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How to safeguard world heritage sites? A theoretical model of “cultural responsibility”

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Abstract

We outline a model in which preservation of UNESCO heritage sites is analyzed as a classical global public good problem where the decentralized Nash equilibrium yields suboptimal contribution vis-à-vis the Social Planner equilibrium. The absence of a Global Social Planner and the need of coordination across different countries for the implementation of the second solution make the Social Planner equilibrium hardly attainable. The same problem arises when trying to enforce symmetric or asymmetric tax deductions in different countries. We analyze the contribution that cultural corporate responsibility can give to the solution of the problem discussing its limits and potential vis-à-vis the other two alternatives.

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Notes

  1. The UNESCO Web site definition highlights the global public good characteristics of heritage sites by saying that “Heritage is our legacy from the past, what we live with today, and what we pass on to future generations. Our cultural and natural heritages are both irreplaceable sources of life and inspiration. Places as unique and diverse as the wilds of East Africa’s Serengeti, the Pyramids of Egypt, the Great Barrier Reef in Australia, and the Baroque cathedrals of Latin America make up our world’s heritage. What makes the concept of World Heritage exceptional is its universal application. World Heritage sites belong to all the peoples of the world, irrespective of the territory on which they are located.” (http://whc.unesco.org/en/about/. Accessed on May 20, 2014).

  2. As is well known in the literature, the problem of free riding leads to underprovision of public goods. Several theoretical papers have analyzed the problem in noncooperative games (Bergstrom et al. 1986; Cornes and Sandler 1986) focusing on the implementation of incentive mechanisms for an efficient allocation of public goods (see, for instance, Clarke 1971; Groves 1973; Groves and Ledyard 1977; Green and Laffont 1979; Laffont 1987; Bagnoli and Lipman 1989; Varian 1994). However, as has been emphasized by this literature, the proposed mechanisms are frequently rather complicated and, as a consequence, difficult to implement (Falkinger et al. 2000). Other works have proposed incentive mechanisms which induce efficient contributions to the public good but whose implementation requires a rather complex and particular refinement of the Nash equilibrium. Other authors (see, for instance, Warr 1982, 1983; Andreoni and Bergstrom 1996; Falkinger 1994, 1996) devised mechanisms based on tax subsidy schemes in which a central authority, the government, tries to increase contributions to the public good. These mechanisms however require perfect information about private characteristics.

  3. The relevance of this problem is evidenced by the World Monuments Fund (WMF)’s announcement of the launch of a 2-year advocacy for 67 sites in 41 countries. Created in 1996, the WMF has concentrated on giving national and international exposure to cultural heritage sites that are at risk. To mention just one specific example on July 3, 2012. “The UN World Heritage Committee has condemned the destruction of sites in Mali, including the fabled city of Timbuktu, and decided on measures to help the West African country protect its heritage, including the creation of a special fund to help it conserve its cultural heritage. UNESCO agreed to help the Government of Mali in reinforcing protection for all of its cultural properties and raise awareness in neighboring countries and among the international community of the situation to help fight the illicit trade in cultural artifacts” (http://www.un.org/apps/news/story.asp?NewsID=42387). As is clear from this example, war and conflicts (beyond poverty) may as well play an important role in deterioration, but, also in these cases, economic resources for protection, restoration after war destruction, education, and local economic development are urgently needed to tackle the problem.

  4. The expression was originally formulated by Besley and Gathak (2001). The literature on corporate social responsibility produced in the last decades several theoretical contributions. See among others, Arora and Gangopadhyay (1995), Bagnoli and Watts (2003), Glazer et al. (2010), Becchetti et al. (2011, 2014) and Reinstein and Song (2012).

  5. The Nielsen multicountry survey on the “Globally Conscious Consumer” (28,000 interviews in 56 countries, downloadable at http://www.nielsen.com/us/en/newswire/2012/the-global-socially-conscious-consumer.html) identifies an average share of 46 % respondents willing to pay more for social and environmental characteristics of the products. Even though the contingent evaluation literature tells us that figures of virtual willingness to pay are upward biased (Carson et al. 2001), observed market shares of ethically responsible products (fair trade or ethical investment funds) tell us that the actual share is nonetheless quite relevant.

  6. For a recent survey on CSR, see Kitzmueller and Shimshack (2012), Hoi et al. (2013) and Dhaliwal et al. (2012).

  7. KPMG International Survey of Corporate Responsibility Reporting documents that CSR reporting was adopted by 90 % of Japanese companies, 71 % of UK companies, and 32 % of US companies in 2005, up to involve 95 % of the 250 largest companies in the world in 2011 (KPMG Global Sustainability Services, 2005 and 2011, both available at the KPMG Web site at http://www.kpmg.com). The Corporate Social Responsibility Report (ICCA 2010, downloadable at: iccaworld.com/dcps/doc.cfm?docid=1246) documents that a separate CSR department was created by 31 % of the top 500 Fortune companies.

