Two cases for valuation of cultural goods September 8, 2016 Trine Bille Associate Professor, Ph.D. Copenhagen Business School Department of Management, Politics and Philosophy

Publications Bille Hansen, Trine (1997): The Willingness-to-Pay for the Royal Theatre in Copen­hagen as a Public Good, Journal of Cultural Economics, vol. 21, no.1, pp 1-28 Bille Hansen, Trine (2002): A Contingent Valuation Study of the Royal Theatre in Copenhagen, In: Ståle Navrud and Richard Ready (ed.): Valuing Cultural Heritage. Applying Environmental Valuation Techniques to Historical Buildings, Monuments and Arti­facts, Edward Elgar Publishing, pp 200 - 237

Application: The Royal Danish Theatre Purpose: To investigate if CVM can be used in order to estimate the total value of the Royal Theatre to the Danish population To study whether the value of the Royal Theatre’s non-market benefits can justify the public grants given to the theatre Activity at its present level

The Royal Theatre Received about 266 mio. DKK in support from the state every year (at the time of the study) Equal to more than 80 percent of the total budget of the theatre Well defined cultural good. All Danes are familiar with it and know they are already paying for it through taxes Very elitist cultural institution: 7% of the population has been to the Royal Theatre with the last year, and 68 percent has never been there

Design of the study A random sample of the Danish population over 16 years old 1,843 people had been interviewed by telephone (responserate 77) WTP: what is the maximum amount the citizens are willing to pay (WTP) for the Royal Theatre to continue its activities at the present level?

Design of the study Question: ”How much are you willing to pay at the most to the Royal Theatre through taxes?” Non-market value: ”Do you think that the Royal Theatre has value for people other than those who go there, because it of significance for the country’s cultural level, attracts tourists or for other reasons?” Budget restriction: “would you still pay more, if it is necessary to raise taxes?” Experiment: split-sample, with and without information about all Danes over the age of 18 pay on average about DKK 60 a year to the Royal Theatre through taxes.

Average Wtp (DKK) Don’t know (%) Zero bids Median Wtp (DKK) With Info. 79 8 16 60 Without 259 37 21 All 154 23 18

Taxpayer (1.000) Aggreg. average median Public subsidy With Info. 350 mio. DKK 270 mio. Without 1,165 mio. DKK Believed payment 1,797 Mio. DKK 450 mio. All 4,498 690 mio. 266 mio.

Validity of the study A number of socio-economic factors are able to explain WTP in a way that is consistent with theory The probability of having a high wtp and to consider the Royal Theatre to have non-use value, is increased: if they attend many other cultural activities, have a high income, a high education, are women and live close to the capital Being unemployed means that the probability of having a high WTP is reduced.

Users Average WTP Non-users With info. (DKK) 205 68 Without info. (DKK) 693 232 All (DKK) 368 137 Aggregated WTP (mio. DKK) 121 561

Economic Valuation of Protection of Archaeological Artefacts in Great Aamose, Denmark

Publications Lundhede, Thomas; Berit Hasler og Trine Bille (2005): Værdisætning af naturgenopretning og bevarelse af fortidsminder i Store Åmose i Vestsjælland, Skov- og Naturstyrelsen, www.sns.dk, 107 sider Lundhede, Thomas, Trine Bille and Berit Hasler (2013): Exploring Preferences and Non-use Values for Hidden Archaeological Artefacts – a case from Denmark, International Journal of Cultural Policy, vol. 19., no. 4, pp 501-530

Purpose of the study: Economic valuation of a proposed nature and wetland restoration project in a river basin area, Greate Aamose, in West Zealand.

3 scenarios Differs with respect to: 1 2 3 Differs with respect to: Protection of archeological artifacts Improvement of biodiversity Recreational opportunities (establishment of paths) Size of the area

Valuation method Valuation by the Choice Experiment Method Internet questionnaire – tested in 3 focus groups Answer from 1.636 respondents ( 51%)

Preservation of artefacts Continued devastation: Important artefacts, including internationally unique sacrificial and settlement sites will be destroyed within a number of years. Reduced devastation : The tempo of the devastation is reduced significantly for some of the most important artefacts, but the devastation is not brought to an end. Protection now and in the future: The artefacts will be protected within the soil, now and in the future, so that they can be excavated and exhibited in future.

Biodiversity: effects for flora and fauna Low Diversity: A large number of animals, but distributed largely within a limited number of common species. Vulnerable and rare species are threatened by distinction due to dry conditions and cultivation. Some Diversity: Many animals distributed within a greater number of common species, including small birds. Vulnerable and rare plants are threatened by distinction only in few places. High Diversity: Many common and rare animal species, especially bird species. Rare species are protected against dry conditions and cultivation.

Recreational opportunities (access to the area) Restricted access via a few tracks and paths Extended access to a larger part of the area via a wider network of paths and tracks

The price-attribute 6 levels from 0 to 200 EUR/year. It is assumed that the Danes should cover the costs of implementing the alternative in the form a fixed annual sum per individual claimed once a year via the income tax. 6 levels from 0 to 200 EUR/year. A “Cheap talk” and budget constraint reminder is added

Choice set

Aggregation for scenario 3 (WTP per individual per year/EUR)

Aggregate results and sensitivity analysis

Hypothetical questions – hypothetical answers?