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Urban heritage as cultural capital, district and

commons: an economic perspective

Enrico E. Bertacchini1

Abstract

This chapter aims at providing an economic perspective to the challenges characterizing integrated conservation and management approaches to urban heritage. Drawing from the cultural economist’s toolkit, this contribution introduces the notion of heritage commons to extend and critically re-examines two established notions that have been often used to frame the nexus between cultural heritage and local development at the urban level, namely that of cultural capital and cultural districts.

Introduction

With globalization and urbanization, development and tourism pressures are posing major challenges to cities all over the world featuring historic cores and distinctive cultural atmosphere. Mass tourism to major cultural destinations in ur-ban areas risk to deplete the collective values and cultural practices traditionally shared by local communities. Similarly, in many metropolitan areas of developing and emerging countries the preservation of the cultural values of both tangible and intangible heritage is often deemed to hinder new development opportunities. Amid these threats and concerns, in the last decades scholars and international or-ganizations have increasingly emphasized the role of heritage as a lever for local development and urban regeneration (Varine, 2002; Licciardi and Amirtahmasebi, 2012). According to this view, historic buildings and cities represent an asset: re-sources embedding and potentially producing value, when properly and efficiently managed. An asset on which it is possible to invest and which – if properly man-aged and enhanced - can generate economic impact in the form of real estate ap-preciation, creation of jobs, income growth in the activities related to heritage,

at-1 Assistant Professor, University of Turin, Department of Economics and Sta-tistics “Cognetti de Martiis”. Email: enrico.bertacchini@unito.it

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tracting residents, tourists, entrepreneurs, and other forms of business, generally in search of distinctive places for their activities.

The attempts for integrating cultural heritage conservation in the process of urban development have often sought to safeguard the character and identity of the his-toric city as expressed by local culture and heritage. Identity and local character can become part of a city’s competitive edge, but are increasingly under threat or destroyed by globalizing processes of urban development. Heritage and local cul-ture may thus become key determinants for the positioning of cities in the global scenario as well as of the quality of life and the well-being of local communities.

With this perspective, in urban conservation and heritage policy circles a new paradigm is increasingly emerging that sets emphasis on integrated approaches to the conservation and management of urban heritage. One of the clearest illustra-tions is the UNESCO Historic Urban Landscape Recommendation (UNESCO, 2011). The concept of Historic Urban Landscape (HUL) has its origins in the problem of governing development in the surroundings of historic buildings or historic urban areas and it draws its formulation from the broader definition of cul-tural landscape, considered as the visible features of an area including both its physical structures, the spatial organization and living human elements (Bandarin and Van der Oers, 2012). In particular, the Historic Urban Landscape approach goes beyond the traditional concept of historic city as a bundle of heritage goods, tackling the wider question of the management of heritage resources in relation with social and economic dynamics. It is based on the recognition and identifica-tion of a layering and interconnecidentifica-tion of natural and cultural, tangible and intangi-ble values present in urban contexts (Taylor, 2016). It aims at managing the devel-opment of historic cities while contributing to the well-being of communities and to the conservation of historic urban areas and their cultural heritage, while ensur-ing economic and social diversity and residential functions. Yet, while integrated heritage conservation and management approaches emphasize the role of heritage assets and the cultural atmosphere as potential drivers for sustainable develop-ment, such an outcome is neither straightforward nor systematic. For instance, sus-tainable development processes imply the proper coordination between stakehold-ers and to solve collective action dilemmas characterizing the collective good, multi-purpose and multi-attribute nature of cultural heritage.

This chapter aims at providing an economic perspective to the challenges characterizing integrated conservation and management approaches to urban heritage. Firstly, drawing from the cultural economist’s toolkit, this contribution critically re-examines two established notions that have been often used to frame the nexus between cultural heritage and local development at the urban level, namely that of cultural capital and cultural districts. Secondly, it proposes the notion of commons as a new economic category useful for grasping the

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complexity of urban heritage under the lens of integrated approaches to heritage conservation.

