very progress which has
sharpened the question of human values in relation to life prolongation.
The tendency has been to cease discussing life expectancy just in terms of
years but to qualify these years as with or without capacity to function in a

32

Economics in urban conservation

reasonable manner. If this condition no longer obtains, should the doctors


prolong life? Should the individual concerned be able to request, when
suffering from an incurable disease, the privilege of 'dying with dignity'?
When prolongation requires heavy investment (e.g. dialysis machines) of
which there are insufficient to go round, who is to be allowed to live or
die? In all these questions: should the decision to terminate be taken by
the doctor, lay administrators, the parents, the children, husband or
wife?32
Whereas the preceding relates to the individual, the implied attitude of
society is however a disdain of human life, in appearing to tolerate so
much slaughter on the roads, terrorism, repressive regimes, torture and
war itself.
Another such contradiction arises in respect of'quality of life'. Whereas
the 'self-fulfilment of the individual' would be thought to be the value
accepted by society, it is flouted daily in the intolerable conditions around
the world in the degradation of rural poverty, slums, shanty towns and
urban squalor.
But even where the physical conditions are acceptable, the seemingly
remorseless pressures for change threaten the ways of life and values
which are traditional and which people cling to in order to provide stability in a changing world. They are assisted if a balance can be kept between
the new and the old; they are enriched if the past culture which is valued
can be transmitted.
Thus there are clearly no universally accepted values in relation to
human resources. But most would accept nonetheless that the prolongation and improvement of quality of human life, its conservation, is an aim
to be pursued.
1.8.3

Man-made

We expand here the distinction made above (1.4.3) between moveables


and immoveables.
Moveables
The reason for conservation here relates to the commonsense view above
(1.7): given ownership and possession why spend new resources on
replacement while the goods have potential for satisfaction? But there is
the deeper reason: the wish to have a visual reminder of the past, for the

Life cycle in the urban system

33

purpose of education, culture, history, etc., which is catered for individually or in museums. 33
However, while consumers would take the commonsense view producers do not always do so. In part, production for indefinite life could
so increase production costs as to make new goods unsaleable. But in part
there is built in obsolescence in order to stimulate greater sales than would
otherwise occur. 34
Immoveables
By definition this stock (unlike the moveables) is of necessity attached to
the land and is, through people's locational requirements, of necessity
distributed in settlements throughout the country, from the metropolis to
the village or hamlet.
As shown above (1.2) in societies in which there is change there is
continuing pressure on the man-made environment. Population growth
generating new families gives rise to the need and demand for new homes;
growth in income gives rise to the demand for more space, and more
modern space; growth in leisure time gives rise to the need and demand for
more buildings and places devoted to mass recreation and/or cultural
pursuits. And even if there is little growth similar pressure can arise from
migration of people and activity to new locations.
Alongside this pressure there is inevitably, because of competing
pressures, a limitation in the amount of investment resources, both real and
financial, which are available for the creation of the man-made
environment.
Accordingly, there is an overriding pressure for society to use its stock of
man-made environment as opposed to discarding it and providing new.
The possibilities of such use are greatest in immoveable compared with
moveable capital goods (motor cars, clothes, etc.) simply because of the
relatively longer life of the built environment. And this tendency is
reinforced by the uneven distribution of income within society, for whereas
those with higher incomes can afford the 'conspicuous consumption' of
buying or building new instead of using the old, those with lesser incomes
do not have the luxury of this choice. For them, and they are the larger in
numbers, the use of the established resources becomes a necessity. In
general, the built environment is a resource whose continued use enables
investment resources, otherwise required to replace it, to be used for other
purposes.

34

Economics in urban conservation

To this economic reason must be added another, of a social kind. People


will express a demand for the new stock (growth in population, income,
taste, etc.) but concurrently would have an attachment to the past through
nostalgia, familiar way of life, etc. They would accordingly like to have
both. In this people are not homogeneous and enter into all sorts of
compromises. Some will prefer to live in older property but enjoy modern
facilities in schools, work places etc. Some would prefer to have also new
homes as long as others live in the older areas, which they can occasionally
visit. Some would be attached to the old completely in order to avoid
disruption of homes, families, neighbourhood relations, etc.
1.8.4

Overall

Thus there can be no consensus on the logic for conservation, as between


the different kinds of urban resources or within any particular kind. But
there would be general agreement that some mix is essential and desirable
at the appropriate balance. Where such mix emerges from the market
process (supply and demand for both old and new in one market) the results
are likely to be patchy since the decisions will relate to individual
ownerships and there will be externalities. Some improvement on this is a
central feature of management and planning for conservation, to which we
now turn (Chapters 2 and 3).

Planning and
management of urban
resources

2.1

2.1.1

From resource to property and commodity

Overview

The preceding chapter introduced the urban system as a resource (1.3). but
it was found from the earliest days of settled cultivation that for their
potential to be realised the resources in production and consumption must
be appropriated into ownership by particular individuals or bodies. 1 Producers must own their means of production to provide incentives and
security for output; consumers must own their purchase of the output; the
ownership must therefore be protected under the law, for otherwise there
would be a general loss of liberty, freedom and welfare.2 Thus while in
common parlance property is the real object which is possessed or owned, it
cannot b e ' . . . defined as something apart from those relationships which in
juridical thought give a thing, a benefit or a privilege the status and quality
of property'. 3 In this book we use the term property to mean both the real
thing and also the property relationships.
Thus resources potentially have use value (1.3). When they become
property, and as property are available for exchange as commodities, they
may have exchange value. Typically this applies to the first two categories
of natural resources described above (1.4.1) (exhaustible but renewable or
non-renewable) and also to man-made resources (1.4.3). But all the while
they are free goods (i.e. accessible to all without payment) it has not been
practicable to appropriate the non-exhaustible resources (sun, air, rain and
climate).
On the whole, human resources have not been appropriated except as
slaves, who become property and commodities for exchange. In non-slave
societies it is not people but their labour power which, as their property,
becomes a commodity for exchange. In such societies there are mixtures of

36

Economics in urban conservation

political and economic freedom. Compare, for example, the political


freedom of the western open society with the necessity for permits for
dwelling and working in specified locations in some countries, such as
China and North Korea; with the comparative lack of economic freedom in
western societies where the surplus value from labour power is appropriated by the capitalist class.4
Thus while the appropriation of resources in the evolution of human
society has its logic, it raises conflicts which go to the very root of social
organisation.5 Some are apparent from this overbrief review: the struggle
for releasing slaves from being commodities; the class warfare explained by
Marx in that it is the appropriation of their labour power by owners of
capital which denies even non-slaves the full fruits of their labour; the
struggles for social control over the use of resources where this is exercised
by owners with regard only to the costs and benefits of the proprietor and
not society as a whole; the indignation that natural resources, which are
God or nature given, should be owned by individuals or corporations
(public or private) and not by the people as a whole; the conviction that
even though the market system be acceptable in relation to many aspects of
socio-economic life, it is offensive in relation to land, simply because it is
the platform of all activity and access to it is identified with freedom,
citizenship and statehood.
What we call land is an element of nature inextricably interwoven with man's
institution. Land is thus tied up with the organisation of kinship, neighbourhood,
caste and creed - with tribe and temple, village, guild and church . . . the economic
function is but one of many vital functions of land. It invests man's life with
stability; it is the site of his habitation; it is a condition of his physical safety, it is the
landscape and the seasons. To isolate it and form a market out of it was perhaps the
weirdest of all undertakings of our ancestors. 6

2.1.2

The built environment as resource, property and commodity

The built environment is a resource which is the joint product of land and
buildings, during the life of the buildings (1.4.3). Being appropriated they
become commodities: clear examples arise, both in the private sector, where
the specific services are paid for directly (housing, shops or cinemas) and in
the public sector, where the services are provided by a public authority out
of taxation (town hall, hospital, park, etc.).
Within this broad sub-division there are many interesting mixtures.
Public housing is provided by a public authority for individual consumption

Planning and management of urban resources

37

by specific payment, in part subsidised out of taxes. Education can be


offered by private education bodies on specific payment as opposed to a
charge on public funds; or, as some would propose, education could be
offered by state schools on specific payment which is provided by the state
as vouchers. Thus within the extremes of clear private and public there is a
spectrum of mixtures of the private and public, which in turn affects the
degree to which the individual services can be bought and sold as
commodities. 'Within this spectrum lie (towards the public end) the
category of public goods or services which if supplied can be made available
to others at no extra cost' (e.g. a park or road surface) and 'one person's
consumption of the goods does not reduce its availability to anyone else'. In
practice the pure public good (non-rival in consumption and non-excludable to anyone wishing to consume it) is rare and there are many 'mixed or
impure public goods'. 7
Because the built environment is 'immobile' it can take on the special
characteristics of 'real' as opposed to 'personal', that is 'real estate'. 8 Of
these characteristics two are of special concern here. First, within the one
physical property it is possible to have a variety of interests, for example,
the owner who creates an occupation tenancy, with the occupiers being free
to create subsidiary tenancies, down to the legitimate user. The owner
includes those who have a financial stake in the property, as financiers of
new development, mortgagees, etc. The user can be sub-divided into the
principal occupier (the tenant or lessee), the employees, and also (for
example in shops) members of the public who visit the building to carry out
their activity as shoppers. These attributes have led to the concept of the
'proprietary land unit' which has been defined
as an area of land used as a single entity and co-extensive in its physical dimensions
with vested rights of property, to use, to dispose and to alienate. Land in its context
is the lawyer's definition of the soil and all that is affixed on the surface and beneath.
Rights of property more particularly are rights to do and forbear from doing
positive acts on or in relation to the land in the unit.9
Second, in respect of these individual interests, there are rights and
obligations, both as between the interests and also in respect of other
property whose interests are affected. For example, a freehold owner may
be subject to an easement of light, being the right of an adjoining owner to
restrict development of the land in a way which would interfere with his
light. And an occupier must respect certain social rules of behaviour, such
as not creating a nuisance to others. It is for such reasons that 'real

38

Economics in urban conservation

property' is seen as a 'bundle of rights and obligations' as between all


(particularly adjacent) property owners. 10
Against this background all 'rights and obligations' relating to the built
environment, whether in private or public ownership, must be thought of
not in relation to one homogeneous interest but to a complex variety. Their
position is regulated by law, in what has been termed 'private land policy',
which runs in parallel with 'public land policy': the considerable amount of
statutory and administrative regulation by public authorities to ensure that
ownership and occupation of property do not infringe the 'public

2.2

What is management?

We saw above (1.3) that the urban system can be seen as a resource. From
this it follows that if its use to satisfy human needs, wants and desires is to
be maximised over its life the resource requires 'management': that is
taking conscious decisions, with an eye to the future, about ongoing
operations or the use of assets, or both in combination, within a structured
organisation. The price of not so doing, of 'bad management', could mean
that the fullest use is not obtained from the operation or asset.
The approach and methods of the generic activity of the management
process are generally applicable in all situations.12 But they will vary
considerably in the nature of the activity or asset under consideration. In this
are two major variables, each with two sub-divisions:
(a) The field of management:
(i) What is being managed? Is it a market stall for fruit, which
operates on a day by day basis? A shop in a High Street which
is part of a chain and therefore subject to national
management considerations? An industrial undertaking,
which in reaching its objectives must have regard to what is
happening around the world in terms of competition, energy
substitutes, markets, etc?
(ii) What means are available to achieve the management objectives?
Is the enterprise independent so that it can be controlled
directly by the management, as for example in the daily
household operations of a family? Or are they so subject to
outside influence that the management is dependent on
external factors, such as the weather in the sale of ice-cream?

Planning and management of urban resources

39

(b) The viewpoint of the manager:


(i) Who is doing the management? Is it the person who owns the
undertaking, framing objectives for himself or his family? Is
it a non-owning managerial hierarchy and bureaucracy,
working on behalf of the absentee shareholders? Is it
government, managing an economy on behalf not only of the
people who elected it but of those who did not?
(ii) What is the time horizon in management? Is it short term so that
the success or failure can be judged in days or weeks? Or long
term so that the result will not be available until well into the
future, to be judged perhaps by future generations?
We now apply this approach to the management of urban resources.

2.3

What is urban management?

We have seen above that the urban system is a complex collection of diverse
inter-dependent resources (1.3) which need management to maximise their
use over their lives (2.2). Given this totality we are thus led to ask whether
there can be a concept of 'urban management'.
While urban management is capable of being conceived in principle, it
raises great difficulties in application, and indeed is rarely seen as a whole in
practice. Perhaps the best approximation would be the 'company town'
(minerals, steel, etc.) where ownership, administration and the operation
of the main industrial activity are concentrated in one organisation. But
while the totality is rare, seven different strands can be detected, each
contributing towards the overall concept.
First, property owners in an urban area, both private and public, will
manage their field (property) according to their viewpoint (objectives).
Each unit of property will be both unique and have unique relationships
with its surroundings, both geographical (linkage) and legal (rights and
obligations), giving rise to the concept of the 'proprietary land unit' (2.1.2).
Each such unit can be short in time (the tenancy of a flat) or very extensive
in area (the whole of a town or a large rural estate) and in the public or
private sector. Whatever it is, it is the proprietary land unit which is the
subject of management in the interests of the owners. Traditionally such
interests have been termed 'estates in land' with the legal connotation being
distinct from the geographical, in which 'estate' is a physical entity. Both
have given rise to the generally interchangeable terms 'estate management',

40

Economics in urban conservation

'land economy' or 'land administration'. 13 Estate management has been


defined as 'the direction and supervision of an interest in landed property
with the aim of securing the optimum return; this return need not always be
financial, but may be in terms of social benefit, status, prestige, political
power, or some other goal or group of goals'. 14 The aim of property
management can thus be broader than simply the commercial. It often is so
where the property is owned by a public body, which may (but not
necessarily will) take a broader and longer view.
Second, the proprietary land unit as just described could be extensive,
either in a compact geographical area, as in the urban landed estates of
Central London, or scattered throughout the urban area in different
parcels. In such a situation the mere existence of a larger geographical area
will result in different management decisions being taken on particular
parcels than would occur if the whole were in fragmented ownerships. In
simple terms, net benefits will not necessarily be maximised on particular
parcels, for this could be inimical to net benefits over the total area in the
proprietary land unit. 15
A third dimension in urban management arises where the large estate is
seen not simply as a function of land ownership but of the development of a
community, in physical, social or economic terms, as in the building of a
new town. Here the maximisation of the net benefits from the land is seen
as a function of building the socio-economic base for the immigrants. 16
For land to be used and developed at all requires an infrastructure of
services. Traditionally these are provided by central and local government
and their special agencies in combination; this is so even where the whole of
the new town has been built in the British system by New Town
Development Corporations, even though these have contributed in the
process.17 This provides the fourth dimension of management. At the
simplest level comes the 'specialist management' by local government of
particular urban facilities which need to be comprehended as a whole, as for
example water supply, refuse or sewerage, traffic or car parking. 18 Until
comparatively recently such facilities were managed individually. But in
the interests of their co-ordination there arose the principles and practice of
corporate local authority 'general management' which, as the name
implies, attempts to apply overall management strategies to urban and local
government facilities as a whole.
This latter concept was more fully developed with corporate planning
and management for local authorities. 19 The concept is expressed as
follows:20

Planning and management of urban resources

41

Local government is not, in our view, limited to the narrow provision of a series of
services to the local community, though we do not intend in any way to suggest that
these services are not important. It has within its purview the overall economic,
cultural and physical well-being of that community and for this reason its decisions
impinge with increasing frequency upon the individual life of its citizens. Because
of this overall responsibility and because of the inter-relationship of problems in the
environment within which it is set, the traditional departmental attitude within
much of local government must give way to a wider-ranging corporate outlook.
A fifth management dimension linked to local government is urban and
regional planning, whose aim is to ensure that decisions taken in relation to
development or renewal in particular are seen in accordance with plans for
the whole community (3.1). In contrast to the previous dimension such
management is not based primarily upon actual executive responsibility
connected with ownership or administration of services but rather with
governmental stimulus or regulation. As we shall see below (2.5) in the
implementation of such planning there is a close relationship with
management.
A fusing of the fourth and fifth management dimensions to provide a
sixth was attempted in studies for three northern towns soon after the
setting up of the new District Councils under local government reorganisation in England in 1972.21 In brief the studies originated from a concern
that conventional management and planning procedures in local government had in general failed sufficiently to improve the conditions of the
urban environment, both because of the fragmented nature of local
government itself and insufficient spread of development planning. The
three reports opened up diverse aspects of the problem and made many
innovative suggestions. One is introduced in exemplification.22
For the purpose of this study it was necessary to define the scope of the
term 'environment'. While recognising that this could involve all the
circumstances and conditions affecting people, the scope was limited to
those responsibilities and functions central to the new District Councils and
the Department of the Environment (DOE) This was clearly not all
embracing, comprising only the land; the built fabric; transportation;
public services; and the protection of the quality of the environment. But to
embrace even these it was necessary to propose 'extended development
planning' and also management (termed operational planning) and
furthermore to show how these two processes could be related in practice as
shown in Diagram 2.1.
A seventh dimension was provided in a study 23 which recognised that

42

Economics in urban conservation

elo

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o

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land use and


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O

3-5 years, plus


perspective beyond

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emphasis

't

3. assembly of
information

1. planning use
of resources
to achieve
aims of local
community within constraints

"
c _oo
U.S

.3
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long run social


cost effectiveness constrained
by overall
resource availability

uses operational planning


programmes of
district spending, plus
intervention in
market plus
representations

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4. evaluation of
alternatives:
packages of
programmes
(plans) and
individual
programmes

short run social


cost effectiveness
constrained by
local government
finance

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programmes

uses spending
programmes predominantly

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cd

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relatively new; a
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all

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cd

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nger range \

long history;
strong role
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{3

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ing

ict

Development
Planning

&
6. monitoring
effectiveness
which returns
to 2. and 3.

Diagram 2.1
Development plan/operational plan relationships
Source: Reference 39

additional emphasis on "efficiency


monitoring"

Planning and management of urban resources

43

while local authorities had many plans and programmes which had
economic content (town planning, financial budgeting, corporate
management, housing, transport and urban programmes) they nonetheless
had no framework in the form of a local economic plan or strategy. It was
this possibility which was explored, in terms of principle and practice, with
proposals as to how the economic content could be grafted onto DOE style
local development planning which as practised fell short of this concept,
even though there was some recognition of its social and economic content.
While particularly prepared for the inner city programme the approach
could be generally applied to the town and its hinterland as a whole.
But the broadening in both local government corporate planning and
urban and regional planning hardly approaches the totality of urban
management. So much of the executive responsibility would lie outside the
province of local government. One possibility of overcoming the weakness
lies in a concept of urban management which accepts the difficulty in
comprehensiveness and goes back to the market for its inspiration. 24 By
definition there will in any urban area, interpreting this to mean not only
the administrative but the functional area, be a large number of fragmented
units (public and private) who have responsibility for managing their own
assets and affairs. In practice they would not do so independently of what is
happening around, for this will influence their management decisions. An
organised management framework for this operation is difficult to conceive
but on the analogy of the market the framework could be organised on the
basis of markets, where ' . . . human activity adapted itself to data about
which it had no information'.25

2.4

2.4.1

Management for urban conservation

Focus

From this perspective on 'urban management' we narrow down to


management for urban conservation. In presenting the approach it would
be helpful if we could adopt the conclusion reached by O'Riordan in
describing the lack of clarity and consistency in the concept of conservation
of natural resources (Preface). This vagueness in the term led him to state
*... it has been felt wise to substitute the phrase "resource management"
for conservation . . . Resource management should therefore be conceived
as a new conservation.'26 But even if our concern was just with the
conservation of natural resources, the identity of the terms would hardly

44

Economics in urban conservation

appear to be adequate. Conservation can certainly be seen as one objective


of resource management. But there can be others. Thus to grasp the full
nature of management for urban conservation requires that we consider the
nature of management generally as brought out above, that is:
(a) The field;
(b) The viewpoint of the manager.
We now trace through these variables in relation to each category of
urban resource.

2.4.2

Natural resources27

Where a resource is exhaustible but renewable (vegetation, animals, fish,


etc.) the management objective of the owner/occupier will be to maximise
the return from the asset, over the period of his interest. This could lead to
management for exhaustion which prevents renewal of the resources (soil
erosion or fish depletion) and so be in conflict with social management objectives, which would wish to see the asset conserved in a way that allowed for its
being renewed and sustained, as for example in soil conservation.
This same kind of conflict arises where the resources are exhaustible but
non-renewable (irreplaceable). The private management objective could be
to exhaust as soon as possible in order to 'get rich quick'. Here the social
objective cannot be management for renewability but management in order
to ensure reserves for future use (e.g. in minerals, agricultural land).
Where the resource is non-exhaustible but pollutable (e.g. air, climate)
the conflict is different. The private objective of the industrialist or
motor-car producer would be to cut direct costs even though atmospheric
pollution arises from external effects. Social control takes measures for
protecting the environment, for example by insisting that the industrialist
and motor-vehicle 'polluter pays' by adding to their costs in order to
eliminate or mitigate the pollution at source. 28
2.4.3

Human resources

A general objective of individuals is to achieve human satisfaction and


happiness, and so achieve 'quality' in their way of life. For this purpose
they will combine in family and other groups for mutual assistance.
Increasingly, to advance these objectives individuals and families
(natural and extended) migrate to urban areas in order to achieve many
qualities of life that would not otherwise be available in villages. But the

Planning and management of urban resources

45

very act of living together poses the well known disadvantages of urban
living. As urbanites they need to give up to institutions their ability for
self-management and are faced with congestion and pollution from
others, leading to overall deterioration in their quality of life. Social
policies for human conservation will aim at the minimisation of these
impediments to, and enhancement of opportunities for, achieving high
quality of life.29

2.4.4

Man-made

Mobile resources, which are personal property, will be used by their


owners in their own way. But where they are not personally owned but held
for the public (e.g. goods in public museums, books in libraries, etc.) then
the public agency has social control with an eye to conservation and
extension of life for the common benefit.
The fabric in the man-made environment suffers from obsolescence and
its private owners and users will be concerned with its renewal. But in this
the management policies may be different from those which would be
adopted by government for urban conservation. The divergence will relate
not simply to the fabric itself but also to those using the fabric. Promoters
of urban renewal projects, even when public, may not be as concerned as
would government about the implications for people of consequential
dispersal to the suburbs or loss of homes through gentrification.30 Part of
this possible divergence arises in the continuing controversy over the
conflicting objectives of unrestrained and limited growth, in urban areas
and in the economy. The no-growth policies are in essence extreme
conservation policies.31
Special conflicts in private and social objectives arise, and special need
for urban conservation, in that part of the built environment which we have
called the cultural built heritage. To this we turn below (Part II).

2.5
2.5.1

The process of planning and management for change


Change through development and conservation

We saw above (1.2) how the urban system changes through the interaction
between people's activities and the physical stock. As a result the stock and
activities become augmented, either through new or the adaptation of

46

Economics in urban conservation

existing. We also saw (1.7) that conservation can be seen as a check on


change. Both are therefore determinants of the rate of change. Since such
change provides the focus of urban management, we now describe in
greater detail the process by which it comes about.

Physical
Whether growth in urbanisation be by development on open land, or
renewal or conservation of the built fabric, the change comes about through
the physical 'development process'. 32 In this the developer as entrepreneur
(a private or public agency) develops; he brings together the factors of
production for renewal or new development (land [sites], economic and
financial investment, the construction industry), some or all of which the
entrepreneur may directly command, to meet an economic demand for the
activities to be provided in the new development (a need for the satisfaction
of which potential owners and occupiers are prepared to pay at stated
prices). Where people would like to pay but do not have the necessary
financial resources at the stated price then the need will not be met unless it
be turned into demand through their resources being supplemented, e.g.
by employer allowances, public subsidy, etc.
When this process takes place there is set up new or renewed urban
fabric, fashioned to meet contemporary requirements, as seen by development agencies (with the collaboration of the other factors) for consumers.
Completion of this process, on the occupation of the buildings, etc.,
initiates an addition to the man-made stock of the built heritage, described
by the noun development.

Activity
The physical development will have been stimulated by the socio-economic
need/demand derived from visualised change in activity. Such change is also
described as development in the literature and practice relating to national
and regional (socio-economic) development planning, 33 being the change
in the flow of socio-economic activities that take place in production and
consumption. Such literature and practice sees the physical stock as the
capital which gives rise to the flow of socio-economic activities. In effect
they contemplate physical development from the other end of the
telescope.
Another difference arises that while socio-economic development is some-

Planning and management of urban resources

47

times equated with growth in product, it more strictly means the carrying
out of the structural changes in society which are needed to make such growth
possible.34 It is possible to have development without growth and growth
without development. In physical development the parallel could be between
development in infrastructure and the growth in the buildings and places
which rely upon it.

2.5.2

The management process

As seen above (2.2) management is a process which is applied to particular


fields by particular managers and within urban management there are
several different strands of fields and managers. Running through this
variety there is a common approach to the management task, which is
adapted to each situation. For example it has been described in relation to
management in local government as follows:35
the organisation identifies certain needs, present and foreseen, in its environment; it
sets goals and objectives in relation to those needs, i.e. the extent to which it will
plan to meet those needs; it considers alternative ways of achieving those objectives;
it evaluates those alternatives in terms of their use of resources and of their effects; it
makes decisions in the light of that evaluation; it translates those decisions into
managerial action; it monitors the results of the action and feeds back to modify the
continuing process; by altering the perception of needs, the objectives set, the
alternatives considered, the evaluation, the decision made or the action taken.

This generic process can also be seen in the urban area in the
management of real property, be it in small parcels or over large estates,
where it has been described as: identification of estate strategy; evaluation
of alternative tactics; selection of preferred tactics; implementation;
monitoring and review.36

2.5.3

Planning for management

The model of management which has just been described (2.5.2) is very
reminiscent of any model for rational planning: the generic activity which
human beings adopt to bridge the future to the present. As such planning,
even for the short term, is a necessary requirement for management. In this
short term, management might conceivably be carried out on a tactical
basis without regard to the longer-term future, as perhaps in the maintenance of flower-beds and grass in an urban park. But even this will have
some longer-term perspective, as for example in deciding on the kind of

48

Economics in urban conservation

materials to be used in making the path or in the soil preparation and


drainage for the provision of the turf.

2.5.4

Management in urban and regional planning

As we will see (3.1) much the same model (for both management and
planning) is used in the typical plan making in the urban and regional
planning process. We will also see that alongside the plan making there is
the 'implementation and review of the plan'. This can be seen as management of the ongoing process of implementation of an urban and regional
plan, strategy or programme. 37

2.5.5

Management and planning

Management and planning are thus interrelated, with managers seeing


planning as an input and planners seeing management as an output. The
critical difference between planning and management is in the agencies
responsible for each of these two aspects, and to the kind of skill and
profession they typically rely upon for advice.
Management looks in the main to managers, accountants and administrators. The tactics of their day to day management are clearly helped by
having regard to objectives, and these become meaningful if translated into
policies, strategies and plans which have regard to the longer and broader
view.38
Urban and regional planning on the other hand stems from the
responsibility of government to take the wide and long view over the
future of the urban and regional area as a whole. In this it relies in the
main for implementation upon the agencies concerned with the management, conservation and development of the urban and regional
resources. It looks in the main for advice to urban and regional planners
working with a variety of contributory skills: in development (architects,
engineers, surveyors, landscapers); conservation (naturalists, ecologists);
social sciences (sociologists, economists). It thus provides a plan to
illuminate critical management decisions in relation to resources and
property.
Thus owners, occupiers and operators see the need for a plan to help
tactical management; and planners see management at a tool for tactical
implementation of its plans. Both overlap. This in practice makes for
strength in the planning and management process, since each can be taken

Planning and management of urban resources

49

as complementary, and each uses a 'planning process' which is reminiscent


of the other. 39
That there are potential conflicts between the objectives stemming from
each side is apparent, not least in the fact that each is studied, taught and
practised by different academic and professional skills; in Universities and
Polytechnics the management and planning schools tend to be distinct,
with distinct academic strengths. But the conflicts can be readily reconciled
in practice. This was achieved in one study, jointly carried out by planners
and managers, where the relationship between development planning and
operational planning was presented (2.3) (Diagram 2.1). 40

Planning for urban


conservation

3.1

3.1.1

Role of planning in the evolution of the urban and regional


system

The general planning process

The urban and regional system of cities, towns and villages has evolved
over the centuries under the stimulus of forces within which the private or
public sector entrepreneurs and land owners take their decisions (1.1). In
simple terms, these are the 'market forces' of the interplay of supply and
demand.
For most of these centuries, and in most communities, there has been
some constraint over the 'market' through governmental control. For
example, those rebuilding in the City of London after the Great Fire of
1666 needed licences. But it is only over the current century that government generally and internationally has taken the view that the evolution of
their urban and regional systems under the impact of 'market' forces can
lead to future situations in town and countryside which are not desirable in
terms of community goals and objectives.1 Accordingly they have introduced urban and regional planning, known also by a variety of synonyms:
town, town and country, spatial, physical, community. 2 In doing so
government has recognised that such a planning can have little effect in
practice in any particular country unless it is introduced as a governmental
function, with its own system of laws, administrative machinery, institutions, financial adjustments between affected owners and the state, and
qualified manpower.3 The function typically embraces plan making, plan
implementation and plan review. The generic process varies from country
to country, and time to time. In the following is described a typical, mature
process, based on the British planning system,4 in which can be seen the
planning and implementation model described above (2.5).

Planning for urban conservation


3.1.2

51

Plan making

Government, central and/or local, has a duty or opportunity to prepare


plans for its communities, central, regional and local, within the planning
system it sets up.
The actual plan making process differs from country to country. But
there is a rational model of a process and procedure which is adopted
throughout the world with varying degrees of emphasis and adaptation. 5 In
essence this involves the identification of the current situation and how it
has evolved; some prediction of the future events without the intervention
of planning; the formulation of optional future possibilities which would
arise with the intervention of planning and implementation; the testing of
such options for feasibility and desirability; the detailing of the selected
options; the formulation of a programme for the implementation of the
options with the necessary means, legal, administrative, financial, etc.; and
the review of such options in the light of experience following implementation, for which purpose there is a monitoring of events.
The typical plan content for the urban area has twin components,
brought out above in relation to the urban and regional system (1.1). The
first is the current and future profile of the present and future users of the
plan area, that is those resident in or making use of it in their everyday
activities: work, shopping, education, recreation, etc. The second is the
provision for them of the appropriate mix of land uses for the activities
(industry, shopping centres, schools, etc.) which will provide for them the
appropriate physical development.
The latter component has earned for the process the title 'physical
planning'. This title is not altogether accurate for covering both
components. The name reflects a tendency in urban planning to be
concerned more with the physical aspect than with the related socioeconomic activity.
From the preceding there will emerge a programme for implementation.
This could comprise a broad approach in terms of policies, proposals,
strategy or plan, together with specific elements of a programme of projects
(particular buildings, environmental areas, conservation areas).
The essence of the programme would be its phasing by priorities and
with a clear indication of the means whereby the programme is to be
implemented: such as the implementation measures of the implementation
authority, the implementation agencies and the resources needed from the
various actors involved.

52
3.1.3

Economics in urban conservation


Plan implementation

Within the framework of the plan, etc. the implementation authority will
steer, influence or control the actions of development, conservation and
renewal agencies who are responsible for implementing their individual
sectors (housing, shopping, industry, roads, etc.)- Within this a plan making
authority may also have distinct implementation functions for particular
sectors, as in parking, housing, roads, etc. and, as we shall see, conservation.6
The nature of the implementation process will vary from country to
country and from locality to locality, according to the implementation
measures, economic resources, political interest and will, etc. Within the
process will be available a variety of implementation measures. From what
was described above (1.2), on the interaction between the physical fabric
and human activity in the urban and regional system, it is apparent that the
implementation can be directed either at the fabric or at the activities, or
both. The former involves measures ranging from the indirect (control over
the actions of others) to the direct (positive action taken by authorities as in
the provision of new roads or new buildings). The latter involves the exercise
of influence by indirect means (general persuasion, taxation or subsidy).

3.1.4

Monitoring and review

Implementation will be ongoing, typically starting during the plan making


process itself. Over the years of implementation there will be continuing
change, some of which will affect the basis and assumptions on which the
plan making was founded. Furthermore, as time elapses, the programme
for implementation will need extending beyond that initially prepared.
Thus a process of monitoring change is needed, leading to a review of the
plan and its implementation, leading to changes in the plan, its implementation and programme. While such monitoring and review is necessarily
periodic, in practice the plan and its implementation could be continually
under ongoing review.7

3.2

Role of conservation in urban planning

Having presented the planning process as a whole, we now consider the role
of conservation in such planning, as adapted for each category of urban
resource (1.4).

Planning for urban conservation

53

As regards natural resources, urbanisation on our planet began only


some ten thousand years ago. 8 During this brief period man has shown his
capacity both for creative development and for exploitation and destruction, becoming divorced from his natural origins and surroundings.
Planning must accordingly aim both to conserve nature in urban areas and
also enhance it.
As regards man, the conservation role has the many facets indicated
above (1.4.2). Parents and teachers must be given the opportunity to
nurture children in both a good standard and quality of life. In projecting
the stream of activities in the planning process (3.1) there is the need to
consider 'continuity5 as well as 'change'. The change is made up of new
forces affecting demand (change in taste, income, etc.) and supply (technology, innovation). The continuity is the protection of the traditional and
established way of life from the new.
This concern has been seen as 'culture conservation' relating not only to
the tangibles (buildings and objects) but to the intangible elements of the
cultural heritage, that is 'folklife' and 'folkways'. This is also expressed as
'community life and values', 9 with community being interpreted in terms
of place or interest or attachment. In this the conservation aim is to see that
planned change avoids, as far as practicable, the disruption of traditional
and contemporary community patterns (folkways); and where not practicable, in the planning survey phase to document forms of expression which
will vanish from the disruption, and to introduce change by reference to the
views and choices of the people affected. Thus, while it is not thought
practicable to freeze folklife in time, it is thought desirable to follow the
objective of 'continuity and change'.
The application of this approach to town planning was seen at the
beginning of this century by Patrick Geddes, who applied his insight as a
biologist to towns and regions. He saw that it was necessary in contemporary proposals for towns to identify and conserve traditional culture
(cultural evolution) and to graft the new proposals on to existing heritage
(conservative surgery). 10
For the built environment, the conservation role stems from the picture
presented above (1.2) of physical stock which has considerable life once
established, and over its life cycle is continually being adapted to change in
socio-economic activities. In consequence, in any particular year the
relative proportion of the new development which is carried out is
comparatively small compared with the mass of urban fabric which exists,
with the old being greater in geographic extent and quantity of stock than

54

Economics in urban conservation

the new. From this it follows that any plan making must pay considerable
regard to the current stock which will continue to evolve over its life cycle
as well as the change for the future which is being planned. This approach
has been forcefully applied by Perloff:11 'A community is, at any moment
in time, made up of the old and the new'. While the old is clearly an
inheritance from the past the new development which is planned also has
links to the past: through the life cycle of what exists; the future is made up
of decisions taken at present which are clearly influenced by the past; and
forecasts for the future are geared to experience of the past. This leads to
'time oriented planning' where 'continuity and change converge'.
The endurance of capital and other urban features involves benefits and costs.
Significant benefits can be found in the additional resources (assets) that longevity
makes available for carrying out the city's functions. The inherited urban assets
continuously constitute a large share of the nation's total wealth (as well as of the
wealth of individuals). Benefits can be found in the comfort given people by the
availability of familiar features . . . Costs of longevity appear in the form of
constraints on the introduction of new technologies such as when a new means of
transporting people and goods is delayed by the existence of the old or when an old
school building delays introduction of new approaches to education.12
Within this approach it is not difficult to see the role for urban
conservation. Not only are there clear reasons for conservation in the
management of resources (1.7) but conservation as a brake upon unnecessary and undesirable change becomes a major objective in planning the
future of the urban area.

3.3.

Role of planning in deferring obsolescence

As explained above (1.6) renewal and conservation of the built environment


are means of tackling obsolescence which have emerged over the life cycle.
Thus it is possible to consider conservation simply as a remedy for
obsolescence as it emerges. But such an approach would hardly be as
positive a contribution as implied in the approach outlined above (3.2).
What is needed is not simply the control of change but the promotion of
continuity. Put simply, how is it practicable to defer the growth of
obsolescence and thereby enhance continuity and postpone the necessary
remedial treatment. How is it practicable to carry out 'planning for the
survival of things'. 13
The starting point here is clearly the obsolescence survey outlined above

Planning for urban conservation

55

(1.6). But whereas that was couched in terms of analysis of individual


properties and homogeneous groups, the area approach implicit in planning requires that the obsolescence survey be carried out in broader areas.
For this purpose generalisation is needed. 14 The first approximation would
be the demarcation of the town by date of original development, in order to
be able to exclude more recent belts of growth where by definition the
obsolescence problem would not be so severe. Within the remainder the
survey would be tackled under the four heads at the micro level envisaged
above (1.6) or if this were found to be too elaborate and time consuming, on
a sampling basis with the particular properties picked out by inspection to
represent areas of homogeneity, the definition of such areas being related to
each of the four obsolescence factors.
Whatever the approach to detail, the result would be the same: the
attempt to pick out areas in the town which were clearly candidates for
obsolescence of varying degrees and of varying kinds. While the four
obsolescence factors would be tackled separately it is likely that in practice
many areas will contain more than one.
From this datum the next step would be to attempt to predict whether or
not the degree of obsolescence for each of the defined areas is static,
growing or declining. For this purpose regard would be had not only to
historical trends but also to the implications of known planning proposals,
as for example the routeing of urban roads which would advance blight and
obsolescence through proximity to the route, or the reverse by contemplating the removal of congestion from the area. From this macro review it
should be practicable to define areas by severity of current obsolescence
and severity of future deterioration. As always in the planning process, this
is the starting point for the devising of measures for the deferment of the
obsolescence to which we now turn.

3.4.

Role of planning in urban conservation

The question then arises: what role can urban planning itself play in such
urban conservation? This shift of emphasis to conservation will aim to
redress the imbalance experienced in urban and regional planning, where it
is the change that has become the focus for the plan making, on the
understandable premise that given the likelihood and inevitability of such
change it is desirable and necessary to take measures in advance, through
planning, to influence and control it. In brief, it was planning for

56

Economics in urban conservation

developmental change as opposed to conservation against change, which


has been the ruling preoccupation. And just as planning intervention by
government is needed to regulate 'market failure' in development (3.1) so it
is in conservation.
As regards the stock, the planning process needs to reflect the change of
emphasis urged by Perloff,15 namely to introduce 'time oriented planning'
where 'continuity and change converge': ' . . . preservation and conservation should become a built in part of the developmental activities of the
community . . . keeping something of the lives of people from each epoch of
the past is of value for the future'.
As regards activities, there must be the greater weight given to people,
communities and their 'folk-life' and 'culture', of a kind which has been
continually stressed in planning by sociologists and anthropologists.16
These considerations in urban and regional planning can be seen to be a
reflection of the major debate and battle in the world at large, between
'growth' and 'no growth', introduced above (1.8.1). In that debate the
focus has been on the exploitation of natural resources and pollution of the
environment in their threat to the standard and quality of life of people on
the planet, in a situation of exponential growth in their numbers and
expectations.
As with the macro debate, it cannot be correct to assume that either
'growth' or 'no growth' will be applied to the exclusion of the other. The
world in general, and all urban areas in particular, need both 'continuity'
and 'change'. Thus the balance needs to be struck in the making of plans
for the future as well as in the management of resources. In this regard the
striking of such a balance is a common enough feature in all planning,
which seeks to prepare and evaluate the outcome of options with a view to
striking that which is best in the interests of the community for whom the
plan is being prepared. 17 The shift of emphasis is to recognise that the
'conservation option' must always be considered alongside the 'development option', including the search for combinations of the two in any given
project.
This balancing of the outcome in evaluation will be the easier if it be
recognised in the plan making that conservation and development are not
of themselves inimical. Change in the sense of development is inevitable in
any community as regards both the physical stock and activities. The
countervailing tendency to the change could be 'preservation', that is the
attempt to freeze in time. Such an approach would at the least frustrate the
legitimate aspirations of people for an improvement in the urban living

Planning for urban conservation

57

conditions which they have inherited; or at a higher level, the achievement


of a standard and quality of life beyond that which they currently enjoy.
From this it is natural to think in terms of 'conservation' rather than
'preservation' for it is in the conservation that change is introduced in a way
which adapts the present to the future. Seen this way, 'development is the
answer to conservation not the problem' 18 and 'It is recognised that urban
conservation and development can be mutually supportive'. 19
This balance will be borne in mind also in the process of plan implementation. It is here where the conflict and friction occurs in practice. In
exercising indirect control, is it in the best interests of the community to go
along with development intentions which would undermine the conservation value of the object in question, or should conservation be maintained
against development pressures? If development pressures are strong,
should government take more positive action (e.g. by subsidising owners to
achieve conservation or by buying property) in order to carry out the
conservation objective?
In the preceding, striking the balance requires ex ante evaluation. The
process of monitoring and review (3.1.4) is a means of ex post evaluation of
whether the balance has been satisfactorily found, having regard to
changing circumstances and experience.
One final, fairly obvious, point needs to be stressed in relation to the
preceding. While the role of conservation and urban planning has been
described by reference to the different categories of resources in the urban
area (3.2) in planning for urban conservation (3.4) the different resources
will be treated as an interacting system. The conservation of nature in the
urban area is not seen so much as an end in itself but as an enhancement in
the way of life for people in the area, in offering them visual and
psychological relief from the mass of bricks and mortar, fresh air in the
city's lungs, places for active or passive recreation. 20 The conservation of
the built environment itself is seen in relation to the conservation of the
life-style carried on in that environment.

Part II
Conservation of the
cultural built heritage

Conservation of the CBH

61

Summary
Having set the general scene for urban conservation we now concentrate on
the process for one particular element in the system, the cultural built
heritage (CBH): that part of the built environment selected by Government
for conservation into the future. In order to explore the nature of the CBH
(Chapter 4), we first link it with the general heritage of man of which the
CBH is but a small part (4.1), emphasising that such general heritage also
has proprietary interests (4.2). We then bring out the distinction between
the general and cultural heritage (4.3) in order to concentrate on the CBH
(4.4), bringing out its characteristics as property and commodity (4.5) and
then return to the question (1.8 above): why do we conserve it? (4.6). We
then show how such conservation relates back to the process of obsolescence, renewal and conservation, discussed in 1.6 (4.7). We then bring out
the distinctive features in property management for the conservation of the
CBH (4.8).
If we are to conserve the CBH in any meaningful way, we need to identify
just what that heritage is and how the protection against erosion is to be
carried out (Chapter 5). This needs the foundation of some coherent
philosophy and theory of conservation and logical answers as to the why of
conservation (5.1).
While countries around the world have here much in common, there is
no standardised system, and each has evolved a different approach for
identification and protection, varying for example with the amount of their
cultural built heritage, attitude to it, etc.
In order to present a picture we have sub-divided the process into four
elements, namely the content of the list or inventory (5.2), the machinery
for its protection (5.3), the effects of the listing (5.4) and how permission is
secured to alter or demolish objects on the list (5.5). A review of these
elements is presented by a brief introduction of the practice in England and
then of related practice in a range of other countries which have been
studied.
We then return to the theme of management and planning of urban

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Economics in urban conservation

resources (Chapters 2 and 3) and trace the steps again in relation to


conservation of the urban cultural heritage, within which we include both
activities and physical stock (Chapter 6).
We first introduce the relation of planning and management. We note
that as with the general built environment, we have activities as well as
stock; cultural conservation is thereby introduced, emphasising that it is
not necessarily related to the CBH (6.1).
We then show how the role of the CBH in urban planning has become
identified over the last fifty years by a succession of international conventions which have sought the integration of the conservation into urban
planning generally, resulting in the strengthening of the conservation
beyond its capacity as a discrete movement (6.2). We introduce the same
theme for the cultural heritage, which has however been far less integrated
into urban planning (6.3). In the remainder of the chapter we go into
further depth on plan making in the conservation of the CBH, both at the
macro and micro level (6.4), and then to the implementation of plans for the
conservation of the CBH (6.5, 6.6, 6.7 and 6.8).
In the process of planning and management for the conservation there
are raised some searching questions which hark back to the fundamentals
of the philosophy of the conservation. These are enumerated and discussed
(6.9).

The nature of the


cultural built heritage

4.1

Man's heritage1

At any moment in time, any society is using its general heritage from the
past, namely all that it inherits from its forebears. This is very varied in
character. It can be categorised in relation to our concept of the urban and
regional system (1.2) as follows:
Physical stock2
(a) natural resources: land, with its minerals, agricultural and
timber products, animal and bird life; the water, with its fish
and plant life; the environment in sun, air, rain, climate;
(b) man-made: works and buildings which are attached to the
land (immobile);
(c) man-made: works which are not attached to walls and
buildings (mobile).
Activities
(a) consumption;, quantity and kind of goods and services
available to people for their standard and quality of life;
(b) production: way in which society has learned to provide the
goods and services for consumption;
(c) religion: relation with the God(s) of the country and the
institutions which serve that relation;
(d) arts: graphic, music, dance, literature, film, plays;
(e) knowledge: accumulated and transmissible through education
and training of all kinds;

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Economics in urban conservation

(f) folklore: collective memory of past generations, absorbed


through the family, teachers, etc.;
(g) tradition: carrying out activities in a manner reminiscent of
previous generations.
By definition, this heritage is continually growing, both with the rise in
numbers of population who are able to transmit to the future, and the
increasing amount of heritage goods and services of the above categories
which are left behind. But the rate of growth is not uniform in all
categories. In the natural heritage there is indeed a diminution, as certain
irreplaceable resources of the earth become consumed. Certain kinds of
inheritance are diminishing, for example particular crafts and skills,
particular forms of education, such as the classics, and particular traditions, when discarded by the young. Others have newly appeared, the
home computers. Thus there are variations in stock in particular categories
and sub-categories.
Associated with these variations in growth in categories are variations in
the future life that can be expected of them. In the built heritage, the
passage of years must erode the structure. Its maintenance will also be
undermined unless measures are taken to preserve and continue the
knowledge, number and skills of master craftsmen; to emphasise the point
in Japan and Morocco these are classified as 'living cultural heritage'. 3 In
the transmission of certain languages or dialects only a short life can be
visualised if there is lack of use, unless efforts are made at continuation
under adverse circumstances (Catalan in Franco Spain) and revival (as with
Gaelic or Hebrew). Folklore, music and dancing are particularly exposed to
disappearance without efforts to record and revive.

4.2

Proprietary rights in the heritage

The heritage can also be property and commodity (2.1). But there is
variation in the kind of proprietary rights in the different categories of
heritage. While natural resources have been given to men by God or nature,
they have become appropriated in most societies: in the state (nationalisation or public ownership of land), in private ownership (large landowners
or peasants), or in the tribe; the same can be said of the built heritage which
becomes attached to land in various forms of ownership; personal property
can be owned by government, companies, individuals, etc.; and cultural
arts are owned by any person who can use the painting, music, dance,

The nature of the CBH

65

language, etc. of preceding generations, although the content of the


performance could be owned by others under copyright.
But whatever the nature of the 'appropriation5 there is in respect of
certain parts of the heritage a form of ownership which transcends that of
the proprietor protected in law. This arises where the society in question,
through its government, attaches sufficient value to any element in the
heritage to lead it to exercise some influence or control in its protection,
nurture and survival. Examples are the wish of a government to ensure the
continuation of certain arts (e.g. folk dancing or language) or, of greater
concern to us here, of buildings of historical or architectural significance.
When this governmental concern is sufficient to justify its taking such a
stand it can be said to create in the heritage a 'heritage tenure', that is rights
without necessarily assuming ownership, of the kind which are taken by
central and local government when adopting laws in urban and regional
planning. But it could also go with ownership, as in museums which set out
to record, store, exhibit and make available to the public collections of the
past, covering any of the elements of the heritage described above. The
principle has a particularly poignant expression in respect of mobile
elements of the cultural heritage of a country which have been taken
abroad, whether as booty from conquest or exercise of other power. The
heritage tenure is here taken to justify restitution to the original country.
The debate continues while an international code is being built up. 4

4.3

The general and cultural heritage

By definition, the natural resources (4.1) are not part of man's cultural
heritage (Appendix 4.1). But within the man-made general heritage can be
detected part which is termed cultural: that which expresses some indefinable but recognisable element which the current society values especially
and which it would wish to pass on to posterity. It is this part which is
popularly called the heritage which is thought to be the hallmark of the
'civilisation' of the people who created it, 5 so enabling civilisation to
advance ' . . . by extending the number of important operations which we
can perform without thinking about them'. 6 It is the 'sum of human
endeavour' and 'includes styles, institutions, activities and memories and
values'. 7
The division between what is to be passed on or not is obvious in certain
instances (traditional cooking versus harmful drugs) but not in others

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Economics in urban conservation

(classical versus jazz music). In these instances the distinction is seemingly


subtle and arbitrary. It is made by successive generations (in some kind
of consensus or elite choice) as the following examples show. Man-made
moveables to be preserved find their way to private or public museums
and art galleries; religion is perpetuated through its institutions; the arts
which survive will depend upon taste as the years go on; all knowledge is
stored (books, TV, film, etc.) with later generations selecting what they
find of value sometimes to become 'classics'; traditions are a matter for
individuals or institutions.
The choice cannot be made once for all but is reviewed by successive
generations. The Victorians disdained Georgian architecture, as the
Edwardians disdained the Victorian. While popular music was originally
disdained by the classical performer it now has a classical era of its own, in
jazz and the blues. Classical Latin and Greek, initially the hallmark of education, have become dispensable and not mandatory; folklore and folklife
have been pushed aside with 'growth and development' and tourism is
now being treasured; traditional technology is now being restored under
the slogan 'small is beautiful'; obsolete buildings of the nineteenth century
are now revered as industrial archaeology.
These examples relate to both activities and buildings. But they are not
necessarily found together. The cultural built heritage can house mundane
activities such as warehousing or manufacturing. And traditional pursuits
are carried out in contemporary schools and community centres. And it is
not even apparent that the matching of the two would assist in conservation generally. The historic buildings need high value uses, not necessarily cultural, to maintain them; and the cultural activities need low
rented accommodation, not necessarily the CBH, to sustain them.

4.4

The cultural built heritage (CBH)

We now focus on a small proportion of part of the general heritage, the


works and buildings and their associated land, which we call the cultural
built heritage (CBH). This could cover a wide array of isolated objects,
such as archaeological sites, ancient monuments (buildings which remain
in whole or ruins which are typically not occupied nor capable of occupation), individual buildings or groups, streets and ways connecting the
groups, places surrounded by buildings, objects such as single standing
columns, statues, etc. Or it could extend to whole areas, be they ones
which in themselves have a heritage value or, having no such value, are

The nature of the CBH

67

nonetheless of importance because they are surrounding or nearby part of


the CBH.
By definition, the CBH will have had some considerable life, even
millennia in the case of archaeological sites. But even for the more recent
buildings the tendency is to select the older ones, simply because they have
the patina of age, and have come to be valued because they are of days gone
by; society is not yet ready to select for conservation the more recent
buildings, if only because the value for posterity is less clear and the
urgency to do so is smaller, in that they are less under threat. But what is of
equal if not of greater importance is the expected future life, since the most
important single objective of such conservation is to secure the extension of
the life into the distant future, for otherwise the effort would hardly be
justified. Termination here could be a function of the object itself (age,
physical decay, etc.) or of the threat of demolition. Thus the inherent
condition of the heritage element (its obsolescence in degree and kind),
together with the possibilities of finding a long and future useful life for it,
becomes of critical importance. * . . . with the conservation progress, we are
creating a future heritage not preserving an historic one'. 8
Where the conservation movement is strong, there is a tendency to create
a bigger and bigger reservoir of the heritage which is selected for conservation, be it through the addition of more recent or less worthy buildings,
or the enrichment of historical interest. When to this is added the
contemporary strengthening of the conservation movement through a
reaction against the nature of contemporary additions to the built heritage
there can be seen a swell in quantum of buildings, objects, etc. which are
thought worthy of consideration for conservation.
This swell emphasises the need for criteria for selection within the built
heritage of those thought worthy of protection, and the need for machinery
aimed at such protection. To this we turn below (Chapter 5).

4.5

The CBH as property and commodity

All that was said above about the built environment as resource, property
and commodity (2.1) would apply equally to the CBH. This in addition has
the special feature of 'heritage tenure' (4.2). The State can express its
interest in any works of art which it does not own, because it regards them
as part of the general heritage (for example in forbidding the export of
pictures or archaeological remains). But it can do so the more easily when

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Economics in urban conservation

the element of the heritage is fixed in place as real, immoveable property.


In addition in such property the concurrent existence of interests is
normal (2.1.2). For another it is accepted that the State can have such an
interest (4.2).
The exercise of heritage tenure could affect differently the various
property interests in a property. For example, the denial to an owner of his
redevelopment rights could be to the advantage of an occupier who finds
the premises suitable despite the obsolescence; indeed he might find it
advantageous to be paying a lesser rent for the older premises than he would
have to pay for the new. Any lender of money on the property would take a
different view. Clearly his security would be undermined by the obsolescence and would not be improved without redevelopment.

4 - 6 - Why conserve the cultural built heritage?


One reason for conserving the cultural built heritage is the same as for
conserving the general built heritage: as a resource for continued use by the
current generation, so avoiding the need for new investment resources to
replace it (1.8.3). Even more important, irreplaceable value is saved for the
current generation, since by definition the CBH has quality which is
different from, and in many ways superior to, the contemporary structure
which would replace it: it provides refreshing contrast from the contemporary scene; it can be distinctive and may have rarity value; it offers a
welcome opportunity for imaginative conversion and adaptation of a
familiar building in the local scene to 'new uses for old' in housing, offices,
light industry, retail and catering, leisure and conference.9
There is a further reason: the obligation felt by any contemporary society
to hand over its cultural built heritage to succeeding generations. However
elusive of definition and assessment of quality (Chapter 5) it is regarded as a
trust for future generations, to be handed on. In the purist views of John
Ruskin 'We have no right whatsoever to touch them. They are not ours.
They belong to those who built them and partly to all the generations of
mankind who are to follow us.' 1 0 Similarly William Morris ' . . . these old
buildings do not belong to us only . . . they belong to our forefathers and
they will belong to our descendants unless we play them false . . . we are
only trustees for those that come after us'. 1 1 Or more contemporaneously
'A city without old buildings is like a man without a memory.' 12
In this spirit, certain countries act as trustees not only for future

The nature of the CBH

69

generations of their nationals but also for non-nationals around the world
(Greece), as have certain Colonial governments occupying foreign countries (the British in India) who continue the protection even when transferring the foreign heritage to the homeland (Elgin Marbles in the British
Museum). An extreme instance is seen in Jerusalem where the trust is even
extended from the national religion, Judaism, to another, Islam, whose
adherents are on the whole hostile to the state which conserves its
monuments: to the point of open avowal to extinction.
There are arguments against conservation. The heritage quality which is
the object of conservation may co-exist in particular buildings with an
internal space which is quite outmoded for contemporary use, even with
expensive adaptation. Insistence on protection of such buildings could lead
to the retention of white elephants which are uneconomic to operate and
maintain: the need to maintain in materials which are compatible with the
original (which cheaper substitutes are not) and the difficulty of finding
craftsmen who can do the repairs, has led to 'a maintenance crisis' for the
architectural heritage. 13 Furthermore, protection could lead to the sterilisation of important sites for new development. This could be significant not
only for the site in question but for those surrounding areas where,
understandably, there is the attempt to limit the size of new buildings in
order to maintain scale with the protected building.

4.7 Conservation of the cultural built heritage as a special case of


renewal
In the evolution of human settlements the buildings and places which
later become the cultural built heritage start their lives in no way different
from others. As such they are subject to all the pressures for obsolescence, adaptation and replacement (1.6). But there comes a time when
contemporary society takes the view that there should be resistance
to renewal in particular buildings or places which have heritage
qualities.
When such a decision is taken two situations arise. First, since by
definition the fabric is old, it can be assumed that it will embody some
degree of obsolescence (1.6.2); secondly, the forces for their renewal must
be constrained to avoid destruction of the heritage (for example, by major
alteration or replacement). Thus buildings, etc. picked out for the cultural
heritage become special cases in the evolution of a settlement in terms of

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Economics in urban conservation

obsolescence and renewal: they may well be obsolete and therefore


candidates for renewal (1.6.3) but there is a special case for resisting their
renewal. The resistance becomes a matter for official policy, legislation,
enforcement, etc. Government acts as trustee for the protection of the
heritage on behalf of future generations, even though the contemporary
generation be called upon to make financial and economic sacrifice for the
purpose.
Thus the introduction of a conservation objective in respect of any part of
the urban fabric introduces constraints on the way in which the fabric
should be treated during its remaining life cycle, compared with the
situation if there were no such objective. This treatment involves intervention at the seven differing scales and levels of intervention described above
(1.6.3). Redevelopment apart, each comes within the ambit of renewal
aimed at 'obsolescence'. Such renewal can be recognised as 'conservation'
in the general built heritage. But in the cultural built heritage there is also
need to restrict and conserve the cultural quality of the building, as far as
practicable within the constraints of the development process (2.5.1). The
object is ' . . . to present to those who use and look at historic buildings
with wonder the artistic and human messages that such buildings
possess'. 14
The kind of constraints introduced by the conservation can be seen in the
control of 'restoration' and 'rehabilitation'. For the former the objective is
to ensure that the building continues into the indefinite future in the form
in which it was initially created, even to the point of removing changes since
its construction which depart from the original designs, purpose, intention,
etc. In the latter it is recognised that restoration in the original form is not
practical nor desirable having regard to contemporary pressures, so that
some adaptation of that original structure or use can be accepted. But even
this can be very restrictive. In the use of the building there would be
limitations coming from the need to respect the interior and exterior of the
fabric as originally designed (e.g. to alter the fenestration or the interior
partitions, ceilings, etc.). There would also be loss of freedom in taking
measures against the obsolescence of the building: in the remedial works
to physical obsolescence, there would be restrictions on what could be
done (e.g. in the strengthening of the fabric where this would mean
alteration of the external appearance); in the remedy of functional obsolescence there would be a limitation on the modernisation of the interior.
All this leads to restrictions on the mode of renewal that might otherwise
be employed.

