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A Proposed Methodology for. Measuring the
Economic Value or Cultural Monuments
Thilan Wijesjnghe
Engineerfng Consu/tant
Introduction : While devising a methodology, for
Weil known historical monuments.such measuring the economic value of
as the pyramids of Egypt, Taj Mahal of cultural monuments would be a complex
India, Borobudr Temples of Indonesia exercise and involve mathematical
and the Sigiriya frescoes and palace modelling and econometric techniques.
complexes of Sri Lanka, while being It is by no means an impossible task. This
symbols of national pride, demonstrate paper does not attempt to venture into
the rich and complex civilisation which detailed quantitative techniques, but
existed during ancient times. intends to emphasise the need to devise a
Furthermore, they are of vital methodology for the above prupose and
importance to the economic of presents a rough approach for carrying
developing nations on account of such out this task. The next few paragraphs
cultural sites becoming nodal points of describe two examples of quantitative
tourist travel, both local and foreign. techniques used to highlight one
significance of cultural sites in Sri
While it is accepted that the Lanka.
contribution from cultural tourism to the
economies of countries boasting unique
historical monuments and sites is National Return From Cultural Tourism
significant, national Governments have -The Sri Lanka Experience
neglected to quantify these benefits due
ln order to highlight the usefulness of
to one or more of the following reasons :
quantitative techniques in estimating
(a) lack of reliable data on national the economic value of cultural sites, this
revenue generated on account of section presents a simple analysis carried
cultural tourism and/or inability out on data maintained by the Tourist
to interpret available data. Board of Sri Lanka. For example, the
(b) a perception that cultural following information is maintained by
monuments and sites are low in the Statistics Division of the Tourist
the priority list of attractions for Board.
business and leisure travellers.
(c) non-availability of a Total annual taurist (international)
mathematical model capable of arrivaIs.
measuring the economic value of .Total taurist receipts per annum.
cultural monuements.
.Total Number of tickets sold to
If one were to value cultural tourists visiting cultural sites within
monuments in terms of merely building the "Cultural Tringle" (e.g.
material or any other tangible material Anuradhapura, Polonnaruwa,
used in its creation, it would indeed be a Sigiriya and Kandy), and revenue
meaningless exercise. A more pertinent there from received by the central
means of valuing a monument would be Cultural Fund (CCF).
to answer the hypothetical question -
.Average du ration of stay io Sri Lanka
what would be the loss of national
per tourist.
revenue in the event of the total
destruction or, decay of a weil known .Average number of days spent at the
monument or, stated another way bad Cultural Sites (based on periodic
the monument not existed in first place ? random surveys of toutists).
13-
152 Economics of Conservation
The available data is sufficient to A Methodology for Justifying Additional
analyse the relationship between Investments in Restoring and Preserving ,
cultural and national tourism. For Cultural Sites -The Sri Lankan
example, by using a basic formula one Experience
can estimate the "National Return from ln 1981, Sri Lanka embarked on the
Cultural Tourism", which is an estimate Cultural Triangle Programme under the
of total tourist receipts attributable to administration of the CCF to carry out,
the cultural sites. The formula used for in~er alia, a systematic archaeological
this computation is as follows : investigation of sites by field
National Return from Cultural Tourism (Rupees per annum) =
Total receiptsfrom tourism (Rs. x Proportion of tourists visiting x No. days spental cultural sites
per annum) cultural sites as a proportion of avg. duration
of stay
An analysisshowingthe respectiveannual national returns from cultural tourism between 1984 and
1990 is given below :
Computation of National return from Cultural Tourism
Description Year Ended December 31
1984 1985 1986 1987 1988 1989 1990
Total tourist arrivais 317,734 257,456 230,106 182,620 182,662 184,732 297,888
Total tourist receipts (Rs. 2,670 2,233 2,300 2,415 2,438 2,750 4,903
million)
Total revenueto CCF from 16,348 13,496 18,878 13,787 !4,!77 19,065 44,722
sale of tourist tickets (Rs.
thousands)
No. tourist tickets sold 149,600 133,632 93,884 76,645 74,062 79,683 117,751
Percentagevisiting cultural 47.1% 51.9% 40.8% 42.0% 40.5% 43.1% 39.5%
sites
Average duration of stay 8.9 0.2 10.9 13.2 12.6 10.7 10.8
(nights)
Average No. of days at 3 3 3 3 3 3 3
cultural sites
National return from 424 3?8 258 230 235 333 538
cultural tourism (Rs.
