Heritage Conservation and the Local Economy
Donovan D. Rypkema
Heritage conservation does not have a value.
Heritage conservation has multiple values: cultural, aesthetic,
educational, environmental, social, historical, and others. A more
recent addition to this litany of values is the economic value of
years, this contributing component of value was considered too crass and
too demeaning to the underlying importance of the historic resources to
merit serious discussion. Even today there are heritage conservation
purists who dismiss the measurement and advocacy for historic
preservation on economic grounds as degrading and insulting to the
metaphysical, immeasurable qualities and importance of humankind’s built
in the long run, they are probably right. In
the long run, the economic impact of heritage conservation is far less
important that its educational, environmental, cultural, aesthetic, and
social impacts. In the long run, none of us particularly cares about the
number of jobs created in the building of Angkor Wat or the tax revenues
generated from the piazzas of Florence. In the long run those other
values of heritage conservation are more important than the economic
value. But as the great British economist John Maynard Keynes said, “In
the long run we’re all dead.”
In the short run, however, many of
those who have the most influence on what happens to our heritage
resources – property owners, members of parliament, bankers, investors –
do care about the economic aspects of heritage buildings. It is
often through the door of economic impact that those decision-makers
become advocates for heritage conservation on other, more important
Thus many heritage conservation
organizations are increasingly making the economic case. Europa Nostra,
the pan-European federation of heritage conservation groups, in a paper
entitled Cultural Heritage Counts for Europe notes, “Cultural
heritage has multiple benefits of Europe today”.
Many of those benefits are economic.
Studies over the last decade have
identified the five major measurables of the economic impacts of
heritage conservation: 1) jobs and household income; 2) center city
revitalization; 3) heritage tourism; 4) property values; and 5) small
First, jobs and household income.
For most professionals in the economic development field, the top
priorities are creating jobs and increasing local household income. The
rehabilitation of historic buildings is particularly potent in this
regard. The costs of new construction in the US will be half materials
and half labor. The costs of rehabilitation will be 60 to 70% labor with
the balance being materials. This labor intensity affects a local
economy on two levels. First, the plumbing fixtures are bought from a
plant a thousand miles away, and the lumber may be imported from across
the ocean, but the services of the plumber and the carpenter are
purchased from across the street. Furthermore, once the plumbing is
installed, the plumbing doesn’t spend any more money. The plumber,
however, gets a hair cut on the way home, buys groceries, and
contributes to his favorite local charity, and each expenditure
recirculates that paycheck within the community.
The Swedish International
Development Agency has funded projects in the West Bank in Palestine
where they’ve found that every $100,000 project typically provides 3,000
to 3,500 workdays, with labor constituting around 70% of the total
expenditures. In Australia, they’ve concluded that heritage conservation
is more labor intensive and also stimulates the development of
traditional trades and skills.
Some think economic development is
only manufacturing. The US state of Tennessee can serve as the typical
contradiction, though. For every million dollars of production, the
average manufacturing plant in Tennessee creates 28.8 jobs. A million
dollars spent on new construction generates 36.1 jobs. But a million
dollars rehabilitating an historic building? 40 jobs.
A million dollars of manufacturing
output adds $604,000 to local household incomes. A million dollars in
new construction adds $764,000. A million dollars of rehabilitation?
Now of course the argument can be
made, “Yes, but once you’ve built the building the job creation is
done.” True, but there are two responses to that. First, real estate is
a capital asset – like a drill press or a box car. It has an economic
impact during construction and a subsequent economic impact when it is
in productive use. Additionally, since most building components have a
life of between 25 and 40 years, a community could rehabilitate 2-3% of
its building stock per year and have perpetual employment in the
building trades. And these jobs can’t be shipped overseas.
In Europe, historic rehabilitation
creates 16.5% more jobs than new construction, and every direct job in
the cultural heritage sector creates 26.7 indirect jobs. Compare this
to the auto industry, where the factor is only 6.3 to 1.
But there is an even subtler issue
regarding jobs in heritage conservation – they are generally well paying
jobs, and globally there is a scarcity of the required skills. A 2005
study in Great Britain identified the need for an additional
6,500 workers in the next twelve months to meet immediate demand.
The Norway Directorate of Heritage identified a huge backlog of
necessary maintenance work and too few trained people to do it.
The restoration and revitalization of the old city neighborhood of Darb
al-Ahmar in Cairo provided significant employment and job training; at
its peak, it employed 400 workers daily.