The nature of the CBH


4.8

71

Property management for the conservation of the CBH

In property management generally (2.4) historic costs are seen as 'foregone' or 'sunk', i.e. no specific future act of the owner can affect them.
By contrast the value (measured by cost) is not, so that management
policy and decisions can have their influence. A general management
objective would be to maintain the value of the asset at as high a level as
practicable throughout its visualised life: in other words to conserve it. In
essence the manager tries to maximise net benefit over the visualised life,
discounting costs and benefits over this life to the point of any decision
(Chapter 7). In this he would not necessarily try to get the maximum
intensity of use (e.g. over-dense occupation of a house) for he could then
be shortening the potential life over which he could benefit. And he
would not necessarily try to lengthen the life indefinitely, for then he
might be frustrating the benefits from both the building and also the site
in an alternative use.
Such conservation has implications for management practice: in levels of
maintenance and repairs; adequate return for investment in proposed
rehabilitation; viability of scrapping the asset in order to realise the latent
value of the site covered by the building. These objectives are consistent
with securing an occupier of the built fabric who would be able to afford
high level expenditure on maintenance of the property and thereby ensure
its longer life. But it could be that such occupation would be less profitable,
in the long run, than one which neglected the maintenance. For example,
where early redevelopment was visualised, neglect of the property could
lead to maximisation of net income in the meantime as would intensive
occupation, even though it would physically damage the property.
By contrast, management of the CBH with an eye to conservation of
necessity leads towards the avoidance of such short-term courses of action.
High level maintenance would be essential in order to maintain the physical
fabric to lengthen life, simply because the overriding aim is conservation
enduring into the future. Indeed the aim would affect the very modes of
maintenance: using sympathetic materials and craftsmen even if more
expensive.15
This property management for conservation of necessity acts as a
constraint on the freedom of action available for such management which
does not include the conservation objective, as the following examples
show. On the cost side, it may be necessary to spend more than would
otherwise be thought desirable. On the value side there is impediment to

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the use which has the greatest net surplus: in general, maximisation of net
asset value needs to be tempered with maximisation of conservation value.
But conservation measures could enhance the occupation value of the
property, arising from the scarcity of its qualities compared with the
generality of the built heritage. When rehabilitation is under consideration,
proposals consistent with the retention and perhaps enhancement of
conservation quality must be chosen rather than those which are indifferent
to it. And since redevelopment itself is the ultimate frustration of conservation, the very objective of conservation must be to frustrate demolition.
This necessity, to place the conservation objective in the forefront of
management policy, has led to the necessity for searching out those uses
which can function in conserved properties, which has been dubbed 'new
uses for old' or 'adaptive use'. 16 In this process, it is necessary to find the
balance between the requirements of the occupiers for continued occupation and the requirements for continued conservation. The solutions in
practice have been very creative.17 Inevitably there must be compromise.
This could fall upon the occupiers in terms of less efficient functioning than
would be possible in a contemporary purpose designed building, or on the
owners in less surplus of income over cost. It could fall on the cultural
quality which would need to suffer in the adaptation needed to make the
balance possible, compared with that which it is desired to retain. But what
is left must be worthwhile, for otherwise the effort in compromise is
wasted, since commercial advantage has been lost without achievement in
heritage quality. 18

Appendix 4.1
A description of the cultural and
natural heritage
The World Heritage Convention of 1972 for the protection of the World
Cultural and Natural Heritage, which is of outstanding universal value, has
the following definitions (UNESCO, 1972):
Article 1
For the purpose of this convention, the following shall be considered as 'cultural
heritage':
monuments: architectural works, works of monumental sculpture and painting,
elements or structures of archaeological nature, inscriptions, cave dwellings and
combinations of features, which are of outstanding universal value from the point of
view of history, art or science;
groups of buildings: groups of separate or connected buildings which, because of
their architecture, their homogeneity or their place in the landscape, are of
outstanding universal value from the point of view of history, art or science;
sites: works of man or the combined works of nature and of man, and areas including
archaeological sites which are of outstanding universal value from the historical,
aesthetic, ethnological or anthropological points of view.
Article 2
For the purpose of this convention, the following shall be considered as 'natural
heritage':
natural features consisting of physical and biological formations which are of
outstanding universal value from the aesthetic or scientific point of view.
geological and physiographical formations and precisely delineated areas which
constitute the habitat of threatened species of animals and plants of outstanding
universal value from the point of view of science or conservation.

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Economics in urban conservation

natural sites or precisely delineated natural areas of outstanding universal value


from the point of view of science, conservation or natural beauty.
For an object in the 'cultural heritage' to be considered of 'outstanding universal
value' it must meet one or more of the following criteria and the test of authenticity:
a)
(i) represent a unique artistic achievement, a masterpiece of the creative
genius; or
(ii) have exerted great influence, over a span of time or within a cultural
area of the world, on developments in architecture, monumental arts
or town-planning and landscaping; or
(iii) bear a unique or at least exceptional testimony to a civilization which
has disappeared; or
(iv) be an outstanding example of a type of building or architectural
ensemble which illustrates a significant stage in history; or
(v) be an outstanding example of a traditional human settlement which
is representative of a culture and which has become vulnerable under
the impact of irreversible change; or
(vi) be directly or tangibly associated with events or with ideas or beliefs
of outstanding universal significance (the Committee considers that
this criterion should justify inclusion in the List only in exceptional
circumstances or in conjunction with other criteria);
and
b) meet the test of authenticity in design, materials, workmanship or setting (the
Committee stressed that reconstruction is only acceptable if it is carried out on
the basis of complete and detailed documentation on the original and to no
extent on conjecture).

Appendix 4.2
A description of moveable
cultural property
In adopting a Recommendation for the Protection of Movable Cultural
Property in 1978, UNESCO has the following description of moveable
cultural property (UNESCO, 1983, p. 215):
(a) 'movable cultural property' shall be taken to mean all movable objects which
are the expression and testimony of human creation or of the evolution of
nature and which are of archaeological, historical, artistic, scientific or
technical value and interest, including items in the following categories:
(i) products of archaeological exploration and excavations conducted on
land and under water;
(ii) antiquities such as tools, pottery, inscriptions, coins, seals, jewellery,
weapons and funerary remains, including mummies;
(hi) items resulting from the dismemberment of historical monuments;
(iv) material of anthropological and ethnological interest;
(v) items relating to history, including the history of science and
technology and military and social history, to the life of peoples and
national leaders, thinkers, scientists and artists and to events of
national importance;
(vi) items of artistic interest, such as:
paintings and drawings, produced entirely by hand on any support
and in any material (excluding industrial designs and manufactured
articles decorated by hand);
original prints, and posters and photographs, as the media for
original creativity;
original artistic assemblages and montages in any material;
works of statuary art and sculpture in any material;
works of applied art in any such materials as glass, ceramics, metal,
wood, etc.;

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(vii) manuscripts and incunabula, codices, books, documents or
publications of special interest;
(viii) items of numismatic (medals and coins) and philatelic interest;
(ix) archives, including textual records, maps and other cartographic
materials, photographs, cinematographic films, sound recordings
and machine-readable records;
(x) items of furniture, tapestries, carpets, dress and musical
instruments;
(xi) zoological, botanical and geological specimens.

5.1

Identification and
protection of the CBH

The issue

As indicated above (4.4) a government cannot protect all possible candidates in the CBH and must accordingly identify those objects which it does
decide to protect. For this purpose we distinguish between an inventory of
possible candidates which can be screened into a list for protection. 1 This
calls for a comparative estimation of the cultural value of the various objects,
with priority for those of higher value. This estimation is elusive for a
number of reasons. Cultural value is an intangible quality which is difficult
to measure. There is no exchange value in the market as a guide to
contemporary valuation by individuals. There is no way of establishing the
values which will be held by future generations, on whose behalf the
selection is being made.
Despite the difficulties, it is important to have a robust method of
identification, for a variety of reasons. Just because the criteria for selection
are intangible and subjective, there is considerable room for debate which
can erode the time needed for concentration on the conservation itself.
Criteria which are not understandable and acceptable will not secure the
necessary resources for conservation. There is need to secure the confidence of those affected by the conservation measures, viz. owners/
developers of the properties concerned, or the taxpayers called upon to find
the financial resources for conservation. There needs to be some firm basis
for an action programme within the overall conservation strategy. All this
needs the foundation of some coherent philosophy of conservation
(Preface), some theory to give logical answers as to the why of conservation
(1.8 and 4.6).
But, however firm the basis for identification of the CBH, it is of little
significance unless there is also a firm legal and administrative basis for its
protection; otherwise the exercise has no impact on practice. The purpose

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and role of the inventory in this regard varies from country to country. 2 It
could simply offer data as a basis for legal protection by others (Canada); it
could be the basis of legal protection, when it becomes the list (India,
Japan, Mexico, Morocco); or could be both (France, Italy); or could be
intended for integration into development policies and plans (Poland,
Morocco).
This chapter deals with the inter-related pursuits of identification and
protection. This process follows similar principles in countries the world
over which have concern with the conservation of the cultural built
heritage.3 However it is carried out at different levels of interest and is not
standardised, so that variations emerge from an international comparison.
Thus rather than go into one process in depth we make a broader review
which summarises a comparative study of practice around the world. The
summary is presented by reference to four main items, which are then
sub-divided into sub-items:
5.2
5.3
5.4
5.5

Content of inventory or list;


Machinery for protection of the list;
The effects of listing;
Securing permission to alter or demolish objects on the list.

For each there is in introduction a review of the issue, then a brief


statement of the practice in England to provide a point of departure, 4 and
then a comparison of relevant practice from selected countries. 5 Since the
statements are based on complex legal provisions they purport to be only
indicative not authoritative.

5.2
5.2.1

Content of inventory or list


What kind of artifact is to be included?

As indicated above (4.4 and in Appendix 4.1) the CBH is wide ranging in
content, from natural or archaeological sites and free standing monuments,
to buildings which are less than a century old and still occupied, or to
groups of buildings. In the literature all these are referred to as sites. Some
countries include moveables (France, Italy, Poland) but most do not.
Furthermore, the claim to be included in the heritage can relate to a wide
number of qualities, such as historical, architectural, aesthetic, educational, ethnographic, etc. Thus it is necessary to establish just what kind

Identification and protection of the CBH

79

of site is to be included in the inventory or list (e.g. Chapter 4, Appendix


4.1).

England
Four categories of artifact can be conserved, each under distinct legislation:
buildings, conservation areas, ancient monuments and archaeological
areas,6 with nature covered by yet other legislation.7 Each category of
artifact is defined. For example, a building ' . . . includes any structure or
erection, and any part of a building as so defined, but does not include any
plant or machinery comprised in the building'. This covers not only
conventional buildings but such minor structures as dovecotes, bird-baths,
fountains, etc.

Review
In other countries, a 'conservation site' could be a whole district, a single
building, a detail of a building, a site with archaeological remains, or some
vegetation or rock formation.
The most common definition of what can be listed are immoveable
objects, buildings, monuments, groups of objects or buildings or districts.
Few countries permit the interior of buildings to be listed or the inclusion
of the area around the object in question. Only some countries stipulate
that religious buildings can be listed, since they are protected under
separate arrangements.
In some countries the identification of the type of objects leaves little
discretion to the listing authorities, as in Sweden. By contrast, some Swiss
cantons prescribe the kind of object but permit also the protection of
others.

5.2.2

What are the criteria for inclusion or exclusion?

In any inventory there will be objects which must be included and clearly
those which should not. While in general there will be a tendency to include
rather than exclude, certainly in the inventory and even in the list, since its
purpose is to ring protective bells. The borderline will vary with the relative
scarcity of the heritage which is available (compare Italy and the United
States). The difficulty arises on the borderline. What are the criteria?

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Economics in urban conservation

Should regard be had to considerations other than 'historic or cultural


value', as for example the condition of the artifact (good, or bad, threatening decay), cost of restoration or conservation, etc.? How is comparative
'cultural value' to be assessed? Clearly all possible items are 'historic' in the
sense of belonging to the past, but what particular features should identify
them? Is it their special place in history, as for example the work of notable
architects, whether these are valued in contemporary circles or not? Is it
their outstanding aesthetic value, judged by contemporary or other standards? Do they represent a living museum of a past way of life? Is it the
educational value, comparable to items on display in a museum, for
scholars and practitioners of the future? Is it a group which as a whole has a
special quality, even though the individual components do not have
quality?

England
As indicated above (5.2.1), there are four distinct kinds of object for
conservation: buildings, conservation areas, ancient monuments and
archaeological areas. The criteria for inclusion differ with each:8
Buildings These are of 'special architectural or historic interest' including the way in which the building's exterior contributes to the architectural
or historic interest of the group of buildings of which it forms part. Where
any part of a building is listed protection relates to the whole building,
including any object or structure fixed to it. In addition to this 'principal
building' the list will cover also any building within the curtilage of the
principal building ('Curtilage building') which has been so since before 1st
July 1948.
The list does not extend to the gardens or parks associated with the
building, even if in itself of special interest, although they can
be covered in non-statutory lists issued by the Historic Buildings Commission. The central government department concerned, the Department of the Environment, interprets these provisions by means of
advisory circulars, which can then be changed according to the circumstances.
The criteria are devised in consultation with persons 'who have a special
knowledge of, or interest in, such buildings' and by reference to national
criteria in which the Department is advised by the Historic Buildings and
Monuments Commission.

Identification and protection of the CBH

81

Conservation areas. Since around 1967 protection has been extended to


buildings which may be individually of lesser quality but collectively have
considerable townscape value. Two tests must be satisfied before designation as a conservation area: it must be of special architectural or historic
interest and it must be desirable to preserve or enhance its character or
appearance.
Ancient monuments. Protection of ancient monuments was first initiated in 1882 and has continued since. Under the current Act of 1979 a
number of categories of monuments were set up, each defined and accorded
different levels of protection: scheduled monuments; ancient monuments
and protected monuments.
Archaeological areas. An archaeological area is one which (to either the
Secretary of State or the relevant local authority) merits treatment as such.
Given this they may (not must) designate it as such. The effect is not
necessarily to preserve the area (and thus sterilise development) but to give
a period of six weeks notice to the authority to enable them to decide action.
If development is not prevented it follows a period for archaeological
investigation.

Review
The main criteria used by most countries are historic, architectural, artistic
and cultural interest, each of which is divided into sub-groups. A
comparative perusal shows that similarities and differences in criteria
between countries, regions and cities reflect cultural values (what they
consider to be worthy of conservation) and also the amount of the CBH that
actually exists in relation to the totality of the general built heritage.
But the use of the criteria will not necessarily result in standardised
assessment, since investigators who actually undertake the listing may
interpret the criteria differently (particularly where they are disseminated
from the centre) and may use criteria which are not specified. In some
countries this problem is addressed by adoption of dates: for example,
anything before certain dates receives automatic protection, as in Cyprus
before 1850 or Israel before 1700. In certain countries different criteria are
used for objects of different dates. Variety in criteria is greater in those
countries where different levels of government are involved. In the United
States the criteria at the national level have no legal status, the actual listings

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Economics in urban conservation

being undertaken by state and municipal governments. Since many cities


use the criterion of aesthetic interest, which is vague, it follows that a city
can choose to list almost anything that it wishes to include.
Also of relevance in this context are the criteria for inclusion in the World
Heritage List (UNESCO, 1972) (see Appendix 4.1).
5.2.3

How to grade conservation quality?

Given the inclusion in the inventory, how can the analysis be further
refined to sub-divide the included candidates in terms of their grades of
quality, having regard to the criteria already chosen for inclusion. This will
clearly not be uniform for each kind of object. The reasoning behind
archaeological sites cannot be the same as that behind historic sectors of
towns.
The questions of grading raise the same operational considerations as the
questions of inclusion. Is it to be centralised or decentralised? Is it to be the
subject of individual judgement, having regard to the variety of criteria
(5.2.2), or the consensus of a committee of scholars from the various fields?
Is the judgement to be entirely subjective or should the attempt be made to
introduce objective analysis by, for example, a points scoring and weighting system?
England9
The list sub-divides buildings in the following Grades: I - of exceptional
interest, II - of special interest, II* - within which some are particularly
important, and former III and current local lists - others of listable quality
which are not statutorily protected.
In order to introduce some objectivity the list includes most buildings
between 1700-1840, with sub-divisions into four different periods:
pre-1700, 1700-1840, 1840-1914, 1914-39. Within these dates there are
differences in the detailed criteria.
Review
In nearly all countries, regions and cities, there is only one grade of
classification; only Denmark, France and Alberta have two. Thus, generally speaking, there is little attempt to differentiate value and significance
in terms of conservation quality.

Identification and protection of the CBH

83

This failure to discriminate in grading quality is of importance for two


reasons. First, it fails to indicate to the owner the degree of protection
which the authorities will seek to ensure for the object in question. Second,
it fails to indicate to the authorities just how seriously they need to take
threats of erosion of the heritage in that particular object. These signals are
important in terms of machinery for protection, as we shall now see.

5.3

5.3.1

Machinery for protection of list or inventory

What kind of listing mechanism?

To what degree is the assembly of the heritage inventory to be centralised,


with a view to achieving uniformity in approach? To what degree is it to be
decentralised with suggestions for inclusion coming from localities, for
scrutiny by a central body? What are the skills to be employed in the
assembly (architects, historians, artists)? How is the material relating to
each of the identified objects to be compiled with a view to comparison?
Should the information sought relate simply to facts? Or should it also
relate to consequences of failure of protective action? Should the views of
owners/occupiers be taken into account? If yes, should these be related
only to the criteria for inclusion/exclusion (5.2.2). Or should they go
beyond this into the circumstances of the owner?

England
Although the machinery for protection is different for the four categories
of conservation object, in that each was provided for initially under distinct
legislation,10 the machinery has been centralised in the authorities concerned with town and country planning, into which the conservation is
integrated. Thus the authorities are the planning authorities (the Department of the Environment and local authorities in two tiers) together with
the specially constituted Historic Buildings and Monuments Commission
for England, popularly called English Heritage, which in parallel to assisting the authorities in their conservation functions, has its own duties: 11
(1) to secure the preservation of ancient monuments and historic
buildings in England;
(2) to promote the preservation and enhancement of the character
and appearance of conservation areas;

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(3) to promote the public's enjoyment, and advance their


knowledge, of ancient monuments and historic buildings and
their preservation.
The ultimate responsibility for listing and designation procedures rests
with the Department of the Environment with its team of inspectors, who
enlist the aid of the Commission, local authorities, voluntary bodies, etc. in
providing inventories. But the records, registers and archives are not
centralised, and there is duplication with poor co-ordination. This has led
to the call for 'A Heritage Database for England'. 12 The mechanics of the
procedures are laid down by legislation. Owners are notified not consulted,
and the listing and designation are not subject to money compensation for
loss of property value. This makes for hardship where there is spot-listing,
i.e. emergency listing, to give temporary listing protection to a site which is
threatened. In archaeological areas there has evolved a voluntary code of
practice sponsored by the British Property Federation on behalf of
property owners and the Standing Conference of Archaeological Unit
Managers on behalf of the archaeologists.13

Review
As might be expected, the law and the practices under it vary considerably
from country to country, and within countries. Major points are:
Legislation. Most countries, regions and cities have a single law for the
listing and protection of heritage objects. But many countries in Europe
have various heritage laws, each covering different aspects or types.
France, for example, has separate laws for the listing and protection of
immoveable monuments, sites and protected zones, while Sweden has
separate laws covering ecclesiastical sites, monuments, antiquities, public
buildings and expropriation. Some countries provide for the listing of sites
within the town planning law, which is usually used together with the
national heritage law, as in Denmark.
Authority. In almost all European countries the listing authority is the
state: in Switzerland, West Germany, Canada and the United States it is the
regional government. Some countries with national listing powers permit
local authorities to undertake local listing so long as it does not conflict with
the national legislation. In some countries (e.g. Canada and the United
States) regional governments enable local authorities to undertake the

Identification and protection of the CBH

85

listing, following consultation with their local heritage board, which is


identified with the authority. Some cities grant listing powers direct to the
board.
Mechanism.
rest:

While the authority is with the state, the decision could

in the legislation and not in administration (in Norway, for


example, ecclesiastical buildings receive automatic protection,
as do antiquities in Cyprus and Israel);
with a minister or council of ministers, commonly requiring
prior consultation and assistance from special heritage boards,
councils or other bodies, though to different degrees.
Procedure. Except for objects or sites which receive automatic or spot
listing, a statutory procedure must be followed in order to afford protection. This is usually started by the decision-making authority, but in many
countries the owner, heritage board or heritage groups can request the
listing. This privilege is extended in some countries to anyone at all (e.g.
Detroit, Miami and Tucson in the United States); but it is limited in
Turkey, West Germany, Miami Beach and San Francisco to the owner.
Notification to owner. In almost all countries the owner must be notified
of the intent to list, in most cases his consent being required. In France this
consent must be obtained only for the listing of moveable objects. Only in
cities in the United States and Ontario is a public hearing held on the listing
proposal.
Right of appeal. Very few countries contain provisions in their legislation of the right to appeal against the listing. Such rights do exist, to the city
council or the Courts, in all American cities.

5.4

The effects of listing

Whether consulted or not, it is important for owners to know the


consequences of the inclusion in the list. Are they to be light, simply asking
for consultation on proposals which might damage the heritage? Or are
they to be severe, imposing a ban on any works of external or internal
alteration, with or without compensation?

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England

Once the formal listing and designation has taken place, the effect is to give
firm control by the authorities over any works which affect the object to be
conserved and its setting. Listed buildings, for example, require 'listed
building consent' for any works of alteration or demolition, including for
the interiors. This control is extended to conservation areas, where all
buildings are treated as though they were listed, with the listed building
control relating to demolition not alteration, and not the interior. It is an
offence to execute any works resulting in the demolition or destruction or
damage to a scheduled monument, or to carry out operations in a designated archaeological area without first serving notice, and allowing six
weeks to elapse after the service of the notice, so enabling the authorities to
act.
Powers also exist for authorities to carry out works of maintenance and
repair to prevent deterioration of listed buildings and also to enforce restitution of such buildings where unauthorised works have been carried out.
There is a comprehensive programme of financial subsidies for conservation, in the main amounting to capital grants with some minor relaxation
of taxation.

Review
In general, the effects of listing involve control and restriction on the
owners and occupiers of the site, and duties on the public authority. These
range over:
Consent for alteration or demolition. In most European countries, construction, alteration and demolition of all listed sites require prior approval.
In a few countries and regions only specific grades in the listings require
consent (France and Alberta) whereas in others a distinction is made
between alteration and demolition.
A few countries in Europe provide protection for a stated radius around
the listed sites, in France, for example, extending up to 500 metres for Class
I buildings.
In some American cities demolition can be refused only on certain conditions: for example in Miami, where incentives are offered to the owner, or
in New York provided that the owner can earn a reasonable return from the
site.

Identification and protection of the CBH

87

Action by the authority. In two places (Alberta and France) where


alteration or demolition of Grade II listings require only notification to
the government, it may respond by reclassifying the site so as to give it
full listing protection. If it does not, the owner may carry on with his
proposals.
In several American and Canadian cities the local authority can temporarily delay alteration and demolition of the listed sites or of sites in the
listed district, to give the opportunity to decide what action to take.
Control on erection of advertising. Outside legislation relating to the
general control of advertisements, a number of countries, regions and cities
place restrictions on advertising on listed sites. These may vary from total
prohibition (Cyprus), total prohibition within 100 metres (Denmark and
France), total prohibition and possibly on adjacent sites (Portugal), and
prohibition at the discretion of authorities (Italy). In other countries,
permission must be obtained for advertising (Germany and American
cities).
Maintenance and repair. In order to prevent a listed site from deteriorating, most countries can require the owner to undertake necessary
maintenance and repairs. On non-compliance the authorities can order
the owner to undertake the repairs, or they may carry them out and
charge the costs. In some cases (Cyprus, France and Portugal) the government may contribute. In some (Italy), if the owner does not refund the
entire cost, the state can acquire at a price based on condition before the
repairs were done.
Restoration. In some countries, where an owner of a listed site has done
unauthorised work, the authorities can require him to restore the site to its
previous condition.
Expropriation. In most European countries as well as Canada, a listed
site can be expropriated, where the authorities consider that the action is
necessary to ensure the conservation.
Incentives. In nearly all countries, regions and cities, listed sites are
eligible for various financial incentives in order to advance conservation.

88
5.5

Economics in urban conservation


Securing permission to alter or demolish objects on the list

In law, once an object is on the list it cannot be removed except for, say,
wrongful inclusion. But provision needs to be made for the authority to
agree action which will permit departure by the owner/occupier from the
restrictions imposed by the listing. What are these circumstances?

England
In England alone there were (December 1977) some 12,000 scheduled
ancient monuments and (December 1985) some 368,000 listed buildings
and (April 1983) 52,000 conservation areas. 14 In the process of preparing
the inventories there is a limit to the depth of investigation that can be
carried out. Indeed, in a situation where, under general planning law,
consent for demolition of buildings is not needed, depth is limited simply
because the purpose is not to provide a sacrosanct list which can never be
eroded so much as a trip wire which enables the authorities to consider
appropriate action when a threat is raised, by proposed works, etc.
Application for listed building consent is distinct from that for planning
consent for development of the listed building. The need for planning
consent can protect listed buildings in another way: permission can be
refused if the development would adversely affect a listed building in
another ownership.
Not all alterations to a listed building require consent but only those
which affect its character as a building of special architectural or historic
interest. When this situation arises permission must be obtained for the
works. This creates an embargo on demolition of the listed building,
without the listed building consent. In considering the application authorities are presented with four criteria from the Department of the Environment, briefly:15
(a) the importance of the building, both intrinsically and
relatively, bearing in mind other comparable buildings;
(b) the architectural merit and historic interest;
(c) the economics to the owner;
(d) the importance of the alternative use which is proposed to the
area which would remain.
As regards conservation areas, although the buildings are deemed to be
listed the control is not the same as for a listed building outside. The test is
the effect of the loss on the character and appearance of the conservation

Identification and protection of the CBH

89

area in question. 16 The control in respect of monuments is severe and


works are authorised only if they are executed in accordance with the terms
of the consent and any conditions attached to it. 17
As regards archaeological areas, operations can be carried out only with
the consent of an investigating authority, appointed by the Secretary of
State. 18

Review
Deletion from the list. In only relatively few places does legislation
enable a listed site to be deleted (e.g. New Zealand, Belgium, Norway,
West Germany, Alberta and Ontario in Canada, and New Jersey in the
United States). New Jersey legislation stipulates that a site can be deleted
from the list if the qualities which warranted its listing have been lost or
destroyed.
Authority for consent. In most places, powers rest with the listing
authority. In a few places, this applies to the higher grade sites, with the
power for the lower grade sites resting with another authority (e.g. France).
In a few cases the powers rest with an authority different from the one
which undertakes the listing.
Who must be consulted? In most places, consent cannot be given
without prior consultation of other bodies. Most European countries
require the minister to consult with the heritage board or, in Norway,
Switzerland and Turkey, with the local authority. In some other countries, consultation is extended to academic and heritage groups and
specialists.
Criteria. Legislation in most countries, regions and cities does not
outline criteria to be used for deciding on consent, exceptions being in
certain American cities. However, while the statutes may not be specific,
guidance is given by non-statutory government circulars, and authorities
have discretion.
The criteria are divided into the cultural importance (e.g. historical or
architectural value); and conditions relating to aesthetics, architecture,
environment and economics.
Criteria relating to importance include whether the consent would be in

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Economics in urban conservation

the public interest; and the effect of new construction on the historic and
architectural value and significance of the listed site.
Aesthetic-architectural-environmental criteria involve examining both
the retention of the listed site and the proposed new construction for their
effect on the character of the surrounding area: for example, would either
enhance its surroundings, taking into account the architectural design and
details of the new building.
The economic criterion applies in certain American cities. Generally
speaking by this is meant 'undue financial hardship'. Most places do not
define the term. An exception is in New York. Delis ting may be granted if
the listed site is not capable of earning a reasonable rate of return, which is
set at 6 per cent of the property's value.
However, in none of the cases does the legislation and its derivatives give
a comprehensive list of the criteria to be used, which is to be given the
greater weight, and how to compare as between the criteria. The result is
that there do not exist comprehensive objective criteria to guide the
process. Consequently, decisions are often based on subjective criteria at
the discretion of the delisting authorities.

6.1

Management and
planning in the conservation of the urban
cultural heritage
Relation of planning and management

We saw above (2.5.5) that the process of planning and management are
closely inter-related, with the difference of emphasis in particular situations stemming from the vantage point of the institution concerned and its
professional advisers. In this context, in relation to urban and regional
planning, we saw that it is conventional to see management as the
implementation of policies, strategies, proposals, plans and programmes.
That is the emphasis in this chapter.
It will also be seen from the title of the chapter that we are referring to the
'urban cultural heritage' and not the 'cultural built heritage'. This is to
introduce the twin aspects of the urban system (the physical stock and the
related human activities) into our planning and management of the urban
cultural heritage, even though for reasons already displayed (4.8) the
cultural activities are not necessarily found in the cultural built heritage
itself.

6.2

Role of the CBH in urban planning

The roles of conservation and planning (3.2, 3.3, 3.4) take on special
emphasis when considering the future of the CBH.
As we have seen (5.1), where society decides to impose conservation
constraints upon owners in the renewal of heritage property, it is in effect
asking them to make management decisions on the future of their property
which balance their own proprietary interests with the social objectives of
conservation. For this purpose society needs to intervene in the market
process. And, as we saw above (5.3), for such intervention it needs to arm
itself with legal powers which override the general laws of property; with

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Economics in urban conservation

administrative machinery for implementation; and with financial resources


where these are needed to support the conservation programme. With these
aids it can intervene at various levels, as follows.
One approach can be referred to as 'random'. Here the totality of the
built heritage is scanned for candidates for conservation and each unit is
then considered when the need arises, for example when there is a threat of
deterioration or demolition.
More comprehensive is sectoral planning for the conservation stock as a
whole. This involves initial inspection and documentation for the preparation of an inventory of the CBH stock, with some grading of priority in
conservation quality. Such inventory provides a basis for a forward looking
policy, strategy or plan for the conservation of the CBH, with its own
conservation priorities and programme, budget, maintenance strategy,
workforce, training. 1 This would have regard to modes of conservation
which are appropriate to the particular item, backed up by some conscious
purpose in retaining the stock, the problems involved in so doing, the
means available, the financial resources required, etc.
However, such policy, plan, strategy, etc. could be lacking in one very
important respect: it could have been prepared without regard to the
planned future of the remainder of the town, village, district, etc. in which
the particular item of the built heritage is found. It would not be taking into
account, for example, whether or not the area was to grow in population or
activity, be improved in traffic accessibility, be surrounded by uses and
activities which are harmonious or not harmonious to the conservation
objective. And, more particularly, by so neglecting the context of the
conservation it would not be considering in full one critical aspect of the
conservation possibilities: the prospects of finding a potential use for the
heritage which would in itself contribute to its maintenance and upkeep
into the future. For example, a historic mansion in an area of residential
decay would hardly attract a possible hotel use. But if its future were seen as
part of an urban conservation area, the hotel use would be more likely and
promising.
It is for reasons such as these that planning for conservation of the CBH
has in practice been integrated more and more around the world into the
ongoing process of urban and regional planning. This integration has been
propelled from two sides. On the one hand those concerned with urban and
regional planning have always seen the need to embrace rural and urban
conservation as one of a series of sectoral concerns to be absorbed within the
comprehensive planning. On the other, those concerned with CBH conser-

Management and planning for conservation of the CBH 93


vation have over the years seen the need to prepare the conservation
strategy within the wider context. There is another equally compelling
reason. As seen above (3.1.3) there has grown up as part of the means of
implementing urban and regional plans the exercise of control over
proposed development through the need to apply for a permit to carry out
development. This clearly is of great significance in controlling erosion of
the heritage, as are other means of plan implementation (e.g. partnership
ventures, financial incentives or disincentives).
Over this century this integration received stimulus from cultural
internationalism introduced in the post-World War I League of Nations. 2
Some highlights are given here. The initial step was taken at the Athens
Conference of 1931, on Restoration of Historic Buildings, organised by the
International Museums Office, which introduced for the first time in
history the concept of international heritage. 3 This was followed in 1933,
also in Athens, by the Fourth Assembly of the International Congresses on
Modern Architecture (ICMA) which laid down the principles of a town
planning Charter. 4 A major step forward was also taken in the First
International Congress of Architects and Specialists of Historic Buildings
in Paris in 1957, which recommended, inter alia, 'that architects and town
planners co-operate so as to secure integration of historic buildings into
town planning'. 5
This led to the Second Congress in Venice in 1964, which produced the
Venice Charter on International Restoration. 6 This showed the evolution
since 1931 of ideas and actions, as evidenced by the following:
the concept of an historic monument embraces not only the single architectural
work but also the urban and rural setting in which is found the evidence of a
particular civilisation, significant development of an historic event . .. the conservation of monuments is always facilitated by making use of them for some socially
useful purpose.
The Venice Congress was also significant for the resolution put forward by
UNESCO for the creation of ICOMOS, the International Council on
Monuments and Sites. This was founded in Warsaw in 1965 as an
international non-government organisation.7 It works in co-operation with
other such organisations, such as ICCROM (International Centre for the
Study of the Preservation and Restoration of Cultural Property: the Rome
Centre) and ICOM (The International Council of Museums). Since then it
has embarked on a continuing programme, including annual international
congresses on different aspects of its work, in close association with
UNESCO. 8

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This led to a major advance at the conference of UNESCO in Paris in


1972, which adopted the World Heritage Convention concerning the
protection of the world cultural and natural heritage. 9
Another significant milestone was the initiative taken by the Committee
of Ministers of the Council of Europe which designated 1975 as European
Architectural Heritage Year (EAHY). 10 This put forward the principles of
integrated conservation policy as follows:
(1) integrated conservation of the cultural heritage and
monuments and sites is one of the basic constituents of
regional town and country planning;
(2) the integrated conservation of a country's cultural heritage
and monuments and sites concerns its citizens first and
foremost;
(3) public authorities at national, regional and local levels have
special responsibilities in the integrated conservation of the
cultural heritage of monuments and sites.
The Council's resolution was also specific on the financial measures
which were needed in terms of:
(1) reallocation of funds;
(2) official financial aid in various forms: increasing the size;
financing of preliminary surveys, financing of works by grants
or long-term low interest loans, tax relief, and the
establishment of a revolving fund.
These financial considerations were further developed in the Nairobi
Charter of 1976 which stressed economic and social considerations:11
33. Protection and restoration should be accompanied by revitalisation activities. It
would thus be essential to maintain appropriate existing functions, in particular
trades and crafts, and establish new ones, which, if they are to be viable, in the long
term, should be compatible with the economic and social context of the town,
region or country where they are introduced. The cost of safeguarding operations
should be evaluated not only in terms of the cultural value of the buildings but also
in relation to the value they acquire through the use made of them. The social
problems of safeguarding cannot be seen correctly unless reference is made to both
these value scales.
And
46. It is most important that the safeguarding measures should not lead to a break
in the social fabric. To avoid hardship to the poorest inhabitants consequent on
their having to move from buildings or groups of buildings due for renovation,
compensation for rises in rent could enable them to keep their homes, commercial

Management and planning for conservation of the CBH 95


premises and workshops and their traditional living patterns and occupations,
especially rural crafts, small scale agriculture, fishing, etc. This compensation,
which would be income-related, would help those concerned to pay the increased
rentals resulting from the work carried out.
This work has been continued with the Washington Charter of 1987 for
the conservation of historic towns and urban areas, which complements the
earlier Charters, identifying the conservation of historic towns and urban
areas ' . . . to mean those steps necessary for the protection, conservation
and restoration of such towns and areas as well as their development and
harmonious adaptation to contemporary life'. 12

6.3

Role of the cultural heritage in urban planning

This integration into planning of the cultural built heritage concentrates on


the built environment. This is to be expected, since the driving force behind
the successive conferences and charters has been in the main the professions concerned with the physical stock. However, in parallel there has
been growing up the quite different emphasis which was referred to above
(3.2), on the activities of the people, which are seen as adjunct to the human
rather than to the man-made resources in the urban system (1.4.2, 1.5.3
and 1.8.2).
This emphasis has its origin not in the developmental skills but in the
social sciences, in particular urban history, historical geography, sociology
and anthropology.13 As a result it contributes a quite different offering to
our understanding of the urban system, repeating a pattern of absorption of
new insights so often found in the evolution of urban and regional
planning. To consider this aspect fully we would need to enter into the
literature and practice on the contributions of sociology and anthropology
in the planning system, bringing out that particular aspect which is related
to the cultural as opposed to the general heritage in relation to such
activities (4.1 and 4.3). There is hardly the space for that here so that only a
brief mention is made.
As in all urban and regional planning there needs to be an awareness of
these relevant aspects before they can be encompassed within the planning
process. This brings forward the need to understand, in the community
which is being planned, the existence and significance of people's activities
(3.1.2); and since these are not homogeneous, to understand their activities
by reference to sub-groups relating to ethnic origins, religion, culture,

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tradition, etc.; to understand in other words what has been described as


'folklike' and 'folkways' (3.2 above).
Clearly these kinds of activities, however rooted, are susceptible to
change, be it the change coming from the dynamism of the group itself (for
example, the absorption into the new country of an immigrant of an ethnic
or religious group), or from the change imposed from outside the urban
area. But while such groups, like all, must face up to change, they are
asking for the change to take into account the values that are generated and
are treasured; and to have the opportunity for commenting on proposed
changes and making their contribution to amelioration of the social and
cultural impacts.
Thus cultural conservation is a positive and deliberate attempt to keep
what is of value in folklife against the seemingly inevitable changes in
activity, changes which are coming at an accelerating pace. The theme is
'continuity and change' or 'change in the context of continuity' (3.2). In
this regard, it would make for ease of presentation if cultural activities in
this selective sense were carried out only in buildings which could be
identified as the cultural built heritage. This is not so (4.3) and indeed, in
many cases, the opposite is found.
Having introduced this aspect of the conservation of the urban cultural
heritage, we do not pursue it but concentrate in the remainder of the
chapter on the cultural built heritage.

6.4

6.4.1

Plan making in the conservation of the CBH

Macro planning

The conservation of the CBH is a social objective, which can be pursued at


state, regional and local levels, within the orbit of urban and regional
planning (3.2 and 6.2). The same question arises as posed above (3.4): how
can such planning contribute to the objective? It can supplement the role
introduced above in urban planning which takes account of the general
built heritage (GBH) (3.4): the need to plan for 'continuity and change'. By
definition this will apply also to the CBH, with certain added dimensions,
as follows:
(1) instead of the GBH, which is simply a fact of existence at the
time of preparing the plan (3.3), the starting point is
conscious selection in the inventory of the CBH (Chapter 5);

Management and planning for conservation of the CBH 97


(2) this inventory, with its implied conservation objective, must
be considered alongside other selected inputs to the plan
making process, as brought out above (6.2);
(3) in terms of the inventory the threat of 'market failure',
leading to the need for government intervention (3.1), is
sharper than in relation to urban conservation of the GBH:
the market cannot cater for the externality of keeping the
benefit of the CBH for future generations;
(4) where the inventory shows areas to be conserved, they need to
be sheltered from current intrusion which threaten their
conservation, such as modern traffic and car parking, large
buildings and incompatible uses. Equally well they need to be
protected in the planned future from new intrusion, and
enhanced by the creation of new environments.
In all the above, there is the tendency to regard the inventory as a given
fact around which the plan must be built. But it must be recognised that
while the inventory is an expression of cultural value at the time of
preparation, the very planning process could influence these values. How
can this be reflected?
Two critical questions arise: will the emerging plans, policies, etc.
indicate a different after-use for the CBH than that evolving in the
unplanned urban system; and will the plans, policies, etc. advance or retard
its obsolescence? In answer, a preliminary screening should identify the use
to which the heritage element is being put and to which it could be put
following rehabilitation; the degree of opportunity it offers as a resource
(1.3); and then the prospective degree of obsolescence within the factors
described above (1.6). It is those buildings, etc. which will show high
degrees of obsolescence for any prospective future use which would be
screened out of the inventory at this stage.
It is not suggested that this analysis be carried out with precision; indeed,
current knowledge would prevent this. But it is suggested that consideration be given to each element of the CBH at least to the level of generality
carried out in respect of identifying the quality of the heritage which
justifies inclusion in the inventory (Chapter 5). To assist in this analysis it
will be necessary to pose and answer certain leading questions relating to
the planned future of the area insofar as it affects the CBH. Some examples
are:
1 In respect of any local community, is there visualised growth,
stagnation or decline in population, and/or in the various

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economic activities which form the economic base of the


community?
2 Whatever the economic profile, how can the conservation of
the built heritage be used as a resource to facilitate growth
(for example as distinctive adapted buildings for the tourist
industry, or the supply of needed social and welfare
services)?14
3 How can investment in the heritage be used as a base for
improving the economy of the area, both in terms of output
and in retention of the output in the locality?
4 Where growth is not needed, and added tourism, etc. could
only add to congestion, etc. how can the plan be used to cater
for the disbenefits, for example in traffic routeing, car and
coach-parking, etc.?
To answer these questions a review is needed of the official and unofficial
policies, plans, programmes, etc., which are to be found at the regional and
local levels, m order that their content should be reflected to the degree
possible. However, since these are continually evolving they may not give
the firm guidelines to the planned future which is being sought.
If so, there needs to be assumptions about this planned future, and
conclusions drawn on the basis of these assumptions, to enable the next
stage of the screening process to be pursued. 15 The assumptions will
indicate those parts of the heritage on which conclusions can only be
tentative at this stage, so that decisions in terms of conservation should be
provisional for this reason alone. Where there is more certainty as to the
planned future the assumptions will be a basis for the review of the current
policies, plans and programmes, and its amendment over the years, as the
assumptions become firmed up through monitoring of experience.
6.4.2

Micro planning

The macro planning just described will be followed, accompanied or


replaced by micro planning for elements of the CBH, which will consider
their current conditions and future in more detail, resulting in conservation
projects.16
This would involve such matters as:
(a) an indication of the future of the areas affecting the heritage,
from the macro planning just described (6.4.1);
(b) a more detailed investigation of the heritage values of the

Management and planning for conservation of the CBH 99


buildings and groups than would have been practicable on
preparation of the initial inventory;
(c) a study of such buildings and groups in their setting, in order
to consider how wide the conservation proposals should be
drawn;
(d) the search for 'new uses for old', which will present an array
of potential occupiers around whom the viability exercise on
the conservation can be built; 17
(e) the study of areas adjoining the heritage buildings, to see
what they could gain in rejuvenation from the stimulus of the
conservation of the heritage.

6.5

Plan implementation in the conservation of the CBH

In introducing planning above (Chapter 3) we referred to the measures that


were available for implementation (3.1.3). We here amplify those measures
with particular reference to implementation relating to the conservation of
the CBH. They are presented in ascending order of government involvement. 18

General influence
An attempt to influence the practice of owners and occupiers of the CBH, in
the direction of adopting a 'conservation ethic' 19 which reflects the
conservation objectives of the plan. The attempt would cover a variety of
measures such as persuasion through publicity and social pressure; information about the cultural value and importance of the buildings, etc.
concerned; education on the importance of the CBH as part of the general
cultural heritage, directed to the schools, universities, adult education, etc.
In all this there would be liaison with and involvement of conservation
pressure groups, 20 and development agencies interested in carrying out
conservation.
Urban and regional planning policies
In urban plans there could be policies which are either helpful to conservation objectives, or undermine them, or are neutral. A review of these
policies should be made with an eye to the effect on the achievement of the

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conservation objectives. For example: given that there are buildings


within the CBH which are suitable for residential, shopping, office, etc.
purposes, a policy which is helpful to conservation would limit the
amount of new building that could be devoted to these purposes and so
help to channel latent demand to the buildings of the CBH; or, policies
which affect a local environment (e.g. transportation) could be so devised
to avoid damage to the environment of the CBH buildings, and increase
their accessibility, and so increase the demand for them relative to other
places.

Direct control under urban planning


According to the precise powers which are available any applications for
permission to alter, extend, demolish, etc. buildings in the CBH would be
judged from the conservation viewpoint. Any attempts to carry out such
work without permit would be subject to penalty. Neglect of the buildings,
which advances obsolescence to the point of making demolition inevitable,
would be delayed through enforcement of compulsory repairs at the owners
expense.
Where change of use, which would not be granted in a non-heritage
building, would provide for viability in conservation not otherwise possible, then a relaxed attitude on planning control would be considered, and
also on building regulations, where these would be costly to meet in an old
building.
But even so there could be diminution in the value of the property
affected to the point of non-viability if the conservation objective is
sustained. Where this attracts compensation from the authorities to the
owner, there would need to be provision for payment, in money or kind, to
ensure that the conservation objective can be implemented. 21
Financial intervention in the market
Where owners and occupiers of buildings in the CBH find it financially
non-viable to carry out conservation objectives, then their paths in that
direction can be made easier through the offer of financial carrots. This
could take various forms:22
(1) grants to owners, developers, or occupiers;
(2) loans to the owners or developers at favourable rates;
(3) tax rebates on expenditures for conservation by developers.

Management and planning for conservation of the CBH101


Environmental improvement23
Where environmental obsolescence is contributing to the difficulty of
conservation then the authority could intervene by carrying out improvements itself to the local physical environment, e.g. closing traffic from
certain streets and diverting to new, demolishing of poor structures to
provide open space, modernising of water supply, drainage and other
utilities.

Government occupation
Very often a key to the inability of owners to carry out conservation
objectives is the difficulty in finding occupiers who would be prepared to
pay the kind of rent which would offer the appropriate return for the use of
the property, or to finance the appropriate conservation works in the face of
obsolescence. In such an instance it would be possible for local or central
government, instead of offering financial subsidy, to take on the occupation
direct (for one or other of their functions) and to pay the appropriate rent.
If this were higher than the market would justify they would thereby be
making a direct financial subsidy to conservation; they would be substituting rental payment to an owner outside the CBH to one who is within.
Government ownership
If the above measures fail to produce results, then the government could
buy the building, by agreement or compulsorily, and then manage it for the
achievement of conservation objectives even though financially they would
lose money. They could, for example, channel the building to a use for
which they would otherwise be responsible, such as a museum. As with
government occupation above, they would be financing a CBH property
rather than another, or a new building.
Public-private partnership
Where government assumes ownership but has no prospective use in
mind for its own occupation it could sell on, by definition at a loss, to a
body which would agree to conserve; or it could enter into partnership
with a developer for joint conservation work and marketing of the
property.

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Co-ordination

To pursue the appropriate instruments from within this range requires


careful consideration of the alternatives and the possibilities. And the
possibilities are strengthened if there be some means of co-ordinating the
views of the various public and non-governmental bodies who might be
interested in ownership or occupation, who would be amenable to
purchase.

Register of CBH available property


In respect of the last three measures it would be an aid on the supply side if
there were made public a full list of CBH property which is available for
occupation,24 in particular noting those which are subject to risk.

6.6

The conservation programme

As indicated above (3.1.2) the plan making process will result in a


programme for implementation which would be a basis for action. The
programme would reflect the nature of the 'plan' itself, ranging from
policies and strategies through to a development plan.
Should the 'plan' be of a general kind, then the programme will relate to
conservation policies or strategies, which will be the guidelines for decisions on particular cases. If it be a development plan it will comprise a
programme for action in conservation projects. For the conservation
programme to be meaningful for implementation it will be helpful for each
of the projects to be specified in greater detail as regards, for example, the
agency or agencies which will be involved; a description of the works to be
carried out; statement of the order of magnitude of the resources required;
an indication of the sources of support from government or other institutions, etc. For this purpose there may be need to call on a conservation
team: the town planner, urban designer, landscape architects, conservation
architects, engineers, economists, cost consultants, property managers,
environmentalists, transport. 25
For such a programme to be a viable basis for action it clearly will need to
be prepared with some regard to its feasibility. This could be carried out in
two steps. First, there would be the general screen for feasibility or
implementability which would be a feature of the macro planning of the

Management and planning for conservation of the CBH103


area, in which proposals need to be tested before inclusion in the plan,
having regard to their prospects for implementation in the circumstances
available in the locality. Second, there would be the more detailed
viability studies in which varying options for projects would be designed
and then analysed in terms of cost and benefit, the latter including the
degree of heritage value which could be 'bought' under each project. The
options would reflect the varying degrees of intervention which are
available (1.6).

6.7

Project implementation in the conservation of the CBH

The conservation programme just described is intended to be a summary of


the action to be taken in conservation implementation over the foreseeable
future, perhaps five to fifteen years. In practice it will comprise projects
ranging from those already in an advanced stage (of preparation or
implementation), to others which are yet to be launched. In the former
there will typically have been consultation between the plan makers and
those responsible for the project implementation. In the latter there will, in
the plan making process, need to be some machinery whereby the
implementing authorities are in consultation and discussion with the
potential implementation agencies, and those providing for governmental
financial support, with a view to initiation of potential projects.
For each particular project the implementation agency could be one of
many kinds: a private owner/developer/financier/occupier who finds it
worthwhile to carry out conservation of a particular building or group of
buildings; a local authority which intends to initiate the conservation on its
own, and for its own occupation; a non-profit making body set up for the
purpose of conserving particular elements of the heritage with public
financial help; or there could be a formal partnership between any of these
parties, in which each has specific functions contributing to the totality:
such as ownership of the property; development and managerial knowhow;
private finance; public finance in terms of subsidy, loans, contribution to
repairs, etc.
Whatever the basis for the partnership, there must be some agreement or
bargain preliminary to the initiation of the works. 26 This can be simply
implied, as where the owner of the property and his developer/financier
collaborators proceed with the benefit of a planning and building permit, in
negotiations for which each side has expressed its views and intentions on

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the project to be permitted. Or it can be formal, as where the authority as


owners of the property in question are seeking the collaboration of the
private sector with its funds and entrepreneurial skills, spelling out its conservation requirements as a planning or development brief.27 This must
satisfy the private sector having regard to any incentives which it will be
obtaining for the conservation action, this being the price of ensuring conservation quality in the completed project.

6.8

Project execution

Once the agreement or bargain has been struck and the necessary permits
obtained, the way is clear for the conservation work to be executed as part
of the development process (2.5.1). The building contract would be similar
to that undertaken for non-conservation works. But the nature of the works
would vary. For one thing, the professional team must adapt to the conservation requirements. Within this team there is a particular responsibility.28
The conservation or historical architect, in addition to his (or her) basic and practical experience as a general architect, must have a knowledge and understanding of
early building technology and must be able to identify the original fabric and later
additions, and interpret his findings to a client. To execute any scheme he must
co-ordinate the work of archaeologists, engineers, planners, landscape architects,
contractors, suppliers, conservation craftsmen and others who might be involved in
an historic building project.
The conservation architect is the generalist in the whole building conservation
process. He must have a good knowledge of all periods of architecture, combined
with a thorough understanding of modern building practice; he must be able to
preserve the artistic and historical value of the old structure, yet prepare schemes
which are satisfactory in respect to modern requirements. This latter includes complying with relevant requirements laid down by codes of practice and building regulations, or obtaining waivers to any inapplicable building codes regulations where
justified by reference to fundamental principles. He needs not only a knowledge of
building technology but also an understanding of the pathology of buildings as evidenced by sinking foundations, crumbling walls and rotting timbers.

In this work should be observed the 'ethics of conservation', namely an


unofficial code of practice which calls for respect for the historical and
architectural integrity of the artifact in question. One formulation is: 29
(1) The condition of the building before any intervention and all methods and
materials used during treatment must be fully documented.
(2) Historic evidence must not be destroyed, falsified or removed.

Management and planning for conservation of the CBH105


(3) Any intervention must be the minimum necessary.
(4) Any intervention must be governed by unswerving respect for the aesthetic,
historical and physical integrity of cultural property.
Any proposed interventions should:
(a) be reversible, if technically possible, or
(b) at least not prejudice a future intervention whenever this may become
necessary;
(c) not hinder the possibility of later access to all evidence incorporated in the
object;
(d) allow the maximum amount of existing material to be retained;
(e) be harmonious in colour, tone, texture, form and scale, if additions are
necessary, but should be less noticeable than original material, while at the
same time being identifiable;
(f) not be undertaken by conservator/restorers who are insufficiently trained or
experienced, unless they obtain competent advice.
Clearly the degree to which this ethic is followed in any particular project
provides an essential element in the degree of retention and achievement of
heritage quality.

6.9 Some planning and management questions in the conservation of


the CBH
From the preceding it is seen that conservation decisions in respect of the
CBH should not be taken lightly: if necessary they must be viewed as
commitments into the long term, thus involving considerable expenditure
of current resources in investment and operation, together with commitments to their financing by both current and future generations. If only for
this reason, answers must be found to some of the following perplexing
questions, relating to both planning and management. 30

Why do we value the CBH?


Is it just the obligation of any particular generation to play its part in the
successive stream of history? Is the purpose to retain evidence, in an open
air museum, of past history, culture, art and way of life? Is it the
recognition that these cultural artifacts of the past are just as much a
resource as the most recent ones to be used for current living? Is it to
provide a contrast, with its refreshment and variety, through a particular
built environment from that of the present?

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What part of the built heritage should we keep?

Clearly we do not intend to keep all the built environment which we inherit.
Some selection is needed. This comes back to the purpose of the retention,
bringing with it some need for selection criteria as a means of indicating
priority by valuation of admittedly intangible values (Chapter 5).

In what form should we keep what we select?


Each part of the built heritage was designed at a particular time (not necessarily with the aid of a professional designer) and built at that time for a
contemporary purpose. Should the conservation objective be to continue
the past in the original form of that time (restoration)? Or is it acceptable to
depart from this rigid specification by, for example, admitting modern
bathrooms into a sixteenth-century home (adaptation)? If such departures
be accepted, how far should they go without losing the conservation
quality? Are we more interested in the physical structure or in the way of
life that such structure saw?
If the original design, structure and use were succeeded by others in the
long history of the monument or building, and the other uses are of historic
interest, should the conservation objective be to the original or to the
successors, bearing in mind that these would also be of historic and cultural
interest? In the former, we are concerned with historic rectitude, so that
only the original is of interest, the main aim being one of scholarly information. In the latter we are more concerned with the use of the building or
object as a resource for the contemporary generation in its way of life, so
that it is to this generation which we look for the conservation specification
with the objective of a future healthy and viable occupation of the building.
While these considerations could be pertinent to any particular building
they are particularly so in archaeological discovery, through layers of
successive generations. And they are particularly searching when exposure
at the upper levels will conceal the lower; and exposure of the lower level
could destroy the younger and later.
Given the conservation objective, what problems arise in
keeping the heritage?
The problems are manifold since the decision on conservation brings with
it many responsibilities. Some examples are:

Management and planning for conservation of the CBH107


(a) How to cope with the costs of maintenance and operation
(e.g. heating and lighting of large rooms) which tend to be
heavier in the older fabric?
(b) Given the conservation, is it to be kept in seclusion or opened
up to access by contemporary generations, including those
from around the world, of whom the bulk could be tourists?
(c) Given wholesale accessibility, how to cope with the problems
of wear and tear by the public on the heritage itself (for
example, the literal erosion of the stones of the Parthenon)
and the consequential provision that has to be made for the
modern mass visitor (in cars, coaches, etc. with the wish for
purchase of mementos, food, refreshment, etc.)? If
accessibility is to be denied because of the wear and tear and
environmental damage, what is the true purpose of the
conservation?
(d) Given such mass use, how to cope with the interference by
the tourists and visitors with the conventional occupation of
the heritage, which of itself makes its contribution to its
continued life and viability? Examples here are the many
cathedrals devoted to worship which are visited by the
masses; or the privately owned house or office to which the
visitor makes his way at the expense of interference with
privacy.
(e) All of this carries with it the problems and responsibilities of
administration, of a labour intensive and therefore costly
kind. At the one extreme there are the ruined cathedrals and
castles which nonetheless require the constant presence of
attendants. At the other extreme is the crowd control
necessary at Woburn Abbey or the Church of the Holy
Sepulchre in Jerusalem or the Church of the Nativity in
Bethlehem.
Is there a need to take action for conservation?
The fact that an artifact is part of the cultural built heritage may not of itself
require that action be taken in its conservation. There is little problem, for
example with churches and cathedrals which in daily use are in the upkeep
of the religious institutions; the owners look after them for their own
purposes and in doing so serve the objects of conservation.

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Economics in urban conservation

But action could become necessary, to avoid erosion of the heritage,


where the owners and the occupiers are not so purposeful in the continuation of the traditional use. Examples are the stately homes of Britain, huge
mansions which are a crippling financial burden in their upkeep and in the
payment of death duties; 31 period buildings occupying sites which are
valuable for contemporary commercial purposes; old buildings which have
run their physical lives and are in the process of physical deterioration.
Accordingly there is the need for watchfulness, which goes beyond the
'listing' or 'designation5 warning to all concerned that destruction or
erosion will be resisted by the public authorities. It implies a readiness to
take action in advance of the problem arising, or quickly if not in advance.

Given the need to take action, what mode of conservation


is to be pursued?
Here there is the variety of action, each with its terminology, which has
been described above (1.6).
What means are available to government to implement
conservation objectives?
How can effective use be made of the array of measures which are available
for implementation of planning and conservation (6.5)? Is anything needed
in addition?

Within such means, what are the financial instruments for


conservation?
How can effective use be made of the financial inducements and penalties
which are available to advance conservation (6.5)? And since resources are
always inadequate, how and where can additions be found (12.6)?
Given the above, how are the decisions to be made on
whether or not there should be conservation; and if
conservation, the mode, financial inducements, etc.?
There are clearly many considerations to be borne in mind before conservation decisions are taken. Accordingly, unless such decision making is to
be randomly based on the threats as they arise to particular items in the

Management and planning for conservation of the CBH109


CBH, there needs to be formulated guidelines on decision criteria, resulting in CBH conservation policy. This can follow many forms, depending
on the basic purpose of the conservation objectives. Some examples are:
(a) As a resource to be utilised to the full for the better life of the
community: the heritage is seen as a resource in contributing
to the social and economic life of the community (1.3), in
contrast to the alternative contribution that would be made
from the replacement of the heritage.
(b) As attracting tourists: given that the attraction of tourists
could be a major feature of the local economy, make the
decision to attract visitors and tourists, and see the
conservation expenditure as an offset against the expected
income, both direct (fees, etc.) and indirect (spending in the
economy).
(c) As a sector within urban and regional planning: see the
conservation objective alongside the others in the planning of
the community, and use the planning system in support.
Decisions which come up against conflicts between policies
(e.g. the heritage will attract tourists but at the same time
create traffic problems) should be resolved in the manner
appropriate in urban and regional planning, where such
conflicts are the everyday scene.

