An Assessment of the Economic Impacts of Cultural Heritage...

5/11/2011

1

An Assessment of the Economic Impacts of Cultural Heritage Projects in Georgia

and Macedoniaand Macedonia

Presentation byDr. David Throsby and Dr. Benoit Laplante

World Bank, Washington D.C. May 4, 2011

3. The economic impacts of CH project: Georgia

Outline

1. Introduction

2. The economics of cultural heritage

p p j g

4. The economic impacts of CH project: Macedonia

5. Conclusions / Lessons

5/11/2011

2


Outline

1. Introduction


p p j g



Introduction

The World Bank has financed a variety of investment projects aimed generally at supporting the conservation, restoration, and maintenance of physical heritage around the world, including in ECA countriesECA countries.

A review of the project portfolio implemented during the period FY1997 through 2010 revealed that the size of the investments ranged from US$150,000 to US$240 million, with Learning and Innovation Loans (LILs) averaging approximately US$5 million.

The overall objective of these investments is to promote employment, poverty reduction and more generally economic development using cultural heritage resources as an asset.

5/11/2011

3

Although Bank projects in the cultural heritage field are subject to the usual assessments that are applied to any project implementation, little is known about the subsequent performance of these projects in the years post-completion

Introduction

performance of these projects in the years post-completion.

Accordingly this study was undertaken to provide some empirical evidence for the economic impacts of cultural heritage investment.

Two case studies were chosen for this purpose, in the historic town centres of Tbilisi, Georgia and Skopje, Macedonia respectively.


Outline

1. Introduction


p p j g



5/11/2011

4

The economics of cultural heritage

Field of increasing interest.

Various types of CH assets have been subjected to analysis: Built (e.g. churches, museums, whole areas) and natural (e.g.

ti l k L k S t )national parks, Lake Sevan, etc.)

With various purposes:

Assessing economic impacts;

Assessing economic benefits.

Various groups of people:

Local residents;

And various approaches:

Panel datasets, control groups, etc.

Contingent valuation, travel cost, hedonic pricing, etc.

Tourists (national and/or international).


In this study:

The projects we are looking are investment projects to restore whole area of the respective cities. p

Methodology

A full ex post cost-benefit analysis using actual data would be ideal

But data limitations are likely to make this very difficult to implementp e e t

A simpler procedure is to gather relevant indicators

5/11/2011

5


In this study:

After discussion with local teams in both Skopje and Tbilisi, it was determined that a reasonable objective would be: j

Assess the economic impacts of the investment projects.


Economic indicators

• Output of goods and services• Business profitabilityp y• Tourism impacts• Labor market effects: employment and wages• Real estate rentals and prices• Further investments stimulated

Cultural indicators

•Immediate use and non-use cultural benefits to residents and visitorsL t lt l i t t i bilit i•Longer term cultural impacts: sustainability issues

5/11/2011

6


Key question of interest: What would have happened in those areas with project if there had been no project (counterfactual scenario)?

And that a reasonable approach would be:

Select a similar area as control group;

Collect general secondary data as well as and primary data in each area;

And that a reasonable approach would be:

Target national stakeholders.


Limitations of the study in both sites:

(1) These projects have been initiated more than 10 years ago in a region of the world which was experiencing important g p g ppolitical and economic turmoils.

This creates difficulties in terms of data availability.

(2) Time to develop survey template, pre-test, and implement was very limited.

5/11/2011

7


Outline

1. Introduction


p p j g



The economic impacts of CH project: Georgia

5/11/2011

8


Number of licenses issued for new businesses:

• Business licenses issued throughout Georgia according to legal status and not according to sectors;

• Business licenses issued in Tbilisi according to legal status and according to tax authority offices.

Employment rates, sectors, average salaries

•Employment countrywide by economic sectors 1998-2009 years;•Employment and average salary in Tbilisi 2003-2007 years;•Average monthly salary countrywide by economic sectors 1999-2009 years;•Average salary according to economic sectors countrywide 2000-2007 years;•Employment & average salary in restaurants/hotels in Tbilisi for 2007.

Real estate values

Retail sales

Tourists and visitors


For the purpose of the study, the following areas were targeted:

• Zemo Kala District of Old Town Tbilisi – a selected project area (referred to as “target area”) subject to intervention within the W ld B k C lt l H it P j t t t dWorld Bank Cultural Heritage Project context; and

• Metekhi Plateau of Old Town Tbilisi – located across the target area and not subject to intervention (control group).

