LITERATURE REVIEW ON

“ECONOMICS OF ARCHITECTURAL CONSERVATION”

SUBMITTED IN PARTIAL FULFILLMENT OF REQUIREMENT OF

SCHOOL OF PLANNING AND ARCHITECTURE, VIJAYAWADA

FOR

GATE SCHOLARSHIP
2021-2022

UNDER THE GUIDANCE OF: SUBMITTED BY:

DR. AMRITAVA SARKAR SMRITIKA BALDAWA

DEPARTMENT OF ARCHITECTURE M. ARCH(MAC), III SEM

SPA VIJAYAWADA SPA VIJAYAWADA

DEPARTMENT OF ARCHITECTURE

SCHOOL OF PLANNING AND ARCHITECTURE, VIJAYAWADA

 Economics Of Architectural Conservation

Contents
Introduction ............................................................................................................................... 3
Economic approach to Heritage Conservation .......................................................................... 3
What is heritage? ................................................................................................................... 3
How Much Is It Worth? .......................................................................................................... 4
Why should governments intervene? ................................................................................... 4
What instruments are available? ........................................................................................... 5
Who benefits? Who pays? Who cares? ................................................................................. 5
Conclusion of the questions................................................................................................... 6
Reference ................................................................................................................................... 6

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 Economics Of Architectural Conservation

Introduction
Cultural heritage be it in a form of archaeological sites, artefacts, buildings, groups of
buildings, works of art, etc. have a great necessity for preservation and conservation. And
these requirements for preservation and conservation of the heritage lays beyond the reach
or interest of economics. Decisions as to what should be characterized as heritage, how much
of it is worth keeping, and how resources should be utilized in maintaining it, have been
largely the province of experts: archaeologists, art historians, architects and others. However
such decisions are likely to be made or changed by policy analysts or economists which might
both gain advantage or effect the cultural heritage deeply.

To understand the economic approach to heritage matters and to identify some key policy
issues in the field of conservation there are some questions that needs to be asked before
implementation of any further plans or proposals. These questions includes:

i. What is heritage?
ii. How much is it worth?
iii. Why should governments intervene?
iv. What instruments are available?
v. Who benefits?
vi. Who pays?
vii. Who cares?

Economic approach to Heritage Conservation

What is heritage?
As per ‘UNESCO Convention for the Protection of the World Cultural and Natural Heritage of
1972 states at Article I’,

Following shall be considered as Cultural Heritage is:

Monuments: architectural works, works of monumental sculpture and painting, elements or

structures of an 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;

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Sites: works of man or the combined works of nature and man, and areas including
archaeological sites which are of outstanding universal value from the historical, aesthetic,
ethnological or anthropological point of view.

However from an economic viewpoint, a definition of cultural heritage might invoke the
notion of 'cultural capital'. Here the ideas from capital theory - investment, depreciation,
maintenance, rates of return, differentiation between stocks and flows, and so on - are
applied to the area of heritage preservation. Thus we might define cultural capital specifically
in the context of immovable heritage as the capital value that can be attributed to a building,
a collection of buildings, a monument, or more generally a place, which is additional to the
value of the land and buildings purely as physical entities or structures, and which embodies
the community's valuation of the asset in terms of its social, historical or cultural dimension.
Interpreted in this way, cultural capital can be seen, like the physical capital in which it is
contained, to be subject to decay if neglected.

After considering the factors mention above, if an objective means existed for valuing cultural
assets which accounted for both tangible and intangible benefits, an economic 'definition' of
cultural heritage might be able to circumvent some of the difficulties of reaching agreement
on the sorts of qualitative preservation values.

How Much Is It Worth?

To understand the value of cultural assets as heritage in order to evaluate their claims on
resources for their preservation, protection, maintenance or improvement, one requires
some means of evaluation. For some such assets, a market valuation might provide a starting
point. Here to determine the value of a cultural heritage one will need to study it’s both the
tangible and intangible values and assets. For example the tangible value can be said to be
the condition in which the structure exists, its use, location, architectural importance, etc.
and intangible values will include the culture, social and also religious worth of the property.

Why should governments intervene?

