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AN EXAMINATION OF MEASUREMENT METHODS FOR VALUING
HERITAGE ASSETS USING A TOURISM PERSPECTIVE
Stacy Porter*
Abstract
Thisstudyexaminesthevaluationmethodsforpubliclyand
privatelymanaged heritageassetsinAustralia.Acriticalexaminationof
methodsexposesthe weaknessoftraditionalmeasurementmethodsfor
valuingheritageassets.A majorproblemisthattraditionalmethodsrely
onanidentifiablecostoran activemarketastheirbasis,factorsgenerally
absentwhenvaluingheritage assets.Inaddition,traditionalmethodsdo
notcapturetheintrinsicvalueof heritageassets.
Thisstudyappliesthemoreinnovativenon-traditionalmeasurement
methodsof TravelCostsandContingentValuation.Theresultssuggest
thatthesemethods canbemoreusefullyappliedtovalueheritageassets.
Theyarenotconstrained bytherequirementsofanidentifiablecostor
activemarketandtheContingent Valuationmethodiscapableof
capturingtotalvalues.Theimplicationsof incorporatingmorethana
narrow,purelyeconomicvaluecanbeappliedto policymakersand
managementdecisionsintermsofmaintenanceand preservationofthese
heritageassets.Theapplicationcanalsoextendcurrent reportingof
heritageassetvaluestoincludesocialandenvironmentalaspectsin line
withthegrowingmovementtowardstriplebottomlinereportingand
sustainability.
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*Stacy Porter is at Curtin University of Technology, Western Australia.
Acknowledgements:
The author would like to thank Kathy Gibson, David Holloway, Diane
Lee, Karen Van Peursem and participants of the poster presentation at the
2002 AAANZ conference for their comments on an earlier version of this
paper. Special thanks to Greg Tower for his encouragement and advice. The
ideas expressed and any mistakes are solely the responsibility of the author.
INTRODUCTION
Publicdemandforgreateraccountabilityofanorganisation's
environmentalactivitieshaveinfluencedprivateandpublicsector
entitiesto extendtheirreportingtoincorporatequalitativeinformation
onsocialand environmentalactivities(Williams1997;Frost1998a).This
expandedreporting doesnotextendtoquantifyingthevalueof
environmentalassets,particularlyin theprivatesector,astheseassets
areconsideredtobeexternaltotheentities' operations.
Someauthorsarguethatenvironmentalassetscannotorshouldnotbe valuedparticularlyforfinancialreportingpurposesandthatany
quantification willonlyproducefictionalvalues(Hines,1991;Carnegie
andWolnizer,1997). Otherssupporttheconceptoftheneedtoidentify
theenvironmentwithinan accountingframework(Gray1992;
Rubenstein1992;Keene1998),eitherin termsofanon-monetaryvalue
(Boyce2000)orinmonetaryvalues(Frostand Wilmshurst1996;Gibson
1996).Grey(1996:12)states,"...ifthingsaren't measured,thenthey
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don'texist....gounnoticed..."andthisistheposition adoptedinthis
paper.
Environmentalassetshavebeenencompassedinthisstudyunder
theterm heritageassetsasthislattertermisonealreadyusedinthe
publicsectorand incorporatescommunityassets.Threecategoriesof
heritageassets,natural, culturalandhistoricalhavebeenidentified,
emphasizingthedifferentaspects includedinthisresearch.
Thelackofanactivemarket,theextensivelivesofheritageassets,
and thedefinitionandrecognitioncriteriaforassetsunderAustralian
accounting regulationsaremajordrawbackstofindingasuitable
methodofmeasurement forquantifyingheritageassets.Inexamining
theseconcerns,thekeyresearch issuethispaperaddressesfocuseson
evaluatingtraditionalandnon-traditional methodsofmeasurementfor
determiningamonetaryvalueforheritageassets.
MEETING THE DEFINITION CRITERIA OF ASSETS
Thefirststepinvaluingheritageassetsinanaccountingcontextis
to determinewhethertheymeetthedefinitionandmeasurementcriteria
ofanasset asdefinedbygenerallyacceptedaccountingprinciples.Thus
adefinitionof assetswidelyacceptedinAustraliainboththepublicand
privatesectorsas evidencedbyitsadoptioninaccountingstandards
preparedforbothsectorscan befoundinStatementofAccounting
Concept(SAC)4whichdefinesassetsas:
"...futureeconomicbenefitscontrolledbytheentityasaresultof past
transactionsorotherpastevents"(PSASBandAASB
1995.para.Ia)'.
AustraliahascommittedtoadoptInternationalFinancialReporting
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Standards(IFRS)bytheyear2005(aswillforexampleNewZealand).
However,thedefinitionandrecognitioncriteriaaresimilarwiththe
InternationalAccountingStandardsBoard(IASB)frameworkusingthe
term 'resource'controlledbytheentity"fromwhichfutureeconomic
benefitsare expectedtoflowtotheentity"(Bazley,Hancock,Berryand
Jarvis,2001).
Whilstthereareslightvariationsinthewordingthemeaning
remainsthe same,withthemajorcomponentsofeitherdefinitionbeing
futureeconomic benefits,control,andpasttransactions.TheAustralian
conceptualframeworkin SAC4expandsonthesecharacteristics.
SAC4clearlyindicatesthatthebenefitsarenotattachedtothe
objector rightitself,andthatbenefitsaccruefromtheuseoftheobject
insatisfying "humanwantsandneeds"(para.18).Thiscanbeclarified
whenlookingat futureeconomicbenefits(orservicepotential)innot-for-
profitentitieswhere goodsandservicesmaybeprovidedatlittleorno
charge.SAC4arguesthat thisdoesnotdeprivethoseoutputsofutility
orvalue,andthebenefitsmaybe foundinenablingtheentitytomeetits
objectives(para.21).