million)
.Source: Ceylon Tourist Board.
the following important facts are excavations, preservation of excavated
noted ftom thé data presented areas through accepted conservation
(a) A very significant portion -on norms and an integrated approach for
average 44% of alI tourists the presentation of monuments. This US
arriving in Sri Lanka between $ 50 million Programme, originally
1984 and 1990 -visited the estimated to conclude by 1990, remains
Cultural Triangle sites. (This does only a third completed, primarily due to
not count tourists visiting sites a shortfall in funding and domestic
elsewhere for which tickets are inflation.
not sold). ln order to address the issue of
(b) Based on the formula cited above, justifying additional investments in
the National Return from restoring and preserving existing
Cultural Tourism is estimated at cultural sites, it is important to present a
Rs. 538 million for 1990 a/one. (It quantitative analysis to show
is noted that this amount is Governments and international donor
greater than the Rs. 424 million agencies that funds spent on cultural
actually spent on developing the preservation are essentially
Cultural Triangle over a ten year developmental in nature, with tangible
period). economic returns.
Therefore, based on the above For the purpose of rationalising the
interpretation of published data, the additional Rs. l ,650 million required to
economic benefits from cultural sites, in complete the Cultural Triangle
its present ruined state, havebeen shown Programme by 1996, an increment cost -
to be significant in quantitative terms. benefit analysis can be adopted.
,
~ ~
This methodology assumes that the Thereforeit can roughly be stated that
completion of the Cultural Triangle on a basis of discounted incremental
Programme would result in incrementa/ national returns, the pay back for the
tourism arrivaIs and incrementa/ envisaged investments within the
income, direct/y attributab/e to the Cultural Triangle is 5 years from the
restored sites. The argument here is that year of completion ( 1996).
typically, restoration means a larger
number of visitors spending longer The Benefits of a Quantitative Approach
periods, and importantly, more The above paragraphs describe two basic
sophisticated tourists in higher income models for quantifying :
bracket, often with specific cultural (a) the national returns from cultural
invests visiting these sites. Hence, the. tourism, which is an indicator of
average tourist after completion of the gross annual national income
Programme, can be assumed to spend derived from cultural sites.
significantly more time and more money
(b) the payback from incremental
than the visitor before restoration.
investments in archaeological
While an inevitable degree of excavation, conservation and site
arbitrariness is attached to the above presentation.
assumption, in the context of past trends
A quantitative approach can therefore
in cultural tourism in Sri Lanka, it would
provide national Governments and
seem reasonable to assume that the
Donor Agencies the basis for measuring
conclusion of the planned scope of work
the economic value of cultural
within the Cultural Triangle Programme
monuments and deciding whether grants
can result in the following :
or loan funds are appropriate for
(a) an increase in the proportion of
maintenance, restoration, excavation,
tourists purchasing tickets to visit conservation, layout and infrastructure
the sites from the present average development within and around the site.
of 44% to say 60%. (A rate Stated another way, quantitative
achieved prior to the ethnic techniques provide the me ans for
disturbances of 1983) evaluating the financial feasibility of
(b) An increase in the number of days investments in cultural development,
spent at cultural sites from the utilising similar methods used in
present average of 3 to say 5. evaluating the viability of development
(c) An increase in total tourist projects.
arrivaIs, over and above the
normal arrivat rate, say by 40,000 Approach for Developing a
per year, directly attributable to Comprehensive Model for Measuring
this project. economic Value
If the above assumptions are As stated previously, the examples cited
quantified for 1997, the year in this paper for estimating national
immediately following the completion of returns fromcultural sites is a very basic
the Programme, the incremental model utilising only readily available
National Return from Cultural Tourism data. This approach does not necesarily
attributable to the Cultural Triangle can measure the true economic impact of
be estimated at about Rs. 1,300 million. cultural sites. This section attempts to
If the Net Present Value (NPV) of present an approach to designing a more
incremental returns from cultural comprehensive mathematical mode! for
tourism is computed for projected period measuring economic value.
of 5 years from 1997 to 2001, discounted
at 18% to 1991 (the risk-free cost of It is first necessary to define what is
capital in Sri Lanka), the NPV figure meant by "economic value" of a cultural
obtained is approximately Rs. 1500 site and then define the parameters/
million. This is roughly equivalent to the variables that determine this value.
total investment within the Cultural Arguably, a logical definition can be
Triangle for the 1991-1996 period. given as follows, based on the theory that
Economics of Conservation
-
if a "product" bas no "market" it bas no .time spent in and around the
value. Thus the value of a cultural cultural site.
monument must necessarily be direct/v
proportiona/ to its, "marketability" or its .private direct and indirect
relative standing as a "marketable investment impacts around the
product". Accordingly the economic cultural site.
value of a cultural monument would be a .distance and accessibility to site
function of its archaeological/historical from other tourist attractions and
significance, relative degree of major business districts.
patronage by visitors as weIl its potentia/ .other .
for attracting visitors.
