Xavier Greffe & Francesca Cominelli

Centre d’économie de la Sorbonne

STAREBEI Programme Conference “Innovative Financing of Cultural Heritage”

London, May 30th, 2013

Financial Instruments for UNESCO Sites A Research Project

What are We Looking For?

A contribution of cultural activities to sustainable development (UNESCO Declaration of Hangzhou, May 17th, 2013).

A financial sustainability supported by permanent financial streams and not only by transitory and ephemeral palliatives.

An equilibrium between the cost of conservation of the existence value and the resources associated to the use-values.

The Political Economy of Cultural Heritage

Financing Cultural Heritage: Which Challenges?

The Relevance of Revolving Funds

The Unesco Wold Heritage

A STAREBEI research project

Outline

The Political Economy of Cultural Heritage:

A First Perspective

An existence value without use-values (The ancient cult of monuments.)

Existence value is a liability financed by dedicated funding: Public subsidies and private donations.

Funding is exposed to many financing threats, and in some countries it mainly depends on political choices.

Conservation of

existence value

Private donations Public subsidies

Mobilization of cultural use-values are expected to support the conservation of the existence value (The modern cult of the monuments.)

Is this increase in cultural use-values compensating the fragility of public and private contributions ?

The Political Economy of Cultural Heritage:

A Second Perspective

Conservation of

existence value

Private

donations Public subsidies

Use-values

Cultural Heritage as a source of various use-values.

Cultural heritage as a basis for a productive ecosystem.

The main issue: How to transform this economic ecosystem in a financially sustainable ecosystem?

The Political Economy of Cultural Heritage:

A Third Perspective

Private

donations Public

subsidies

Use values

Existence

value

Private

donations

Public

subsidies

World Heritage

Site

Existence value

Safeguard Traditional economies: agriculture, navigation, commerce,…

Education and training

Derivative products: books, decorative objects, films,…

Tourism

Housing, accommodation

Cultural activities

Re-use of spaces

Cultural Heritage Jobs in France

(Thousands, 2007)

0

50

100

150

200

250

300

Nb. Of Jobs

Management

Maintenance

Tourism

Non Artistic use

Contemporary Financial Challenges

There exists many interdependent use-values (direct, indirect and induced.)

But the direct cultural use-values: Are much weaker than other ones; Suffer from a low maturation since they are experience goods.

Need for financial innovations making the totality of the system and its components financially sustainable.

Possibility of raising various forms of finance: Government grants, donations, bank lending, etc.

New perspectives: revolving funds, acquisition funds, crowdfunding, etc.

Revolving Funds as an Answer for

Cultural Heritage Sustainability

Revolving funds

Create a solidarity between funding resources.

Take in charge projects characterized by low and slow return.

Are reinvested among different sectors.

Attract sources of finance from different types of institutions.

Various examples or near-by examples World Bank rehabilitation project (Middle East Medinas)

Aga Khan Foundation

UNESCO sites such as Quito or Hiraizumi

Are Revolving Funds Sustainable?

They depend on the economic and financial environment:

The interdependence and the variety of the operators

The number of projects and entrepreneurs

A urban bias?

In absence of these conditions, an acquisition fund may seem more relevant

Due to the lack of projects and operators, the logic of intervention should be direct

But which ending strategy?

Revolving Funds and Unesco Sites

A permanent financial instrument to ensure a local sustainable development based on cultural heritage.

A double dynamic:

On the one side, the preeminence of the Outstanding Universal Value, and artistic and/or historic criteria.

On the other side, a wider scope: From monuments to cities, landscapes and historic urban landscapes

STAREBEI project

First Phase : Analysis of UNESCO official documents related to World Heritage Sites Main characteristics of UNESCO sites Direct and indirect uses Typologies of funding Innovative forms of funding (e.g. Vienna: Old Town Preservation

Fund , Amsterdam: The National Restoration Fund – revolving structure)

Next steps: Analysis of experiences of implementation of revolving funds in

UNESCO sites: requirements for success. Survey to test the possibility of developing revolving funds for

UNESCO sites (demand, budget, source of finance, feasibility). Imaging scenarios for a broader diffusion of revolving funds in

UNESCO sites : demand, structure and governance.

The Case of Seventeenth-century Canal

Ring Area of Amsterdam

It comprises a network of canals that encircled the old town

Source of finance:

National Restoration Fund set up in 1985,

provides funding for restoration projects, among other things,

the Fund issues loans out of its Revolving Fund, which has now reached EUR 273 million.

it offers the private owners of private residences the option of applying for a low-interest Restoration Fund mortgage,

the interest on such mortgages and the mortgage repayments go back into the Fund,

the monies are then used primarily to provide low-interest loans for larger restoration projects.