Synopsis of Seminar proceedings
Title:
VALUING THE INVALUABLE: APPROACHES AND APPLICATIONS
Wednesday, September 30, 1998, 9:15 a.m. to 12:30 p.m.
Panelists:
John A. Dixon
Program Team Leader, Environmental Economics and Indicators, Environment Dept.
Stefano Pagiola
Economist, Environmental Economics and Indicators, Environment Dept.
Paola Agostini
Economist, Environmentally & Socially Sustainable Development, Latin America and Caribbean
Objective:
The seminar examined how economists might approach the issue of assigning economic values
to the various benefits associated with the preservation of cultural heritage, from both a
conceptual and a methodological perspective. The presentations and discussions focused on
approaches to valuation and on their application in three case studies.
Salient points of discussions:
Conceptual and methodological issues
The first part of the seminar focused on conceptual and methodological issues involved in the
economic valuation of investments in cultural heritage. The benefits of cultural heritage have
often proved difficult to value in traditional economic terms. Hence their values are either
referred to as “very large” (the invaluable) or they are not measured and ignored (the unvaluable). Neither approach is likely to produce useful results for informed policy making.
Following an introduction by John Dixon, Stefano Pagiola discussed how economic analysis of
cultural heritage (both man-made and natural) can be applied to many types of benefits
associated with these sites and help make more informed decisions. An important initial step is to
break down the problem into more manageable parts, by identifying the specific benefits
provided by a given cultural heritage site, including for example recreational, aesthetic, or
existence benefits, and how these benefits are likely to change as a result of the planned
interventions. This also requires identifying how different groups are affected. Depending on
factors such in income level or cultural background, different groups might have very different
valuations of any given benefit. Tradeoffs between different kinds of benefits must also be
identified.
Many techniques exist which can help value the benefits of investments in cultural heritage.
These techniques include:
•
Travel Cost Methods, which use information on the expenditures visitor bear to visit sites to
derive their demand curve. This technique is most appropriate for valuing already existing
sites threatened by conversion to other uses. This information can also be used in the process
called “benefit transfer” whereby an undeveloped site (e.g. a newly accessible historic city) is
similar in character and potential users as is an existing site. The values derived from present
use of the existing site are then used to estimate potential benefits from the new site.
•
Hedonic Price Methods, which use statistical techniques to determine how attributes such as
historic status affects property values. This technique is most appropriate for valuing
investments on individual buildings in urban settings where improvements are likely to be
reflected in their market price.
•
Contingent Valuation, which use survey techniques to determine the willingness to pay for
specified improvements in the cultural heritage site. This is the most flexible technique, since
it can be used to look at any of the benefits provided by cultural heritage sites; some, such as
existence value, can only be examined in this way.
Some techniques are very robust and can lead to quite precise measures (for example, the use of
travel costs to estimate benefits from visitation). Other types of benefits are harder to measure or
are dispersed over large populations. These benefits may be estimated using other approaches,
especially those that rely on survey-based techniques. The job of the economists is to know when
to use each technique, what probable level of confidence can be assigned to different estimates of
value, and how to use these results in benefit-cost analyses.
The discussion centered around the definition of value, and the extent to which the available
techniques would be able to capture its many dimensions.
Case Studies
In the second part of the seminar, three case studies drawn from recent World Bank projects with
important cultural heritage dimensions were presented. These case studies illustrated how the
cultural dimensions and benefits of projects at historic cites were valued and how these
valuations were included in the economic analyses of projects at these sites.
Paola Agostini discussed the analysis undertaken for a proposed rehabilitation project in the
historic Medina of Fès, in Morocco. The Medina in Fès is one of the largest living medieval cities
in the world; it was listed as World Heritage site by UNESCO in 1980. Conditions in the Medina
are rapidly deteriorating. As part of the economic analysis, contingent valuation methods were
used to determine the value non-residents place on conservation efforts in the Medina. The
survey found that visitors to the site itself would be willing, on average, to pay as much as US$70
per person per visit for improvements aimed at preserving and improving conditions in the Medina.
