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

Transcription

1 An Assessment of the Economic Impacts of Cultural Heritage Projects in Georgia and Macedonia Presentation by Dr. David Throsby and Dr. Benoit Laplante World Bank, Washington D.C. May 4, 2011 Outline 1. Introduction 2. The economics of cultural heritage 3. The economic impacts of CH project: Georgia 4. The economic impacts of CH project: Macedonia 5. Conclusions / Lessons 1

2 Outline 1. Introduction 2. The economics of cultural heritage 3. The economic impacts of CH project: Georgia 4. The economic impacts of CH project: Macedonia 5. Conclusions / Lessons 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 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. 2

3 Introduction 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. 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 2. The economics of cultural heritage 3. The economic impacts of CH project: Georgia 4. The economic impacts of CH project: Macedonia 5. Conclusions / Lessons 3

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. national parks, Lake Sevan, etc.) With various purposes: Assessing economic impacts; Assessing economic benefits. Various groups of people: Local residents; Tourists (national and/or international). And various approaches: Panel datasets, control groups, etc. Contingent valuation, travel cost, hedonic pricing, etc. The economics of cultural heritage In this study: The projects we are looking are investment projects to restore whole area of the respective cities. 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 implement pe e A simpler procedure is to gather relevant indicators 4

5 The economics of cultural heritage In this study: After discussion with local teams in both Skopje and Tbilisi, it was determined that a reasonable objective would be: Assess the economic impacts of the investment projects. The economics of cultural heritage Economic indicators Output of goods and services Business profitability 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 visitors Longer term cultural l impacts: sustainability issues 5

6 The economics of cultural heritage 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; Target national stakeholders. The economics of cultural heritage 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 political and economic turmoils. This creates difficulties in terms of data availability. (2) Time to develop survey template, pre-test, and implement was very limited. 6

7 Outline 1. Introduction 2. The economics of cultural heritage 3. The economic impacts of CH project: Georgia 4. The economic impacts of CH project: Macedonia 5. Conclusions / Lessons The economic impacts of CH project: Georgia 7

8 The economic impacts of CH project: Georgia 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 years; Employment and average salary in Tbilisi years; Average monthly salary countrywide by economic sectors years; Average salary according to economic sectors countrywide years; Employment & average salary in restaurants/hotels in Tbilisi for Real estate values Retail sales Tourists and visitors The economic impacts of CH project: Georgia 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 World Bank Cultural l Heritage Project context; t and Metekhi Plateau of Old Town Tbilisi located across the target area and not subject to intervention (control group). 8

9 The economic impacts of CH project: Georgia 0 Sololaki 7 Zemo Kala (Erekles Moedani) 1 Metekhi (Darejani) 8 Zemo Kala (Vercxlis Qucha) 2 Metekhi (Plateau) 9 Kvemo Kala (Gudiashvilis Moedani) 3 Abanotubani 1 Kldis Ubani 0 4 Kvemo Kala (Tsikhis ubani) 1 Sololaki (kvemo) 1 5 Zemo Kala (Sanapiro) 1 Sololaki (Zemo) 2 6 Kvemo Kala (Centraluri) The economic impacts of CH project: Georgia Survey respondents by area and types Zemo Kala # of interviews Metekhi Plateau # of interviews Population 80 Population 38 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 d In 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. 9

10 The economic impacts of CH project: Georgia Changes in real estate value Per sq.m. Price in Zemo Kala and Metekhi 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. The economic impacts of CH project: Georgia Perception of changes in housing conditions Recent Housing Conditions Compared to Before % 42% 42% 30% 30% 16% Improved Worsened Stayed the same Metekhi Kala 10

11 The economic impacts of CH project: Georgia Since 2002, 18 new restaurants, cafes and pubs were established in Zemo Kala since None were established in Metekhi Plateau. 6 Factors of Starting Business in Kala Tourists' concentration Historical location Convenient location Prestigious location Attractive location Old district Crowded place The economic impacts of CH project: Georgia 700 Number of visitors (thousands) Rest of Georgia Tbilisi Kala

12 The economic impacts of CH project: Georgia 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 Restoring Kala improves Tbilisi as a place to visit or live in Investing in improvements in Kala is a waste of money Kala is a place that helps people come together The renovated buildings of Kala are beautiful Kala gives me a sense of Georgian cultural identity Kala should be demolished and replaced with modern buildings The economic impacts of CH project: Georgia Beyond the Bank project: In 2005, the Rehabilitation of Old Tbilisi Program, which was cofinanced 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. 12

13 Outline 1. Introduction 2. The economics of cultural heritage 3. The economic impacts of CH project: Georgia 4. The economic impacts of CH project: Macedonia 5. Conclusions / Lessons Map of the Old Bazaar in Skopje Skopje Old Bazaar Contact zone Dukandzik Contact zone Mavrovka Contact zone Skopska tvrdina (Skopje Fortress) Contact zone Most (Bridge) 13

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

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, 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. 15

16 Surveys undertaken Restaurants, café shops, souvenir shops, 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 Daily 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. 16

17 Perception of cultural benefits: Visitors to Old Bazaar The Old Bazaar is an important part of Macedonian culture Restoring the Old Bazaar improves Skopje as a place to visit or live in Investing in improvements in the Old Bazaar is a waste of money The Old Bazaar is a place that helps people come together The renovated buildings of the Old Bazaar are beautiful The Old Bazaar gives me a sense of Macedonian cultural identity The Old Bazaar should be demolished and replaced with modern buildings I have learnt something about my cultural heritage from being here Strongly agree (%) Agree (%) Neutral (%) Disagree (%) Strongly disagree (%) Total (%) Statements about value of cultural heritage Skopje Old Bazaar Prilep Old Bazaar Total proportion agreeing (%) Total proportion agreeing (%) Positive statements Part of Macedonian culture Improvement in liveability Visual/aesthetic value (a) 70.5 Social value Identity/symbolic value Educational value Negative statements Heritage investment a waste of money Should be demolished 21.5 Note: (a) This statement not included in Prilep survey 17

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 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; controlling for biases in soliciting respondents willingness to pay; and specifying a feasible payment vehicle comprehensible to respondents. Willingness to contribute Visitors willingness to make a one-off contribution to heritage restoration in the Old Bazaars in Skopje and Prilep (per cent) Amount willing to contribute Proportion of respondents (%) Skopje Prilep Zero Up to 500 MKD MKD MKD More than 1500 MKD Total

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 s totaling nearly US$ 2.5 million since 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 2. The economics of cultural heritage 3. The economic impacts of CH project: Georgia 4. The economic impacts of CH project: Macedonia 5. Conclusions / Lessons 19

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. Conclusions and lessons 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. 20

21 Conclusions and lessons 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? Conclusions and lessons 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. 21

22 An Assessment of the Economic Impacts of Cultural Heritage Projects in Georgia and Macedonia Presentation by Dr. David Throsby and Dr. Benoit Laplante World Bank, Washington D.C. May 4,