TheWesternAustraliansitesincorporatedintothisstudyare
designated andadvertisedtouristsites(Moon1997;DerbyTourist
Bureau1998). Therefore,evenintheabsenceofdirectorpositivecash
inflows,theywillmeet thefirstelementinthedefinitionofanassetas
eachsitecontributestothe objectivesoftheentitythatownsormanages
them.Thatis,eachsitegenerates futureeconomicbenefitsintheform
oftouristnumbersandsubsequenttourist dollars,eventhoughthe
inflowmaynotbedirectlyassociatedwithindividualsites.
Thesecondcomponentofthedefinitionofanassetisthatofcontrol.
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For assetsgenerally,andheritageassetsinparticular,eachcasewill
needtobe assessedindividuallyintermsofcontrol.Possessionandlegal
ownershipwill generallyconstitutecontrol.However,thesearenot
consideredessential characteristics(PSASBandAASB,1995:para.25-
26),andcontrolmaybe inferredbymoralorequitablemeans(Burritt
andGibson,1993).The accountingstandardonleases(AASB1998)isa
goodillustrationofcontrol withoutlegalownership.
Fortheheritagesitesunderconsiderationinthisstudy,thoseunder
private managementarecontrolledasaresultofdesignatedpastoral
leaseswitha 'diversification'permitfortourism.Thepubliclymanaged
sitesexaminedinthisstudyarecontrolledasaresultoflegislation.This
confirmsthatthereis undisputedcontrolofthesitesincludedinthis
research.
Thefinalrequirementtomeetthedefinitionofanassetiswhere"the
transactionorothereventgivingrisetotheentity'scontroloverthefuture economicbenefitsmusthaveoccurred"(PSASBandAASB1995
.para.lS)"For theassetsinthisstudy,thegrantingofthelease(forthe
privateowner)andthe passingoflegislation(forthepublicowner)is
evidenceofapasttransaction. Therefore,asfutureeconomicbenefits
andcontrolhavealreadybeenestablished forthesitesincorporatedin
thisstudy,allsitesmeetthedefinitionofanasset underSAC4.
MEETING THE RECOGNITION CRITERIA OF ASSETS
ThesecondstepinvaluingassetsasoutlinedbySAC4is
determiningthat futureeconomicbenefitsareprobableandthatthe
assetpossessesacostor valuethatcanbereliablymeasured.Probable
isnotexpresslydefinedinSAC4, howeveritisidentifiedasmeaning
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"morelikelyratherthanlesslikely"andis basedon"availableevidence
orlogic"(PSASBandAASB1995:para.40).
Theassetsidentifiedinthisstudyaredesignatedtouristsites.There
is evidencethatvisitornumbersareincreasingeachyear,with
commitmentsfrom therespectiveownersthatadditionalfundingwillbe
investedforlong-term growth",Consequently,theestablishedand
ongoinguseastouristsiteswould besufficienttosatisfytheprobability
criteriathatthebenefitsareenablingthe entitytomeetitsobjectives
andwillcontinuetodosointheabsenceof evidencetothecontrary
(Gibson,1996).
Thesecondandmostdifficultaspectofvaluinganassetin
accordance withSAC4iswhethertheassetpossessesacostorother
valuethatcanbe measuredreliably(para.39).Theabsenceofany
purchasepriceinmany instances,andthelackofareadymarketfor
heritageassetspresentmajor difficultiesindeterminingacostorvalueandamethodtoreliablymeasurethat valueforthesetypesofassets.
Traditionally,accountantsaremorecomfortablewithcostmeasures
howeverthereissomemovementtowardsvaluemeasures4.Although
commonlyusedterms,costorvaluearenotdefinedinSAC4.Costmay
be interpretedasthe'pricepaid',andisconsideredthevalueatthatpointintime (AustralianNationalAuditOffice1996).Pallot(1997)
discussescostandvalue intermsofdifferentmeasurementbasessuch
ashistoricalcost,currentcost(for example,replacementcost),or
currentmarketvalue.Itwouldappearthat'cost' representstheinitial
pricepaid.Valueisnotsoeasilydefinedwiththeliterature
acknowledgingthatitisa"controversialconcept"(Peace,1997:2).For
example,CarnegieandWolnizer(1997)criticizeHone(1997)fornot
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defining 'value'andforconfusingthetermbycombiningfinancial,social
andothervalues in the same context. However, others argue that these
should be included to represent a total value (Bennett 1996; Geno 1996),
whilst Milne (1991 :87) discusses the changing aspects of cost-benefit
analysis (CBA), which has progressed to incorporate social, ecological and
intrinsic values.
Whilst the lack of consensus on a definition of 'value' appears to be
dependent on one's perspective and 'what' is being valued, it is apparent
that 'value' is a more comprehensive term than 'cost' and will represent
more than the price paid. This is an important distinction as many heritage
assets do not have a cost attached and there is no ready market for these
assets.Itis argued that the heritage assets in this study do have a value
and therefore meet the recognition criteria. However, there is the need to
evaluate different measurement methods in order to establish a value and
that this will go beyond market prices to incorporate other values includingsocial and ecological benefits in order to represent their total value (Peace,
1997).
EVALUATING TRADITIONAL METHODS OF MEASUREMENT
In surveying alternative methods for valuing heritage assets Gibson
(1996) concludes that these range from total exclusion; token or nominal
valuations; to real estate values. This supports the view that there is no one
method of valuation that has universal acceptance (Rubenstein, 1992:504;
see also: PSACOE, 1996; Financial and Corporate Management Committee,
1994).
There is little in the accounting literature on evaluating methods for
valuing heritage assets (see Gibson 1996) and no evidence of valuing
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privately managed heritage assets although there has been some attempt to
value publicly owned heritage assets (see for example Gibson 1996; Hone
1997). There is also some guidance in valuing publicly owned heritage
assets in the form of AAS 29 which permits various methods of measuring
heritage assets including historical cost and fair value, or where the fair
value cannot be assessed, then the lower of replacement cost or
reproduction cost (PSASB 1998). AAS 29 does acknowledge the difficulty
associated with traditional accounting methods for measuring heritage
assets concluding that practical difficulties in identifying and measuring
these assets may need to be overcome (para.7.4). There is no guidance
offered within the Standard on how to overcome these difficulties.
