On March 5th I had the honor of being the first witness at a hearing in Brussels of the European Parliament. The hearing was called by Spanish Member of Parliament Cristina Gutierrez-Cortines. For a discussion of the hearing see the blog that follows this one. My testimony is included below:
Heritage Investment: Counter Cyclical Opportunity in Economic Downturns
Thank you Dr. Gutierrez-Cortines for inviting me here for this important hearing. Europeans generally understand the components of sustainable development: environmental responsibility, economic responsibility, and social/cultural responsibility. We have known for some time that unless we make significant changes quickly, our environment is not sustainable. What we have learned in the last 120 days is that we have built our economy on foundations and assumptions that are also not sustainable. So governments have two simultaneous challenges: how to get the economy rolling again, and how to restructure our economies so that they become sustainable. Heritage conservation has a central role in responding to both of those challenges. Counter-cyclical economic strategies should be both efficient and effective. Heritage conservation meets that test with projects ready all over Europe the funding of which would put people immediately to work. Heritage conservation strategies target the construction trades – one of the industries most affected by this recession. Simultaneously, there is a shortage of craftsmen in a variety of restoration skills. So job training, job creation, and a life time profession can be encompassed within the same strategy. Those aren’t just jobs. They are good, well-paying jobs, particularly for those without formal advanced education. They are not make-work jobs; they are real, productive jobs. Counter-cyclical strategies should target long term capital improvement projects.
Heritage buildings are certainly capital assets but also, almost by definition, are long term in perspective -how long they have lasted already and how long they can last into the future if we protect them. Counter-cyclical strategies should create jobs and generate personal income. Heritage conservation is a labor intensive activity with 60 to 70 percent of the total expenditure on labor rather than materials. This has a significantly greater initial impact on a local economy than does new construction, but also much larger secondary impacts. Once installed, materials don’t spend any more money. But the carpenter, plumber, and electrician each spend their paycheck locally on a haircut, groceries, and paying local taxes. Since this recession is world-wide, counter-cyclical strategies should have widely dispersed benefits. Because heritage buildings are spread throughout Europe and are located in both the largest cities and the smallest villages, a heritage-based strategy automatically has wide-spread benefits. Counter-cyclical strategies should be directed toward projects that are catalytic to other economic activity and leverage public funds with private investment. One of the most impressive economic characteristics of heritage conservation is how the investment in one building tends to spur investment in nearby buildings. Further, many European countries have developed incentive programs through which public investment is matched two and three and four to one by private investment, effectively leveraging scarce public resources. Counter-cyclical strategies should advance specific public policy initiatives. At the European Union level and in virtually every country there are dozens of policy declarations supporting heritage conservation, not just for economic development, but for social and cultural advancement, poverty alleviation, housing, environmental considerations, education, and others. In recessions a variety of factors affect the implementation of large scale plans. Financial constraints, political conflicts, and environmental concerns are all reasons that large projects are often delayed or shelved.
Heritage conservation, however, can be done at virtually every scale, from the smallest shop building to massive revitalization of large urban areas. Smaller projects can proceed while larger ones are still on the drawing board, thus providing a measure of employment and income stability to a local economy.Finally counter-cyclical strategies should advance sustainable development. If we return to the graphic representation of sustainable development, we are today in an environmental crisis, and economic crisis, and in many countries if the social and cultural assets aren’t in crisis they are at least in jeopardy. As we restructure our economies to be sustainable, heritage conservation should play a major role. What would a sustainable economy look like? I would suggest it would have seven characteristics. First, a sustainable economy would be based on using local assets.Second, sustainable economic development would depend primarily on the private sector, particularly small business. Third, a sustainable economy would participate in economic globalization but mitigate cultural globalization. Fourth, sustainable economic development strategies would acknowledge the contribution of quality of life to economic competitiveness.Fifth, sustainable economic development would not be a zero sum game where for one city to win another has to lose. Sixth, a sustainable economy would advance the cause of environmental responsibility. Finally, a sustainable economy would advance the cause of the social/cultural responsibility. How does heritage conservation fit the criteria for a sustainable economy? Start with local assets. Obviously, the historic buildings themselves are local assets, but it doesn’t stop there. Heritage buildings are invariably where millions of Euros of infrastructure investment has already been made by previous generations. All too often that infrastructure is left unrepaired and underutilized as we substitute peripheral development for neighborhood reinvestment. One of the great success stories for cities and for heritage conservation has been center city revitalization. In every European city I have visited that has experienced an economic rebirth of its core, heritage conservation was a key component of the success.
