What are the effects of UNESCO World Heritage designations on local economic outcomes?
The debate on this topic is wide-ranging, but often based on qualitative evidence, case studies or using regional-level data. The article attempts to answer the question with a new quantitative analysis using data on Italian municipalities over the period 2006-2019 and adopting novel and validated methods to identify the causal impact of World Heritage designations.
By signaling the historical and cultural significance of cultural heritage, UNESCO World Heritage designations have often been argued to trigger economic effects through tourism flows or an increased demand for amenity values households place on the historic built environment and its conservation. However, the existing empirical evidence has yielded mixed results due to two main limitations. First, several empirical studies use data at a relatively large regional or provincial scale, covering extremely diverse territories and internally heterogeneous economic structures, which might blur the effect of World Heritage sites. Secondly, it is generally challenging to disentangle the causal effects of the UNESCO designations due to the selection bias problem in finding areas with comparable heritage endowments and similar local economic trajectories.
In our study, we investigate the impact of the UNESCO World Heritage List (WHL) inscription on income and property values in Italian municipalities during the past two decades. Italy constitutes an ideal environment for analyzing the impact of UNESCO designations because of the considerable number of World Heritage Sites and its decentralized government structure, where regional and local governments play an active role in the application process for heritage site recognition. As a result, it is a question of substantial policy relevance whether those efforts are worth their cost. Moreover, to address the selection bias and identify the causal impact of inscription, we compare municipalities treated with new UNESCO designations with municipalities having attractions included in the national ‘tentative list’ that are qualified for inclusion in the World Heritage List but have not yet been inscribed.
Using the staggered difference-in-differences (DiD) designs proposed by Callaway and Sant’Anna (2021), our event study analysis shows that World Heritage designation in Italy positively impacts taxable income per capita, with an increase of about 2% five years after the designation. At the same time, the consequences in the real estate market are more nuanced. While we find hardly any impact of the World Heritage designation on ordinary apartments, the prices of luxury dwellings in highly urbanized areas rise by almost 10% in the first five years, but not in rural areas where housing supply is arguably more elastic. Finally, we find that the prices of commercial properties rise significantly in both urban and rural areas, though the effect is more persistent in the latter.
Based on this evidence, we further investigated possible transmission mechanisms of WHL designation on local economic outcomes. First, to test the tourism-led growth channel, a hypothesis frequently made in the literature, we study the trajectories of official tourist flows in treated and control municipalities around designation years and find that they are compatible with the hypothesis of increased touristic visibility of a locality after WHL designation. Next, we test the sorting hypothesis based on the idea that the increased amenity value of sites after WHL inscription attracts wealthy individuals with a high valuation of those amenities. Although data on mobility by income level are not available, we find the resident population and the share of high-income taxpayers to grow faster in treated localities after designation, compatibly with a hypothesis of gentrification leading to a change in the composition of residents and a higher demand for luxury dwellings.
In summary, our study contributes to the debate on the economic impacts of UNESCO designations by providing a new counterfactual empirical approach based on municipal-level data. The evidence obtained, based on the Italian context, is also likely to have validity for other European countries with similar cultural heritage characteristics and economic dynamics. However, the positive effects we document on local economies may arise from dynamics that are not necessarily favorable to residents. In particular, the phenomenon of limited land for housing development, particularly in highly urbanized areas, coupled with the increase in demand for second home ownership and bids for renovated and refurbished structures, is bound to lead to competition between ‘‘external’’ groups and local residents, with ‘‘exclusionary’’ consequences due to shortages of affordable housing and displacement or relocation of the most vulnerable segments of the population, including workers in tourism-related sectors. This is an important dimension of the issue that we have not analyzed here and that ought to be addressed in future analyses of the socioeconomic impact of UNESCO WHL designations.
Reference
Callaway, B., Sant’Anna, P.H.C., 2021. Difference-in-Differences with multiple time periods. J. Econometrics 225 (2), 200–230, https://doi.org/10.1016/j.jeconom.2020.12.001
About this article
Bertacchini, E., Revelli, F., & Zotti, R. (2024). The economic impact of UNESCO World Heritage: Evidence from Italy. Regional Science and Urban Economics, 103996. https://doi.org/10.1016/j.regsciurbeco.2024.103996
About the authors
Enrico Bertacchini is Associate Professor of Economics at the University of Turin, Economics and Statistics “Cognetti de Martiis”
Federico Revelli is Full Professor of Economics at the University of Turin, Economics and Statistics “Cognetti de Martiis”
Roberto Zotti is Associate Professor of Economics at the University of Turin, Economics and Statistics “Cognetti de Martiis”
About the image
Image by FrDr, CC BY-SA 4.0, via Wikimedia Commons