An absence of literature in evaluating suitable measurement methods
for valuing heritage assets gives little guidance on how valuation can be
achieved. Therefore, this study is similar to that of Gibson (1996) with the
remainder of this section evaluating the exchange-based methods of historiccost and the market based measures of recoverable amount; net realisable
value; net present value; and deprival value (with replacement cost
examined under deprivalvalue).Section5thenexaminesthenon-
traditionalmethodsofTravelCostand ContingentValuation.
Historical Cost
Theadvantagesanddisadvantagesofhistoricalcostarewell
documented (seeforexample:Houghton,1996;Hope,1999;Australian
NationalAudit Office,1996).Inresponsetodissatisfactionwiththe
historicalcostmethod,the AASB,thePSASBandtheAARFintendedto
addressthemeasurementissueas partoftheConceptualFramework.
Fromtheoutset,theproposedStatementof AccountingConcept(SAC5)
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wasacontroversialanddifficultproject,andno measurementStatement
hasasyetbeenissuedsincethereleaseofthefirst proposalin1994.In
viewofthefactthatAustraliaislikelytoadopt InternationalFinancial
ReportingStandardsinthenearfuture,itisunlikelythat thepreviously
proposedStatementonMeasurementwillproceed.However, recent
Australianaccountingstandardsfocusontheuseofmarketvalues,an
indicationthatthereisamovebythestandardsetterstowardagreater
fair marketvalueorientations.
Intermsofvaluingheritageassetstherearetwomajorconcernsin
using historicalcost.Thefirstisthattheremaynothavebeenacost
associatedwith the'purchase'orthatthereisnorecordofthecost.This
isparticularlyrelevant topublicsectorentities,whichuntilrecentyears
usedacashbasisofaccounting anddidnotrecorddonatedassets,or
thoseacquiredfornocost(Pallot,1997). Thisisthecaseforthepublicly
managedassetsinthisstudy,whichareunder designatedNationalParksandwereacquiredfornocost.
Thesecondconcernisthatmostheritageassetsarelong-livedwith
some havingindefinitelivesandthebenefitstobeaccruedarenot
adequately reflectedinthecostoftheasset.Althoughaproblem
encounteredwithalllong-livedassets,thisisparticularlyrelevantto
heritageassetswherehistoricalcostis notrepresentativeofthetotal
value.Anexamplewouldbetherequirementof AASB1037tousenet
marketvaluewheretheassetoritsproduceisforsale. Thebasisofthe
requirementisthattheuseofhistoricalcostdoesnotreflectthe
biologicalchanges(forexamplethegrowthoftrees)withthehistorical
cost figureseentobelessrelevantinreflectingpricechangesforsuch
longlived assets(Keys1998;Hope1999).
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Asnocostcanbeestablishedforthepubliclymanagedassetsin
this study,thesecondconcernisparticularlyappropriatetothe
privatelymanaged assetsbeingconsidered.Dependingonthetypeof
leasedesignation,the 'purchaseprice'isgenerallytheunimprovedland
value(basedonthemarket valueofstockcarryingcapacity)plusa
percentageincreasebytherelevant taxingauthority(20%inthecaseof
thePastoralLandsBoardofWestern Australia)(ValuerGeneral'sOffice
2002a).Althoughtheleaseisbasedona 'marketvalue'ofstock,it
becomesthehistoricalcostatthetimetheleaseis renewed.Thereare
severalproblemswiththismeasurement.Firstly,the informationon
stocknumberscomesfromthepastoralist.IntheKimberley regionof
WesternAustralia(thestudysite),thepastoralistdoesnotalways know
howmanycattlehe/shemayhaveatanygivenpointintime.Insufficient
timeandrecordkeepingabilitiesofpastoralistscanresultinlowquality
or possiblyinaccurateinformationbeingsubmitted(ValuerGenerals
Office, 2002b).Secondly,thedesignateduseoftheprivatelymanaged
sitesinthis studyhassubstantiallychangedfrompastoralisttothatofa
privatelymanaged wildernessparkfortourists.Therefore,notonly
wouldtheinitialcostnot reflectthevaluetoday,butalsoitwouldnot
reflectanyvaluefortheheritage assetsasthesewerenotseparately
identifiedandrecognizedatthetimeof purchase(orleaserenewal).
Inlightoftheprecedinganalysis,thelackofanidentifiableor
relevant costindicatesthathistoricalcostisnotausefulmethodfor
measuringheritage assets.Inaddition,giventhe'cost'isbasedon
(arguably)outdatedandpossibly incorrectinformation,thereissome
reasontoquestionthereliabilityofthecost determined.
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Recoverable Amount
Onemarket-basedmethodofvaluationisthatofrecoverable
amount. Thisamountisexpectedtobe"...recoveredthroughthecash
inflowsand outflowsarisingfrom...continueduseandsubsequent
disposal"oftheasset (AASB1996).Wheretheassetistobedisposedof,
thevalueistermednet market(ornetrealisable)value,whichrefersto
the"estimatedproceedsof sale...less...costs"(AASB1998:para.13).
Wheretheassetistocontinueinuse, itistermednetpresentvalue(AS
CPAandICAA,1989).
Althoughitcanbearguedthatnetmarketvalueincorporates
biological values(Keys,1997),intheabsenceofamarketthisvalue
cannotbeclearly establishedwithanyreasonabledegreeofreliability.In
addition,thereisthe argumentthatneithermethodadequatelyreflects
theintrinsicorsocialvalues associatedwithheritageassets(Geno,
1996).Thelackofidentifiablecashflows andtheabsenceofsalesforthe
assets,eliminatesrecoverableamountasa suitablemethodtovalue
heritageassetsinthisstudy.