The significance and the
opportunities for restoration artisans cannot be overstated. In England
an estimated 86,000 people are employed to preserve nearly 4.5 million
historic houses and another 550,000 historic commercial buildings.
In France, 40,000 craftsman work on repairs and maintenance of cultural
The Aga Khan Trust is funding projects in the Islamic world that are
reviving traditional skills, generating new jobs, and providing
In Halmstad, Sweden, restoration work has put long-term unemployed back
to work and provided training for immigrants, apprentices, and women.
In fully developed economies, in
the developing world, in market-based economies, and in socialist
economies there are always some economists and politicians who would
argue that in economic downturns, public expenditures should be made to
create employment. And around the world, among politicians’ favorite
forms of public works is building highways.
David Listokin at the Center for
Urban Policy Research at Rutgers has calculated the relative impact of
public works. Suppose a level of government spends $1 million building a
highway. This means 34 jobs; $1.2 million in ultimate household income;
$100,000 in state taxes; and $85,000 in local taxes.
Or the government could construct a
new building for $1 million. The result: 36 jobs; $1,223,000 in
household income; $103, 000 in state taxes; and $86,000 in local taxes.
Or that million dollars could be
spent rehabilitating an historic building. It would create 38 jobs;
$1,300,000 in household income; $110,000 in state taxes; and $92,000 in
local taxes. It is clear which one of these options is the most
economically impacting in public works projects.
Ultimately, economic development is
about jobs, and heritage conservation not only provides jobs, it
provides good jobs and more of them.
The second area of the impact of
heritage conservation is center city revitalization. There is a
resurgence of downtowns all over America. One would be
hard pressed to identify a single example of sustained
success in center city revitalization where heritage conservation wasn’t
a key component. Conversely, the examples of very expensive failures in
downtown revitalization have all had the destruction of historic
buildings as a major element.
By far, the most
cost-effective U.S. program for economic development—not just for
historic preservation or downtown revitalization, but the most
cost-effective economic development program of any kind—is a
program of the U.S. National Trust for Historic Preservation called Main
Street. Main Street is commercial district revitalization in the context
of historic preservation. It started as a program for the downtown
districts of small towns. In the last 25 years, some 1,700 communities
in all 50 states have had Main Street programs. Over that time, the
total amount of public and private reinvestment in those Main Street
communities has been $23 billion. There have been over 67,000 net new
businesses created, generating nearly 310,000 net new jobs. There have
been 107,000 building renovations. Every dollar invested in a local Main
Street program leveraged nearly $27 of other investment. The average
cost per job generated—$2,500—is less than a tenth of what many
state economic development programs brag about.
Street began as a program of economic development in the context of
historic preservation for small town downtowns but in recent years the
fastest rate of growth in Main Street programs has been in neighborhood
commercial districts in larger cities. The first, and hugely successful,
urban Main Street program was in Boston, where it was the top economic
development priority for Mayor Menino. Subsequently urban Main Street
programs began in Baltimore, San Diego, Philadelphia, Milwaukee, Dallas,
Detroit, Washington (D.C.), and elsewhere.
Inter-American Development Bank has had a major initiative in the city
center of Quito, Ecuador. There are multiple indicators of its success:
new businesses, restaurants, and cultural activities; reinvestment by
existing and new residents; increased property values; and net economic
benefits well above expenditures.
Similar ongoing efforts in the old medina in Tunis have resulted in the
middle class returning, both as residents and as business and property
owners. The rates of return on private investment have been high, and
the leverage of public funds to private funds has been 3 to 1.
British Columbia in Canada, they’ve concluded that downtown heritage
revitalization has increased economic prosperity without requiring
large-scale new development.
In much of the developing world,
the major issue is the overwhelming immigration to cities from the rural
areas. In much of Europe and North America, however, the problem is the
opposite. For forty years there has a steady departure of much of the
middle class from central cities, leaving them populated solely by the
very rich and the poor.
But every five years or so news
magazines such as Time and Newsweek will have a cover
story on the “back to the city” movement, and indeed that really is
happening all over the United States. But wherever you look, the “back
to the city” movement has not been back to the city in general, but back
to the historic neighborhoods within the city. There may be new
construction and new neighborhoods built eventually, but the first
attraction back to the city is invariably historic areas.
