Arguing for Preservation as an Economic Development Strategy
by Letters 4 the Damned
Social scientists in Colorado, Florida, New Jersey, and Maryland all came to a similar conclusion. Benefits range from 20,000 plus new jobs in Colorado to a 1:2 dollar return ratio for Florida for each grant dollar invested towards preservation. Furthermore the federal Main Street program utilized in Florida resulted in a staggering 10:1 return in state revenue. The Main Street program, which began in the early 80’s, has assisted around 1,700 communities since it’s inception totaling 17 billion in reinvestment as well as hundreds of thousands of jobs and above 90,000 rehabilitated buildings. An average return from the Main Street program can be expected to be around 40 dollars for every 1 dollar invested. In regards to further evidence of increased employment, when compared to new construction, rehab projects generated twice the employment as discovered in New Jersey by Listokin and Lahr. There is no doubt that studies on historic preservation and economic development overwhelmingly yield positive benefits. This is a strong point in the debate but is often attacked through an argument about the validity of the methods used to obtain these results. The outcomes and conclusions are solid and as I wrote before seem to be a mere matter of common sense. Due to the overwhelmingly positive results of these studies, opponents are left to attack the methods used to obtain these results as their prime argument. Thus, preservationists need to be aware of the weaknesses of these methods as a matter of preparedness. Hopefully these preservationists will also be able to refute said weaknesses. Scientific sources that discuss the validity of the methods used might be used to counter the argument of preservation opponents. Most importantly though we must identify these frequently declared weaknesses.
Each type of study listed in the opening paragraph contains its own weaknesses. Basic cost studies such as the one used in Rypkema’s pro forma calculations are quantitatively driven relying “on straightforward math and descriptive statistics.” (Mason, 12) This type of positivist approach is typically hard to rationally argue against. More common though with basic cost studies the problem does not rely in the equation but rather what data is used in the equation. As Mason writes regarding cost benefit analyses, a type of basic cost study, “decisions about which costs and benefits are included in the frame of a particular study should be examined carefully.” Where cost benefit analyses suffers is in its lack of comparison to other possible economic alternatives. This leads to an incomprehensive study because all the possible variables have not been accounted for. Though CBA results can be valuable in a debate, economic impact studies are more commonly used because of their easily understandable results and simple format. Both are quantitative studies but economic impact studies take into account the effect preservation has on a regional economy through its resulting multipliers and positive externalities.
Economic impact studies are probably the most convincing information to utilize in a pro-preservation debate as long as the pro-preservationist is aware of the studies weaknesses. As with basic cost studies economic impact studies do not account for all the preservation values. Most commonly they rely on market data and whatever they cannot equate to market prices is typically unused and left out of the study, again, leading to an incomprehensive study. As with basic cost studies the economic impact studies are also commonly attacked for not considering possible opportunity costs. However, “economic impact studies are more effective and meaningful when measuring the effect of investment being imported (not re-circulated) in to a particular, bounded regional economy—for instance, a tourism project drawing most of its visitors from outside the region.”(Mason, 15) When arguing economic impact studies focusing your argument on investment rather than recirculation would be more reliable in debate and less prone to rebuttal.
A third type of study, that is often utilized to measure causal relation between two variables such as educational attainment and income, is also utilized in historic preservation. Most commonly these regression analyses studies measure the economic relation between landmark designation and property value, both on an individual and on a distance-based basis. Through the use of the hedonic method, a type of regression analyses, preservationists “measure the effect of a popular historic site on land values at various distances from the site” they then compare these results to a statistically identical non-historic area. (Mason, 15) Another type of regression analyses called the travel-cost method measures the cost individuals are willing to incur to visit a specific historical site. In regards to the weaknesses of regression analyses, the literature I am using as reference seems to not mention any such weakness. If, after reviewing more specific references on regression analyses, a preservationist comes to this same conclusion then these studies may make for an irrefutable and strong argument in favor of historic preservation. A fourth type of commonly cited study, however, is largely qualitative and much more refutable thus caution should be taken, as these stated-preference studies contain more uncertainty then the other previously mentioned types of study.
There are two types of stated-preference studies used in preservation. They are contingent valuation, and choice modeling. Due to historic preservation resulting in both private and public goods it is a necessity to have a type of study to measure these public goods. By utilizing contingent valuation the entirety of preservations benefits can be more comprehensive. Public benefit is at the core of preservation and through the recognition of these priceless qualities it’s true value can be more accurately reported. Originally developed in the environmental economics field, CV or contingent valuation gained much support through its involvement in the Exxon oil spill to measure the legal damages and costs the spill caused in relation to public goods. The success of CV has led to it being used as a main alternate for economic impact studies. However still, “some criticize CV methods at the conceptual level because they are not based on actual markets and data from actual transactions” and the hypothetical nature used to measure willingness to pay is often open to much inaccuracy. (Mason, 17) Due to the substantial difference reported by economic studies on measuring reported willingness to pay and actual pay, CV is open to attack and easily refutable. This makes CV a popular but dangerous source in presenting preservation arguments. Choice modeling is the second type of stated preference study used to measure the benefits of preservation.
Choice modeling is also survey based but is based on a ranking system rather than simply picking from a list of answers. The descriptive nature of the question framework also leads to data on what attributes of a good are most valued. In historic preservation choice modeling is used to measure the whys rather than the overall cost one is willing to incur to visit a historic site. This leads to a more detailed view of the most appealing attribute of the historic site in question. Again, due to the qualitative nature of choice modeling, like CV, the findings can be refuted in numerous ways presenting an interesting but dangerous argument. Case studies are another popular source of information that is open to rebuttal based on its qualitative nature.
Measuring the validity of case studies can be done through identifying those with “clear analytical frameworks and not merely anecdotal information.”(Mason, 18) Case studies unlike the other forms of study do not focus on measuring the value of “preservation goods per se” and the most reliable case studies typically involve rigorous qualitative research and incorporate quantitative data through the use of descriptive statistics. (Mason, 18) For the most part, case studies offer an informative view of historic preservation projects, and due the narrative nature of the study they are an “effective means of disseminating information about new policy development or results of research.” (Mason, 18) There is much information to debate the positives of preservation on economic development yet as stated earlier in order to best defend preservation the advocate must be familiar with the weaknesses of the methods used to study historic preservation. This is and will continue to be the primary argument against historic preservation and economic development until the research methods improve over time. Until then advocates must become familiar with and utilize as much literature as possible to properly defend historic preservation as an economic development strategy.
After perusing many scholarly articles on historic preservation as an economic development strategy the literature that presented the best overview and most relevant detailed information was that of Randall Mason and his discussion paper Economics and Historic Preservation: A Guide and Review of the Literature. Not only did this paper provide the most concise and detailed overview of the economic benefits of preservation but it also identified the weaknesses used to refute the preservation argument. In regards to other reference literature the paper also contains an annotated bibliography of what is titled the First Ten Readings containing a list of ten readings best for informing readers new to the issue. Other reference materials I utilized to aid in my further understanding outlined by Randall Mason was a report to the advisory council on the economic impacts of historic preservation which contained more recent data and updated information and further explanation of the issue. I would strongly recommend reading these two papers in their entirety to any advocate of preservation that wishes to successfully defend its economic benefits.
– Christopher Kolezynski
Mason, R., (2005). Economics and Historic Preservation: A Guide and Review of the Literature. Pennsylvania, PA: The Brookings Institution.
Rypkema, D., Cheong, C., & Mason, R. 2011. Measuring Economic Impacts of Historic Preservation: A Report to the Advisory Council on Historic Preservation. Washington DC: Advisory Council on Historic Preservation.