Financing for
Urban Heritage and Conservation



Hari Srinivas
Policy Analysis Series E-051. April 2015.



M

ost countries, particularly in the developing world, have a rich and varied urban heritage. This is contained not only in distinctive historic districts, but also in individual monuments and archeological sites of great significance.

Such heritage forms part of the countries' cultural and history and is representative of the different and historical phases in the progression of national culture. As a result of this, many sites have received international recognition and awards, such as UNESCO's "World Heritage" Sites.

The conservation and development of heritage assets and sites is gaining priority in the policies of central and local governments, due to the key role that it can play in promoting tourism and economic opportunities, besides sustainable development in the long run. Such issues are increasingly being based on local traditions and community resources, in the context of increasing globalization of the economy and the culture.

Real financial benefits of natural heritage conservation

Conservation is enhanced when private-sector investors and national or local governments are convinced that there is an economic rationale for establishing protected natural areas. It has been estimated that in a national park in Kenya, each lion is worth US$27,000 per year and each elephant herd US$610,000 in terms of visitor revenues per year. Also, each hectare of the park is estimated to yield US$40 per year, which is 50 times more than the net profits expected from the land were it used agriculturally.

- Elizabeth Boo,
Ecotourism; Potentials and Pitfalls Washington, D.C.: World Wildlife Fund and the Conservation Foundation, 1990.

A number of factors facilitate and help promote heritage conservation, in the spheres of governance, education, technology and finance. Within this framework, the role and involvement of banks and financial institutions in assisting borrowing for the protection and development of heritage assets is now receiving increasing attention.

Benefits of Heritage Conservation

Heritage Conservation provides concrete benefits to property owners, to businesses and to the community as a whole. For example, heritage preservation and designation increases property values, both of the restored building and surrounding properties. It can also be a draw to tourism and helps businesses attract customers.

Restoration keeps money within the community, by requiring local materials from local sources. Heritage conservation projects can in fact become business opportunities. Businesses and building owners can take advantage of public programmes and incentives to maintain and restore heritage buildings. Cost savings can be achieved due to lower construction and demolition waste, and less than half the energy needed for new construction.

Financing Heritage Projects

Linkages between heritage conservation and economic development, particularly in the context of promoting tourism, are still being understood, leading banks and financial institutions to be cautious in funding urban heritage conservation projects. They have focused on projects that accelerate economic and social development, and meet technical, economic, institutional, financial and environmental review criteria [1].

The success in financing heritage projects depends on how the projects themselves are formulated. There is a clear need to develop conservation models that are capable of being enhanced in the long term and becoming self-sustaining. This will need the full support of the local communities and owners of heritage properties.

Project Governance

Conservation projects have been successful when they provide additional opportunities for participation by private entities, as an alternative to public financing. Projects will also have a better chance of success if they encourage public-private cooperation in the financing and implementation of conservation projects. This may require, on the public sector's side, improvement in the laws and regulatory environment, and clarifications in institutional roles and responsiblities involving heritage conservation.

Clear codes and standards relevant to heritage conservation will also have to be made. Cities that have an environmental impact assessment procedure in place to approve development projects can easily include heritage crtieria as an integral part of the assessment. On the private sector's side, there is a need for providing financial, technical and other inputs to the project to enhance conservation efforts. Gathering background information and project formulation itself can be taken up by private sector entities.

Financial Instruments

The setting up of financial instruments (for example, taxes, subsidies, fees, grants, and other budgetary allocations)for heritage conservation should go hand in hand with active technical cooperation programmes that support institutional development and project preparation activities. This will ensure that the intended benefits and outcomes accrue to the local community at large, and are achieved in a timely manner.

Information and Knowledge

Building of knowledge and experience on the interlinkages between culture and development is also important. Emphasis need to be placed on long-term sustainability of cultural and heritage development investments and the active involvement of all stakeholders, particularly local communities, in project financing and execution. Linkages that focus on public-private partnerships, and emphasize community ownership of investments will not only help in making projects attractive to financial institutions seeking to invest funds, but will also help in achieving the intended outcomes of the projects.

Assessing heritage projects

In assessing the financial soundness of a heritage project proposal, it is important to take into account the project's impact on heritage assets in all stages of the project, including, indetification, preperation, appraisal, negotiation/approal, implementation and evaluation.

Assessments of projects from a heritage point of view can be done through a number of ways - Identification of significant heritage issues through research and survey, field studies, development of tools and strategies, elaborating procedures to be taken in case of archeological finds, ensuring training and capacity building, developing procedures in monitoring and evaluation.

A number of issues can be outlined in appraising a project's value-added to conservation of heritage assets:

  • Policy, legal and institutional framework
  • Baseline data
  • Impact assessment
  • Analysis of alternatives
  • Environmental management plan


  1. The World Bank, in 1999, released a report on how to carry our an environmental impact assessment for heritage sites, titled - "Cultural Heritage in Environmental Assessment" [Return to text]

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