5/11/2011

9


0 Sololaki 7 Zemo Kala (Erekles Moedani)1 Metekhi (Darejani) 8 Zemo Kala (Vercxlis Qucha)1 Metekhi (Darejani) 8 Zemo Kala (Vercxlis Qucha)2 Metekhi (Plateau) 9 Kvemo Kala (Gudiashvilis

Moedani)3 Abanotubani 1

0Kldis Ubani

4 Kvemo Kala (Tsikhis ubani) 11

Sololaki (kvemo)

5 Zemo Kala (Sanapiro) 12

Sololaki (Zemo)

6 Kvemo Kala (Centraluri)


Zemo Kala # of interviews Metekhi Plateau # of interviews

Population 80 Population 38

Survey respondents by area and types

Pedestrians 36 Pedestrians 0

Museums 4 Museums 0

Hotels 6 Hotels 6

Restaurants 18 Restaurants 1

Shops 24 Shops 6

Business Center 1 Business Center 0

Total 169 Total 51

I t f b i th t t dIn terms of businesses, the survey targeted:• All hotels/guesthouses located in Zemo Kala and Metekhi Plateau; • All restaurants and practically all shops in Metekhi Plateau; • All museums located in Zemo Kala.

5/11/2011

10


Changes in real estate value

1883

Per sq.m. Price in Zemo Kala and Metekhi

16771883

12801559

2005 2010

Metekhi

Kala

Over the period 2005 and 2010, real estate values increased by 12.2% in Metekhi Plateau, and by 21.8% in Zemo Kala.


Perception of changes in housing conditions

Recent Housing Conditions Compared to Before 1998

30%

42%

30%

16%

41%42%

Improved

Worsened

Stayed the same

Metekhi Kala

5/11/2011

11


Since 2002, 18 new restaurants, cafes and pubs were established in Zemo Kala since 2002. None were established in Metekhi Plateau.

3

4

5

6

Factors of Starting Business in Kala

0

1

2

Tourists' concentration

Historical location

Convenient location

Prestigious location

Attractive location

Old district Crowded place


600

700

Number of visitors (thousands)

100

200

300

400

500

2006 2007 2008 2009

Rest of Georgia 351.2 300.3 296.8 329.4

Tbilisi 121.4 146.1 139.4 286.8

Kala 21.6 24.5 27.3

0

5/11/2011

12


Perception of Kala and the impact of the project

Agree Neutral/No opinion/Can’t say

Disagree

Kala is an important part of Georgian culture 32 2 2

Restoring Kala improves Tbilisi as a place to visit or live in

33 2 1

Investing in improvements in Kala is a waste of money 0 1 35

Kala is a place that helps people come together 35 1 0

The renovated buildings of Kala are beautiful 31 1 4

Kala gives me a sense of Georgian cultural identity 28 1 7

Kala should be demolished and replaced with modern buildings

3 1 32


Beyond the Bank project:

In 2005, the Rehabilitation of Old Tbilisi Program, which was co-financed by the Municipality of Tbilisi and the private sector.

An additional US$ 10 million was leveraged through direct funds from the President’s cabinet dedicated Old Town Tbilisi’s infrastructure rehabilitation.

In 2010 the Mayor of Tbilisi launched the “New Life for Old Tbilisi” Program.

5/11/2011

13


Outline

1. Introduction


p p j g



Map of the Old Bazaar in Skopje

Skopje Old Bazaar

Contact zone “Dukandzik”

Contact zone “Most” (Bridge)

Contact zone “Mavrovka”

Contact zone “Skopska tvrdina” (Skopje Fortress)

5/11/2011

14

Map of the Old Bazaar in Prilep

Prilep Old Bazaar

Contact zone south (W)

Contact zone north (N)

Contact zone “Mala Carsija” (Small bazaar) (I)

Contact zone “Kej” (I down)

Contact zone “Pazar” (Bazaar) (S)

Skopje, a street in the Old Bazaar in 2000

5/11/2011

15

Skopje, a street in the Old Bazaar in 2010

Stakeholders

• Commercial businesses such as shops, restaurants, cafes, hotels etc. in the Old Bazaar area;

• Cultural organisations such as museums mosques• Cultural organisations such as museums, mosques, churches, etc.

• Residents in the Old Bazaar area and in Skopje more generally;

• Tourists and visitors from elsewhere in Macedonia and from other countries;

• Public and semi-public authorities, NGOs etc.

5/11/2011

16

• Restaurants, café shops, souvenir shops, handcrafts, and jewellery makers;

Surveys undertaken

handcrafts, and jewellery makers;

• Hotels, guest-houses, hostels;

• Museums, galleries, exhibition halls; and

• Domestic and foreign visitors.

Findings from economic indicators

Initial Bank investment helped stimulate additional funding of $2½ million in 2006-2010

Daily tourist numbers have almost doubledDaily tourist numbers have almost doubled

Mean daily tourist expenditure up by 30%

Increase of 52% in daily numbers of locals + tourists visiting restaurants, cafes, shops.

Employment numbers and have grown more than three times faster than in control site.

Particular impacts on attendances in museums and galleries among both foreigners and locals.