Part
Economics in urban
conservation

Economics in urban conservation

113

Introduction
The opening paragraph of a recent report with the compelling title The
Livable City stated:1
1

The World Conservation Strategy, the starting point for the British programme, is about matching the superficially conflicting goals of development
and conservation: development being the means of meeting human needs and
improving the quality of life and conservation being the use of resources,
especially living ones, in a sustainable way, so safeguarding all their benefits for
future generations.
. . . the Strategy reflects the growing convergence over the last decade of
environmental and development thinking: that both are about sustainability
and that to succeed in realising their potential benefits both must impinge upon
the lives of people at the local level.
Conservation has never been seen as having a dominant part to play in the
affairs of urban areas

And the first chapter concludes with a quotation from Barbara Ward:
Tor an increasing number of environmental issues, the difficulty is not to
identify the remedy because the remedy is now understood. The problems
are rooted in the economy and society.'2
This reference to how economics can play its role in society, which is
concerned with development and conservation,3 is a useful starting point
for Part III. We wish to emphasise that economics has an essential role in
the reconciliation of the interdependent, and superficially conflicting, goals
of development and conservation in the face of limited resources; and that
the sensible use of economics for the purpose can achieve better results in
both development and conservation for the people who are affected.
But our canvas for the application of economics is more limited than that
in Parts I and II. While there we brought in the urban area as a whole, in
Part III we recognise that economics has made a considerable contribution
to the subject of the natural environment and of human capital, but so far
not in depth to the built environment. We therefore concentrate in the
main on the built environment, and within this on that particular element
of the built environment which we have called the cultural built heritage.

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Economics in urban conservation

Summary
Our first step is to emphasise from the economic aspect much of what has
been said already on the management of urban conservation. We thus need
to consider the role of conservation in economic life (7.1) and how
economics can contribute to the management decisions of proprietary
interests in conservation (7.2). This leads to the introduction of economics
in management for urban conservation in general, again with sub-divisions
relating to natural, human and man-made moveable and immoveable
resources (7.3).
The first three are touched on briefly, for they are well covered in the
literature. But we elaborate on the last which is not. In this we set the
foundations for economic decisions relating to proprietary interests in the
life cycle of the built environment by introducing a generalised model and
the notation applicable to that model (7.4). We then apply the model to a
description of the role of economics in management decisions, at particular
decision stages in the life cycle of the built environment, from the use of the
open land to rehabilitation and redevelopment. In this it will be seen that at
each stage a common set of variables are used, adapted to the particular
situation. We then emphasise how the incidence of costs and benefits will
vary as between property interests in the process (7.5).
So far, the model and analysis have not considered the question of
financing or time. These we now bring in. For the first we consider the
implications of borrowing money (7.6). For the second, we see how to look
ahead over the life cycle so that the differing flows of costs and returns are
discounted to a given point in time, in the process taking account of real
and inflationary changes in price (7.7). We then see the same process from
another standpoint: the relation of land use and land value throughout the
life cycle (7.8) leading to a discussion on the concept of the economic life of
property (7.9). Finally we consider the effect of government intervention,
in particular planning, on the estimates of cost and return and thereby land
value (7.10).
Having considered this aspect of economics in urban conservation in
general we now retrace the steps in respect of the CBH itself (Chapter 8).
What are its characteristics as a resource (8.1) and as property (8.2)? This
leads to bringing out the particular economic features in the life cycle of the
CBH (8.3) and the role of financial aids to meet the shortfall in conserving
the CBH when management decisions would indicate non-conservation
were the property not protected. This leads to a profile different from the

Economics in urban conservation

115

non-CBH for land use and land value in the life cycle of the CBH, and in
forecasting its economic life (8.4).
We then go on to retrace the content of Chapter 6, on management and
planning for conservation of the CBH, by reference to economics in this
process, in a wider sense than the preceding (Chapter 9). We start by
considering the similarity and distinction of purpose in economics and
planning (9.1) considering also planning and the market (9.2) and then the
role of the economist in urban and regional planning (9.3) leading to some
economic principles in plan making (9.4), and the test of the plans for
economic feasibility (9.5) and economic evaluation (9.6). We then come to
the use of economics in the conservation projects and programme, its
priorities and implementation (9.7-9.8).
In the preceding it is value for money in urban conservation which is
pursued. For this it is necessary to have some estimate of the value of the
cultural qualities of the built heritage (i.e. make a valuation), both for
inclusion from the inventory to the list and also for consideration when
threats are raised to objects on the list (10.1). But there are severe problems
in attempting to assess the value of this intangible. We go on to consider
what is the basis of the cultural value and how can such basis be valued
when it is not sold in the market-place, by asking just what is value in this
context (10.2) and what is being valued (10.3) before going on to recognise
that the valuation is made in the real world and is therefore influenced by
whom it is made, ranging from the individual to government, and in respect
of what decision, ranging from the inventory to contribution to society
(10.4).
This leads to the question: how is the valuation made? We recognise that
valuation of this particular 'incommensurable' is part of a large field
relating to many intangibles, and present some approaches. We first
consider its relation with market value (10.5) and then review other
approaches (10.6) before considering the particular approaches to grading
heritage quality in preparing the inventory or list (10.7). We then consider
the role of economics in cultural valuation (10.8) and the economic concept
of opportunity cost (10.9). We demonstrate the concept in relation to an
example, first of private opportunity cost (10.9.2), then of social opportunity cost (10.9.3). We then highlight how economics can help in social
decisions on conservation (10.10).
To some degree the cultural value is indicated in the inventory and list
prepared for its protection. The question arises: to what degree (11.1)? To
explore this we introduce the nature and the purpose of the list, which

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Economics in urban conservation

establishes its limitations for establishing comparative cultural value for


money (11.2). This leads on to exploration of how the inventory can be
screened before it becomes the list, under three heads: prior consultation,
planning and economics (11.3).
But however well screened, the list is still no more than a warning that
development/conservation pressures need to be fully considered before
decisions are taken to alter or perhaps demolish the property. Such
considerations have an economic content in that on the one side there is the
potential loss of value in heritage quality, and on the other the differences in
costs which would fall upon the developers and community if the quality
were protected. These are introduced (11.4) pointing to the tools of
economic analysis which are involved and which are later to be amplified
(Part IV).
But whether or not valuations can be made of the incidence of the
qualities to be conserved, there can be no question but that the conservation itself confers both benefits and costs so that we are concerned with
their assessment (12.1). This leads to identifying the true costs and benefits
of conservation of the CBH (12.2): who benefits and who loses (12.3); and
how costs and benefits are in fact distributed in the process of conservation
(12.4). We then focus on who should pay (12.5). We tackle this by
recognising that this issue arises in all fields tackled in urban and regional
planning and not simply in conservation, where they come within the ambit
of compensation and betterment. This leads to a discussion of the issue in
these terms (12.5).
We then come to the question: how much should be paid by those who
pay, or pricing for conservation (12.6). One reason why there is so much
difficulty in obtaining payment for conservation is that the external element
of the building, etc., is a public good which cannot be charged for; and that
in respect of the interiors, even when available to the public, there is
reluctance to charge the consumer in full for enjoyment, since there is the
general social aim of facilitating the spread of the benefits of cultural
conservation by reducing prices for its enjoyment, even to the point of zero
pricing in museums, art galleries, etc. These issues are put in sharper focus
when the relationship between conservation and tourists is examined
(12.7).

7.1

7.1.1

Economics in the
management of the built
environment

Conservation in economic life

What is economic life?

In his everyday activities, as an individual or in a family or wider group,


man has many different lives, spiritual, cultural, social, psychological,
physiological as well as economic. The lives are concurrent and interdependent: religious activity needs financial resources for maintaining the
religious establishment and places of worship; cultural activities need a
social framework; physiological well being is very much influenced by
employment and income.
Within this array of diverse lives, economic life has one special characteristic. The implementation of any decision to act in any of the lives typically
implies the use of economic resources, natural or man-made, for without
them the decision will not result in action. Even daily meditation or jogging
absorbs time which could be put to competing purposes. It is in this way
that economic life penetrates all other lives. We now turn to how this takes
place.
'Economic life is an organisation of producers to satisfy the wants of
consumers.' 1 It enables people to exchange, typically via the means of
money, the output of their production (as owner of one of the classical
factors of land, capital, labour or entrepreneurial/management skills) for
the goods and services they consume. In the private sector the money
typically comes from private income or capital. In the public sector the
money is typically owned collectively, in that it is raised from taxes.
In economic life, man's behaviour shows an almost limitless tendency to
increase his consumption of goods and services, and so his 'standard of
living'. But his resources for purchase are limited in relation to his needs,
wants and desires. This applies to countries as a whole and within a

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Economics in urban conservation

country: some have enough resources only for bare necessities, others for
an adequate standard of life, others for a high 'quality' of life while others
reach 'conspicuous consumption'. Whatever the level there is the need to
trade off between different ways of spending resources for the goods and
services to be consumed. In this the criterion of choice is seeking the best
'value for money': that bundle of purchases which will achieve the greatest
value to the consumer (benefits) from whatever expenditure he makes
(costs).
In this search for best 'value for money' a consumer can usually estimate
the cost, the amount of resources (price, time, travel, etc.) he needs to
spend. But he has much greater difficulty in estimating the value to him of
the purchase, i.e. its capacity as a resource with potential to give rise to an
activity which would make a favourable difference to his life by fulfilling
some need, want or desire (1.3). This capacity is 'utility', 'the quality in
commodities that makes individuals want to buy them, and the fact that
individuals want to buy commodities shows that they have utility'. 2 In
practice he cannot measure this 'utility' for it is entirely subjective to him. 3
But he can form a view of which of alternative buys for a given cost would
give him personally the greatest utility. In effect he trades off in his mind
the value to him of any specific purchase not simply in terms of its cost to
him, but of its opportunity cost: what he is foregoing by spending his
resources that way rather than the alternative way which gives him the
greatest utility (10.9).
Such trade offs are entirely subjective and personal, whether it be in a
purchase as mundane as goods in the supermarket; or less material, as a seat
at the opera; or in a transaction involving future generations, such as
conservation. And since everyone will have different perceptions (some
valuing books more than food, etc.) the decisions are entirely peculiar to
the individual and cannot really be made for him, not even by a parent for
his children.
However he is not free to dispose of all his income in this way, for the
government of the country will decide on behalf of all citizens to spend a
certain part of their money collectively in accord with its own programmes:
housing, roads, defence, social services, conservation, etc. For these
programmes government in theory decides the utility to all, and which
programme will give them the best value for money. To help this decision it
uses a variety of means: carrying out or observing opinion polls, referenda,
consultation of representative bodies, public participation, knowing 'what
my electors want'; knowing what is 'best for them'. 4

Economics in management of the built environment


7.1.2

119

Economic life and conservation

We saw above (4.8) how property management principles are applied in the
conservation of the CBH. Analysing the value for money approach in
economic life (7.1.1) to a heritage building designated for conservation we
see that the occupier will be able to trade off in his mind the building's extra
occupation costs (inefficient heating, etc.) against its extra occupation value
(7.5.3), compared with one which has different (perhaps zero) heritage
quality. Even if he can quantify the cost but not the value, he will be able to
trade off this value against other opportunities which he could purchase for
the cost, so deciding a money price to be paid for the occupation. The
producer of the conserved building, through rehabilitation designed to
extend and enhance both its occupation and heritage qualities, will thus be
able to judge the money cost to him against the money price to be derived
from the consumer.
But as we saw above (5.2) in conservation of the built heritage there is
another party to the transaction, namely government. In the ultimate it is
government which decides the inventory of buildings, etc. which have
heritage quality and how much and which ought to be conserved; and then,
through its listing mechanism and procedures, imposes a 'heritage tenure',
i.e. regulation of the freedom of owners to manage their property in what
they consider their best interests (4.2). To do this efficiently, those
concerned with the administration of conservation policy should understand the market process in which they are intervening, so as to secure
conservation objectives without undermining the private property interests
which in practice conserves the heritage through rehabilitation, etc. 5 (8.3).
This process results in the cultural heritage element in the built
environment being a singular commodity, for the following reasons:
The management objectives of the owner/occupier (private or
public) of the listed building will reflect the heritage quality of
the building insofar as it has utility to them, but will not
necessarily reflect the heritage value as seen by government on
behalf of current and future generations, both nationals and
others.
In appraising this heritage value government will recognise its
many components: those who actually visit the buildings for
direct experience of the heritage quality; those who do not or
can not visit the buildings but who cherish the fact, from books,

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Economics in urban conservation


TV, etc., that they exist so that there is an option to visit; those
who may not be directly interested but who wish to ensure the
bequest of the artifacts to future generations.6
In constraining the management decisions of the owner/
occupier through 'heritage tenure' the government is imposing
its values, while the owner/occupier is bearing the cost, as are
other members of the community who would prefer the use
from a replacement building rather than the listed building (a
modern versus rehabilitated hospital).
Where the owner needs subsidy to conserve the building for its
heritage quality, he is asking taxpayers to pay for the utility to
them of that quality, for the benefit of current and future
generations.

From this it follows that the government has general difficulty in


deciding on 'value for money' in heritage value. It must somehow estimate
its utility (which can only be personal and subjective) on behalf of the
current generation, both nationals and others, and on behalf of unknown
future generations, for an unspecified time into the future. And this it must
somehow trade off against a cost which is not theirs in the main but is
incurred by the property owners concerned and also certain other members
of the local community who suffer loss through conservation.7 They can
more readily consider 'value for money' in those instances where they incur
costs in direct subsidy to owners for conservation; since they have limited
amounts of money for grants, etc. they must ration amongst competing
claimants for aid. 8

7.2

Economics of proprietary interests in conservation

We saw above (4.8) that management decisions for urban conservation have
regard not so much to the resource but to the particular proprietary
interests in the resource with which management is concerned. We now
articulate further how the differing proprietary interests enter into the
economic calculus.
For any particular resource there will be an owner, occupier, operator,
financier, etc. (who may be private or public, and may be rolled into one).
Each of these interests will take the relevant decisions for the sections of the
stock they are legally concerned with. But their objectives may not be

Economics in management of the built environment

121

simply financial (pecuniary). The owner of a fine house and landed estate
under which minerals are found might eschew the exploitation of the
minerals in order to conserve the surroundings and environment of the
house, with a view to handing it on to succeeding generations. He will thus
value the 'psychic' benefits as well as the financial.
But even where the objectives are all financial, each of the interests will
have differing sub-objectives. The owner will regard the property as an
investment, and therefore look to his returns; the occupier will consider the
property as a base for his activities, and will look to profitability (in
production services) or satisfaction (in consumer services); the financier
would have in mind the return on his loan and its security. Clearly these
sub-objectives could be conflicting, making for potential disagreement.
The benefit to the owner (the financial return) is a cost to the occupier (his
rent).
Thus the overall optimising of services can be complex, owing to the
various interests who may be taking conflicting decisions, against a background of changing qualities of the services which can be obtained over the
life cycle. Since the sub-objectives can be conflicting, it is necessary that
they be balanced by institutional arrangements in the management of property. Examples are in lease provisions: insistence on dilapidation clauses in
the management of a building by the occupier so as not to erode it to the
detriment of the owner; and on good husbandry by the tenant farmer.9
Unless internalised by contract, these are examples of externalities,
namely the costs created by owners and occupiers of resources which they
do not need to bear, and the benefit for which they cannot charge. 10 These
arise also as between different properties. Factory production could clearly
introduce noise and traffic nuisance to surrounding dwellings. Typically
these are not covered by contract but by law relating to the land, nuisance,
etc. aimed at the mutual protection of neighbours. 11 It has been found
necessary to extend the law beyond this by environmental protection, town
planning, etc. to protect the public at large from private mismanagement of
resources.12 Examples are
(a) against depletion of natural resources, as where tree felling
must go hand in hand with replanting; or where fishing is
limited to particular seasons, size offish, etc.;
(b) against pollution of the environment, as where exploitation of
a resource is controlled to limit the polluting effects on the
atmosphere, etc.;
(c) against unco-ordinated development which would be

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Economics in urban conservation

mutually harmful, as in town planning provisions which


introduce use zones, development in parallel with utility
services, etc.
We now apply these general management principles to each of the
categories of urban resources described above (1.4).

7.3
7.3.1

Economics in management for urban conservation


Natural resources

Volumes have been written on this 13 and only points of principle will be
introduced. The management approach to natural resources varies with
categorisation in terms of exhaustibility, etc. (1.4.2). Generally speaking,
the role of economics is to predict the costs and the benefits, and their
relationship, that will flow from the management options, which introduce variables that relate to exhaustibility, renewability, irreversibility,
etc.
Where natural resources are found in the urban area, the economics of
their conservation is similar to that in the non-urban. But one major
difference is inevitably introduced. In rural areas the conflict between
competing land uses tends to be less sharp. For example, agricultural and
mineral use are compatible with each other over time (farming, followed
by gravel extraction, followed by soil restoration and farming). But in
urban areas the conflict is much more severe. By definition urban use will
entirely sterilise natural resources, as for example the soil on a building site
or the view in undulating topography. Thus succession of uses cannot be so
readily arranged. This leads to the need to conserve natural resources
within the urban fabric, and compare competing land uses in terms of
sequence of cost and value as part of management decisions. For example,
do you develop housing to sterilise gravel? Or do you exploit the gravel and
then use the pit for some other urban use, such as water recreation, or
remake the landscape for mixed housing and recreation use?

7.3.2

Human resources

As with natural resources, the economics of the conservation of human


resources has been well developed in the literature. 14 In this the human
being is regarded as any other form of capital so that investments made in

Economics in management of the built environment

123

him (costs) can be considered in relation to the expectation of future


benefits (e.g. higher productivity through training; higher usefulness in
economic life through education; greater output through improvements in
health, etc.). In the returns to the investment will be not only the power to
have a higher standard of life through higher income, but also a better
quality of life through better education, health, etc.
In this there is one critical factor introduced by the urban environment
which is not found in the rural. Whereas in an urban environment the
human being gains much that is not available in the rural (work opportunities, social contact, higher levels of education and culture, etc.) the
benefits must be bought at costs of urban crowding, traffic congestion,
stress of competition, etc. While some such costs are inevitable, it is not
inevitable that they be as high as experienced. Major areas are environmentally degraded; people are deprived of the urban opportunities they
came to seek; nature's free goods of sun, air and light are denied through
pollution. These considerations bring to the fore the economic benefits of
improved urban and regional planning 15 and control of environmental
pollution.16

7.3.3

Man-made resources

Of the two categories in man-made urban resources (moveable and


immoveable) the economics of the former is well covered in the literature
and is not of strong relevance here. 17 The economics of the immoveable is
also well covered in theory and practice, 18 but the treatment tends not to
reflect the thrust here of considering use over the life cycle. Hence we need
to elaborate. This is done in the following way:
7.4 A general model with its notation for considering on a
comparable basis the successive stages in the life cycle for
which economic decisions need to be made: use of urban
land, new development on open land, use of built fabric,
obsolescence of the fabric and its renewal.
7.5 The simple application of the model to these stages, that is
without regard to the effect of the following, which are then
introduced in sequence in general terms.
7.6 The implications for the decision of the need to borrow
money, i.e. financing the venture.
7.7 Having regard to the future, in terms of both discounting and
inflation.

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Economics in urban conservation


7.8 An overview of the relationship between use and value during
the life cycle as a whole.
7.9 The relevance of predicting the economic life of property.
7.10 Effect of planning control.

7.4
7.4.1

Economic decisions in the life cycle of the built environment


Introduction

We now use the concept of the life cycle of the built environment
introduced above (1.6) to trace the typical economic decisions that need to
be made during the life cycle of any particular property, from its initial
development through to its eventual redevelopment. In this we do not
initially reflect the fundamental impact of urban and regional planning
controls (Chapter 3) but consider this at the end (7.10).

7.4.2

The model over the life cycle

As brought out above (2.1 and 2.4) property management decisions are
concerned with optimising the value of particular proprietary interests in a
resource over the expected remaining life of the interests. Economics
provides the calculus for such decisions, by showing how costs and benefits
can be compared in critical situations such as the following:
(a) use of the unbuilt land prior to development (7.5.1);
(b) development, in the initial transformation of the unbuilt land
(7.5.2);
(c) use of the built fabric (7.5.3);
(d) obsolescence of the built fabric and its site (7.5.4);
(e) rehabilitation during the life cycle (7.5.5);
(f) redevelopment at the termination of the life cycle when there is
introduced a new element of built fabric (unrelated to the
former element) and the beginning of a new life cycle (7.5.6).
Since throughout the life cycle we are, by definition, dealing with the
same variables (the land, property, occupation costs, etc.) it is possible to
describe them by a model which can be used throughout. The model is
introduced (7.4.2), then a description of the notation for using the model
(7.4.3), and then its application to a typical situation over the life cycle
using the common notation (7.5).

Economics in management of the built environment

125

In each situation (a) to (f) there could be two variations, each relating to
the costs and returns:
(i) independently of using borrowed finance, or with such
borrowing (terms of repayment and interest on loan);
(ii) allowing for time or not; in any of the above situations (a) to
(f) we are concerned with management decisions at a point in
time, which will relate to the flow of costs and returns over
subsequent years, typically with asymmetry between the
timing of the flows. Adjustment for time brings the flow of
cost and return to a common date, called discounting.
Since both the financing and discounting are simple in concept yet
complex in application19 we introduce them only in general (7.6 and 7.7).

7.4.3

The model notation

We now introduce the notation for the models. The initial letters relate to
the interest (occupier, etc.) or element (relocation); the second letters relate
to cost (c), value (z>), gross (g) or surplus (s), which could be + / - . Their
meaning will become clearer in their application below (7.5).
Capital or annual
Cost
Value
(a) Use of open land
Owner
annual operating cost
annual value (return) gross
(surplus) ( + / - ) (o/vg-o/c)
capital value:
{ols x years purchase (yp))
Occupier
annual operating cost
annual value (return) gross
(surplus) ( + / - ) {oclvg-oclc)
capital value: {ocls x yp)
(b) Development on unbuilt land
(landowner, developer and financier combined)

olc
olvg
ols
olv
oclc
oclvg
ocls
oclv

126

Economics in urban conservation


Capital or annual
Cost
Value
(i)

Land
Cost (at beginning):
to owner (o/v)
to purchaser
Value (on completion)
(ii) Relocation and disturbance
Cost
(iii) Construction
1. Clearance
2. Utility services
3. Roads
4. Building
(iv) Fees and charges
1. Professional fees
(on (iii) 1-4)
2. Interest on capital:
short term
long term
3. Developers profit
(v) Completed development
Cost (i) - (iv)
Value
(vi) Surplus ( + / - )
Development (d/vd/c)
Land (l/v-l/c)
Land profit (// p ^-// c )
(c) Use of built fabric
As occupier in (a)
(d) Obsolescence
(i) Additional value on rehabilitation
(ii) Additional cost for rehabilitation
(iii) Building obsolescence surplus
( + / - ) (reh/v-reh/c)
(iv) New property value on development
(v) Cost of works for redevelopment
(vi) Site obsolescence surplus
( + / - ) (red/v-red/c)

IIc
llpdv
IIv
rdlc
clc
ulc
rlc
blc

plf
i/s
ilt
dlp
dlc
dlv
s/dv
llpdv
//p

rehlv
rehlc
bl0
redlv
redlc
s/o

Economics in management of the built environment

127

Capital or annual
Cost
Value
(e) Rehabilitation
(i) Heritage value before work
(ii) Additional value following work
- market
- heritage
(iii) Cost of work as in items
(b) (ii) (iii) (iv)
(iv) Surplus (+/-)
- property (rehlvrehlc)
- heritage (hlv2-hlv\)
(f) Redevelopment
(i) Property value before work
(ii) Heritage value before work
(iii) Property value on completion
(iv) Cost of work as in items
(b) (ii) (iii) (iv)
(v) Surplus (+/-)
- Property (redlv-olv)
- Heritage (hlvX-o)
- Site (red/v-red/c)
7.5
7.5.1

hlv\
rehlv
hlv2
reh/c
s/pv
slhv
olv
h/vi
redlv
redlc
slpv
s/hv
sliv

Application of the model


Use of open land

A vast proportion of the earth's surface is undeveloped. Within this, part is


literally unused (deserts or Arctic wastes), some is used for human
consumption (farmland, forests, etc.). Other 'open' land is used for 'urban'
purposes without being developed by built fabric (e.g. waste disposal, open
air recreation, quarrying for minerals, etc.), mostly following 'improvement' with roads, utilities, etc.
If land and improvements have any value at all it is because they can be
used by people for particular purposes, from which there is derived some
excess of the value of the product compared with the cost of achieving it.
This clearly applies in farming (in the contribution that the land makes to
producing the output) but less clearly in offices (which facilitate the work
leading to the output) and in dwellings (which provide the output of shelter
for the family, etc.). It is the possibility of obtaining these net outputs

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which the occupiers value, and for which they are prepared to pay a rental
or price related to the net value of the output to them. Thus the value to
them can be established, being the estimate of the discounted net values for
such occupation into the future. The art of valuation is to make the relevant
estimates of value over the expected life under various assumptions.
The occupiers management decision is how to secure the use which
would realise the maximum net annual surplus (oc/s), which is the annual
gross value derived from the occupation less its annual costs (oclvgoclc).
In such situations there is clearly identity of interest between owner and
occupier (both seeking the maximum ocls) but there is also conflict. The
owner will seek to obtain the maximum rent that the occupier can pay (i.e.
the total of the ols) for then he will obtain the maximum capital value,
which is the capitalisation of the net rental payments (o/v). But then the
occupier's capital value would be nil, since the operating surplus (oc/s) is
swallowed up by rent and he has no 'profit rent' (although he would still be
earning his net revenue from the occupation itself).
There is another possible management conflict. In using the land for any
purpose the interest of the occupier is to extract the full return from the
land over his visualised occupation. While this would not be critical for
people in an open desert or Arctic waste (although possibly harmful to
nature), it could be critical near an urban area where the current use of the
land is interim, on the way to another use. The exploitation by the occupier
should not, in the view of the owner, inhibit transference to the new use
(from mineral excavation to farming land to urban development). In brief
the owner must ensure that he will not have heavy costs of preparation for
the next use arising from the over-exploitation of the interim use. He must
therefore use appropriate constraints in his leases (7.2).

7.5.2

Development on unbuilt land20

We start with the open land which has a use (e.g. farming or recreation) for
which there is a market value (the exchange price for the net benefit of the
current use projected into the future for its expected life). Where prospective demand arises for the use of such land for urban purposes, the land
will have a potential higher value for the higher intensity of use. To realise
that value the developer must invest in works and buildings. To provide an
indication of the best mode of investment (layout, use density, etc.) he will
commission designs (by architects, engineers, land economists, etc.) to
show the market values for the development which could be obtained on

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the realisation of optimal forms of completed development (dlv) and the


costs necessary to realise such development (d/c).
Any excess of value over costs (d/vd/c) (with costs including developers
profit) is considered as flowing to the land and becomes the potential
development value for the land (llPdV) or, popularly the land's 'site value' or
'residual value' for the particular development. This is the maximum
available for purchasing the land in question for that development, without
encroaching on developers profit. But that price will not necessarily equate
the 'land profit', which is the difference between such potential development value (llpdv) and what the land will sell for on the basis of its value for
use (o/v) without expectation of development. This difference is the 'land
profit' {lip).
From the relevant calculations, the developer can also answer other
questions of interest: what would be the capital and operating costs, the
land profit, the developers profit, the likely cash flow?
Accordingly, the bid which any prospective (private or public) renter or
buyer makes for the land is based on some estimate of the value to him of
using it for a specified new use, with or without incurring development
costs (d/c) (i.e. from simple change of use through to major construction).
But he is not the only bidder in the land market. There will be others with
the same or different uses in mind. And they will be faced with different
supplies of land, each with its varying characteristics. The owners of this
supply will also consider the land value from similar approaches: what can
he expect the bids to be having regard to the residual value? In totality this
competition makes up the particular 'land market' in the overall group of
such markets. 21
In order for the developer to secure the land for his purpose his offer
price must meet at least two conditions: it must at least exceed the value of
the ongoing current activity to the owner and occupier, both the value in
exchange (o/v) and use (oc/v) and the value of the disturbance and relocation
costs of the occupier (r/c); and it must be sufficiently high to outbid others
concerned to purchase the land for development. This in itself forces any
prospective developer to instruct his professional team to design that
scheme which is most efficient in achieving the maximum value in the
development over its cost (d/vd/c or l/pdv) and thereby the maximum
surplus available for his offer.22 This is the 'highest and best use' of United
States appraisal literature. 23 The best offer will typically result in a sale.
Thus it is the market process by which the use of particular land is
decided via development, for this is the institutional framework in which

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land becomes developed. The result of the process is a decision on the use,
form and intensity of the development, and thus the nature of the physical
stock which becomes the built heritage when it is completed, to endure
over its life cycle.
This market process has various significant repercussions for the built
environment. First, possible uses which generate less residual land value
than the one chosen tend to be squeezed out from the particular site to other
sites, for which the competition from bidders for development is not so
severe and thus in respect of which the landowners must accept lower
prices. Second, by the same token, where a successful bid associated with
less residual land value is higher than one associated with more, the
successful bidder will need to reduce other costs. Where he wishes to
maintain his developers profit, there is a tendency in the design to reduce
the former (with the prospects of bidding more for the land) and to increase
the latter, since it is the capital costs of construction which are immediate
and not the ongoing costs of maintenance and operation. The result is that
the building construction may be poor and the 'life cycle costs', 24 the 'costs
in use' 25 over the life cycle of the building, may be higher than necessary.
Third, since a prime consideration in the new development is always the
need to obtain the appropriate financial loans, with the lenders being
primarily concerned with the security of their investment in the long term,
the financiers' requirements are often a key to the built form.

7.5.3

Use of the built fabric26

Once the development is completed by occupation then the decisions which


have been taken, and the capital which has been sunk (committed),
become the starting point for the building's long life. In this the critical
agency is the occupier and not the owner, for without him the building's
potential services are not being utilised.
In his use of the building, the occupier (be he producer or consumer) has
the returns from his occupation to earn (oc/vg) from which he needs to find
operating costs (oc/c). As to the former, he can use the qualities of the land
and buildings in his occupation, linked with the off site qualities on which
he is dependent: location in relation to other occupations and activities;
accessibility to and from elements of concern to him (e.g. labour power,
markets, transportation); the utility services available (gas, water, electricity, telecommunications, etc.); and the more immediate environmental
factors (noise, atmospheric pollution, vibration, visual outlook, etc.). As to

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the latter he must meet the operating costs which are real in relation to the
occupation itself (heating, water consumption, air conditioning, maintenance, etc.)i; financial in servicing the owner's capital investment; and fiscal
in his contribution to taxes as a means of contributing for the public
services which are offered (access, street lighting, etc.).
Generally speaking, faced with these variables the occupier will be under
financial and business pressure to maximise the surplus of occupation
benefits over operating costs (oc/s). The pressure comes from various
sources; from the landlord, who will over the period of the occupation seek
to increase the rent payable; the owners of the business which he is
operating in terms of net profits; and from his own limited financial
resources having regard to the other claims on his income.
These variables will not remain constant over any length of time, except
for those periods where a contract has established fixed costs, such as rents.
And thus the relationships between the returns and the costs become the
subject of continuing management of the occupation depending on its
nature (a private house through to a museum). In this there are clearly the
twin objectives, of maximising the value of the services being enjoyed
through the occupation (oc/vg) while at the same time minimising the
operating costs consistent with this enjoyment (oc/c). Within this,
management decisions will clearly be taken looking some period ahead
(short term for example in levels of heating but long term in the kind of
heating to be provided). And, within these realities of decision making, the
overriding objective will be to find the optimal state whereby the maximum
net value or benefit can be obtained over time. In other words, the use of
the built fabric will be conserved.

7.5.4

Economic obsolescence 27

We saw above (1.6.2) that during its life the building will show obsolescence of one or more of each of the four kinds enumerated: structural,
functional, locational and environmental. Faced with approaching obsolescence, the occupier and owner will need to decide the actions necessary to
cope with the obsolescence, in particular those which come within their
powers, the structural and functional in the main. In facing up to the
appropriate decisions the owner/occupier/investor will be faced with calculations of financial costs and returns for rehabilitation (7.5.5).
Unless the additional expected returns to be obtained, from any use of the
building, exceed the costs of coping with the obsolescence, the decisions

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will not be taken. In such cases the building may not be obsolete in the sense
of being 'completely useless with respect to all uses they might be called
upon to support' (1.6.2) and may still be maintained to support its current
use. But it can be regarded as economically obsolete and on economic
grounds, having regard to the variables foreseen at the time of the decision,
it will not be renewed but allowed to deteriorate in anticipation of its next
phase in the life cycle.
However if the conclusion be that the building is not economically obsolete,
renewal measures will be devised to retard the obsolescence and extend the
remaining life, in both years and quality. But it could be (and often is) that
the potential value of the site for redevelopment following destruction of the
existing building {sltv) could be higher for new development than the value
of the property as it stands (o/v). If it be sufficiently higher (by at least the
developers profit), the site could be described as being economically obsolete
in the current use. This clearly results in the demolition of buildings which
are not obsolete, and certainly not economically obsolete, for the purpose of
replacing them with new stock.

7.5.5

Rehabilitation28

Rehabilitation of a building (1.6.3) takes place when works are carried out
with the aim of overcoming some at least of the obsolescence, normally
structural and functional. In the process work could also be introduced
which would add to the bulk of the building (e.g. by lateral or vertical
extension) which would facilitate the economics of rehabilitation.
The economic calculus of the owner follows that of new development,
but differs in one important respect. The land cost is taken as already sunk
(it is embodied in the joint structure of land and buildings) so that only
marginal costs and values are considered. The owner or developer will
study the alternatives of renewal by rehabilitation, reconditioning, revitalisation, etc., but the costs of rehabilitation (reh/c) (without land/property
costs) will need to be compared with the increased value which will be
obtained in the building to be renewed following the execution of the work
(reh/v). If the latter be sufficiently more than the cost (s/pv is +) to show
adequate developers profit he will proceed. If not, then he will not proceed
without some inducement subsidy.
In making this assessment there are two datum points of interest: the
property as it stands; or as it is likely to be if the rehabilitation works are not
carried out but only the minimum maintenance needed to prevent the

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buildings becoming structurally defective, or functionally incapable of use


(1.6.2), so that the property will decline relatively in relation to the supply
of competitive property. It is the latter which is the true measure, since the
economics of rehabilitation then takes into account the prospective loss or
gain in the investment if no action be taken.

7.5.6

Redevelopment29

In this case the option is to pull down the building to release the site which
has become economically obsolete, so that the cost of the site is the cost of the
property, which equals its current value in the market (o/v) disregarding
development potential. The process of bidding for the property in order to
establish the right to create a new property of higher value is identical with
that for open land which is to be developed for the first time (7.5.2).
But there is one critical difference. The residual value which the
entrepreneur could afford to pay for the property, in order to bid it away
from its current use, would need to be sufficient to provide a profit over the
value not of open land but of urban land. Since this is usually much higher
it necessarily means a relatively high 'land' bid, since properties could have
a value in the market long after they might be thought obsolescent on the
four criteria (1.6.2), even if judged economically obsolete (7.5.4). It also
means greater chances than in new development of the property having a
negative value for development as a site.
It is these considerations which make it so important for entrepreneurs
concerned with redevelopment to secure high intensity schemes following
demolition of the standing buildings. Such considerations have another
significance. Given the:
(a) likelihood of a development being attracted to obsolete rather
than non-obsolete property (to keep down acquisition costs)
and
(b) need to secure a high land bid in competition with other
purchasers and would be developers
there is an upward pressure on the rentals or sales values to be obtained
from the new scheme. This bears heavily on the pre-renewal occupier who,
by definition, will be living at rents at the lower end of the scale, because he
is in obsolete property. If he cannot afford the higher occupation costs
which will be brought about through the redevelopment (the typical
situation) then there is a pressure for his displacement from the property. If
this be residential then he will be forced to find accommodation also at the

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lower end of the market, which may mean relocation in another area with
contingent loss of job, through commuting, in community association,
etc. 30 If it be business, then there is likely to be the loss of business linkages
and, in shops and services, of goodwill.

7.5.7

Rehabilitation versus redevelopment

The previous two sections have considered rehabilitation and redevelopment as discrete management options. But during the life cycle of the
building it will be necessary on occasions, certainly towards the end of the
life, to consider these as alternatives. It is this decision which we now
review. For each case the common question is that posed (7.5.5/6): given
the conditions as they exist, or as they might be if no action is taken, what
will be the difference in the marginal net benefit of rehabilitation versus
redevelopment?31 In this comparison there is little difficulty in method
outside what has been discussed above, although there are differences in
estimation, except for one critical factor: the comparison of the value of the
new and rehabilitated property on the same site. This is part of the
difference between the calculus for the private and public sector to which
we turn below (7.5.9).

7.5.8

Heritage value

The model and notation have been devised for buildings without heritage
value. We turn below (8.3) to the implication of such value for this kind of
economic calculus. But it is useful at this point to show how such value (h/v)
fits into the model in the relevant cases: rehabilitation and redevelopment.
In both the heritage value is seen alongside the economic value. In
conjunction with the calculation for financial surplus or loss arises the
question: what is the implication for the heritage value before and after the
works? In rehabilitation is (hlVl hlv) a 4- or - ? In redevelopment,
what is the h/Vl which is irretrievably lost?
7.5.9

The private and public sector

All the elements on the cost side are common, although there could be
differences in approach to their estimation; for example, in the public
sector interest on capital could be lower than the market rate, as could the
rate for discounting the future (7.7), the assumed life (7.9) could be

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135

different and developers profit could be zero. This brings with it variations
on criteria for viability.32 But on estimating the value side there are
differences.

Value in the market


Exchange value in the market can be estimated in the usual way through
market value appraisal, in either rental or capital terms, but questions arise
in respect of rehabilitated property. 33 First, will it have a higher or lower
quality (value) than the new accommodation following redevelopment?
Although, by definition, it will not be designed as though new, it may
nonetheless be of sturdier construction; or, in kind of layout, have a
scarcity value; or in terms of age, have a period quality which may give it a
prestige value. Second, there is a possible difference in the life of the
property. Even if of higher occupation value than new, it cannot be
typically expected to have a predicted life as long as the new since
obsolescence will tend to arise earlier although, as just indicated, there
could be exceptions. Conventionally in housing a thirty year future use is
taken for rehabilitation as opposed to sixty for new. Third comes the
question of whether or not the values immediately following completion of
the project will hold on the same profile in competition with properties
following redevelopment. Here the expectation would be that the value of
the rehabilitated properties could fall off more sharply. Fourth, will the
maintenance costs per unit be the same? Fifth comes the rate of discount for
the differential flow of costs and returns, bearing in mind the shorter
expected life of the rehabilitated property.
A simple approach to handling the first two variables for houses
which could be either improved or redeveloped is shown in Table 7.1. 3 4
Given estimates of the quality of the improved dwelling as a percentage
of that of a new dwelling, and of its useful life in years, the table shows the
maximum to be spent in improvement of the dwelling as a proportion of the
cost of the new building. In this instance, using an 8 per cent rate of interest
(the fifth variable), the table assumes that the comparative profile of values
of the properties will remain constant (third variable). In addition the
fourth variable must be taken into account, that is the capitalised value of
any additional costs and maintenance for the rehabilitated dwelling must be
deducted from the maximum cost of improvement.

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Table 7.1 Maximum cost of improvement per dwelling as proportion of cost of


new building

100

Quality of improved dwelling as


percentage of that of new dwelling
90
80
70
60
50

0.96
0.91
0.79
0.69

0.87
0.82
0.71
0.62

Useful life
(years)

40
30
20
15

0.77
0.73
0.63
0.55

0.68
0.64
0.56
0.48

0.58
0.55
0.48
0.42

0.48
0.46
0.40
0.35

Source: MOHLG Circular 65/69, Appendix B.

No market price
Where the comparison relates to a building for which there is no market
(unpriced) value (for example hospital, school, etc.) then the comparison of
exchange value is not possible. The actual value must then be estimated on
some other basis. The techniques for so doing are well advanced, having
been matured of necessity in the economic dealing with public sector
goods, in cost benefit analysis (Chapter 14).35 But a simple comparison on
quality is feasible by allocating a points scoring system to qualities of the
new accommodation which would be obtained on redevelopment and
comparing this, item by item, with the accommodation to be provided on
rehabilitation.36
A particular instance of this kind of quality, relevant to this study, is the
heritage quality which will feature in the buildings to be rehabilitated but
be lost on redevelopment. In some cases this feature will be fully reflected
in market value and can be measured this way. But there could be heritage
quality in the rehabilitated property which would not be so reflected. We
turn to this point below (Chapter 10).
7.5.10

Incidence of costs and benefits on property interests

The varied property interests become important when considering the


incidence of costs and benefits of ownership and occupation during the life
cycle of property. Some examples echoing (7.5.1-7.5.7) will demonstrate:
(a) In new development: the developer/entrepreneur is concerned
with the costs of carrying out the development and the
returns (benefits) from occupation, either of himself or

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137

another. These benefits to the developer/entrepreneur are the


costs to the occupier of securing the occupation, for which he
in turn receives the direct benefits of occupation.
(b) Use during the life cycle: clearly it is the occupiers who are
primarily concerned (that is the user, his employees, the
visiting public, etc.). But again it is the financial costs of
occupation (7.5.3) which are the benefit to the owner, thus
leading to potential divergence of interests (for example when
needing to adjust rentals during periods of inflation, or on
termination of leases).
(c) Obsolescence: the various kinds of obsolescence could affect
the occupation value of the premises, although not uniformly.
But the adjustment to rents payable to the owner would tend
to lag behind the obsolescence, perhaps because of lease or
tenancy terms.
(d) Renewal: the owner of the building is concerned to renew
against obsolescence, for this undermines the value of his
investment. His decision to do so will be affected by the
expected costs and the returns of the investment that would
be involved. The occupier faces a different problem. The
obsolescence may or may not affect his functioning. And he
may or may not be willing to pay the additional rents required
in order to make the renewal economically feasible for the
owners.

7.6

The implications of borrowing money

As brought out above (7.4.2) in the methods of estimating costs and returns
so far (7.5) no allowance has been made for borrowing money by the
landowners, developers, etc. In practice this is the very rare situation for in
the great majority of development and renewal projects money is borrowed,
and even when not borrowed is treated as if it were, so making allowance
for the opportunity cost of the capital involved. The simple effect on the
calculations displayed are that the prime actors must make provision in
their estimates for the cost of borrowing money, in terms of interest and
repayment of capital. In effect this produces interlinked calculations for the
two parties involved: the agencies directly involved in the project (the
equity owner) and those who are financing it (the lender). So powerful is the

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financing role in development and renewal that financing requirements will


affect the economic outcome of all projects.
The sources of the financing are very varied indeed as owners of funds
seek investment outlets; and furthermore the methods used in such
funding are continually evolving in response to the dynamics of the market,
shifts between differing portfolios for investment, taxation, interest rates,
inflation, etc. 37 And the changes are speeding up under the impact of
deregulation in the operations of the financial markets.
The implications in practice are that in addition to considering the
incidence of costs and benefits on the various property interests in any
particular project it is necessary to add another interest, that of the
financier.

7.7

Taking account of the future


Discounting

Some economic processes can be analysed irrespective of the time element.


The payment of cash for the receipt of an immediate consumption of goods
or services (ice cream or a shoe shine) are cases in point. This certainly does
not apply to the production and use of the built heritage over its life cycle.
In the production, capital costs are incurred over the period of the
development process and then, on completion of the development, operating and renewal costs throughout its life. This results in a flow of unequal
costs and benefits, which endure for differing periods. These cannot be
simply added up to represent totals. The logic is simple. Payments today
are more onerous, and benefits today are more desirable, than tomorrow.
How then can they be transformed so that the individual items can be
summed?
For this problem the accepted approach is discounting for time. The
simple economic model was that 'individuals making their decisions
regarding present consumption and saving would be governed by their time
preference regarding consumption, that is, their marginal rates of substitution between present and deferred consumption'. 38 The clearest application is in the private sector, in which money not used for payment can be
earning interest and benefits deferred can be immediately realised by
borrowing their capital value and paying interest. This leads to the
following basic techniques of calculation:39

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139

Let the investment cost be c, the rate of interest i and the period of years
t. Then:
Accumulation (A) of a fixed sum at the end of year t
c(l + i)'
Present (discounted) value (PV) of c payable in the future after t years; this
is the inverse of A, that is
1/,(1 + i)'
With these formulae it is possible to value streams of future payments or
benefits at a common point, typically the time of decision. The value can be
expressed in capital terms (by capitalising periodic payments) or in annual
equivalent (by decapitalising capital sums).
In these formulae, the arithmetical outcome clearly depends on the rate
of interest (i) which is adopted and the period of years (i). For the private
sector this rate is simply the one in which the payments would be earning
interest if otherwise employed (opportunity cost of capital) adjusted
upwards for the risk element compared with other kinds of investments.
This logic does not necessarily prevail in the public sector, as we will see
below (14.4).
Change in price level
As just indicated, discounting for the future has regard to the expected flow
of unequal costs and benefits. These variations in flow can stem from
various sources: costs in economic activity will be reduced through
technological change in, for example, methods of building; or be increased
if particular materials become scarce in real terms. Such changes need to be
reflected in the calculations. It is easier in relation to costs, for the
construction period itself will be relatively short term. But it is much more
difficult for value, since what is being considered is the remaining life of the
property as far as can be foreseen.
Further complications arise in that changes in real costs and values
cannot be expected to be uniform over all kinds of projects in the built
environment. In terms of labour costs, the reduction in the numbers of
skilled tradesmen means that their costs are likely to be higher than the
typical. In terms of values, the increasing scarcity of particular types of
historic buildings, with the erosion of the heritage, suggests that they will
increase relatively in values with other property.

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Economics in urban conservation

Side by side with these changes in relative prices there are also the familiar
effects of inflation on the general level of prices. 40 In this instance the changes
relate to all the costs and values which are taken into account, as their levels
change with inflation. The arithmetical adjustment here is more straightforward since it is uniform. But a particular difficulty can arise since it cannot
be assumed that the prices of individual elements will necessarily rise symmetrically. The very inflation itself creates changing conditions in subeconomies, as will the measures taken by government to control the
inflation, as for example by freezing prices, wages, interest rates, etc.
Finally there is the difficulty that in predicting the level of costs and values
it is difficult to distinguish the real from the inflation rate, despite the need to
consider them in different ways. From this arises the need to make simplifying assumptions in carrying out the estimates and then to test the validity of
the assumptions in terms of sensitivity.41 In essence these tests ask the question: what would happen to the conclusions if the assumptions vary by
certain stated amounts?

7.8

Land use and value in the life cycle of the built environment42

So far in this chapter we have considered the economics of the built environment largely by reference to the man-made structure itself. This, as indicated above (1.4.3), is part of a joint product, the land and the buildings. We
now turn to the land on its own. Once the land is joined with buildings
through development it is 'trapped' in terms of its use; it is completely subservient to the use of the structure itself and its curtilage (the land surrounding which is used with the structure). It becomes free from this trap only at
the end of the life cycle when the structure is cleared for redevelopment.
Thus the value of the land throughout the life cycle is affected by the value of
the joint product. It is this we now trace.
As indicated above (7.5.2) it is the successful bid of the potential
developer for the property in question which primarily decides the use
which is to come about, should he carry out his intentions. At this point in
time, land use and land value run together. But thereafter, while the land
value is trapped in terms of the structure's use it can, without development
works, fluctuate within that use. For example, a dwelling could become an
office overnight, without any structural alterations, so attracting higher
rental value, even though the contract rent could persist at the residential
value, so earning a 'profit rent' for the occupier.

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141

This simple example shows that there is a relationship between changes


in the use of a property and changes in its land value; and in respect of these
fluctuations it is possible to estimate that part of the value of the joint
product which flows to the structure and that to the land. 43 In brief, current
land use and its appropriate current value will run together until such time
that there is some prospect of change of use, through the development
process. This process is generally lengthy, but once it has started the
current use and the new value do not necessarily run together. As soon as
there is some prospect of development there is a prospective potential use,
attracting a potential value which is higher than the current use value.
Transactions in the market will reflect this 'hope' pending a decision on the
use in the planning permit. Competitive bids for the land will then discount
the expectations of net value from the development to take place. On the
acceptance of the final bid which is associated with the new land use, and
the realisation of this land use through development, the use and value for
that use will run together again.
After some time the same process will begin again owing to the
obsolescence of the established property and the prospects of renewal. The
prospects will be explored in terms of reconstruction, rehabilitation and
restoration (7.5.5-7). Here again there will be some 'hope' value in respect
of the prospective use, so that the value of the land for the current use will
again not run together with the value of the property.

7.9

Life of property

In the management of property an estimate of its future life is of


significance for many decisions. For example, when new, over what period
would it be safe to make provision out of rental earnings for the repayment
of a loan on the property or the accumulation of a depreciation fund for its
reinstatement; when considering works of rehabilitation to extend life, over
what period is it reasonable to visualise that the rehabilitated property
would be in a position to produce the rental income; in granting long leases,
at what point of time in the future would it be reasonable to expect that a
group of properties owned by one landlord and leased separately would fall
in for comprehensive renewal?
While for all such decisions, and others, it is necessary to make some
estimate of life it follows from the preceding (7.5) that the estimate will be
difficult to make, because of uncertainty owing to the complexity of issues

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surrounding the concept of 'life of property'. 44 When will obsolescence of


the various kinds come in, to the degree of shortening the life? To what
degree will any particular renewal provision extend such life? What are the
chances of property becoming the object of conservation policy, so
constraining the termination of its life at the will of the owner? Thus it is
necessary to make assumptions, explicit or implicit.
Such assumptions at any particular time could be eroded in the following
years. They could provide an underestimate, as where the rehabilitation of
the area surrounding the property, through public or private agencies, has
increased the attractiveness and rental value of the property in question,
and so made more feasible rehabilitation to extend its life. Or the revision of
the assumption may need to be downward, as where a suddenly announced
proposal for a new road project, etc. creates blight in the area, and so
undermines prospective rental values and the possibility of introducing
feasible rehabilitation.
But even if the assumptions are not eroded, arrival at the estimated date
for the end of the life of the property may find it still very much 'alive and
kicking' rather than on its death bed, for all kinds of reasons, of the kind
just indicated. At that point in time the property would have yet further
economic life, in that the building would not be economically obsolete (7.5.4).
Should this occur, then any reasons of an 'accountancy' nature (e.g. that
the loan on the property has been amortised or the depreciation fund
accumulated sufficiently) are no reasons for decisions to terminate the life:
the landowner will regard the fact as a windfall gain and base his
management decisions on the property in respect of the future potential.
His approach would be: 'bygones are bygones'. Equally well, unexpected
blight which undermines the future viability of the property will be a basis
for management decisions to shorten the expected life rather than to gear
the decisions to the notional periods based on amortisation or depreciation,
even if there be outstanding loans at the termination.
Similar considerations arise where a 'life' for the occupation of the
property has been decided upon in granting a long lease, be it in a building
lease for the erection of new property or an occupation lease for a standing
property. At the time of the grant, both landlord and tenant will have
considered the implications of the 'contract life' for their respective
investment appraisals. But for the same reasons as those indicated, this
'notional life' may prove in the event to be an under or overestimate in
terms of the economic life of the property. The end of the lease may see the
property with a viable economic life into the indefinite future, or with one

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that has already in fact terminated so that the property is ripe for renewal.
In the former instance the lessee would seek to continue his lease and in the
latter he would be anxious to terminate. It is such factors which will form
the basis for negotiation of the renewal of the lease.
In brief, while the 'life' and 'economic life' of the property are valuable
and indeed essential concepts in a variety of situations it is clearly difficult
to make estimates at any particular moment in time. This makes it difficult
and indeed unwise to use such estimates as a basis for making decisions
which will be binding in future, for example the date when a certain area
will be redeveloped.

7.10

Effect of planning control45

In all the preceding we have not taken account of one effect on cost and
values which is paramount and all pervasive, namely the impact of
government activity on the land and property market. This influence
affects the whole of the economy: so much so that the central debate in
mixed economies is the balance that should be observed between allowing
the economy its head and government intervention. 46
In relation to the built environment the intervention from urban and
regional planning is very powerful (3.1) with the many controls from other
sources (protection of road lines, environmental controls) which it takes
under its wing. Paramount here for our concern are the conservation
constraints. The impact of such planning is most strongly felt when a permit
is needed for the carrying out of new development or renewal, for then the
impact becomes crystallised in the decision. But it also is felt at other points
over the life cycle of property, in the manner in which the urban and
regional planning process steers evolution of the urban entity, or fails to do
so. The allocation of new areas for development will stimulate associated
rises in land value for retailing to serve the new residents; or diminution in
property values where amenities are undermined. Equally well the failure
to tackle urban problems, such as the inner cities or transportation, carries
with it deterioration in property and land values through environmental
obsolescence, etc.
The direct effect referred to in the granting of the permit could be felt in
any of the situations described above (7.5). In brief, while the trends
affecting the properties in question are the main determinants of the
economic action to be taken, no development except the minimal can be

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carried out without the actual permit, for then the investment would be
unauthorised and subject to enforcement action. Thus until that permit is
granted the values are expressed in terms of 'hope'. In some cases the hope
can be very strong, so that their realisation can be counted upon. In others
it can be so remote (building within the green belt) that the discounting for
their realisation must be high.
It is at the point of realisation of value with the grant of the permit that
there is the counter effect of what has come to be called 'planning gain' . 47 In
essence this is the use by authorities of their positions of power in the
development process to exact a contribution from the developers which
they would not otherwise or normally make in terms of their obligation in
law. Simple examples are the contribution of public buildings, release of
land in the development project for open space, amenities, planting, etc. 48
In such situations, the terms of the bargain struck between the developer
and the planning authority for the grant of the permit must be reflected in
the cost of the project. This affects the financial outcomes in the situations
described above (7.5).

8.1

Economics in the
conservation of the CBH

The CBH as a resource

Certain buildings are created with the intention of their being monuments
(royal palaces, royal burial chambers, mansions intended to be the home of
a family for generations, churches or mosques). These apart, when the
CBH is initially developed it would not be seen as distinct from the
generality of the built environment; it is by definition only later that the
social decision is taken to conserve it.
Such a decision certainly constrains the use of the stock in question as a
resource. For example, how can you expand the economic base of the
community in manufacturing, retailing, commerce, etc. if large parts of the
relevant fabric were designed with an eye to the requirements of centuries
ago and conserved since?1 But in other respects the CBH can be seen as a
resource of even higher value than if it were not so earmarked, as the
following examples show:
1 Stock designed in a previous age can provide an environment
which will not or cannot be reproduced today, and therefore
offers a relatively scarce opportunity for both stability in the
physical environment and enrichment of human experience.
2 Architecture from earlier centuries can give an aesthetic
character to a locality which is distinctive from that provided
solely by recent and contemporary generations, and can so
enrich the human experience.
3 This distinctive character, and its architectural and historic
interest, will attract visitors to the locality, from the same
country or abroad, who will generate spending in the locality.
4 Such spending will generate employment, both direct in
relation to the expenditure itself, and indirect through the
spending of those employed (the multiplier effect).

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In summary, while the conservation of the CBH can be regarded as a


constraint on the freedom of the current generation in the management of
its assets, it can also be exploited as a resource for the socio-economic
advancement of that and later generations. Thus the conservation of the
heritage for that purpose can become an objective of socio-economic
development.

8.2

The CBH as property

The CBH is property in a way similar to other elements of the built


environment, except that it is subject to the constraining interest of the
state in its conservation, which we called above 'heritage tenure' (4.2). This
creates impediments to finding the use which has the greatest net surplus;
maximisation of net asset value needs to be tempered with maximisation of
conservation value. But the result might not be long-term diminution in
asset value, since the very conservation measures themselves will tend to
enhance the long-term occupation value of the property, arising from the
scarcity of its qualities compared with the generality of the built heritage.

8.3

Economics in the life cycle of the CBH

We now illustrate the effect of the heritage tenure constraints on particular


situations in the life cycle of the CBH, following similar treatment for the
general built heritage (Chapter 7).
8.3.1

Economics in use

Older buildings do not necessarily have higher 'costs in use' than the more
recent.
The traditional technology relied on few materials, simple construction and
generous proportions which provided a high thermal capacity and moisture 'buffer'
effect. By contrast, industrial technology has developed complex forms of construction in a multitude of interacting lightweight materials; and design procedures have
been dominated by standards. They rely heavily on mechanical/electrical services
and the systems, once installed, are very expensive to modify.2
But the conservation constraints could introduce limitations on the
freedom of the occupiers in the use of the building for activities (so that

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147

these will not interfere with the structure) and therefore the costs to be
incurred (e.g. need to retain fenestration or have more fire protection).
This will affect the economics in use of the building, and the management
consideration which can be given to these aspects by the owners and
occupiers.

8.3.2

Economics of obsolescence

By definition, a building which is to be conserved as part of the CBH will


tend to be older and have had a longer life than most contemporary
buildings. Thus the tendency will be for a greater degree of structural and
functional obsolescence. But nonetheless there will be greater inhibitions
on the owners and occupiers to tackle the growing obsolescence.

8.3.3

Economics of renewal

If only constrained rehabilitation is allowed in the interests of conservation


then the owners and occupiers will be hampered in their search for the
optimal renewal project. This can be illustrated by a simple example. Let
us visualise a 100 year old merchant's house, listed Grade II, which is
physically deteriorated and functionally obsolete for its original purpose
(one family) and is occupied without proper sub-division by numerous
families. Being in the centre of the city, surrounded by commerce, the
local planning authority would agree to office use. The site suffers
economic obsolescence in that its value for redevelopment for offices is
greater than the value of the building in its entirety. The owner would like
to demolish and redevelop for that purpose.
Redevelopment. If the authority resists redevelopment then the owner
will suffer the potential loss of the excess of the site value for an office over
the value of the current property. He is thus deprived of a speculative gain,
and the developer a profit. However such gains could well go to another
site, also suitable for offices, on which the authority would give permission.
Restoration. The authority might start its bargaining by wishing to see
the house restored to occupation by one family. The owner finds little
demand for such a use, so that the price he would obtain on sale would be
less than the cost of works. He could not proceed because of non-viability.

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Rehabilitation. The owner would then consider rehabilitating the building for offices. If the extra value were less than the extra cost then the owner
would not be interested and would continue to use the building as it stands.
If the extra value would exceed the extra cost he would wish to adapt the
building. Should the authority resist because of diminution of heritage
value then the owner and developer will be denied gains which again could
be picked up on another site.
Do minimum. Whether the owner elects to continue occupation in the
current structure, or is forced to do so by resistance from the authority to
rehabilitation, he is faced with the need to operate a building which is
physically and functionally obsolete. Nonetheless the receipts from the
occupation of the building could exceed the expenses, so providing
economic viability. But whether or not the profits were adequate for the
upkeep of the building, the owner would hardly be encouraged to continue
its life. Thus the building would deteriorate, towards non-viability. Should
the authorities intervene with a view to preventing deterioration through
enforced repairs and maintenance, they might be driving the owner into a
situation of annual loss as opposed to annual gain. The use would then not
be economically viable.