  8. Satisfaction of a wider range of stakeholders in CSR entails certain costs which may however be compensated by potential benefits. Among the latter, we mention minimization of conflicts with stakeholders (Minor and Morgan 2011), higher workers productivity due to efficiency wage (Shapiro and Stiglitz 1984), turnover and intrinsic motivation mechanisms (Deci 1975), innovation in waste/emission management which anticipates more restrictive regulation and creates technological leadership, consumer surplus extraction due to the willingness to pay for social and environmental responsibility of concerned consumers. This last point will be the focus of our analysis. Empirical findings on the nexus between CSR and corporate performance investigated in different countries and sample periods reflect this uncertain balance between CSR gains and costs. Some of them document a positive nexus (Hart and Ahuja 1996; Feldman et al. 1996; Russo and Fouts 1997; Butz and Plattner 1999; Dowell et al. 2000; Konar and Cohen 2001; King and Lenox 2001; Hibiki and Welch 2003; Becchetti et al. 2008; Margolis et al. 2007; Baron 2009), others document a negative relationship (see, for instance, Cordeiro and Sarkis 1997; Wright and Ferris 1997; Wagner et al. 2001), while a third group of contributions documents the absence of significant differences between SR and conventional firms (McWilliams and Siegel 2000).

  9. A further problem is that concrete occasions for contributing to the preservation of heritage sites in distant countries (such as donation to international NGOs taking care of the issue, i.e., through collection of coins in Airports) may be very limited. For a discussion of the general issue of heterogeneous valuations of global public goods, see Kaul et al. (2003).

  10. The case of foreigners who care for cultural and natural heritage sites in other countries is not at all uncommon. The same activity and financing from private sources of private and governmental institutions such as the World Monuments Fund described in footnote 3 confirm it. From a theoretical point of view, the situation envisaged here with free riding of the low-income country is clearly a case in which “the exploitation of the great” in the provision of international public goods holds (Boadway and Hayashi 1999).

  11. Tax deductions of this kind exist in several countries. For an overview of the tax policies from a macro and comparative perspective by country, number and nature of tax benefits, see for instance The Ernst and Young international survey 2009, available at http://www.forum-avignon.org.

  12. It is important to remark that the two solutions have quite different characteristics. In the first case, private donations are enhanced with tax advantages, separately decided in the two countries, and they increase disposable income for the consumption of the private good. In the second case, a global benevolent planner (an international authority) decides how much individuals in the two countries must donate for the global public good.

  13. What we assume in this section is not unjustified by empirical evidence. Many corporations engage actively in restoration of monuments and consider it as part of their marketing strategies. Their interest for arts and her safeguard should therefore be explained not only in terms of firms’ philanthropic attitudes but also in a traditional model of profit maximization. According to a recent survey in the year 2008(http://www.tafterjournal.it/2008/07/25/limpresa-incontra-arte-e-cultura) on 63 firms engaged and active in the arts and culture of the city of Montreal, most of them declared they had significant reputational gains from their support to the arts and culture sector. One of the most interesting examples from this point of view is that of companies, such as those working in the tourism industry, which can exploit complementarities between the private and the public good contribution sold in their (private/public good) bundle. An example is Expedia, Inc., the world’s leading online travel company which created the partnership of the World Heritage Alliance with the UNESCO World Heritage Centre. The World Heritage Alliance is currently involved in the protection of 20 World Heritage sites in seven countries including Mexico, Costa Rica, Belize, Jordan, Dominica, Ecuador, and the USA. Over the last four years, the Alliance has expanded to include 59 corporate members and partners, such as the Fairmont Hotels and Resorts and Mandarin Oriental, which contribute with grants, stimulate them on behalf of responsible tourists and promote environmental, cultural, and social responsibility, and support local community tourism initiatives at World Heritage sites. Another example of mutually beneficial partnership between private sector and cultural heritage preservation is the World Monuments Fund’s long-term project at Preah Khan, a temple in Cambodia, sponsored by the American Express Company (Starr 2013). The latter supported a risky project which has been paid off in the long run in term contributing to corporate philanthropic reputation. Other examples of profitable partnerships between culturally responsible companies and heritage protection may be found in Labadi and Long (2010) who refer to the cases of the French Bank Credit Agricole which invested 1.4 million Euros for the reopening and restauration of the historical rooms of the Cheateau of the Fontaneibleau and the group Vinci which invested 12 millions for the restauration of the rooms of mirrors at the Cheateau of Versailles in France. Corporate cultural responsibility may as well take other forms: IBM created virtual sites devoted to the UNESCO heritage site, while, more traditionally, several tour operators, such as EF Tours and JET Tours, promote responsible tourism, asking their clients to donate for the conservation of the visited heritage site (http://business.un.org/en/entities/36).

  14. More details on this result are available upon request.

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  1. Economics Department, University of Rome “Tor Vergata”, Via Columbia 2, 00133, Rome, Italy

    Leonardo Becchetti, Nazaria Solferino & M. Elisabetta Tessitore

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  1. Leonardo Becchetti
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  2. Nazaria Solferino
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  3. M. Elisabetta Tessitore
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Correspondence to Leonardo Becchetti.

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Becchetti, L., Solferino, N. & Tessitore, M.E. How to safeguard world heritage sites? A theoretical model of “cultural responsibility”. Int Rev Econ 62, 223–248 (2015). https://doi.org/10.1007/s12232-015-0237-9

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