Other visitors to Morocco may share an overall appreciation for this kind of site, but since they are
not physically present at the site they will not receive any use benefits; their willingness to pay for
preservation is based on the value they place on the site's existence, and to some extent on the
possibility that they might visit it in the future. The survey found that such visitors would be
willing to pay about US$30 per person per visit. Given the number of tourists visiting Morocco
each year, this is equivalent to a total annual benefit to visitors of about US$58 million (about
US$11 million to Fès visitors and about US$47 million to other visitors). Even if only a fraction of
this amount could be captured in Morocco—for example, by increasing the tourist tax on hotel
rooms or an airport departure tax—it would generate a substantial annual income flow which could
be used to finance the required conservation investments.
Stefano Pagiola discussed on-going research into the value placed by residents and visitors on
conservation of the historic center of Split in Croatia. The city of Split has developed inside the
walls of Palace of Roman emperor Diocletian. The uniqueness of the site, in which roman,
medieval, and baroque architecture is juxtaposed, made UNESCO list it as a World Heritage
City. Unfortunately, many parts of the historic core of Split have deteriorated and are in urgent
need of repair. Many historic buildings within the core are in poor conditions and in danger of
collapse. Others are closed to the public. Still others require reconstruction and rehabilitation to
reveal their historic and artistic importance or to increase accessibility to visitors. Contingent
valuation surveys are being conducted among both visitors and residents to determine
willingness to pay for a program of conservation and improvement. The approach adopted is
similar to that previously used in the Fès case study. Survey respondents were shown a series of
photographs showing current conditions at the site; overlays were then used to show how the
project was going to change conditions. Data from these surveys is currently being analyzed.
Other approaches to valuing the project's improvements, such as hedonic price techniques, were
considered but were not feasible due to the nature of the site. Given the small size of the real
estate market within the historic core, there are too few transactions to allow a statistical analysis
of the influence of different factors on property prices.
John Dixon discussed the case of Petra and Wadi Rum in Jordan, examples of both man-made
and natural landscapes that are cultural destinations. These sites are two of the leading attractions
in Jordan and are highlighted as part of the national tourism promotion effort. The analysis of
these sites focused on the rents that are generated, and the extent to which they can be captured
through entrance fees, hotels and other service taxes, and by associated economic activities. In
the ancient rock-carved city of Petra, for example, access is controlled through a narrow canyon
called the siq and the government has successfully implemented a sizeable entrance fee for nonJordanian visitors (about $30 per person) with a very modest fee for nationals (about $1.40).
Even with this high entrance fee, the uniqueness of the site has continued to attract visitors and
Petra alone now contributes the bulk of revenues to the entire national protected areas system.
Similar work is now underway to increase revenues at Wadi Rum, a magnificent desert
landscape. In both locations, the need to work with local stakeholders was an important part of
efforts to conserve these sites.
Conclusions and Recommendations:
Several conclusions emerged from the seminar.
First, economic analysis can help us think about the problem and ask the right questions.
Second, there are many techniques that can be used to measure at least some of the benefits of
cultural heritage. They may not capture all of the benefits, but for many purposes, and
particularly for the kind of work that is typically undertaken at the World Bank, they are often
sufficient in that they capture enough of the benefits to permit an informed decision on whether
to do a given project or not.
Third, even when some or all of the benefits cannot be quantified, economic analysis can be
combined with qualitative assessment to help lead to more informed decisions.
Case Study 1
Valuing the Benefits of Conservation of the Fès Medina
1998
The preparation of a World Bank-financed project aimed at preserving and improving the
historic Medina in Fès, Morocco—a UNESCO World Heritage site that is rapidly
deteriorating—provided an opportunity to test the approach described in this paper. The Fès
study was a pioneering effort in the use of CV for valuation of cultural heritage sites.
