Abstract
Restoration and conservation of heritage brings to many values: culture, aesthetics, education, environment, society, history as well as many other values. One of the most mentioned values in recent year is the economic value.
When we talk about the importance or value of a heritage, we are truly making a claim on the value: its purpose, experience, identification method, measurement method and its role on the decision making related to conservation, restoration both tangible and intangible heritage values.
This paper examines the economic value of restoring and preserving heritage ecosystems from an approach that valuates the economic value of natural ecosystems and offers some suggestions for valuation process of economic value of the Ham Rong - Nui Do heritage ecosystem.
Keywords: Heritage ecosystem; valuation of heritage economy.
1. Economic value of heritage
For many years, economic value is often considered too shallow and cannot be compared with the meaning of historical resources. Even today, there are still people who make absolute heritage conservation, deny the calculations and supportive views based on economic arguments, and argue that economic calculations have underrated and insulted the importance and unmeasured metaphysical values of human historical heritage. This is true in the long run when the economic impact of heritage conservation becomes much less important than the signification of education, environment, culture, aesthetics and society. However, in the short run, the recognition of economic value is a way for managers and investors to find a common voice, which helps to attract the resources of society to invest in restore heritage.
The concept of value in economics has a long history, at least from the economists of the Adam Smith classic school. It has become a significantly controversial matter and still been discussed until now. However, the model of neoclassical economy has solved the problem clearly, by determining the value derived from personal interests. Value is something that consumers are willing to pay in return for certain goods or services. Consumers always know how to maximize their benefits rationally through exchange processes in perfect markets. Even if the market fails, for example, in the case of a public goods, it is still possible to measure their values, that is the willingness to pay of individual consumers to express the value of the mentioned goods. Therefore, when we think about the economic value of heritage in this model, we are thinking about the kinds of values which individuals recognize and are prepared to pay in one way or another.
Categories in which the value of heritage can be classified under these terms are well known and clearly stated in the heritage economy. Types of values correspond to the way in which individuals experience heritage, or by using directly or indirectly. Based on the approach of environmental economics and the approach of heritage economists, we can determine the values of the heritage ecosystem through the following diagram:
Figure 1. Components of economic values of heritage ecosystem
Direct use value is the cumulative value for individuals, households or businesses through direct consumption of heritage services. It can be experienced in a variety of ways, for example through heritage property ownership, or by enjoying the services of an asset of a heritage by living in a heritage house or working in a heritage building; such values are reflected in market prices, and can be observed, for example, in actual rental values or rental values of heritage buildings used as living houses or commercial facilities.
Indirect use value is the value which heritage brings to many subjects and is the secondary impacting value of heritage conservation. For instance, restoring heritage creates jobs for locals who do not own any heritage, promotes the reconstruction of cities, brings up many jobs for corporations in the heritage areas.
The option value reflects the wishes of those who are benefiting directly or indirectly from heritage to protect that heritage for their own use in the future. It is measured through the willingly paying price for the protection of these heritages to help that payer continue to enjoy in the future.
The preserving value reflects the desire of current generation to preserve values of heritage for their next generations in the future. It is also measured through the willingly paying price for protection of heritage for their next generations.
The existence value is the one belonging to each individual’s perception. It is clear that many individuals may not have come to heritage sites but they may have heard or seen them on films, they want the values of heritage to be protected simply because they see them as valuable and need protecting without any other personal needs. In this case, their willingness to pay only for the desire to preserve the heritage reflects the existing value of the heritage.
2. Valuating the value of heritage method
2.1. Travel cost method
The travel cost method evaluates the entertaining value of heritage based on the disclosure of consumer preferences to estimate the demand curve for entertainment. The basic hypothesis of the TCM method is that the cost of going to a heritage site with the purpose of visiting reflects the value of that entertainment site.
The analyst will interview visitors about where they come from, how much they have to spend on the trip and the visiting frequency to that heritage site during the year. Thereby, we can find the functional relationship between the price per visit (travel costs) and the number of visits made. On the other hand, from the willingness to pay of visitors for the trip and the number of visits, it is possible to make a travel demand curve that shows the relationship between the number of visits and the cost of visit. The value of the landscape and entertainment of the study site is assessed as the total benefit of visitors and is measured by the area under the demand curve.
