Making A Case for Heritage: Economic Value

There are many approaches to making the economic case for heritage: from the staff you hire and the goods and services you purchase to conservation costs and tourism revenues. We are touching on a few different approaches to provide empirical evidence and to inspire you as you prepare your local case.

Eco-Environment

• 63% of Canadians are willing to pay more for an ecofriendly home (and the most eco-friendly home is already built).
• In 2007, the University of British Columbia saved $8.5 million by choosing to revitalize, rather than demolish and replace the Buchanan building block for the Arts Faculty. Its green features, including double-glazed, energy-efficient windows, and new heating and ventilation systems, will continue to enhance university life for students and staff, and protect the environment. The paybacks will continue to roll in as UBC’s green reputation attracts eco-minded students and funders.

Heritage conservation means job creation

• The 2010 US study, Delaware Historic Preservation Tax Credit Program, found that $1 million spent on rehabilitation of historic properties created 14.6 jobs while $1 million spent on new construction created 11.2 jobs, a difference of 30%.
• The 2011 US study, Good News in Tough Times: Historic Preservation and the Georgia Economy, found that $1M of economic activity created 18.1 historic rehabilitation jobs compared with 14.9 jobs for new construction, a difference of 21%.
• German and American studies show that a higher proportion of construction costs for heritage conservation projects goes to the labour force than for new-built projects. Building industries typically estimate project costs of 50% labour and 50% material for new construction, while labour costs for heritage rehabilitation are between 60% and 80% of total cost.
• After reviewing 20 years of project costs, the Ontario Heritage Trust determined up to 90% of heritage conservation project costs are allocated to labour.
• In 2015, Canada’s historic sites directly contributed $134.5 million to the Canadian economy and employed 4,665 people. In 2017, Parks Canada’s National Historic Sites contributed $612 million to Canada’s GDP, $82 million in tax revenues and 6,100 FTE jobs. (source: Parks Canada)

The Value of Real Estate

There is a strong perception that heritage designation can be detrimental to the value of the property, but the evidence tells a different story. The approach to research is varied, and studies often work with small samples and incomplete data, but collectively they make a compelling case. (See our downloadable guidebook, Understanding Heritage Real Estate: Perceptions and Practice, for more information and sources.)

• One report suggests: “Historic designation of properties… [do] not in itself have any demonstrable negative effect on the value of those properties… The performance of designated properties is conclusively at or above average… When people recognize and, we suppose, properly care for a property, they seem generally to be reworded in the market place.”
• A survey of 24 Ontario communities and 3,000 properties found 74% of heritage properties performed average or better than average in the market.
• A Vancouver Heritage Foundation study claimed, “Overall, both designated and non-designated heritage homes outperformed nonheritage homes.” Comparing houses on the same street, the study showed:
  • The value of designated heritage home increased by 78%
  • The value of the heritage registered home increased by 45%
  • The value of the non-heritage home increased by 48%
• The Oak Bay Heritage Foundation prepared a summary of international studies, concluding “There is strong evidence to suggest heritage designation has positive effects on property values as compared with non-designated properties…”

Tourist Trade

• With an ever-expanding tourist market that has a proven interest in heritage, and with an extraordinary return on investment, heritage as an economic generator should not be underestimated. See our section on tourism.

Provincial Perspective

This section is taken directly from Estimates of the Direct Economic Impact of Culture in the Western Provinces in 2017, Hill Strategies (source)

Based on Statistics Canada’s product perspective, the direct economic impact of culture products was estimated at $7.1 billion in British Columbia in 2017, which equates to $1,450 per capita and 2.7% of provincial GDP. The culture employment estimate was 98,100 in 2017, or 4.0% of all jobs in the province. The value added of culture products in B.C. is equal to the national average (2.7% in B.C. and all of Canada), while the employment impact is higher in B.C. (4.0%) than in any other province and well above the national average (3.5%).

Intra-provincial comparisons show that the GDP impact of culture industries in B.C. ($7.9 billion) is larger than the value added of agriculture, forestry, fishing, and hunting ($5.8 billion) and utilities ($6.3 billion) and is similar to that of accommodation and food services ($8.0 billion) and mining, quarrying, and oil and gas extraction ($8.2 billion). The value added of culture is less than that of educational services ($13.4 billion), transportation and warehousing ($16.4 billion), and manufacturing ($18.5 billion).

The estimated GDP of sports industries in 2017 is $1.3 billion, or 0.5% of the province’s GDP. The value add of culture is $7.9 billion, or six times larger than the sports estimate.

Canadian Perspective

The Department of Canadian Heritage includes the following information in their third iteration of the “Government of Canada Survey of Heritage Institutions”.

• Not-for-profit heritage institutions in Canada generated over $2.5 billion in revenue in 2015, an approximate 23% increase over 2011.
• The vast majority of the sector’s revenue was generated in four provinces. Ontario accounted for $1.1 billion (43%), Quebec $619 million (25%), Alberta $236 million (9%) and British Columbia $225 million (9%).
• When breaking down the data by types of heritage institutions, museums generated most of the revenue in the sector, contributing over $1.1 billion (44%) in 2015, followed by art galleries at $559 million (22%), archives at $368 million (15%), zoos and botanical gardens at $333 million (13%), and historic sites at $145 million (6%)

Developing a Local Story: Economy

Use the intrinsic-instrumental-institutional framework to develop a well-rounded description of the economic impact of heritage. Here are some suggestions to help you get started. (Read this short introduction to our recommended approach to making a case.)

Intrinsic

• By its very nature, heritage is irreplaceable. It is something that was created in the past, using materials that are often no longer available and skills that are not readably available. Beyond the materials, so much of its value relies on emotional and spiritual qualities that certainly cannot be replaced. We can, therefore, say heritage has a high economic value, as it would be too expensive – if not impossible – to replace. With this in mind, describe the inestimable value of a much-loved heritage site (“What would it mean if it disappeared tomorrow? Who would we replace it?”)

Instrumental

• For statistical, quantitative information, review the preceding information and refer to the Tourist Trade section of Making a Case for Heritage.
• Every year Heritage BC prepares studies that offer excellent economic statistics for BC’s heritage sector. The studies are found here.
• Consider your activities and finances; this can range from the staff you hire and the services and products you purchase to the tourists coming through your doors and the contractors you engage. What are the various ways you contribute to economic generation in your community?

Institutional

• As with other sections, it might be helpful to consider the heritage sector as a whole when making an economic case. As we have seen, the sector has a noticeable impact on the economy, but this is not well known, likely because we do not talk about it enough. Review other sections, such as Tourist Trade and Building Conservation, that offer impressive statistics proving heritage is a strong economic force.

The Economics of Business in Calgary: A Preliminary Business Case for Heritage Preservation (source)
Dr. Jörg Haspel, Built Heritage as a Positive Location Factor – Economic Potentials of Listed Properties, ICOMOS, 2011
Donovan Rypkema, Heritage Conservation and the Local Economy, Global Urban Development Magazine, 2008.
Ontario Heritage Trust, Cultural Heritage – Proposals for Ontario Cultural Strategy, Dec.2015).
Voice Your Support, National Trust for Canada (source)
The Social and Economic Importance of Heritage (source)
Estimates of the Direct Economic Impact of Culture in the Western Provinces in 2017, Hill Strategies (source)
Government of Canada, Survey of Heritage Institutions, 2017 (source)