Exploring value capture mechanisms for heritage protection under public leasehold systems: A case study of West Lake Cultural Landscape

• Published in: Cities Vol. 86; pp. 198 - 209
• Main Authors: Wu, Jiayu, Hu, Yingjie, Wang, Qingxi, Chen, Yunwen, He, Qingsong, Ta, Na
• Format: Journal Article
• Language: English
• Published: Kidlington Elsevier Ltd 01.03.2019; Elsevier Science Ltd
• Subjects: Auctions; Capture effect; Case studies; China; Corruption; Cultural heritage; Deeds; Enforcement; Finance; Infrastructure; Investments; Land; Leasing; Legitimacy; Owners; Property taxes; Property values; Revenue; Systems; Taxation; Tenure; Transaction cost; Transaction costs; Value; Value capture; World heritage; China; Hangzhou China; Value capture; Capture effect; Transaction cost; China; World heritage
• DOI: 10.1016/j.cities.2018.09.014
• ISSN: 0264-2751

Many protected areas are struggling to achieve financial stability and meet the costs associated with managing a World Heritage Site. These problems may be solved or eased by value capture as a source of public revenue; this revenue is usually then applied to infrastructure investment. Our study first proposes a framework for analyzing world heritage finance and then argues that the increase in “windfall” value should be captured and transferred to land owners in World Heritage Sites. We reviewed the value capture mechanisms described in previous studies under public leasing systems. Based on our theoretical framework, only three value capture mechanisms were found to be suitable for heritage protection, namely, the land-transfer fee at the initial auction, the deed tax at the transaction stage, and the property tax at the tenure stage. Using a transaction costs and capture effect framework, this paper explains the differences among these mechanisms. The results show that these value capture mechanisms have advantages and disadvantages for different aspects of transaction costs. The land-transfer fee at the initial auction carries risks such as maintaining the legitimacy of the government and preventing corruption. The deed tax requires stronger enforcement, while the property tax drains the government's energy via negotiations with the public. With regard to the capture effect, the property tax performs best; therefore it is the most suitable value capture mechanism. •Many protected sites experience difficulties achieving financial stability and meeting the costs associated with their management.•The windfall value increase due to land-use regulation should be captured and used to compensate to land owners in World Heritage Sites.•The three value capture mechanisms, a land-transfer fee at the initial auction, a deed tax at the transaction stage, and a property tax at the tenure stage, are regarded as credible instruments.•We structured a theoretical framework based on transaction costs and the capture effect to compare these value capture mechanisms.•The property tax is argument for the most sustainable as low transaction cost and efficient capture effect.