For the application of this method to assess the benefits of the plan of restoring heritage, it is necessary to make two entertainment demand curves, one for the current use plan and one for the case of heritage project. The consuming surplus discrepancy between the two demand curves is the added benefit brought by the project.
Figure 2: Entertainment demand curve and consuming surplus
There are 3 basic approaching method in the Travel Cost Method: Zonal Travel Cost method (ZTCM), Individual Travel Cost Method (ITCM), and Random Utility Approach. The ZTCM is the popular and easy one to apply for many heritages, even for those with low visiting frequency.
2.2. Hedonic Pricing Method
Hedonic Pricing Method uses statistics to identify correlation between price fluctuation of market-priced products and changes in relating environmental convenience. For example, after having the project of restoring heritage, the value of that heritage itself and the more beautiful landscape make the real estate prices go up where people prefer to live. This change can be measured to quantify effective impacts of the project on the heritage value.
Steps:
- Identify the value needs valuating
- Gather data on the asset’s price before and after conducting the project
- Select model and valuating functions
- Estimate parameters and the contribution of the heritage in the real estate’s value.
For accurate analysis, a large amount of data is required, covering the factors that govern the value and characteristics of the attributes involved in a period in the form of value function data. The main advantage of this method is that it is possible to measure value based on actual options (Perman, 2003). Finding information about the real estate market is feasible and effective because this information accurately shows the value.
2.3. Contingent Valuation Method
The Contingent Valuation Method (CVM) is used to assess the value of heritage by building a virtual market through the willingness to pay (WTP) of interviewees in a contingent situation. CVM is applied to many elements of heritage such as the value of heritage restoration to a certain level of quality; landscape value of heritage; value of conservation of tangible and intangible heritage... The quality of a CVM study depends on the quality of the whole process. After collecting all the necessary information by the questionnaire, we calculate the average and median of the WTP / WTA and together with the coefficient affecting the price, thereby calculating the total economic value of the heritage area needing pricing.
This method has superior advantages compared to other direct measurement methods. CVM evaluates both the existence value and the selected option value of the heritage without requiring complex partitioning or subdivision as some other methods (Mogas, 2006). The answers to CVM methods directly measure monetary values. Therefore, these values are theoretically accurate.
Steps:
- Description of priced services.
- -Contingent situations in which services were supplied to interviewees.
- Clarification of payment method: Normally, there are ways of payments such as taxes, fees, donation, transfer through demanding accounts, credit cards, etc.
- Step 2: Identify survey samples and survey tools.
Samples of the survey are all subjects who have the potential/ ability to benefit from such goods and services. For example, with the pricing of an entertainment value heritage, the interviewees may be visitors or those who intend to visit.
Survey tools depend on goods that need to be priced to select different forms of survey such as through direct interviews with questionnaires, by mail, telephone, etc. In any way, the questionnaire construction and the way of interviewing for respondents to answer easily are indeed important.
- Step 3: Receiving paid prices
After the construction of the contingent market, the researcher can conduct a survey by face-to-face interview, phone interview or mailing.
The purpose of the survey is to determine the maximum Willingness To Pay (WTP) of the survey sample for improving the quality of the heritage or the minimum Willingness To Accept (WTA- Willingness To Accept) for heritage loss. To collect information about WTP / WTA, the following ways may be used:
- Open - ended question: Ask questions directly to the interviewees such as "How much are you willing to pay for the preservation of Dong Son heritage?" The result obtained by this method is number continuous data has a great variation.
- Payment Card: Provide a table of different payment willingness levels for the interviewee to choose a level. The results of this method are random payment willingness levels.
- Bidding game: Offering a price, if the respondents accept, continue to increase the price until they are not willing to pay, then stop. The price obtained by this interview is usually highest because the interviewee may overestimate the value of the property.
- Single bounded: Only ask for opinions on a fixed price for a respondent and use different prices to ask different people. For example, "If the service is provided at the price of $ xx, do you care and accept?"
- Double-bounded: The interviewer firstly offers a price to know whether the respondents are willing to pay or not. If they are, double the price, and if they are not, halve the price. The obtained numbers from this method is the paying range of respondents.
- Step 4: Calculating the average WTP
Calculating the average and median of paid prices after eliminating irrational answers.
- Step 5: Analyzing factors influencing WTP
The purpose of this step is to examine the factors affecting WTP. Therefore, WTP is considered an explained variable and we need to define the regression function for a series of explanatory variables such as income, gender, age, educational level, etc.