Urban heritage as cultural capital

From an economic viewpoint, cultural heritage, such as monuments, museums and historic buildings may be considered as a form of cultural capital, which is an asset that embodies both economic and cultural values (Throsby, 2001).

As a physical asset, it embodies economic values because it gives rise to a flow of services over time, and may equally deteriorate (and hence depreciate) if the property is not maintained.

However, as far as its cultural component is concerned, the same physical asset includes also cultural value, some intrinsic or assigned quality that stands apart from the property’s financial worth and reflects some evaluation of its signifi-cance, for historical, religious, spiritual, symbolic, and identity reasons. Also in this case, being heritage a social construct defined by the community of reference, the stock of cultural value embodied in the heritage goods may equally deteriorate or disappear if not properly conserved, maintained and transmitted through gener-ations.

The interplay between economic and cultural values challenges standard tech-niques of economic valuation, which generally drive investment and market ex-change decisions (Rizzo and Throsby, 2006; Rizzo and Mignosa, 2013).

Cultural heritage has direct economic value, in the form of its real estate value or the benefits accruing to tenants or tourists who visit it as a cultural site, that may be captured in the prices and financial valuation given in standard market transactions. However, unlike other standard economic goods, cultural heritage may also generate non-market and non-use benefits, given the component of col-lective use and significance expressed by its cultural recognition (Navrud and Ready, 2002). Non-use values may relate to the asset’s existence value (people value the existence of the heritage item even though they may not consume its ser-vices directly themselves), its option value (people wish to preserve the option that they or others might consume the asset’s services at some future time), and its be-quest value (people may wish to bequeath the asset to future generations). Non-use values may also arise as beneficial externalities to individuals who do not di-rectly and willingly use heritage assets for instrumental purpose, but, for example, might enjoy the visual representation and atmosphere living in or passing by areas endowed of heritage assets. Besides such categorical distinctions, as a form of ex-ternal effect, what is important to notice is that none of the non-use values can be easily captured through pricing mechanisms and in market transactions.

As a result, cultural heritage, even that privately owned, is considered from an economic viewpoint as a form of public good. It generates non-rival and often hardly excludable benefits to a wider group of subjects (i.e. local community, tourists, tourist service providers) that do not directly pay for its preservation and

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maintenance. In such circumstances, economic theory suggests that there is a risk of suboptimal provision of investments in heritage preservation as far as proper funding and governance mechanisms are devised to cope with the heritage public good dilemma. This argument has provided also the basic economic justification for public sector intervention and fiscal incentives policies to support cultural her-itage preservation.

With this perspective, the recognition of heritage as a form of cultural capital owning public and collective good characteristics leads to some key implications for the management and revitalization of urban historic centers.

The cost and collective action problem of historic centers’ preser-vation

While it has been recognized that cultural heritage sites pose public good dilemmas that lead to the risk of underinvestment for their preservation, the chal-lenge to safeguard the distinctive traits of historic city centers and guarantee their sustainable long-term management is even more worsened by the generally high fragmentation of ownership of heritage that leads to a context of decentralized and uncoordinated decisions related to the benefits and cost of heritage preservation.

Being heritage buildings a form of real estate property, individual owners of buildings with architectural and historic value generally bear four categories of costs related to heritage conservation: 1) the cost of the heritage regulatory sys-tems; 2) the incrementally greater cost for repair and maintenance for heritage buildings; 3) the cost of compromises to contemporary use and enjoyment; and 4) the opportunity costs for foregone development opportunities (Productivity Com-mission, 2006). By contrast, the financial return from restoring and preserving his-toric landmarks and buildings with architectural and cultural value may be per-ceived by individual owners lower than other alternative development opportuni-ties in the same area. This is mainly due to the potential functional obsolescence of the building or the difficulty in monetizing non-market and public good benefits that accrue indirectly to other beneficiaries (i.e. the enjoyment from aesthetic im-provements of the building by the local community).