The former mayor of Washington, DC,
Anthony Williams, established an ambitious but commendable goal of
attracting 100,000 new residents to Washington over a decade. So, one
study looked at what had happened to Washington during the 1990’s. The
overall population of Washington fell in that 10-year period from
607,000 to about 572,000. Yet, that pattern certainly was not consistent
throughout the city. Had Washington’s historic districts declined at the
same rate as did the rest of the city, the 2000 population would have
been less than 562,000. Conversely had the entire city grown at the rate
the historic districts grew, the Washington population in 2000 would
have been over 621,000.
When “back to the city” happens, historic districts are the first
The next category is heritage
tourism. This is a challenging area. While tourism is one of the
fastest growing segments of the world’s economy, not every city can or
should look to tourism as a major portion of its economic base. There
are cultural, economic, logistical, and sometimes even religious reasons
for why tourism is not appropriate for every community. Furthermore, it
would be a mistake to only connect historic buildings with tourism—there
are many more ways that historic buildings can be used as a local
resource. In the U.S. 95% of all of the historic resources in productive
use have nothing whatsoever to do with tourism. However, when tourism
is identified as part of an overall development strategy, the
identification, protection, and enhancement of historic resources is
vital for any sustainable effort.
In the state of Virginia, a study
contrasted the spending patterns of heritage visitors with tourists who
did no heritage activities. They found that heritage visitors stay
longer, visit twice as many places, and so, on a per trip basis, spend
2.5 times more than other visitors. Worldwide, wherever heritage tourism
has been evaluated, this same basic tendency is observed: heritage
visitors stay longer, spend more per day, and, therefore, have a
significantly greater per trip economic impact.
Biltmore, a great estate in North
Carolina, commissioned a study of its local impact. Here are the
numbers: 760 employees, $215 million to the local economy, $5 million in
taxes, $9.5 million in direct payroll, and $8.4 million in indirect
payroll. But the most impressive number is this one: for every $1 a
visitor spent at Biltmore, $12 was spent elsewhere—hotels, restaurants,
gas stations, retail shops, etc. Biltmore was the magnet that drew
visitors, but for every dollar that Biltmore reaped, others garnered
In Norway they found similar
results—only 6-10% of the spending involved in visiting a cultural
heritage site was spent at the site itself; the balance was spent in the
community around the site.
The University of Florida in
conjunction with Rutgers University did an economic analysis of historic
preservation in Florida. Florida is not a state that immediately comes
to mind as being heritage tourism based. One tends to think of Disney
World, beaches, and golf courses. Tourism is clearly the largest
industry in Florida, but just the heritage tourism portion of that
industry has impressive impacts, with over $3 billion in expenditures,
$500 million in taxes, and over 100,000 jobs. And while most of the
jobs—predictably—are in the retail and service industries, nearly every
segment of the economy is positively affected.
Evora, Portugal is a 2000-year-old
city founded by the Romans. As a world heritage site, Evora has been
building a sustainable heritage tourism strategy for nearly three
decades. It has been successful based on the criteria set by the long
term mayor, “…tourism will provide for the harmonious coexistence of
tourism and heritage, such that economic development is not allowed to
proceed at the expense of fundamental values and does not impede access
to culture by the communities which have inherited it.”
But with all these numbers, an even
more important conclusion emerges: when heritage tourism is done right,
the biggest beneficiaries are not the visitors but the local residents
who experience a renewed appreciation for and pride in their local city
and its history.
The United States is a country
obsessed with property rights. As a result, the area that has been
studied most frequently is the effect of historic districts on property
values. The most common result? Properties within historic districts
appreciate at greater rates than the local market overall, and they
appreciate faster than similar non-designated neighborhoods. The worst
case is that historic district houses appreciate at rates equivalent to
the overall local market.
In England, they’ve found that a
pre-1919 house is worth on average 20% more than an equivalent house
from a more recent era, and the premium becomes even greater for an
earlier historic home.
On the commercial side, the Royal Institute of Chartered Surveyors has
tracked the rates of return for heritage office buildings for the past
21 years and found listed buildings have consistently outperformed the
comparable unlisted buildings.
Similar analyses in Canada demonstrated that 1) heritage
buildings had performed much better than average in the market place
over the last 30 years, 2) there is no evidence that designation reduces
property values, and 3) the price of heritage houses was not affected by
cyclical downturns in property values.
And this isn’t just true in the
most advanced economies. In Quito a six-year study showed that land
value appreciated in the targeted heritage area 44%, as compared to
nearby areas with less than 10%.