Net Realisable Value
Problemsassociatedwithnetrealisablevalueincludethefactthat
thereis rarelyamarketforheritageassetswithanticipatedproceedsof
saleextremely difficulttodetermine.AASB1037addressestheissueof
theabsenceofan activemarketanddeemsthatthevaluewouldthenbe
determinedbythebestindicator of a market price (Keys, 1998). One of the
indicators to use in the absence of an active market is the value of a like
asset. However, heritage assets are generally unique and rarely have like
assets to compare with. Therefore, in line with Gibson's (1996) conclusion,
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this method for calculating recoverable amount is not deemed appropriate
for valuing the heritage assets of this study.
Net Present Value
Net present value relies on the earning potential of the asset, with the
future ongoing cash flows discounted back to a present value (Houghton,
1996; PSACOE, 1996).Itshould be noted that the use of net present value
is not advocated in all cases where recoverable amount is calculated. For
example, AASB 1010 does not require cash flows to be discounted when
establishing the recoverable amount for assets in use.
In light of the fact that only a single discount rate is chosen, the
selection of the most appropriate discount rate for discounting future cash
flows (if any) to the present period is somewhat arbitrary and uncertain
(Knetsch 1993; Houghton 1996).
The requirement for cash inflows poses a measurement problem for
many heritage assets, particularly those held by the public sector, where
cash flows may not be generated, the timing of cash flows may be uncertain,
or they cannot be isolated and allocated to the asset being valued. This is
the case for heritage assets considered in this study (private and public).
Whilst accommodation and entrance fees may be charged, this is done for
an area and not for individual assets, and as such, may not be
representative of the total value to be assigned. There is an additional
problem that most of the heritage assets considered cannot be isolated from
the land to which they are attached, therefore, while there may be a market
value for the land, this is unlikely to reflect the value of the asset on the
land. The issue of non-separatability may apply to more than just heritage
assets. AASB 1037 (1998:para.8c) addresses the issue, advising that "value
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should be allocated on a reasonable basis". However, the obvious difficulties
with this allocation are the lack of an historic cost to compare to a current
market value (where no market exists) and the separation of intrinsic and
social values to attribute to the heritage assets.
Gibson (1996) acknowledges that net present value may provide a base
for calculating an asset value. However, the subjective nature of choosing an
appropriate discount rate given the long lived nature of the heritage assets
in this study and the uncertainty of identifying cash flows to the assets
eliminates net present value as an appropriate method to value the heritage
assets in this study.
Deprival Value
Thedeprivalvalueapproachisalsodependentonmarketconditions.
Deprivalvalueisdefinedas"...thevaluetotheentityofthefuture
economic benefitsthattheentitywouldforgoifdeprivedoftheasset"
(PSACOE,
1996:13).
TheFinancialandCorporateManagementCommittee(1994:14)
states thatthebasisformeasuringdeprivalvalueis"thelowestof
currentreplacement costandrecoverableamountwiththemethodologydependentontheactionto betakeninregardtotheasset.Replacement
costisthecostofpurchasingor manufacturingtheasset(AASB,1998b)
withrecoverableamountbeingthe higherofnetrealisablevalue(asset
heldforsale)andnetpresentvalue(for continueduse).
Theinherentproblemsindeterminingareplacementcostforthe
heritage assetsbeingassessedareclear.Theprobabilityofpurchasingor
manufacturing alikeassetisminimal.Theassetscannotbeseparated
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fromthelandtheyare attachedtoandthefeaturesoftheseassetsare
predominantlynatural,historicor cultural,whichcannotbereplacedor
reproduced(Geno,1996).Deprivalvalue requirestheuseofthelower
amountofreplacementcostandrecoverable amount.However,if
replacementcostcannotbedetermined,thenthevaluewill hingeonthe
higherofnetrealisablevalueandnetpresentvalue.Intheabsence ofan
activemarket,orthepresenceofcashflows,thenthevalueattached
would bezero.AsGibson(1996)concludes,ifrecoverableamount(net
presentvalue ornetrealisablevalue)andreplacementcostcanbe
calculated,thendeprival valueispossible.However,itisunlikelythata
positivevaluecouldbe calculatedforbothmeasures,andasthelower
amountisused,thiswould generallyresultinazerovalue.Therefore,
deprivalvalueisnotconsideredan appropriatemeasureforvaluing
heritageassets.
Theprecedingreviewoftheuseoftraditionalmeasureshighlightsthe inadequacyofthesemethodsinvaluingheritageassets.Inaddition,
thereisthe triplebottomlineargumentthatmarketbasedvaluesare
notsuitableastheydo nottakeintoaccounttheintrinsicorsocial
valuesofheritageassetsandthata marketvaluecannotbeassigned
wherenomarketexists(Peace,1997;Belland Lehman,1999).Thisis
particularlyrelevantformanyheritageassetswhere therearenodirect
economicbenefits.However,evenintheabsenceofa market,asocial
andenvironmentalvaluecanbedeterminedinindirectways (Rowleset
al,1998:47).Thesenon-traditionalmeasurementmethodsare critiqued
inthefollowingpages.
EVALUATING NON-TRADITIONAL MEASUREMENT METHODS
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Travel Costs and Contingent Valuations are two methods of behavioural
linkage techniques (Wilks 1990; Milne 1991) which have been used to value
a diverse range of assets from conservation zones and botanical gardens, to
museum artifacts, oil spills and information from livestock sales (examples
include: Crase and Dollery, 1999; Gibson, 1996; Mitchell and Carson, 1990;
Johnson and Thomas, 1992; Resource Assessment Commission, 1991).
The Travel Cost method is a surrogate market approach based on
actual rather than hypothetical costs which act as a proxy for an entrance
(visitors) fee. Contingent Valuation is a simulated market approach
assessing the 'willingness to pay' (WTP) for benefits or the 'willingness to
accept' (WTA) compensation for a reduction in the benefit. Table 1 illustrates
the characteristics of the Travel Cost and Contingent Valuation
measurement methods which are expanded on in the next section.