The value of uniqueness and the sense of place

Being heritage complexes, made up of historic landmarks and buildings with architectural and cultural value, the cultural capital of historic city cores conveys a unique cultural atmosphere and sense of place (Licciardi and Amirtahmasebi, 2012). Such idiosyncratic character is the result of the accumulated forms of cul-tural expressions that coalesce into the productive milieu, the styles of buildings

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and the associated social fabric. Investing in heritage preservation in historic city cores thus means to enhance a resource that is hardly substitutable across space and increasingly worth in the global competition among cities. Firstly, because it helps fostering the image and attractiveness of a city for both tourism and busi-nesses’ locational choices. Secondly, because it reinforces the identity and social cohesion of the local community in relation with the place.

One of the major challenges in acknowledging the benefits arising from the dis-tinctive cultural character of historic city centres is that they mostly belongs to the category of non-market and public good values as a peculiar feature of cultural heritage goods. As a result, a central issue in heritage economics is the question of identifying the precise dimensions of economic and cultural values that give his-toric city cores their distinctive character.

Interestingly, much of the methodology developed for assessing environmental benefits has been directly used for the evaluation of the economic benefits stem-ming from urban heritage preservation (Pagiola 1996; Navrud and Ready 2002). While most research of this type has focused on the economic valuation of indi-vidual historic monuments and archaeological sites, only few works have ad-dressed the welfare effects of preserving and enhancing urban heritage complexes. Some seminal works date back to the 90’s and are studies conducted in the context of projects funded by World Bank to restore Fez Medina in Morocco and the his-toric core of the Croatian city of Split (Pagiola, 1999; World Bank, 1999). Other more recent applications have been undertaken for the city of Valdivia in Chile (Baez and Herrero, 2012), Skopje, in Macedonia, Tbilisi in Georgia (Throsby, 2016) or Port Louis in Mauritius (Bertacchini and Sultan, 2020)

The findings of these studies tend to confirm the existence of non-market or un-exploited direct-use values that are often overlooked by decision-makers and can provide useful guidance to better evaluate the economic relevance of maintaining the distinctive cultural and architectural character of historic city centers.

Sustainability of urban heritage

Considering heritage as cultural capital has also a clear parallel with the inter-pretation of natural environment and ecosystems as natural capital (Throsby 1999; Rizzo and Throsby 2006). Both cultural and natural capital have been inherited from the past, will deteriorate or degrade if not maintained, and impose on the present generation a duty to care for the assets involved so they can be handed down to future generations. This suggests that sustainability principles, such as in-tergenerational equity, precautionary principle or the recognition of the value of diversity, should be extended also to any analysis of the long-term management of cultural capital, including heritage in urban historic cores (Throsby, 2016). One of the key elements for a sustainable approach to historic city centers is the precau-tionary principle that argues for a risk-averse stance in decision-making when irre-versible consequences are possible, such as that of demolishing decaying

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build-ings with architectural and cultural value. In fact, after a building with architec-tural value has been demolished and a bigger and more modern structure has taken its place, going back in time may not be an option anymore. This is why, in a con-text of irreversible investments, it is sensible to protect a greater number of build-ings with architectural value than would be optimal if there were certainty on how the area will evolve (Rama, 2012).

Yet, while sustainability principles provide a theoretical ground for conserving cultural heritage in urban areas, from a social welfare viewpoint they provide little guidance on the level and extent of heritage protection that would be optimal in operational terms. This is because, unlike natural resources and ecosystem ser-vices, preferences and attitudes over cultural values expressed or produced by her-itage assets are more difficult to be quantified or objectively measured. Moreover, cultural investments to enhance cultural capital may not only be directed toward conservation of existing heritage, but also to new and contemporary artworks and cultural goods.