An underappreciated contribution of
historic buildings is their role as natural incubators of small
businesses. In America, 85% of all net new jobs are created by firms
employing less than 20 people. That ratio is similar in Europe and even
greater in the developing world. One of the few costs firms of that size
can control is rent. A major contribution to the local economy is the
relative affordability of older buildings. It is no accident that the
creative, imaginative, start up firm is not located in the office park
or the shopping center–they cannot afford the rents there. Historic
buildings become natural incubators, usually with no subsidy of any
Pioneer Square in Seattle is one of
the great historic commercial neighborhoods in America. The business
association asked firms why they chose that neighborhood. The most
common answer: it was an historic district. The second most common
answer: the lower cost of occupancy.
Neither of those responses is accidental.
In Ningbo, China over the last
decade, a series of dilapidated, overcrowded, and unsanitary buildings
have been converted to the Fan Center, filled with small businesses
selling antiques, books, and art. The restoration of the Souq al Saghir
in Damascus has stimulated new businesses and more activity from
existing businesses, selling to both tourists and local residents. In
Macao 60% of the retail revenue comes from the heritage conservation
Many countries and regions will
have similar data. Here is what the Chair of the Australian Heritage
Commission had to say:
Heritage is an asset for any country–for many in the Asia/Pacific region
it is a key area for future economic development. Significant heritage
places are valued as tangible links with the past, as major tourist …and
So there are the big five – jobs,
center city revitalization, heritage tourism, property values, and small
business incubation. Other areas of impact are discovered in some
analyses–revenues from the movie industry, enhancement of crafts
businesses, the connection between historic facilities and the
performing arts, neighborhood stabilization, the economic integration of
neighborhoods, tax generation, and others.
There are three other areas that
might be called, economics once removed. These are areas where,
in America and led by the National Trust for Historic Preservation,
preservation is becoming a central element of larger strategies. These
larger strategies are affordable housing, Smart Growth (our name for our
anti-sprawl movement), and the broader issue of sustainable development.
The efforts in the United States have been first, to learn what the
impacts of historic preservation are in these areas; second, to educate
other preservationists in these findings; third, to communicate
preservation’s role to larger audiences; and finally, to integrate
historic preservation as a critical component of a comprehensive
There is no movement in America
today that enjoys more broadly based support across political,
ideological, and geographical boundaries than does Smart Growth.
Democrats support it for environmental reasons, Republicans for fiscal
reasons. Big city mayors, rural county commissioners—there are Smart
Growth supporters everywhere. The increasing public volume and political
expenditures of Smart Growth’s opponents is in direct relationship to
Smart Growth’s broad and growing support.
The Smart Growth movement has a
clear statement of principles:
a range of housing opportunities and choices;
Encourage community and stakeholder collaboration;
distinctive, attractive places with a ‘sense of place’;
development decisions predictable, fair, and cost effective
Preserve open space, farmland, natural beauty, and critical
a variety of transportation choices;
Strengthen and direct development toward existing communities;
advantage of compact built design.
If a community did nothing but
protect its historic neighborhoods, it will have advanced every Smart
Growth principle. In fact, any Smart Growth strategy that doesn’t have
historic preservation at its core is stupid growth, period.
One area affected by preservation
is a bit less obvious. Today in most countries, many people
diligently recycle their aluminum soft drink cans. It’s a pain in the
neck, but we do it because it’s good for the environment.
Landfill throughout the United
States is increasingly expensive in both dollars and environmental
a quarter of everything dumped at the landfill is construction debris.
The link between the environment and the demolition of heritage
buildings is often missed, but that link is a crucial one. A typical
small commercial building in the United States is 25 feet wide, 120 feet
deep, 2 stories, and made of brick. If that small building is demolished
today, the entire environmental benefit from the last 1,344,000 aluminum
cans that were recycled is lost. Not only has an historic building been
thrown away, months of diligent recycling by the residents of the
community have been wasted. Why doesn’t every environmentalist have a
bumper sticker saying, “Recycle your aluminum cans AND your historic
Finally, if cities are to succeed in the challenge of economic
globalization, they will have to be competitive with other cities in
their region and worldwide. However, their success will be
measured not just by their ability to foster economic globalization, but
equally in their ability to mitigate cultural globalization. In both
cases, a city’s historic built environment will play a critical role.
most important lessons about the significance of heritage conservation
for economic development come from the rapidly developing parts of the
world, places like Dubai, Bahrain, and Singapore.