TravelCost
ForTravelCoststheexpenditureincurredactsasasurrogateforthe
price paidtoacquiretheavailablebenefits,withwageratesactingasa
proxyforthe valueoftraveltime(CraseandDollery,1999).Themethod
isdesignedto capturethe'true'costofagoodwherethevalueofthe
benefitsconsumedare considerablyhigherthantheactualfeecharged
(Dixonetal.1988).Thusthe truecostofvisitingaparticularheritage
siteisnotonlytheentrancefee,but includesthecostsassociatedwith
travelandanestimatedcostoftravelingtime (basedonthetraveltimeof
participantsmultipliedbyaspecifiedwagerate).
Usingthisinformationademandcurvecanbedrawntoestimate
anentry feefordifferentzonesoftravelandthefeeincorporatedintoa
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netpresentvalue modeltoestimatethevalueofaheritagesite(Gibson,
1996).Theappealofthis methodisthatitisbasedonactualrather
thanhypotheticalbehaviour,with transactioncostsdirectlyrelatedto
accountingmeasurementmodels(Milne, 1991;ResourceAssessment
Commission,1991;Gibson,1996).
Theuseofwageratesforcalculatingthe'valueoftime'is
controversial. Argumentcentresonwhetheranaverage,fullorindividual
specificrateismore valid(Milne,1991:95)andwhetherworkand
leisuretimearesurrogatesforone another(Gibson,1996).Thisstudy
adoptsasimplifiedapproachignoringtime valueswhich,whilst
potentiallylessreliable,Milne(1991)arguesisstilluseful fordecision-
makingandmorecosteffective.
TheTravelCostmethodonlymeasuresactiveorpassiveusebenefits
and cannotincorporatenon-usebenefitssuchaspreservationoroption
values.This isconsideredadisadvantageasitlacksapplicationtothewidevarietyof heritageassetsthatmaybeconsideredforvaluation
(Milne,1991;Knetsch, 1993;Gibson,1996).However,theTravelCost
methodisconsideredtohave highmarketvalidity(Departmentof
EnvironmentSportandTerritories,1996). Travelcostscanprovidea
reasonablesurrogateformarketvaluefortheheritage assetsbeing
measured.Inaddition,itisausefulindicatortoassessthevalues
derivedfromthecontingentvaluationmethod.
Contingent Valuation
TheContingentValuationmethodelicitspeople'spreferencesfor
goods byfindingoutwhattheywouldbewillingtopayforaspecified
goodorchanges tothatgood.Thisprovidesamechanismforcapturing
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useandnon-use(or existence)valuesthatcanincorporatesocialand
environmentalbenefitswhich couldnototherwisebequantifiedindollar
terms(MitchellandCarson,1990). Forexamplethesocial'well-being'of
supportingacommunityprojectorthe preservationofacertainfauna
speciescanbequantifiedbyassessing respondents'willingnesstopay
forsuch'goods'.Thusthemainadvantagesofcontingent valuation is that
it can be employed in the absence of a market and allows the estimation of
use and non-use benefits, which provides an estimate of total values
(including preservation values not just financial values) not incorporated in
related market techniques such as the travel cost method (Wilks, 1990).
The procedures for implementing the CV method are as follows:
1.Define and describe the item to be valued;
2.Determine the payment vehicle (for example, taxation, travel cost, site
fee);
3.Elicit value with a series of questions on:
Willingness To Pay (WTP) for benefits; or
Willingness To Accept (WTA) compensation for a reduction in the benefits,
with regard to eliminating undue bias; and
4.Collect demographic details from the survey to help interpret results of
different opinions, preferences and attitudes (Wilks, 1990:12-13; Milne,
1991:99).
The first two procedures relate directly to the item being valued and are
situation specific. Information bias can arise where respondents are
provided with too little or misleading information about the item being
valued. Instrument bias relates to the payment vehicle and can result "in
different willingness-to-pay responses" where the respondent is unreceptive
to the method of payment suggested (Dixon et al. 1988). Therefore the main
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criteria for the first two procedures are that respondents are familiar with
the item being valued and that the payment vehicle be realistic and neutral
(Milne, 1991 :97).
There are several techniques that can be used for the third procedure,
that of eliciting a value of willingness to pay (WTP) or willingness to accept
(WTA{ A major concern centres on question phrasing and problem definition
to reduce under or overstatements of values which may arise because of
strategic bias or unfamiliarity of the asset being valued (Milne 1991; Gibson
1996). Strategic bias is where respondents overstate or understate their
willingness to pay in an attempt to deliberately influence the provision of a
good or reduce the amount they believe they will have to pay.Itis argued
that bias is difficult to confirm and measure, particularly as comparable
market prices do not exist for the items being valued, and even surveys on
market priced goods do not escape research/respondent bias (Mitchell and
Carson, 1990:125; Milne, 1991:98). Careful construction of any survey canreduce this bias and whilst a concern it is not sufficient in itself to
invalidate the use of CV techniques (Mitchell and Carson, 1990; Carson et
al., 1997; Peace, 1997).
The response rate of the survey was far above normal social science
parameters thus non-response bias was not considered a problem for this
study.Anchoringbiaswasovercomewiththeinclusionofopen-ended
questionsthus eliminatingastatedreferencepointforWTP.
AnotherissuewiththeCVmethodisthechoiceofusingeither
WillingnesstoPay(WTP)orWillingnesstoAccept(WTA).Theliterature
acknowledgesthathighervalueswillbeattachedtoWTA,eventhough
economictheorywoulddictatethatthevaluesshouldnotdiffergreatly
(Mitchell andCarson,1990;Knetsch,1993).Afterconductingand
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reviewingnumerous studiesonthedifferencesyieldedbythetwo
measuresKnetsch(1993:7) confirmsthatpeoplevaluelossesmore
highlythangainsandconcludesthat whilstincomeconstraintsand
designflawsmaybecontributoryfactors,the majordifference"appears,
contrarytotraditionalviews,tosimplybeacommon characteristicof
people'spreferences".Basedontheseconclusions,Knetsch suggests
thatWTAshouldbeusedformeasuringcompensation(losses)whilst
WTPshouldbeusedforimprovementsorgainsinordertominimizeany
under oroverestimationoflossesandgains.Thisisthepositiontaken
inthisstudy, whereWTPisusedtoelicitvaluesforvisitingthesiteand
forpayingtorestore ormaintainthesites.WTAisusedforeliciting
valuesfordiminished experienceonvisitingthesitesduetodegradation.
