Friday, 6 September 2013

More than Bricks and Mortar

By Corey Allan, Research Analyst, Motu Economic and Public Policy Research

Of the many complex issues which surround the Christchurch rebuild, one of the most contentious appears to be what to do with the many quake-damaged heritage buildings.  The Court of Appeal recently gave the Anglican Church the OK to 'deconstruct' the Christchurch Cathedral, a decision which campaigners are taking to the Supreme Court.  Just last week, heritage campaigners came to parliament demanding that the demolition of heritage buildings cease.

The reason for this contention comes down to the complex set of values which are in play when we are talking about heritage preservation.  Earthquake strengthening and restoration of heritage buildings is an expensive undertaking; it may simply be cheaper to demolish and construct a new building.  However, this fails to recognize the full set of values which are in play when we are talking about heritage preservation.  Simple monetary metrics struggle to deal with the values people place on heritage.

A recent Ministry of Culture and Heritage research report* details the different kinds of values at play in heritage protection, and the cultural sector in general.  The core issue is that key sources of value derived from heritage protection are non-market values.  Heritage has public good aspects; we cannot exclude someone from enjoying the Gothic architecture of the Christchurch Cathedral from the square.  Nor does one person's enjoyment of heritage diminish or impede the enjoyment of others (known as non-rivalry).  Some of the value accrues to individuals who do not even use heritage.  Some people may derive value from having the option to visit a heritage site, while others may simply value the existence of heritage buildings.  This could be because people value living in a society where heritage is celebrated; it could be because people want the heritage to exist for future generations to enjoy.  Economists call these 'existence values' and 'bequest values'.  These types of values are inherently difficult to quantify.

Policy makers should be conscious of these values when deciding which buildings should be saved.  Revealed preference is not a particularly useful technique in this case.  The community may prefer to save a building which is not the most commercially successful because of the history the building represents.  Not all heritage buildings will be able to be saved - either because they are too damaged or the restoration budget will not allow it.  In choosing which buildings to save or strengthen using public money, the government should be aiming to maximize value for money while recognizing that non-market values play a key role in social welfare in this space.

* This is also available as a Motu Working Paper