Prince’s Foundation placements Tom Mott and Sam Rowland-Simms working on the roof at Shrewsbury Flaxmill Maltings, Shropshire.
Shrewsbury Flaxmill Maltings, Shropshire. Prince’s Foundation placements Tom Mott and Sam Rowland-Simms working on the roof with Croft Building & Conservation Ltd.
Shrewsbury Flaxmill Maltings, Shropshire. Prince’s Foundation placements Tom Mott and Sam Rowland-Simms working on the roof with Croft Building & Conservation Ltd.

Techniques for Valuing Heritage in Economic Terms

Part of the Heritage Counts series. 8 minute read.

Heritage is undervalued within our current economic system because conventional valuation techniques rely heavily on assumptions about the close links between the value of goods or services and market prices.

Conventional valuation techniques undervalue heritage

Heritage is not fully traded in markets but there is plenty of evidence showing how people value heritage and heritage is important for people’s welfare.  For example:

  • According to the Taking Part Survey, 94% of people agree or strongly agree with the statement ‘it is important to me that heritage buildings or places are well looked after’ (DCMS, 2017)
  • More recent examples in the news such as the demolition of the Crooked House pub in Staffordshire (Cook, 2023) or the felling of the Sycamore Gap tree, Hadrians Wall, (Robinson, 2023) demonstrates just how emotive heritage and the loss of heritage can be for local and non-local populations
If we want to put people first, we have to know what matters to them, what improves their wellbeing...
Stiglitz, 2018

The disconnect between economic valuation and how people value non-market goods and services has resulted in increasing pressure to improve and develop methods in economics to better value goods and services that are not traded in markets. In the UK, HM Treasury’s revised Green Book guidance recommends a welfare approach including consideration of “non-market” outcomes, health and wellbeing outcomes, emphasising valuing all benefits and costs, not just financial benefits such as jobs and other standard measures of economic output such as GDP (HM Treasury, 2022).

The Culture and Heritage Capital programme

The Culture and Heritage Capital programme is an ongoing initiative by the Department for Culture, Media and Sport (DCMS) along with Historic England and other Arm’s Length Bodies (ALBs) aiming to establish an agreed economic approach for valuing the benefits of culture and heritage (Sagger et al, 2021). The programme’s aim is to create publicly available statistics and guidance that will allow for more accurate articulation of the value of services provided by culture and heritage on an economic platform.

The total economic value of heritage

Many of the benefits obtained from heritage are not supplied (or only partially supplied) in private markets and therefore do not have a market value. In the absence of assigned market values, businesses, governments and individuals are likely to underinvest in heritage, which can lead to suboptimal economic outcomes for society, particularly over the long term and between generations.

Economists have developed the concept of Total Economic Value (TEV) to categorise the different ways in which individuals value goods and services which are not (fully) traded in markets based on use values and non-use values. Non-use values are economic values assigned by individuals who do not consume the good/service.

Total Economic Value is made up of the following:

  1. Direct use value e.g. visits to a heritage site
  2. Indirect use value e.g. spending at shops as part of a heritage visit

  1. Option value e.g. option to visit a site in future
  2. Existence value e.g. heritage part of place identity
  3. Bequest value e.g. future generations access to heritage

For unique assets such as heritage, non-use values can in fact outweigh use values. Different approaches are needed to capture the ‘Total Economic Value’ of heritage. Non-use valuation techniques are used to assess non-use values using two main methods for both Use and Non-Use values.

  • Revealed preference techniques involve inferring the price or value which individuals place on something by examining their actual behaviour. Examples include:
    • Hedonic Pricing: Estimating values by observing how heritage and cultural assets affect the prices of related goods and services, such as property prices
  • Stated preference techniques use questionnaires which describe a hypothetical choice to obtain estimates of the willingness to pay for a particular outcome. Examples include:
    • Contingent Valuation: Directly asking people how much they would be willing to pay (WTP) for specific outcomes related to heritage and cultural assets
    • Choice Modelling: Presenting individuals with hypothetical scenarios and choices to infer their preferences and values

Key heritage valuation studies

There are a small and growing number of valuation studies that have applied non-use valuation techniques to the heritage sector in England. Some of the evidence is presented below.

Contingent Valuation Studies

A Contingent valuation study for four museums and galleries. Primary research was conducted to estimate the value the digital offer of art galleries and museums in England, using the same economic valuation techniques as applied to the traditional ‘offline’ offer, or the in-person experience, of a variety of cultural institutions.

Type of Cultural Site

User/Non-User

Valuation Scenario

Mean WTP

Derby Museum and Art Gallery

User

WTP for the monthly subscription fee to continue accessing the digital offer and supporting in offering digital content

£3.27

Bristol Museum and Art Gallery

User

the WTP for the monthly subscription fee to continue accessing the digital offer and supporting in offering digital content

£4.37

Foundling Museum

User

the WTP for the monthly subscription fee to continue accessing the digital offer and supporting in offering digital content

£4.93

Great North Museum

User

the WTP for the monthly subscription fee to continue accessing the digital offer and supporting in offering digital content

£3.92

A Contingent valuation study to estimate willingness to pay for a free online film archive portal containing historical film footage for localities throughout the United Kingdom. Three online surveys were used to elicit WTP values composed of members of the general public who used the online portal for the first time ( completes=479); existing users (completes=411) non-users (completes=1,493).