Potential Economic Benefits
The above definition does not consider
the value of a monument in terms of lt is inevitable that most cultural sites of
economic factors of production the world have nat reached its optimum
(materials, labour etc., bu't primarily as tourist absorbtion level. This refers to the
a determinant of its present economic optimum tourist traffic per given time
benefit and its potential economic period that the site can accommoda te
benefit to the country. without causing da mage to the site and
causing inconvenience to visitors. The
The paragraphs below briefly ex mine computation of the optimum absorption
the determinants of economic value : level would depend great Iy on the
physical characteristics of the site itself.
Relative Arcbaeological/Historical Once this level is determined, it would
th en be possible to estimate any
Significance
incremental investments that would be
This yardstick of measurement is
needed to reach the optimum absorption
intangible and pertains to the relative
level and the incremental economic
global standing of a given monument in
benefits therefrom. lncremental
terms of its :
investments to reach desired absorption
* historical significance and context.
levels could be incurred for one or more
.age. of the following :
* design.
.road network (approach from
.visu al impact and size.
business district and vicinity of site )
.architectural and engmeenng .rest, recreation areas and other
sophistication. amenities.
* Other.
.lighting.
.Landscaping.
ln mathematically modelling the above,
.excavation.
a uniform rating scheme can be adopted
to rank each attribute. .conservation.
.presentation and layout of
Present Economic Benefits monuments.
This would be a measure of the site's .marketing.
benefit to the national in ils presenl .other.
slale. in terms of economic values. The
parmeters which can be included in this
measurement are : The above incremental investments
, .
.number ()f tourist visits per defined would th en naturally lead to incremental
time period. revenue generation, indirect investment,
.number of hotels in the viciDity of employment and other economic
the site. benefits. This can lead to the
computation of an appropria te rate of
.employment impacts, direct and return on the incremental investment as
indirect. an indicator of project viability.
Derivation of Total Annual Economic monuments is marketing. Although the
Value market potential of each cultural site
It should be noted that for obvious and nation would vary, common factors
reasons modelling techniques can vary which need to be incorporating cultural
from country to country and site to site. tourism includes :
Nevertheless, the approach outlined in (a) research and data collection on
Section 5.0 would result in the local and global tourism trends,
computation of a total of 4 broadly (b) itemising country-wise and
defined indicators useful for respective monument-wise comparative
Cultural Ministries of various countries,
advantages,
economic planners and Donor Agencies.
(c) tourism target market analysis.
These indicators are:
(d) rationalisation of prices charged
(a) A global standard for numerically
for tourist tickets.
ranking significant historical
monuments. (as described in (e) determination advertising and
paragraph 5.1) promotion strategies.
(b) Economic returns per annum to a
Conclusion
nation from cultural sites in their
present state (paragraph 5.2) As stated previously, quantitative
techniques provide the means for
(c) The Economic Rate of Return
evaluating the financial viability of
(ERR) from incremental
investments in cultural development.
investments to reach desired
Such techniques become essential in
tourist absorption levels
negotiating for grant or loan funding for
(paragrpah 5.3) investments in cultural projects. In the
(d) The TOTAL ANNUAL case of /oan funding. the revenue
ECONOMIC V ALUE of a generation capacity and debt service
Cultural site can then be derived capacity of specia/ cu/tura/
by appropriately aggregating deve/opment projects can be shown
(utilising mathematical using quantiative methods. It should be
modelling techniques) the values noted here that investments in cultural
from (a), (b) and (c) above, net of development not only encompass
incremental investments, archaeological works and site layout, but
maintenance, debt service also include construction of access
marketing and other running highways, hotels and recreation
costs. facilities.
Marketing Strategy for Cultural
ln concluding it is pointed out that this
Monuments would most Iy outlines à basic approach
Increment investments on infrastructure for measuring the economic value of
alone is insufficient for cultural sites to cultural sites. It is proposed that this
reach optimum visitor absorption levels. approach be further refined and
A very important element in maximising developed into a globally accepted
economic retums from cultural methodology.