Inthiswayitisbelievedthat WTPwillberepresentativeofamarket
value,whilstWTAwillbe representativeofadeprivalvalue.
Thefourthprocedureofcollectingdemographicdetailshasrelevanceto theprecedingdiscussiononWTPandWTAresponses.
Demographic informationsuchasincome,ageandoccupationcanbe
predictorsof respondentsWTPandenhancethereliabilityandvalidityof
thedata(Mitchell andCarson,1990).
Insummary,theevaluationoftraditionalandnon-traditional
measurementmethodshasillustratedthatthemarketbasedmeasures
of historicalcost,recoverableamountanddeprivalvaluearenot
appropriate methodsforvaluingtheheritageassetsinthisstudy.The
analysisalsoreveals thatthenon-marketsocialmeasuresoftravelcost
andcontingentvaluationare moreappropriatethantraditionalfinancial
basedmethods.TravelCostsarea surrogatemarketbasedmethodthat
canrepresentaneconomicvalue. ContingentValuationisasimulated
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marketmethod,whichcanincorporate economic,socialand
environmentalvalues.
METHODOLOGY
Theheritageassetschosenforvaluationweresixprivatelyoperated
sites andfourpubliclyoperatedsites,representingthreeseparate
geographical locationsinthesurroundsoftheGibbRiverRoadinthefar
north-westof WesternAustralia'.AstheTravelCostandContingent
ValuationMethodboth requiretheuseofasurveythismethodwas
adopted.Giventheremotenessofthe sites' location, it was considered that
a mail survey would capture larger numbers of respondents. Tn addition,
mail surveys reduce interviewer bias, which is particularly relevant to
eliciting responses for use in the contingent valuation method (Mitchell and
Carson, 1990; Milne, 1991).
Due to the seasonality of the sites selected (in the 'wet' season these
sites are often not accessible) three mail surveys (owners, tour operators
and tourists) were distributed in the peak tourist season of 1999. An initial
list of tour operators was obtained from several sources and a final list was
drawn up where operators were identified from more than one source. The
selection of Tourist Operators was based on a non-probability quota design
with 21 operators contacted resulting in 10 participating (47.6%), 10 not
responding (47.6%) and one declining (4.8%). Tourists were selected on a
random basis, as the questionnaire was distributed via tour operators and
tourist bureaus operating in the region and who were willing to participate
in the study. This distribution ensured that the selection was cross
sectional, covering self-drive tourists and those undertaking organized
tours. The content of the tourist surveys distributed to self drive tourists
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and those tourists traveling with a tour company were the same. In total
125 questionnaires were distributed to Tourists with 55 (40%) useable
responses received. Selected information requested from owners, operators
and tourists is illustrated in Table 2.
This includes general demographic details, identification of site
characteristics (cultural, natural and historical), financial information
relevant to the groups surveyed (site purchase costs, market values, travel
and tour costs) as well as willingness to pay and willingness to accept
questions in order to operationalise the Travel Cost and Contingent
Valuation Methods. The results obtained from this data are analysed in two
parts:
1.Discussion of the approach to measure heritage asset values
2.Other general findings.
Results - Heritage Asset Values
The results of valuing the 10 heritage sites can be illustrated with the
most popular (from tour company survey) and most preferred (from tourist
survey) sites from three geographical locations (refer Table 3). The privately
managed site of Emma Gorge on EI Questro Wilderness Station nestles
under the majestic Cockburn Ranges in the north eastern Kimberley region.
Luxury tented facilities provide easy access to a permanent droplet waterfall
among remnant sub-tropical vegetation. Windjana Gorge and Tunnel Creek
(Napier Range in the south eastern Kimberley) and Bell Gorge (King Leopold
Range in the south western Kimberley region) are all publicly owned sites
controlled by the Department of Conservation and Land Management
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(CALM). Windjana has camping facilities and the spectacular gorge walls
formed from a Devonian reef are renowned for obvious fossilized life forms.
As the name suggests, Tunnel Creek has a naturally formed tunnel through
the ancient limestone reef, and is steeped in history.Ithas no camping
facilities. Bell is one of the highest points in the Kimberley giving
spectacular views of a series of waterfalls and boab- lined creeks (Moon,
1997; Derby Tourist Bureau, 1998; Kimberley Specialists in Tourism, 1999).
Table 3 illustrates that survey respondents determined Emma Gorge to
be the most highly valued site for all methods. Contingent Valuations,
Tourist Costs and Tour Costs were obtained from the tourist surveys. The
Contingent Valuation of $2,400 per tourist is the mean result tourists were
willing to pay to revisit the site. Travel costs of $2,100 per tourist were
obtained from the touristsurveysbasedontheaveragecostpertourist
forselfdrive.Tourcostsof
$1,029.20pertouristwerederivedfromtheaveragelengthofatour(6.2
days) atanaveragecostofatourforthesamelengthoftime.Emma
Gorge($58.84 pertourist)isbasedonareturnoninvestment(market
sellingpricelesscostsof sale)estimatedfromtheinitialpurchasepriceplusimprovements,landvalues andprojectedincomestreams.
Similarly,BellGorge($141.44pertourist), WindjanaGorge($95.49per
tourist)andTunnelCreek($71.62pertourist)are basedonamarket
sellingpriceestimatedfromprojectedincomestreams.As thesethree
sitesarenationalparks,therewasnopurchasepriceavailable.