Belinda Yuen of Singapore National University says, “…the influences of
globalization have fostered the rise of heritage conservation as a
growing need to preserve the past, both for continued economic growth
and for strengthening national cultural identity.”
the twenty-first century, only the foolish city will make the choice
between historic preservation and economic development. The wise city
will utilize its historic built environment to meet the economic,
social, and cultural needs of its citizens far into the future.
article began with a quotation from a British economist and so will end
by quoting an American one. The great Harvard economist John Kenneth
Galbraith once wrote, “The preservation movement has one great
curiosity. There is never retrospective controversy or regret.
Preservationists are the only people in the world who are invariably
confirmed in their wisdom after the fact.”
Donovan D. Rypkema is President of Heritage Strategies International
in Washington, DC, and a member of the Board of Directors of Global
Urban Development, serving as Co-Chair of the GUD Program Committee on
Celebrating Our Urban Heritage. HSI was established in 2004 as a
companion firm to PlaceEconomics, a consulting firm of which Rypkema is
the principal. Rypkema has worked with communities in 49 States, seven
Canadian Provinces and over 20 countries. He is the author of
The Economics of Historic Preservation,
Community Initiated Development,
The Economics of Rehabilitation,
Economic Development on Main Street,
and other works published by the National Trust for Historic
Adopted June 2, 2005. Position paper of Europa Nostra
"Job Creation Through Conservation,” paper presented at
Swedish Urban Heritage Network at World Urban Forum II,
Barcelona, Spain 2004.
Calculations by the author based on data from Regional
Multipliers: A User Handbook for the Regional Input-Output
Modeling System (RIMS II), U. S. Department of Commerce,
Bureau of Economic Analysis, May 1992 et.seq.
Terje Nypan, “Cultural
Heritage Monuments and Historic Buildings as Generators in a
Post-Industrial Economy”, in Culture: New Jobs and Working
Conditions through New Information Technology, proceedings
of the vertikult workshop at the annual MEDICI conference. 13-14
November, 2003, Milan, Italy
Traditional Building Crafts Skills: Assessing the Need,
Meeting the Challenge, National Heritage Training Group,
Op. cit. Terje Nypan.
Aga Khan Trust for Culture, "Al-Azhar Park, Cairo and the
Revitalization of Darb Al-Ahmar," (N.p.: Aga Khan Foundation,
August 2005) .
Op. cit. Traditional Building Crafts Skills: Assessing the
Need, Meeting the Challenge, ibid
Op. cit. Terje Nypan.
Op. cit. Aga Khan Trust
UN-Habitat, "Conservation of the Cultural Heritage, Halmstad,"
UN Best Practices Database, 1 January 1996,
(1 August 2005).
Personal correspondence between author and Dr. David Listokin,
Center for Urban Policy Research, Rutgers University.
Ismail Serageldin, "Our Past is our Future: Investing in our
Cultural Heritage," Proceedings of the 4th
International Symposium of World Heritage Cities: Évora,
September 17-20, 1997, (N.P.: Organization of World Heritage
Donovan D. Rypkema, Planning for the Future, Using the Past.
The Role of Historic Preservation in Building Tomorrow’s
Washington, DC. Office of Planning, September 2003,
Donovan D. Rypkema, Virginia’s Economy and Historic
Preservation: The Impact of Preservation on Jobs, Business, and
Community, Preservation Alliance of Virginia, 1995
Donovan D. Rypkema, Profiting from the Past: The Impact of
Historic Preservation on the North Carolina Economy,
Preservation North Carolina, 1998
Economic Impacts of Historic Preservation in Florida,
Center for Governmental Responsibility, University of Florida
and Center for Urban Policy Research, Rutgers University, 2002,
Abílio Dias Fernandes, "Official Opening," Proceedings of the 4th
International Symposium of World Heritage Cities: Évora,
September 17-20, 1997, (N.P.: Organization of World Heritage
Heritage Counts 2003
(London: English Heritage,
(1 August, 2005)
The investment performance of
listed office buildings: 2002 update,
06 December 2002,IPD,
English Heritage and the RICS Foundation
Eduardo Rojas, Inter American
Development Bank, correspondence with author
Pioneer Square Business Climate Survey, 2002, Pioneer
Square Business Improvement Area
David Lung, "Introduction: The Future of Macao's Past," The
Conservation of Urban Heritage: Macao Vision, International
Tom Harley, "The Value-add of Cultural Heritage," AUSHeritage/AUSTrade
Export Seminar, 2003 Chairman Australia Heritage Commission,
Sidney, 27 June 2003,
http://www.ausheritage.org.au/HARLEY .pdf (1 August
Quoted in The Economics of Historic Preservation: A Community
Leader's Guide, National Trust for Historic Preservation,
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