8.3.4

New uses for old

In economic analysis for tackling obsolescence via renewal (7.5), the


decision as to rehabilitation or redevelopment includes the redevelopment
option. This is constrained away by conservation. Thus the economics of
conservation has as a focal point the need to explore possible uses for the
fabric which must be retained (subject to adaptation through acceptable
alterations, etc.). It is this exploration, the key to conservation by rehabilitation, which has been richly pursued under the impact of the conservation
objective.3

8.3.5

Financial aids to meet the viability shortfall

Where governments wish to conserve, but the conservation constraints


result in non-viability in rehabilitation, they have made available a diverse
and complex array of financial aids to meet the shortfall. These can be in a
variety of forms4 of which some are:

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149

(a) repayable loans at favourable rates of interest and period of


repayment;
(b) capital grants to reduce the incidence of the cost on the
developing owners;
(c) reduction in capital cost to the owners by provision of staff
and materials at low or zero cost;
(d) contributions to maintenance costs;
(e) tax relief whereby the government does not pay directly but
indirectly through a reduction in tax liability on the property
in question, either on a capital or revenue basis;
(f) tax increment financing, whereby incremental increase in
taxes on a project area are earmarked for recycling into
further projects;
(g) governmental patronage, whereby government takes on
appropriate buildings and rental payments or capital
purchase;
(h) revolving funds whereby the capital is made available to an
agency wishing to rehabilitate and sell and repay the loan,
using the surplus and additional loans for tackling the next
property;
(i) making available incentive schemes applicable to the
generality of property which suit the situation of the heritage
property;
(j) authorising charitable arrangements whereby industry and
financial institutions can use some of their resources for
conservation, for the benefit of tax relief.
Not all such aids are relevant to particular cases and nor are they necessary.
Thus selection is needed. This can be approached by reference to the
various financial aspects in the development process (7.4) in order to
identify where there is a particular bottleneck which can be alleviated.
In terms of contribution to the shortfall, both kinds of source, direct or
taxation, are clearly of interest to the owner. But there is a distinction
between the two from the viewpoint of government concerned for conservation. With tax relief the initiative comes from the prospective owner/
developer who takes advantage of the relevant rules, which may or may not
favour particular kinds of property or conservatioxi situations; speaking
generally, the conservation priorities are then decided through the
market. 5 With the direct subvention, the bureaucratic control will rest with
the government department concerned with conservation and not with the

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generality of taxation. This permits of specific attention to conservation


objectives. More particularly, within the focus of this chapter, there is the
possibility of government exercising priority in terms of conservation value
for money, in the allocation of the relatively scarce subvention funds to the
large and growing calls upon them. 6

8.4

Land use and land value in the life cycle of the CBH

Within the context given above (7.8) we now introduce the special element
in this relationship which arises through constraints on change when the
built environment is part of the cultural built heritage. Generally speaking
a new variable, heritage quality, enters the economic calculus for optimising asset value. Three typical situations will illustrate.
(a) Continuation of the activities related to the current use of the
property, e.g. a residence or museum in the case of a building
capable of occupation; or a public park in the case of a ruin or
archaeological site. Here the qualities which make the
building, etc. part of the CBH are maximised but the
commercial value may suffer.
(b) Change involving limited structural alteration (from an
individual house to a series of apartments) or major alteration
(from an individual house to an office, convalescent home,
hotel, etc.). Such change of use, and the associated structural
work, could be inimical to the conservation objective. But it
might not be so. It could be that the particular use which is
visualised is as much or more in sympathy with the building
than the current, as where a storage warehouse becomes a
museum. Indeed the search for 'new uses for old' opens up
creative possibilities of a whole range which could be
sympathetic to the building. Given the right bargain, both
commercial and conservation values can be maximised.7
(c) The value of the property as an economically obsolete site.
Here demolition of the structures is visualised so that the
land itself is released for development for a new use and
optimal value. Clearly this is completely abortive of any
conservation objective.
In brief, if left to itself the market would decide which of these values
would be the highest in money terms. The resultant transaction would

Economics in the conservation of the CBH

151

decide the future use of the heritage quality. If conservation quality be


threatened, conservation constraints would regulate market value to the
benefit of conservation quality. The land use, land value and conservation
profits would be affected, as would the prediction of economic life.

Economics in planning
for conservation of the
CBH

9.1 The similarity and distinction of purpose in economics and


planning
As indicated above (Chapter 3), planning for conservation is seen as part of
urban planning. Accordingly we here see the economics of planning for
conservation as part of the use of economics in urban planning. Such use is
not all that straightforward. It is thus necessary to introduce it as a
preliminary.
There is a decided tendency for planners and economists to mutually
consider the other inimical to their purpose. For this there need be no
fundamental reason, considering that they have some identity of purpose.
While open to controversy,1 economists would generally accept as a starting
point the classic statement of Robbins, 'economics is a science which studies
human behaviour as a relationship between ends and scarce means which
have alternative uses'. 2 Amongst economists this formulation calls for
planning. Two brief references from economists of different views will rub
home the point. Even Hayek can say:
All economic activity, in particular, is planning decisions about the use of resources
for all the competing ends. It would therefore seem particularly absurd for an
economist to oppose 'planning' in this most general sense of the word . . . The
dispute between the modern planners and their opponents . . . is not a dispute on
whether we ought to choose intelligently between the various possible organisations
of society . . . It is a dispute about what is the best way of so doing. 3

And Myrdal, a dedicated planner, points out that the term 'planned
economy' contains ' . . . a plain tautology, since the word "economy" by
itself implies a disposal of available means towards reaching an end or
goal'. 4 It has 'an automatic direction of economic life towards an inherent
goal, i.e. of non-planned planning'. 5
While urban and regional planners do not have a neat definition as a

Economics in planning for conservation of the CBH

153

starting point, they would also recognise the Robbins statement as a point
of departure. 7 But then divergence soon appears. They would disagree with
the Robbins concept of planning being concerned only with studies and of
neutrality about ends. The formulation of the ends, in terms of goals and
objectives, is an essential part of the planning process; and while there is
controversy in planning as to whether the values of the planners themselves
should enter into the formulation, even those who claim to be value free in
this regard would certainly see their planning as normative and not just
positive.
Planners find another divergence in that they by definition are concerned
not only with economic costs and benefits but also with social, environmental, etc.: the inherent costs and benefits falling on the community being
planned for (the externalities) and not simply the direct costs and benefits
on individuals and firms, which has been the major preoccupation of
economics until the application to the public sector, public goods and
choice over the last fifty years (Introduction).
Thus there is a fundamental identity of purpose with good reasons for
divergence. These have led to many attempts at reconciliation in the
literature, from both planners and economists.8 That there is growing
convergence is clear, not only in literature but in practice as economists
work within the town planning process and town planners within development and operating enterprises, each learning from the other, in terms of
content. 9 This is accompanied by mutual influence on method. Economists
benefit from needing to apply their mature discipline to new topics:
amenity, the natural environment, pollution, leisure. 10 Planners benefit
from seeing growing rigour enter their practice, as in the process of
evaluation of projects and plans (9.6 and Part IV). 11

9.2

Planning and the market

Both economic planners and town planners share the common starting
point in their work: intervention into an ongoing system with a view to
improving upon the outcome that would otherwise prevail. Both recognise
that, as just indicated (9.1), the market carries out 'non-planned planning'
and so produces order in the ongoing system. But both recognise that this
order could be improved upon because of its well known features, such as
the following: the market is primarily concerned with efficiency and not
equity; the efficiency is judged in the main by private and not social costs

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Economics in urban conservation

and benefits; the absence of equity is due in some measure to economic and
social inequality; there is the difficulty of accommodating the public sector,
alongside public sector activities. For economists this field is generally
known as 'market failure'12; to planners it is the imperfections of the land
and development market which are even more marked than with other markets. 13 In both instances the intervention is carried out by government.
From this it follows that there are necessarily great variations in the nature of
the intervention, be it in the economy in general (compare East and West
Europe); or in urban and regional planning (compare the different systems
in north-west Europe). But there is a common thread. In simple terms, in all
countries there are twin drives for both efficiency and equity, with too much
emphasis on efficiency resulting in a sacrifice of equity (Britain in the 1980s)
or a drive for equity resulting in a loss of efficiency (Eastern Europe). 14
The problem therefore is to find the right balance in intervention against
'market failure'. It is in achievement of this right balance around which the
discussions revolve, in the theory and practice of intervention in all
countries, and there have been many essays on the topic in regard to urban
and regional planning in Britain.15
But in the preoccupation of balancing against market failure it has been
forgotten that two other kinds of failure can emerge. First, it does not
follow that government intervention to remedy market failure will necessarily produce a situation which is better than the market would otherwise
have produced. Government after all is human in that it is made up of
politicians and their administrators; and these have the difficult task of
showing that their intervention produces better results than the 'nonplanned planning of the market. In principle a plan should be better than
no plan; in practice it does not follow that any plan is better than no plan.
There is also the possibility of 'freedom failure'. Any intervention for
social control and social justice, however well intentioned, must mean some
loss of freedom to individuals and corporate bodies. How far should this go
in the balance between the rights and obligations of the state and those of
the individual? It is the judgement that the individual freedoms are
sacrosanct that has led the 'marketeers' to be so vehement against public
intervention beyond the most limited kind. 16
This necessity to define and consider the 'logic of intervention' in all
cases and at all times has relevance also to intervention for conservation.
The market left to itself will not conserve the cultural built heritage, in
quantity and quality. Intervention is needed. But is government fully

Economics in planning for conservation of the CBH

155

effective in its administration? Is it not desirable to at least consult with the


owners of the buildings affected prior to legal control? Where are the
boundaries to be drawn in coping with market failure, government failure
and freedom failure?

9.3

Role of economist in urban and regional planning

It is today taken as axiomatic that urban and regional planning is too


complex and important to be left as it once was just to the generalist urban
and regional planner. Of ever growing importance is the contribution of a
large range of other 'contributory disciplines': architecture, urban design,
engineering, law, sociology, ecology, economics and so on. But what is not
so generally agreed upon are the respective roles of these skills in the
planning process. At one extreme some have thought that these need
contribute only information and advice, by way of 'feed'. At the other
extreme some say that if all could act as planners in concert - social,
transportation, economic planners, etc. - the need for the distinctive role of
the general planner himself would be removed. Within these extremes
there are other views. Following is that taken here. 17 While exemplified by
the use of economics it is applicable to other 'contributory disciplines';18
and while referring to 'economics' it applies also to the contributions of
those concerned with all aspects of economic life: the surveyors, valuers,
accountants, etc.
Clearly there can be no uniform mix of skills: the job in hand varies
throughout the duration of the process, the particular problems which are
studied cover a wide range, as does the level at which the planning
operation is being conducted - from the region to the village. From this it
follows that the particular contribution of economics in town planning
studies will vary, receiving greater emphasis in some than others. In one
case everything could depend on the economic feasibility of attracting
industrialists to a particular location; in another everything could depend
on judgements in which the economist can give no immediate help, for
example, the architectural quality of a historic town centre. Economics
must be relatively more important to the whole operation in a regional
study. But even at the local scale, where site design and layout is a major
concern, economics must play its part, for example, in measuring the
marginal costs and benefits of variations in density.

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Economics in urban conservation

There is no particular point at which economics can be said to enter or


leave the process; it must participate throughout. This is not to say that it
would be employed at an even pace or rate, but rather that the economist
must be available for the appropriate task at the appropriate stage. From
this it follows that the nature of the economics contribution will vary with
the particular stage, as we now illustrate by reference to a typical planning
process.19
There may be need to invite views in the early formulation of economic
objectives. This would involve a variety of economic studies, for example,
the economic history and base of the area, analysis of trends, review of
constraints upon full utilisation of local resources, forecasts of employment
prospects, market analysis of the demand for the different activities and
uses. These studies will lead to a crystallisation of the specific economic
problems, opportunities and objectives which could be followed and of the
economic constraints on choice of solution: for example, in the capacity of
the construction industry or sources of finance or public subsidy.
When alternative plans are being prepared, economists can help across
the drawing board, as it were, with guidance as to designs where costs can be
minimised and value maximised, definition of cost thresholds, marginal
costs and returns in variations from particular planning standards. This will
lead on to tests for economic feasibility of the alternatives. In the selection of
the preferred alternative, cost minimisation, cost effectiveness and cost
benefit techniques will enter into the evaluation of designs, and also estimates of financial cost and return will give a lead on financial viability to
particular developing and operating agencies. The preferred alternative
would need the contribution of economics in its detailed design, in resources
required, the demands that will arise for the accommodation to be provided
in the various time phases and financial costs and return appraisals. This will
lead to feedback to the designers, as where costs are considered too high or
revenues too low for any particular implementation agencies.
At the implementation stage, real estate analysis is needed on private and
particular public sector projects. And in the more varied world of development control, economics can indicate where, for example, proposed
planning conditions and restrictions would affect the economics of the
development and, therefore, its viability; suggest alternative locations for
enterprises where it is contemplated refusing permission for siting in the
location proposed; and could suggest pricing policies for car parks, traffic
congestion or environmental pollution.
From the above it is seen that the orchestration of the planning team

Economics in planning for conservation of the CBH

157

requires management. This is part of the education, skill and experience


of the town planner, as has always been recognised: the awareness of
when, how and at what scale to invite collaboration from other skills
and how to organise the collaboration. It is not a matter of the size of
the operation: whether or not to site a new office block near a road
carrying heavy traffic could require specialist calculations from a traffic
engineer.
A final point needs to be made about this particular view of the
constellation of planning skills. Here the process is looked at from the
viewpoint of the urban planner, for it is within such planning that the
economist is collaborating. But an economist seeing urban planning from
his own viewpoint, for example when advising an industrialist on the scale
and character of investment, would do so as a background to the
economic analysis needed; the planning framework is regarded as external
to the operation and investment decisions. This vantage point would be
adopted by every discipline, including the conservation architect (architectural conservation), so that we have no Copernician concept but a galaxy
of inter-related conceptual systems. From such standpoints, town planning
is thus also a ^contributory discipline'.

9.4 Some economic principles in plan making for conservation of the


CBH
Reference has been made above to the manner in which urban and regional
planning embraces conservation, in general (Chapter 3) and for the CBH
(Chapter 4). This is now picked up with examples of the economic strands
in the process.
Recognising the potential of assets which exist20
It is natural in the planning of towns to concentrate on problems, for these
are the focus of remedial plan proposals. But there are also opportunities
were potential is not being fully used, and which could be so used in
advancing the plan's objectives. These are 'amenities' which are developable assets. Some examples are: the cultural institutions which exist;
buildings giving particular character, whether recognised as part of the
CBH or not; special traditions and activities for which the town is noted;
natural features (hills, rivers, gardens, etc.) which can become foci of

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Economics in urban conservation

attraction. Since by definition much of the assets tend to be seen in the


historic centre of the town, this becomes a special focus.

Deferment of obsolescence
As indicated above (3.3) planning has a role in deferring obsolescence in
general, including for the CBH. For this regard would be had to the special
information derived from the economic screening for obsolescence (11.3.3)
in order to see whether proposals can be devised for slowing up or averting
obsolescence.

Helping rehabilitation by enhancement of use value


Whereas for the non-CBH the renewal alternatives available in tackling
obsolescence can include comprehensive redevelopment, in the CBH the
presumption is that this option is by definition precluded, if at all possible.
That is the essential purpose of the plan's conservation strategy. If for
example it is the immediate environment of a historic building which leads
to difficulties in finding suitable occupiers who will conserve it then it is the
possibility of improvement in that environment that needs to be studied.
This is but one example of an array of proposals which can enhance the
use values of the CBH and so encourage rehabilitation. Other instances
abound in proposals aimed at urban regeneration in social, economic,
physical and environmental terms. 21 Particular attention could be given to
whether transportation proposals and policies could be steered to enhance
the use values of the heritage. Examples are: is the concentration of traffic
and parking in a particular area adding to environmental nuisance, so
discouraging the use of the CBH, or is such an area languishing because of
poor accessibility to potential hotel or shop customers?

Steering demand for accommodation into the supply


of CBH
An element of the economic studies for any plan is the assessment of the
increase in demand for accommodation in the study area and the means of
supply for meeting this demand. By definition, the supply can be made up
either of existing stock (as it is or rehabilitated in some way) or new stock.
The alternative ways of matching the two, with choice of the best, is a
typical feature of plan making.

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159

The essence of the demand study is to identify the variables which will
influence the future demand. These are not the same for all uses. Clear
examples in relation to housing are the expected increase in population,
demographic change in population structure, prospective family formation, increase in purchasing power through increase in economic
prosperity, etc. In respect of offices it is the predicted growth in the
white-collar sector of the economy. In hotels it is the expected increase in
visitors, tourists, etc. Because of these variations, the methods and
techniques of forecasting for economic demand vary from use to use, as
does the robustness of the conclusions which can be drawn from the
forecasts.
In each sector the macro estimates of demand for particular uses must be
matched in the first instance against the supply offered by the existing
stock. In this matching the CBH competes with its special characteristics:
in the higher cost of upkeep of the historic buildings and greater restriction
on freedom of alterations, and the compensating attraction of the quality of
the heritage buildings when compared with others. Thus where there is a
significant supply of CBH in an historic town, conservation can be
advanced by limiting in the plan the supply of new stock to meet any
particular demand, in order to attempt to channel such demand into the
CBH. This requires in combination a restrictive policy of limiting the
relevant supply of new stock with the positive policy of attempting to
enhance the quality and value of the CBH.

9.5

Economic feasibility of plans for conservation of the CBH

One step in the conventional urban and regional planning process is the
testing of alternative strategies, policies, planning proposals or particular
projects for feasibility (i.e. broad practicability or possibility) prior to their
comparative evaluation as a basis for choice. Such tests can cover a wide
array.22 It is the economic tests which are our concern here, at the macro
level.
First comes economic feasibility: will the proposals be practicable under
the prevailing or foreseeable economic climate. Here the paradox arises: the
more successful the conservation of the CBH, the more will the socioeconomic activities of the town be carried on in the buildings which have by
definition a greater degree of obsolescence than the occupiers would
choose, given the freedom to do so. The buildings will be older than the

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typical; their internal arrangements will not be as functional as those


designed more recently; there could be more locational and environmental
obsolescence than the typical. And all these tendencies will have greater
significance where the conservation in question applies to a large area, as in
the centre of historic towns, rather than individual buildings.
Given success in conserving the CBH, the question thus arises: will the
socio-economic base of the town be adversely affected, or even in the
extreme case, eroded through constraints on the use of the CBH stock?23
Will the residential stock be so expensive to maintain (because of structural
or functional obsolescence) that the occupation becomes a drain on the
household incomes? Will the buildings to be used in offices, hotels, shops,
etc. be inefficient for their purpose? And will such increased costs be offset
or not by the additional value to occupiers that comes from using buildings
which have the distinction of the heritage, as opposed to the contemporary
and typical? And will the town find that potential occupiers (residents,
businessmen, etc.) are deterred from moving to it by the nature of the CBH
and the restrictions on its alteration? Or will they be attracted to it for that
reason? And, by the same token, will investors find the town attractive or
otherwise compared with towns without heritage buildings? Within these
major questions there will be more particular ones.
First, given a planning strategy of diverting some of the demand to CBH
buildings, will there be sufficient demand for the accommodation so
earmarked compared with demand for the non-heritage, in that town or
another?
Second, given a major programme of rehabilitation of the CBH, will
there be available appropriate skilled building labour and contracting firms
to carry out the necessary work at reasonable cost?
Third, is there the expectation of financial viability (worthwhileness)
which will attract the necessary investment funds? For example, will there
be available for the CBH programme the financial resources from central or
local government (as direct subsidies in rehabilitation or in effecting
environmental improvements, etc.)? And where there is a financial shortfall, could supplementary sources be found, as for example direct taxation
of the visitors/tourists who benefit from the conservation (12.6)?

Economics in planning for conservation of the CBH


9.6

161

Economic evaluation of plans for conservation of the CBH

In the formal planning process, the preceding steps will have resulted in a
short list of alternatives which are presented for choice by the decision
makers, as a basis for implementation of the conservation strategy, plan,
etc. It is to aid judgements in such choice that formal evaluation analysis is
undertaken, as a means of comparing the alternatives in a way which is
meaningful to the decision makers. Such evaluation is no different from
that carried out for general plan making. It raises the classical question:
how can the limited resources be allocated to competing projects so that the
priorities observed produce the best 'value for money' in conservation
quality? When applied to the CBH it must reflect the relative heritage
values which would be achieved in the alternatives (Chapter 10).
In making their choice the decision makers could have a variety of criteria,
implicit or explicit. Following are some examples. Which can be achieved at
the lowest capital and operating costs to the government and would therefore be the least burden on rates and taxes? Which gives the maximum conservation of the CBH without regard to cost? Which would least damage the
economic base of the community? Which gives the maximum amount of
space which is conserved for the least cost? The choice criterion clearly
needs careful selection for it affects the outcome. Least cost ignores the possibility that low cost projects may have also low heritage value. Equally well,
priorities in terms of the highest heritage value in projects, without regard to
cost, would ignore the possibility that greater returns in conservation could
be obtained by spreading out the limited resources over a large number of
lower value projects. And which costs are to be used: upon the taxpayers as a
whole, on particular sections of the community (e.g. the CBH property
owners) or on the economic base, etc.
Given such questions and the context for them, there then must be used
the appropriate economic evaluation methods aimed at answering them. To
these we return below (Part IV).

9.7

Economics in the CBH conservation programme

In discussing management and planning in the conservation of the CBH we


saw that the culmination of the process should preferably be a programme
for conservation which will be the basis for implementation (6.5). We also
saw that the nature of the programme would vary with the kind of 'plan',

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ranging from conservation policies through to strategies or a series of


detailed conservation projects. In the implementation of any such programme there will, as always, just not be adequate resources available to
achieve all the CBH conservation objectives in any particular town and, if
viewed nationally, in any particular country. There thus arises the need for
some assessment of the costs that would be involved and the benefits to be
achieved in conservation terms, so that the total resources available can be
used to 'buy' as much conservation as is practicable within the limited
resources. In essence we are seeking 'value for money' in conservation, to
which we return below (Chapters 10 and 14).
Such economic assessment is clearly the most practicable when the
conservation projects have been defined, so that the estimate of the costs
and benefits involved is facilitated. This falls within the field of project
evaluation or appraisal.24 But in its application to the cultural built heritage
certain well recognised difficulties arise. For one thing the 'heritage value'
to be aimed for cannot be readily translated into money terms in order to
achieve a numerical benefit cost relationship (Chapter 10). For another,
even so, the benefits/disbenefits to be derived must reflect not simply those
that would accrue to the property owners but also to the government in
introducing 'heritage tenure' on behalf of posterity, and to the contemporary community at large. To this we return below (Part IV).
However, in the nature of conservation practice a plan may not result in a
clearly defined comprehensive programme of conservation projects. Indeed
the projects could emerge at random. Some will be initiated by local or
central government on property they own. Some will be in areas in which
government proposes to invest public resources, as for example in environmental improvements. A large number typically arise when there is a threat
from the public or private sector to a conservation item that is included
within the official list. Some will be identified from urgent rescue action
initiated by the conservation authorities on heritage buildings which are
being neglected.
But however random, in effect the items amount to a conservation
programme, in which there is competition for resources. Thus the same
approach will be used as in the assessment of the conservation programme,
just described, but necessarily on an ad hoc basis relating to the circumstances as they appear at the time. In all cases the economic aim will be to
achieve the maximum heritage value with the use of the least resources
possible, whether falling on the private sector or the public, consistent with
the economic viability of the project itself.

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163

In this we return to the nature of this heritage as a commodity (4.5). The


cultural quality represents value to the contemporary society as a whole,
which it wishes to pass on to future generations. Its cost is in the additional
resources (capital and operating) falling on the promoters/occupiers
because of their need to protect the heritage, subsidised perhaps in part by
government to assist in the financial viability of the rehabilitation project
aimed at securing continuation of the heritage. The protection and
provision of the cultural heritage is thus part of a development project
which has its commercial dimensions. This could be out of accord with an
architectural aim of achieving maximum heritage quality without regard to
cost or value of the works to the relevant property itself.
But since the conservation decisions are social decisions, made by public
authorities, it is also possible for them to perceive the costs and benefits in a
wider sense, that is those falling on the community as a whole outside the
particular property boundary for which the project analysis is being carried
out; these will include externalities, that is those costs or benefits falling on
sectors other than the promoters or occupiers (Part IV).

9.8

Priorities in the conservation programme of CBH

Whether the CBH items emerge as a comprehensive or random programme, the economic assessment for projects just described will enable
each to be ranked in terms of the heritage value to be achieved for the
resources to be used. This will permit that other well known feature of
project evaluation, namely the assessment of priorities as between projects
which are competing for scarce resources.
Leaving aside for the moment the complexities of establishing the value
in money terms (considered in Chapter 10) it is possible to devise a
programme based on priorities, on the approach illustrated in Diagram 9.1.
Here for each element of the conservation programme is shown the benefit
in terms of heritage quality which would be achieved against the resources
required to achieve it. The essence of the exercise is to find that combination of projects which will match the total resources available for conservation while maximising the heritage value.
To answer the question in accordance with the principles of cost benefit
analysis (Chapter 14), each conservation project would be ranked in terms
of a given criterion, e.g. net value (Diagram 9.1), or benefit-heritage
quality/cost ratio. 25 Measuring this quality in money terms would lead to a

164

PROJECT No.

Economics in urban conservation

HERITAGE
QUALITY/
BENEFITS/
IN P O I N T S

nnnnD
RESOURCES/
COSTS

PRIORITY IN
NET BENEFITS

SHARE OF COSTS
IN FIXED BUDGET
BY PROJECTS IN
PRIORITY

COSTS TRANSPOSED ON BENEFITS,


TO SHOW NET BENEFITS

Diagram 9.1
Assessing priorities of conservation projects in fixed budget
ranking of priority in heritage value for money. Taking the list of projects
in sequential ranking of net benefit (heritage quality minus cost) to the
point of exhaustion of the given resource budget, achieves the maximum
conservation Value for money' of that budget, in surrogate terms.
Within such a ranking will need to be considered the problem that does
not exist with priority ranking in other fields (e.g. new roads, etc.) namely
that the conservation objects by definition are old and typically in need of
some repair which, if let go too far, would erode the object itself to a point
where it would need demolition. The consequences are serious, for the
object is then irreplaceable. This consideration requires that a part of the
funds be allocated to a 'fire fighting' programme. In this the 'value for
money' criterion must still be applied. 26 Is the cost of emergency treatment

Economics in planning for conservation of the CBH

165

so small that the question of value for money could be postponed on this
score? Having regard to different levels of repair, would the physical life of
the object be sufficiently extended so that it could take its place amongst the
generality of objects to await its conservation turn? Would the conservation
quality to be obtained on full conservation works justify the cost of repair?
Or would this be so low as to justify using the repair resources for
conservation of other objects? All this requires that the question of the
heritage value of the object be considered even at the time of its need for
emergency repairs.
There is another reason for departing from the strict 'value for money'
criterion across all projects. By definition, objects having values of quite
different origins (history, culture, architecture, etc.) are being compared;
objects in certain towns containing a great abundance are being compared
with other towns in which they could be rare, and therefore have the
additional 'value' of local scarcity; objects having national significance are
compared with those of local significance, with the result that the latter
would be downgraded in comparative value.
Faced with this situation a quite different approach would be to make
some prior selection of groups, for example by category of heritage value,
or location, or national, regional or local importance. For each group there
would be allocated a division of the budget, on some judgemental ends.
Then within each such group the 'value for money' criteria would be
applied to give the ranking. In this way the resources to be spent will result
in objects being conserved over a broad front of categories as opposed to
being confined to objects of 'heritage excellence'.
In all this the aim of the conservation strategy and policy must be borne
in mind: the resistance to significant alteration or removal of any identified
element of the heritage, in order to prevent damage which is irreversible
and loss of stock which is irreplaceable, so that the conservation quality can
be improved into the future on a sound footing.

9.9

Economics in project implementation

For conservation to be achieved in practice the projects need to be


implemented on the ground. The process for the CBH is little different
from that in other projects, be they for new development or renewal; they
will be carried out by the development process (2.5).
In this process, the use of economic principles will clearly vary with

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Economics in urban conservation

criteria of the implementation agency. A public authority, in offering


grants, etc. will be concerned with the net financial costs compared with the
heritage values to be achieved. The approach of a non-profit conservation
agency (the third force) will be similar except that they will not be
dependent on profit to be made, excess of money value over cost, but will
typically be content to recoup costs (excluding government subsidy) by
sales. The private entrepreneur will equally be concerned to attract as
much subsidy as he can from government wishing to enhance heritage
value, but will certainly wish to gain profits in the excess of value over cost
in the development project.
It is in respect of all such projects that the government will be exercising
regulatory controls (typically under planning legislation) in the interests of
achieving maximum conservation value. Where this will undermine
profitability to the extent that the private entrepreneur finds the project
non-feasible, so that he does not proceed, not only will the maximum
conservation value be lost but also any conservation at all, short of public
purchase. It is in the 'bargaining' which proceeds that 'value for money'
analysis needs to be used on both sides. 27

10 Valuation of the cultural


built heritage

10.1

The issue

Throughout the preceding the concept of heritage value has been omnipresent. The CBH becomes identified as such only because its heritage
quality is valued by the contemporary generation, both for itself and for
passing on to the future. This led to questions as to why that value is held
(4.6). We then saw that in order to identify the CBH which is of value there
needs to be an inventory (5.1); and that in its preparation specific criteria
must be introduced as to the kind of artifacts to be included; whether or not
particular items which rank for inclusion have enough heritage quality; and
how to grade the heritage quality of such items (5.2). More particularly,
in introducing economics into evaluating programmes and priorities for
conservation (9.6-9.8) we saw the need to estimate the amount of such
value. Such estimate must be in quantity of stated units. Where the units
are in terms of money, the common measuring rod in an exchange economy,
the estimating is called valuation.
How far this can be achieved for heritage quality is the subject of this
chapter.

10.2

What is value?

Since the valuation is an estimate of the amount of value we need to first


comprehend that elusive concept, value. Following is a summary from
contemporary neo-classical value theory. 1
All goods and services have intrinsic or inherent qualities, associated
with 'value in use'. Some are common with others (one of the 1986 batch of
Rover cars), while others might be literally unique (the location, elevation,
slope, etc. of a building site). As such, these goods and services are

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Economics in urban conservation

resources in that they potentially provide the means to give rise to an


activity which can favourably satisfy a human need, want or desire (1.3). As
such they could have a value to man, which is not necessarily an intrinsic or
inherent value; what is the value of a motor car stuck in some inaccessible
desert or the building site in a jungle?
Thus the estimate of amount of value is directly related to the potential of
goods and services to favourably satisfy human needs, wants or desires. In
economics this potential to satisfy is called utility, a term often used
interchangeably with satisfaction, happiness, welfare, economic welfare.
Utility, and its value, are entirely subjective to the individual; it depends on
his physiology, psychology, environment, social relationships, etc. This
total utility he cannot objectively measure. But what he can assess is his
willingness to pay (WTP) for a marginal increase in his total utility. This is
done by reference to the opportunity cost of that payment, namely the price
of the other goods and services that he is willing to give up to achieve that
marginal change in utility (10.9).
But while the individual would in certain circumstances be able to obtain
the marginal utility without cost, for example opening a window at
negligible cost for additional fresh air in a stuffy room, he could typically do
so only by incurring marginal costs, that is disutility. Here again the
valuation can be made in terms of the opportunity cost of the goods and
services involved. Thus the value to the individual of particular goods and
services is the opportunity cost of its utility (the benefit) minus the
disutility of obtaining and using it (capital and operating costs). The value
is the net utility.
Such estimates are not however made in the abstract but in relation to the
real world. Accordingly there is the need to consider the following in
respect of the CBH.

10.3

What is being valued in the CBH?

Prices for fine art and rare books are regularly established at auctions and
gallery sales, reflecting their exchange value in the market place, although
not necessarily their objective artistic or cultural value. This dichotomy
arises with the CBH, but in a more exaggerated way.
By definition the cultural value is attached to an object in the built
environment, whose primary value derives from its use and not cultural
quality. For example, a listed Georgian house in everyday use as an office

Valuation of the CBH

169

could have a considerable market value relating to that use; but its cultural
value is only partly reflected in the market price. Conversely, former cotton
mills have significant cultural value as industrial archaeology but may have
no market value as property, since they are no longer useful for their
original function; are not functionally suitable for new uses; and because of
their size require considerable annual expenditure on their upkeep. While
the market value could be small (perhaps negative), the cultural value is
significant. And the point is further emphasised in considering the contrast
between the negative market value of a ruined castle, which must be kept
that way because of its considerable heritage value, and thereby involves
the government in considerable sums in maintenance and management, so
producing negative exchange value.
In brief, what is being valued is an intangible quality, which society
currently treasures and wishes to pass on to future generations, but which is
attached to a man-made object, which is property, public or private, whose
exchange value to the owner could be positive or negative. There will be no
direct correlation between exchange and heritage values.
This dichotomy comes into sharp focus where renewal is being considered for an obsolescent building in the CBH. Then the contrast is in
exchange value for the object/building and a series of marginal works to it,
and a corresponding series of marginal changes in heritage value, each
related to the particular renewal option (7.5). In the choice of option the
two critical parties are bargaining for primarily different values: the
owner/developer for most financial surplus (tempered perhaps with psychic
and patronage considerations) and the conservationists for heritage
quality.
The question therefore arises: how can the heritage quality be valued?
Since the value is in the 'eye of the beholder', we pursue the question
(10.4) in relation to the various parties concerned: an individual who is
not the owner/occupier of the property to which the cultural value is
attached, and then one who is; a group who are not the owners of the
property but nonetheless value its heritage qualities (for example, a
specific conservation society); society on whose behalf government
decides; and government, which in the ultimate is charged with taking
the decision for conservation on behalf of contemporary society and
future generations.

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Economics in urban conservation

10.4

By whom is the valuation being made?

10.4.1

An individual

Non-owner/occupier
The starting point is the recognition that the value of the cultural quality to
the individual will be, as in any other object which is valued, the utility he
can derive from it. Against this value he would put the costs to himself of
enjoying that utility in order to decide whether or not he would obtain value
for money in buying it.
As to costs, since he is not the owner or occupier of the property he would
have no direct costs, although there could be indirect costs if the conservation of that element of the heritage were being subsidised by public
funds, falling on him as taxpayer or ratepayer.
As to the utility, he cannot put a money price on the value to himself
of the 'capacity to make a favourable change to his life'. But what he
can do, if he can bring the object of his valuation into a preference
relationship with other objects, is to equate that value to the price he is
willing to pay (WTP) for the privilege of having it: i.e. the highest
value of the goods and services that could be bought with that price:
the opportunity cost (10.9), and so make a comparative judgement on
the utility to him.
This identification is made more difficult in the CBH because of two
factors. First, the utility does not simply relate to himself. For one thing
there is the value to others in contemporary society. He might for example
consider that he himself would derive little utility; but he would recognise
that others could do so, and would make his vote for the heritage retention
on behalf of those others. Second, while he might make such a vote in
respect of non-heritage goods (e.g. a playground for children even though
he is childless) his vote for the CBH carries with it the pledge to
conservation on behalf of future generations. In this regard, he cannot
clearly place a value on that utility to those generations. He does not know
them, nor their number, nor whether indeed they will have a similar
approach to the value of the heritage item as himself and the contemporary
generation. He will not even have the possibility of considering such value
as though the future generations were his descendants. But he will make
some judgement about their preference, even if only by guess or
assumption.

Valuation of the CBH

171

Owner
The individual who owns the CBH property in question would be in the
same position as one who does not, except for the major obvious difference:
on him would fall the extra costs of dealing with the property owing to the
conservation constraint. It is this extra which he would need to trade off in
terms of opportunities foregone.

Occupier
The individual occupier would be in the same position as the owner: except
that his extra costs would relate to those of occupation not unrestricted, net
of any reduction in rent.

10.4.2

A group

Group valuation of the CBH is more common in practice than is that of the
individual, outside the owners/occupiers of the property directly involved.
Such groups are found in the civic societies, etc. which have been formed to
act as guardians and watchdogs of the heritage (at the national or local level)
and who on a daily basis engage in controversy and activity for particular
items. In this respect, the group is no more than a collection of individuals,
each of whom will address the subject of value in the manner indicated
above (10.4.1). Their group valuation is the sum of the individual
valuations. They are unlikely to have similar valuations. Then when the
group needs to demonstrate its group valuation of the heritage, the
individuals will influence each other: there will be an exchange of opinion
and information, which in itself could mean that certain individuals will
raise or lower their sights on the topic, or go along with the values of others
to achieve a concerted view.
This aspect of the valuation takes on particular significance when the
group concerned approach the subject as experts in the field, for then they
will have special information, insight, etc. into the heritage quality of the
particular item compared with others in their field. But while the discussion and appraisal will be better informed, the conclusion may be more
difficult simply because in the nature of the CBH the experts will come
from different sources (history, art, education, archaeology, etc.) giving
rise to the additional difficulty of cross-cultural comparison of the
quality.

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10.4.3

Economics in urban conservation


Society

We distinguish above (10.1) between the facts relating to the heritage and
the value that might be placed on that heritage by the contemporary
generation. Whatever the facts it is only when values are attached to the
heritage by the contemporary society that it begins to take an interest in its
protection, conservation and perpetuation, an interest which could be
sharpened when they see the heritage disappear.2 Clearly such values are
not always of esteem leading to the urge for conservation. It could be quite
the contrary, e.g. traditions in over-feeding, smoking, drug taking, sex,
worship, etc. which are thought to be unsuitable in the contemporary
society and therefore should be the subject of erosion and not conservation.
The attitude towards religion in Soviet Russia or in Khomeni Iran are two
cases in point of diverging views towards the one theme, traditional
religions, and illustrate that values in relation to the heritage will differ as
between countries and cultures, and whether these are in the First, Second
or Third World.
We are thus led to consider the way in which any particular society values
its heritage, and the action that any particular generation proposes in
respect of the heritage. This could range from rejection through indifference to treasuring for conservation. This range will not be uniformly
applied. There could be, for example, rejection of religion and monarchy,
while treasuring their historic artifacts, as in the Soviet Union; or treasuring
the artifacts of the national religion but not of others, as with Jordan in its
occupation of the Old City, Jerusalem, between 1948 and 1967.
Furthermore, not only will the valuation be of varying kinds in a
particular generation but it will change from generation to generation, and
indeed over the lifespan of a particular generation. Such fluctuations are of
interest not only for themselves but also for understanding the differences
in stance taken by particular generations. For example, a previous generation may have neglected a particular art form (e.g. ballet dancing) while
the contemporary generation does not. By contrast, a previous generation
may have been concerned with the protection of an element of the heritage
to th'e degree that the later generation considers 'over protective'. The
protection of agricultural land in Western Europe is perhaps one such
example; often sufficient consideration has not been given to the fact that
the contemporary society is predominantly urban as opposed to rural, that
urban land needs must be satisfied and that agricultural efficiency can offset
to a degree the diminution in agricultural land supply.

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173

Equally there are variations as between generations as to how any


particular one considers the interests of its successors. While it cannot
predict how these will value their heritage, the contemporary generation
knows that they will have their own valuation of it. Accordingly future
generations must be left the freedom to exercise their own judgements on
conservation. Since these cannot be predicted it becomes important that
they are able at least to exercise the judgement; in brief, they must have
the option of the opportunity of inheriting the heritage as a basis for the
conservation. This could lead to conserving buildings which, while not
particularly valued today, could conceivably be treasured tomorrow. But
clearly future generations cannot be given the opportunity to exercise
their judgement in favour of all the heritage which currently exists,
because this would impose burdens on each succeeding generation in the
protection of the ever growing heritage. There accordingly arises the
strategy of offering choice. Instead of attempting to keep what the
current generation thinks of as 'best', it chooses a selection from across a
wide range (type, use, area, etc.) to maximise the opportunity of satisfying future generations.
All this therefore leads to questions such as how any particular generation makes its valuation of the heritage, what are its priorities in
conservation, how it devotes its necessarily limited resources to ensuring
the transference of a maximum quantum of the heritage.
Not only are such questions inherently difficult to answer for any
individual but they become particularly difficult on behalf of society.
This arises because variations as between segments of society can be
expected in, for example, the following:
(a) majority and minority views;
(b) the old, middle-aged and young;
(c) the wealthy and the poor;
(d) by religion, in a multi-religion society;
(e) by ethnic groups, in a plural society;
(f) by breadth of horizon: is the concern equally with the
heritage which is of importance to the nation, region or
locality; and is there loyalty for the heritage which happens to
be in its country but is valued internationally, and indeed by
religions or ethnic groups other than those of its state?

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10.4.4

Economics in urban conservation


Government

From the preceding section it is apparent that since society as a whole is not
of the scale and constitution of a New England town meeting or Israeli
kibbutz, it can hardly use their means to answer the questions raised on the
heritage. Thus it sets up an institution, government, to do so on its behalf.
While government itself is also a group, it is of quite a different kind to the
above (10.4.2), for reasons such as:
(1) whereas the previous group is typically self appointed and
may represent only themselves, government is elected to
represent a community, local, regional or national;
(2) the purpose of government is not so much to provide a group
expression as to take social/collective decisions on behalf of its
electors, simply because of the difficulties of that group
making decisions on its own;
(3) in the making of such decisions, government is acting on
behalf of the totality of people, including those not qualified
to vote and those (not necessarily a minority) who would have
chosen an alternative government; and also those unborn. In
so doing they must recognise not simply the conservationists
but also those who claim that conservation is a brake on
economic progress; and future generations who will benefit or
suffer from conservation;
(4) despite all the complexities, government is nonetheless forced
into making decisions, because 'the buck stops here'..To
them conservation of the heritage is more than a discussion on
quality and attempt to reach consensus on that quality. It is
part of the machinery for conserving the heritage which
involves, as with other areas of government, day to day
decisions.
But since government cannot make the social valuation itself (because
the utilities created are to individuals) how can it make the public or
collective choice on behalf of this totality of individuals? It would be
pleasant to think that it attempts to do so as a disinterested agent of society
as a whole, attempting to express the 'public interest'. 3 But even if it did so
the methods and techniques it could adopt for the purpose are elusive.4
And in the nature of politics in a society in conflict it hardly attempts to do
so. And what approach to the answers it does adopt (positive) or should
adopt (normative) is in itself the subject of considerable literature. 5 For our

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175

purpose we can but recognise as a starting point the facts from the
machinery set up for identifying cultural value by the preparation of the
inventories (Chapter 5); thereafter we are in the politics of conservation.6

10.5

Market value and the CBH

In economic life the first attempt at identifying value is recourse to the


market: at what price does the object exchange in money terms? But as with
many goods in the economy, the market price is of little help in establishing
the value of the CBH. There are two groups of reasons: general for all
market values and specific to the CBH.
On the first, the market price reflects the level at which the generality of
buyers and sellers at that moment in time wish to exchange some good or
service. As such, in the theory of price, 7 it reflects 'marginal utility' of the
marginal buyer and seller. From this it follows that there will be many
buyers who value the object more than the price they need to pay at that
moment in time: they have consumer surplus. It is the price plus consumer
surplus which will measure 'total utility' or 'use value'.
The second group relates not to the generality of market prices but to the
particular phenomenon of the cultural built heritage. The market price
reflects the value of the property in which the heritage element is to be
found, and not that element in itself. For example, there will be no market
and therefore no market price and value for a ruined castle or a selfstanding column (since there is no profitable use for them and they have
considerable costs of upkeep) and yet their cultural value could be very
considerable. At the other extreme a period house could have a very high
value which is contributed to in part only by its architectural and historic
qualities. It is this integral intangible cultural value which we are estimating: integral in being inseparable from the property itself and intangible in
the sense of elusive of definition, measurement and valuation.
Since the cultural quality is integral with the property, it would be
possible to disentangle its value from the market price by regression
analysis.8 But this is not practicable where the cultural value is an
externality, for tourists or future generations, for then there is no price. In
this regard, the cultural heritage is not an isolated phenomenon. Such
intangibles abound in economic life: the value of a beautiful scenic
landscape for passers by, of a view from a house, of a nuisance from
aeroplane noise, etc. In some instances they are bought and sold with the

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Economics in urban conservation

good in question (the difference in prices when buying a noisy or non-noisy


house) and in others they are not, being externalities (the landscape view to
a passing motorist). But in all cases they come under the category of
'incommensurables', that is, lacking a common basis of comparison; or
extra market goods in not being exchanged in the market and thereby
'unpriced'. 9
But although incommensurable and unpriced, the need to estimate a
value for such goods and services becomes of central significance in those
areas of economic analysis which, by definition, need to have regard to
them, mainly in the areas of public sector economics where the decisions
need to take account of the values even though unpriced. Here there is a
vast body of literature 10 within which we now review approaches to the
valuation of the cultural built heritage.

10.6

Approaches to valuing the CBH

In the general debate on conservation there are arguments for and against
(1.7-8). In this controversy there is often the need to show that conserved
buildings are a resource of benefit to society so that their erosion would
result in socio-economic loss. This leads to the search for a means of making
this assessment. In this regard we are fortunate in having the review of the
problem by Fusco Girard, 11 who introduces the work of Carlo Forte. 12 For
the direct value (private utility) Carlo Forte looked to the market. For the
indirect value, which he termed 'social surplus value', he sought to place a
money value on the attributes of the externality, by following four
procedures:
(a) contribution to the national income in the form of benefits
from the tourist economy, by capitalising the annual net
increase;
(b) value based on 'willingness to pay' for a series of intangibles,
including the direct visits to the cultural heritage itself;
(c) the capitalisation of the annual conservation, maintenance,
custody, etc. expenses of the cultural heritage items, on the
proposition that the value of such resources must be at least
such as to justify their earmarking for this purpose;
(d) the value of resources saved in providing a new building
because of the use of the cultural heritage item for the
purpose.

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177

In essence Carlo Forte was suggesting that the economic value of the
conservation object was to be found by summing its direct value by the
market and its social surplus value through the money valuation of the
externalities.
From this vantage Fusco Girard suggests that the value of the heritage
can be seen in two parts: 13
not only the utility of the resources for the direct uses, but also a more complex
utility, as capacity to satisfy multiple and heterogeneous needs of man in his free
time, in his cultural, productive activities and so on.
In amplification he suggests14 that the components of the total heritage
value can be summed from:
(a) willingness to pay for direct visits, valued by simulation in a
surrogate market;
(b) indirect benefits or costs to those nearby who are impacted by
the conservation (e.g. increased trade for hotels, shops,
transport and car parks);
(c) potential users who have the option to visit from the
continued existence of the heritage;
(d) benefits and costs to future generations whose option for
utility from the heritage is left open.
The third and fourth of these values can be termed 'option' and 'bequest'
value, terms used in environmental economics, especially as relating to
wildlife, to which can be added, for example, altruistic, vicarious or
ideological values.15 As such they come into the category of utility, in that
their expression will satisfy some human need, want or desire. The value to
the individual or the group however complex can thereby be determined on
the willingness to pay for the utility.

10.7 Approaches to grading heritage quality in preparing the


inventory/list
But how can the individual or group assess the utility of the heritage
quality? Here we can learn from the preparation of the inventory (5.2).
Once the kind of object has been decided upon for inclusion in the
inventory the decision must be taken as to quality of the heritage, both as to
its inclusion or exclusion and, once included, its cultural grading. As such
the task falls ultimately to the government which sets up the list with a view

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Economics in urban conservation

to its protection, but it can be contributed to by anyone concerned (e.g.


conservation societies, historians, etc.).
The estimate of value here relates to the inherent and intrinsic qualities
of the CBH. This can be attempted in an entirely judgemental way by the
individual concerned. This is adequate for any decisions which he can
control, for example in planning studies. Limitations soon arise when there
is the need to obtain group valuation of any objects, as when it is necessary
to grade conservation quality in the study of historic centres or to select
buildings or groups for the purpose of the inventory or list. Here something
more formal is required.
Methods for the purpose, based on more than individual judgement,
have evolved over recent years, 16 relying on methods that have been
developed in parallel over a range of disciplines: physical sciences, social
studies, economics, environmental psychology, impact assessment, architecture, landscape and urban and regional planning. 17 The methods have a
common feature. In essence it is to recognise the difficulty of assigning a
single value (utility) to objects with complex attributes (such as the cultural
heritage) and therefore to break this value down into a large number of
sub-elements within which the area of assessment, judgement or valuation
can be narrowed. By then aggregating the values in each sub-element a total
single valuation is derived.
In illustration we present one such method which has been well
articulated in Canada for valuation of the cultural built heritage, 18 designed
to contribute to the formulation of plans and policies for historic buildings,
individually or in groups. The process has three components:
(1) on site survey (inventory) of buildings which are to be
assessed;
(2) judgement or valuation (there called evaluation) to analyse the
cultural quality of the buildings, etc. in the survey;
(3) formulation of conservation plans, with appropriate controls,
incentives, etc. which can be integrated into the urban plan.
We here consider in further detail only the second step, by reference to
Diagram 10.1, which illustrates the core of the method.
On the left are shown supply criteria (A-E), each with sub-criteria
(totalling twenty) each of which has four sub-divisions. There are thus
eighty items for assessment of value for any building. Each attracts its
own score in points, allocated within a predetermined maximum, as
follows.
The five basic criteria are allocated a maximum of 100, the allocation

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179

Building Evaluation Sheet

Name
Location
Reference Number
A Architecture

(Maximum 35)
10
20
8
15
5
10
4
4

1 Style
2 Construction
3 Age
4 Architect
5 Design
6 Interior
B History

(Maximum 25)
25
10
5
25
10
5
20
10
5

7 Person
8 Event
9 Context
C Environment

(Maximum 10)
10
5
2
5
2
1
10
5
2

10 Continuity
11 Setting
12 Landmark
D Usability
13
14
15
16
17

(Maximum 15)

Compatibility
Adaptability
Public
Services
Cost

E Integrity

(Maximum 15)
5
3
1
5
3
2

18 Site
19 Alterations
20 Condition

Evaluated by
Recommendation
Reviewed by
Comments
Approved by
Comments

Total Score
Group
Date

Date
Date

An evaluation sheet appropriate for evaluating with fixed


numerical scores
Diagram 10.1
Evaluation of cultural quality in buildings by points scoring
Source: Kalman (1980) where the reference is to a building evaluation sheet

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Economics in urban conservation

reflecting the purpose of the evaluation. This is illustrated in Diagram 10.1,


which shows how the respective weights can differ, for example between
the commemoration of history or protection for the future.
Maximum points in score
Future
Historical

Architecture
History
Environment
Usability
Integrity

A
B
C
D
E

40
45
5
0
10

35
25
10
15
15

100

100

Each of the sub-criteria has a range of points (as shown) each of which is
graded to represent the following four conditions which show a geometric
rather than arithmetic progression in order to distinguish more sharply
between the different qualities:
E
VG
G
F/P

Excellent
Very Good
Good
Fair or Poor

The final step is the evaluation of the meanings of the scores. In this
regard is had to the following: the purpose of the evaluation; the weightings
between criteria and sub-criteria which have been built in; and the
significance of the conclusion for the conservation policy and plan itself.
This particular approach goes a considerable way to establishing the
value of cultural quality in the hierarchy of scaling techniques. 19 It
expresses total value in points over a stated range at known intervals from a
common origin, thus being an 'interval scale'. As such it contains the
information which would be included in a 'nominal scale5 (just numbers) or
in an ordinal scale (greater or less). But it is not a 'ratio scale', in that the
common point of origin is not fixed, either by assumption or by observation
(e.g. that water freezes at 0 degrees centigrade).
Thus while there is a relative measure of quality it cannot be absolute.
This contrast can be compared to the distinction in economics between
'ordinal' and 'cardinal' utility. The former is sufficient to enable the
preference to be known between two alternatives. The latter enables the
'intensity of preference' or the 'amount of preference' to be established.20

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Another rich feature of the method is the ability to weigh between the
five main categories, the 20 sub-categories and the four sub-divisions in
each. While arbitrary, this ensures some conscious assumptions by the
individual surveyor, and the possibility of achieving some comparability
amongst many surveyors, operating over a large area or period, by setting
up an agreed basis for the comparative weights.
This approach gives a grasp of the total value of heritage quality (and
other similar intangibles) by breaking down the problems. But as a method
it can be improved upon by introducing more analytical and statistical
rigour.21 But even the introduction of rigorous methods can falter on one
basic weakness:22 they assume that the sub-criteria selected for independent measurement are indeed independent in practice. Clearly they are not
so; in a building style, construction and age may well run together as do
design and interior, adaptability and services. However, these interdependent attributes are less of a problem when moving from the current
situation to one that is planned, in the amelioration of the obsolescence with
a view to conservation, as we shall see below (10.9.2). Here what is
important is the relative improvement that can be introduced towards the
conservation objective. For this purpose the interdependence of the
individual attributes of the building or group does not invalidate the
comparison, since the interdependence can be judged in the predicted
scores.

10.8

Role of economics in cultural valuation

Within the above context we now consider how economics can contribute
to valuation of the cultural element in the CBH. 23
As indicated, the first task is to establish the heritage quality, using for
the purpose the knowledge of the array of scholars who have information on
the relevant cultural fields or domains (archaeology, anthropology, history,
religion, architecture, folklore), and the comparative place of the object in
them (11.2). From his discipline alone the economist cannot contribute as
an expert to such cultural valuations. In this field or domain, as in others,
he can register the signals on value (be they derived from buyers and sellers
in the market-place or politicians/bureaucrats in relation to public decisions), i.e. what buyers are prepared to give up for the utility from the
goods and services which are exchanged; or the cost of achieving that utility.
From this his particular contribution is to establish the nature of the costs

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Economics in urban conservation

and benefits to all or particular sectors of the community which will


experience them, and to assess the relationship between such costs and
benefits in order to advise, on particular economic criteria, whether the
expenditure of resources on that particular outlet will be worthwhile in
terms of viability and whether it will represent 'value for money' compared
with expenditure on other outlets.
From this it follows that while the economist can register the 'price' of
goods and services (what people are prepared to pay for them) he has no
direct way of placing an 'economic value' on them, even for tangibles like
motor cars, let alone intangibles such as the cultural heritage. 24 The
purpose of the valuations is to facilitate decisions on conservation of the
heritage by the various modes (restoration, etc.) that are possible. By
posing the question in terms of the values established for the heritage
through the appropriate cultural domains, for comparison with the opportunity costs of the proposed action established by the economist, a way
forward is seen for conservation decisions.
In this approach both sides of the equation cannot be expressed in money
terms. If they could be, then decisions on the ranking of priorities in
conservation would certainly be all the easier. And to this extent the
approach of Forte 25 is certainly in the right direction: of attempting to
measure in money terms the differing benefits and costs attributable to
conservation of the heritage. But that is quite different from showing how
decisions in conservation can be made. In this the approach of Fusco Girard
is nearer the bone: of assessing the social cost of conservation.26 We now
proceed to show how this can be done.

10.9
10.9.1

Opportunity cost and the CBH


The concept

Both Kalman and Nijkamp attempt to establish the value, measured by


points, of the cultural element of the built heritage. But given that their
approach provides reasonable values, how is this to be used in economic
assessment where both cost and value must be considered together? It is
here that the concept of opportunity cost is relevant. In essence this starts
from the statement that there is no objective way of measuring the value of a
good or service to the consumer. An illustration can be given for so tangible
a commodity as a motor-car. Clearly it would not be offered by the

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183

manufacturers unless the price to be paid (the value) exceeded the cost of
production, appropriately defined. Given this, the price is dictated through
the competitive interaction of supply and demand. An individual faced
with the possibility of purchase will buy if the value to him of the use of the
motor (travel, prestige, etc.), judged subjectively, is at least greater than
the cost in money terms. But as regards this cost he will consider not simply
the dollars and cents but what those dollars and cents would buy as an
alternative to expenditure on the motor-car, namely their opportunity cost,
i.e. their worth to him of the goods and services in the best (to him)
alternative use. Indeed, having regard to this, it could be that he would pay
more than the market price if he had to. The excess in price would be the
measure of his consumer surplus in respect of the car.
Thus the opportunity cost of the motor-car is not the money price but
rather what that money could buy for him in goods and services. He is
judging the satisfaction from the motor-car itself only by comparison with
the satisfaction from other commodities which he could pursue with the
given money. These satisfactions are entirely subjective to him. Thus he
has no way of establishing the value of the motor-car. What he can say is
whether or not he would be prepared to pay the money price in terms of
opportunities which would be foregone. And if this reasoning applies to a
motor-car it will so much more apply to an incommensurable like buying a
seat for the opera or the enjoyment of a meal in a restaurant.
We now apply this concept to the valuation of the cultural built
heritage.
10.9.2

Private

In illustration we revert to the example used above (8.3.3) in the economics


of renewal of a listed obsolete residential building in the town centre. We
follow the four options there described but add the following information
on the heritage quality of the building (HV) under the four options. Using
the Kalman method (10.7) the building in its current condition scores
forty-eight points; and using the same method to predict potential heritage
quality following the works in each of the schemes, we reach the following
ranking (with 1 as best).
(a)
(b)
(c)
(d)

Do minimum
Rehabilitation
Restoration
Redevelopment

Score
48
65
82
0

Ranking in HV
3
2
1
4

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Economics in urban conservation

From this ranking the question arises: if heritage value is to be conserved


at each of these levels, what would need to be given up in money value by
the proprietor through not exercising the best commercial option (on his
own or in association with a developer)?
In this instance, the best commercial option is redevelopment, which
would result in the maximum surplus to the land, that is sltv (7.4.3) as
estimated below (13.2). This is the opportunity cost of any of the options. It
is accordingly the common datum in the following comparison:
(a) Do minimum. The property would continue in its present condition so
that no net additional cost would be required except the essentials to keep
out the weather and maintain functioning. The opportunity cost is therefore sliv from the redevelopment plus these essential costs.
(b) Rehabilitation. Here it is assumed that the extra value from reconditioning of the property would be offset by the extra cost of works
(including developers profit) so that the net cost of the rehabilitation would
be zero. The opportunity cost is therefore sltv from the redevelopment.
(c) Restoration. The cost of works will be greater than in rehabilitation
and the potential after use value likely to be less. Accordingly the net added
value of restoration would be minus, so that the opportunity cost would be
this net loss added to sliv from foregoing redevelopment.
This opportunity cost ranking can now be compared with the heritage
value ranking, as follows (with 1 as best):

(a)
(b)
(c)
(d)

Do minimum
Rehabilitation
Restoration
Redevelopment

Heritage value
ranking
3
2
1
4

Opportunity cost
ranking
3
2
4
1

From this it is seen, as might be expected, that the ranking for heritage
value and opportunity cost are not symmetrical. The best commercial
option (i.e. least opportunity cost) results in the lowest ranking of heritage
value; and the highest opportunity cost (restoration) has the highest
ranking in historic value. Thus the proprietor concerned with heritage
value would need to trade off the marginal difference in heritage value and
opportunity cost between the options. For this purpose he would wish to

Valuation of the CBH

20

40

185

60

80

100

HERITAGE VALUE IN POINTS

Diagram 10.2
Private opportunity costs to proprietor of conservation of the heritage
quantify the difference in opportunity cost. The method of so doing, using
our present example, is presented below in respect of certain options
(13.2). Adopting illustrative figures derived that way for sliv we have:

(a)
(b)
(c)
(d)

Do minimum
Rehabilitation
Restoration
Redevelopment

Heritage
value
points
48

65
82
0

Sllv

inm
-0.1
+ 1.2
-1.0
+2.5

Private
opportunity
cost in m.
2.6
1.3
3.5
0

The findings are illustrated in Diagram 10.2. The horizontal axis shows
heritage value in points and the vertical the private opportunity cost in
millions (that is to the proprietor). From the plotting of each of the four
options it is seen that redevelopment has zero opportunity costs with zero
heritage value, whereas restoration has opportunity costs of 3.5 million
and maximum conservation quality. The other two options are between.
Faced with this display what decision would the proprietor take? If
following only commercial objectives he would clearly opt for redevelopment, giving him the maximum surplus of land value. But if his
management objectives tempered commercial gain with the wish to maintain heritage quality, he would consider the marginal financial losses of
pursuing the other options against the marginal gain in conservation
quality. Of these it is likely that he would come down in favour of

186

Economics in urban conservation

rehabilitation, where for a relative loss of 1.3 million he would achieve


high conservation quality.
But whether or not the proprietor includes conservation objectives, the
conservation (planning) authority will. In this it will have regard to many
considerations of which one could be the amount of loss which its
conservation decision would impose upon the proprietor. In this regard it
would look at Diagram 10.2 from the other end of the telescope than the
proprietor. It would wish to avoid the Do Minimum situation and
encourage conservation works, and so be strengthened in the knowledge
that the Do Minimum option would give the proprietor high opportunity
costs. But if it wished to pursue the purest restoration line, it would reflect
that this option would cause even higher opportunity costs (i.e. loss of
potential development value) to the proprietor. Thus it would be reasonable to settle for rehabilitation in the knowledge that this would achieve
high conservation quality with not unreasonable opportunity cost. Provided this option would be financially viable to the proprietor (13.2 below)
this option could well be the basis for the bargain to be struck by proprietor
and authority in pursuing their individual objectives.