AstheTravelCostmethodisbasedonactualcostspaid,itis
expected thatEmmawouldbethemosthighlyvaluedsiteasitisthe
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mostexpensiveof thefourillustratedsitesintermsofaccommodation
costsandreceivesmore visitorsthananyothersite.Thesamereasoning
canbeappliedtothehigher valueassignedtoEmmafortheContingent
Valuationmethodasthedata revealedthattouristswillingnesstopay
wasbasedontheirtravelcostsplus somearbitrarypercentageincrease
assignedbytourists.
TheOwners'valuationhighlightsthatEmmaGorgehasamuch
greater investmentininfrastructurethanallothersitesandasit
receivesthehighest numbersofvisitors(resultinginhigherincome
streams)itisvalued substantiallyhigherthantheothersites.Whilst
owners'valuesmayreflectthe abilityofthemarkettopurchasethe
propertiesonwhichtheseassetsare situated,theyarenotreflectiveof
theintrinsicorextrinsicvaluesofthe individualheritagesites.This
negativelyimpactsontherelevanceofthese estimatesandreducesthe
reliabilityiftheintentionistoportraythetotalvalue (economic,socialandenvironmental)forindividualheritageassets.
Intheabsenceofatraditionalmarketvaluefortheseheritagesites,
the TravelCostvaluewouldclearlypresentmorerelevantinformation
thana nominalorzerovalue.TravelCostsarealsoabetterindicatorof
thevalue placedontheindividualheritageassets,andarenotnarrowly
limitedtopurely economicvaluationsforthelandonwhichtheyare
situated.Inaddition,asthis methodisasurrogatemarketmeasure,
basedonactualtransactioncosts,itmust alsobeconsideredtohave
somedegreeofreliability.
ThedifferenceinvaluebetweentheTravelCostandTourCost
calculationsisbasedonanadditionalcostoftravelingtotheregion
includedin theformeramount.Althoughalegitimatecostinvisitingthe
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heritageassetsites inthisstudy,otherheritageassetsmaynotinvolve
thisadditionalexpenses.Itis recommendedthatthesurveyinstrument
foranyfutureresearchinvolvingthe TravelCostmethodensurethatthe
disparityincostsfrommultiple departure/destinationpointsbe
recognized.
Consistentwithpastliterature,TravelCostvaluationsarelowerthan
thoseoftheContingentValuationmethod(Milne,1991).Aspresentedin
Table 3,thislattermethodishigherthanothermethodsandillustrates
thatContingent Valuesrepresentthevalueoverandabovetheactual
costsoftraveling(Johnson andThomas,1992).ContingentValuationis
asimulatedmarketmeasure, takingintoaccounttotalvalues
incorporatingeconomic,socialand environmentalvalues(Milne,1991;
DepartmentofEnvironmentSportand Territories,1996).Intermsof
representingatotal'heritage'assetvaluefor assessmentoflongterm
economicsustainability,thisvalueisconsideredthe mostrelevant.
SomewouldarguethatContingentValuesarelessreliablethan
Travel CostsorOwners'valuesastheCVmethodisnotmarket-based
datawith"no externalreferentvalueagainstwhichtoassess...
reliability..."(Milne, 1991:100).Forheritageassetsgenerallyand
particularlytheassetsinthisstudy, thereisnoestablishedmarket,
therefore,anymethodissubjecttoassumptions andestimations.
ReducedreliabilitydoesnotnegatetheusefulnessoftheCV methodas
SAC3acknowledgesthatatrade-offwilloftenexistbetween relevance
andreliability(PSASBandASRB1990:para:7).
Inconclusion,itisarguedthattheContingentValuationmethodis
the mostrelevantforcapturingtotalvalues,andasthetraditional
methodshave proventobeinadequatefortheassetsinthisstudyitis
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alsoarguedthatitis morereliablethanthetraditionalmethods.
Results - General Findings
Indeterminingtheabovevaluesfortheheritageassets,anumberof
relationshipsandfactorsweretakenintoaccount.Theseincludedthe
typeof tourist,themode(type)oftouristtransport,thetypeof
restrictionsonaccessto thesites,andthetypeofheritageasset.
Analysisrevealedthat85.2%ofrespondentsareinthecategoryofa
'generaltourist'andthattherewasanalmostequaldistributionofmode
of travel(selfdrive50.9%andtourcompany49.1%).Itwasdetermined
that occupationandresidencewerefoundtobethemostsignificant
factorsin valuingheritageassetsatthe.05level(pvaluesof.019and.
026respectively). Thisresultsuggeststhattheheritageassetsinthis
studyattractmoretourists fromcertainoccupationsandplaceof
residencewhichisconsistentwiththe findingthatthemostfrequent
touristisaretiree(33.3%)fromNSW(32.1%).
Touristresponsesindicatedthatsignsofdegradationnegatively
impacted onthevaluetheyplacedonheritageassets.Themajorthemes
ofdegradation were:litter,wasteandgraffiti(49%);and,bush
destructionfromburn-offs, traffic,firewoodcollectionanduncontrolledcampfires(19%).Thiswas supportedbycommentsthattouristsvalued
mosthighlythosesitesthatretained naturalwildernessandlowtourist
impacts(39%).
Theresultsindicatethatparticularassetcharacteristicsappearto
influence visitors'preferences.Thefourmostfrequented(byOperator)
andpreferred(by Tourists)siteswereBellGorge,WindjanaGorge,Emma
GorgeandTunnel Creek.Thecharacteristicsofthesesiteswere
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designatedasnaturalforEmmaGorgeandBell,withWindjanaGorge
andTunnelCreekexhibitingallthreecharacteristicsofnatural,
historicalandcultural. Theinclusionof'historical'atWindjanaGorge
andTunnelCreekdifferentiatesitfromothersites'designated
'natural/cultural'characteristics.Itwouldappearthat'cultural'wasthe
least significantfactorininfluencingtouristpreferencesofpreferred
sites.