The project
Like the rest of Morocco's 30 Medinas, the Fès Medina has been largely overlooked for much of
the century as investment concentrated in areas outside the traditional urban centers. The result
has been a serious deterioration of the historic building stock, of the urban infrastructure, and of
the urban environment. This decline has been compounded by in-migration from rural areas,
resulting in a high population density consisting mostly of residents with income levels below
the national average. A 1995 survey found that 36 percent of the Medina's 150,000 inhabitants
are below the poverty threshold, a proportion far exceeding the national average for both urban
(10.4 percent) and rural (28.7 percent) populations. Moreover, half of the housing stock is
seriously decayed and housing occupancy levels surpass acceptable levels. Many small-scale
polluting industries have concentrated in the Medina, resulting in poor air and water quality and
important negative health impacts including cholera. Most infrastructure is in need of
replacement or modernization, particularly water supply, sewerage and solid waste disposal,
telecommunications, and transport.
Fès was placed on the World Heritage List in 1976. In 1980 UNESCO launched an international
safeguarding campaign, which raised awareness of the site's importance but did not succeed in
generating the financial support needed to carry out significant rehabilitation works. Most
conservation activity to date has concentrated on individual monuments, with little attention to
the remaining built environment.
The proposed World Bank-financed project will assist in the conservation and rehabilitation of
the Fès Medina, with particular attention to the historic housing stock and the quality of the
urban environment. It will do so with direct interventions as well as efforts to increase private
conservation efforts. Priority rehabilitation activities will upgrade the historic housing stock.
Tourism offerings will be expanded. Access for emergency public services will be improved and
extended to the center of the Medina, facilitating logistical activities for residents and businesses
and creating more favorable conditions for urban development and private sector investment.
Solid waste collection and pollution reduction for small-scale industries programs will be
instituted. The capacity of the municipality and responsible local agencies to plan and carry out
proposed improvements will be strengthened. A labor-intensive public works program linked
with the rehabilitation process will create employment and hence contribute to poverty reduction.
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Analysis of benefits
Five major groups can be identified as benefiting from the planned activities in the Fès Medina:
•
Residents of the Fès Medina and of Fès generally.
•
Moroccans who are not residents of Fès.
•
Foreign visitors to Fès, including
•
Tourists. About 160,000 adult foreign tourists remain overnight at Fès hotels annually.
•
Islamic pilgrims.
•
Foreign visitors to Morocco who do not visit Fès during their current trip. About 1,500,000
adult foreign tourists visit Morocco annually.
•
Non-Moroccans who do not visit Morocco.
A full analysis would require the benefits received by each of these groups to be investigated.
The residents of Fès will benefit directly from the improvements carried out to the Medina's
infrastructure. Analysis of likely increases in property values resulting from improved accessibility,
for example, shows a rate of return of 17 percent to expenditures on this component. In addition to
benefiting from the physical improvements, residents will also benefit from the conservation and
revitalization of the Medina's cultural heritage. Other Moroccans will likewise benefit from the
same improvements, albeit to a smaller extent than residents.
Although Moroccans, and particularly residents, are likely to benefit significantly from the
preservation of the Medina's cultural heritage, time and resource constraints meant efforts to
quantify the cultural heritage benefits of the proposed project had to be targeted on tourists and
foreign residents. Tourists represent a significant source of potential income which could help
finance the required improvements but which is only partially captured at present. In addition,
research was also undertaken on the benefits to be received by non-Moroccans who do not visit
Morocco, to get a sense of the global value of the existence of the Fès Medina.
Contingent valuation of tourist willingness to pay for conservation of Fès
To estimate the benefits that foreign visitors to the Fès Medina would receive, a contingent
valuation survey was carried out with World Bank financing during the summer of 1997. The
survey distinguished the willingness to pay for improvements of visitors of the site itself from
those of other visitors to Morocco.