The role of cultural districts in historic city

cores

While the conservation of heritage aims at preserving or recovering the distinc-tive physical traits of historic city cores, the cultural and economic values of the heritage assets may be only fully magnified by renovating and revitalizing their significance and adapting their functional uses to the changed or evolving eco-nomic and social conditions. Linking heritage conservation with its revitalization thus means to integrate the broader cultural resources of a place as a productive factor into the local economy by leveraging on the intangible heritage and the lo-cal system of cultural and creative activities directly or indirectly linked to the her-itage of the place. This would allow the buildings to be occupied and utilized for economic uses, which renders the structures and consequently the area competi-tive with the rest of the city.

To trigger such culture-led development processes, most of the research on this field has paid attention to the role of cultural clusters, districts, or quarters (Santa-gata, 2006; Cooke and Lazzeretti, 2008; Evans, 2009; Sacco et al., 2013; Marques and Richards, 2014). In most cases, all these terms refer to phenomena that share some specific features:

- a spatial concentration of cultural and heritage resources, or culture-re-lated activities in specific areas of cities

- economic specialization that allows the cultural system to utilise both the levers of exogenous growth (with markets outside the territory in

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question) and endogenous growth (the production factors being specific to the particular territory).

- a system of economic and institutional actors who, between them, have developed a dense network relationship within a particular territory - small, localized firms and cultural organizations operating in

comple-mentary aspects of cultural and artistic markets

- generation of positive spill-overs and externalities between the actors of the district that allow them continuously to fine-tune their know-how and their knowledge

- capacity to produce strong symbolic meanings and enhance the identifi-cation or reputation of the place at the local and international level. What is noteworthy to stress here is that the cultural district perspective builds on that of cultural capital by putting emphasis on the entrepreneurial and organiza-tional dimension of the production of cultural heritage-related goods and services. The unit of observation is not the cultural assets forming the stock of cultural capi-tal or generating flows of economic services, but cultural firms, organizations and professionals which use cultural capital as an input in the productive process. As a result, the key question this approach often seeks to answer is how economic and cultural actors are able to leverage on the cultural capital of a place through an in-dustrial and creative atmosphere and drive local economic development. A first answer come from a broader conceptualization of cultural heritage (and capital as well), closer to the anthropological perspective of material heritage. Besides the most traditional organizations stewarding official heritage, such as artworks, col-lections, monuments and antiquities, under the cultural district approach heritage can take the form of more intangibles expressions embedded in creative industries, such as craftsmanship, tastes and traditional productive know-how and skills (Bar-rère, 2013).

More importantly, the cultural district approach underlines the necessity of col-lective action among cultural actors to make heritage a driver for local develop-ment. While cultural districts and quarters may emerge spontaneously – with firms and cultural organizations exploiting agglomeration economies that spur co-loca-tion and the formaco-loca-tion of networks of collaboraco-loca-tion - in most of the cases, local cultural systems are only “potential” cultural districts. Having a relatively high concentration of cultural activities or heritage assets in a city is not a sufficient condition to activate a district logic. What is necessary is a proactive vision and at-titude of the local actors toward the common goal of creating an enhanced image of the cultural and heritage potential of the local system.

In a cultural district, there is a continuous tension between competition and coop-eration. Every museum or cultural firm competes against each other to attract visi-tors, tourists or to sell their products in local and international markets, but at the same time they need to directly or indirectly cooperate and collaborate to guaran-tee that the quality and reputation of the overall heritage-related goods of the dis-trict is maintained. With this perspective, the link between cultural disdis-tricts and

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lo-cal development occurs through increasing the awareness of the lolo-cal cultural ac-tors to behave and operate as a collective and integrated system. In this case, insti-tutions (such as collective marks or standards) and territorial marketing policies play a crucial role to trigger such district logic by enabling a common image of the local cultural system and favoring the cooperation and alignment of incentives by individual actors.