User/Non-user

Valuation Scenario

Mean WTP  (£)

New users

Subscription for Britain on Film (monthly)

£2.54

Top-up donation for research and archive work (monthly)

£1.67

Existing users

Subscription for Britain on Film (monthly)

£3.21

Top-up donation for research and archive work (monthly)

£2.26

Non-users

Annual donation for Britain on Film

£4.68

Annual donation for research and archive work

£3.44

Contingent valuation to provide monetary estimates of the benefits that regional art galleries and regional theatres provide to visitors and the local population in England, using four galleries as case studies.

Type of Cultural Site

User/non-user

Valuation Scenario

Mean WTP

Baltic Centre for Contemporary Art, Gateshead

User

Visitor WTP entry fee to access gallery (per visit)

£5.79

User

Experimental visitor WTP for Expansion of gallery (randomised +10%/+20%/+30%) (one-off donation)

£7.25

Non-user

Non-visitor WTP to support gallery (one-off donation)

£3.52

Lady Lever Art Gallery

User

Visitor WTP entry fee to access gallery (per visit)

£5.67

User

Experimental visitor WTP for Expansion of gallery (randomised +10%/+20%/+30%) (one-off donation)

£6.11

Non-user

Non-visitor WTP to support gallery (one-off donation)

£3.87

Manchester Art Gallery, Manchester

User

Visitor WTP entry fee to access gallery (per visit)

£4.59

User

Experimental visitor WTP for Expansion of gallery (randomised +10%/+20%/+30%) (one-off donation)

£5.62

Non-user

Non-visitor WTP to support gallery (one-off donation)

£3.87

Millennium Gallery, Sheffield

User

Visitor WTP entry fee to access gallery (per visit)

£6.02

User

Experimental visitor WTP for Expansion of gallery (randomised +10%/+20%/+30%) (one-off donation)

£6.81

Non-user

Non-visitor WTP to support gallery (one-off donation)

£4.29

Contingent valuation study to estimate the local residents’ Willingness to Pay (WTP) to maintain historic high streets and public heritage assets in good condition.

Type of Cultural Site 

 

User/Non-User

Valuation Scenario 

Mean WTP per household per year (in £) 

Pre-industrial high street 

User

Voluntary donation to maintain the high street in its current good condition due to public funding cuts 

 £7.80 

Industrial era high street 

User

Voluntary donation to maintain the high street in its current good condition due to public funding cuts 

£6.31 

Town Hall 

User

Voluntary donation to maintain the historic site in its current good condition due to public funding cuts 

£5.73 

Libraries 

User

Voluntary donation to maintain the historic site in its current good condition due to public funding cuts 

£7.67 

The paper estimates the value of engagement in library services through a contingent valuation study of around 2000 library users and non-users.
The study considers WTP to maintain current library services among library users and non-users in England.

User/non-user

Valuation Scenario

Mean WTP

Users

Increase in annual council tax

£19.51*

Non-users

Increase in annual council tax

£10.30*

Contingent valuation of four museums (The Great North Museum, The National Railway Museum, the Ashmolean Museum and the World Museum). Valuation was estimated through survey respondents’ willingness to pay to prevent a hypothetical scenario of museum closure due to funding cuts.

Type of Cultural Site 

User/Non-user 

Valuation Scenario 

Mean WTP (in £) 

Museum 

User  

Entrance fee is established due to public funding cuts. 

 £6.42 

Museum 

Non-user  

Annual donation due to public funding cuts.  

£3.48 

Uses contingent valuation to estimate value for four historic cities and their respective cathedrals (Canterbury, York, Lincoln and Winchester). Cultural sites of the same type were chosen according to the similarities of their attributes (size, fees, reputation). To obtain valuation estimates, users (residents and visitors) and non-users of the historic city were asked to consider a hypothetical scenario of a threat of damage from climate change and a short-fall in funding.

 

 

Canterbury

 

Lincoln

 

Winchester

 

York

 

Pooled average

 

User WTP

£9.74

£9.64

£9.96

£9.18

£9.63

Non-user WTP

£5.32

£5.96

£5.97

£7.30

£6.14

 

Canterbury Cathedral

 

Lincoln Cathedral

 

Winchester Cathedral

 

York Minster

 

Pooled average

 

User WTP

£7.00

£8.05

£7.98

£6.66

£7.42

Non-User WTP

£3.63

£3.27

£3.89

£4.20

£3.75

Contingent valuation of the A303 Stonehenge road examining the value that UK residents put on the removal of the A303 from its current location within the World Heritage Site (WHS), in relation to noise reduction, increased tranquillity, visual amenity and reduced landscape severance in the vicinity of Stonehenge.