10.9.3

Social

In the bargain just described the proprietor is concerned with a private


good (his property) and the authority with a public good, even though
impure (heritage quality attached to the property). In this situation, if the
authority were concerned only with conservation it might enter the
bargaining process as just described. But where it is also the planning
authority (integrated conservation in 6.2) it would be pursuing planning as
well as conservation objectives. While these are somewhat diffuse they can
be acceptably described as having regard to the public interest in the
evolution of our towns and regions (3.1 above).
The criteria for achieving such public interest are notoriously difficult to
both define and follow. One such criterion which is central to our focus has
been introduced: just as the proprietor is concerned with his opportunity
cost (10.9.2) in the conservation objective so should be the community.
Thus the planning authority is concerned to identify the opportunity costs
to its community (the public) of alternative courses of action, in this case of
the conservation options. In this analysis it is necessary to have regard to
total costs and benefits to the proprietor, the conservation authority and
also all other externalities (7.2). This we call the social opportunity cost.

Valuation of the CBH

187

4-

o
>
z
DC

2_

20

40

60

80

100

HERITAGE VALUE IN POINTS

Abbreviations: DM : Do Minimum
RH : Rehabilitation
RS : Restoration
RD : Redevelopment

Diagram 10.3
Social opportunity costs to community of conservation of the heritage
In essence the analysis needs to predict the value as far as possible of the
costs and benefits falling not only on the proprietor but also on the
remainder of the community. A method of so doing is presented below
(Chapters 14 and 15) and also applied to conservation (12.4 and Chapter
16). For our immediate purpose we assume that it has been so applied to
our options. But since so many of the costs and benefits are unpriced and
non-measurable (10.5) we cannot show the opportunity cost in money
terms but only by some points system. This is presented for illustration in
Diagram 10.3 with the ranking (1 is best) brought out in the following
table:
Heritage value
Socialopportunity
in points
cost in ranking
(a)
Do minimum
48
3
(b)
Rehabilitation
65
1
(c)
Restoration
82
2
(d)
Redevelopment
0
4
This ranking it will be seen is different from that derived in terms of
private opportunity cost. That indeed is the conclusion from the case
studies below (Chapter 16). This demonstrates what is apparent: that the
opportunity costs of conservation of the heritage will differ according to the
parties whose costs and benefits are considered, and so would vary between

188

Economics in urban conservation

them. This can be of practical significance in conservation issues. A


common example arises where the benefits to be derived from conservation
fall upon the visitors and tourists but the costs on the local community and
taxpayer. The opportunity cost to the latter is therefore very much larger
than to the former (12.7). Thus a similar analysis of any or all of the sectors
which are impacted would enable the distribution of costs and benefits
throughout the sectors to be seen so that a judgement can be formed in
terms of the equity of the consequences of the conservation decision (12.4).
In conclusion we return to the discussion above on the measure of value of
conservation to society (10.4.3). We see that it is not the economic value in
itself which is critical but the opportunity cost. We accordingly can conclude
with Fusco Girard: in order to measure differences in value to society of the
cultural heritage, that would come from optional conservation decisions, we
need to assess the social cost of the achievement of the differences.27

10.10 How can economics help in the social decision on


conservation?
In the previous section is shown that the role of the economist in
conservation is the identification of the opportunity costs rather than the
cultural value. But economics can go further than this.
All decisions made with regard to the use of resources, whether by private
agencies or governments, and whether based on economic analysis or not,
result in the allocation of resources for the implementation of the decisions
and the distribution of the product of those decisions as between different
individuals and groups. In the former, since resources are scarce in relation
to human needs, society is concerned that they secure maximum output in
order to maximise the satisfaction of needs. This relates to the 'efficiency'
aspects of decisions. And since civilised society works on the presumption
against at least great inequality, it is concerned to see at least some 'equity'
and 'social justice' in distribution. This relates to the 'equity' aspects.
Given this situation, the role of economics is to offer advice and views on
the best use of those resources in terms of both efficiency and equity criteria.
But as a discipline and skill it is well known that economics is much more
helpful in its contribution to efficiency than equity. 28 Indeed there is a view
that economics can offer little on the topic and that the decisions relating to
equity are best made in the political arena. 29
It is also well known about economics that its efficiency maximising tools

Valuation of the CBH

189

are more mature in relation to decisions in the private sector, where the
optimisation of the costs and benefits relate in the main to the direct
interests of the agency involved in the economic activity. The reason for
this greater competence is that, with the relatively recent growth in the
public sector, economics has traditionally concentrated most on the private
sector. This is compounded by the fact that while the private sector
operates in the market place, which offers signals through prices which
economists use as a basis for their analysis, in the public sector the market
place is not used in the same way, and the signals are either weaker or
non-existent. They are weaker where the public sector provides goods and
services for exchange (as in a state industry providing coal, steel or railway
services). They barely exist where public agencies provide public goods or
impose public (social) control: where there is free access by any member of
the public without specific payment (the 'free rider')? with the costs being
met from general taxation (e.g. for open spaces, libraries or museums
without charge); or where government applies policies in regulation and
control, as in conservation of the CBH.
While the existence of the public sector has its unassailable existence in
the modern economy, the absence of price signals do lead to inefficiency, as
the East Europe economies recognise. It is to remedy this situation that the
'liberal/market economists' devote so much ingenuity to 'deregulate and
privatise' the public sector, and where this remains to strengthen market
principles. 30
But even where the market is introduced into the public sector it cannot
resolve the 'efficiency' and 'equity' requirements. For these reasons,
economic analysis has been applied and cost-benefit analysis vigorously
developed, over the last half-century or so, in relation to many goods and
services which have no price in the market place, such as water resources,
highways, public transport, education, health, defence, etc. 31 This enables
economics to help in social decisions, through the adaptation of economic
analysis and techniques for the problems posed. Here we are concerned
only with one type of problem: accepting that there are not the resources for
protecting all the CBH, for which element of the CBH should government
intervene in resisting its erosion? We turn to the relevant analytic tools
below (Chapter 14).

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10.11 The valuation in its decision context


10.11.1 Approach
Having described the nature of value (10.2) and then the decision context
(10.3 and 10.4) we now demonstrate how the valuation is in fact
approached in three different situations in the conservation of the CBH.
These will show how these valuations need to be adapted to the decision
context.
10.11.2 Valuing conservation quality for plan and project evaluation:
worthwhileness
As just indicated, to assess worthwhileness it is necessary to have common
values for the costs and the benefits, namely opportunity costs.
As regards costs, the typical approach is to assume that the resource costs
for the conservation work will be equal to their money costs in the market,
for they need to be bid away from other contemporary building and
engineering operations. As regards the value of the cultural quality, the
opportunity cost is the value of the resources which are given up to achieve
that particular heritage opportunity. How this is approached in valuation
terms is described above (10.9).
10.11.3 Ranking of priority in conservation with given budget
As seen above (9.6) having defined the conservation projects there is then
the need by the planning or conservation authority to rank them in terms of
priority for execution within an overall total or annual budget. In this case
by definition each of the projects would be 'worthwhile' (10.11.2) for
otherwise it would not be a candidate for the priority selection.
Since the quality cannot be valued directly in money terms (10.5-10.6) it
can be measured by the opportunity cost of the heritage value (10.9) based
on the quality grading on the points system (10.7). Clearly the latter
approach is not placing common values on the cost and benefit side but it
will serve the purpose, provided that we are concerned with reasonably
homogeneous cultural objects so that there could be seen to be a co-relation
between the inherent or intrinsic qualities and their opportunity cost in the
minds of the decision makers.

Valuation of the CBH


10.11.4

191

Project implementation

So far we have been dealing with planning for conservation and now come
to project implementation, as set out above (9.7-9.9). Here the decision
relates to the carrying out of the project itself which involves decisions by
the entrepreneur (private or public) and the conservation and planning
authorities giving their consent.
The values with which the former is concerned are those relating to the
developer of the property, as sketched out above (8.3); in brief, he is
concerned with the costs of the project to himself and the market values
which he would derive, leading to the assessment of financial loss or gain.
The conservation authority is concerned with the difference to the heritage
quality which would emerge from the options available to the entrepreneur;
in brief it is concerned with maintaining the maximum heritage quality
which is practicable and resisting its erosion. The planning authority, in
integrated conservation, would reflect the values of the conservation
authority. But it might differ in attitude towards the uses which will
emerge; in brief these must accord also with its other planning objectives.
From this analysis of the options (either presented all at once or
sequentially) the bargain will be struck, with each party striving for its best
position in the light of its objectives. In this it would need to consider also
the other interests with which it is concerned, for example, the developer
with his financier and shareholders; the conservation authority with the
pressure groups; the planning authority with the public at large.

11 Screening of the
inventory or list

11.1

The issue

From the preceding (Chapter 10) it is apparent that some identification of


comparative heritage value is needed if 'heritage value for money' is to be
achieved in conservation. Since some such identification already exists in
the preparation of inventories (for ancient monuments, archaeological
areas, conservation areas and listed buildings) the question arises: does not
the inventory already provide the information?
The answer varies for the four items. Monuments are generally well
covered because of their relative scarcity and age. There is only a small
inventory for archaeological areas for, by definition, they have not all been
explored. Conservation areas are intended as broad brush indicators,
within which there is flexibility of interpretation. It is in the buildings and
other specific objects that the real difficulty arises, for they are so
numerous, are very disparate in nature and their inclusion has great
significance for owners and developers, since each can be the focus of the
development/conservation conflict. We therefore concentrate on them in
this chapter, within the framework of British practice. To what extent is
the inventory a conclusive statement of comparative heritage tenure?

11.2

Nature and purpose of the list

In practice in Britain the inventory of buildings, etc. is the basis for the
official list (5.2) whose prime purpose is to convey a warning, backed by
legislative teeth, to those concerned that they own/occupy a building, etc.
with 'heritage tenure' which must be respected. For this purpose, compared with the approach above (10.7), a fairly crude valuation and
categorisation of the heritage quality is all that is required: indeed the

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193

content of the list for any item is confined to certain particulars which are of
sufficient architectural and historic interest to justify listing and do not
purport to be comprehensive. The list cannot be up to date at any moment
in time for the circumstances affecting its items are continually changing
(e.g. condition of the building, property values, environment). Indeed the
changes make necessary continuous reassessment of the list with additions
and deletions, a monitoring exercise of some dimension.
In practice, however, the purpose and limitations of the inventory, as
just described, are often forgotten. The list tends to become sacrosanct as a
weapon of the conservation policy and is treated as a bastion which must be
defended against all anti-conservation erosion. The reasons for this are
again clear. The development pressures against the objects on the list are
heavy; and compared with the conservation authorities the development
industry has considerable resources (manpower and financial) with which
to press its case against conservation. This leads to the conservationists
fighting resolutely for each item on the list in the hope and expectation that
they will win some even if they lose others.
But in such an approach the 'best is the enemy of the good'. Without the
value for money approach in the definition of priorities maximum conservation values will not be achieved. Instead, energies are spent in confrontation as opposed to securing worthwhile conservation bargains. Value for
money is not being achieved where the 'money' is limited as are the skills of
craftsmen and the time and energy of often volunteer conservation
enthusiasts.
This leads the then official responsible for listing to say:
The paradox emerges that a more selective attitude to what is to be preserved
coupled with a greater concern for its true preservation may release resources to
be spread over a wider field and a saving of a higher proportion of the true
heritage. 1
and to conclude:
Evaluation, then, is the key process: a reasoned evaluation that tells future
generations that we have given our consideration to each item and valued it
sufficiently highly in the context of our historic inheritance to be worthy of
preservation. Curiously, in most stated philosophies that are accepted or preached
today this vital initial process is either ignored or omitted. A mere statement that it
is in the national interest that such and such should be preserved is considered
sufficient. I suggest that as time passes and the heritage becomes more complex as
each generation adds the products of its own particular culture this, if it ever was
valid, becomes less and less so. It becomes an umbrella to shelter beneath, a mere

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screen to hide the fact that there has been no evaluation in any depth, permitting
confused thinking behind the decisions to preserve.2
Given this approach the question arises: how can the inventory, prepared
as a basis of the umbrella warning in the list, be screened to make it more
useful in conveying realistic heritage value in the list? Three possibilities
exist which are now explored.

11.3

11.3.1

Screening the inventory

Prior consultation

As brought out above (5.3) in almost all countries the owner of a building
must be notified of the intention to list, in most cases his consent being
required, whereas in England there is notification after the event without
consultation. Furthermore, the listing process is carried on in comparative
secrecy. This means that there is not available at the time of listing
pertinent and relevant information which could be offered by the owner,
both on the property itself and on his views and intentions. If available, it
would provide an early warning system to the owner on the possibilities of
listing, so that he would be alerted in his management decisions. Clearly
this could open up the prospect of owners taking avoidance action (e.g.
demolition) so that the notification would need to be accompanied by some
interim legal restraint on their freedom.
Whatever the merits of the present practice for individual properties,
there clearly is some advantage in prior consultation with owners of large
holdings of period buildings so that management, conservation and planning policies can be evolved in concert.
11.3.2

Planning proposals

Where the items on the inventory are seen as discrete elements in the urban
area, they tend to be regarded as museum pieces, that is unaffected by the
changing world around them. But given that the conservationists wish to
see their policies 'integrated with planning' (6.2) such a stand is unrealistic.
What becomes significant is not simply the inherent quality of the listed
items, however imperfectly measured or valued, but also the proposals of
the planning authorities for the future of the area within which the listed
item stands.

Screening of the inventory or list

195

Accordingly the inventory should be screened by the considerations


which were introduced above with regard to the macro planning of the
urban area (6.4.1): for example, the likelihood of obsolescence of varying
kinds being retarded or speeded up, having regard to the planned future;
the array of uses which such a future might find most suitable for the listed
item; the planned changes in the surrounding areas which would
strengthen or weaken the future of the listed items.

11.3.3

Economics

Having refined the inventory with regard to the planned future it needs
screening from the economic viewpoint. The level of such screening would
be related to the macro level of planning (6.4.1) for it would be impracticable to go into considerable depth at the micro level (6.4.2). Furthermore
the variables of concern (cost and value) will be liable to continuing change,
so that decisions at the micro level could be premature; where there is
doubt it is preferable to retain the heritage items on the list, with the
presumption that they should be conserved, unless there are compelling
economic reasons for their deletion.
Against this background the macro economic screening would take
account of the following tests, for which consultation with owners and
occupiers would be desirable:
1 Specification of the current situation, e.g. description of use,
occupier, tenure, owners of the activities taking place, of
inter-dependence with surrounding area.
2 Investigation of the degree to which the heritage element is
'obsolete', using the framework described above (1.6) or some
others.
3 Investigate the possibilities of remedying the obsolescence.
This would be carried out in relation both to the current use
as described, and also in respect of any reasonable potential
use, which would accord with both the views of the owner of
the property and of the planning authority.
4 Analyse these potential uses in terms of feasibility to
occupiers and owners, on the lines described above (5.5) but
in broad terms only. The aim would be to show those items
on the inventory which are clearly non-viable in management
terms, nor likely to be so.
From the preceding would emerge conclusions as to whether or not items

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should remain on the inventory. It would have another purpose. It would


point to possible conservation action, e.g. the desirability of management
measures which would aim at deferring growing obsolescence, advancing
priority in conservation measures, avoiding deterioration of the fabric or
attracting public or private funds before the condition of the item became
irreversible. In this way the list would not be just a static conservation
warning but also a diagnostic planning tool.
Such screening would have a useful by-product, of facilitating some
macro analysis of the size of the CBH, and the types of objects, which are
under the protective umbrella. This is needed because there is no measure
of the amount of resources which are implicitly earmarked for the
protection of the objects on the list for comparison with what is likely to be
available. It is this which gives rise to the apprehension that the current
generation may be too heavily saddled with the obligations for protection.
No one knows whether it is or not. The apprehension is fuelled by the fact
that the number of objects on the list will increase sharply: the DOE
estimates that the current number of objects (368,000 in England at
December 1985) could rise to about 500,000 when the resurvey of buildings
is completed by the end of 1987.3 But there is a suggestion that the figures
are a considerable underestimate, because they relate to entries, with one
entry perhaps relating to a complete square of houses, leading to the view
that the total figure for buildings could not be less than about one million
and the conclusion t h a t ' . . . it is increasingly difficult to defend the whole
system of historic building protection against the criticism that it is
arbitrary and capricious'. 4 Furthermore, such screening could be the
beginning of a monitoring and review of the list and the administrative
actions taken on it.

11.4
11.4.1

Economic criteria for development affecting heritage quality


The issue

A list screened even in the way described will not fully reflect the micro
economics of any particular item, either at the time of screening or as
predicted into the future. But since such micro economics is critically
important for the economic viability of the items the shielding of the list
against possible change could in certain instances undermine the very
objectives of the conservation programme. Resources could be aimed at

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197

projects which were economically non-viable, and therefore be wasted in


terms of the main objective (conserving the heritage). By the same token,
such resources could not be employed in alternative projects, which were
economically viable. The very act of maintaining a non-feasible objective is
counter-productive; it could produce blight and waste of resources and
frustration of the conservation objective.
Given the decision not to apply micro-economic feasibility testing to the
list when prepared (for the reasons argued above in 11.3.3), and given the
desirability of doing so before commitment to implementation, the question arises: when would the right time be? Clearly this should not be later
than the firming up of the conservation projects, prior to their introduction
into the programme. The nature of the feasibility tests, and on whom they
would fall, would clearly vary from project to project according to the
agency which is visualised for the implementation: property owners,
occupiers or conservation agency. Where subsidy could be involved then
central or local government would be party to the analysis. But the need
for the tests could arise before or after this: when development proposals
are made and require permission in respect of a listed item (by the owner
or perhaps by a public authority seeking to carry out public improvements).
Where there is a development proposal, the line could be taken by the
conservation authority (and often is) that the object is on the list and
therefore refusal must be given to any works which will diminish its
heritage quality. Clearly such an approach might be in order if the list itself
has been prepared and kept up to date having regard to all the development, planning and economic considerations which would arise on the
specific case (11.2). But equally clearly, from the discussion above (11.3)
this cannot be. Accordingly it is certainly necessary, as in present practice,
to consider each case on its merits at the time of the proposal to introduce
change. We show how this can be done in relation to micro economics: first
in respect of direct costs and benefits to the owner/developer, and then the
indirect costs and benefits to the wider community. In practice these
considerations, and thereby the economic calculus, would be influenced by
the conditions in law affecting the grant of permission for deleting or
demolishing the heritage (the listed building consent in British practice).5
But here we do not reflect them.

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11.4.2

Economics in urban conservation


The owner/developer

In the typical situation, the economic considerations at issue are those


discussed above, relating to the use of the building, its degree of obsolescence and proposals for rehabilitation or redevelopment (8.3). The
economic questions then become:
(a) Is it economically viable for the owner to continue using and
maintaining the building with the conservation quality
retained?
(b) If not, what adaptation would be viable, in the structure
and/or uses and, given the adaptation, what heritage quality
would remain?
(c) If not, is there a case for financial support to ensure viability
and so conserve the heritage?
(d) If not, should the decision be in favour of redevelopment
now, or should there be postponement in the expectation that
conditions under (b) will run in favour of a satisfactory
bargain?
Taking each in turn:
(a) If continued use is not viable (q/s is negative) then the heritage
is at risk. But if such use is viable without adaptation (o/s is
positive) then a claim on economic grounds (e.g. loss of
potential development value) for development to erode the
heritage could not be sustained. But there could be a claim
for compensation or loss of development value, if accepted in
the law of the country (12.5).
(b) If continued use is not viable, or the owner would find
adaptation more profitable (7.5.5), then there arises the trade
off between the achievement of a satisfactory level of viability
while at the same time not diminishing the heritage quality
but hopefully enhancing it. This can be considered the trade
off in terms of 'value for money', with the value being prized
by the conservation authority in heritage quality and the
money being that of the developer. On the value side there
could arise in the minds of the conservation authority the
architectural quality of the new product, particularly in a
conservation area. Although providing no heritage quality, its
excellence compared to that existing could in certain cases
compensate for loss in heritage quality.

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199

(c) Having established that the best conservation bargain in (b)


will not reflect adequate heritage quality the authority must
consider whether it wishes to 'buy' additional quality through
subsidy. Here again there is the 'value for money' trade off.
(d) If the subsidy is not forthcoming, or insufficient, the
owner/developer will press for permission to adapt at
unacceptable sacrifice of heritage quality, or redevelop with
its complete destruction. At that moment in time the
economic grounds in his claim would be irresistible.
But into the trade off comes an issue which is special (although not
unique) to the CBH: that of irreversibility and non-substitutability. This
adds another dimension where high cultural quality is at risk. To this there
could be varied approaches. While the heritage quality in the particular
building would be an absolute loss, is it one of a number of comparable
buildings which could be saved as a substitute? If not, is it possible to add a
value for irreversibility on the approach: would the loss of the heritage
value in question be worth the benefits accruing from the proposal to erode
it? 6 Are there elements in the valuations which have led to the conclusion
(e.g. construction costs, other use values, demand for new uses) which
could be expected to change in the relatively near future, so justifying a
postponement of the decision?
11.4.3

The community

So far we have considered the trade off in two dimensions only: the direct
costs and benefits to the owner/developer and the heritage value to the
conservation authority. But there are at least three others.
First, while conservation has been integrated in planning there could be
divergence between conservation and planning objectives in a particular
instance, which in practice could be expressed by different divisions in the
local authority planning department (e.g. the adaptation of a listed building
requiring for viability a use which is not favoured by planning policy).
Insofar as the use preferred for conservation would be less beneficial to the
community than the preferred planning policy, there is a corresponding
cost to the community in the conservation option. Second, whereas the
conservation issue on the particular building could be clear, there could be
external repercussions on conservation issues elsewhere. For example,
would the change proposed by the developer have beneficial or adverse
impacts on the surrounding area where the building in question is part of a

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Economics in urban conservation

group which has conservation quality, or is part of the setting for other
buildings of quality on the list?
Third, in the same vein, the direct costs and benefits to the owner/
developer and conservation authority will typically exclude other kinds of
indirect costs and benefits to the community. These could be 'local5 (the
beneficial or adverse impact on the current use and potential use of
surrounding non-conservation property); or affecting the whole urban area
and its region (the undermining of the urban economy through severe
conservation constraint).7
These wider dimensions clearly involve costs and benefits which are
outside the direct ones to the owner/developer. Their analysis thus needs to
be wider in scope than the calculus discussed so far (Chapters 7 and 8).
Certain tools are available for the purpose. To these we return below
(Chapters 14 and 15) with some case studies in illustration of their use
(Chapter 16).

12 Who benefits and who


loses from conservation
oftheCBH?

12.1

The issue

As brought out above (4.4-4.5) the CBH is a singular resource. While being
property which is owned and managed like other real estate, government
claims via 'heritage tenure' of its cultural quality, which it proposes to
conserve for the public, contemporary and prospective, means that the
owners of the property can only manage it subject to constraints. But
while the cultural element is taken by government in this way, the heritage
is not singular in being a public good any more than the general built
environment. In both the interior of the property is clearly private (one
person's consumption precludes the consumption of the same unit by
another) with the exterior being public (one person's consumption does not
reduce its availability to anyone else) and once the good is provided to the
public gaze the producer is unable to prevent anyone from consuming it. 1
The responsibility for the singularity clearly falls at the door of government, acting on behalf of the community. But government does not pick up
the tab for all extra costs. Their impact falls on the property owners, private
or public. Here is something of an anomaly. By definition, conservation is
promoted and undertaken for the benefit of a wide contemporary public,
often foreign to the country in which the heritage is to be found (visitors
and tourists) and also for the benefit of the future generations. But the costs
of the conservation are by comparison localised. They fall on the owners
and occupiers of the property and also on the community of the administrative area in which the property happens to be. In terms of management the
singularity results in:
while the management objectives of the owner/occupier
(private or public) of the listed building will reflect the heritage
quality of the building (insofar as it has utility to them), they

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Economics in urban conservation


will not necessarily reflect the heritage value as seen by government, for current and future generations;
the imposition of the 'heritage tenure' will thus constrain the
management decisions of the owner/occupier. While the
government is imposing its values, the owner/occupier is
bearing the cost, as are other members of the community who
would value the use from a replacement building rather than
the listed building;
where the owner needs subsidy to conserve the building for its
heritage quality, he is asking taxpayers to pay for the 'utility5 to
them of the conservation quality, for the benefit of current and
future generations;
these generations will include people who are not nationals but
who value the heritage quality sufficiently to visit it, specifically
or as tourists.

In this complex situation we are thus led to the following questions in


relation to the conservation of the CBH:
how
who
how
who
how

to assess the true costs and benefits?


benefits and who loses?
are the benefits and costs distributed?
should pay the cost?
much should he pay?

It is these issues which are discussed in this chapter, concluding with an


introduction to the special case of tourism and conservation.

12.2

How to assess the true costs and benefits?

We have seen above (4.6) that the benefits from conservation stem from the
stand taken by conservationists, and government in their support, that
there should be continuity with change in our urban environment and
activities. The beneficiaries are those who would lose if there were no
attempts at conservation, that is owners/occupiers, the local community
and visitors and succeeding generations.
But the costs are not distributed evenly amongst these beneficiaries. On
whom do they fall? It is natural to regard the costs of conservation as those
extra direct money costs falling on the occupiers/owners of the property

Who benefits and loses from conservation?

203

concerned, or on government from its financial contributions. This is not


quite so. The true costs of the conservation are the differences to the owner/
occupier of the financial inputs (capital and operating) between the nonconservation/conservation options against which is offset the difference in
financial benefits. Assuming that both these options derive from analysis
from which they are shown to be the best under the options, the difference
measures what we called above private opportunity cost (10.9.2). This could
be either positive or negative.
We also showed above (10.9.3) that alongside the costs and benefits
falling on those directly involved with any particular project there are the
indirect costs and benefits falling on the community as a whole. These we
called the social opportunity costs, which again can be positive or negative.
In essence then the true cost of conservation is the social opportunity cost,
seen from the viewpoint of those who benefit or lose from the conservation.
The true benefits of conservation are the heritage values which would be lost if
action is taken to erode the heritage. These are the assessment measures.

12.3 Who benefits and who loses?


In order to establish who benefits and who loses we must recognise that
conservation does not come about through general statements of policies,
goals, or ideology, but rather through the measures in practice which
impose the bite of the conservation constraint and so are the means of
achieving the conservation benefits and imposing the costs. We examine
these measures in turn (3.1.3). 2
(a) General influence. This measure attempts to influence owners and
occupiers to adopt the 'conservation ethic' in their management where
otherwise they would not do so. Since any such adoption would be voluntary on their part, they will have decided voluntarily to absorb any costs.
(b) Urban and regional plan making. The provisions in plans (from policies to programmes) will influence the owners and occupiers of heritage
items, to at least the degree of making it difficult for them to pursue contrary management objectives, and so impose costs. For example, if a listed
building be included in a residential area, so that commercial uses are inhibited, there would be less prospects of achieving commercial values in the
building to better sustain the conservation costs.

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Economics in urban conservation

(c) Designation for conservation. Where there is specific designation


for conservation, e.g. through listing, there is immediate impact on the
management freedom of the owner/occupier and therefore diminution of
value.
(d) Direct control. While the preceding two measures cause cost in the
sense of diminution of value through 'blight', actual loss to the owner/
occupier is experienced when a specific refusal is given to a planning application for development. If such refusal persists (including on any appeal to
higher authority) then there is an elimination of the hope value which
would be contingent on the possibility of a permission and the reduction in
the value of the asset, at least until hope is revived.
(e) Financial intervention in the market. Such direct costs falling on
the owner/occupier can be eased by financial subsidy from government.
This can take several forms. Direct subsidy (grants, loans at favourable
rates or tax rebates) reduces the financial costs of the works to the owner/
occupier (thus making conservation more viable) and passes it onto
government (the local and central taxpayer at large). This occurs also on
payment of compensation for loss of development value suffered by the
owner (12.5.2).
(f) Environmental improvement. Here the local authority finds it desirable or necessary to invest in improving the local environment, so enhancing the values that would be obtained by the private owners following conservation. This is an indirect cash benefit to them at local authority cost.
(g) Government occupation. Where the key to the successful conservation is finding a new use for old but such uses are difficult to find,
government has the opportunity of filling the gap by occupying the building for one or other of its activities. Where such occupation is not one that
they would choose in the light of alternatives they are taking a second best
choice, in that the occupation conditions could be inferior for the price
which they are called upon to pay. In this way they are financially subsidising the owner in order to assist in the conservation. The extra financial
costs would be met out of taxation, so spreading to the public at large. And
the inferior occupational qualities would be a burden to the individual
public servants and departments who need to cope in the less functionally
efficient property. 3

Who benefits and loses from conservation?

205

(h) Government ownership. In this instance government is accepting


that conservation would not ensue if left to the current owners/occupiers
and that they themselves must buy in order to retain quality. The financial
costs would be passed to taxpayers.
(i) Government co-ordination. Since conservation battles of the various
kinds are carried out property by property, it is likely that there will be lack
of co-ordination. For example, government in seeking accommodation for
its various departments may not have access to the inventory of property
earmarked for conservation, and thereby not be in a position to elect to buy
or occupy property where this would most advance the conservation
objectives. Such co-ordination should make for greater efficiency than
currently prevails in the conservation sub-market, so that the costs of
conservation overall should be reduced to the benefit of conservation.
This review of implementation measures and their benefit/cost incidence
demonstrates the spectrum between the extremes of general influence and
government co-ordination. There are attempts to improve the working of
the conservation sub-market without significantly adding to public sector
costs (a); powers of regulation (b, c, d); fiscal intervention (e); direct
investment (f); government participation (g, h, i). We thus have a
combination of what has been called the public use of private interest and of
direct government intervention.

12.4

The sectoral distribution of the costs and benefits

From the preceding it is seen that the costs and benefits of conservation are
not symmetrical in their incidence, neither on contemporary people nor
between generations. We now examine this incidence more closely by
reference to Table 12.1, 4 which shows a means of tracing the incidence of
conservation. For demonstration we use an example where conservation (of
a building, group or area) is compared with the alternative of clearance and
redevelopment.
Since the impact will not be uniform on the community, the table lists
various sectors involved, namely the producers and operators of relevant
buildings in the urban system (1,2) and those who consume the services
generated (7, 8). For each of the sectors is briefly described the nature of
the impact of the conservation proposal (3 and 9) and space is provided for

Table 12.1 Distribution of benefits and costs of conservation


Producers and operators
Impact of conservation
Description
Type R C

Sector

Sector

Consumers
Impact of conservation
Description
Type R C

5 6

7
9
11

13
15

17

Owners of CBH
property
Owners of property
- nearby
- general
Local government
- on site
- off site
Local planning
authority
Local conservation
agencies
Central conservation
authority
- loans
- grants
Central government
conservation authority
Local economy
- goods
- services
National economy
- taxation revenue
- taxation costs
- imports
- prices
- maintenance

Property values

Property values

AF

Costs

Operating costs

Capital and
operating costs

Capital and
operating costs

D
D

Operating costs

Employment

AR

10
2

Occupiers of property Occupation values

Occupiers of property
Occupation values
- nearby
- general
6 Local services
Occupier

AR
AR
AR

AF

Local ratepayers

Rate assessments

14 Visitors and tourists Experience of heritage AR

Economic flows

16 Local community
- residents
- workforce

Environment
Culture
Employment

AR
AR

Heritage prestige
Tax assessment

I
AF

Opportunities for
heritage

AR
18

20

National
- citizens
- taxpayers
Posterity

Notes: 1 , 3 : 'Owners' include developers, financiers, etc.


6
: Local services include shops, hotels, restaurants, etc.
9
: Local conservation agencies include the local authority, voluntary bodies, etc.
R : Redevelopment
C : Conservation

11 12

208

Economics in urban conservation

the judgement as to whether these sectors would be better off or worse off
(plus or minus) when conservation (C in columns 6 and 12) is compared
with the redevelopment (R in columns 5 and 11).
Finally the table brings out (columns 4 and 10) that the costs and benefits
are not in themselves of a uniform kind and significance, so also affecting
incidence. This is achieved by distinguishing between the four types
(columns 4 and 10) namely:
experienced directly by the sectors;
Direct
(D)
Indirect
experienced indirectly by the sectors;
(I)
Associated real
real costs and benefits falling on the
(AR)
remainder of the community;
Associated financial (AF)
not real but transfer costs and benefits
falling on the remainder of the community.
We thus have here an indication in principle of the variety of sectors who
may be involved in decisions whether or not to conserve, be they directly
concerned with the property in question or with impacts outside. For
example, the owners and occupiers of property outside that conserved (3,
4) could get benefits from the conservation which are transfer costs (in fact
other property owners would lose) but would not pay for the rise in value
except perhaps through increased taxation assessment. The authorities
concerned with conservation (7-13) will pay for it financially in the
administrative machinery which is set up and perhaps through subsidies, to
the real benefit of the local and wider community (1420). The visitors and
tourists to the locality (14) will receive the benefits from experiencing the
heritage but will not be paying directly for it.

12.5

Who should pay the cost?5

12.5.1

T h e issue

From the analysis just made on the incidence of the costs of conservation, it
is clear that there are two broad groups who bear the costs directly (i.e. 1
and 2):
(1) the owners/occupiers of property,
(2) the public at large via government from direct or indirect
intervention (i.e. 5-13, 8 and 18).
If these be the costs which are borne directly then the other costs and
benefits shown in Table 12.1 amount to externalities, namely the costs

Who benefits and loses from conservation?

209

which cannot be recouped and the benefits which cannot be charged for.
The distinction between the two in any country and at any moment in time
is a matter for the law (statute, administrative law and interpretation by the
courts). Clearly such law is not enduring; even written constitutions are
subject to continuing interpretation and unwritten constitutions are continually amended by new laws. Thus it is practicable for a change in the law
to shift the burden of costs from those who previously bore them to others
who did not; it can internalise the externalities. In relation to conservation
there is an analogy to the discussion on amenity rights by Mishan. 6 Given
that the conservation quality is part of real property (in public or private
ownership), the state in introducing legislation which creates heritage
tenure is clearly taking away proprietary rights. This results in costs, which
may be offset if the new law insists that the state needs to compensate for
the taking of such rights, or not, if the new law does not so insist.
From this it follows that any government intervention at any moment in
time will result in some redistribution of costs and benefits compared with
what previously prevailed. Where this redistribution would result in a
situation vis-a-vis property owners which government considers to be
unjust, it can make provisions for adjustment by what has come to be called
compensation-betterment in Britain. In this they answer the question in
relation to the new conservation measures: who should pay?
As regards (1), should the state compensate those property interests
which suffer from social control aimed at conservation? As regards (2),
since there are direct beneficiaries from conservation (as opposed to the
general beneficiary of the community at large and its descendants) should
the state seek to collect from them via betterment towards the costs of
conservation? The answers to the questions will have consequences for
conservation policy as a financial feedback on the costs to the various
parties concerned.
Underlying the answers to the questions are principles of ethics,
political ideology, etc. 7 Some are:
owners of heritage property should not be denied the rights
available to others, so that any loss incurred should be compensated by the rest of the community;
but where this loss is accompanied by increase in value to other
owners, a betterment charge should be levied, to offset the
burden on the rest of the community;
since the benefit is for posterity, the community finding the

210

Economics in urban conservation


compensation should be that of the future, so that the cost to the
contemporary generation should be met out of long-term loans
to be paid off by future generations.

It is such principles we now discuss.8

12.5.2

Compensation

Burdens on the owner could arise, and thereby a claim for compensation, if
the conservation proposal for the particular property was restoration to a
historical kind of use for which contemporary demand was absent. But
insofar as government would accept a use for which the property is suited,
provided the fabric is conserved, then no compensation need arise, if the
owner still has a surplus of benefit over cost. Indeed, this is the general
position that government tries to reach, since the objective of conservation
without public subsidy can only be achieved if the users of the property are
able to generate sufficient income to cover the costs of conservation.
But another situation arises where the rights in question relate to
development as opposed to current use. At stake here are the development
rights which the owner would otherwise enjoy, e.g. in building around the
property (and so damaging its character and eroding the heritage) or
pulling it down for redevelopment. Such sterilisation of an archaeological
site for building, or denial of the full development value of the site, could
give rise to financial loss. But by the same token, if this is to be fully
compensated then the financial costs falling on government would be very
heavy and so very inimical to the conservation programme. And this is
made worse by the normal situation whereby under planning legislation it
is the local authority which needs to bear the compensation costs whereas
by definition the protection of the heritage is generally for the nation as a
whole. Accordingly, the state's attitude to this situation is critical, since
different attitudes will produce different answers for conserving the CBH,
as the following will show.
On the one hand the state could say that even though the property is part
of the built heritage the owners should retain the freedom tQ buy and sell as
they wish, so that if 'tenure heritage' is to be exercised compensation must
flow. Alternatively it could take the view that because of the 'public
interest' in conserving the heritage, the owner is restricted in his freedom
and should take on the role of guardian of the heritage, must accept the
financial penalties which flow from it and have no compensation for loss of

Who benefits and loses from conservation?

211

rights. In such a case the conservation objectives are being achieved at the
cost of the owners and not of the state, that is the public at large. Two
examples will illustrate the contrast.
In Britain in respect of development rights a distinction is made between
those which can be enjoyed in relation to the 'existing' or 'current' use (a
term which is less a matter of fact than of legal definition) and those which
could be enjoyed were the property to be developed (that is having a material
change in use, with or without the introduction of physical development). 9
In broad terms, the former rights (what exists) cannot be infringed without
compensation, but the latter rights are considered to be the property of the
state and can accordingly only be enjoyed on a specific permit of local or
central government. From this it follows that if the 'development rights'
are resisted by the state then no compensation is payable. Thus refusal to
allow the alteration or demolition of buildings in the CBH, for the use of the
development rights, does not attract compensation; despite the financial
loss the owner bears these costs of conservation.10
In the United States, a simple interpretation of the law relating to this
issue would appear to lead in the same direction. It has been established
that the state (federal, state and local levels) have 'police power', which
enables it to exercise control over property in the public interest without
compensation. Taken on its face value, this would appear to give the state
the right to insist that heritage quality in property be protected without
compensation. However this is not so clear. Where there is a 'taking' of
property then 'just compensation' is payable under the Fifth and Fourteenth Amendment of the Constitution. The dividing line between those
cases where the regulation is valid without compensation, and where it
constitutes a taking and is therefore compensatable, is elusive: 'a definition
that will satisfy most everyone in close cases has eluded consensus'. 11 In
practice it is recognised that attempts to preserve the CBH (landmark
buildings) is liable to compensation. This principle is demonstrated by a
ruling of the U.S. Supreme Court when the Penn Central Transportation
Company wanted to build a five-storey office tower above a landmark
building, the Grand Central Terminal in New York. The Court decreed
that the protection of the Station under the New York City's Landmarks
Preservation Law was a valid exercise of the local governments police
power and that like zoning legislation it did not amount to a 'taking' that
would require just compensation. However, one consideration in the ruling
was that under this Law the owner could transfer and so sell the denied
development rights to other properties. 12 These, in New York, must be

212

Economics in urban conservation

adjacent but for example in Chicago they can be in any other designated
area. This way the landmark can be protected without local financial
burden, as can indeed other land needing protection (e.g. open space in
New Jersey, or ecological resources in Puerto Rico). Thus in fact the 'police
power' control is compensatible in this way.

12.5.3

Betterment

As in any development project, there are parties outside the conservation


project itself who receive benefit, alongside others who suffer cost. The
question thus arises: can such benefits be taxed directly by the conservation/planning authority, in what is generally referred to as 'betterment'
or 'windfalls'?
Examples of the beneficiaries are the immediate occupiers, residents and
users of the conserved area who have an environment which is not the
conventional; adjoining owners and occupiers whose property have higher
values because of the conserved environment; visitors from the country and
tourists from abroad who have access to culture; those who gain from the
trade so generated, in transportation, shops, hotels, etc. leading to increase
in local taxes based on property value, sales, etc.
Identification of beneficiaries is only the initial step in the devising of an
appropriate taxing policy for recoupment of the benefits. This, as with
taxation generally, must be practicable: the costs of collection must not be
significant in relation to the expected income; regard must be had to the
capacity of the beneficiaries to pay; there must be clear advantage in specific
pricing as opposed to general taxation.13
If a charging system can be devised there follows the question: can the
revenues so collected be earmarked in national and local budgeting for the
implementation of the conservation which gave rise to it, or must it go into
the general fund? But whether or not the specific earmarking be accepted,
if additional revenues directly flow from conservation charging, then the
case can be more readily mounted for allocations from government budgets
for implementation of conservation.

Who benefits and loses from conservation?


12.6

213

How much should be paid? - pricing for conservation

In the preceding sections we have seen the difficulties of earmarking some


of the benefits from tourists via betterment taxation to the benefit of the
cultural built heritage itself. As part of this issue there is another: to what
extent can specific charges be made to those who enjoy the heritage?
One of the difficulties that emerged above (12.1) was that conservation is
not a pure but an impure or mixed public good, with the inside of the
buildings in question being private and the exteriors being public. Since
the mass of visitors and tourists are content with the exteriors, for it is this
which gives the charm and atmosphere they enjoy, they cannot be charged.
The hope instead, of those who need to bear the costs of conservation, is
that the visitors are attracted to enter the conserved premises and so
become susceptible to charge: directly for museums and indirectly via
taxation for shops, restaurants, hotels, etc.
But even where conservation thus becomes a private good, the issue is
not settled. While government and conservation motivated groups are
conscious and vociferous about the value of conservation, the general
public are typically less so, not only in relation to the built environment but
to other aspects of the general heritage. This combination has led to a
tendency for low pricing where elements in the cultural heritage are open to
the visiting public, notably museums. 14
At one extreme, the line is taken that the whole purpose of conservation
is to pass on the cultural values which have been conserved to the people
and there should be no price constraint against their enjoyment; since
charging would reduce in some measure the public's interest it would be
counter productive in advancing culture and education.
At the other extreme is taken the view that zero pricing means not only
the necessity for finding costs out of general revenues but also offers no
means of identifying the values which the visiting public in fact attach to
the heritage which has been conserved. The response to prices would be a
measure of willingness to pay for the value and thereby give some empirical
guidance in the formulation of conservation policy as between different
possibilities.
Linked with this viewpoint there is another: since zero pricing must of
necessity mean larger numbers of visitors (indeed one of its objectives is to
attract as many as possible) the increased numbers could provide consequential costs, in terms of wear and tear of the site or building being
visited (e.g. the floor of the Parthenon), the need to accommodate nearby a

Economics in urban conservation

214
(A)

TOURISM INDUSTRY

_L
FIRMS

CENTRAL
GOVT

LOCAL
GOVT

PROPERTY
OWN/OCC
SPENDING ON
TOURISM RELATED
ACTIVITY

TOURISM SERVICES
-| RESIDENTS/WORKERS
TOURISM ACTIVITY

WORK COMMUTERS

(B)

-| SERVICES COMMUTERS
VISITORS
TOURISTS

(C)
BENEFITS
DIRECT JOBS
INDIRECT JOBS

DISBENEFITS
COSTS
Traffic,
Parking, etc.

WHO BENEFITS FROM TOURISM


AND
WHO PAYS

IMPACT ON CONSERVATION

Diagram 12.1
Schematic model of circulation of spending on tourism related activity
greater number of cars and coaches and shops, etc. catering for the public;
and the congestion costs of large numbers of people interfering with
individual enjoyment.

12.7

Conservation and tourism

In Table 12.1 tourists are picked out as one consumer sector (No. 14)
which affects the local economy. They are truly a singular sector and as
such merit special comment. Just because tourism offers this critical mass
in its impact on the heritage of the country of visit, it sharpens the focus of
all the benefits and costs relating to conservation discussed in this chapter.

Who benefits and loses from conservation?

215

Tourism is singular in relation to conservation for a number of reasons. It


is a huge industry, involving millions of people who spend millions in
money each year. It is a growth industry, in numbers, spending and
adventurousness of destination in terms of world travel. It represents a
major element of the economy in many countries, bringing foreign
exchange and stimuli to national and local economies. Its impact can be
seen more specifically by considering Diagram 12.1 which seeks to trace the
flow of spending on tourist related activity within a local economy which
attracts tourists. At A is shown the tourism industry which generates
tourism activity in response to spending from various sources at B, of which
visitors and tourists are part. The activity generates benefits and disbenefits
at C, leading to two critical questions: who benefits from tourism and who
pays, and what is the impact on the conservation of the built fabric and
life-styles which the tourists come to visit and see as part of the attraction of
the locality?
While the purposes of the travel can be very varied tourists also are
interested in the heritage of the countries they visit including the cultural
built heritage. But they bring not only benefit. The very mass of tourists
can create significant costs to the local communities where they participate
in the heritage, both the built (access roads, car park, policing, etc.) and the
way of life (culture shock, commercialisation, etc.). In certain instances
they introduce damaging changes in the economy and society.15 Thus while
undoubtedly offering a stimulus to the economic base of the cultural built
heritage in many localities, so making rehabilitation for adaptive use more
feasible and viable, tourists nonetheless attract costs of various kinds on the
community affected. Since as indicated the level of the benefits and the
costs are both high, and the beneficiaries from the tourism are not those
who meet the costs, it follows that there is the need to find a balance
between the two. A means of analysis for so doing is introduced below
(Chapter 15).

Part IV
Selected tools of
economic analysis for
project evaluation

Selected tools of economic analysis

219

Introduction
In Part III we explored the role of economics in the conservation of the built
environment and in particular the cultural built heritage. To advance that
role we need to use the appropriate tools of economic analysis. As was seen,
many are involved, such as forecasting and feasibility analysis. Within
these there is one family of tools of particular relevance, namely project
evaluation or appraisal.1 This is now introduced.
This family comprises a huge variety of tools,2 which are devised to
answer a variety of questions.3 We need therefore to select those which are
relevant to the issues raised in this study, namely those which aim to
predict, estimate and value the costs and benefits and their distribution
amongst the parties involved and affected in particular projects. As
brought out in Part III, there are three in number, viz:4
Financial and social financial analysis (FA and SFA).
Cost benefit and social cost benefit analysis (CBA and SCBA).
Community impact analysis (CIA).
These are considered respectively in detail in Chapters 13-15. As a
preliminary we introduce here (a) some common features of the three and
then (b) some differences.
(a) Some common features
Our central concern is with any development project (including for renewal
and conservation) which is an injection into the urban and regional system
(1.1). By this injection the development project aims at using resources
(inputs) to produce change (outputs) into that system. To evaluate/appraise
the project we need accordingly to specify the inputs and the outputs. This
is assisted by the analysis in Table IV. 1
As will be seen, the first column specifies the project elements, both 'on
site' (1) and 'off site' (2). It is in respect of the former that the project costs
(resources) are required, for the physical fabric and the activities/uses that
will be carried on by the population within it. Such costs could also be
required* from the promoters in respect of the off site elements, as for
example contribution to roads and utility services or the need to ameliorate
off site effects, such as environmental impact. As regards (2), off site, the
balance is different; there will be a greater weight in the effects of linkages,
and in impacts on the economy, cultural quality, environment, etc.
The enumeration of project elements assists in the definition in the

Table IV. 1 Framework for change visualised by a development project

Project elements

1 On site
(a) Population

Living
Working
Visiting
(b) Physical fabric
Land
Natural resources
Utilities
Transportation
Telecommunications
Buildings and sites
Open space
(c) Activities/uses
Residential
Production
Distribution
Consumption

Current

Project
without

Blight

Displaced

Retained

Construction

Change
Completion 7 - 1 or 7 - 2

2 Off site
(a) Linkages
Utilities
Transportation
Telecommunication
Urban services
(b) Effects!impacts
Economic
Social
Cultural
Linkage
Environmental
Risk hazard
Source: Lichfield and Schweid (1986). See Tables 15.3 and 15.4 below for worked example.

222

Economics in urban conservation

columns of the change from the current situation (1) that will occur 'with'
the project. This is the project's output, or, more strictly, the output
should be derived from the situation as it would be if the project were not
undertaken ('without' the project (2)). Pending the commencement (?) of
the project there could be 'blight': the suspension of economic activity
pending the introduction of the project (3), or displacement in a redevelopment project (4), or retention (5), or effects during the construction
(6). Finally there is the result arising from the project upon completion (7)
and its net change from the 'current' or 'without' situation (8). An
example of how the table was used in a specific case is shown below
(Tables 15.3 and 15.4).
It is the changes in cols. 4-7 which comprise the development, and the
subject of the evaluation of the project: the appraisal/assessment of the
relationship of the output (benefit) to the input (cost), in general terms the
rate of return of benefit to cost. In projects generally, the cost and benefit
will vary as between options. But situations can arise where the output or
benefits, or the input or costs, are constant. In this case the methods used
are the same but are better termed respectively cost minimisation (for the
common output) or cost effectiveness (for the common input). 5
In such appraisals the question posed could be: why do the project at
all? For this the datum is the situation at some point in the future if the
project be not carried out (without the project or do nothing option) for
comparison with that arising if it were (with the project). In the without
situation it may be necessary to take into account works which cannot be
avoided even if there be no project (e.g. provision of utilities). Then we
have the do minimum situation.
This necessity for considering what would happen in the without situation must be extended to all changes which can be predicted, as for
example deterioration in the buildings (costs) or in the quality of urban
services, as where the closing of a school makes residential accomr*
dation less desirable for prospective residents (value). The answer relates
to the absolute worthwhileness, and the result can be compared with some
standard as a point of reference, e.g. the rate of return on comparable
investments in the market. Thus, with and without is not the same as
before and after.
The question posed could be: why do the project this way? Here the
appraisal/assessment relates to the differences between alternative outcomes compared with the common projection without the project, adopting one of the futures as a datum. This permits of a comparison of differ-

Selected tools of economic analysis

223

ences in the outcomes of all options. But in this case there will be no absolute
'rate of return' for comparison with the standard in the market.
Another common feature is the need to take account of time in the cost
benefit predictions. This has been introduced above (7.7). It answers the
question: why do the project now?

(b) Some differences


Certain of the differences will emerge in Chapters 13-15, as for example on
discounting practice between appraisal for the private sector and the public
(14.4). But here we concentrate on one major difference between the three
evaluation methods. This stems from the fact that, while each method of
evaluation aims to assess the relationship with cost and benefit, it does so by
reference to questions which are either expressly posed or are implicit in the
method. 6 In these three instances the questions relate to:
Financial and socialfinancialanalysis (Chapter 13)
The financial implications for only the promoter of the project
(FA) or also including other parties directly involved in the
project, e.g. the consumer (SFA).
Cost benefit and social cost benefit analysis (Chapter 14)
The implications for the use of resources in the economy only
by the promoter of the project (CBA) or also by other promoters
who are affected (SCBA).
Community impact analysis (Chapter 15)
The implications for all sectors of the community who are
impacted by the project (CIA).
The application of the methods for these varying questions brings out the
following differences, shown in Table IV.2.
On site/off site
FA, SFA relate only to direct impacts on the project site,
whereas CBA, SCBA and CIA also look outside.
Sector
FA and CBA relate only to one particular sector which is
directly involved in the project, the promoter and related
consumers, whereas SFA, SCBA and CIA go beyond.

224

Economics in urban conservation

Table IV.2 Difference between the tools for analysis of costs and benefits

FA

SFA

CBA

SCBA

Socio-economic
CIA

V
V

V
V

V
V

V
V

V
V
V

V
V
V
V

V
V

V
V
V

Financial

Economic

Site

-on
-off
Sector
- promoter
- on site
- off site
- all relevant
Costs and benefits
- direct
- some indirect
- community

Source: Lichfield (1983)


SFA relates to all parties directly involved in a project and not
only the promoter.
SCBA takes into account, in addition to the promoter, selected
sectors who are not impacted.
CIA relates to all relevant sectors.
Costs and benefits
FA, SFA take into account only direct costs and benefits.
CBA and SCBA take selected indirect costs and benefits into
account whereas CIA attempts also to cover all of the relevant
community.
These differences can be brought out also in relation to Table IV. 1
FA and SFA:
will evaluate on site changes under (a), (b) and (c).
CBA and SCBA: will evaluate the same on site changes and selected off site
under (a) and (b).
CIA:
will evaluate all on site and all off site elements which are
relevant.
These differences are more sharply brought out in Table IV.3 which
contrasts the application of social cost benefit analysis and community
impact analysis to one specific transport mode: public transport in buses. 7

225

Selected tools of economic analysis


Table IV. 3 Comparison of inputs of Department of Transport social
cost-benefit analysis with community impact model
(1)

Sector
Passenger transport executive

Passengers in:
-Bus

-Rail

-Car/Lorry

(2)
Department of Transport
social cost-benefit analysis
Cost
Benefit
Operation cost

(3)
Community impact
Cost

Operation cost
Fares plus
subsidy from
passenger transport executive
plus subsidy
from Department
of Transport

Fares plus quality


(level) of service

Operation cost
plus quality (level)
of service
Operation cost
plus quality (level)
of service

Benefit
Fares plus
subsidy from
passenger transport executive
plus subsidy
from Department
of Transport

Fares plus
Trip end value
quality (level) of
service
Fares plus
Trip end value
quality (level) of
service
Operation cost Trip end value
plus quality
(level) of service

Source: Lichfield (1987b), p. 8.

As the table shows, whereas SCBA considers only the direct costs and
benefits to the two sectors involved (transport operator and passengers) the
CIA takes in also the on site (i.e. off bus) value of the trip to the passenger at
its origin and destination.
We now proceed to describe each of the methods in turn.

13 Financial impact:
financial analysis

13.1

Context

In Chapter 7 we introduced a model for the approach to financial analysis


for management of the built environment at any stage in the life cycle, and
in Chapter 8 showed how this could be adapted for conservation of the
CBH. We now demonstrate the use of the analysis for the central theme of
our concern: the decision whether to rehabilitate or redevelop heritage
buildings? But while answering this particular question the estimates can
also illuminate others of relevance to conservation: what price to pay for a
property subject to conservation via rehabilitation? What is the ceiling on
capital costs of works which could be incurred with an eye to viability?
What would be the limit on operating costs which could be incurred having
regard to the rents to be realised?1
These and related questions can be answered by the application of a
generic method of financial appraisal/valuation. We do not propose to
reproduce here the wide array of foundation material on this analysis, but
to demonstrate the principles by reference to an imaginary example.

