Published by EH.NET (January 2003)


St?le Navrud and Richard C. Ready, editors, Valuing Cultural Heritage: Applying Environmental Valuation Techniques to Historic Buildings, Monuments and Artifacts. Cheltenham, UK: Edward Elgar, 2002. xi + 280 pp. $90 (hardcover), ISBN: 1-84064-079-0.

Reviewed for EH.NET by John C. Whitehead, Department of Economics and Finance, University of North Carolina at Wilmington.

In Valuing Cultural Heritage, St?le Navrud and Richard C. Ready address a topic growing in importance as economic development threatens many of the world’s cultural and historical treasures — the assignment of economic values to cultural and historical resources. The assignment of values is not straightforward since many cultural and historical resources are difficult to allocate by the market mechanism. The assignment of values is critical, however. When compared with the economic value of economic development, cultural and historic resource market values often appear lacking. The greatest contribution of this book is that these values will not be overlooked.

Market economies have generally proved to be capable of allocating goods, services, and other resources in an efficient manner. One exception is public goods — those goods that are nonrival and nonexcludable in consumption, providing little incentive for consumers and firms to develop a market. Examples of these goods include national defense, environmental quality, and cultural and historical resources. In such cases, most economists acknowledge that markets fail to allocate resources efficiently and the role for government is to provide the public goods for society through taxation and public programs. The problem becomes determining the correct amount of the public goods to provide for society.

One analytical method used to determine the correct amount of public goods to provide is benefit-cost analysis. If the benefits of the public good exceed their costs then the government should provide the good. In order to conduct benefit cost analysis of cultural and historical resources estimates of benefits and costs are needed. This is not a problem on the cost side. Maintenance and administrative cost estimates are readily available. There is a problem with estimating the benefits of cultural and historical resources. What is the economic value of historical resources like Stonehenge that provide enjoyment and wonder to visitors and non-visitors alike?

So called “non-market valuation methods” have been developed to answer questions such as these. Navrud and Ready review these and offer guidance on their applicability to cultural and historical resources. For example, the hedonic price method is typically used to value air quality by measuring the difference in housing prices based on differences in housing characteristics. Since people prefer clean air, housing prices in cleaner air neighborhoods are higher. The benefits of clean air are measured by the price differences. If people prefer to live nearby to historical and cultural resources, land and housing prices will rise and the value of historical and cultural resources can be determined.

The travel cost method is typically used to measure the value of trips to recreation sites and changes in their quality. Fishing sites with higher water quality tend to produce more fish. Anglers will travel farther and more often to these higher quality sites. The differences in the travel expenditures are used to place monetary values on the sites and their qualities. If travelers go to cultural and historic sites the economic value of the trips can be determined. If the number of trips changes due to changes in the site’s cultural resource characteristics, then the value of the characteristics can be determined.

In the case of cultural and historical resources much of the economic value accrues to those who enjoy the resources vicariously. For many of these resources, people do not tend to choose to live near them or make frequent trips to visit them. There are limitations to the usage of the hedonic price method and the travel cost method to value these goods. A third methodology is more appropriate.

The contingent valuation method has been used for over thirty years to assign monetary values to resources previously viewed as having only intrinsic value. The contingent valuation method involves asking survey respondents what they are willing to pay for changes in allocations of public goods. There have been over a thousand applications of the contingent valuation method, mostly in the field of environmental (e.g., air quality) and natural resource (e.g., fishing quality) economics. The contingent valuation method can be used to place monetary values on resources for those who use the resources (i.e., visitors) and those who use the resources vicariously through conversations with friends, books, television programs, and other media.

During the past ten years there have been a small but growing number of contingent valuation applications to cultural and historical resources. Studies have considered the economic value of preservation of historic buildings, monuments, museums, cultural artifacts and other resources that are, perhaps, not efficiently allocated by markets. Most of the researchers conducting these path-breaking studies have chapters in the book.

Navrud and Ready introduce a number of studies applying the methods and assigning values to cultural and historical resources. Almost all of these studies use the contingent valuation method. The editors end the book with a chapter reviewing the existing studies, less than forty to date, covering the range of cultural and historical resource values. They describe some gaps in the literature and provide some suggestions for future research.

The bulk of the book is a chapter-by-chapter march through previously unpublished applications of non-market valuation methods to cultural and historical resources. The resources considered include Stonehenge and historic buildings such as cathedrals, castles, monasteries, and theaters in Europe, historic monuments in Washington DC, cultural artifacts such as aboriginal rock paintings and Roman imperial remains, museums, and the Fes Medina in Morocco.

Many of the applications are high quality using state-of-the art survey methods, visual aids, survey questions that are designed to elicit “true willingness to pay” without excessive bias, appropriate statistical methods, and examinations of the validity and reliability of the willingness to pay statements. On the other hand, some of the applications are deficient in one or more of these characteristics. In some cases there are serious deficiencies that a na?ve reader will, unfortunately, overlook.

The book is most useful to those who are (1) interested in the cultural and historical resource policy analysis, (2) interested in conducting a study to measure the economic values of culture, and (3) unfamiliar with valuation methods. Those in category (1) will find the book essential as an introduction to a new and growing area in their field. Experienced contingent valuation researchers who are in category (2) will find the book to be important background reading. Those in categories (2) and (3) will find the book essential but should not rely on it as a primer on how to conduct valuation studies.

John Whitehead’s research includes the contingent valuation of cultural amenities provided by historic buildings and shipwrecks, and sports teams, stadiums, and arenas.