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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.

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