A multi-stage sample of 600 adult visitors was designed to represent visitors (including both
tourists and those visiting for business or other purposes) to Morocco who visited the country
during June-July, 1997. Of the total of 600 interviews, 400 interviews were undertaken in Fès.
Of the remaining interviews, 120 were carried out in Casablanca and 80 in Tangier, on the basis
of their respective visitor flows.
The first section of the survey consisted of 16 questions requesting information about the
respondent's visit to Morocco and to Fès. In the second section, the situation at Fès was
presented to respondents using a short narrative supplemented by showcards featuring colored
photographs of the Medina. This presentation provided respondents with a standardized set of
information about the character and condition of the Fès Medina today. It concluded by saying
that without a major rehabilitation effort the Medina will continue to decline. The third section of
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the instrument presented a plan to rehabilitate the Fès Medina, which was described as having
been developed by “the Moroccan Government in collaboration with experts from international
agencies.” Respondents were told the plan would accomplish three things:
•
It would improve the Medina's appearance; buildings, streets, sewers, public spaces, and
monuments would be repaired and cleaned up;
•
It would preserve the Medina's traditional character and cultural heritage for future
generations; and
•
It would ensure that the Medina would continue to be a productive and vibrant living city.
These prospective accomplishments represent the public goods that the proposed rehabilitation
plan will provide.
Respondents were then told that “one way to help pay for” the proposed activities would be to
charge visitors such as themselves a special fee. Fès visitors were asked whether they would
have included Fès in their itinerary if they had had to pay a Fès preservation fee of a specified
amount when they registered at their hotel. For non-visitors to Fès, the fee was presented as a
departure fee. Respondents were randomly assigned to one of six price-point sub-samples which
varied between 25 and 2,000 dirhams (between $25 and $200). The amounts were chosen to
bracket the anticipated range of median willingness to pay. It was assumed that visitors to Fès
would be willing to pay more than tourists who were not visiting Fès. The upper ranges for these
two groups were thus fixed at the equivalents of $200 and $100, respectively.
Interviewing began in Fès on June 16, 1997 and continued until July 3. The Casablanca and
Tangier interviews were conducted between July 15 and July 25.
Benefits received by visitors
Visitors have a demonstrated preference for the site, since they have taken the trouble to come
and visit. Since they are on-site, they will also experience directly the results of any
improvements. They are likely, therefore, to have a high willingness to pay for improvements.
The survey found that visitors to the site itself would be willing, on average, to pay as much as
US$70 each for improvements aimed at preserving and improving conditions in the Medina.
Given the number of visitors each year, this equivalent to a total annual benefit to visitors of
about US$11 million. This figure would of course increase if the number of visitors increased.
Benefits received by non-visitors
Other visitors to Morocco may share an overall appreciation for this kind of site, but since they
are not physically present at the site they will not receive any use benefits; their willingness to
pay for preservation is based on the value they place on the site's existence, and to some extent
on the possibility that they might visit it in the future (known as option value). The survey found
that such visitors would be willing to pay about US$30 each. Given the number of tourists
visiting Morocco each year, this is equivalent to a total annual benefit to visitors of about US$47
million.
To further investigate the benefits received by non-visitors, a Delphi survey was conducted
among European CVM experts to determine what, in their opinion, the mean and median WTP
for the rehabilitation of the Fès Medina would be among the European population in general. A
Delphi survey involves solicitation of the opinions of experts rather than consumers. When
funding or time are not available for the collection of original data, such a survey may be the
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only way to develop an estimate of the value. The Delphi exercise was conducted using a
stratified random sample of 30 attendees at the June 1997 meeting of the European Association
of Environmental and Resource Economists (EAERE) in Tilburg, Netherlands. This meeting was
chosen because it was likely to contain the largest concentration of European economists familiar
with contingent valuation.
