Application of Cost-Benefit Analysis to Evaluate the Efficiency of Cultural Heritage Preservation Projects in Historic Towns of Russia

Abstract—

The article is dedicated to the problems of justifying public investment in projects aimed at Russian cultural heritage preservation. The case study considered in the article is the project “Preservation and Development of Small Historic Towns and Settlements” (Project). The preparation of this Project involved evaluation of its economic net present value. The results of the evaluation were used to justify the feasibility of public funding of the Project. Performing an economic cost-benefit analysis required conducting surveys of different target groups of potential users of the Project’s results regarding their willingness to pay for the proposed improvements. The surveys were conducted using contingent valuation methods in two historic towns: Rostov and Chistopol. The article discusses the methodological aspects of evaluating the efficiency of public investment in Russia and other countries and presents the results of the conducted surveys and the performed calculations of the Project efficiency indicators. The calculations show that the Project is justified at the federal level from the society’s perspective, as it has a positive economic net present value and an economic internal rate of return that exceeds the social discount rate.

This is a preview of subscription content, access via your institution.

Notes

  1. 1.

    Methodology of Evaluating the Effectiveness of the Use of Federal Budget Funds for Capital Investment, approved by Order no. 58 of the Ministry of Economic Development of the Russian Federation of 24 February 2009. http://economy.gov.ru/minec/activity/sections/fep/prikaz58.

  2. 2.

    Methodological Recommendations no. VK 477 for Evaluating the Efficiency of Investment Projects, approved by the Ministry of Economy of the Russian Federation, the Ministry of Finance of the Russian Federation, the State Committee of the Russian Federation for Construction, Housing, and Municipal Economy on June 21, 1999. Moscow: Ekonomika, 2000.

  3. 3.

    Methodological Recommendations no. VK 477 for Evaluating the Efficiency of Investment Projects, approved by the Ministry of Economy of the Russian Federation, the Ministry of Finance of the Russian Federation, the State Committee of the Russian Federation for Construction, Housing, and Municipal Economy on June 21, 1999. Moscow: Ekonomika, 2000.

  4. 4.

    If the WTP is estimated as the average or median value obtained using the contingent valuation method.

REFERENCES

  1. 1

    Mel’nikov, R.M., Otsenka effektivnosti obshchestvenno znachimykh investitsionnykh proektov metodom analiza izderzhek i vygod: Uchebnoe posobie (Assessment of the Efficiency of Socially Significant Investment Projects Using the Cost-Benefit Analysis: Manual), Moscow: Prospekt, 2016.

  2. 2

    Boardman, A., Greeberg, D.H., Vining, A.R., and Weimer, D.L., Cost-Benefit Analysis: Concepts and Practice, Cambridge: Cambridge Univ. Press, 2018, 5th ed.

    Google Scholar 

  3. 3

    Glaeser, E.L. and Redlick, C., Social Capital and Urban Growth: NBER Working Paper No. 14 374, Cambridge, MA: Natl. Bureau Econ. Res., 2008.

  4. 4

    Hansen, T., The willingness-to-pay for the Royal Theater in Copenhagen as a public good, J. Cult. Econ., 1997, vol. 21, pp. 1–28.

    Article  Google Scholar 

  5. 5

    Investment Project Financing Economic Analysis Guidance Note, Washington, DC: World Bank, 2013.

  6. 6

    Last, A.K., The Monetary Value of Cultural Goods: A Contingent Valuation Study of the Municipal Supply of Cultural Goods in Lüneburg, Germany, Working Paper Series in Economics no. 63, Lüneburg: Leuphana Unive. of Lüneburg, 2007.

  7. 7

    Valuing Cultural Heritage: Applying Environmental Valuation Techniques to Historic Buildings, Monuments and Artifacts, Navrud, S. and Ready, R.C., Eds., Cheltenham: Edward Elgar, 2002.

    Google Scholar 

  8. 8

    Pagiola, S., Economic Analysis of Investments in Cultural Heritage: Insights from Environmental Economics, Washington, DC: World Bank, 2016.

    Google Scholar 

  9. 9

    The Economics of Uniqueness: Investing in Historic City Cores and Cultural Heritage Assets for Sustainable Development, Licciardi, G. and Amirtahmasebi, R., Eds., Washington, DC: World Bank, 2012.

    Google Scholar 

  10. 10

    Throsby, D., Determining the value of cultural goods: How much (or how little) does contingent valuation tell us? J. Cult. Econ., 2003, vol. 27, no. 3, pp. 275–285.

    Article  Google Scholar 

  11. 11

    Throsby, C.D. and Withers, G.A., Measuring the Demand for the Arts as a Public Good: Theory and Empirical Results, North Ryde, NSW: Macquarie Univ., 1982.

    Google Scholar 

Download references

Author information

Affiliations

Authors

Corresponding authors

Correspondence to L. E. Limonov or M. V. Nesena or A. A. Semenov.

Ethics declarations

The authors declare that there is no conflict of interest.

Additional information

Translated by A. Ovchinnikova

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Limonov, L.E., Nesena, M.V. & Semenov, A.A. Application of Cost-Benefit Analysis to Evaluate the Efficiency of Cultural Heritage Preservation Projects in Historic Towns of Russia. Reg. Res. Russ. 10, 530–537 (2020). https://doi.org/10.1134/S2079970520040164

Download citation

Keywords:

  • cultural heritage preservation investment projects
  • financial analysis
  • economic analysis
  • willingness-to-pay estimation
  • contingent valuation method