With help of government policies and restrictions, the Cultural heritage which might come
under government administration or private sector have to follow and obey the policies
resulting in safeguarding of the same. Along with it, the foreseeable future in most countries
voluntary action to correct for market failure in the heritage area, whether that action
originates in the non-profit or the profit-seeking sectors, is unlikely to be capable of carrying
out the whole task on its own. In any case, voluntary action itself is at least to some extent
dependent on government policies which offer tax incentives, provide information, support

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infrastructure and so on. Thus a continuing and key role for government in affecting the
economics of cultural heritage is apparent.

What instruments are available?

Let us begin by considering the tasks that any individual or group might face in relation to
identifiable items of cultural heritage. The tasks might include:

i. Preservation or protection of an item of heritage from destruction or demolition

ii. Conservation or maintenance of an item of heritage in its present state.
iii. Restoration of an item of heritage to some former state
iv. Renovation of an item of heritage to some new state
v. Improvement or enhancement of an item of heritage, for example through adaptive
re-use.

Each of these tasks could be given an economic interpretation in line with our earlier
discussion; for example, maintenance of a heritage item in its existing state may entail current
expenditure on repairs, whereas improvement in the cultural and economic value of an asset
(for example through restoration) may be seen as requiring investment over time. The
problem of instrument choice is a familiar one in economics and in the wider spheres of
government policy implementation. So choosing the tool and technique that will be required
for above tasks becomes an important topic for associated experts like architects,
conservationist, engineer, etc. It might become a difficult task in choosing the tools and
techniques will also require to be economical and fulfil the requirements at the same time.

Who benefits? Who pays? Who cares?

These questions refer to the 'stakeholders', the range of people who may have some interest,
either directly or indirectly, in a particular heritage items or in matters of cultural heritage
more generally. Stakeholders may be identified as:

i. those who enjoy some direct private (excludable) benefit from the heritage items
under consideration
ii. those who enjoy some beneficial externality or (non-excludable) public-good benefit
from the items
iii. those who bear some direct cost associated with the heritage items, for example
through contributing personally to the cost of upkeep, renovation and so on
iv. those who bear part of the cost of upkeep, renovation and so on, when that cost is
borne collectively, for example through tax expenditures

The range of stakeholders can be both private and public. In the private sector, those who
benefit, pay and have an influence on decisions are likely to coincide in particular cases. In
the public domain, those who benefit and those who bear the cost will probably coincide as
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much or as little as in other avenues of government expenditure. Those who decide, however,
will not necessarily be representative of the wider public interest. Whether this situation can
be construed as capture of the decision-making process by entrenched interests or as a
voluntary surrendering of authority to those who know better, or simply as reflecting
administrative convenience, is a moot point that deserves further investigation.

Conclusion of the questions

i. The definition of cultural heritage does have an economic dimension, in so far as the
expression of cultural value derives from individual utility functions and might be
measured, at least in the first instance, in terms of willingness to pay.
ii. The notion that heritage value can be interpreted as cultural capital opens up
potentially fruitful ways for approaching social decision-making in this area.
iii. There are clear theoretical grounds for identifying a public interest in matters
pertaining to cultural heritage, and hence a presumptive case for collective action to
rectify the consequential market failure. Whilst there appears to be a growing role for
voluntary action in this respect, the apparent extent and strength of the public interest
in this area is likely to require a continuing key role for government.
iv. The matter of instrument choice is likely in most cases to be resolved, as it is
elsewhere, in strategies containing a mix of tools, rather than in policies relying on a
single instrument alone.
v. The identification of the range of beneficiaries and potential beneficiaries from the
preservation and enhancement of cultural heritage can help to identify both the
appropriate fiscal jurisdictions within which to locate the financing of delivery of public
benefits in this area, and the appropriate locus for decision-making.

Reference
i. Handbook on the Economics of Cultural Heritage,2013 by Rizzo and Mignosa
ii. Economic Perspective on Cultural Heritage,1997 by Rizzo
iii. The Heritage Game: Economics, Policy and Practice, 2008 by Peacock and Pizzo
iv. Cultural Economics and Cultural Policies, 1994 by Peacock
v. Economics in Urban Conservation. New York: Cambridge University Press, 1988 by
Lichfield Nathaniel

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