The results of the Delphi survey indicated that the household WTP for preservation of Fès
ranged from $12.1 (mean WTP) to $ 2.15 (median WTP). To be as conservative as possible, the
lowest estimated value ($2.15), was used. This estimate was applied to the 144,342,000
households ion Europe (Eurostat, 1991), giving an estimate for the total value of Fès Medina to
European households of about US$310 million. The best use of this number is to indicate that
European households place a relatively high value on restoration of the Fès Medina.
Even if only a fraction of the amount of benefits received by visitors (US$11 million to Fès
visitors and US$47 million to other visitors, for an annual total of about US$58 million) could be
captured in Morocco—for example, by increasing the tourist tax—it would generate a substantial
annual income flow which could be used to finance the required conservation investments.
References
Carson, R.T., N.E. Flores, and R.C. Mitchell. 1997. "The Theory and Measurement of Passive Use
Value," in I. Bateman and K. Willis, eds., Valuing Environmental Preferences: Theory and
Practice of the Contingent Valuation Method in the US, EC and Developing Countries. New
York: Oxford University Press.
Carson, R.T., R.C. Mitchell, M.B. Conway, and S. Navrud. 1997. "Non-Moroccan Values for
Rehabilitating the Fes Medina." Washington: World Bank Report.
Dixon, J. and R. Sherman. 1990. Economics of Protected Areas: A New Look at Benefits and Cost.
Washington: Island Press.
Krutilla, J. 1967. "Conservation Reconsidered," American Economic Review, 57, pp.787-796.
Mitchell, R.C. and R.T. Carson. 1989. Using Surveys to Value Public Goods: The Contingent
Valuation Method. Baltimore: Johns Hopkins University Press.
Navrud, S., Pedersen, P.E., and J. Strand. 1995. "Valuing our Cultural Heritage: A Contingent
Valuation Study of the Nidaros Cathedral." Landbruksoekonomisk Forum, 2-95, pp. 53-65,
summarized in English in Navrud, S., ed. (1992), Pricing the European Environment,
Scandinavian University Press/Oxford University Press, 110-111.
Ziglio, E. 1996. "The Delphi Method and its Contribution to Decision-Making," in Adler, M. and
E. Ziglio, eds., Gazing into the Oracle: The Delphi Method and its Application to Social Policy
and Public Health. London: Jessica Kingsley.
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Case Study 2
Economic Analysis of Conservation of the Historic Center of Split,
Croatia
Stefano Pagiola, 1998
The historic city of Split is a UNESCO World Heritage site. Built on the site of the
Palace of Roman Emperor Diocletian, it juxtaposes Roman, Medieval, and Baroque
architectures.
Unfortunately, many parts of the historic core of Split have deteriorated and are in
urgent need of repair. Many historic buildings within the core are in poor conditions and
in danger of collapse, including the Temple of Jupiter and buildings on the Peristile.
Others are closed to the public. Still others require reconstruction and rehabilitation to
reveal their historic and artistic importance or to increase accessibility to visitors. If
nothing is done, many valuable historical and architectural monuments will be lost to
future generations and become inaccessible to visitors.
The World Bank is helping the Government of Croatia and the Municipality of
Split prepare a project to conserve and rehabilitate the historic center of Split, as well as
other sites in the Kastela Bay area. Project activities in Split will include
•
Conservation works in Diocletian's Palace, including major infrastructure
investments such as drainage and humidity control and provision of basic
services, restoration of the Palace’s southern façade, and restoration of newly
recovered areas of the Palace;
•
Rehabilitation of selected historic buildings within the old town, including
structural work on the peristile and Jupiter’s Temple;
•
Rehabilitation of the public walkway along the city wall; and
•
Construction of an Ethnographic Museum, which will make accessible to
visitors its valuable collections (which are currently in storage).
Cultural heritage plays an important role in Croatia’s tourism industry.