User/ Non-user 

Valuation scenario 

Mean (£ Net Present Value) 

Visitor use values 

Annual tax for removal of the A303 from its current location 

£68 

Visitor non-use value (road user) 

Annual tax for removal of the A303 from its current location 

£22 

Non-use and option values (general population) 

Annual tax for removal of the A303 from its current location 

£14 

Contingent valuation and wellbeing valuation performed on the Natural History Museum and Tate Liverpool.

User/ Non-user 

Valuation scenario 

Natural History Museum 

Tate Liverpool 

Visitor use values 

Entrance fee (NHM) OR Donation (TL) 

£6.65 

£10.83 

visitor non-use value 

additional donation on top of an entry fee 

£2.78 

£8.00 

Non-use and option values 

additional donation on top of an entry fee 

£8.29 

£6.10 

Contingent Valuation examining visitors’ willingness to pay (WTP) to enter Castle Acre Priory and Walmer Castle and Gardens.

User/ Non-user 

Valuation scenario 

WTP - Castle Acre Priory 

WTP -Walmer Castle and Gardens 

Visitor (EH member) 

£ increase in membership fee per year 

2.14 

3.99 

Visitor (non-EH member) 

£ increase per ticket 

2.66 

2.73 

Non-user (non-EH member) 

£ increase in general taxes per year 

1.83 

1.77 

Contingent Valuation of willingness to pay (WTP) for the continuation of Bolton’s museum, library and archive service.

User/ Non-user 

Valuation scenario 

Mean WTP (£per month

Users 

Support the continuation of the Bolton’s Museum, library and archive service  

7.93 

Non-users 

Support the continuation of the Bolton’s museum, library and archive service  

£2.82 

Contingent valuation willingness to pay (WTP) for maintenance actions for buildings in Oxford.

User/ Non-user 

Valuation scenario 

Mean WTP (per year) 

Local household  

WTP for preservation of buildings 

£30 - £34 

Local household  

WTP for cleaning of buildings 

£20 - £27 

Local household spend  

WTP for restoration of buildings 

£20 - £25 

Contingent valuation valuing aesthetic changes to Lincoln Cathedral due to air pollution.

User/ Non-user 

Valuation scenario 

Mean WTP (per hshld per year) 

Local household  

WTP to increase exterior cleaning from 40 years to 10 years 

£50 

County households  

WTP to increase exterior cleaning from 40 years to 10 years 

£27 

Contingent valuation examining visitors’ willingness to pay to enter Warkworth Castle.

User/ Non-user 

Valuation scenario 

Max WTP 

Visitors (user) 

WTP for recreation and education 

£1.62 

Visitors (user) 

WTP for preservation 

£1.41 

On average visitors were willing to pay twice as much as the entry fee in order to enter the castle.

A contingent valuation study that sought the WTP towards the restoration of buildings in Grainger Town, Newcastle.

Mean WTP per household per year of Newcastle residents in terms of a tax increase to pay towards the restoration of buildings in Grainger Town, was found to range between £10 and £14 (1995 £). Overall, aggregate WTP for restoration was estimated to be almost £1 million, after adjusting for differences in wealth across the aggregating population.

Stated Preference – Contingent valuation of access to Durham Cathedral.

Revealed preference 

Visitor user 

Voluntary contributions 

£0.44 

Stated preference – willingness to pay 

Visitor user 

Hypothetical compulsory charge  

£0.78 

Hedonic Price Modelling

Hedonic Price modelling using 160,000 data points in six British cities - Proximity to a listed building increased property prices by between 4.4% and 10.3%.

Hedonic price modelling analysing 1,088,446 house sales between 1995 and 2010:

  • Properties in conservation areas sell for 23 % more on average than other houses.
  • When location, property features and other factors affecting house prices are adjusted for, a premium of around 9% is found.

Wellbeing Valuation Study

Wellbeing valuation using data from the British Household Panel Survey and the Understanding Society Surveys.

Activity  

Type of impact  

Increase in likelihood of reporting good general health  

Reduced likelihood of visiting GP 6+ times per yr/ using psychotherapy 

Estimated annual cost savings (per person) 

Estimated population level annual NHS cost savings 

Heritage 

GP Visits  

2.76% 

0.70% 

£2.59 

£82.2M  

Psycho-therapy  

0.23% 

£3.50 

£111.1M  

Discrete Choice Technique

A Choice Experiment survey to estimate the public value the public places on different experiment attributes of the Vindolanda archaeological site.

 User/Non-User 

Valuation Scenario  

Loss of Utility/ Mean WTP

User 

Loss of utility if excavation and research at the site ceased 

 £27.18

User 

Loss of utility if the artefacts were moved to other museums

 £18.65

User 

WTP to see an increased amount of reconstructions on the site

 £6.16

User 

WTP to prevent the creation of a children's play area on the site

£2.94


References

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