13.2

An illustration of financial analysis2

Let us return to the 100 year old merchant house of (8.3.3) comprising
15,000 sq. ft. gross on a site of half an acre in the centre of town. It is
located in the business area but has been kept in residential use until
recently by the last descendant of an old family who has died. As it stands
the property is worth 700,000. This is clearly below potential value and
the executors for the estate must obtain the best value.
The house is clearly functionally obsolete for its original purpose and is
also physically deteriorated. It is furthermore locationally and functionally

228

Economics in urban conservation

Table 13.1 Development appraisal


Refurbishment of listed building within constraints

(a)

(b)

(c)
(d)

(e)

(f)

Capital value on completion


187,000
Rent 17 per sq.ft. on net of 11,000 sq.ft.
Capitalise at 6%/16.7 y.p.
3 ,117,000
86,000 say
Less purchase costs 2.75%
Deduct building costs
Construction: gross of 15,000 sq.ft. @ 46
690,000
per sq.ft.
86,000
Professional fees:
Finance costs: 1 year 2 months @ 14% p.a.
65,000
building and professional fees
8,000
Legal fees:
Agents:
Letting
19,000
Sale
46,000
Promotion
15,000
80,000
Gross margin [value (a) minus cost (b)]
Deduct developers costs
Finance on building 1 year 10 months
335,000
30,000
Acquisition costs
Developers profit at 20% on cost
520,000
Maximum price which can be paid for existing
building
[Gross margin (c) minus cost (d)]
say
Profit to estate
Surplus in (e) over value of property in current
use

3,030,000

929,000
2,101,000

903,000
1,198,000
1,200,000
500,000

Notes to Tables 13.1-13.4: Derivation of certain common items


Item (a)
Purchasers costs: Agents fees on acquisition: 1%
Stamp duty: 1%
Solicitors costs: 0.5% plus VAT
Item (b)
Professional fees: 12.5% to cover architects, structural and other engineers and
quantity surveyors.
Finance costs:
Assumed that the building costs will rise by equal amounts
throughout the period of contract. Therefore interest on total
cost for half the period.
Legal fees:
0.25% on sale price.
Agents fees:
10% of rent
Sale costs:
1.5% of value
Promotion:
Assessment
Item (d)
Finance costs:
As in item (b).
Acquisition costs: Stamp duty: 1%
Agency
: 1%
Legal
: 0.5%

Financial impact: financial analysis


Table 13.2 Development

229

appraisal

Refurbishment with listed building consent outside constraints

(a)

(b)

(c)
(d)

(e)

(f)

Capital value on completion


Rent 17 per sq.ft. on net of 12,000 sq.ft.
204,000
3,400,000
Capitalise at 6%/16.7 y.p.
Less purchase costs 2.75%
93,000 say
Deduct building costs
Construction: gross of 15,000 sq.ft. @ 40
per sq.ft.
600,000
Professional fees:
75,000
Finance costs: 1 year at 14% on building
and professional fees
48,000
Legal fees:
9,000
Agents:
Letting
20,000
Sale
50,000
Promotion
15,000
85,000
Gross margin [value (a) minus cost (b)]
Deduct developers costs
358,000
Finance on building, 1 year 6 months
Acquisition costs
38,000
567,000
Developers profit at 20% on cost
Maximum price which can be paid for existing
building
say
[Gross margin (c) minus cost (d)]
Profit to estate
Surplus in (e) over value of property in current
use

3,307,000

817,000
2,490,000

963,000
1,527,000
1,525,000
825,000

See notes following Table 13.1.


obsolete for residential purposes and is acceptable by the planning authority for office use. But since the building was listed Grade II there would
be resistance to redevelopment and also to alteration which would affect the
character of the building.
The executors are thus faced with four possible courses of action:
(1) to sell the property as it stands;
(2) to refurbish within the constraints of the listing;
(3) to seek listed building consent to refurbish outside these
constraints;
(4) to seek listed building consent to demolish and rebuild for
offices, at the plot ratio of 1:1 which prevails in the business
area.

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Economics in urban conservation

Table 13.3 Development appraisal: redevelopment

(a)

(b)

(c)
(d)

(e)

(f)

Capital value on completion


Rent: 20 per sq.ft. on net of 16,000 sq.ft.
320,000
5,818,000
Capitalise at 5.5%/18.18 y.p.
Less purchase costs 2.75%
160,000 say
Deduct building costs
Construction: gross of 20,000 sq.ft. @
1,200,000
60 per sq.ft.
150,000
Professional fees:
Finance costs: 1 year at 14% on building and
professional fees
96,000
15,000
Legal fees:
Agents:
Letting
32,000
Sale
87,000
139,000
Promotion
20,000
Gross margin [value (a) minus cost (b)]
Deduct developers costs
Finance on building: 1 yr. 6 mts. @ 14%
676,000
61,000
Acquisition costs:
Developers profit: 20% on cost
970,000
Maximum price which can be paid for existing
site
say
[Gross margin (c) minus cost (d)]
Profit to estate
Surplus in (e) over value of property in current
use

5,660,000

1,600,000
4,060,000

1,607,000
2,453,000
2,500,000
1,000,000

See notes following Table 13.1.


To inform themselves as to the potential difference to the estate, the
executors have asked for an estimate of the sale value of the property under
the three development options in (2)-(4). The appraisals/valuations are
shown in Tables 13.1-3, in each case in response to the question: what
would a developer pay for the building if able to take advantage of its
potential value beyond that for current use? The tables are prepared on a
consistent basis, following the residual method of valuation (7.5.2), so that
the differences in the variables in the estimates can be seen. In essence they
each display:

Financial impact: financial analysis

231

Table 13.4 Effect on viability of listed building refurbishment (Table 13.1)


on revised assumptions on significant items
Revision from
Table 13.1

(a)

(b)

(d)

(e)

(0

Capital value
140,000
Rent 14 per sq.ft. on 10,000 sq.ft.
1,960,000
Capitalise at 7%/14.2 y.p.
Building costs
Gross area of 15,000 sq.ft. @ 50 per
sq.ft.
750,000
Finance on construction costs
69,000
Developers costs
Developers profit on construction cost
580,000
Maximum price which can be
paid:
1.20 million
Table 13.1
Less: Table 13.4
1.19 million
Equals
Profit to estate over value of property in
current use

Reduction in value
(increase in cost) on
Table 13.1

1,070,000

60,000
4,000
60,000
1,194,000

0
700,000

See notes following Table 13.1.

(a) capital value of the building on completion of works, derived


from the net rental value of the lettable floor space capitalised
at an appropriate rate of interest (years purchase) less
purchaser's costs;
(b) the gross building costs of achieving the completed
development, to be deducted from the capital value on
completion. This is made up of construction and financing
costs and professional, legal and agency fees;
(c) the gross margin available when deducting the gross building
costs from the capital value;
(d) the allocation of that gross margin between developers costs,
i.e. raising finance on the building acquisition costs and
developers profit;
(e) the residue when the developers costs are deducted from the
gross margin, to give the price which the developer can afford
to pay for the building in order to refurbish in the first two
circumstances, or demolish for redevelopment in the third;

232

Economics in urban conservation

(f) the excess of this residue over the value of the property as it
stands (700,000), i.e. the profit to the estate owner.
The conclusions from these three appraisals follow.

13.2.1

Where the refurbishment is viable


The executor: owner/developer or purchaser
1 The effect of conforming to the listing constraint on
refurbishment results in a reduction in sale price from 1.52
million to 1.2 million (Tables 13.1 and 13.2). The difference
(0.32 million) represents the potential gain in sale price for
success in obtaining the listed building consent for
refurbishment outside the listing constraints. From the tables
it is seen that the reasons for the difference in value relates to
the lesser area of lettable floorspace in the listed building; the
higher costs of refurbishment; the consequential differences
to the remainder of the on-costs (fees, financing, profit, etc.).
2 When either refurbishment option is compared with
redevelopment (Table 13.3) there is clearly a considerable
shortfall: of 0.975 million if the constraint be lifted and 1.3
million if not. The essential difference here lies in securing a
much larger lettable floorspace in the new building through
the increase in density of the site; the higher years purchase
for capitalising rents in the new building as compared with
the old; the higher net lettable floorspace of the new design.
Of significance is the increase also in the prospective
developers profit, from around 0.5 million to 1 million. It is
this, plus the higher value of the existing property under
these three options, which provides the commercial stimulus
to combat conservation.
The conservation authority

Given the heritage quality of the Grade II listed building, is it reasonable for
the authority to resist the listed building application and so seek to deny the
owner refurbishment without constraint, or redevelopment? On the basis
of the above valuations the answer would appear to be yes, since:
(1) with constrained refurbishment (Table 13.1) the owner would

Financial impact: financial analysis

233

be making a considerable profit on sale (500,000) and the


developer would have a positive value on purchase (1.2
million), not negative value;
(2) since the net income obtainable for the refurbished listed
building is positive (17 per sq.ft. net of occupation expense),
it cannot be argued that there would be insufficient income to
maintain the property and so maintain the heritage quality;
(3) in the situation described there will be no call for public
subsidy to give financial viability to the maintenance of the
listing constraints.

13.2.2

Where the refurbishment is non-viable

The appraisal in Table 13.1 shows that even despite the conservation
constraints the refurbishment of the listed building would be financially
viable. But, the appraisal shows, it would take only some more pessimistic
assumptions relating to the conservation constraints to make the refurbishment non-viable. This is illustrated in Table 13.4, in which we do not go
through the whole calculation but merely pick out three significant items,
showing both the result of the revised assumptions and the reduction in
value from Table 13.2.
(a) Capital value
The net lettable space is reduced to 10,000 sq.ft.; the rental
value is lower at 14 per sq.ft.; and the inferior building
would capitalise at the higher percentage of 7 per cent. The
resultant fall in capital value from Table 13.2 is 1,070,000.
(b) Building costs
The construction costs would be greater at 50 per sq.ft. on
the same gross area. Because of the reduced investment
security of the building, raising the finance would be more
expensive. The increase of 64,000 would be offset from the
completion value of the building.
(c) Developers costs
The developer would require a higher developers' profit. The
additional cost of 60,000 would be offset against the
completion value.

234

Economics in urban conservation


The executor: owner/developer or purchaser

Comparing the positive value of 1.2 million in Table 13.1 with the
reduction of 1.19 in value from Table 13.4, we see that the price which can
be paid for the existing building as a basis for refurbishment is zero. This
means that the estate would lose 700,000 if the property were sold to a
developer at his price, which would be calculated to show a developer's
profit. If the non-significant items are also reckoned then the loss is likely to
be greater.
In such a situation the developer would clearly attempt to improve the
viability of the scheme (revised layout, reduction in costs, etc.), in the
process no doubt attempting to whittle away at the conservation constraints. But let us assume that he cannot make the improvement. There
then arises the possibility of attracting financial aid from one or other of the
sources described above (12.3). The analysis described so far (in simple
terms) would be the basis for the case to the authorities for grant or loan.
The conservation authority
Faced with the conclusions in Table 13.4, the authority before deciding
would wish to test the figures, with advice as necessary. Should they accept
them then they must conclude that refusal of listed building consent would
result in the property not being occupied nor refurbished, with the
consequential inevitable deterioration. Therefore they would seek to
compromise on some of their constraints (e.g. in allowing alteration which
would undermine to some degree the heritage quality, or redevelopment
with retention of the facade, or allowing some new office building of a
sympathetic character within the curtilage). If this did not produce viability
they could hang on hoping, for example, that the office rental values would
rise sufficiently to provide viability.

13.2.3

Effect of taxation relief on financial viability

So far we have not included in the appraisal any reference to the relief from
taxation which would be available in the possibilities outlined. This is
consistent with development appraisal practice which ignores taxation at
the outset and then applies it, on the simple proposition that the taxation
burden and relief outcome is different for every scheme, development
company, individual, etc.

Financial impact: financial analysis

235

No assumption is made here on the individual circumstances. But


speaking generally it is apparent that relief either on a capital or annual
basis will contribute to reducing costs to the promoter and thereby
enhancing the potential viability of any refurbishment scheme.

13.3

Social financial analysis

In the example discussed so far we have been concerned with appraisals


seen from the viewpoint of the developer. In this, his income from net rent
from the occupiers is his net benefit. But this net rent is a cost to the
occupier, to which he must add also the operating costs of the occupation.
Thus, as pointed out above (7.2), while sharing common objectives in
property development and investment, the different parties have distinctive interests. It follows that in the economic analysis relating to
management decisions the outcome would depend on just which interest is
concerned. Since the interests are in conflict any decision will have
repercussions on the others: a higher market value, rent or capital, to the
landowner, is a cost to be paid by the occupier, his benefit being the higher
quality value. These repercussions on interests other than those directly
involved in the decision, whose costs and returns do not have to be reflected
by the decision maker, are termed 'social' following the conventions of
economics which distinguishes between private and social (externality)
costs and benefits (14.3).
From this it follows that any comprehensive financial appraisal for
management decisions should show the repercussions on all the interests
affected in the decision, and not simply those of the decision makers. While
this may not be of immediate importance in making the decision, it is
nevertheless of concern. While in his investment appraisal rents are his
benefits, the developer is concerned also to consider the rents as costs to his
tenants, for on this rests the security of his investment.
In conservation projects the social financial analysis is certainly of
interest to government. It brings out the financial viability of the conservation project to each of the parties directly concerned, upon whom the
implementation of the conservation project will fall. If there is imbalance in
cost and return between the parties then some adjustment might need to be
made in order to smooth the path of implementation. And the analysis
would show who would be bearing the cost of implementation which could
give rise to need for subsidy or to compensation.

Table 13.5 Social financial analysis


Option in
tables

Cost/benefit
items

Developer

Landowner

Contractor

Financier

Professionals

Occupier

Conservation
authority

13.1

Cost
Benefit
Surplus/loss
Cost
Benefit
Surplus/loss
Cost
Benefit
Surplus/loss
Cost
Benefit
Surplus/cost

2,510
3,030
520
2,740
3.307
567
4,690
5,660
970
1,960
1,900
(60)

700
1,200
500
700
1,525
825
700
2,500
1,800
700
0
(700)

620
690
70
540
600
60
1,080
1,200
120
675
750
75

400
400
0
406
406
0
772
111
0
_
0

+
174
174

187 +
V
p
204 +
V
p
320 +
V
?
140 +
V
?

13.2

13.3

13.4

+
169
169

+
304
304
_
0

o/c

o/c

o/c
+
o/c

_
H/V
H/V

H/VH/V_
0
0
Sub
H/V
H/V-Sub

Notes: Col. 3 Developer. Cost made up of (b) and (d), less developer's profit which is shown as surplus/loss. The benefit is
(a).
4 Landowner. In each case the cost is the value of the property as it stands and the benefit is (e), with the surplus
being (f).
5 Contractor. The benefit is the contract price, the construction costs in (b), against which must be found the
cost to the contractor leaving a surplus, assumed here at 10% of contract.
6 Finance. The benefits here are the financing costs to the developer in (b) and (d), with no provision made for
longer term finance when the development is completed. Since the money tied up could presumably have
been lent at comparable rates elsewhere, it is assumed that the cost to the financier equals the benefit, leaving
zero-surplus/loss.
7 Professionals. Here the benefits are the fees earned (professional, legal, agent) in (b) and acquisition costs in
(d). For this time must be put in as costs, leaving the net position as zero (with partnership, etc. profits being
seen as remuneration of partners).
8 Occupier. The cost of the net rental values and the occupation costs (not estimated). As against this are the
values for occupation of the premises (v). Assuming an open market situation the surplus/loss would be zero
with gross occupation costs equalling gross occupation value.
9 Conservation Authority. The intangible value of the heritage quality in the building is shown as H/V in option
1, with a reduction in option 2 and zero on redevelopment in option 3. There would be no direct costs to the
conservation authority except for the subsidy payable in option 4 to avoid the redevelopment and the
destruction of the heritage quality.

238

Economics in urban conservation

13.4 Illustration of social financial analysis


In illustration we present in Table 13.5 an adaptation of the financial
analysis for the developer which is shown in Tables 13.1-4, in order to
bring out the complementary relationship of the various parties who would
be concerned with the conservation project.
In the rows are summarised the critical items of cost, benefit and
surplus/loss for each of Tables 13.1-4. In column 3 these items are picked
out for the developer (the focus of Tables 13.1-4) and then for the
remainder of the affected parties in columns 4-9. The following conclusions can be drawn:
3: Developer
There is increasing capital investment in options 1-3 leading to increase in
capital value with increase in margin of developer's profit, which is shown
as the cost of enterprise, risk, etc.
4: Landowner
The cost to the landowner in all cases is the 700,000 value of the current
investment. In options 1 to 3, his benefit would rise with the increase in
residue from the increasing profitability of the project, but would fall to
zero in option 4, leading to loss equal to the current value should he dispose
of the property.
5: Contractor
Here the benefit would vary with the amount of the contract in each case.
This figure would be offset by the construction costs (c) leaving a
contractor's profit in each case, taken at 10 per cent, as a reward for cost of
management, risk, etc.
6: Financier
The benefit, amounting to the financing costs, would vary according to the
size of the borrowing. In each case it would be offset by the opportunity
cost of the capital, provisionally assumed to be equal to the interest earned,
leaving the net position at zero.

Financial impact: financial analysis

239

7: Professionals
Here again the fees would vary with the capital invested, not only on
construction but also law, acquisition and disposal. As an offset to the
benefit would be the skill, time, etc. of the professionals whose opportunity
cost is assumed equal to the fees charged.

8: Occupier
The costs to the occupier would be the net rent together with the
occupation costs (not estimated). For this the occupier would receive the
value of the premises. This is assumed to be common for the rehabilitated
building and more for the redevelopment building. The net outcome is not
identified.
9: Conservation authority
In options 1 to 3 the authority is not faced with the cost subsidy to the
project. In option 1 it has the benefit of the heritage value (hlv) which is less
in option 2 and zero in option 3. In option 4 it would retain the same value
as in option 1 but at the price of the subsidy.

Overall
It is seen that each option contains its unique distribution of costs, benefits
and surplus/loss across the parties involved. In simple terms, in options 1-3
the fortunes of the developer, landowner, contractor, financier, professionals, are linked together because of the arithmetic of the calculation.
But this does not apply to the occupier because in addition he has the
occupation costs and value to contend with. And it applies even less to the
conservation authority, which stands to receive diminishing heritage values
in options 1-3 as the profitability to the others increases, while to retain the
same position in option 4 as in option 1 it must find the subsidy to meet the
shortfall of profitability to the developer and landowner.

14 Economic impact: social


cost benefit analysis

14.1

Context

In tracing through the economic decisions in the life cycle of the cultural
built heritage (8.3) we saw that while heritage quality was intimately associated with the property, it could not be equated with the value
of the property itself; it is one of its attributes. We therefore pursued the
question: how can such heritage quality be valued? (Chapter 10). This
question is of more than just academic interest for we also saw that in
conservation as in economic life generally it is necessary for government to
seek value for money in the use of resources seen from the national
viewpoint.
This kind of search is but one of many facing government in its attempt
to estimate worthwhileness and priority of projects emanating from the
public rather than the private sector (highways, water, defence, etc.). In
this they find, by definition, they need to address the question from the
viewpoint of society as a whole, rather than the market-place. For
example, in relation to a project involving rehabilitation or redevelopment,
it would be legitimate to take account of such factors as rehabilitation being
more labour and less capital intensive than redevelopment, and thereby
saving energy and producing more employment. Given this it is found that
the method of financial analysis (Chapter 13) is not adequate for the
purpose. 1 The reasons are varied. By definition public sector goods and
services are often not exchanged in the market (schools, roads or amenity
open space) and thus have no market price as a basis for estimating return
or benefit, so that surrogate methods of value measurement need to be
found (10.5-6). On the cost side, the public sector is concerned not so
much with financial costs (which include transfer costs such as land price,
interest, taxation, etc.), but the real cost to the economy. In this it is
necessary to take account not only of the direct costs and benefits on the

Economic impact: SCBA

241

promoters but also those falling on others, that is the spillovers or


externalities.

14.2

Origins of method

It was to reflect such needs that cost benefit analysis (CBA) was developed
for a whole range of public sector decisions on projects relating to the
investment of public resources for goods and services which have no
market price (highways, education, water, defence, etc.)- 2 It has conventionally attracted the prefix social (SCBA) when the analysis is concerned
not simply with the economic costs and benefits falling on the particular
promoting agency but also on others who are not the promoters, but whose
activities will be affected by the project: as where the repercussions on road
traffic of improvements in underground railways are taken into account by
the railway promoters. Since in this study we are concerned with the effect
of action by the developer or the property owner on the promotion of
conservation by the authority concerned with the cultural heritage, we use
social cost benefit analysis.

14.3

Method and technique of SCBA

The features of SCBA which are common to and different from the other
evaluation methods under review were introduced above (Part IV, Introductory).
But although the literature, and its application to projects in practice is
vast,3 there is no simply stated method which would be acknowledged by
all. However the following would be accepted as an indication:
(a) specify the project and its options;
(b) specify the inputs and outputs of the project and options,
both off site and on site (Table IV-1), and accordingly the
changes that would be introduced under the options;
(c) estimate and value the costs and benefits from the viewpoint
of the project promoter, and other related promoters;
(d) adopt a datum for the comparison of options accordingly;
(e) carry out a comparison on the with and without principle;
(f) choose between the options on stated decision criteria, taking
account of the appropriate discount rate, uncertainty, etc.

242

Economics in urban conservation

In certain cases the costs might be stipulated, and in others the benefits.
Then the options would be tested on the maximum benefits for the given
cost or minimum cost for the given benefits. These methods, respectively
known as cost effectiveness or cost minimisation, follow the same rules as
cost benefit analysis, where there are the two variables (p. 222).
While these particular steps may seem simple enough, they are quite
complex in theory and application, the literature showing differences in
treatment and emphasis. But it has nonetheless a solid, common foundation. Since its treatment is exhaustive, and cannot be readily condensed,
we do not (as with financial appraisal, Chapter 13) attempt to display the
general method. Instead we concentrate on certain elements which bring
out the particular application to conservation of the cultural built heritage
and the economic as opposed to financial approach. 4

Nature of costs in conservation


The nature of the costs involved in conservation have been presented above
(Part III, in particular Chapters 7 and 12). While these costs are of a varied
nature, in SCBA it is only the resource costs to the economy which are
relevant for judging value for money. This distinction is brought out in
comment on the enumeration by Realfonzo of the varied costs that are
encountered in any conservation project.5
(1) between costs on structures and those involved with people
(e.g. housing);
(2) between the conservation property itself (direct) and those
outside (indirect);
(3) between those which draw on economic resources
(restoration) and those only on financial resources, which are
transfers (acquisition cost of property, interest on capital,
etc.);
(4) in relation to the conservation property itself and to the
physical environment, aimed at enhancing the conservation
value of the property;
(5) as between the private sector and the public sector, whose
contributions are both needed towards the conservation.
Not all these are resource costs to the economy. For example, the
acquisition of the property for conservation would exclude the land which
is a sunk cost (since it cannot be put to alternative use with the building
existing on it); and also the property (since the price would be a financial

Economic impact: SCBA

243

transfer between owners and not call upon new economic resources). But it
would include the construction (the resources used by the building
industry) together with the professional fees and developer's profits, the
cost of professional fees and entrepreneurial manpower, but not the
financing charges, which is a transfer between owners of capital and will not
involve new resources. To this would be added the expected recurrent
maintenance costs of the fabric.

Nature of benefits in conservation


The benefits from conservation have been described above (Part III, in
particular Chapter 12). They, it is seen, can be very widely distributed.
From these the selection must be made for SCBA in terms of promoters.
One possibility is that the planning authority be linked with the conservation authority, since the options for conservation can have implications
for the uses and activities in the objects to be conserved and their
surroundings, and thus for the planning benefits to be derived. As to the
sectors who benefit (Table 12.1), the choice can range from the very narrow
(simply the benefit of conservation quality to the conservationists) to the
wider (which would include benefits to the economy from tourism, etc.).

Valuation of costs and benefits


In SCBA both costs and benefits are seen in terms of 'opportunity cost'
(10.9). Thus the costs of a project are those that would be incurred in the
project but valued at the best opportunities foregone by not using those
resources elsewhere. For simplicity this is typically taken at the market
value of those resources. But this simple rule will not apply if the market
value is distorted through government intervention as with monopoly
markups, indirect taxes, import duties, etc. which are in the nature of
transfers rather than real costs. For these 'shadow prices' are adopted.
A particular difficulty in the evaluation of benefits is that there is no
market price for the cultural value as a starting point (10.5). And another is
the irreversibility attached to a decision to erode the cultural heritage,
either through works of rehabilitation or more decidedly through demolition. In the cost benefit literature this problem has been most rigorously
tackled in relation to destruction of the natural environment in a wilderness. 6 Using that approach, the question is posed: what would the current
generation be willing to pay to retain the option of having the current

244

Economics in urban conservation

cultural quality (bearing in mind the cost of maintaining it) into the
indefinite future? (the option value). This question would clearly need to
take into account the opportunities foregone in the development project
which would be the source of the potential erosion of the cultural quality.
This approach can be taken further by recognising one feature of the
CBH which is distinct from that of the wilderness or rural landscape. Since
the cultural quality is attached to bricks and mortar, it is practicable in
certain structures to move the building as a whole or, where this is not
possible, to rebuild the object in facsimile on another site. In itself, this will
clearly be less valuable than the original to the purists in preservation. But
in many cases additional value is achieved if the setting of the buildings,
etc. is improved over the original (as in the common case of a conserved
building being surrounded by unsuitable and overshadowing structures in
the centre of the city). For this possibility a resource cost can be estimated.
The willingness to pay question can then be directed to this rather than the
hypothetical cost.

Distribution of costs and benefits


Cost benefit analysis set out traditionally to select projects on the criterion
of efficiency, therefore choosing those which had the maximum surplus of
benefit over costs. For this purpose all benefits were included to whomsoever they accrued, and double counting was avoided in order to ensure that
it was net benefit to the economy as a whole which was being measured. It
was recognised that not all sectors of the community were gainers, but the
assumption was that the greater the surpluses the more resources were
available to compensate those who lost. The criterion then became: total
net benefit provided that no one lost; and no member of the community
worse off and at least one better off.7 This became refined to the
compensation test: total net benefit provided the losers could be compensated, even if not compensated.8
A clear flaw here is the uneven distribution of income between the
beneficiaries and thereby uneven distribution of utility to them: the higher
the income group the lower the marginal utility of a dollar gain or loss.
From this it followed that a project ranking first among options in terms of
efficiency could rank lower in terms of fairness of distribution or equity.
One way round this is to translate the benefit into utility and not money
terms, leading to selection of the project which showed maximum surplus
of total utility over cost.9

Economic impact: SCBA

245

Another consideration in distribution is to take into account the transfer


payments between groups which clearly were relevant in terms of incidence
and distribution, but which had been ignored on the efficiency calculation,
since it was only real costs which were of interest.
However this kind of 'incidence analysis' has not been fully explored in
traditional cost benefit analysis. It is a feature of community impact
analysis to which we come below (Chapter 15).

Decision criterion for the relation of costs and benefits


From this basis it is possible to set up a schedule of comparative resource
costs and benefits for the alternative conservation projects. This will enable
consideration to be given to the marginal change in heritage value against
marginal change in costs. Because the two sides would not be in similar
units of measurement (money) we cannot adopt the conventional SCBA
criteria of cost-benefit ratio, net present value or internal rate of return. But
while there would be thus no absolute level of 'conservation viability' it
would be practicable to compile an index of benefits measured by say a
points system (10.7) as against resource costs, which could indicate relative
'value for money' and be meaningful for conservation objectives.10

Rate of discount
When introducing above (7.7) discounting for the private sector we left for
consideration here the more important question for our study: assuming
that the arithmetical discounting by reference to a loan rate of interest is
acceptable for the private individual, is it relevant for a group? In
conservation, this question is more far reaching than simply finding the
approximate rate of interest. It goes to the heart of conservation: how
should the values of the current and future generation be compared and
inter-related? It is therefore now given fuller treatment.

14.4 The social rate of discount


Many arguments have been introduced against the logic of following in
public sector decisions the market rates for discounting. Even in the
simplest terms: would this apply to parents investing for the future with
their young children in mind? Would parents discount at the same rate if

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they had no children and did not expect any? In brief, why should the
'social rate of discount' follow the private, in principle and practice?
For example, whereas the individual faces a cost in the interest on a bank
loan, the banker receives a benefit, and society should not be concerned
with transfers; and the individual cares about after-tax return whereas
society cares about pre-tax return. 11 Why should society have a discount
rate which is a reflection of interest rates in the market place, which is made
up of the interplay between an enormous number of investors, speculators,
gamblers on futures, etc. who are looking in the main to the short term
only.12 In the short term, how can individual investors reflect changing
values in time over the future, particularly when the future must be seen
over a long life cycle in natural resources or the built heritage?
But these reservations on discounting for the public sector go beyond the
question of the appropriate social rate of discount and social time preference. There is reaction against the arithmetic of the discounting technique,
particularly when using the rates of interest typical of recent times, of the
order of 10-20 per cent. For example, at 10 per cent the present value of
regular annual payments of 1 would be 9.77 after twenty-five years but
only 9.999 after 100. Thus the present value of the benefits beyond
twenty-five years are arithmetically worth very little, thereby discouraging
the longer-term view, as in conservation. While this might be acceptable
for the shorter-term horizon of the private sector it is hardly credible in the
public sector, where decisions need to be taken for future generations.
On this 'It seems fair to say that there is no consensus at all on what to do
about this aspect of CBA'. 13 Thus the search has been made for a more
coherent alternative to simply reflecting market rates. One possibility has
been the long-term borrowing rates for government, which do take a
longer-term view than the market, but not all that long because government must compete in investment for borrowing savings with the private
sector.14 Another is to ignore discounted values of the current generation,
beyond say twenty years. Another is to assume a particularly low social rate
of discount, perhaps 2-3 per cent, which implies that society values the
future considerably higher than do individuals in the current generation.
This retains the principle of the future being less important to the current
generation than the present, without reflecting the prevailing conditions in
the money and investment markets, which are due to quite different
considerations. This approach is clearly of great relevance in relation to the
conservation of the cultural built heritage. By definition contemporary
government is taking a decision reflecting the values of distant future

Economic impact: SCBA

247

generations which runs counter to the shorter-term values of the real


estate, investment and development markets in relation to the property in
question.
In parallel with the attempt to find a pertinent social discount rate there
have been a series of robust attacks by very distinguished economists on
the use by society of discounting at all. For example, 'there is no excuse for
treating generations unequally' and to discount later enjoyments in comparison with earlier ones is 'a practice which is ethically indefensible and
arises merely from the weakness of the imagination':15
. . . this preference for present pleasures does not - the idea is self-contradictory imply that a present pleasure of given magnitude is any greater than a future
pleasure of the same magnitude. It implies only that our telescopic faculty is
defective, and that we, therefore, see future pleasures as it were, on a diminished
scale ... 1 6
We are interested in tomorrow's satisfaction, not in today's assessment of
tomorrow's satisfaction;17 pure time preference is 'a polite expression for
rapacity and the conquest of reason by passion'; 18 and 'there is no way to
collect bids and offers from everyone who will ever live. In the markets
that actually do take place, future generations are represented only by us,
their eventual ancestors.' 19 This view is in contrast to 'whatever else
democratic government reflects only the preferences of the individuals who
are presumably members of the body politic'. 20
Whether or not these considerations should lead to adopting a zero social
rate of discount, so that consumption per head would be 'constant through
time so that no generation is favoured over any other .. .', 21 the general
effect is for the social rate of discount to be lower than the private, resulting
in benefits and costs for the future having greater weight than would be
seen simply from using contemporary market rates of interest. Some
reasons are: contemporary society should take the longer view than contemporary individuals or organisations; there is a bias towards underestimating cost in the magnitude of damage to resources and the environment;
since we have no way of knowing the values of future generations it is wise
to be cautious and assume that their values will be higher than those
expressed in today's market-place or in government policies; it is wise also
to recognise that since decisions on investment could well prove to be
wrong in the future22 it is necessary to build into the analysis the irreversibility of particular decisions (building on gravel or farmland, destroying a
view, etc). 23
Just what the particular discount rate should be in particular circum-

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stances comes in the end to be a matter of judgement by those taking the


decision, reflecting the values they wish to adopt in this inter-generation
comparison. In making the judgements, it is useful to recognise the
practical implications of the various rates that could be followed, by using
sensitivity tests on the outcome for society. A low social discount rate
means favouring the public sector projects, so leading to more public sector
projects, perhaps at the expense of squeezing out those needed from the
private sector, and higher contemporary taxation, etc. in order to finance
them. A high social rate of discount could result in a level of investment too
low to make adequate provision for future generations, so highlighting the
critique of our present urban system that we have 'private affluence and
public squalor'. 24
Applying the above to conservation of the cultural heritage (built or
otherwise) our general experience suggests that the pertinent social rate of
discount is not adequately considered. Developers concerned with the built
heritage are discounting costs and values at market rates, as in other
property transactions. Since the heritage quality is a non-detachable
attribute of the property, its value is also discounted at this rate. But on the
above logic it should be discounted by society (i.e. government in this
instance) at a lower rate or not at all. This would make for difficulties in the
valuations. But it would provide a logic for government subsidy on behalf
of future generations.

15 Community impact:
community impact
analysis

15.1

Context

We introduced above (Introductory, 13.3 and 14.2) the term 'social' to


reflect that financial and economic analysis was concerned in each case with
repercussions on sectors other than those who were promoting the project
under consideration. But even under this connotation the range of the
sectors brought in is only partial. For example in social financial analysis
they exclude off-site costs not borne by the promoters; and while social cost
benefit analysis is capable of handling the sectors which are indirectly
affected,1 it typically does not set out to do so.
But there are decision situations in which consideration of the impact on
the whole community is essential, as in urban and regional planning, where
the 'public interest' requires that decisions take into account the impact on
all relevant sectors of the relevant community. Thus a full analysis is
required which will encompass all the off-site linkages and effects which
were introduced in Table IV. 1, thus including all relevant externalities and
spillovers. Thus a fully social form of analysis is required. This is provided
by community impact analysis.
But even if social cost benefit analysis were to attempt to cover the whole
range of sectors and externalities involved, it typically has the following
limitations. Being founded in economic analysis it tends to have regard
primarily to economic impacts and thus ignores others which are relevant,
such as social and environmental, which come outside the 'measuring rod
of money' and are not in the economic content of national income
accounts. Being concerned with the economy, cost benefit analysis concentrates on the net change in economic output from the project and thereby

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rightly eliminates 'double counting'. It is not concerned with the distribution of the costs and benefits between the sectors.
That this wider approach is entirely relevant for conservation was seen
above in considering who benefits and who pays for conservation (12.3).

15.2

Evolution of the method of PBS A/CIA

The method originated around 1956, in the attempt to find a more


satisfactory way of evaluating and choosing between alternative urban and
regional development projects and plans as an aid to decision making. 2
Following a review of current methods which were found to be lacking for
the purpose, the cost benefit approach was favoured.3 But CBA proper was
found to be inadequate for urban and regional planning (relating primarily
to a single sector, lack of interdependency between projects) and while
social cost benefit analysis was reaching out in the right direction it was
lacking as just described (15.1). Accordingly CBA was adapted into
planning balance sheet analysis (PBSA) which retained the theory and
principles of CBA.4
It was not until the subsequent growth of impact prediction and
assessment (IA) in the seventies (which went beyond the economic impacts
of cost benefit analysis to the social, natural resource, environmental, etc.
impacts)5 that it was appreciated that PBSA had in fact been attempting to
evaluate not costs and benefits per se but the costs and benefits flowing from
this array of impacts, i.e. repercussions from the injection of the project
into the system. The process of impact analysis within PBSA was somewhat
in the 'black box'. PBSA was accordingly adapted and renamed community
impact analysis (CIA), both in order to show that it is more comprehensive
than other kinds of impact analysis (e.g. energy, transport, economic,
social) and also to show that it is not simply the impact as output which is
important (as in IA) but the effect of that output on people. Furthermore,
since the end purpose of the impact analysis is not just assessment but also
evaluation, CIA is seen as a step towards aiding choice in alternatives, that
is towards community impact evaluation (CIE). 6
This distinction between analysis and evaluation is ignored in using the
terms cost benefit analysis, social cost benefit analysis, or planning balance
sheet analysis, even though it be understood that the purpose of the analysis
is the evaluation without registering the need for the distinctive names. The
distinction is thought useful in CIA/CIE.

Community impact: CIA

251

15.3 Some features of CIE


We saw above (Introductory) features which CIE has in common with
SCBA. We now turn to some of its special features.
As indicated, CIE has antecedents in both cost benefit analysis and
impact assessment and relies on the literature and practice in each. The two
are brought together into community impact evaluation in the following
way:
1 Planning balance sheet analysis follows social cost benefit
analysis in aiding a choice amongst options on the criterion of
the relationship between benefits (outputs/impacts) and costs
(resource inputs).
2 But in contrast to SCBA, PBSA pursues the question over all
relevant sectors of the relevant sectors of the relevant
community, with the aim of producing a set of sectoral 'social
accounts'. This necessarily involves apparent 'double
counting', as in conventional book-keeping and social
financial analysis.
3 In these accounts, PBSA is concerned not only with the
economic impacts of SCBA but with all impacts affecting the
welfare of that community, thus embracing as well social,
natural environment, hazard, etc.
4 But while borrowing from the techniques of impact
assessment, the purpose in CIE is different. Whereas IA is
generally concerned with comparing the predicted impact
with some standard as a measure of significance, CIE is
concerned with evaluation in the cost benefit sense. Thus an
impact of considerable significance in terms of IA might be of
no significance at all in CIE, if its repercussions on people be
trivial, or the differences in the repercussions as between
options be only marginal.
5 In the evaluation CIE differs from SCBA in one critical
respect. In the latter the impact is seen as a totality on the
economy (on whomsoever the costs and benefits fall). In CIE
on the other hand it is necessary to disaggregate all relevant
sectors from the outset in the attempt to identify, predict,
assess and measure the difference as between the options in
welfare on that community sector.
6 In this regard CIE has the economic approach of SCBA in

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that the difference in welfare is seen from the viewpoint of the
community sector's own objective and not those of the
analyst, decision maker, etc.
7 But just as impact prediction and assessment provides a better
definition with measurement, so does impact evaluation.
Accordingly while the costs and benefits must be included
whether measured (or indeed measurable) or not, they should
be measured where practicable. But the measurement is
different from that in impact assessment where it is the
magnitude and scale of the output which is generally in
question, measured in some scientific terms for comparison
with standards. In CIE it is the benefits or costs to people, as
perceived by them, which must be measured and, if
practicable, valued.
8 But unlike the usual practice in impact assessment,
measurement is carried out in two cycles. In cycle 1, the
impacts are measured only in respect of the data which are
readily available. This may be adequate for a reasonable
conclusion on evaluation. If not, from the conclusions and the
feel of the analysis which has been obtained, the impacts are
selected which would appear to be critical for choice between
the options. It is these which are measured in cycle 2. This
process thus ensures that measurement is carried out only on
those impacts which are relevant to the evaluation.

15.4 Concepts of efficiency, equity and trade off in community impact


evaluation
Efficiency
The conventional criterion for economic efficiency (net benefit or benefits
minus costs) assumes that any decision unit would choose between options
on its sectoral objective of maximising net benefit. This concept is applied
in community impact evaluation by posing for each of the community
sectors its sectoral objective, and judging which of the options they would
prefer on that basis. That option is the most 'efficient' for them.
It follows that if all the community sectors preferred the same option
then, on the judgements made, that particular option would be the most
efficient, even though the excess of benefit over cost had not been

Community impact: CIA

253

measured. But where sectors differ in their preference for a particular


option (as they usually do) the conclusion is not clear.
If we were able to measure all the impacts we could compare the actual
amount of benefit less cost for all the sectors, and therefore derive aggregate
efficiency for the total community. But, it is only for a limited array of costs
and benefits that comparative indices in money terms can typically be
obtained. For others, but not all, measurement without money valuation,
or only ordinal statements, can be made. This clearly inhibits reaching
conclusions on efficiency. But it does permit of comparative and perhaps
ordinal rankings on efficiency, by comparing marginal outputs with
marginal inputs, even though not valued or even fully measured.
Equity in distribution of costs and benefits
Whatever the project, its choice and implementation will result in an
allocation of resources and, inevitably, as in all economic activity, a
distribution to the various sectors of the costs and benefits arising from this
allocation. This will have certain 'social justice' or 'equity' implications
which representative bodies must consider alongside 'efficiency'. In doing
so, it is useful to recognise that in urban and regional planning generally the
nature of the distribution is three-fold. We illustrate by reference to
transport.
First comes the 'geographic' or 'horizontal'. Because the activities of the
town are spread over an area, it is not possible for them to be evenly
accommodated in the level of service offered. For example, some residents
will have long walks to bus stops and infrequent services and others will
not. Thus in choosing where to live the household will trade off the various
attributes of different locations, of which accessibility by transport is one
(others being proximity to countryside; availability of schools, shops, etc.;
local environmental amenities). And in the trade offs, each may value
differently the individual attributes of the package and its totality. And the
total will be traded off against price.
In this trade off comes the second aspect of distribution, 'income' or
'vertical'. In the evaluation of the package, the town's residents cannot
compete evenly, because of varying income and wealth levels, access to
information and professional help, etc. Accordingly low income families
are disadvantaged in the competition.
This leads to the third aspect where 'needs' for public transport vary.
Some groups (young, elderly or infirm) are disadvantaged in that they are

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Economics in urban conservation

incapable of driving a car. Even if they could afford a car, this reduces their
mobility and accessibility compared with a car-owning neighbour.
Faced with these inevitable inequalities in distribution of costs and
benefits, the authority must have regard to the issues of 'social justice' or
'equity' which arise, and the degree to which they wish to trade off
conflicting efficiency and equity considerations, when making their decisions. In essence they must consider not simply value for money, but
'whose value' and 'whose money'.
In seeking the help of analysis for this purpose an authority will however
find that the methods of evaluating 'equity' are inadequate compared with
those of efficiency. And there is comparatively little movement in them in
the literature. 7
But whether the method be there or not, decision makers must necessarily reach conclusions on these aspects in their decisions; to ignore
distribution and equity is also reaching a decision on them. For this, there
is no general agreement on what constitutes social justice or equity, nor any
method of advising confidently on the topic (as there is in efficiency); there
is no universal weighting system. Some would argue that needs must be
brought into the balance, some would argue for merit and some for
deserts. 8 Thus decision makers must use their judgement, in accord with
their own concepts of social justice. These are matters of ethics, which will
vary between localities and political parties, and over time even with given
parties.
For the decision makers to do this, they need to know the incidence of
the costs and benefits amongst various sectors of the community. On this,
CIA can assist by displaying the costs and benefits on the array of sectors
that are pertinent. Faced with such a display the decision makers can
consider the costs and benefits by sector, and the question of whether and
how they wish to trade off the option with the greatest efficiency against less
efficient options which will provide a more equitable distribution, in
accordance with their concepts of social justice. As indicated they cannot
do so by any accepted weights, even in SCBA where the costs and benefits
are all measured in money terms (14.3). It is more difficult where there are
non-measurables, as in CIA. But at least they will be able to readily
recognise the existence of inequality (which is inevitable) and make
adjustments towards less inequality, in accordance with their individual
criteria on equity.

Community impact: CIA

255

Trade off between efficiency and equity


Having reached conclusions on efficiency and equity it is then necessary to
trade off between the two in reaching the final conclusion on choice: which
option would give the best mix of efficiency and equity? But since the
criteria for equity are unsure, the trade off becomes unsure. This is
particularly so in CIE, where the efficiency conclusion can only be
indicative, because of lack of measurement and valuation. What guidelines
can be offered?
In the simplest case, the preference for efficiency and equity could be
symmetrical, and so enable a choice to be made which would have good
features for both. In practice, however, this is unlikely. Accordingly there
would need to be some trade off as between the two. The simplest approach
to the trade off would be to adopt provisionally the option proved best on
efficiency and then consider the implications on equity. This would then
lead to judgements as to whether a less efficient more equitable option
might be chosen instead, bearing in mind the opportunity cost in resources
and equity. But it is possible to work from equity towards efficiency. Here
the choice would be made on equity, and then consideration be given to the
opportunity costs in dropping from the preferred option to one of the
others.
In many instances, with so little certainty in the conclusion on either
equity or efficiency, no recommended choice can be seen. But the CIE
display would enable the decision makers to consider the implications of
their choice and so reach a judgement on their preferred option.

15.5

The method of CIE

PBSA/CIE has been used over some twenty-five years to evaluate a large
number of actual projects and plans in urban and regional transportation
development planning. Appendix 15.1 to this chapter gives a selection
unpublished and published. In this work the approach has in general been
consistent and standardised, the major change being the introduction of
impact assessment as just described. But it has been necessary to adapt the
general method to the specific study because of variations such as the
following as listed in Appendix 15.1:
(1) the need to treat projects differently from plans;
(2) the scale of plans (from the regional to the local);

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Economics in urban conservation

(3) the kind of plans (from strategy or policy to plan);


(4) the content of the plans (a new town, renewal, road building);
(5) different aspects of a particular kind of content (private
motor-car, public transport or pedestrian crossing);
(6) time and money resources available for the study (in depth to
rapid assessment).
Since the actual method of CIE has varied from study to study, it is not
practicable to put forward a standard method, just as it would not be in
respect of financial or social cost benefit analysis. But we do have the need
here to put forward the method in greater detail than in financial or cost
benefit analysis, simply because there currently is, outside the actual case
studies, no comparable bank of readily available literature on the subject.
Accordingly what is introduced is the actual method, adapted from the
generalised approach, which was adopted in a recent study in conservation,
in Jerusalem.9 This is one of the case studies presented below (16.3). There
all three methods of analysis (Part IV, Introductory) were used. Here we
show only the CIE.

15.6

15.6.1

The method applied

The case

The Old Sha'arey Tsedek Hospital was built at the close of the last century
on the outskirts of Jerusalem, in what is now the centre of the city, and was
used for that purpose until a replacement hospital was built elsewhere in
Jerusalem, opening around 1970 (Plan 15.1). The old building was then
surplus to requirements and the Hospital Board as owners wished to sell at
the best price, as a contribution to the heavy costs of the new hospital. For
this purpose they entered negotiations with a development company, who
proposed to demolish and use the site for flats. However the Municipality
of Jerusalem wished to see the building conserved because of its importance
in historical terms in the growth of Jerusalem and its modest qualities as an
example of the then contemporary Turkish architecture.
As a result of these two conflicting pressures, protracted negotiations have
taken place between the landowners/developers and the Municipality, with
several options being designed which would leave the Hospital building for
another use (bank, hotel, museum), and enhance it by means of surrounding open space, with the remainder of the site being available for flats.

Plan 15.1
The old Sha'arey Tsedek Hospital: Jerusalem: location plan

Plan 15.2
The old Sha'arey Tsedek Hospital site: Jerusalem: rehabilitation scheme
Note: Based on design by Y. Allon

New Building - Residential

Plan 15.3
The old Sha'arey Tsedek Hospital site: Jerusalem: redevelopment scheme
Note: Based on design by Y. Allon

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Economics in urban conservation

Table 15.1 Comparison of land uses in Sha'arey Tsedek: Options A and B


Dunams

A
Total land area
3.9
Less road widening
Less new N-S road
3.0
Hospital building
3.0
Open space
3.5
Total
For residential purposes
On which residential development
(in thousand m2)
On which density
Floor area index (FAR )is

(4 dunams to 1 acre)
B
24.6

24.6

3.9
3.0
2.94
13.5
11.1

(55%)

9.84 (40%)
14.76

24.0

29.0

216.0

200.0

While based on the above facts, the study presented here was not
commissioned by the parties but used as part of wider research. The
planning and real estate aspects of the case are naturally grounded in the
complex Israeli practice. But this for our purpose need not concern us.

15.6.2

The options

For the purpose of demonstration of the analysis of rehabilitation/redevelopment issues two options were formulated (Plans 15.2 and 15.3):
A: retention of the hospital building and grounds with
adaptation to a municipal Natural History Museum and
provision of high rise apartments on the remaining land;
B: demolition of the building with the retention of some open
space by the City with the remainder of the site covered by
flats.
The resultant land uses are as shown in Table 15.1

15.6.3

The method in summary

The CIE method is presented below (15.6.4) by reference to a series of


tables, 15.2 through 15.10. These show the sequential steps leading to the
evaluation itself (15.9) and its summary (15.10). In order to assist the
somewhat complex presentation, we here show in a master table (15.2) how

Table 15.2 Master table ofCIE showing source of input to Table 15.9
Ranking
Option B
compared
Project Impact Impact
Sectoral Unit of
with
Input
table No. Description No. variable type
description objective measurement option A
Community sector

Preference
against
Preference
sectoral for sector/
Nonobjective sub-sector Probability significance
10

15.3
15.4
15.5
15.6
15.7 x
15.8 x

X
X

Notes: The x shows the input from tables at left.

11

12

13

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Economics in urban conservation

the evaluation Table 15.9 is made up by inputs from the preceding tables.
Table 15.2 itself follows the form of Table 15.9. In the first column are listed
the intervening six tables, with an (x) in each of the other columns as appropriate to show how these tables are fed into the final evaluation Table 15.9.
15.6.4

The community impact analysis and evaluation

Framework for change


Tables 15.3 and 15.4 follow Table IV. 1 in summarising what currently
exists on the site and what will exist on the completion of the project. The
tables enable us to explore the wider ramifications on and off site for
rehabilitation and redevelopment respectively. They show the project
elements in the rows (categories 1-4) and in the columns the current
situation (1) and the three stages of the development process (displaced,
construction and on completion) (2-4) and then the changes from the
current situation (column 1) of those sectors (columns 5, 6, 7). The (x)
indicates where appropriate entries are made in the columns, with a dash
(-) in the change columns to indicate 'no change'.
What exists on the site, and will exist on completion of development, are
shown in the rows under category 1 of the project elements (on site) and in
rows 1 (current) and 4 (completion). Entries for the remainder of the
columns and rows show the remainder of the repercussions. In category 2
there is the on-site activity; this is zero for the current situation (the hospital
having been vacated) but with activity under each of the items on
completion, namely total population on the site, those concerned with
production in the Museum, those concerned with consumption in the flats,
Museum, open space, and in visiting the cultural heritage.
These activities have off site linkages in category 3, being the relationship of the site to the remainder of the city in terms of transport,
communications, utilities and urban services.
And these activities and linkages will have off-site effects, in category 4,
such as economic (creation of employment); social (educational facilities);
movement (generation of traffic); environmental (acting as a fresh air lung
and offering visual impacts); and risk/hazard (arising from the traffic).
In addition to columns 1 and 4 there are two intermediate situations. The
first, in column 2, describes the elements in the four categories which
would be displaced from the site because of the new project. And in column
3 is the construction that would take place on the site, in relation to each of

Table 15.3 Framework for change


Option A (rehabilitation)
Project elements

1. On site
Land
Buildings: Hospital
Huts
Flats/car parks
Roads
Infrastructure
2. On site activity
Population
Production
Consumption F
- Residents
NHM - Visitors
OS
- Visitors
NH - Tourists
3. Off site linkage
Transport
Communications
Utilities
Urban services
4. Off site effects
Economic
Social
Movement
Environmental
Risk/hazard

Current (post
hospital)

Change from current


2-1
3-1

Displaced

Construction

On completion

4-1

Notes: x : entry in table showing project ramifications.


- : no change in change columns 5-7.
A blank conveys 'no ramification'.

Table 15.4 Framework for change


Option B (redevelopment)
Project elements

1. On site
Land
Buildings: Hospital
Huts
Flats/carparks
Roads
Infrastructure
2. On site activity
Population
Production
Consumption F
- Residents
NHM-Visitors
OS - Visitors
NH -Tourists
3. Off site linkage
Transport
Communications
Utilities
Urban services
4. Off site effects
Economic
Social
Movement
Environmental
Risk/hazard
Notes: x

Current (post
hospital)

x
x
x x

41

x
x
x

x
x
-

(-)
x
x
x

(-)
x
x
x

x
x

x
()
x
()
x
()

x
(-)
x
(-)
x
(-)

x
(-)
x
(-)
x
(-)

x
x
x

x
x
x
x

x
x
x
-

x
x
x
x

x
x
x
x
x

x
x
x
x
x

x
x
x
x
x

Construction

On completion

(x)

(x)
x
x
x
x

()

x
x

Change from current


2-1
3-1

Displaced

entry in table showing project and its ramifications.


no change in change columns 5-7.
where entries differ from those in Table 15.3 (in nature of impact, not type).

x
x
x

Community impact: CIA

265

the project elements, following displacement through to completion of the


finished project.
This leads to the identification in the final three columns of the changes
from the current situation, column 1, which the project will bring about:
through displacement (5); through construction (6); and on completion of
the new project (7).
In Table 15.4 we have the same picture presented for Option B,
redevelopment, as for Option A, rehabilitation. As can be seen, in most
essentials the entry in the cells is the same. But there are differences in
respect of elements in group 1 and 2, which are shown in brackets, for ease
of identification.
Impact identification from the project variables
Tables 15.3 and 15.4 present a snapshot picture of the repercussions of
the two Options A and B. But they do not convey just how these are
brought about. This is presented in Tables 15.5 and 15.6.
In the left hand column of each table is itemised the three project
variables, namely the elements in the completed projects which will
introduce change from that which exists. These elements are new roads (1),
current buildings and spaces (2), and new buildings and places (3).
Against each of these elements is shown by a cross (X) where the impacts
will be experienced through displacement, construction or operation
(following completion). The impacts themselves are divided into four (as in
15.4 above):
(1) Direct (D) on the site itself;
(2) Indirect (I), as where a tall building will rob light from an
adjoining site or provide noise on it;
(3) Associated Real (AR) where the project will give rise to real
(technological) increases or decreases which change total
volume of activity (e.g. generated factory or tourist
employment adjoining a new road or a risk/hazard from an
airport which would discourage nearby activities through
fears for safety);
(4) Associated Financial (AF) where the activity of the proposal
will diminish the activity from elsewhere without increasing
or decreasing total volume of activity and so result only in a
financial (pecuniary) change.
A perusal of the tables brings out the incidence and range of impacts from

Table 15.5 Impacts from project variables: Option A

(conservation)
Impacts from
Displacement

Project variables

1.

Roads:

2.

Current buildings and places:

3.

New building and places:

Widening
New
Huts
Hospital as NHM
Grove
Flats and car parks

X
X
X

X
X
X

Notes: X shows cells where there are impacts.


(X) shows cells where there are impacts not common with Option B.

AR AF

Construction
D

X
X
X
X

X
X
X
X

AR AF

Operation
D

X
X

X
X

AR

AF

X
X

(X) (X) (X)


(X) (X) (X)
X
X X
X

Table 15.6 Impacts from project variables: Option B

(redevelopment)
Impacts from
Displacement

Project variables
D
1.

Roads:

2.

Current:

3.

New building:

Widening
New
Huts
Hospital as NHM
Grove
Flats and car parks
Open space

X
X
X
X
X
X
(X) (X)
(X) (X)

Notes: X shows cells where there are impacts.


(X) shows cells where there are impacts not common with Option A.

AR

Construction

AF D
X
X
X
X

AR

X
X
X
X

X
X X
(X) (X)

Operation

AF D
X
X

I
X
X

AR
X
X

X
X X X
(X) (X) (X)

AF

268

Economics in urban conservation

the project variables. And a comparison brings out the differences (shown
by ()), stemming from the differences in the elements and the options. A
major instance is the displacement of the hospital, and the absence of the
Natural History Museum, in B.

Identification of community sectors


Having identified the impacts from the project variables, we now need to
show the community sectors on which they will fall, in either Option A or
B. These are presented in Table 15.7.
There could be several ways of enumerating the relevant community
sectors. The approach favoured here is to ensure comprehensiveness in the
enumeration by distinguishing between those who are responsible for
producing and operating the development in question and those who will
be concerned with consuming the services which it creates.
Based on this approach, the table enumerates the producers/operators on
the left hand side (with odd numbers) against which are paired (as far as
practicable) the consumers on the right hand side (against even numbers).
It will be seen that sectors 1-7 are producers/operators on the site itself,
whereas sectors 9-15 are those concerned off site. This is paralleled by the
consumer sectors, with sectors 2-8 being on site and sectors 10-16 being off
site.

From this table it is apparent that functionally the impacts are very
widespread. They are made up of at least the following:
(a) the central area of Jerusalem, since the site adjoins the central
area;
(b) the City of Jerusalem as a whole, since its people will come as
visitors to the Natural History Museum and also to the open
space to be provided;
(c) nationally and internationally, since the Museum will be
visited by those concerned with the Israeli cultural heritage.
From the preceding it follows that it is not possible to define a
geographical boundary to the community which is affected by the development of the hospital site. It is a functional rather than a geographical
community.
But nonetheless there is a geographical definition to the decision maker
who is concerned with the development and planning implications of what
happens on the site, including the conservation of the heritage and the
payment of betterment tax. This is the Municipality of Jerusalem in the

Table 15.7 Community sectors and options in which they are involved

No.
1
3
5

7
9
11

13

15

Producers/operators

Consumers

Sector

Sector

Description

Option

Current landowner on site


Developer/financier:
Flats/car parks
Municipality on site:
(1) roads/utilities
(2) NHM
(3) Grove
(4) open space
Government on site:
National heritage
Municipality off site:
roads/utilities
Other landowners:
(1) adjoining
(2) elsewhere
Jerusalem economy:
(1) employers/firms
(2) urban services
Government budget

AB
AB

No.
2
4
6

AB
A
A
B
A

8
10

AB
12
AB
AB
14
AB
AB
AB

16

Description

Option

Current occupiers of site


Residents in flats
Users of site:
(1) traffic on site
(2) visitors to NHM
(3) visitors to Grove
(4) visitors off site
(5) passers by
Tourists and visitors to NHM
Traffic:
(1) to site
(2) general
Other occupiers:
(1) adjoining
(2) other
Jerusalem economy:
(1) labour
(2) nearby residents - air
- visual
(3) downtown users
(4) users of urban services
Taxpayer

AB
AB
AB
A
A
B
AB
A
AB
AB
AB
AB
AB
AB
AB
AB
AB
AB

Table 15.8 Summary of impacts on completion of Options A and B


Sector

Summary description of impact

Project

Impact

variables

type

No.

Name

Option A

option B

New roads

D
AR
AR
AR
D
AR
AR
AR

Current buildings

5(1)
9(1)
11(1)
13(2)
6(1)
10(l)&(2 )
12(1)
14(4)
5(2)
5(3)
5(4)
7
13(1)
15
6(2)
6(3)
6(4)
8
14(1)
14(2)

Municipality on site
Municipality off site
Adjoining landowners
Urban services
Users of site
Traffic
Adjoining occupiers
Users of urban services
Municipality on site
Municipality on site
Municipality on site
Government on site
Jerusalem employers/firms
Government
Visitors to NHM
Visitors to Grove
Visitors to open space
Tourists/visitors to NHM
Jerusalem workforce
Nearby residents

More roads
More accessibility
More accessibility
More accessibility, more users
Traffic noise
More accessibility
Increase in accessibility
Increase in accessibility
New museum
New Grove
New open space
Retain CBH
More business

v=
v=
v=
v=
v=
v=
v=
v=
-V

DAF
D
D
D
AR
AF
AF
D
D
AR
AR
I

Change in

Enjoy new NHM


Enjoy Grove
Enjoy open space
Enjoy national heritage
Jobs in NHS and space
Enjoy fresh air and visual impact

v+
V
V
V-

New buildings

D
D
AF
AR
AF
AF
AR
I
AR

1/2
3
5
11(1)
11(2)
12(2)
13(2)
4
14(1)

Landowner and occupier


Developer
Municipality on site
Landowners adjoining
Landowners elsewhere
Occupiers elsewhere
Jerusalem urban services
New residents
Jerusalem workforce

I
AR

14(2)
14(3)

Nearby residents
Downtown users

AF

14/16

Government/taxpayer

Notes: Change of impact in Option B shown: V = : same kind


V - : less
V+: more
V : new
none

Increase site value


Increase profit
Betterment tax
Increase land value
Increase land value
Maintain value of flats
Increase business locally
New access in central location
Increase employment in flats and
servicing cars
Increase environmental attraction
Increase enjoyment through
activity at night
Increase income from Sha'arey Tsedek
Hospital site

v+
V-

v+

V-

v+
v+
v+
VV-

v+

Table 15.9 Evaluation of options (on completion)


Community sector
Impact
type

Sectoral objective

Units

B-A

Preference for
Subsector
Sector

No.