Positive climate created for further business expansion in the Old Bazaar area.

5/11/2011

17

Strongly agree

(%)

Agree (%)

Neutral (%)

Disagree (%)

Strongly disagree

(%)

Total (%)

The Old Bazaar is an important part of Macedonian culture

79.2 13.1 5.5 2.2 0 100

Perception of cultural benefits: Visitors to Old Bazaar

Macedonian culture

Restoring the Old Bazaar improves Skopje as a place to visit or live in

23.0 61.2 10.9 4.9 0 100

Investing in improvements in the Old Bazaar is a waste of money

0 1.1 2.7 23.0 73.2 100

The Old Bazaar is a place that helps people come together

33.9 30.1 21.9 12.6 1.6 100

The renovated buildings of the Old Bazaar are beautiful

41.0 29.5 23.0 5.5 1.1 100

The Old Bazaar gives me a sense of24 6 63 9 7 1 4 4 0 100

The Old Bazaar gives me a sense of Macedonian cultural identity

24.6 63.9 7.1 4.4 0 100

The Old Bazaar should be demolished and replaced with modern buildings

0 0 0 6.0 94.0 100

I have learnt something about my cultural heritage from being here

31.1 48.1 14.2 6.6 0 100

Skopje Old Bazaar Prilep Old Bazaar

Total proportion agreeing (%)

Total proportion agreeing (%)

Statements about value of cultural heritage

agreeing (%) agreeing (%)

Positive statements

Part of Macedonian culture 92.3 83.4

Improvement in liveability 84.2 83.3

Visual/aesthetic value(a) 70.5 –

Social value 64.0 95.2

Identity/symbolic value 88.5 78.6

Educational value 79.2 59.6

Negative statements

Heritage investment a waste of money 1.1 9.5

Should be demolished – 21.5

Note: (a) This statement not included in Prilep survey

5/11/2011

18

A contingent valuation or choice modeling study should pay attention to:

• defining the population of beneficiaries;

• using appropriate procedures to ensure a valid random• using appropriate procedures to ensure a valid random sample is drawn, if necessary stratified according to variables of interest;

• designing a questionnaire that provides necessary information and realistic scenarios to respondents;

• including questions that yield objective data on respondents’ perceptions of the strength of the external or public-good effects under consideration;public-good effects under consideration;

• controlling for biases in soliciting respondents’ willingness to pay; and

• specifying a feasible payment vehicle comprehensible to respondents.

Visitors’ willingness to make a one-off contribution to heritage restoration in the Old Bazaars in Skopje and Prilep (per cent)

Willingness to contribute

Amount willing to contribute Proportion of respondents (%)

Skopje Prilep

Zero 9.8 28.6

Up to 500 MKD 67.2 59.5

1000 MKD 16.4 11.9

1500 MKD 5.5 0

More than 1500 MKD 1.1 0

Total 100.0 100.0

5/11/2011

19

The economic impacts of CH project: Macedonia

Beyond the Bank Project:

Funds have been leveraged from various donors as well as the private and public sectors totaling nearly US$ 2.5 million t e p ate a d pub c secto s tota g ea y US$ 5 osince 2006;

Investments planned for 2011 alone (restoration of a caravanserai, a Hamam, Skender Beg square and four shops) are predicted to be in excess of US$ 2 million.


Outline

1. Introduction


p p j g



5/11/2011

20

Conclusions and lessons

In comparison with the control sites in each case, tourist numbers and expenditures have increased, businesses have expanded, new start-ups have been initiated, and employment and skill levels have been enhanced.

The study has also provided some quantitative evidence on the cultural benefits perceived by stakeholders and their willingness to pay through voluntary contributions to a fund to continue the rehabilitation work.


However, as noted in the Completion Report for the Georgia project dated 18 March 2004 “monitoring and evaluation systems must be carefully designed to ensure that monitoring efforts produce data that are useful in assessing project outcomes and impact.”

Without such data, it is difficult to assess what has changed and to assess how much of these changes can be attributed to the CH investment project, especially many years after the project has been completed.

5/11/2011

21


A further issue of interest, beyond attribution, is of additionality in a broader geographical scope than the project area.

At the city level, or at the national level, how much more economic activities were generated as a result of the project?


In principle, it would have been possible to implement a travel cost approach or an hedonic pricing approach to assess the economic benefits of the project. These are well suited for ex-post assessment.

However, these methodologies take considerable amount of time and resources to implement.

5/11/2011

22

An Assessment of the Economic Impacts of Cultural Heritage Projects in Georgia

and Macedoniaand Macedonia

Presentation byDr. David Throsby and Dr. Benoit Laplante

World Bank, Washington D.C. May 4, 2011

An Assessment of the Economic Impacts of Cultural Heritage...

Documents

Transcript of An Assessment of the Economic Impacts of Cultural Heritage...