A literature review of the economics and heritage conservation was conducted by Randall Mason in a 2005 in a Brookings Institution Metropolitan Policy Program publication. In the preamble, Mason points out that historic conservation is typically judged to be a sound investment. By most accounts, it is more efficient and profitable to preserve a historic building than to construct a new one. Designating a landmark or district as historical typically maintains if not boosts the value of the property, and as an economic development tool, historic conservation has proved its worth.

Nearly any way the effects are measured, be they direct or indirect, historic conservation tends to yield significant benefits to the economy. However, the methods of determining the value of historic conservation vary widely, and several challenges persist in applying normalised economic methods to the field. The literature review by Mason assesses the current findings on the value of historic conservation and the methods used to assess that value, making the case for needed improvement if the economics of conservation is to more objectively and rigorously quantify the effects of historic conservation. The dilemmas faced in assessing the value of historic buildings include the fact that historic conservation is both public and private, and has both monetary and nonmonetary purposes.

Historic conservation can be a private good in that it offers a range of goods and services consumed by individuals and traded in markets (such as real estate). On the other hand, it can be intrinsically a public good with benefits deriving collectively and provided not by markets, but by government or non- profit groups. The economic costs and benefits of historic conservation are the subject of persistent and urgent questioning in public debates. Whenever historic conservation comes up in public discourse, it seems, economic arguments figure prominently. Sometimes the discussion is about whether historic conservation has some economic value, and the answer generally is “yes” and sometimes the tougher questions are ventured: does historic conservation of a certain site have more economic value than an alternative investment might have? What are the costs and benefits of regulation? Mason asks: is conservation an effective way to stimulate economic development? These are fundamentally difficult and tricky questions to answer.

Notwithstanding, historic conservation is organized primarily to sustain and create cultural values, like historical associations, senses of place, cultural symbolism, the aesthetic and artistic qualities of architecture, and the like. Studying the economics of this or any other part of the cultural sector amounts to calculating the incalculable, or pricing the priceless. Economic analyses can easily determine partial or proxy values for the full value of historic conservation, but what do these tell us? Are they sufficient or even useful? A growing number of studies and research projects take on issues in this realm of understanding the economic values of historic conservation. The specific kinds of questions and themes addressed include: Justification of public policies and other investments (especially rehabilitation tax credits); rationales for advocating conservation over new construction; rationales for promoting generally conservative approaches to managing the built environment (falling under the rubrics of “sustainability” or “smart growth”); justifying material support for conservation as an expression of culture (in which a lot of the questioning is identical to that plaguing the arts and culture sectors in general, whether the topic is funding for museums, art, music, or other forms); and how to use economic analysis to inform management decisions for historic conservation sites and programs.

Some underlying assumptions about economic understandings of conservation include:

• historic conservation is a legitimate public good. Historic conservation has, by consensus, tradition and law, been considered by the majority of voters and public officials as a legitimate function of government. The levels and kinds of public support and spending on historic conservation are up for questioning, however, and constantly debated. Thus arises an “advocacy” literature, supporting ideological beliefs in the cultural need for historic conservation with economic analyses and rationales.
• reconciling economic and cultural notions of value is a source of confusion. Different conceptions of the value of things—some priceable, some priceless—have traditionally separated those working in the culture and economics fields. Since historic conservation trades on and generates both kinds of value, it requires seeing value through these very different lenses.
• the value of historic conservation need not be expressed and analysed only in quantitative terms. Qualitative expressions of the value of conservation often are dismissed by economists simply because they are not susceptible to standard economic (mathematically driven) methods of analysis. But these cultural values—resisting easy quantification and mathematical treatment—are essential to the nature of historic conservation and there must somehow remain part of the discourse on decision-making and other economic discourses on conservation. In other words, applying standard quantitative, market-derived measures of historic conservation will not suffice—a priori—to express the full value of conservation as cultural expression and public good.

There is broad agreement that the benefits of historic conservation outweigh the costs. More specifically, the economic costs of conservation are outweighed by the benefits—both economic and cultural—of a robust historic conservation sector.

The literature is conclusive about the overall positive benefits of historic conservation. Much of the literature, explains Mason, is concerned either with articulating these benefits, often in quantitative, monetized terms or finding those points on the cost-benefit curve at which the best marginal improvements to benefit can be made. The literature ranges across issues at the level of government policy decisions to those of individual consumers; questions regarding the proper pricing of historic conservation benefits to the evaluation of alternative decision choices. This review concludes that adequate tools and studies exist to analyse the private values of historic conservation, but studying these alone is inadequate to the task of making informed decisions about historic conservation. To enable better decisions, the public values of conservation need to be better analysed. Mason urges that replicable model studies of the empirical relationships between historic conservation activity and economic factors are needed. Such studies should be designed to answer directly the kinds of questions practitioners and policy makers have about the relationship between conservation and economics. There is a growing literature on this front—yet it remains inadequate for everyday application by historic conservation practitioners, other professionals, and decision-makers.

Paul Rappoport – Heritage 21 – 21 December 2015