Therearemanyfactorssuchasowners'accessrestrictions,
distance, costs,timeorinfrastructureimpediments(roadconditions)
thatmayaccountfor thedifferenceintouristpreferencesandnumbers
fordifferentclassificationsof heritageassets.Owners'restrictionsdonot
applytothefourmostpreferred sitesandcostisobviouslynotafactor
indeterminingtouristnumbers,asEmma ismoreexpensive.Time,
distanceandinfrastructureimpedimentsseemto negativelyaffectthe
rankingofBellGorge,howeverthesefactorsdonot explainthelowertouristpreferencesforothermoreeasilyaccessiblesitesonEI Questro.
Thereareanumberofpossibleexplanationsforthisbuttheevidence
indicatesthatthedistinguishingfeatureoftheselesspreferredand
frequented sitesistheheritageclassificationof'natural/cultural',with
'natural'(Emmaand Bell)and natural/historical/cultural'(Windjana
andTunnel)sitesofmore interesttotouristso.
Insummary,certainrestrictionsonaccessappeartoaffecttourist
numbers butdonotappeartoaffecttouristpreferences.Therestrictions
ofdistanceand infrastructure(roadconditions)'addedvalue'totourists'
experiencesinthis study,implyingthatmanagementshouldnotremovethelatterrestriction(little canbedoneaboutdistance)throughmajor
roadupgrades.Heritage classificationsdonotappeartoaffecttourist
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numbersbutmayaffecttourist preferenceswith'cultural'appearingto
betheleastsignificant.
IMPLICATIONS
Itisarguedthatlongtermeconomicsustainabilityisdependenton
long- termenvironmentalsustainability(PSACOE,1995).Inotherwords,
the depletionordestructionofanon-renewableresourcemayachieve
short-term gainsbutwillnegativelyimpactonlong-termsurvival.Thisis
particularly relevanttothetouristindustrythatincreasinglyis
becomingmoredependenton asustainedenvironment.Implicitinthis
argumentisthatheritageassetsshould bevaluedandthatvalueshould
berepresentativeoftheassetinordertobetter assesscurrentand
futureuses.Forfinancialreportingthisclearlyindicatesthat asuitable
value(orrangeofvalues)forheritageassetsshouldbeincludedto
enableuserstoappreciatefullythelong-termviabilityofanentity
controlling theseassets.Formanagementandpolicydecisions,
valuationusingTravelCost andContingentValuationcanprovidea
morecompleteassessmentof alternativeprojectsevaluatinglong-term
econormcandenvironmental sustainabilityforheritageassetusage.
ThesealternativemeasurementmethodsofTravelCostsand
Contingent Valuationcanprovidebothrelevantandreliableinformation
thatwillraisethe profileofthevalueofheritageassetsandenablethese
valuestobeincorporated infinancialreports.Suggestionsfor
integratinganeconomic,socialand environmentalvalueforfinancial
reportingwouldbetolookatmulti-column formatsoralternatively
multi-pageformats.Theimplicationsofreportingmore thanonevalue
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couldassistinthedeliveryofusefulinformationtousersof financial
reports.Iftheintentionistoassessanentities'longtermeconomic
sustainabilityandmeasuretheiraccountabilityofsustainingheritage
assets,then theinclusionofmorecomprehensivevaluationsarefar
moreusefulthana narroweconomicvaluethatmeasuresshortterm
gainsonly.
Futureresearchcoulddeterminehowthesevaluescouldbe
operationalisedintofinancialreporting.Onesuggestionwouldbeto
recognise Owners'valuesonthefaceoftheBalanceSheetwithTravel
Costsand ContingentValuesdisclosedasnotestotheaccounts.
Conversely,Travel Costs11couldberecognisedonthefaceofthe
BalanceSheetwithseparate disclosureofContingentValuesinthenotes
accompanyingtheseassetvalues. Asasurrogatemarketmeasure,users
canevaluatetheeconomicvaluethatthe TravelCostmethodproduces,
assessingtheeconomicviabilityoftheentity controllingtheseassets.Alternatively,bothvaluescouldberecognizedand incorporatedina
'triplebottom'lineformatwhichfocuseson"...economic prosperity,
environmentalquality,and...socialjustice"andisintendedto capture
atleastpartoftheintrinsicvaluesthatresideinherentlyinheritage
assetsbymeasuringstakeholderpreferencesforenvironmental
conditions (Elkington,1999:19).Inthiswayeconomicvaluewouldbe
representedby TravelCostswithsocialandenvironmentalvalues
representedbyContingent Values.
Futureresearchcouldalsoexaminethepossibilityofproducinga
model ofvaluationthatcouldbetransferabletoreportingentitiesfor
boththepublic andprivatesectors.Suchamodelwouldneedto
evaluateawiderangeof measurementmethodsandheritageasset
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factorsthateffectvaluation.
Thenon-traditionalmethodsprovideadditionalinformation
regarding individualpreferences.Theresultsofthisstudyshowthatthe
survey respondentsprizethecurrentuseoftheheritageassets,with
manycommenting thatpreservationisessentialevenattheexpenseof
imposinguserrestrictions(in termsofvisitornumbersand/orareasof
access).Respondentvaluationsandstatedpreferencesmaypersuade
decisionmakersthatpossiblechangesin designateduse(forexample
destructionthroughmining)maynotproducelong termeconomic
resultsduetoconsumerprotests,courtbattlesandproduct avoidance
andcanbecomparedtocostsofforegonedevelopment.Thus,the
differentvaluescalculatedfromtheTravelCostandContingent
Valuation methodscanbeinterpretedasanindicatoroftherelativenet
benefitsof competingresourceuseandensureamorecomplete
considerationofgainsand lossesofdifferentresourcemanagementoptions.
Inconclusion,bygoingbeyondaneconomicvalue,theensuing
values fromthesemeasurementmethodscanbeutilisedtoraisethe
profileofthevalue ofheritageassets.Thispresentsanopportunityfor
thecurrentgeneration(users andnon-users)toacknowledgeand
respectthefullworthofheritage (environmental)assets;toappreciate
theneedformaintenanceandpreservation oftheseassets;and,toassist
inrespondingtocallsformore'accountability'for thesustaineduseof
theseassets.