1. Do social benefits of preserving built heritage exceed the costs? Case: Bryggen in Bergen Ståle Navrud Department of Economics and Resource Management Norwegian University of Life Sciences E-mail: stale.navrud@umb.nostale.navrud@umb.no

2. Contents Review of economic valuation studies of cultural heritage = Social benefits of preservation Case: Cost –Benefit Analysis (CBA) of the World Heritage Site – Bryggen in Bergen, Norway

3. Review of studies -. Ready and Navrud (eds.) 2002: Valuing Cultural Heritage Mostly Stated Preference techniques used (Contingent Valuation and Choice Experiments) Use and Non use – values captured 27 studies (by 2002); incl. 6 World Heritage sites Developed/developing/transition countries Span a wide range of physical assets, services, quality and policy issues – attempt to classify studies

4. Lessons learned i) Few empirical valuation studies ii) Existing studies vary widely  difficult to compare iii) People attribute significantly positive value to CH (Cultural Heritage) iv) Large proportion state zero WTP - protesters - genuine zero  funding

5. Lessons learned (cont.) v) Higher values for users vi) Non-users benefits are positive vii) Competing cultural goods and Part-whole bias /Embedding viii) Periodicity of elicited WTP values iv) Accurate description of good - match expert assessment and understandable to people

6. Conclusion of review Experience from environmental valuation apply equally well to CH valuation Potential for benefit transfer (i.e. transfer of from study sites to new policy cases) ? Highly site- and project specific values  “Book of values” not possible, but there might be similar values for groups of CH goods  There is a large need for new valuation studies of cultural heritage for new policy uses

7. Policy Uses 1) Project evaluation (protect/restore) (e.g. Stonehenge, Split, Fes Medina) 2) Level of investment in ongoing projects (e.g. Nidaros and Lincoln Cathedrals) 3) Choices between competing uses (e.g. Nidaros, Stonehenge; new studies of access and deterioration of buildings from access) 4) Decisions on funding mechanisms (Durham Cathedral, Napoli Musei Aperti)

8. Extent of Market – Number of ”affected” households Total benefits (B) B = b i x N Number of affected households (N) just as important as mean WTP/household (b i ) - for local, regional, national, global public goods (i.e. World Heritage site = global public goods)

10. Case: CBA of Bryggen In Bergen Benefits: Use Value: 500.000 visitors per year Non Use Value: Households (hh) in Bergen and rest of Norway; Contingent Valuation of national, representative sample of 480 Norwegian households: Average Willingness-to-pay (WTP) = 188 2003-NOK/hh one-time amount Households in other countries worldwide could also have WTP for this gobal good, but small

11. CBA (cont) Costs Restoration program 200 – 300 million NOK in total for next 10 years Net Present Value (Discount rate r = 4 %, Time horizon = 10-20 y = 80 – 90 million NOK  SOCIAL BENEFITS EXCEED COSTS Sensitivity: NPV=0  Critical Value for Benefits = 137-145 NOK/hh as a one-time amount

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