Urban heritage as commons

Popularized by Elinor Ostrom’s pioneering work on natural resource community-based management systems (Ostrom, 1990), the term “commons” has been tradi-tionally used in economic analysis to define physical resources which are subject to overuse and appropriation dilemmas (common-pool resources), as well as prop-erty and governance regimes over resources that are owned in common or entail collective action. More recently, a growing recognition has emerged that impor-tant types of humanly constructed shared resources, such as information, knowl-edge, infrastructures or urbanscapes could be appreciated and analysed as new forms of commons, often subject to enclosure (Hess and Ostrom, 2007; Hess, 2008).

As heritage and cultural expressions can be generally conceived as social con-structs that require some degree of human interaction and transmission in order to be produced and used, no wonder scholars have started looking at them under this new perspective. Crucially, it is possible to identify two main reasons that are leading to the paradigm shift in the heritage discourse toward a commons perspec-tive. Firstly, research on the commons partly originated from a critic to traditional approaches on either state or private property arrangements as the only solutions for the sustainable use of collective resources. Likewise, the debate around her-itage has often paid attention only to public authorities for herher-itage conservation and management or the private tourism sector as the main channel for generating economic opportunities based on heritage. Conversely, today there is a greater recognition of the role of local communities in heritage conservation approaches as well as main targets of the heritage-based sustainable development strategies (Varine, 2002; Gould, 2018).

In particular, Gould (2017) discusses how commons’ self-governance mechanisms might apply to the management of archaeological resources, so as to empower the local communities.

Secondly, while cultural heritage has been usually treated in distinct categories de-pending on its physical and immaterial attributes, recent years have seen a grow-ing awareness of the interplay between tangible, intangible and material compo-nents. This aspect has profound implication also in the way cultural heritage, as a specific typology of economic good can be analysed and interpreted. With this re-spect, Bertacchini et al. (2012) have proposed a new research agenda which tries

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to define the domain of cultural commons to study cultural expressions, in both tangible and intangible forms, as shared resources by a community that involve some type social dilemmas to sustain them.

Dilemmas in Urban Heritage Commons

Considering urban heritage as a commons brings some relevant analytical implica-tions for managing heritage in a sustainable way and to enhance local and equi-table development. For example, by focusing on the “community” dimension, the commons perspective helps defining a framework to interpret the attributes of the community and the structure of interactions of the actors who share and use the heritage resource. Urban heritage, in the complexity arising from the coexistence and interaction of the built environment, landscape, social fabric and cultural at-mosphere, can be seen as a multi-attribute and multi-use resource which is indeed enjoyed and managed by a community of diverse actors and stakeholders that op-erate at different scale (i.e. international, national, local) and may express diver-gent interests in the type of uses of the resource (scientific, leisure, political, liveli-hood etc.).

More importantly, the commons perspective allows eliciting and systematize in a comprehensive framework the various social dilemmas that hinder the role of her-itage as a potential sustainable development activator at the local level.

As a physical resource, the urban cultural heritage suffers from the familiar social dilemmas identified in the commons literature for common-pool resources or pub-lic goods, namely appropriation or provision problems.

Appropriation problems generally arise with the overuse, rent dissipation of the re-source. This is quite evident in the congestion effects generated by tourism dy-namics, where excessive development of tourism demand at cultural sites threat-ens the sustainable conservation of heritage (Zhang, 2012).

Similarly, several different factors might hinder an effective and sustainable con-servation of urban heritage, representing a dilemma in the provision of a collective good. For example, the unequal distribution of benefits and cost arising from her-itage conservation and rehabilitation projects can lead to conflicts between urban stakeholders reducing the involvement and cooperation by local residents. With this respect, community-based urban heritage rehabilitation approaches can be seen as a commons-like social dilemmas. To ensure the sustainable management and development of cultural heritage the incentives for conservation and use of the shared resources must be aligned between all the stakeholders. If an unbalance ex-ists in the appropriation of benefits deriving from the valorisation of urban her-itage as well as in the costs deriving from conservation policies incurred by the different actors, the risk is to have no alignment in the incentives for properly con-serving heritage and obtaining long-term sustainable development.

