The Application of Economic Analysis to New Heritage Economics

The Work of Xavier Greffe and some examples of the application of his analysis

There is a need to place any work programmes relating to the ‘new heritage’ in a professional and sustainable framework. The field of ‘heritage economics’ has attracted extensive research, challenge and interpretation. The work of innovative thinkers merits analysis and reporting within the context of this programme. However, instead of embarking on a formal ‘literature review’ which would help to highlight the scope and depth of the current debate, I consider it more appropriate to address the needs of a wide readership by looking through the prism of some writers. The work that I have selected for reporting here will not so much reflect the status of the writer in the larger field of ‘heritage economics’ internationally but more for its usefulness and relevance to us for the exploration of ‘new heritage economics’.


In ‘The Economic Value of Heritage’ Xavier Greffe refers to heritage as an economic resource and, ‘ an important lever for economic development’ and an ‘instrument for satisfying the demand for leisure activities’. His paper also covers the same ground of interest to us, that is:

 Opportunities to create jobs

 A source of new references for economic innovations


Greffe also refers to ‘a way of positively enforcing the identity of the local authorities’. Greffe maintains that ‘economists have always quoted the cultural activities as a prototype of the non-economic commodity; it was non-reproducible and non-substitutable’. Greffe recommends four key questions which need to be addressed in relation to analysing the ‘economic knowledge of heritage’. These are:


What are the bases of the economic value of Heritage, i.e. what are the reasons for the individual and social demand for Heritage?

Greffe sees heritage as a source of economic activity since it creates some utilities, direct or indirect, individual or collective. These are artistic and aesthetic values related to feelings and knowledge and are linked to tourism. Greffe also refers to ‘educational value’ resulting in the education and training of young people in heritage studies. Greffe observes that the progression of multimedia ‘has allowed to deliver new tools and products which increase the quantity and quality of this potential training through heritage. Further the clustering of information, archive and research services is noted as economic activities. Greffe also says that households, companies and local authorities may also be linked with housing and real estate services.

What are the economic limits of Heritage, in terms of content and development?

Further heritage links are connected with cultural tourism. The cultural heritage may change over periods of time leading to the need to clarify the criteria for defining cultural activity. The communication criterion is Greffe’s first suggestion in that it creates a strong meaning for the society. The ‘scientific’ criterion recognises scientific or artistic value and destruction would be considered as a loss. Finally the ‘economic criterion’ refers to the high cost of replacing a heritage asset.


Further expected benefits of heritage can be understood in terms of ‘the expenditure or income multiplier’, ‘the employer multiplier’ and the ‘input-output multiplier’ or the Leontief multiplier.

Greffe next addresses ‘the optimal Heritage investment’ and asks ‘what are the optimal investments in heritage conservation’? Three different kinds of investment are proposed, supported by mathematical equations to express the relationships between costs, values, inputs and outputs:
 ‘The re-utilisation’ factor where an owner changes the use of the heritage.

 ‘The renovation or rehabilitation’ where the owner maintains the state of the heritage without considering the use that can be realised.

 ‘The conservation’ factor, private or public, where the owner of the heritage asset intends not only to maintain his heritage but also to create new user or non-user values.


The relevance and importance of the Economics of New Heritage

Returning to the economics of the ‘new heritage’, are the above considerations relevant or even important? They are relevant even if so to some extent. The above analysis of Greffe’s work may present avenues for investigating the economic potential of the new heritage assets.


Are the tools of analysis proposed by Greffe important for the study of new heritage of minority communities in the UK? Greffe proposes the following reasons for the implementation of his analysis and, some of it is applicable to the new heritage of the UK:

 The owners of the new heritage may not have assessed the interest of their heritage assets.

 The owners may have identified the right indicators to assess the value of demand for the assets

 The owners of the assets may be unable to organise new services required by different consumer groups


How can the positive expected effects of heritage be materialised? It must be remembered that Greffe’s questions apply to the more general and traditional sources of heritage, which may have greater connections with tourism. The main outcome of interest is the use of multipliers. This will be considered in greater detail based on the key outcomes:


1. The owners of heritage own the assets; the users demand only services.

2. There may be a need to reduce the cost of heritage services.

3. The owners need to develop marketing and sale promotional skills if they are exploit new heritage assets.

4. There may also be a need to develop non-profit organisations with a specialisation in t e development of heritage assets.

5. There may be a need to develop a public policy to manage public collective goods which many new heritage assets may become over time.


The above factors merit further consideration in the future. The work of Xavier Greffe has potentially helped to identify a number of pathways for future exploration of the economics of new heritage in the UK. I also hope to take a few leaps and look at situations in US, Canada and Europe.