Description

No.

Project
variables

10

1,2,3

Increase land value


(net of betterment tax)
Increase development profits

1
2
2
2
3

D
D, AF
D
D
AF

More municipal services


-do-do-doMore betterment tax

0
-

=
A
A
B
A

1
3

PRODUCERS/OPERATORS
Current landowner of site
Developer/financier
Municipality on site
(1) Roads/utilities
(2) NHM
(3) Grove
(4) Open space
(5) New flats

+
+

Preference for Sector 5

7
9
11

Government on site
National heritage
Municipality off site
Other landowners
(1) adjoining
(2) elsewhere

2
1

D
AR

Conserve heritage
Reduce traffic congestion

3
3

AR
AF

Increase land value


Increase land value

A
=

=
A

0
-

A
=
A
B

A
A
A
=

Preference for Sector 9

13

15
2

Jerusalem economy
(1) Employers/firms
(2) Urban services

2,3
1
2
3

AF

Government budget
CONSUMERS
Current occupiers of site

AR
AR
AR
AR

1,2,3

More business
More accessibility
More business
More business
Preference for Sector 15
Greater financial contribution to Sha'arey
Tsedek Hospital from landowner
Minimise disturbance

N/C
A

4
6

Residents in flats
Users of site
(1) traffic on site
(2) visitors to NHM
(3) visitors to Grove
(4) visitors to open space
(5) passers by

Secure flats in good location


1
2
2
3
3

D
AR
D
D
F

AR

Enjoy the cultural built heritage

AR
AR

Reduce congestion
Increase accessibility

Minimise traffic nuisance


Enjoy NHM
Enjoy Grove
Enjoy new open space
Enjoy new view over town

A
A
B
B
A
A

Preference for Sector 6

8
10

Tourists and visitors


Traffic
(1) to site
(2) general

Preference for Sector 10

12

Other occupiers
(1) adjoining
(2) elsewhere

2,3
2,3

AR
AF

Increase occupation value


Maintain occupation value
Preference for Sector 12

14

Jerusalem economy
(1) workforce
(2) nearby residents air/visual
(3) downtown users
(4) users of urban

2,3
2,3

AR
F

2,3
2,3

AR
AR

2,3

AF

Greater number of jobs


Greater environmental
attraction
Greater interest
Greater accessibility
Preference for Sector 14

16
Notes:

Taxpayers
Col. 7
8

:
:

9
9& 10

:
:

the gap shows measurement other than in


+, B is better than A
, B is worse than A
0, B equals A
?, non-certain
A & B are equal
N/C, preference not certain

N/C
A
A
B
N/C
A

274

Economics in urban conservation

first instance, with the State of Israel in the background. The latter comes
in on at least three respects:
a It has a stake in the definition of the nature of the cultural
heritage in the country and would have views on the
justification for including the Hospital in the inventory of the
cultural heritage,
b Insofar as it provides the bulk of the finance for the
Municipality of Jerusalem, it is concerned with the financial
repercussions on the Municipality of its decision,
c As a provider of funds for the move of the hospital from its
former site to its present new building, the government is
interested in seeing the Hospital Board realise money from
the site as a contribution towards the debt incurred by the
hospital move.

Summary of impacts on community sectors


In Table 15.8 is summarised the predicted impacts by type, from the
project variables'by type, which are drawn from the impact analysis (which
is not included here). Each impact is related to the community sector on
which they fall, indicated by number and name (from Table 15.7).
From the table heading it is seen that only the impacts in the third phase
of the project (operation following completion) are shown, and not those
relating to displacement and construction. That is because in this case the
displacement in the two options is similar, except for the significant
difference of the hospital which is retained in Option A and removed in
Option B (the grove and open space in the options respectively are largely
substitutes); and there would also be great similarity in the impacts in the
construction phase, in character and volume. Accordingly, the impact
description and evaluation for these two phases would only complicate the
description without adding much to the evaluation.
A summary is given in the table for Option A. As regards Option B, the
difference in the impact is presented by a notation showing whether it is of
the same kind (and equal, less or more in size); whether it is a new impact;
and whether there is none at all.

Community impact: CIA

275

Impact analysis and evaluation (on completion of


project)
All the preceding analysis is a preliminary to the critical next step, which is
the evaluation of the impacts, presented in Table 15.9. This is introduced
only for that third phase of the development, completion.
The table follows the conventional form of community impact analysis
by showing from Table 15.7 separately for producers/operators and
consumers the community sectors (columns 1 and 2) with a third column to
indicate the number of individuals in each community sector where this is
relevant (not shown here). For each sector is picked out in column 4 the
project variables and in column 5 the impact type (from Tables 15.5 and
15.6).
In the master Table 15.2 the next column is impact description. This, for
ease of presentation, is read from Table 15.8, which in itself is a summary
of the relevant impact analyses (which are not presented here). It is in
respect of these impacts that column 6 introduces the objectives of that
sector. These are presumed by the analyst, from common knowledge, to be
the objective by which each of the sectors will judge its preference as to the
impacts produced as between the options. They are adopted in this way as
hypotheses simply because to establish them with more authority would
require a considerable amount of survey and investigation, which would
hardly be justified on this project. Column 7 shows the units by which the
impacts have been measured.
Column 8 is the heart of the evaluation. For each option, each sector is
notionally asked the same question: how would the particular community
sector (column 2) judge, according to its sectoral objectives (column 6), the
impacts on that sector (Table 15.8) which come from the project variables
(column 4)? In each case the question is asked by comparison of the state
on completion of Option B with completion of Option A. Where the sector
is reckoned to perceive an improvement the result is shown by a (+)
(better), where a deterioration by a minus ( - ) (worse), and where no
difference by a zero (0). The reasons for the conclusions in column 8, and
how they are derived from the preceding columns, is presented in an
explanatory text. Because of its length it is not reproduced here.
The conclusions from the scorings in column 8 lead to the indication of
the preference for the option in column 9. This is shown as A or B, or by an
equals sign (=) where they correspond, or a non-certainty (N/C) where the
comparison leads to no clear result in that particular instance. In this way

276

Economics in urban conservation

Table 15.10 Conclusion on options from Table 15.9 (completion)


PROD UCERSIOPERA TORS
1
3
5
7
9
11
13
15

Landowners
Developer/financier
Municipality on site
Government: national heritage
Municipality off site
Other landowners
Jerusalem economy
Government budget

V
V
V
V
V
V

CONSUMERS
2
4
6
8
10
12
14
16

Current occupiers on site


Residents in flats
Users of site
Tourists and visitors
Traffic in general
Other occupiers
Jerusalem economy
Taxpayer

V
V
V
V

Notes: V , preference from Table 15.9


- , A & B equal
?, preference not certain.

the conclusions on the options are shown for each sector. But in some cases,
where more than one project variable affects a particular sector, there will
be differing entries (e.g. sector 5, municipality on site). Here a summary is
attempted in column 10.

15.6.5

Conclusions on efficiency
Efficiency

A perusal of Table 15.9 shows that in the preference column 9 there are
many scores for each of Option A and Option B, with some shown as N/C.
Thus it is not easy from this table to form a clear conclusion as to the
preference between the options. Accordingly a summary table is prepared,
Table 15.10. This is a simplified version, listing the various sectors under
producers/operators and consumers and then transferring, in two columns
for Option A and B, the conclusions from column 9 of the previous table.
The preferences are shown by a tick (V), the neutrals by a dash (-) and the
non-certains by a question mark (?).

Community impact: CIA

277

A perusal of this table enables the following conclusions to be drawn on


the evaluation of the options at the completion stage. These are:
producers! operators

For Option B the only advantaged sectors are developer/


financier (3). This apart, all the others would favour Option A,
except for neutrality of the Municipality off site (5) and the
uncertainty of the Jerusalem economy (13).
consumers

The only sectors favouring Option B are the new residents in


the flats (4). All the others would favour Option A, apart from
the current occupiers of the site (2), who are neutral (since the
site is vacant) and again the Jerusalem economy (14).
In summary, leaving aside the uncertainty of the Jerusalem economy (13
and 14) those who would favour Option B would have a financial advantage
(3) and potential residents in the flats would favour the larger number (4).
As against these sectors we have the large number of producers and
consumers who would favour Option A. Thus the question arises: Do their
preferences outweigh the preferences of those in favour of Option B?
The financial implications for the developer and financier (3) of adopting
Option A are in themselves not of material significance. While they would
lose the possibility of maximum investment (and profit) on the site, their
profit margin would be of the same ratio. And presumably the shortfall in
absolute profits would be made up by other projects. Equally, while the
residents of the flats (4) would lose some (but not all) choice of flat on this
site, with the given demand the losers could be accommodated elsewhere,
although perhaps not in such a central location.
On the whole, the advantages lost to potential beneficiaries of Option B
through pursuing Option A would not appear to be so great as to outweigh
the advantages to the more numerous sectors who could obtain benefit from
Option A. Of the 'certain' sectors, Option A is preferred to Option B.
We now come to the uncertainty of the Jerusalem economy (13 and 14).
This is shown uncertain because of the countervailing preferences for
Options A and B between the different items shown. Greater precision
could be obtained on this item were further research work to be undertaken, in terms of more precise identification and measurement of the
impacts from the project variables. Indeed this example illustrates the role
described above (15.3) of such research and measurement in community
impact evaluation: readily available data are used and no further survey is

278

Economics in urban conservation

carried out at the outset of the analysis. This is done when the provisional
conclusion reveals certain impacts from which judgements cannot readily
be formed, which are significant for the conclusion, on which therefore
further research in terms of time and money is justified.
In this case the judgement is made that since this project is but a small
one in the totality of Jerusalem economic and social life, differences one
way or the other would not be material and are not sufficient to overturn the
conclusions just drawn as to the preference for Option A.
The evaluation so far has been in terms of the preference of the individual
sectors for the option of advantage to them seen in terms of their sectoral
objectives. This can be interpreted as the option which gives them the
greater net benefit in terms of their sectoral objectives. In these terms,
Option A has the greater efficiency.

Equity
However, this conclusion does not give an answer in terms of equity, that is
in accordance with the principles of social justice which should be also
considered by public authorities alongside the conclusion relating to
efficiency. But whereas with efficiency there are well known rules for analysis
and recommendation (generally speaking the greatest margin of outputs to
inputs, or net benefit) there are no such readily accepted rules for equity
(15.4). And thus the equity rules which prevail are very much a matter of
political persuasion of the decision takers at the time, which can clearly
vary from place to place and from period to period.
In the absence of such rules reliance must be placed upon the judgement
of those concerned with the decision, in accordance with the principles of
social justice which they adopt for the problem and situation in question. In
these circumstances all that the analyst can do is to present the facts, to
bring out the equity implications of the efficiency judgements, or just leave
the decision on equity to the decision makers.
On this the facts are apparent from Table 15.9. The community
preference on efficiency is clearly for Option A, namely conservation. This
would leave at a disadvantage only the two sectors picked out in the table as
favouring Option B, namely the developer/financier (3) and the residents in
the flats (4). The question thus arises: would the inequity to these sectors
for adopting Option A be so great as to outweigh the conclusion in favour of
Option A in terms of overall efficiency?
On this the answer has been suggested above in considering the

Community impact: CIA

279

conclusion on efficiency. The loss to the developer/financier (3) is in not


being able to make as much profit as could be obtained in Option B on this
particular site; and whereas the developer/financier could understandably
wish to maximise profit on any site on which he secures the appropriate
permissions to proceed, this is hardly a severe hardship in community
terms. And equally with the residents of the flats on the site (4). The fact
that under Option A they would obtain 5,000 sq. metres less than the
provision in Option B, can hardly be regarded as a hardship, since the
frustrated individual families can certainly obtain alternative flats in
appropriate places elsewhere in Central Jerusalem.

Trade off between efficiency and equity


This is a situation where the more efficient solution is also the more
equitable. Put another way, were Option B to be adopted rather than Option
A, there would clearly be not only a less efficient solution but also a less
equitable.

Overall
This is given below (16.3) where the conclusions also from the other three
methods of analysis are introduced (Chapters 13 and 14).

Appendix 15.1
Selected published examples of
planning balance
sheet/community impact studies
The studies are grouped by name according to the categorisation introduced above (15.5). Their bibliographic references then follow, indicating
in the margin the authorship and the date of publication:

(1)

(2)

NL Nathaniel Lichfield
NLA Nathaniel Lichfield & Associates
NLP Nathaniel Lichfield & Partners
Plan
Israel
West Midlands
Limerick
Edgware

1971
1971
1967
1968

Project
Nottingham
Third London Airport
Morocco

1967
1969
1977

Scale of plan
National
Regional
Local

Israel
West Midlands
Ipswich
Barnstaple

1971
1971
1970
1981

281

Community impact: CIA


(3)

Kind of plan
Strategy
Policy
Plan

(4)

Content
New Towns
Urban renewal
Roads

Conservation

Shopping

(5)

Different aspects
Transport Modes
Airports

of

Israel
Scotland
Dublin
Limerick
Edgware
Barnstaple

1971
1978
1980
1967
1968
1981

Ipswich
Peterborough
San Francisco
York
Nottingham
Worthing
Barnstaple
Jerusalem
Jerusalem
Cribbs Causeway
Stonebridge

1970
1969
1962
1974
1967
1966
1981
1986
1986
1971
1973

particular

Third London Airport


East Midlands
York
Manchester

Motor-cars
Public transport
Public vs. private
transport
Stevenage
Pedestrian crossing
general
Accessibility and environment
in redevelopment
Newbury
(6)

Time and resources


Within one month
In depth over three
years

kind

Ipswich
Manchester

of

content
1969
1980
1974
1983/84
1969/71
1980
1963

1970
1984

282

Economics in urban conservation

NL

1962

NL

1963

NLA

1966

NLA

1967

NLA

1967

NL

1968

NLA

1969

NL

1969

NLA

1969

NL

1970

NL

1971

NLA

1971

NLA

1971

Cost-benefit Analysis in Urban Redevelopment: Research


Report 20. Real Estate Research Program, Institute of
Business and Economic Research (Berkeley: University
of California).
(with Crompton, D. H.) Cost benefit analysis and accessibility and environment. Traffic and Towns (Buchanan
Report) Appendix 2 (London: HMSO).
Worthing: Cost Benefit Analysis of Alternative Road Proposals (Unpublished).
Alternative Strategies, Report and Advisory Plan for the
Limerick Region, Vol. 2, Part XII (Dublin: Stationery
Office, 1967).
E. Mitchell & Sons and Arthur Ling & Associates,
Nottingham: Cost Benefit Analysis of Alternative Sets of
Road Proposals Affecting Plans for Redevelopment, Vol. 1
(Unpublished).
(with Chapman, Honor) Cost-benefit analysis and road
proposals for a shopping centre: a case study: Edgware.
Journal of Transport Economics and Policy, 2.
Cost benefit study, Commission on the Third London
Airport: Evidence Submitted at Stage HI to the Roskill
Commission by Cambridgeshire and the Isle of Ely, Essex
and Hertfordshire County Councils, ch. 14.
Cost-benefit analysis in urban expansion: a case study:
Peterborough. Regional Studies, 3.
Stevenage Public Transport: Cost Benefit Analysis, Vols. 1
& 2 (Stevenage: Development Corporation).
(with Chapman, Honor) Cost-benefit analysis in urban
expansion: a case study: Ipswich. Urban Studies, 7.
Evaluation of the hypotheses, in Israel's New Towns: A
Development Strategy, Vol. 1, Ch.ll (State of Israel,
Ministry of Housing).
Cost benefit analysis (planning balance sheet) evaluation
of alternatives, in A Developing Strategy for the West
Midlands: Report of the West Midland Regional
Study, Technical Appendix 5 (Birmingham: The
Study).
Comparative planning analysis with and without Severndale:
Proof of Evidence submitted to Local Planning Inquiry

Community impact: CIA

NL

1971

NLA

1973

NL

1974

NLP

1977

NLP

1978

NLP

1980

NLP

1980

NLP

1980

NLP

1981

NLP

1984

NLP

1983

NL

1986

283

on the Proposed Severndale Shopping Centre, Cribbs


Causeway, Bristol (Unpublished).
(with Chapman, Honor) The urban transport problem
and modal choice. Journal of Transport Economics and
Policy, V.
Comparative planning analysis with and without the Stonebridge Shopping Centre. Proof of Evidence, submitted to
Local Planning Inquiry into the Proposed Stonebridge
Shopping
Centre,
Bickenhill,
Warwickshire
(Unpublished).
(with Proudlove, A.) A planning balance sheet analysis of
six alternative routes in Conservation and Traffic.
Appendix B (York: Rowntree Trust).
(with W. S. Atkins & Partners) Costs and benefits of the
programme from a national viewpoint in Morocco:
Economic Opportunities Associated with the Steel Complex
(Unpublished).
Planning Balance Sheet Analysis of Alternative Oil-Related
Industrial Strategies, Scotland (Unpublished).
Towards a Shopping Policy for the Dublin Sub-Region
(Dublin City Centre Business Association).
East Midlands Airport Runway Extension: East/West:
Assessment and Evaluation of Environmental and Economic
Impacts (Unpublished).
(with Department of Civil Engineering Transport)
Imperial College, Pedestrian Crossing: Application of
Social Cost Benefit Analysis (Unpublished).
Barnstaple Town Centre Study: Evaluation of the Strategic
Elements of the Options (Barnstaple: North Devon District
Council).
Achieving Value for Money in Public Transport: Community
impact evaluation in the GMPTE Second Three Year Public
Transport Plan: Report No. 6 (Greater Manchester
Transport).
Achieving Value for Money in Public Transport: Report No.
2: Trafford Park Case Study, Vol. 1, 2 & 3 (Greater
Manchester Transport).
(with Schweid, Joseph) Case study: the Old Sha'arey
Tsedek hospital, in Conservation of the Built Heritage, Part

284

NL

Economics in urban conservation

1986

III (Jerusalem: The Jerusalem Institute for Israel Studies)


(Hebrew).
(with Schweid, Joseph), Case study: Nahalat Shiv'a in
Conservation of the Built Heritage, Part III (Jerusalem:

The Jerusalem Institute for Israel Studies) (Hebrew),


1986.

PartV
Case studies in the
economics of
conservation of the
CBH

Case studies in the economics of conservation

287

Summary
In this part we present a summary of a number of actual cases in the
conservation of the CBH, in which the tools of economic analysis described
above (Chapters 13-15) have been applied as an aid to reaching decisions on
the conservation project.
From amongst the welter of property involving conservation issues, both
in plan preparation and also in project development, four have been
selected on the following criteria:
(a) well documented, and therefore providing data in the studies;
(b) familiarity with the issues;
(c) illuminating a variety of conservation issues which are of
significance for this book, in some logical sequence as follows:
(1) Central Buildings, Southwark, London, a mid-nineteenthcentury hop auction market. This shows how financial
analysis can be used to test the financial viability of
continuing occupation of a historic building while retaining
the heritage quality.
(2) Royal Holloway Sanatorium, Surrey, a late nineteenth-century
hospital. This starts with a decision that continued occupation
for the current use was not viable, so that it would be
necessary to adapt the building to a new use. The issue is
then how to test through financial analysis the viability of
alternative uses that are proposed, in order to show which
have the economic potential for sustaining continued life in
the building.
(3) Sha'arey Tsedek Hospital, Jerusalem, a nineteenth-century
hospital. Based on the case details introduced above (15.6) the
issue is discussed: how to decide between redevelopment or
rehabilitation. The answer to the question was sought
through four kinds of tests: financial analysis to the
prospective developer; social financial analysis for all parties
directly involved; cost benefit analysis in terms of real
resources; community impact analysis for repercussions on
the community.
(4) Covent Garden, London, an area of some 100 acres. Here
comprehensive redevelopment was justified by financial
analysis, with piecemeal redevelopment being less attractive
to the promoters. But it was shown by planning balance sheet

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Economics in urban conservation

analysis, the earlier name for community impact analysis, that


area-based rehabilitation was more beneficial for the
community as a whole.
Each study is presented in turn with some but not complete consistency,
to show the:
(a) case;
(b) issue;
(c) analysis adopted;
(d) findings from analysis;
(e) conclusions of relevance for conservation.

16 The case studies

16.1

Case study 1: viability for occupation1

The case
Central Buildings, Southwark, London, was built around the middle of the
nineteenth century, in twelve storeys including a double basement. It was
originally used as a hop auction market, containing for the purpose a
domed balconied well from ground floor to the roof, rising 115 ft. through
the full ten floors above ground. Around 1920 it suffered severe damage by
fire, and in World War II from bombing. As a result of the demolition
following the fire and the bombing there were only between four and six
floors left, including the double basement. As a result it had lost much of its
original architectural quality.
The issue
Around 1970 the owners were faced with a problematic building. There
was no longer any call for the original use; the fire, bombing and
subsequent adaptation had resulted in a large central gallery with small
suites of offices situated around its remnants; the cellars were of little use in
contemporary conditions; maintenance costs were high, because of age,
fire, wartime bombing and running sand and water 12 ft. below pavement
level.
As a result the owners were considering redevelopment. But in March
1970 the building was spot-listed as Grade II, with particular reference to
its facade, internal galleried court and ironwork. This reinforced the
powers of control against redevelopment already afforded by the inclusion
of the building in a conservation area. Redevelopment was accordingly
resisted by the authorities.

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Economics in urban conservation

The study
The owners commissioned reports from consultants into the following
alternative courses of action:
(1) retain all features of historic and architectural interest, repair
and modernise and add three floors at the western end of the
building;
(2) rebuild behind the existing facade, to comprise a new office
building with ground and five upper floors, and basement car
park;
(3) demolish and rebuild to provide accommodation similar to
option 2.
Amongst the studies only one is of relevance here: relating to the
economics of continuing to use the existing building. In this inputs were
provided from the other consultants, the architects, quantity surveyors,
structural engineers and estate agents and valuers.
In essence the report investigated the following:
the actual expenses and rents in the years 1968-72;
the forecast expenses and rents from 1973 to 1990, on three
alternative assumptions on rent rises (3 per cent, 6 per cent and
10 per cent).
The expenses included depreciation and insurance of equipment, rates,
repairs, staff wages and insurance, general expenses, heat and light,
administrative and professional fees (all net of those which could be
recovered).

Findings
In essence the study showed that while for the years 1968-71 there had been
a surplus of rents over expenses, there was an actual loss in 1972 and
predicted loss from then on. To put the options on a comparable basis, the
total losses before tax (discounted to 1972 at 1970 prices) were estimated,
amounting to 50,000 on the assumption of 10 per cent increase in rents,
115,000 at 6 per cent and 155,000 at 3 per cent. Accordingly, even taking
the most favourable profile for rent increases, the building would steadily
and increasingly cost more to run than the rent income.
From this it was apparent that no authority could expect an owner to
maintain the building from 1972 onwards in its then condition. If they did

The case studies

291

the owner would be forced to abandon it to avoid a steady financial drain.


By so doing he would not be keeping the heritage qualities of the building
in existence, so that there would inevitably be some absolute loss to the
heritage. This would also come about if Option 3 were pursued, namely
demolition. Thus there was a trade off between the greater or lesser
retention of the heritage qualities in Options 1 and 2. In the event,
permission was given for new floorspace which enabled the interior of the
building to be kept as well as the facade (Option 1).

Relevance to conservation
To establish that a heritage building is non-viable as it exists, and therefore
requires financial support, it is necessary to show that its continued use
without support could only be run at a loss, not only at the time but in the
future; and that a development option existed which could produce
viability while retaining quality.

16.2 Case study 2: the Royal HoUoway Sanatorium, Virginia Water,


Surrey2

The case
The Royal HoUoway Sanatorium was built in the 1880s and opened in 1884
for the treatment of mental illness. Tremendous care and study went into
its design, so that it is an exceptional example of late Victorian architecture,
standing in some 23 acres (Plan 16.1). In 1981 the original buildings were
listed Grade I, that is 'of exceptional interest' (5.2.3), there being (1985)
only 5,750 in England and Wales out of a total of some 368,000 listed
buildings.3 Most but not all of the remaining buildings are subsequent and
inferior in character and so dispensable. To the south of the main building
lies a cricket ground and gardens which provide a splendid setting for it.

The issue
In 1980 the owners of the Sanatorium, the South West Thames Regional
Health Authority, decided to discontinue its use for the purpose, in
accordance with the reorganisation of the National Health Service, and
gave instructions for its disposal. Since there was clearly no market for the

Site Boundary
Retained Buildings
Demolished Buildings

?m

New Building

USES
A

Office

Residential

Parking

_-.-

10

10
0

Plan 16.1
The Royal Holloway Sanatorium, Virginia Water: current block plan
: Based on drawing prepared by Hunter & Partners

30
20

50 metres
40

The case studies

293

former use, it was necessary for the purpose of the disposal to obtain a
planning consent for a new use, in order to establish the potential value.
For this purpose applications were made in 1982/83 to the local planning
authority. They favoured residential, by conversion of the main building
and new sheltered dwellings to the north, because they feared that
employment use would create pressure for housing in the local green belt.
But they were aware that such use for the main building would not generate
sufficient value to ensure its upkeep and maintenance into the future. They
were prepared to consider offices which although against policy was the
only use by which the building could be preserved.
The owners identified a developer who would be willing to buy the
building for such office use, with some new residential development in the
grounds to the north. He made a planning application in 1982 for office use
in the totality of the Grade I building, of some 65,000 sq. ft. for pure offices
and the same for ancillary circulation and storage. The proposal was well
received by the planning officers and an agreement negotiated. But the
local planning authority refused the application because they considered
the office use excessive. The prospective developers appealed. In parallel
they gave evidence at the Inquiry into the Local Plan held in April 1985 by
an Inspector appointed by the Secretary of State for the Environment. It is
from the voluminous evidence presented at this Inquiry by expert witnesses
for the developer, which was rebutted by evidence by the authority, that
the following material is extracted, in particular:
David Campbell Jackson, of 12th May 1985.4
Nathaniel Lichfield, of 14th May 1985.5

The decision-guidelines
Under the regulations for a local plan inquiry the Inspector is appointed by
the Secretary of State but does not submit his report to him but instead to
the local planning authority. It is for them to accept or otherwise the
Inspector's recommendation.
The recommendation made by the Inspector related to an appropriate
use for {he building, bearing in mind not only the land use planning
considerations (residential versus office) but also the policy of protecting
listed buildings against erosion of their heritage quality. In this he took
account of the government guidelines for the decision criteria on alteration
or demolition of listed buildings (Listed Building Consent) (Appendix
16.1).

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Economics in urban conservation

Table 16.1 Royal Holloway Sanatorium: rehabilitation: financial viability


of scheme (1): office/residential
Gross sale value of:
Offices
Residential
Total
Less sale cost:
Offices at 3%
Residential at 2.5%

30,255,000

825,000
68,875

Total net sales receipts

Development costs
Site & purchase
Site running
Restoration & building
Offices
Residential
Fees
Offices at 16%
Residential 14%
Letting & legal
Interest at 14% pa
Total development costs

Developer's profit of 15%

27,500,000
2,755,000

29,361,125

6,000,000
400,000
10,318,000
3,251,000
1,650,880
455,140
150,000
3,908,130
26,133,150

3,227,975

The options
Several options were considered of which two were tested in detail:
Scheme 1 Office and residential (O/R):
Conversion of main building to 65,000 sq. ft. of offices and
65,000 sq. ft. ancillary, together with 105 new residential units.
Scheme Y Residential alone (R): Maximum number of units amongst
sub-options:
Conversion of listed buildings to sixty-two town houses or flats,
fourteen new units on the northern boundary and fifty-nine
bungalows on the cricket pitch.

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295

Table 16.2 Royal Holloway Sanatorium: rehabilitation: financial

viability

of most profitable residential scheme (Y)

15,517,500
387,940

Total gross sales receipts


Less sale costs at 2.5%
Total net sales receipts
Development costs
Site & purchase
Site running
Restoration
& building
Fees

15,129,560

6,000,000
400,000
16,646,000
2,330,440

Gross
Interest
Developers profit
Total development costs
Shortfall in revenue

18,976,440
9,491,760
Nil
34,868,200
-19,738,640

Essential findings

Financial analysis6
Table 16.1 shows that Scheme 1 produces a financial surplus of value
over cost, to provide a developer's profit of 15 per cent. This would
make it feasible for the developer to carry out the scheme and to pass on
the annual operating costs of maintenance, etc. to the intending
purchasers.
However, the financial analysis of Scheme Y gave a different story,
despite having the maximum number of dwellings amongst the residential
sub-options, with bungalows on the cricket pitch being adverse to the
setting of the listed building. Even allowing for no developers profit, the
values show a shortfall over costs.
This conclusion was subjected to sensitivity tests which showed that
the sales values would need to be increased by 130 per cent to break
even with costs, or 147 per cent to provide a 10 per cent development
profit.

Economics in urban conservation

296

Table 16.3 Royal Holloway Sanatorium: evaluation of office/residential and


residential options

Community sectors
Item Description

Sectoral objectives

Options
compared
with current
O/R R
Preference

Current landowner
Developer/financier
Local authority off site
Other landowners:
- Laundry
- Sandhills Lane
- Other

Maximising land values


Maximise surplus value
Minimise cost
Maximise values

O/R
O/R
=

Built heritage
L.A. rate income
The economy
Consumers
Current occupier
New occupiers:
- residents luxury
- residents sheltered
housing
- office
Adjoining occupiers
- Sanatorium grounds
- Office use

Increase amenity:

Vehicular traffic
- cars
- services vehicles
and visitors

Accessibility

Tourists/visitors
to heritage
Ratepayers
General public

Availability of listed
building in long term
Minimise rate burden
Visual enjoyment
Access

2
Producers/operators

1
3
5
7

9
11
13
2
4

10
12
14

16

Workforce

Conserve into future


Maximise
Maximise growth

Attract new occupier

Gain accommodation

O/R
O/R
O/R

O/R
R
NIC

N/C
NIC

O/R
O/R
O/R
O/R
O/R
O/R

Increase jobs

O/R
O/R
O/R
O/R
O/R
O/R
O/R

Notes: Cols. 4 and 5 show a method of ranking the option with the current situation.

The case studies

297

Table 16.4 Royal Holloway Sanatorium: Summary of evaluation in Table


16.3: O/R against R options
Options

O/R
Producers/Operators
1 Current land owner
3 Developer/financier
5 Local authority off site
7 Other landowners
9 Built heritage
11 L.A. rate income
13 The economy
Consumers
2 Current occupier
4 New occupiers
6 Adjoining occupiers
8 Vehicular traffic
10 Tourists/visitors and heritage
12 Ratepayers
14 General public
16 Workforce

V
V
V
V
V
V
V

V
V

N/C
N/C

N/C
N/C

V
V
V
V

: V indicates preference
N/C indicates non-certain.

Community impact evaluation7


The results of this analysis, carried out on the lines indicated above (15.6),
are shown in Table 16.3 and summarised in Table 16.4, from which the
following conclusions are drawn.
Producers/Operators. The table shows that the O/R scheme scores for
all sectors except (5) (local authority off site) on which there is neutrality.
Consumers. The table shows that there is neutrality for sector (2)
(current occupier); preference for the O/R scheme for sectors: (4) (new
occupiers); (10) (tourists/visitors to the heritage); (12) (ratepayers); (14)
(general public); (16) (workforce); and non-certainty in the remaining two
sectors: (6) (adjoining occupiers) and (8) vehicular traffic.
Leaving the neutral and non-certain sectors aside there is a decided

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Economics in urban conservation

preference for the O/R scheme. We therefore need to consider the weight of
the two sectors on which there is uncertainty, namely (6) (adjoining
occupiers) and (8) (vehicular traffic). The question arises, if it were possible
to predict these two impacts, would a decided preference for the residential
scheme in them counteract the preference for the O/R scheme in the five
sectors mentioned?
This would appear unlikely since the impacts from (6) and (8) are not
likely to be significant compared with those on the five sectors for whom the
O/R scheme clearly scores: (4), (10), (12), (14) and (16), particularly (16) in
respect of employment.

Overall conclusions
The closure of the Sanatorium clearly requires a new use for the property,
one which is capable of generating sufficient capital expenditure for
rehabilitation and revenue for maintenance to ensure conservation of the
Grade I building into the future, and the maintenance of its foreground as
an open setting.
The analysis shows that Scheme 1 meets these requirements but not
Scheme Y. In this even building houses on the foreground (affecting the
building's setting) would not give financial viability. There would thus be
pressure for the demolition of the listed building in order to produce a
cleared housing site, so destroying for ever its Grade I heritage value.
Having established that because of financial viability the office/residential scheme would better conserve the heritage it is pertinent to raise the
further economic question: at what cost in terms of resources?
As regards operating costs (maintenance and upkeep of the buildings and
gardens, etc.) the relevant costs are much the same.
As regards capital cost (construction and fees), the difference between
the two options for the principal building is:
Scheme 1 12.0m.
Scheme Y 9.1m.
This means that the conservation of the listed building will be bought at
the price of the extra capital costs of 2.9m. These would be borne in the
ultimate not by the developers but the occupiers of the office/residential
scheme, out of the sale prices. The conservation will thus be financed in the
ultimate from the firm to be housed in the refurbished building. It is their
extra costs which will gain the advantage to the national heritage of the

The case studies

299

conservation of the building and grounds, to a higher quality than could be


obtained by the residential only option.
The extra 2.9m. needed for conservation would fall initially on the
developers and ultimately on the occupiers of the property. But will there
be also indirect costs, falling on other sectors of the community?
Just what these are can be seen from Tables 16.3 and 16.4. These show a
preponderance of net benefit from conservation on the affected community
sectors. Put another way, leaving the non-certainty sectors aside, no sector
of the community will suffer in socio-economic terms under the office/
residential option with its greater achievement of heritage quality in the
Hollo way Sanatorium; the occupiers of the office building are no exception
to this, for while they will be paying the heavier purchase price they will
have the accommodation of value equal to the price.
This means that in Scheme O/R not only can conservation be achieved at
the highest practicable heritage quality level, but also that this higher
quality will be obtained not at net loss but at net benefit to the remainder of
the community.

Relevance to conservation
Since Royal Holloway Sanatorium is a Grade I listed building there could
be little compromise in conserving its heritage quality. And since the
nature of the building was such that only the high value office use could
provide the necessary funds for adaptation and continued maintenance, the
conservation choice lay in the direction of offices.
However, in the local planning policies this was less desirable than
residential, since the concern was the protection of the established character of Virginia Water, which could be undermined by the introduction of
business use of the premises with its traffic on surrounding roads and
pressure for new dwellings from new employees.
These disbenefits of the office scheme were reflected in sectors 6 and 8 of
the community impact analysis (the undermining of the Virginia Water
character and impact of new residential pressure on the Green Belt being
too diffuse to identify).
Thus the CIE was in fact a way of testing the policy which preferred
residential to protect character against the policy which preferred office for
conservation. It showed the opportunity cost of each. In brief, the
community impact analysis showed that office use would not leave the
community worse off but better off. In other words, the conservation

300

Economics in urban conservation

objective could be financially achieved only by the office scheme; and this
would not be deleterious to the community.

End note
It remains to be added that the Inspector of the Local Plan Inquiry
recommended in favour of the developer's scheme and that, on the
subsequent submission of a planning application for conversion to offices,
the Borough Council issued the planning permit.

16.3

Case study 3: The Old Sha'arey Tsedek Hospital,


Jerusalem8

The case
See 15.6.1.

The options
See 15.6.2.

The issues
The conservation issues can be posed in relation to four questions, for each
of the parties in the following three sectors, i.e. (a) landowner/developer/
Municipality directly involved in the development of the site; (b) Municipality/State as conservation authority; and (c) community at large.
1 What is the conservation quality which will be retained under
Option A and thus what is the conservation loss in the
complete redevelopment of Option B? In this it is assumed
that the maximum conservation quality will be retained in
rehabilitating the building, consistent with financial
constraints.
2 What is the difference in cost and benefit between pursuing
Option B (commercial redevelopment) rather than A
(conservation)?
3 Resulting from 2, what is the opportunity cost of pursuing

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301

conservation (A) as opposed to redevelopment (B), i.e., what


do the three sectors in (a), (b) and (c), have to give up in
terms of net benefit if conservation is pursued (A) rather than
redevelopment (B)?
4 Is the amount of opportunity cost in 3, to the respective
groups, a reasonable one to expect for achieving the
conservation quality in 1?
The study carried out the necessary work to answer these questions as an
aid to decision makers, using the appropriate evaluation methods in each:
financial viability to the parties in the development process;
resource costs needed for conservation as against heritage
quality, for Municipality or State as conservation authority;
net benefit to the Jerusalem community at large
The methods of analysis
The analysis for the study was pursued by three different methods:
(a) Social financial analysis, to bring out the direct financial costs
and returns to each of the parties directly involved in the
development project, namely the Hospital Board as
landowner, the development company and the Municipality.
(b) Cost benefit analysis, aimed at comparing the costs to the State
in terms of real economic resources, and the benefits to the
State in terms of the heritage value which would be achieved.
(c) Community impact analysis, to show the costs and benefits and
their distribution to all sectors of the Israeli community who
would be impacted.
Conclusion on the conservation issues
We now present answers to the four questions presented above, in respect
of the three sectors, using the three preceding methods of analysis.
What is the heritage quality which would be retained in Option A and
lost in Option B? In Option B clearly no heritage value would remain but
some would be retained in Option A. Here the quality as a working hospital
cannot be conserved in 'restoration' terms, but the rehabilitation of the
building for a Museum would enable it to continue to display some of the
original architectural and historic qualities.

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Economics in urban conservation

What is the difference in cost and benefit for the three sectors between
pursuing rehabilitation (A) as opposed to redevelopment (B)?
For (a) the landowner would lose $0.065m. (the higher development
value being offset by the higher betterment tax), 9 the developer would gain
a development profit of $0.03m. while the Municipality would gain
$0.935m. (the higher betterment tax). The non-quantified value of the
roads and open space would be common to both options.
For (b) there would be greater resource costs in B ($1.88m.) and nil
conservation quality.
For (c) there would be a net loss in B to the major number of community
sectors involved and a net benefit to only two sectors (developers/financiers
and new residents on the site). Their gain would hardly outweigh the loss to
all the other sectors.
What is the opportunity cost of pursuing conservation in A, as opposed
to redevelopment in B: what would be given up in terms of net benefit?
(a) The landowner would gain the $0.965m., the developer
would lose the $0.03m. and the Municipality lose the
$0.935m.
(b) Since the resource costs for rehabilitation would be less than
those for redevelopment, the opportunity cost is zero.
(c) Since the community would in the main benefit from
conservation rather than from redevelopment, the opportunity
cost of pursuing conservation would be negative and not
positive: the community would in fact gain from conservation.
Is the opportunity cost a reasonable one to achieve the conservation
quality?
(a) Landowner: the answer is clearly in favour of conservation; he
gains financially by it.
Developer: resistance might be expected; he loses a bigger site
and some development profit.
Municipality: although losing financially in Option A, they
would gain in conservation. Thus there would be a trade
off in the financial and conservation functions. The weighting
is not clear. But the stand the Municipality took against the
planning permit presumably implies the answer it would give:
conservation even at financial loss.
In summary, on financial terms alone, only the developer
would oppose conservation.

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303

(b) Since there would be a saving in resource costs to gain


heritage quality, the opportunity cost is reasonable.
(c) In Option A, two of the sectors associated with the national
heritage would gain (the Government as guardian of the
heritage and the tourists and visitors who would come to see
it) compared with Option B where the heritage would
disappear. Now if the remainder of the community were to
benefit from Option B then the opportunity cost of
conserving the national heritage could be seen as the losses to
them. But the reverse is apparent. In Option A, retaining the
heritage, the community as a whole would benefit rather than
lose. In these terms again the opportunity cost of conserving
the heritage would be negative and not positive. This being so
it follows that it is certainly reasonable to invite the
community to pursue conservation rather than
redevelopment. By doing so they would not lose in net benefit
but gain, including the heritage quality.

Relevance to conservation
In this case the approach of case 2 is taken further. By raising wider
questions and exploring the answers to more parties, the deeper ramifications of the simple issue (conservation or redevelopment) are exposed.
Since varied answers are given to the varied questions, it follows that
making decisions on only selective questions (e.g. on financial profit or loss
to the property owner, or heritage value of the building) could give biassed
decisions. Accordingly since there are many viewpoints for any conservation decision, it is necessary to have regard to them all in order to reach a
balanced and defensible decision.

16.4 Case study 4: Covent Garden, London: redevelopment or


conservation over an area
The case 10
Until its removal in the seventies to a new more efficient location at Nine
Elms, the Covent Garden Produce Market was located on 15 acres in
Central London, where it had been for three centuries, between modern
London's entertainment complex to the west and the City of London

V *.

V
o
IHCCADILLY
CIRCUS

o i

100 200 300 400 500metres

Plan 16.2
Covent Garden, London: location plan

^^M

COVENT GARDEN

SURVEY AREA

The case studies

305

fringes to the east (Plan 16.2). Its daily functions (involving heavy
collection and distribution traffic) contributed to the 'blight' of the
surrounding area (some 80 acres in extent). The removal of the market would
clearly be a stimulus to the regeneration of the area. A consortium of the local
planning authorities concerned (Greater London Council, City of Westminster and Borough of Camden) visualised the regeneration in wholesale
clearance and redevelopment, for which there were large scale opportunities,
in which they would be involved also as landowners (Plan 16.3).
For the purpose of preparing the redevelopment plan the Consortium set
up the Co vent Garden Planning Team. Their brief included the following:11
A broad financial appraisal of the redevelopment proposals including acquisition
costs, development costs and revenues; distinguishing between those of the
Consortium and totals for the scheme as a whole, and including where appropriate
cost-benefit studies of alternative proposals.
On these aspects, the Team was to work with the Valuation Officers of
the Greater London Council and City of Westminster, with consultancy
advice on the methodology of financial analysis by Nathaniel Lichfield &
Associates.
When the Consultants were appointed in 1967 the Planning Team had
prepared a Draft Plan. 12 They had comprehensive redevelopment in
mind. 13
1.1 In 1972, after three centuries on its present site, the Co vent Garden market is
expected to vacate the 15 acres it now occupies in the heart of London. Taken
together with a bigger area of obsolete property adjoining the present market, this
will provide the opportunity within the next ten to twenty years, to reconstruct up
to 80 acres of the West End - an area big enough to allow breaking away from the
existing urban pattern and building in a new form better adapted to modern needs.
The pattern of streets and buildings has changed little from that shown in drawings
dated more than 200 years ago - a pattern based on the ancient route of the Strand
and extended haphazardly outwards from Inigo Jones' plans of the early 1600's for
the Covent Garden 'Piazzas', the first of the London squares. It is not surprising
that the pattern itself is obsolete. What is unusual is the scale of the present
opportunity to make basic improvements.
The Consultants then saw their contribution as carrying out a series of
tests on the draft proposals in respect of:14
(1) what was the degree of economic obsolescence in the properties identified by the
Planning Team as having 'opportunities for change': if the site values do not
exceed the property values then the opportunities could be expensive to
achieve;

306

Economics in urban conservation

Plan 16.3
Covent Garden, London: redevelopment opportunity
Note: Based on Covent Garden's Moving: Covent Garden Area Draft
Plan, 1969

The case studies

APPRAISAL
\

SUMMAHYMAP:
BEDEVELOPMENT
0PPORTBWT1ES
FIG 10

307

308

Economics in urban conservation

(2) what would be the relocation costs of firms which were to be displaced: this
would indicate levels of compensation for disturbance and possibly give rise to
plans for relocation in the study area or outside;
(3) what was the demand for future uses provided for the study area, having regard
to both consumer demand and market response;
(4) financial evaluation of alternative designs for segments of the scheme;
(5) financial analysis of the implementation proposals having regard to the staging
of the programme, which agencies should be involved and method of disposal of
local authority land?

The issue
The Draft Plan proposed large scale comprehensive redevelopment of large
segments of the Study Area. This happened to be at a time when in Britain
there was a groundswell of reaction against this form of renewal in favour of
a more conservative approach of regeneration through area rehabilitation,
environmental improvements, etc. with only piecemeal redevelopment.
This groundswell became an organised focus at the Public Inquiry into the
Draft Plan. In consequence the Secretary of State rejected the comprehensive redevelopment; while approving the general objectives of the plan and
the area as suitable for comprehensive redevelopment he invited the
Greater London Council to make substantial modifications to both the scale
and volume of the redevelopment originally contemplated.
This led to revised proposals which laid the foundation for ongoing
regeneration, including retention of the Market Buildings themselves and
their rehabilitation.15
This change in plan for the Covent Garden area stimulated a later study
of the renewal strategy being adopted, with an evolution of the two
alternative approaches: comprehensive or 'the gradual piecemeal renewal
of the area and conversion of existing structures within the existing
framework of roads and services'.16 This evaluation was carried out by
planning balance sheet analysis after considering for the purpose and
dismissing conventional cost benefit analysis and goals achievement matrix.
Using both these two sources we are able then to present a comparison
between comprehensive redevelopment of major segments of the area as
against area rehabilitation. And furthermore we are able to compare the
results produced by social financial analysis (reflecting the interests of the
various parties directly involved) and planning balance sheet analysis
(taking into account wider repercussions).

The case studies

309

Table 16.5 Covent Garden: redevelopment: investment costs and returns on


land transaction

ITEM

Whole
scheme

Initial cost of land


and site engineering
Ground rents
Rate return at %

m
END OF DEVELOPMENT
Consortium
Private
of three
sector
authorities
alone

73.2
6.0
8.4%

23.1
1.4
6.0%

50.0
4.4
8.7%

Table 16.6 Covent Garden: redevelopment: annual surplus/deficit to parties


on land transaction

Item

Whole

Private

Con- G.L.C. Camden


sortium

(000)
Westminster

Total annual costs


of land and site
Engineering
Net annual surplus
(%)
Deficit
(%)

5.629
0.515
9.1
-

4.174
0.380
9.1
-

0.771
0.154
20.0
-

0.423
(0.423)
(100)

0.259
0.03
1.1
-

0.383
(0.002)
(0.05)

0.077
(0.346)

0.054
0.057
-

0.023
0.021
-

Share of Consortium surplus


Net surplus
Net deficit

The financial findings on comprehensive


redevelopment17
The testing and iterative procedures relating to financial appraisal gave the
following estimates on completion of the Draft Plan scheme:
1 The total capital costs of the whole scheme over the fifteen
years would be 138 million, of which 66 million would be
transfer costs of land acquisition and 72 million would be in
real costs of construction.

310

Economics in urban conservation


2 Of the total cost, 55 million (40 per cent) would be in the
public sector and 82 million (60 per cent) in the private. Of
the public sector, 17.5 million would fall to central
government and 37.5 million to the local authorities.
3 The returns to the scheme are presented in Table 16.5 in
terms of the land transaction: that is, the ground rent which
would be received, or the notional ground rent at which land
owners would be sitting where they are freeholders. This
return is compared not with the total cost figures just referred
to but only with the capital cost of land acquisition and site
engineering works required to create sites ready for building.
Taking the scheme as a whole ground rents would ultimately
show 8.4 per cent on the total initial investment of 73.2
million thus producing a surplus over the cost of borrowing
on initial capital, assumed at 7.5 per cent. Thus on this
criterion the scheme as a whole, taking the private and public
sectors in combination, would be financially viable. But the
position as between the public and private sectors would
naturally vary. As the table shows, the private sector would
earn somewhat above average (8.7 per cent) and the
Consortium of three authorities on average below (6 per cent).
4 These rates of return for the public and private sectors do not
reflect the full picture that would arise when construction
costs and rack rents are taken into account. For the public
sector it cannot be expected that the position would improve,
for most of the investment would be non-profit earning. But
in the private sector the reverse would apply. Provisional
estimates show that if the ground rents were deducted from
the estimated net rack rents, there would still be left a surplus
over the interest on cost of construction amounting to at least
as much as the ground rents alone (4.4 million). In other
words although the rate of return on the land transaction to
the private sector at 8.7 per cent is only about 1 per cent
higher than the cost of borrowing, when the rack rent return
is taken into account the investment as a whole would be
highly profitable and attractive.
5 The rate of return would vary as between the three
authorities. Their position can be seen from Table 16.6 which
compares for the end of the scheme their total annual costs on

The case studies

311

land and site engineering (with loan charges at 7.5 per cent)
with their net annual surplus or deficit by way of actual or
notional ground rents.
The table shows that whereas on their own the GLC and
Westminster would show an annual loss, both the Consortium
and Camden would have a surplus. The surplus of Camden
and the loss of Westminster would be quite nominal in
relation to their expenditure but the Consortium's surplus
and the GLC's loss would be significant. This position would
be altered when account is taken of the sub-division of the
annual Consortium surplus of 154,000 between the GLC,
Camden and Westminster, in the agreed proportion of 50, 15
and 35 per cent. The net result is that the GLC would show a
loss of some 346,000 whereas Camden and Westminster
would each show a surplus of some 60,000 and 20,000
respectively per annum.

Implications of findings for the mode of comprehensive


redevelopment18
Following this analysis some implications were brought out for the mode of
carrying out the redevelopment, as follows:
1 Generally speaking the aim has been to reduce as far as possible the initial capital
costs which would fall on the authorities. But there is a limit below which the
obligation cannot be reduced, given the objective to carry out comprehensive redevelopment in this part of London. This limit has been decided by planning considerations: that is the blocks of land which it is essential for the Consortium to
acquire in order to pool established ownerships, close streets which do not conform
with the planned layout and secure multi-use development. If less land were initially acquired then it is likely that comprehensive redevelopment would not be
practicable, and certainly no scheme on the lines of this Report could be realisable.
2 Once the initial land acquisition has been made, and the comprehensive
redevelopment secured, it is then generally practicable to sell off freehold
interests rather than retain the landownership and the debt liability. In this
particular scheme however sale of freehold sites is generally not practicable,
owing to the complex character of the scheme and the multi-use of sites.
Accordingly, to reduce capital liability the policy is recommended of disposal of
long leasehold interests by way of premium rather than ground rent, so retaining
the freehold interest with the Consortium but attracting capital recoupment
which will result in keeping down the outstanding loan. In effect the recoupment
would act as a revolving fund for later land acquisition purposes.

312

Economics in urban conservation

3 In this way it is possible for the authorities to carry out the planning obligations
implicit in the scheme; reduce to a minimum their amount of debt at any one time
in promoting the scheme; and retain the freehold to the benefit of future
ratepayers, both because of the possibility of obtaining proportions of increase in
site value in the later years of the scheme (a factor which has not been reflected in
the financial analysis) and also obtaining revision to the freehold after a long lease
of say 99 or 125 years.
4 But the results of the financial analysis suggest a further possibility, which could
secure all the advantages just referred to and yet further reduce the debt liability
and perhaps also the revenue operating losses from public sector development.
This arises because of the financial viability of the scheme as a whole, covering
both the private and public sectors. As Table 16.5 shows, the total actual and
notional ground rents which would be generated exceed the interest costs on land
acquisition and site engineering; and furthermore when the rack rents on private
sector development are taken into account the surplus of total income over total
costs would be generous. Accordingly it is possible to envisage that a large scale
property development company, or a consortium of several, might take over the
whole of the project including the land acquisition (by agreement supplemented
by use of compulsory purchase powers by the authorities). In return for a partnership agreement on these lines, the Consortium should be able to secure favourable
financial terms. It is not possible from the analysis to be precise as to what these
might be, but it is possible that the Consortium would be able to negotiate for the
private development company to bear at least the land costs of the public sector, or
secure some other contribution to the public sector liabilities.
5 In short, the financial analysis shows that this major redevelopment in Central
London can be achieved on the lines set out in the report and programme without
serious financial loss, and perhaps none at all to the authorities. Indeed it would
not be out of the question that over the life of the project or upon completion
some net revenue could be earned.

Comprehensive versus piecemeal redevelopment: findings on planning


balance sheet analysis
We now turn to the second study, the evaluation of the comprehensive and
piecemeal redevelopments by planning balance sheet analysis. The
essential results are shown in Table 16.7 below.
The conclusion was: 19
The Balance Sheet showed that while the comprehensive redevelopment plans
(column C) would be highly profitable in financial terms, this was no longer the case
when social costs were taken into account. Moreover, many of these social costs especially displacement of housing and business - would bear most heavily on

The case studies

313

Table 16.7 Covent Garden: comprehensive versus piecemeal redevelopment: a


planning balance sheet appraisal

Group

Item

Costs (m)
P
C

Benefits (m)
P
C

A. PRODUCERS/OPERATORS

1.0 G.L.C. and local authorities

2.0 Central government

3.0 Developers
4.0 Business in area
4.1 Business displaced
4.2 Business not displaced
4.3 New business
5.0 Business outside area

Construction and site engineering


Savings on services
(Ground rents)
Construction and site engineering
grants
(Ground rents)
Construction and site engineering
(Ground rents)
Benefits lost
Disruption
Loss to trade, etc.
Agglomeration economics
Benefits of occupation
Loss of contact
Total Q
Benefit-cost ratio

14.6

5.2

7.0
0.4

2.8f
(2.5)

49.8

29.8

31.5
5.6
m*

m*
(11.4

mOJ

(6.6

-)

(25.2

13.5)

mO
102.5

m*
62.5

102.5

62.5

5.9

5.6

0.7

2.2
1.0
2.0

6.5)

14.9
0.5
mO

m**
108.9
0.98

m*
53.2
1.2

Benefit lost and disruption


Loss of social contact
Benefit of new environment

1.2
m**

0.8
m**

Time loss/running cost


Time loss
Loss of comfort
Accident savings
Loss of character of area
Amenity of new area

7.2
3.6
0.8
m**

Loss of benefit
Gain of utility
Total Q
Benefit-cost ratio
Grand total m
Total benefit-cost ratio

m**

m*

12.7
0.5
121.6
0.9

6.5
1.7
59.7
1.2

B. CONSUMERS

6.0 Existing residents


6.1 Residents displaced
6.2 Residents not displaced
7.0 Future residents
8.0 Travellers
8.1 Private transport
8.2 Bus passengers
8.3 Tube passengers
8.4 Pedestrians
9.0 City population at large
10.0 Users of new facilities
10.1 Existing facilities
10.2 New facilities

2.4
1.2
2.0
m*

m*

mO

m*
6.6

mO
10.9

109.1

73.4

Note: ^Intangibles shown by letter 'm'; * *, *, 0 is an attempt to gauge magnitude (after Lichfield, 1964 etc.);
0 is an insignificant amount, though to * * very significant.
Source: Alexander (1974), p. 54.

low-income residents and small business operations (items 4.1, 6.1 in the Balance
Sheet), i.e., those people and activities least able to afford it. Congestion costs
arising from the comprehensive scheme would also be high and, as shown under
Item 8.0, would significantly worsen conditions for travellers in central London.
On the other hand, if the area were redeveloped in a more piecemeal fashion (see

314

Economics in urban conservation

column P) by gradual rebuilding within the existing framework on a scale


comparable to existing structures, these social costs would be significantly lower as
they would cause less disruption and congestion.
This led to the general conclusion: 2 0
In general terms therefore, the analysis undertaken indicates that in the case under
examination the alternative of the comprehensive redevelopment is inferior in
comparison to the situation produced by controlled gradual piecemeal redevelopment, in terms of its effects on the welfare of the community. Whilst the
comprehensive scheme does offer the community greater benefits, these are
outweighed by far greater costs (social and financial) that it involves. Furthermore
these costs fall on the less well off members of the community.

Alexander (1974) then shows how the analysis can also be used as a tool
for assisting in the design of a variation which should be preferred, since it
would retain the features of the original plans which were shown to be
healthy and attempt to ameliorate those which were not. The conclusion
is: 21
Yet there are grounds for concluding that neither scheme is particularly satisfactory
from this point of view of promoting the welfare of the community, since the
piecemeal scheme also bears heavily on the lower income groups of the community
and tends to produce an area that is dominated by activities of an intensive and
profit-oriented nature at the expense of uses such as housing and public facilities.

Conclusions of relevance to conservation


Both studies show that social financial analysis and planning balance sheet
analysis can be applied to the plan for a big complex area as well as a limited
isolated project, as in cases 2 and 3. They also show that while the analysis
can be used for evaluation, it can then be employed as a design tool for
making proposals of relevance to the scheme: the financial for implementation method, and the planning balance sheet for a new design.

16.5

Conclusion for all cases

In development and conservation planning, socio-economic analysis should


not be regarded as just analytical tools to aid decision making but also the
means of exploring possible decisions and advancing implementation.

Appendix 16.1
Criteria for listed building
consent
Extract from DOE Circular 23/77
In the listing of buildings the Secretary of State pays no attention to the
condition of the building, or the economic feasibility of its retention,
whereas these are clearly relevant criteria in assessing applications for listed
building consent. This must be so, for it is evidently not practical to retain a
building ad infinitum, when it is past its useful life. It is not the intention of
legislation and policy on historic buildings to attempt to preserve such
buildings for ever, but merely to ensure that the case for the preservation of
a building is given due weight when proposals for its demolition or
alteration are put forward.
Thus whatever the strength of the case for listing, Circular 23/77 makes
clear that the listing is not itself a reason for resisting alterations or
demolition of the building (as defined above 4.1-4.2). Starting with the
warning:
64. Generally, it should be remembered that the number of buildings of special
architectural and historic interest is limited. Accordingly, the presumption should
be in favour of preservation except where a strong case can be made out for granting
consent . . .
It then goes on:
65. Preservation should not be thought of as a purely negative process or as an
impediment to progress. The great majority of listed buildings are still capable of
beneficial use and, with skilled and understanding treatment, new development can
usually be made to blend happily with the old. The destruction of listed buildings is

316

Economics in urban conservation

very seldom necessary for the sake of improvement; more often it is the result of
neglect, or a failure to appreciate good architecture . . .
As to the kind of 'strong case' that needs to be mounted against the
'presumption' the Circular states:
63. The following guidance on criteria may prove helpful to local authorities when
considering applications for consent to demolish or alter listed buildings:
(a) the importance of the building, both intrinsically and relatively bearing in mind
the number of other buildings of special architectural or historic interest in the
neighbourhood. In some cases a building may be important because there are
only a few of its type in the neighbourhood or because it has a fine interior, while
in other cases its importance may be enhanced because it forms part of a group
or series. Attention should also be paid to the contribution to the local scene
made by a building, particularly if it is in a conservation area; but the absence of
such a contribution is not a reason for demolition or alteration;
(b) in assessing the importance of the building, attention should be paid to both its
architectural merit and to its historical interest. This includes not only historical
association but also the way the design, plan, materials or location of the
building illustrates the character of a past age; or the development of a
particular skill, style or technology;
(c) the condition of the building, the cost of repairing and maintaining it in relation
to its importance and whether it has already received or been promised grants
from public funds. In estimating cost, however, due regard should be paid to
the economic value of the building when repaired and to any saving through not
having to provide alternative accommodation in a new building. Old buildings
generally suffer from some defects but the effects of these can easily be
exaggerated;
(d) the importance of any alternative use for the site and, in particular whether the
use of the site for some public purpose would make it possible to enhance the
environment and especially other listed buildings in the area; or whether, in a
rundown area, a limited redevelopment might bring new life and make the
other listed buildings more economically viable.

