ECONOMICS UNIQUENESS

ECONOMIC VALUATION OF CULTURAL HERITAGE ■ 89
here can be classifi ed under the heading of “monetary analysis” (see previous
section of this chapter) and partly also under the heading of “decision support
analysis.” “Performance indicators analysis” receives less attention here, as this is
more of an engineering type of approach than an economic valuation analysis.
Compensation Methods
Compensation methods in the evaluation of cultural heritage are linked to the
applied welfare-theoretic methods and seek to fi nd the sacrifi ces and revenues
involved with a change in the availability or quality of a cultural asset (Lazrak
et al. 2011a). If a cultural good is demolished, then the fi nancial compensation
for the loss of this good may be estimated by assessing the costs of reconstructing
the asset. Th is does not necessarily imply an actual physical rebuilding of
the asset concerned, and hence a virtual compensation can also take place. It
should be noted that a lost cultural heritage good may also be compensated
for by the construction of another, new heritage good with at least the same
cultural quality value. Th is approach is increasingly used in urban planning.
Th ere are numerous examples of old buildings (including castles, mansions,
and pavilions or even small towns; for instance, Bruges in Belgium, and
Willemstad in Curaçao) that have been conserved, partly or entirely, aft er a
period of decay. In such cases, the amount of money necessary to restore a physical
cultural heritage good in its historic state provides a shadow price for that
good that off ers useful information for compensation costs in project evaluation.
Hypothetically, it will then be worthwhile to rebuild or restore an asset when its
social value is at least equal to its shadow price.
However, in many cases, also in valuing cultural heritage, it is hard to determine
its shadow price or it is uncertain whether the social value will exceed its
shadow price unless a further thorough investigation into the various use values
of the good in question is undertaken. It is clear that an important limitation of
any compensation method is the fact that it presupposes substitutability of the
good concerned, either in physical terms or in monetary terms. If a good is seen
as exclusive or even unique, then a major evaluation problem emerges, although
the system of insurance values and insurance premiums off ers some way out.
Social Cost-Benefi t Methods
Social cost-benefi t analysis has a long history in the economics of project evaluation
methods. In the cost-benefi t analysis tradition, a sophisticated toolbox has
been developed over the years to deal with complex project evaluation issues,
sometimes with large spillover eff ects. In the past decade, many attempts have
also been made to incorporate intangible environmental eff ects into these