- Step 6: Aggregating data for determining the total WTP
Aggregating data to determine the total willingness to pay or willingness to accept of all individuals at the study site for the value of a heritage or a certain attribute of the heritage ecosystem. Therefore, how can the value for the entire population be calculated from the average value of the sample? Data aggregation can be done in one of two ways:
1. If the sample is representative, it is possible to multiply the average WTP / WTA of the sample by the total population, which is a good estimation for the total value.
2. If the sample’s overall bias reflection is the related population, modifications need to be done by econometrics technique.
- Step 7: Assessing the conducted CVM survey
In order to evaluate the CVM survey, it is necessary to answer the following questions: Does the survey have many reluctant respondence? Is there evidence that the respondents understood the hypothetical market? Compared to other research results, are the paid prices appropriate? In this case, tests can be done to determine the reliability of the answers.
In cost-benefit analysis, hypothetical market-based pricing can be used to compare individuals’ willingness to pay to preserve heritage or an endemic value before and after having the conservation project. The discrepancy between the two WTP levels is the added benefit of the conservation plan.
However, this method has some basic limitations. Firstly, the respondent is put into a hypothetical situation. In a hurry or misunderstand the problem, the answer is not close to their corresponding behavior. Secondly, the interviewer can express situations differently, the different approaches for different respondents can cause significant errors. These discrepancies have a significant effect on the average price which is aggregated later.
Contingent market-based pricing is one of the most appropriate methods that has been successfully applied in some heritage areas around the world. In order for the valuation to bring about high-precision results, it is necessary to conduct surveys with a large enough scale, to collect relatively comprehensive information on the economy, resources, society and conservation value of affected area. In addition, the quality of questionnaires and investigation and interview skills should be paid special attention in order to achieve good results.
2.4. Choice Modelling Method
Choice Modelling Method (CM) is a method of valuation based on stated preference. This method derives from the combined analysis, the respondents will have many choice sets. From each choice set, the respondents will choose their preferred option. By setting each attribute at a price or cost level, the marginal benefit estimates will be converted into monetary estimates for each change in attribute levels (Mogas, 2006). Then, the probability that the “i” individual likes “j” option more than n other options in the solution set is understood that the probability of benefit from “j” option is greater than the probability of benefit from the other options.
This method allows us to select multiple options through repeatable attributes and scenarios (instead of having trade-offs as in CVM), allows us to verify according to the logical framework so that those who answers will reveal quite exactly their interests. This approach goes into specific problems instead of abstract issues in the CVM method, provides more information and increases practicality, creates an attraction for respondents.
Steps
- Determine the value of heritage needing valuation
- Determine sample and subjects needing analyzing
- Create contingent scenarios (experts)
- Group discussion for questionnaires
- Tests for completing the questionnaires
- Develop the calculating model
- Field investigation
- Handle data and estimate model (fix errors)
- Calculate sample’s value and make generalization
For example, to determine the willingness to pay for the preservation of a natural heritage site, different attributes of that region are given for different uses, each of which will be divided into different level. Then we proceed to ask for personal opinions to know their choices. Based on the survey results, they will know what values people want to protect and the total amount of money they accept to preserve that heritage.
3. Suggestions for valuating of Ham Rong – Nui Do Heritage (Thanh Hoa)
3.1. Subject of valuation
Ham Rong-Nui Do heritage is considered a heritage ecosystem with layers of heritage classes, from natural heritage to cultural heritage, from poetic heritage to spiritual heritage. All converge in this area and it has a continuation of cultural inheritance over many periods. However, many relics and heritage have been lost and even forgotten. Restoring values of the heritage will bring great benefits including economic benefits.
If the restoration of heritage values is considered a major project, the valuation of the economic value of the heritage to evaluate benefits brought to many different subjects including: people in the heritage area; community; the investors; government; other stakeholders who are interested in heritage and benefit from the heritage... contributing to identifying important values of heritage and implementing cost-benefit analysis for component projects.
In terms of subject of calculating valuation of economic value of heritage ecosystem in the Ham Rong-Nui Do area, the author has following suggestions:
Calculating economic value from tourism activities: The value of tourist landscapes in this area is the overall value, which cannot be separated for each single entertainment location because the nature of this area has both natural heritage, cultural heritage and festival, especially archaeological heritage in a geographical area which is not too large. Therefore, visitors to this area will have the opportunity to experience those legacies that are difficult to separate each legacy in the value of entertainment landscape value. The method of application is the regional travel cost method.