Notes
Introduction
1 Barnett and Morse (1962), pp. 72-97. The pioneer was Pinchot Gifford (1910).
2 O'Riordan (1976), Ch. 5-8. The current concern in the United States is
expressed in the work of The Conservation Foundation, founded in 1948, 'a
non-profit research and communication organisation dedicated to encouraging
human conduct to sustain and enrich life on earth'. Its founder, Osborn
Fairfield, published in the same year Our Plundered Planet.
3 Brown (1905); Ward (ed.) (1968).
4 Barnett and Morse (1962), pp. 72-4.
5 Porritt (1974).
6 Meadows et al. (1972).
7 United Nations (1972).
8 For extreme views in relation to national resources, see Brown (1981) (pro
conservation) and Goeller and Weinberg (1977) (and, on the grounds that all
mineral resources are substitutable).
9 Ward (ed.) (1973); Ward (1979); Ward and Dubos (1972).
10 Cf. Barnett and Morse (1962), pp. 73-95; O'Riordan (1976), Ch. 1-4;
Appleyard (ed.) (1979), pp. 8-49; Kain (ed.) (1981), pp. 6-9.
11 Clarke*al. (1980).
12 Berry (1983).
13 Williams-Ellis (ed.) (1937); Booker and Green (1973); Fergusson (1973).
14 Hirsch (1977); and Ellis and Kumar (1983); Bosselman (1978).
15 Beckerman (1974); Simon (1981).
16 Myrdal(1960).
17 Olson and Landsberg (1975).
18 Porter (ed.) (1986).
19 Barnett and Morse (1962), p. 72.
20 O'Riordan (1971). For a historical review which encompasses a number of these
disciplines see the entry for conservation in Sills (ed.) (1968).
21 Pearce (1976); Bain (1973); Baumol and Oates (1979).
22 Backhouse (1985), Ch. 21.
23 Millward et al. (1983); Prest and Turvey (1965); Pearce (1968); Mishan (1975).
24 Pigou (1948); Kapp (1950); Kapp (1963); Mishan (1967).
25 Olson (1965); Buchanan (1968); Mueller (1979).
26 Backhouse (1985), Ch. 29.

318

Notes to pages 4-22

27
28
29
30
31
32
33
34

Friedman (1953), Part I; Lipsey (1983), Ch. 1.


Myrdal (1958).
Cole, Cameron and Edwards (1983).
Friedman (1962); Hayek (1986 and 1960); Seldon (1977).
Dobb(1960).
Keynes (1936); Galbraith (1974).
Nolan and Paine (1986).
Pearce (1976); Fisher (1981); Krutilla and Fisher (1975); Baumol and Oates
(1979); Bain (1973).
35 The rich literature of urban economics hardly recognises the topic. And it was
only in the seventies that a leading thinker in planning tentatively advanced the
concept that urban conservation had a major role to play in urban planning
alongside change through development: Perloff (1980).
36 Wells (1949); Jenkins (1975); Olsen (1982).
37 See references introduced below in Parts III and IV.

I Life cycle in the urban system


1 This concept clearly has links with the literature on urban and regional systems.
For systems in general see Beishon and Peters (1976); for social systems see
Bredemeir and Stephenson (1962); for physical/activity systems see Wilson
(1970), Wilson (1972) and Chadwick (1978). For a critical review of urban
models from differing viewpoints see Sayer (1976) and Cullen (1984).
2 Webber (1963).
3 Resource seems to be one of those words which are used liberally but are elusive
of definition. Following a review, O'Riordan (1971), pp. 3-4, states that ' . . .
there is no satisfactory definition of a resource' and summarises the discussion
by concluding ' . . . that a resource is an attribute of the environment appraised
by man to be of value over time within constraints imposed by his social,
political, economic and institutional framework'.
4 This simple trinity is a summary of the complexities of human attitudes and
aspirations. See for example the contrast of positional goods to conventional
goods in Hirsch (1977). In this there are hierarchies. For example, Maslow
(1970) sees the following individual 'needs hierarchy' through which society
evolves: survival; security; belongingness; esteem; and self-fulfillment or selfactualisation. And economists recognise that a particular good or service can
satisfy a large number of wants arranged in a hierarchy Lancaster (1971),
pp.146-7.
5 The distinction brought out in relation to consumer demand by Lancaster
(1971), pp. 6-11.
6 Barlowe (1958), pp. 284-6; Ciriacy-Wantrup (1952), pp. 29-30; O'Riordan
(1971), p. 5; Pearce (1976), pp. 142-7.
7 For a somewhat different enumeration see Harvey (1973), pp. 157-60.
8 Fries and Crafto (1981).
9 For a fuller account see Marshall et al. (1964).
10 Packard, Vance (1981).
II Nun etal. (1976), p. 5.

Notes to pages 22-38

319

12 Nutter a/. (1976),Ch. 2, based on Cowans al. (1970). See also Sim (1982), Ch. 2.
13 Nutter a/. (1976).
14 Nathaniel Lichfield & Associates (1968). Another formulation for the typical
life cycle of a building related to rehabilitation is given in Eley and Worthington
(1984), p. 20: Birth, expansion, maturity, redundancy and rebirth/demolition.
15 This aspect of obsolescence has been probably most researched, e.g. Feilden
(1982).
16 CALUS(1986), p. 52.
17 CALUS (1986), p. 57.
18 Medhurst and Lewis (1969), pp. 61-2.
19 This aspect has been considerably researched over recent years, e.g. Perloff
(ed.) (1969).
20 Nathaniel Lichfield & Partners, 1984b (unpublished).
21 See e.g. Grigsby (1963).
22 Department of the Environment (1977).
23 Gibson and Longstaff (1982), Ch. 1.
24 Gordon (1974).
25 The terminology is not standardised, and the words are used in many different
ways. For a six language international glossary see ICOMOS (1977).
26 Feilden (1982), pp. 8-12.
27 For a description of change in the city centre of Manchester see Medhurst and
Lewis (1969) and of Glasgow see Sim (1982).
28 World Commission (1987), p. 43.
29 See for example Marcuse (1974); and World Commission (1987).
30 Goeller and Weinberg (1977).
31 Brown (1981).
32 For a review of many such issues see Journal of Medical Ethics; and Lockwood
(ed.) (1985).
33 Davis (1979).
34 Packard (1981).

2 Planning and management of urban resources


1 See Robinson (1970), Ch. 3.
2 For a review of the arguments in favour of private property ownership see
Becker (1977), Ch. 5 and 6; and Denman (1980).
3 For the full argument see Denman (1978), Ch. 3.
4 McLellan (1983), pp. 45-7; Harvey (1982), Ch. 1.
5 For a review of the arguments against private property ownership, see Becker
(1977), Ch. 8.
6 Polany(1956), p. 178.
7 Pearce (ed.) (1983a), p. 360; Buchanan (1968), Ch. 4 and 5.
8 Maudsley and Burn (1975), Ch. 1.
9 Denman and Prodano (1972), pp. 24-5.
10 Denman and Prodano (1972), pp. 30-1.
11 The distinction between 'private' and 'public' land policy is made by Lichfield
and Darin-Drabkin (1980), p. 82.

320

Notes to pages 38-49

12 Mullins (1985), Ch. 5.


13 These differing titles are associated with degrees at the various universities and
polytechnics in relation to land as a particular focus of study. See for example
Stapleton (1981); Ratcliffe (1978); Thorncroft (1965).
14 Thorncroft (1965), p. 3.
15 For an early statement see Advisory Committee (1946); Wells (1949); Lichfield
(1956), Part VI.
16 Lichfield (1978) in Golany (ed.) (1978).
17 Schaffer(1970).
18 These distinctions are made by Stewart (1971), p. viii.
19 Ministry of Housing and Local Government (1965); and Department of the
Environment (1972).
20 Department of the Environment (1972), p. xv.
21 Nathaniel Lichfield & Associates and Imbucon/AIC (1973); Urwick, Orr &
Partners with Graham Ashworth (1973); and McKinsey & Co. (1973); Department of the Environment (1973). An account of how they were fused in one
London Borough, Lambeth, is given in Cockburn (1977).
22 Nathaniel Lichfield & Associates with Imbucon/AIC (1973).
23 Nathaniel Lichfield & Partners (1980).
24 Nathaniel Lichfield & Partners (1985).
25 Hayek (1986), p. 144; Butler (1983), Ch. 2. But just as the market in economic
life is not the simple aggregation of independent units of economic theory, so are
the 'markets' in urban life. See for their analysis in the light of urban
managerialism Pahl (1975).
26 O'Riordan (1971) p. 19.
27 This topic is very advanced in the literature and practice. See for example Pearce
(1976).
28 For a range of methods see Pearce (1976), Ch. 5.
29 For a review of the contribution of sociology to planning see Buttimer (1974).
30 Lichfield (1974).
31 Olson and Landsberg (eds.) (1975).
32 There are many accounts of the physical development process. See for example
Lichfield (1956); Hall et al. (1973); Leonard and Davidson (1976); Lichfield and
Darin-Drabkin (1980).
33 E.g. Waterston (1968); Seers (1968).
34 Schiavo-Compo and Singer (1970).
35 Stewart (1974), p. 211.
36 Ratcliffe (1978).
37 It is of interest that a major study on urban policy and planning should be called
Managing Urban Change. See OECD (1983).
38 See for many illustrations Long Range Planning, Journal of the Strategic
Planning Society.
39 See for a discussion from the systems viewpoint, Chadwick (1978), Ch. 14.
40 See Nathaniel Lichfield & Associates and Imbucon/AIC (1973).

Notes to pages 50-63

321

3 Planning for urban conservation


1 One reason for the view which is relevant for this study has been 'market
failure'. See for example the general argument in Bator (1958); and in relation to
urban and regional planning Ratcliff (1949); Lichfield (1964); Foster (1975);
Harrison (1977).
2 See Bruton(ed.) (1974).
3 For a concept of a planning system see Lichfield (1975) and Lichfield (1984).
4 The British planning system was an innovation in 1948 over the pre-World War
II system (Town and Country Planning Act 1947). It has evolved since (not
always progressively), and been adopted in many parts of the world (not always
wisely). The nature of this system is not readily grasped, for it is complex and
changing. See for its evolution Cherry (1974); for its everyday practice Keeble
(1969); for its formal practice Heap (ed.) ongoing; for its development plans
Ministry of Housing and Local Government (1970); for its policy planning
Solesbury (1974); and for a recent overall view Haar (ed.) (1984).
5 See for example Lichfield et al. (1975), Ch. 2. For an exhaustive discussion on
the rational approach in planning see Breheny and Hooper (eds.) (1986).
6 For an approach to plan implementation geared to plan making see Lichfield
and Darin-Drabkin (1980), Ch. 2.
7 See for example Roberts (1974), pp. 176-7.
8 Eckbo (1985); Childe (1981).
9 The following relies upon Loomis (1983), p.27ff. See for an international
perspective, UNESCO (1982). For the amplification of 'community' see Willmott (1987).
10 Geddes, Patrick (1904).
11 Perloff(1980).
12 Perloff(1980), p. 123.
13 The evocative subtitle in Meier (1980), p. 128.
14 This approach was applied in Nathaniel Lichfield & Partners (1984b). Another
approach is used in devising strategies for urban renewal, which require
definition of areas of actual or emerging obsolescence. For a city-wide application see Gibson and Longstaff (1982) Ch. 3 and 4.
15 Perloff(1980), p. 131.
16 For example, Willmott and Young (1957); Fried (1963).
17 Lichfield et al. (1975), Ch. 3.
18 Reilly (1986); Lichfield and Lintott (1986), Ch. 15.
19 Antoniou (1984), p. 19.
20 Gulick in Jarrett (ed.) (1961).

4 The nature of the cultural built heritage


1 This section was stimulated by the writings of the conservationists. Particular
mention must be made to the essays in Lowenthal and Binney (eds.) (1981); and
the very rich Lowenthal (1985).
2 A detailed categorisation devised for conservation of the cultural and natural
heritage is presented in Appendices 1 and 2 to this chapter.

322

Notes to pages 64-78

3
4
5
6
7
8
9
10
11
12
13
14
15

Sykes(1984),p.21.
UNESCO (undated).
Eban(1985),p. 1.
Whitehead (1961).
Loomis(1983), p.29.
Faulkner (1978), p. 457.
Hanna and Binney (1983).
Ruskin(1889), p. 258.
Morris (1877).
Smiegelski, cited in Ward, (ed.) (1968), p. ix.
Earl (1980); Feilden (1982b).
Feilden (1982a), p. 3.
Such conservation objectives affect management in the two major heritage
owners in Britain. In Government there is the Historic Buildings Commission
for England (English Heritage) which is responsible for managing some 400
monuments and buildings under the National Heritage Act 1983. Outside
Government is the National Trust which under the National Trust Act 1907
promotes 'the permanent preservation for the benefit of the nation lands and
tenements (including buildings) of beauty and historic interest'.
16 Urban Land Institute (1978).
17 E.g. Urban Land Institute (1978) and Hanna and Binney (1983).
18 This balancing between cost and value relies essentially on economic calculus,
and is accordingly discussed below, Ch. 13.

5 Identification and protection of the CBH


1 The terms inventory, list and survey seem to be used interchangeably. Here
inventory includes all potential candidates derived from the survey, and the list
contains the objects selected for protection at law.
2 See Sykes (1984), p. 139, from which the examples are drawn.
3 Sykes (1984).
4 The practice is somewhat different in other parts of the UK. See Lichfield and
Lintott (1986), which in itself is based on a large number of sources, a major one
being Suddards (1982). Useful summaries, taking account of changes in 1985
and 1986, are given in Department of the Environment (1987a) and (1987b).
5 The presentation in this chapter relies upon two sources: the published survey
by Sykes (1984) for UNESCO and an unpublished review carried out for The
Jerusalem Institute for Israel Studies by Lichfield and Salamon (1984). Because
of the considerable volume of material in this review specific footnote references
are not given.
While the two overlap, the first concentrates on the preparation of the
inventory itself in eleven countries (not including Britain) while the latter is
concerned more with the implications of the legal protection. Using both
sources the analysis was made in this chapter on a comparative basis for the
following:
Asia: India, Australasia, Australia, New Zealand, Japan.
Africa: Morocco, Zambia.

Notes to pages 79-99

6
7
8
9
10
11
12
13
14
15
16
17
18

323

Europe: Austria, Belgium, Cyprus, Denmark, East Germany, England,


France, Greece, Holland, Hungary, Ireland, Italy, Norway, Poland, Portugal, Spain, Sweden, Turkey, West Germany.
Latin America: Argentina, Mexico.
North America: Canada, Alberta, Ontario, Quebec.
USA: National Register, New Jersey, Alexandria, Charleston, Detroit,
Miami, Miami Beach, New Orleans, New York City, San Diego, San
Francisco, Tucson.
Suddards (1982); Lichfield and Lintott (1986), Ch. 4-7.
E.g. Wildlife and Countryside Conservation Acts.
Lichfield and Lintott (1986), Ch. 4-7.
DOE (1977), Para. 12 and Appendix I; DOE (1981), Appendix A.
Lichfield and Lintott (1986), Ch. 4-7.
Department of the Environment (1984a); Department of the Environment
(1984b). For an account of the work in hand see English Heritage (undated a).
Feilden(1986),p.221.
British Archaeologists et al. (1986).
English Tourist Board (1986), pp. 8-11.
DOE Circular 23/77.
Lichfield and Lintott, Ch. 5.7.
Lichfield and Lintott, Ch. 6.5.5.
Lichfield and Lintott, Ch. 7.5.

6 Management and planning in the conservation of the urban


cultural heritage
1 Feilden (1982a).
2 For a brief history on which the following relies see Hinsch (1980); UNESCO
(1983); Parent et al. (undated).
3 Hinsch (1980), p. 4; Parent et a/., p. 12.
4 Hinsch (1980), p. 5.
5 Hinsch (1980), p. 7.
6 Hinsch (1980), pp. 8, 11; Parent et al. (undated), p. 15.
7 Hinsch (1980), p. 8.
8 Hinsch (1980), Annexe 1; and Parent et al. (undated), pp. 137-46.
9 UNESCO (1972).
10 Council of Europe (1976).
11 UNESCO (1983), p. 195ff.
12 UNESCO (1987).
13 See for example Young and Wilmott (1957); Marris (1974).
14 Binney and Hanna (1978).
15 Lichfield and Lichfield et al (1983).
16 See for example the four historical town studies: Esher (1968); Donald Insall and
Associates (1968); Burrows (1968); and Colin Buchanan and Partners (1968).
17 Urban Land Institute (1978), Adaptive Use, Part II. See also Greater London
Council (1977) for a survey technique for analysing conditions in a conservation
area by using indices of use, repair, decay and conservation quality.

324

Notes to pages 99-118

18 This approach follows Lichfield and Darin-Drabkin (1980), Ch. 2.


19 Berry (1983).
20 For a list of such groups and other bodies involved in conservation in Britain see
Suddards (1982), Ch. 12. This includes statutory bodies and consultees; Royal
Commissions; private, voluntary and educational interests (national, regional
and local). A full expression of this kind of influence is seen in the work of
Partners for Livable Places (1983), Washington DC, on alliance of parties
concerned with liveability and the built environment. See McNuUy et al. (1985).
21 As an example of payment in kind there is the transfer of development rights.
See Rose (1975).
22 For a comprehensive review of those available in England see Lichfield and
Lintott, Ch. 13.
23 For relevant studies which applied to the residential GBH and not CBH see for
example Taylor Woodrow Group (1964); Civic Trust for the North West (1965);
Hallmark Securities (1966); Ministry of Housing and Local Government (1966);
Robert Matthew, Johnson-Marshall and Partners (1971). And for redundant
industrial buildings see Eley and Worthington (1984).
24 As put out for England by the Historic Buildings and Monuments Commission
for England (English Heritage).
25 Feilden(1985),p.213.
26 Cf. Lichfield and Lintott (1986), Ch. 14-15.
27 The planning briefgives guidelines from the planning authority to developers; the
development briefgives instructions from the developer to his development team.
28 Feilden (1982a), pp. 12-13. This authoritative work was primarily directed at
the conservation architect.
29 See for example Feilden (1982a), p. 6; and US Department of the Interior (1980)
reproduced in Feilden (1985), p. 216.
30 This section has benefited from the conclusions reached on dilemmas of
preservation by Lowenthal (1981) in Lowenthal and Binney (eds.) (1981),
pp. 213-37.
31 See Butler (1981).

Part III Economics in urban conservation


1 Davidson and McEwen (1983).
2 In Eckholm (1982), Foreword.
3 For an exploration of the issues see Pearce (1977).

7 Economics in the management of the built environment


1 Hicks (1971), p. 18.
2 Robinson (1964), p. 48. This is a controversial area of consumer demand. See
Lipsey (1983), pp. 164-75.
3 Economists
once
thought
that
utility
could
be
measured
cardinally in for example 'utils'. Fleming (1952). But today only the ordering of
utility is thought practicable except for risk situations where the introduction of

Notes to pages 118-142

325

probabilities provide a cardinal cultural scale. See Pearce (1983a), pp. 58, 323,
462.
4 Mueller (1979).
5 Schultze (1977).
6 Brookshire et al. (1985).
7 Lichfield (1987a).
8 English Heritage (undated a), p. 34.
9 Maudsley and Burn (1975), Ch. 8.
10 Pigou (1948).
11 McAuslan (1975), Ch. 1.5.
12 E.g. Heap (1982); O'Riordan (1976), Ch. 8; Smith (1974), Ch. 3.
13 E.g. Ciriacy-Wantrup (1952); Pearce (1976); Whitby and Willis (1978).
14 For a summary see Pearce (1983a), p. 192; and Becker (1964).
15 Lichfield tf al. (1975).
16 Baumol and Oates (1979); Pearce (1976).
17 Packard (1960).
18 See for example Darlow (ed.) (1982); Stone (1980).
19 For example Darlow (ed.) (1982), Ch. 3; and Ratcliffe (1978), Part II.
20 See for example Lichfield (1956), Part III, for examples of private and public
development.
21 See for example Goldberg and Chinloy (1984), Ch. 4, 9 and 10.
22 Turvey (1957) for a discussion of how the market works.
23 American Institute of Real Estate Appraisers (1985), Ch. 11.
24 Joint Centre for Land Development Studies (undated); Haviland (1977); and
Haviland (1978).
25 Stone, P. A. (1980).
26 E.g. Darlow (1983); Stapleton (1981); Stone (1980).
27 An amplification of Nathaniel Lichfield & Associates (1968).
28 Schaaf (1960); Needleman (1965); Needleman (1968); Needleman (1969);
Sigsworth and Wilkinson (1967).
29 Lichfield (1956), Ch. 15; Harvey (1981), Ch. 7 and 9.
30 Lichfield (1961).
31 For the fierce controversy over the algebra of the two renewal solutions see
Schaaf (1969).
32 Cf. Lichfield (1956), Part III.
33 For example Lichfield and Chapman (1970).
34 Ministry of Housing and Local Government (1969).
35 Non-market values are fully explored in the literature on cost-benefit analysis.
See for example Krutilla and Fisher (1975); Lichfield et al. (1975), Ch. 6;
Lichfield (1972); Sinden and Worrell (1979), Part II.
36 Royal Institution of Chartered Surveyors (1981).
37 Darlow (1982), Ch. 7 and 8.
38 Fisher (1961).
39 Pearce (1983), Ch. 4. The discounting arithmetic is in practice made with the
help of tables. See Davidson (1978) and Rose (1976).
40 Sugden and Williams (1978), Ch. 3.5.
41 Pearce (1983), Ch. 6.
42 This section is a summary of Lichfield (1956), Ch. 22; and Lichfield (1979a).

326
43
44
45
46
47
48

Notes to pages 143-154

See Brownlow (1956).


For a discussion see Switzer (1963).
See Lichfield (1956), Ch. 24.
See Lichfield (1980).
Department of the Environment (1984b).
See Jowell (1977a & b) for a review of actual examples.

8 Economics in the conservation of the CBH


1 This was the question explored in relation t6 Bath in Nathaniel Lichfield and
Partners (1975).
2 Feilden (unpublished).
3 Cantacuzino, Sherban (1975); Scottish Civic Trust (1981).
4 For a review of aids available in England see Lichfield and Lintott (1986)
Chapter 13; for Europe and North America see Council of Europe (1987). For
the significance of the real property tax in the United States see Fidler and
Martin (1987) and Listokin (1982); for tax relief on capital expenditure in the
United States see Reynolds (1982). While tax relief on real property has been
affected by the Tax Reform Act, 1986, the provisions for heritage buildings in
the main remain much the same.
5 This would appear to be the situation in the United States where adaptive use is
stimulated and dominated by tax relief incentives to business.
6 For the practice of English Heritage in this regard see English Heritage
(undated a).
7 This is the focus of Urban Land Institute (1978) and Lichfield and Lintott
(1986), Ch. 14 and 15.

9 Economics in planning for conservation of the CBH


1
2
3
4
5
6
7
8

9
10
11
12

Kirzner(1960), Ch. 6.
Robbins (1932), p. 16.
Hayek (1944), p. 26.
Myrdal (1960), p. 3.
Myrdal (1960), p. 4.
For the uncertainty on the objectives of urban and regional planning see
Committee of Inquiry (1986), Parts II and III.
Lichfield (1964a); Denman (1964); Foster (1975); Stewart (1974); Pearce et al.
(1978); Harrison (1977).
Lichfield (1960); Moor (1983). Economics is not alone in claiming an identity
with planning. Architecture is a clear instance. Less clear is law. See Jowell
(1977).
See the many and varied consultant and local authority planning studies over the
past twenty years.
E.g. Baumol and Oates (1979).
Lichfield e* al. (1975).
Bator (1958).

Notes to pages 154-178


13
14
15
16
17
18
19

20
21
22
23
24
25
26
27

327

Ratcliffe(1949).
The following is based on Lichfield (1980).
See footnote 7 above.
Hayek (1960); and Friedman (1962).
Lichfield (1968).
Lichfield (1966).
Since the planning process is not standardised, the illustrations refer to one
typical model planning process, for example as described in Lichfield et al.
(1975), Ch. 2.
See MacNulty et al. (1985); and Perloff et al. (1979).
See for example, Department of the Environment (1973) and (1977).
See for example Lichfield and Darin-Drabkin (1980), Ch. 2.
This was the question posed in Nathaniel Lichfield and Partners (1975).
McMaster and Webb (eds.) (1978); O'Riordan and Sewell (eds.) (1981); Bridger
and Winpenny (1983).
Crompton and Lichfield (1962) for environment; Nijkamp (1975) for
monuments.
Fidler (1987).
See Lichfield and Lintott (1986), Ch. 14.

10 Valuation of the cultural built heritage


1 The literature is vast. This section relies upon Lipsey (1983), Ch. 14; Pearce
(1983a); and Sinden and Worrell (1979), Part I. For the quite different Marxian
analysis of value see Harvey (1982), Ch. 1.1.
2 E.g. Booker and Green (1977); and Save Britain's Heritage (1980).
3 That government follows its own objectives and not necessarily the 'public
interest' is argued, for example in Downs (1957) and Buchanan and Tullock
(1962).
4 For a review see Mueller (1979), Ch. 3-4.
5 For a review of the political theory see Self (1975); and of the methods and
techniques, Mueller (1979); Buchanan and Tullock (1962). For methods of
establishing people's views on amenity by various techniques see Smith (1974),
Ch. 7. On values in general see Arrow (1967) and Facione et al. (1978).
6 Allison (1975); Lowe (1983).
7 See for example Lipsey (1983), Part 2-3; and Stigler (1978).
8 See for example Nathaniel Lichfield and Associates (1971), p. 129ff.
9 Sinden and Worrell (1979), pp. 11-12.
10 For a comprehensive account see Sinden and Worrell (1979), Parts II and III.
However, they do not cover valuation of the CBH. See also Nijkamp et al.
(1985).
11 Girard (1986); Girard (1987).
12 Forte (1973a); Forte (1973b); Forte (1977).
13 Girard (1986).
14 In discussion.
15 I am indebted to David Pearce for this comparison with natural resource
valuation. See Brookshire, et al. (1986).

328

Notes to pages 178-203

16 For a review of methods see Johnson (1980); Falkner (1977); Lawrence (1977);
Warren (1972).
17 See Torgerson (1958); Churchman and Ratoosh (1959); Ackoff (1962); Sinden
and Worrell (1979); Voogd (1983); Edwards and Newman (1982).
18 Kalman
(1980).
For
application
to
environmental
quality
see Crompton and Lichfield (1962). For distinction in supply and demand
attributes see Lancaster (1971), p. 7.
19 See Stephens in Churchman and Ratoosh (ed.) (1959), p. 24; Voogd (1983), Ch.
5; Nijkamp era/, (eds.) (1985).
20 See Dasgupta and Pearce (1972), Ch. 1. For an approach to transformation from
ordinal to cardinal see Nijkamp et al. (eds.) (1985), pp. 425-47.
21 Sinden and Worrell (1979), Ch. 11; Voogd (1983), Part II; Nijkamp (1986);
Edwards and Newman (1982).
22 Sinden and Worrell (1979), p. 246.
23 On this point I have benefited, in many discussions, from the sociologist-anthropological viewpoint of Eric Cohen.
24 In this the economist apparently resembles Oscar Wilde's cynic, who knows the
price of everything and the value of nothing. But only apparently. He certainly
knows the price. While not himself knowing the value, he knows how to
establish the values held by others, through their signals in the market or, if
there be no market, then through its simulation.
25 See footnotes 11-13 above.
26 Girard (1986).
27 Girard (1986).
28 Okun (1970); Kaldor (1985).
29 For varying views on this point see Kirzner (1960), pp. 137-42.
30 E.g. Seldon (1977).
31 There is a huge literature on cost benefit analysis. For a comprehensive but
dated although still relevant review of practice see Prest and Turvey (1965). For
something more up-to-date see Sinden and Worrell (1979); Mishan (1982);
Pearce (1983a).

11 Screening of the inventory or list


1
2
3
4
5
6
7

Faulkner (1978), p. 472.


Faulkner (1978), p. 473.
Griffith (1986).
Griffith (1986).
Lichfield and Lintott (1986), Ch. 4; and Suddards (1982).
Pearce (1983b), p. 98.
Nathaniel Lichfield and Associates (1975).

12 Who benefits and who loses from conservation of the CBH?


1 Pearce (1983a), p. 360.
2 The categorisation is based upon Lichfield and Darin-Drabkin (1980), Ch. 2.

Notes to pages 204-241

329

3 Lichfield(1962).
4 The diagram is derived from the evaluation method of community impact
analysis, which is amplified below (Ch. 15).
5 This section is an amplification of Nathaniel Lichfield and Associates (1968).
6 Mishan(1967), Ch. 6.
7 McAuslan (1980).
8 This section summarises a complex and rich field. See Hagman and Misczynski
(eds.) (1978); Lichfield and Darin-Drabkin (1980); and McAuslan (1984).
9 Town and Country Planning Act, 1971, sec. 22(1).
10 See for example Lichfield and Darin-Drabkin (1980), Ch. 5. But the position is
quite different for farming rights. A farmer can be compensated for agreeing not
to farm a tract which should be conserved for nature, both in respect of the value
of crops foregone and also in respect of the subsidies not earned. See Wildlife
and Countryside Act, 1980.
11 Hagman (1971), p. 325.
12 Rose (ed.) (1975).
13 In Britain where there is a tradition of free entry to museums to encourage
'cultural education' there are pressures for departure into charging. The aim is
to introduce the market mechanism into areas which have been traditionally
subsidised because they are part of the arts.
14 Harris and Seldon (1976).
15 See e.g. Bosselman (1978); Cohen (1984); Cohen (1986); Heritage Trust (1985).

Part IV Selected tools of economic analysis for project


evaluation
1 See McMaster and Webb (eds.) (1978); O'Riordan and Sewell (eds.) (1981);
Bridger and Winpenny (1983).
2 Lichfield el al. (1975), Ch. 4. For a comprehensive review relating to transport
evaluation see Lichfield (1987b), p. 84.
3 See Lichfield (1977b).
4 The family falls into the category of cost-utility (benefit) analysis, as defined in a
review of rational techniques in policy analysis. See Car ley (1980).
5 The term 'cost-effectiveness' is sometimes equated with what is here called cost
minimisation. See Bridger and Winpenny (1983), p. 9.
6 This is based on Lichfield (1983) and Lichfield (1987b).
7 Lichfield (1987b), p. 89.

13 Financial impact: financial analysis


1 See Thorncroft (1975).
2 The example in 13.2 is taken from Lichfield and Lintott (1986), Ch. 14.4.3. Its
method is based on conventional financial appraisal, as in Darlow (1982) or
Ratcliffe (1978).

330

Notes to pages 242-250

14 Economic impact: social cost benefit analysis


1 For the contrast between financial appraisal and cost benefit analysis see Sugden
and Williams (1978), pp. 4-9; and Beesley and Foster (1965).
2 Prest and Turvey (1965); Peters (1973); Pearce (1983b), Ch. 2.
3 For example: for general application in Sugden and Williams (1978); Mishan
(1982); Carley (1980); Pearce and Nash (1981); Pearce (1983b); Bridger and
Winpenny (1983). For the vast literature on water resource cost benefit analysis,
the grandfather in the subject, which presents the foundation, see for example
Eckstein (1958); McKean (1958). And for particular application to the human
environment, McAllister (1980); Abelson (1979); Cooper (1981).
4 For general CB A treatment of these items see for example Sugden and Williams
(1978); Abelson (1979); Pearce and Nash (1981); Pearce (1983).
5 Realfonzo (1983). For costs generally see Pearce and Nash (1981).
6 Krutilla and Fisher (1975), Ch. 3; Pearce (1983), pp. 98-105.
7 This is the Pareto criterion of welfare economics. For a discussion see Sugden
and Williams (1978), Ch. 7.
8 This is the test associated with Kaldor-Hicks following a large discussion in the
literature. For a discussion see Sugden and Williams (1978), Ch. 7.
9 For a discussion see Sugden and Williams (1978), Ch. 14; and Pearce (1983),
Ch. 5.
10 This approach was used in Crompton and Lichfield (1962) by measuring the
equally intangible benefit of environmental quality resulting from urban road
schemes. The value is assessed by the analyst but could be tested by social
survey.
11 Solow (1974), p. 302.
12 Dobb (1960), Ch. 2.
13 Pearce (1983), p. 53. See for a discussion Dasgupta and Pearce (1972), Ch. 6.
14 Marglin (1967), p.47ff.
15 Ramsey (1928), p. 453.
16 Pigou(1948), p. 25.
17 Sen (1957), p. 746.
18 Harrod(1948), p. 40.
19 Solow (1974), p. 302.
20 Marglin (1963), p. 95.
21 Solow (1974), p. 303.
22 Hall (1981).
23 Krutilla and Fisher (1975), Ch. 3.4; and Pearce (1983), Ch. 7.
24 Galbraith (1958).

15 Community impact: community impact analysis


1 See for example the cost benefit analysis carried out by the Roskill Research
Team in Commission for the Third London Airport (1971).
2 Lichfield (1956), Chs. 18-19.
3 See Lichfield (1970); and Lichfield et al. (1975), Ch. 4.
4 Lichfield (1964).

Notes to pages 250-314


5
6
7
8
9

331

See for example Clarke et al. (1980).


Lichfield (1985).
For a review see Miller (1976).
For the difficulties in this see Okun (1970) and Kaldor (1985).
Lichfield and Schweid (1986), Part III (Hebrew).

16 The case studies


1
2
3
4
5
6
7
8
9

10
11
12
13
14
15
16
17
18
19
20
21

Based on Nathaniel Lichfield and Associates (1972).


Based on Lichfield (1985) and Campbell-Jackson (1985).
English Tourist Board (1986).
Campbell Jackson (1985).
Lichfield (1985).
Campbell Jackson (1985).
Lichfield (1985).
Lichfield and Schweid (1986), Part III (Hebrew).
Owing to the fact that the retained building in option A would be given to the
Municipality and thus be credited against liability for betterment tax, whereas it
could not be so credited in option B.
Based on Consortium (1967); Nathaniel Lichfield and Associates (1967a and
1967b); Alexander (1974).
Consortium (1967).
Consortium (1967).
Consortium (1967), pp. 3-5.
Nathaniel Lichfield and Associates (1967a).
Consortium (1970), Ch. 1.
Alexander (1974).
Nathaniel Lichfield and Associates (1967b); Greater London Council (1968);
Consortium (1970), Ch. 8.2; Consortium (1970), Appendix P.
Nathaniel Lichfield and Associates (1967b).
Alexander (1978), p. 62.
Alexander (1974), p. 58.
Alexander (1974), p. 58.

Bibliography
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Abercrombie, Nigel (1982) Cultural Policy in the United Kingdom (Paris:
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Warren, David (1972) Economic Growth and Environmental Indicators: The Quantification of Environmental Intangibles and their Incorporation into a System of
National Accounts (unpublished).
Waterston, Albert (1968) Development Planning (Baltimore, Maryland: The John
Hopkins University Press).
Webber, Melvin (1963) The Urban Place and the Non-place Urban Realm, in
Webber, Melvin M. et al.> Explorations into Urban Structure (Philadelphia:
University of Pennsylvania).
Weisskopf, W. A. (1965) Economic Growth Versus Existential Balance, Ethics 75.
Wells, H. W. (1949) Planning and Estate Management, Journal of the Town
Planning Institute, 36.
Whitby, M. C. and Willis, K. G. (1978) Rural Resource Development: an economic
approach (London: Methuen & Co. Ltd).
Whitehead, Alfred North (1961) Adventures of ????? (Cambridge: Cambridge
University Press).
Whittaker, Chris, Baron, Peter and Monahan, Jane (1976) The Handbook of
Environmental Powers (London: The Architectural Press).
Williams, Barrie (1978) The Underuse of upper floors in Historic Town Centres
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Williams, Bernard (1975) Consider the cost: the economics of conservation, Built
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Bibliography

353

Williams-Ellis, Clough (ed.) (1937) Britain and the Beast (London: Dent).
Willmott, Peter (1987) Community in Social Policy (London: Policy Studies
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Wilson, A. G. (1970) Entropy in Urban and Regional Modelling (London: Pion Ltd).
(1972) Behavioural inputs to aggregative urban systems models, in Wilson, A. G.
(ed.) Papers in urban and regional analysis (London: Pion Ltd).
Wootton, Barbara (1934) Plan or No Plan (London: Victor Gollancz Ltd).
(1938) Lament for Economics (London: George Allen & Unwin).
Working Party on Historic Town Centres (1975) The Renewal of Historic Town
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World Commission in Environment and Development (1987) Our Common Future
(Oxford: Oxford University Press).
Worskett, Roy (1969) The Character of Towns: An approach to conservation (London:
The Architectural Press).
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List of statutes referred to:

National Trust Act 1907


Town and Country Planning Act 1971
Wildlife and Countryside Act 1981
National Heritage Act 1983
Historic Buildings Commission for England 1985

Index

Authors cited in the footnotes and bibliography have not been included in the
index.
accessibility: of the cultural built
heritage, 107
accommodation, demand for: and the
cultural built heritage, 158-9
activities, human: and change, 45-7;
as heritage, 63-4, 66; and
obsolescence in the built
environment, 26-7; and the urban
life cycle, 9, 11-13, 13-16; and
urban planning, 56, 95
adaptation: of the built environment,
26; and the cultural built heritage,
69, 106; of the Royal Holloway
Sanitorium, 287, 291-300; see also
rehabilitation
adaptive use, 72
advertising, control of: on listed sites,
87
Alexander, Ian, 314
ancient monuments: listing of, 79, 81,
88
archaeological areas, 192; listing of,
79, 81, 89
archaeologists, 84
architects, conservation, 104, 157
architectural interest, special: and
CBH conservation, 78, 80, 81
architectural quality: and listed
building consent, 78, 88
artistic interest: and CBH
conservation, 81
arts, the; as heritage, 63, 66
Associated Financial costs and benefits
(AF), 208
Associated Financial impacts (AF), 265

Associated Real costs and benefits


(AR), 208
Associated Real impacts (AR), 265
benefits, see costs and benefits
bequest value, 177
betterment, 212
British Property Federation, 84
buildings: and conservation, 2; use of,
and economics, 126, 130-1; see also
listed buildings
built environment: economics in
management of, 117-44; as heritage,
64; and obsolescence, 54-5; reasons
for conservation, 33-4, 57; as
resource, property and commodity,
36-8; and the urban life cycle, 15,
17-18, 21-9; and urban planning,
53-4, 95; see also cultural built
heritage
Canada, 78, 84-5, 87; Alberta, 82, 86,
87, 89; CBH valuation in, 178-81;
Ontario, 85, 89
case studies: in the economics of CBH
conservation, 287-314
CBH, see cultural built heritage
Central Buildings, Southwark: case
study of, 287, 289-91
change: framework for, in CIA, 262-5;
planning and management for, 45-9;
and urban planning, 54, 96
CIA, see community impact analysis
CIE, see community impact evaluation
commodity: built environment as,

Index
36-8, CBH as, 119-20; cultural built
heritage as, 67-8, 163; general
heritage as, 64-5; human resources
as, 35-6
communities: costs and benefits to,
188, 209-10; and inventory
screening, 199-200; and urban
planning, 53, 54, 56, 95-6
community impact analysis (CIA),
223, 245, 249-79, 280-4; in case
studies, 256-79, 287, 299-300
community impact evaluation (CIE),
251-79; in case studies, 297-8,
299
community sectors: in community
impact analysis, 268-74
compensation, 209, 210-12
conservation: arguments for, 29-30,
30-3; arguments against, 69;
evolution of, 2-3
conservation areas: listing of, 79, 81,
88-9
conservation authorities: and financial
analysis, 232-3, 234; and social cost
benefit analysis, 243; and social
financial analysis, 236, 237, 239
conservative surgery, 53
consolidation: of the built
environment, 26
construction: in community impact
analysis, 265-8
consumers: in community impact
analysis, 272-3, 276, 277, 297-8
consumption: and economic life,
117-18
contractors: and social financial
analysis, 236, 238
cost benefit analysis (CBA), 189, 241,
244, 249-50, 251, 287, 301; and
CBH programme priorities, 163-4;
social cost benefit analysis, 223, 235,
240-8
cost and benefits: in case studies, 29,
328-9; and the cultural built
heritage, 71, 103, 201-15; in
discounting, 138; in human
resources, 123; and planning,
153-4; of property interests, 136-7;
sectoral distribution of, 205-8; see
also financial analysis

355
Covent Garden case study, 287-8,
303-14
cultural built heritage (CBH), 45,
61-109; definition of, 66-7;
economics in conservation of,
145-51; economics in planning for
conservation of, 152-66;
identification and protection of,
77-90; management and planning
for conservation of, 91-109; nature
of, 63-72; as property and
commodity, 67-8; reasons for
conservation, 68-9; and social cost
benefit analysis, 248; valuation of,
167-91; w also listed
buildings
cultural conservation, 53, 96
cultural evolution, 53
cultural fields, 181
cultural interest: and CBH
conservation, 81
cultural heritage, 65-6; description of,
73
cultural quality: and the CBH, 72;
evaluation of, 178-81; and social
cost benefit analysis, 244
cultural value, 168-9; of the CBH, 77,
80
culture conservation, 53
Cyprus, 85, 87
dates, adoption of: and CBH
protection, 81
Denmark, 82, 84, 87
Department of the Environment
(DOE), 41,80, 84, 88, 196,315
deterioration of buildings: and
economics, 148; prevention of, 26
developers: and community impact
analysis, 269, 271, 276, 277, 278-9,
302; and inventory screening,
198-9; and social financial analysis,
236, 238
development: and change, 45-7; and
compensation, 210-12; of urban
resources, 29-30
development planning, 42, 43, 49; and
CBH conservation, 102
direct conservation: of the built
environment, 26

356

Index

direct control: and costs and benefits,


204; and urban planning, 100
direct costs and benefits (D), 208
direct impacts (D), 265
direct value, see private utility
discounting, 138-9; and social cost
benefit analysis, 245-8
displacement: in community impact
analysis, 265-8
economic life: and conservation, 113,
117-20
economic obsolescence: of buildings,
126, 131-2, 150
economics: in CBH conservation,
145-51; and cultural valuation,
181-2; and the evolution of
conservation, 3-5; and inventory
screening, 195-6; in managing the
built environment, 117-43; and
planning, 152-3; in planning for
CBH conservation, 152-66; in urban
conservation, 113-215
efficiency: and community impact
analysis, 276-8, 279; and
community impact evaluation,
252-3, 255; and cost benefit
analysis, 244; and equity, 154,
188-9, 255, 279
England: CBH listing in, 79, 80-1, 82,
83-4, 86, 88-9
environment: improvement of, costs
and benefits, 204; physical, and the
urban life cycle, 9, 11, 12, 13-16; of
conservation projects, 165;
environmental obsolescence, 23-4,
25, 26, 27-9, 101, 131, 143
equity: and community impact
analysis, 278-9; and community
impact evaluation, 253-5; and
efficiency, 154, 188-9, 255, 279
estate management, 39-40
ethics of conservation, 99, 1045,
203
exchange value, 135-6
FA, see financial analysis
filtering down process: and
obsolescence, 25
financial analysis (FA), 223, 227-39; in

case studies, 287, 295-7; see also


social financial analysis
financial assistance: and CBH
conservation, 100, 148-50; and CBH
listing, 86; and development, 130;
implications of borrowing money,
137-8; and plan implementation,
100
financial intervention: and costs and
benefits, 204
financiers: in community impact
analysis, 276, 277, 278-9; and social
financial analysis, 236, 237, 238
folkways (community patterns): and
urban planning, 53, 96
Forte, Carlo, 176-7, 182
France, 78, 82, 84, 85, 86, 87, 89
freedom failure, 154, 155
functional obsolescence: in the built
environment, 23, 24, 26, 27-9, 131,
132; and the cultural built heritage,
148, 160
Geddes, Patrick, 53
gentrification, 27
Girard, Fusco, 176, 177, 182, 188
government: co-ordination by, 205;
costs and benefits to, 201, 204-8,
209; economic life and conservation,
119-20; failure, 154, 155; and
heritage tenure, 67-8; identification
and protection of the CBH, 77-90;
intervention, 3, 4, 65, 97,' 166;
occupation by, 204; ownership of
CBH, 205; and plan implementation
in CBH conservation, 99-102; and
social cost benefit analysis, 246;
valuation of the CBH by, 174-5; see
also conservation authorities; local
authorities
Greece, 69
group valuations: of the CBH, 171,
178
growth: and CBH conservation, 98;
and conservation, 3; and
development, in urban resources,
29-30; and urban planning, 56
Hayek, F. A., 152
heritage: cultural and natural, 7 3 ^ ;

Index
general, and the cultural built
heritage, 63-6
heritage quality, 136, 150-1, 163;
development affecting, and
economics, 196-200; grading of, in
list preparation, 177-81; in the
Jerusalem case study, 301; valuation
of, 169, 192, 240
heritage tenure, 67-8, 119, 120, 146,
162, 192; costs and benefits, 201,
202
heritage value, 161, 162-3; and
conservation programmes, 165, 166;
and the cultural built heritage, 167;
economics of, 119-20, 134; and
opportunity cost, 190
historic buildings, 2, 5, 66
Historic Buildings and Monuments
Commission, 80, 83
historic interest: and CBH
conservation, 78, 80, 81
human activities, see activities, human
human resources: as commodity, 35-6;
and economics, 122-3; reasons for
conservation, 31-2; and the urban
life cycle, 9, 17, 20; and urban
management, 44-5
ICCROM (International Centre for the
Study of the Preservation and
Restoration of Cultural Property),
93
ICOM (International Council of
Museums), 93
ICOMOS (International Council on
Monuments and Sites), 93
IMCA (International Congresses on
Modern Architecture), 93
immoveable resources: and economics,
123-4; as heritage, 63; reasons for
conservation, 33-4; and the urban
life cycle, 18,21-9
impact assessment (IA), 250
India, 78
indirect conservation: of the built
environment, 26
indirect costs and benefits (I), 208
indirect impacts (I), 265
indirect value, see social surplus
value

357
individual valuations: of the CBH,
170-1
inflation, effects on price levels, 140
infrastructure of services, 40, 47
internationalism, cultural, 93-5
inventory of buildings, see listed
buildings
Israel, 85; see also Jerusalem
Japan, 64, 78
Jerusalem, 69; case study in, 256-79,
300-3
Kalman, Harold, 182
knowledge: as heritage, 63, 66
land, development on unbuilt:
economics of, 125-6, 128-30
land, use of open: economics of, 125,
127-8
land administration, 40
land economy, 40
land profit, 129
land units, 18
land use, and life cycles: in the built
environment, 140-1; in the cultural
built heritage, 150-1
land value, see land use, and life
cycles
landowners: in the built environment
life cycle, 140-1; and community
impact analysis, 269, 271, 276; in
the Jerusalem case study, 271, 276,
302; and social financial analysis,
236, 238
leased property: economics of long
leases, 142-3
legal obsolescence, 23
legislation: on CBH listing, 84
life, sanctity of: and human resources,
31-2
life cycle: of the built environment,
124-7, 140-1; of the cultural built
heritage, 146-51; of the urban
system, 11-34
life expectancy, 20, 31-2; of the CBH,
67
listed buildings: criteria for consent,
315-16; financial analysis of
refurbishment, 227-35; grading

358

Index

heritage quality, 177-81;


identification and protection of,
77-90; screening of list, 192-200
Livable City, The (Davidson and
McEwen), 113
local authorities: and compensation,
210; corporate planning and
management for, 40-3; costs and
benefits to, 205-8; and management,
47
locational obsolescence, 23, 24, 26,
27-9, 131
macro planning: and CBH
conservation, 96-8, 102-3, 195
maintenance: of the cultural built
heritage, 70, 87, 107
man-made resources: and economics,
123-4; as heritage, 63, 65-6; as
property, 35; reasons for
conservation, 3 2 ^ ; and the urban
life cycle, 9, 17-18, 20-1; and urban
management, 45
management: of the built
environment, economics in, 117-44;
and conservation of the urban
cultural heritage, 91-109; and
planning, 47-9, 91; of urban
resources, 35-49
market, the: and economics, 189; and
planning, 153-5
market failure, 97, 154, 155
market value, 135-6; and the cultural
built heritage, 175-6
Marx, Karl, 36
Mexico, 78
micro planning: and CBH
conservation, 98-9
Mishan, E. J.,209
mixed economy, 4
monitoring: of plan implementation,
52
monuments, 2, 192; listing of, 79, 81,
88
Morocco, 64, 78
Morris, William, 68
moveable cultural property, 75-6
moveable resources: and CBH listing,
85; and the cultural built heritage,
78; and economics, 123; as heritage,

63, 65; reasons for conservation,


32-3; and the urban life cycle, 18,
19, 20; and urban management, 45
Myrdal, Gunnar, 152
Nairobi Charter (1976), 94-5
natural heritage: description of, 73-4
natural resources: and conservation, 2;
and economics, 122; as heritage, 63,
65; as property, 35, 36; reasons for
conservation, 30-1; and the urban
life cycle, 9, 15, 17, 19-20; and
urban management, 44; and urban
planning, 53, 57
New Town Development
Corporations, 40
new urbanisation, 16
new use for old, 72, 148
New York, 86, 90
Nijkamp, Peter, 182
Norway, 85, 89
objectives of conservation: and the
cultural built heritage, 106, 109
obligations: in the built environment,
37-8
obsolescence: and the cultural built
heritage, 69-70; deferment of, and
planning, 158; economic, 126,
131-2, 150; and economic feasibility
of CBH conservation plans, 159-60;
and economics, 137, 141, 142, 143,
147; and inventory screening, 195,
198; in man-made resources, 33; and
plan implementation in CBH
conservation, 100, 101; role of
planning in deferring, 545; and the
urban life cycle, 18, 21-9; and urban
management, 45; and valuation of
the CBH, 169
occupation, viability for: case study of,
287, 289-91
occupation value of property, 72
occupiers: and CBH conservation,
99-102; and CBH listing, 83; in
community impact analysis, 269,
271, 276; costs and benefits to,
201-3; and the cultural built
heritage, 72; and economics, 121,
128, 129, 130-1, 133-4,137;and

Index
inventory screening, 195; and social
financial analysis, 236, 237, 239;
valuation of the CBH by, 171
operation: in community impact
analysis, 265-8
operational planning, 42, 49
opportunity costs, 182-8, 190, 203,
243, 302-3
option value, 177
owners of property: and CBH
conservation, 99-102; and CBH
listing, 83, 84, 85, 91; and the
cultural built heritage, 72; and
compensation, 209, 210-12; costs
and benefits to, 201-3, 205-8, 209;
and economics, 121, 128, 129, 130,
131, 137; and financial analysis, 232,
234; and inventory screening, 194,
195, 198-9; valuation of the CBH
by, 171; and urban management,
39-40; see also landowners
partnerships, public-private: and CBH
conservation, 101
Perloff, Harvey S., 54, 56
physical environment, see environment
physical (structural) obsolescence: in
the built environment, 23, 24, 26,
27-9, 131, 132, 148, 160
physical planning, 51
physical stock: and change, 45-6; as
heritage, 63; and urban planning,
53-4, 56, 95
plan implementation, 50, 51, 52, 57,
93; and CBH conservation, 99-102,
162
plan making, 50, 51, 56; and CBH
conservation, 96-9, 157-9; and costs
and benefits, 203; economics in
CBH conservation, 157-9
planning: and conservation, 3; and
economics, in CBH conservation,
152-66; effect of planning control,
143-4; and inventory screening,
194-5; and management, 47-9, 91;
and social opportunity cost, 186; for
urban conservation, 50-7, 91-109;
or urban resources, 35-49
planning balance sheet analysis
(PBSA), 250, 251, 255; in the

359
Covent Garden case study, 287-8,
312-14; examples of studies, 280-4;
see also community impact analysis
planning gain, 144
Poland, 78
policies: in urban and regional
planning, 99-100
pollution: and the management of
natural resources, 44
Portugal, 87
preservation: of the built environment,
26; and urban planning, 56-7
price level, changes in, 139-40
pricing for conservation, 213-14
private land policy, 38
private opportunity costs, 183-6, 203
private sector: and the built
environment, 36; and conservation
projects, 166; and discounting,
138-9, 245; and economics, 117,
134-5, 189
private utility (direct value): and CBH
valuation, 176-7
producers/operators: in community
impact analysis, 272, 276, 277, 296,
297,313
professionals: and social financial
analysis, 236, 237, 239
programmes, conservation: CBH, and
economics, 161-3; CBH, priorities
in, 163-5
project evaluation, 190
project implementation: CBH,
economics in, 165-6; and CBH
conservation, 103-5; and CBH
valuation, 191
projects, conservation, 162
property: built environment as, 36-8;
cultural built heritage as, 67-8, 146;
heritage as, 64-5; life of, and
economics, 141-3; management, and
the CBH, 71-2; urban resources as,
35-6; see also occupiers; owners of
property
proprietary interests in conservation:
economics of, 120-2
proprietary land unit, 37, 39-40
protected monuments, 81
public land policy, 38
public sector: and the built

360

Index

environment, 36-7; and


conservation projects, 166; and
discounting, 245, 248; and
economics, 117, 134-5, 189; and
social cost benefit analysis, 240-1
quality of conservation: grading of,
82-3
quality of life, 32
Realfonzo, Almerico, 242
reconstruction, 21; of the built
environment, 26; and economics,
141
redevelopment, 21; case studies of,
287, 289, 300-14; and community
impact evaluation, 260, 262, 264,
265, 267; and the cultural built
heritage, 70; economics of, 127,
133-4, 135, 136, 147; financial
analysis of, 229, 230; and inventory
screening, 198; and opportunity
cost, 183-6, 187-8; versus
rehabilitation, 134
regional planning, 41, 50-2, 95,
99-100; effect of planning control,
143-4; role of economist in, 155-7
rehabilitation: of the built
environment, 26; and community
impact evaluation, 260, 262, 263,
265; and the cultural built heritage,
70, 72, 160; economics of, 127, 131,
132-3, 135, 141, 142, 148;
enhancement of use value, 158; and
inventory screening, 198; and
opportunity cost, 183-6, 187-8;
versus redevelopment, 134
religion: as heritage, 63, 66
religious buildings, 79, 107
renewal: and the cultural built
heritage, 69-70; and economics,
137, 141, 147-8; and the urban life
cycle, 21-9; and valuation of the
CBH, 169
replacement: of the built environment,
26; and the cultural built heritage, 69
reproduction: of the built
environment, 26
resource: the cultural built heritage as,
145-6

resource costs, 242-3


resource management, 43
restitution: of the built environment,
26
restoration: of the built environment,
26; and CBH listing, 87; and the
cultural built heritage, 70, 106; and
economics, 141, 147; and
opportunity cost, 183-6, 187-8
rights: in the built environment, 37-8
Royal Hollo way Sanitorium, Surrey:
case study of, 287, 291-300
Robbins, Lionel, J52, 153
Ruskin, John, 68
sanctity of life, 31-2
SCBA, see social cost benefit analysis
scheduled monuments, 81
sectoral planning, 92
services: and the urban life cycle,
18
SFA, see social financial analysis
signals on value, 181
social cost benefit analysis (SCBA),
223,235,240-8,249,250,251
social decision on conservation: and
economics, 188-9
social financial analysis (SFA), 223,
235-9, 249; in case studies, 287,
301, 308, 309-12
social opportunity costs, 186-8, 203
social surplus value (indirect value):
and CBH valuation, 176-7
society: valuation of the CBH by,
172-3
socio-economic development, 46-7
special architectural and historic
interest, buildings of, 80, 81
Standing Conference of Archaeological
Unit Managers, 84
state, the, see government
structural deterioration, see physical
obsolescence
sustainable development, 29
Sweden, 79, 84
Switzerland, 79, 84, 89
tax relief: and CBH conservation,
149-50; and financial analysis, 234-5
taxation, 204, 212

Index
technological changes: and locational
obsolescence, 24
time orientated planning, 54, 56
tourists, 109, 160, 176, 213; and
benefits, 188; and conservation,
214-15; problems of, 107
town planning, see urban planning
Turkey, 85, 89
UNESCO (United Nations
Educational, Scientific and Cultural
organisation), 93; on moveable
cultural property, 75-6
United Nations, 2
United States, 2, 3, 79, 81-2, 84-5,
86, 87, 89; and compensation law,
211; New York, 86, 90
urban: definition of, 1, 11
urban cultural heritage: management
and planning in conservation of,
91-109
urban management, 39-43
urban planning: and the cultural
heritage, 95-6; effect of planning
control, 143-4; role of CBH in,
91-5; role of conservation in, 52-4;
role of economist in, 155-7
urban renewal, 25
urban resources: life cycle of, 16-21;
planning and management of, 35-49
urban system: life cycle in, 11-34; role
of planning in, 50-2

361
utility, 118, 119, 120, 168, 170
valuation: of the cultural built
heritage, 167-91; and social cost
benefit analysis, 243-4
value: of the CBH, reasons for, 105;
definition of, 167-8; of land, and the
built environment life cycle, 140-1;
in the market, 135-6
value for money, 118, 162; and CBH
listing, 193; and conservation
programmes, 166; of conservation
projects, 164, 165; and cultural
valuation, 182; and heritage value,
119-20; and inventory screening,
198
Venice Charter on International
Restoration, 93
visitors: and benefits, 188; and the
cultural built heritage, 160; pricing
of, 213-14; problems of, 107
Ward, Barbara, 113
Washington Charter (1987), 95
Webber, M., 11
West Germany, 84, 85
World Cultural and Natural Heritage,
73
World Heritage Convention, 94
World Heritage List, 82
WTP (willingness to pay), 168, 170,
176, 177