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Alternatively, the conservation and rehabilitation of urban heritage can be flawed by conflicts among different city governmental and public entities involved in the conservation and management of urban heritage or actors might have different views on the optimal level of conservation to be provided, mainly due to the dif-ferent geographic scale of the public good that heritage conservation should pro-vide (e.g. for historic city centers included in UNESCO World Heritage List). The above appropriation and provision problems tend to stem from the tangible component of cultural heritage and impact the integrity of the physical attributes of heritage assets in a way no different from the dilemmas affecting the gover-nance of natural resources. Yet, urban heritage as a commons is subject to other type of social dilemmas and conflicts arising over the definition, use and appropri-ation of its cultural values. It is possible to classify the following types of dilem-mas over cultural values.

- Heritage substitution (cultural vs economic value): a given productive

use of the heritage asset would conflict with the preservation of the cul-tural values, or of the attribute exhibiting culcul-tural values. The tension between the potential economic return from the new production use and the maintenance of cultural value (which often involves costs for its conservation) leads to a replacement or loss of the cultural value in which the asset is demolished or partially transformed. This dilemma, that falls within the sphere of values, is often associated or confused with the appropriation and provision problems that underlie the physical characteristics of the cultural heritage.

- Heritage commodification (Disneyfication): when the attribute of a

her-itage asset with cultural significance is used as an input to market goods and services, the economic value of the resource increases and the larger demand expressed by individuals outside the local and traditional community risks to dilute or transform the cultural meaning associated with the heritage.

- Heritagization (Patrimonialization): this type of dilemma entails a

con-flict over the the definition or appropriation of heritage values between public authorities, commercial actors and the local community (Gravari-Barbas and Renard, 2010). For instance, the risk of degrada-tion of tradidegrada-tional cultural practices as cultural commons depends not only on the loss of the cultural traits by members of the community, but also on the exhaustion or loss of access to urban amenities and tangible heritage assets upon which the traditional cultural expressions are based. As a result, too strict conservation approaches to the physical component of urban heritage may hinder other heritage values that are more likely the expression of local traditional practices.

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Conclusion

This chapter has provided an economic perspective to the definition of integrated approaches to the conservation and management of the urban cultural heritage. The analysis suggests that the concept of cultural commons, recently in-troduced in the economic debate, might extends the main interpretative models of cultural capital and cultural district that had been proposed to analyze the trajecto-ries of heritage-based local development, especially in urban context. The concept of cultural capital and that of cultural district share the recognition of the role of cultural resources within production processes to promote local development. However, they place emphasis on distinct issues and dynamics concerning the conservation and management of cultural heritage, which are instead referable to the cultural commons perspective.

Like that of the cultural capital, the idea of cultural commons highlights the op-portunity of analyzing heritage in terms of tangible and intangible dimensions as well as sustainability principles. However, looking more directly at the character-istics and behavior of the community, the cultural commons perspective sheds light on the complex social dynamics that lead in the conservation and use of her-itage to the interplay between its tangible and intangible components. Further, with regard to the tensions arising in the sustainable management of cultural her-itage, the cultural commons approach suggests that they are not limited to the problem of finding a balance between economic and cultural values, but also on the misalignment of incentives and the potential opportunistic behavior of differ-ent types of stakeholders.

Finally, besides the concept of cultural capital, cultural commons extends the intellectual framework based on the notion of cultural district. The latter, taking an entrepreneurial and organizational perspective on how to use heritage as an input for production processes, highlighted the collective action problem in coordinating local cultural institutions and firms in the development of heritage-based goods and services. Crucially, the cultural commons extends the collective action prob-lem originally identified in the cultural district model to a wider array of social dilemmas involving the management and conservation of heritage and addresses on a broader perspective the issue of governing the multifaceted dimensions of heritage as a shared resource.

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