Calculating direct use value: People in the heritage area benefit from the project, contributing to creating new jobs and income. These values are calculated through the household production function method.
Calculating the added value of real estate projects: The area around heritage will have an increase in real estate value as many people want to own houses in these areas. The valuation of the added value of real estate will approach each project, comparing the value of real estate in Ham Rong - Nui Do area with projects elsewhere to see the value of the heritage affects the price of houses in heritage area. For real estates that have been formed before a heritage restoration project, can be accessed by the method of house price function in which the value of the location in the heritage area is a variable affecting house prices.
Calculation of option value, preserving value and existence value: These values belong to human awareness of the importance of heritage, the importance of heritage restoration should depend on each type heritage (objects or intangible objects; culture or natural landscapes, etc.) to select the appropriate calculation model. Featured values can be calculated including:
- Preserving value and existence value of restoration of prehistoric Dong Son culture.
- Preserving value of restoration of ancient city- Thieu Duong, Tu Pho capital;
- Option value of restoring folk Taoist space and folk singing area of Ban A Mountain, Bang Trinh Mountain.
3.2. Valuating model and data requirement
The following table describes how the above value types can be determined and the required data to collect for the valuating process.
Table 1. Requirements on data, hypothesis for types of use value and nonuse value
Types of value
|
Valuating technique
|
Measurement value
|
Necessary data
|
Note and hypothesis
|
Direct use value (directly exploited from the heritage)
|
On-site valuation for market products uses actual value.
For goods that are used directly, use market value for the respective goods. If not suitable, use a indirect opportunity cost approach to assess the time used to harvest through income levels.
|
The total annual value of each product / service is produced or supplied from the heritage area.
|
In terms of direct valuation:
Market price at the point of each product.
Quantity of goods harvested, sold, given away and used in households
In terms of indirect valuation:
Unit price for corresponding goods.
Cost of input materials
Time to use to create products.
Chi phí lao động địa phương tương ứng. Corresponding local labor costs.
Exchange rate
Year (data collection date)
|
Market prices represent real value in the market with a competitive market at equilibrium (prices are not distorted).
All externalities are identified and included in the price.
|
Tourism value
|
Zonal travel cost method/ Individual travel cost method
|
Annual entertainment value of the heritage area
|
Data from the visiting survey:
Socio-economic variables
The place of departure of visitors
Travel time
The cost of visiting the tourist destination
Frequency and length of travel
|
Roads to the site are suitable for everyone.
Each tourist trip has its own purpose.
The relationship of demand function can be determined
There is no factors except for travel cost affecting the entertainment value of the heritage site.
Market price used in valuation is not distorted.
|
Added value of the real estate
|
Enjoyment valuation method
|
Indirect value of heritage restoration through added value of real estate
|
Market price of real estate by type before and after the heritage restoration project.
|
Market prices are not distorted
Buying behaviors towards real estates can be observed
|
Preserving value and existence value of the heritage
|
Contingent valuation method
|
The nonuse value of the heritage through the WTP price to protect and restore heritage.
|
Subjects who are benefiting from the heritage or will benefit from the heritage
|
Individuals who are aware of the importance of each heritage value.
|
4. Conclusion
Valuating the value of heritage is a new field for Vietnam and the world. In the world, the valuation is usually done for each heritage (temple, pagoda, natural landscape), there are few cases of valuating the value of a heritage ecosystem with many types of heritage in one narrow geographical area.
The approach to economic valuation of the heritage ecosystem in Ham Rong - Nui Do area may stem from the valuation of the economic value of natural ecosystems due to the similarities in natural capital and cultural capital values. By the method of single valuation for each type of value we can sum up to get a picture of the total economic value of the heritage. Economic calculations will raise a voice to the economic value of heritage and the necessity of restoring heritage to managers. Although it is still quite new and lacking in data, we can affirm that the valuation of value of heritage ecosystems can be successful in Vietnam based on valuating methods applied worldwide and experimented in natural ecosystems in Vietnam.
Nguyen Quang Hong.MA
hongktqd@neu.edu.vn
Faculty of Environment, Climate Change and Urban,
National Economics University
(International Conference ICSEED2019)
References
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