Traditionally, tourism (excluding small crafts and trades) provided about 4-5% of
employment in Croatia, and at its height provided 6.2% of GDP. Tourism accounted for a
particularly large share of economic activity along the Dalmatian coast, where Split is
located. Tourism dropped to 0.6% of GDP in 1992, and recovered to 4.4% in 1996,
though much of Dalmatia remains well below pre-war levels. Conserving and restoring
Croatia’s cultural heritage is likely to play an important role in attracting, and the
material and human losses from the war, if not redressed , could severely damage
Croatia’s ability to safeguard its cultural heritage resources, which would have long term
negative effects on the contribution of tourism to economic growth and development in
the country.
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In order to evaluate the benefits of investments in conservation of cultural heritage
at Split, contingent valuation surveys are being carried out of both tourists and residents.
The tourist survey was undertaken during August 1998. 400 interviews were carried out,
equally divided between West European and East European visitors. After first asking a
number of questions designed to elicit the visitor’s preferences and knowledge about the
site, the conditions experienced at the site and the planned project are described.
Photographs of the site are shown to ensure that respondents were aware of current
conditions, and overlays on top of these photographs were then used to illustrate
concretely how the project would change conditions. The results of this survey will be
analyzed in the next few months. A similar, though smaller-scale, survey of residents is
also planned.
Undertaking a hedonic analysis of property prices was considered as a possible
means of valuing the benefits of cultural heritage to residents. This option was not
pursued for several reasons. First, there is a limited number of properties in and near the
historic center. Since only a small fraction of these properties is likely to be bought or
sold in any given year, the number of transactions would be too small to allow the
necessary statistical analysis to be undertaken. Moreover, until recently there were strong
restrictions on the operation of real estate markets in the city, restrictions which have not
completely disappeared. These restrictions affect the operation of the markets and hence
the valuation of properties.
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Case Study 3
Estimating Economic Rents from Tourism in Jordan
John A. Dixon, 1998
The government of Jordan has borrowed about $ 40 million from the World Bank
for the Second Tourism Development Project, which is designed to create the conditions
for an increase in sustainable and environmentally sound tourism in Petra and Wadi Rum,
two important historic sites in Jordan. Petra, the “lost” pink city carved into the living
rock, is a UNESCO World Heritage Site. Wadi Rum, a fantastic natural landscape of
sand and towering rock massifs, is most famous as a home for Lawrence of Arabia during
the Arab Revolt at the time of the First World War. Along with the port city Aqaba, Petra
and Wadi Rum form a Golden Triangle of great historic and cultural importance and are
the premier tourism attractions in Jordan.
As a result of the Peace Process, Jordan has enjoyed rapid growth in visitor
numbers and associated earnings. Between 1989 and 1995, for example, annual tourist
arrivals increased by 67% from 641,000 to 1,073,000, of which about 400,000 to 450,000
are normally considered as international visitors (the rest being visitors from neighboring
countries visiting family members). Tourism receipts account for 9% to 12% of GNP.
A majority of these international visitors come on package tours, either with Jordan
as a destination, or as part of a longer Holy Land or Middle East tour. In the first nine
months of 1996 a total of 285,200 tourists came on package tours, including 11,500
cruise ship visitors and 45,600 day visitors, largely from Israel. Almost 230,000 visitors
spent more than one day in Jordan, and these visitors stayed an average of 3.6 nights.
Not all package tours visited the same sites; in 1996 Amman hosted the largest
number of visitors and each stayed an average of 2.4 nights, while those staying in Petra
spent an average of 1.3 nights. Most visitors stopped in Wadi Rum for only a few hours;
a small portion stayed for several days and these largely camped at the guest house or in
the desert. However, visitors to Wadi Rum did stay in hotels, although not in Wadi Rum
itself, and therefore an average of 0.5 nights per visitor may be a good approximation.
These numbers are somewhat deceptive, however, since the small size of Jordan makes
day visits to many parts of the country feasible and many Amman and Aqaba visitors
used these locations as staging sites for visits to other tourist destinations.
1.1
Estimating the economic benefits
Estimating the economic benefits of the project is more difficult than for a
traditional tourism investment like a hotel. For a new hotel, for example, one can easily
estimate returns based on assumptions of occupancy, costs, and tariff structure. In the
case of the present project, much of the investment is in the form of “facilitating
investments” that are designed to minimize negative environmental impacts, improve
safety and public amenities, or promote increased visitation in general. Although many of
these investments are designed to ensure the longer term sustainability of the tourism
industry, not necessarily yield immediate returns, they also serve an important catalytic
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role in ensuring complementary private investments. The tourism industry is actively
investing many tens of millions of dinars in hotels and other visitor facilities, transport,
and marketing efforts.
The economic analysis of the benefit from the project depended on estimating the
additional numbers of visitors that would be made possible by the project over time
(compared to the numbers that would come without the project) and the economic
benefits to Jordan (the economic rents collected) from these additional visitors. This is a
form of “break-even” analysis, not a traditional benefit-cost analysis. Note also that this
analysis is based on full estimation of costs of the project, and minimum estimates of the
benefits from additional, sustainable visitor-days.
The major categories of benefits included the following:
•
Admission fees, that go directly to the national Treasury. A dual pricing policy is
already in place in Petra with Jordanians paying 1 JD (about $1.5) and non-Jordanians
paying 20JD (about $30). Only nominal charges are paid by visitors to Wadi Rum
where the proposed management plans include the introduction of new, multi-leveled
visitor fees, part of which will continue to go to the local community and part of
which will go to the Jordanian government (probably to the Aqaba Regional
Authority, the ARA).
•
Hotels collect a tax on the room and on the food and other services provided to
guests. No direct service is provided in exchange for this tax. At present this tax is
about 10% of the total bill and produces a substantial amount of revenue each year.
Although most of the hotel tax is produced by hotels in Amman, Petra and Aqaba
account for 18% and 25% respectively of the total. The biggest growth since 1993 has
been in Petra with the recent opening of a number of new hotels. These room taxes
are another source of economic rent from tourism.
•
In addition to taxes on hotel rooms and meals, and admission fees, visitors purchase
many other services and goods while in Jordan. These include transportation, guide
services, souvenirs, and other purchases; an example of representative services
offered to visitors to Wadi Rum are found in Table 1 below. Although not all of these
expenditures are benefits to the Jordanian economy (for example, to provide
transportation the vehicle and fuel are both usually imported), a portion of these
expenditures can be counted as economic rent. The analysis estimated that economic
rent share on average expenditures of 35 JD per person per day for hotel, meals,
transportation and guides is about 20%. In addition, a small economic rent is
generated by the sale of souvenirs
Table 1. Fees Charged Visitors to Wadi Rum
Jeep Rides
from 6 JD to 45 JD depending on length of the tour; an average of 15 to
20 JD per jeep (for up to 6 people).
Camel Rides
from 2 to 20 JD (or more if overnight ) per person depending on length;
an average between 7 to 20 JD.
Camping
from 2 to 3 JD per person per night.
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The economic analysis consisted of estimating the total economic rents to Jordan
associated with additional visitors due to the project. The total benefits came from two
main sources: the economic rent portion from admission fees and other rents, and the
increase in total rents from each visitor staying longer in Jordan. For example, it is
estimated that each visitor to Petra generates about JD32.45 ($48) in rents during their
average stay in Petra of 1.25 days. For Wadi Rum the number is smaller (about JD9.25
per visitor) due to lower admission fees and shorter stays. Similar estimates of economic
rents can be made for other sites (or a composite daily value for the “typical” visitor) and
this information can be used to generate estimates of annual rents from increased visitor
days.
These estimates of benefits can then be compared to the costs of the project. In this
case, the expected increased economic rents, based on several assumptions about a
sustainable increase in the number of visitors, were sufficient to justify the proposed
investments. Note that this analysis only focussed on benefits to Jordan from increased
international visitation and did not value the benefits to Jordanians visiting the same sites,
nor the benefits received by residents of Petra and Wadi Rum from the infrastructure
investments.
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