Next a sustainable economy is orientated toward the private sector, particularly small business. The next panel will discuss opportunities for SMEs so I needn’t say much here other than this: 70% of the jobs and nearly 70% of the European GDP comes from small business.
The heritage industry itself is largely made up of small businesses – contractors, architects, conservationists, historians, consultants. Unlike building highways or skyscrapers where the bid winners are invariably giant, multi-national firms, on heritage projects the expertise is usually in small firms who spend their profits at home.
Number three on my list was globalization. What neither the supporters nor the critics of globalization understand is that there is not one globalization but two – economic globalization and cultural globalization. For those few who recognize the difference, there is an unchallenged assumption that the second is an inevitable outgrowth of the first. I would suggest those are two different phenomenon, which while interrelated, are not inexorably linked. While there are sometimes painful disruptions, on a composite basis economic globalization has far more advantages than disadvantages. But cultural globalization has few if any benefits but has significant adverse social and political consequences in the short term and negative economic consequences in the long term. If cities are to succeed in the challenge of globalization, they will have to be competitive not only with other cities in their region, but worldwide.
However, their success will be measured not just by their ability to foster economic globalization, but equally in their ability to mitigate cultural globalization. In both cases, a city’s historic built environment can play a central role. Globalization means change – change at a pace that can be disruptive politically, economically, socially, and psychologically. Adaptive reuse of the historic built environment can provide a touchstone, a sense of continuity that helps counteract the disruption which economic globalization tends to exacerbate. Next, sustainable economic development strategies would recognize that quality of life is a major component of economic competitiveness and that knowledge workers in particular place a high value on quality of life criteria in their choice of where to live and work. When we finally recover from this economic chaos, the European economy will resume a sizable shift in its economic base and the nature of doing business. Much of the “product” produced by European workers is knowledge and information. And those commodities can be produced virtually anywhere and can be transported for nearly no cost. This means that more businesses and their employees will be locationally indifferent. I don’t know the numbers in Europe, but today in America perhaps 20 percent of American businesses and a third of American workers can literally be located anywhere. How will that choice be made? On the quality of life the city provides. What constitutes “quality of life”? There are many possible variables including good schools, public safety, the weather. But when the physical attributes of a place are measured, the historic built environment is a significant quality of life contributor. From a European perspective, economic development should not be a zero sum game. But that’s how most economic development in the past has been. For Barcelona to recruit an industry Belgrade had to lose it. When for every winner there has to be a loser is the definition of a zero sum game. But from a European perspective, what’s the sense of that?
There is no net economic benefit, just a shifting from point A to point B. But a heritage conservation based economic development strategy is not that way. For one community to effectively use its heritage resources in no way precludes another city from doing the same. To the extent that they both use heritage buildings, both are advancing sustainable economic development. So far I’ve only focused on sustainable economic development. But sustainable economic development has to advance the cause of the environmental component of sustainable development. How does heritage conservation do that? We could begin with solid waste disposal which is increasingly expensive in Euros and in environmental impacts. Let me put this in context. We all diligently recycle our aluminum cans because were told it’s good for the environment. Here is a typical North America commercial building – 25 feet wide and 120 feet deep. Let’s say that today we tear down one small building like this. We have now wiped out the entire environmental benefit from the last 1,344,000 aluminum cans that were recycled. We’ve not only wasted an historic building, we’ve wasted months of diligent recycling. And that calculation only considers the impact on the landfill, not any of the other sustainable development calculations like embodied energy.Embodied energy is defined as the total expenditure of energy involved in the creation of the building and its constituent materials. When we throw away an historic building, we are simultaneously throwing away the embodied energy incorporated into that building. So we start with the energy embodied in the building then add the energy expended tearing it down and hauling it to the landfill. What have we wasted? Over 212,000 liters of gasoline. Much of the “green building” movement focuses on the annual energy use of a building. But the energy embodied in the construction of a building is 15 to 30 times the annual energy use. Razing historic buildings results in a triple hit on scarce resources. First, we throwing away thousands of Euros of embodied energy. Second, we are replacing it with materials vastly more consumptive of energy. Third, recurring embodied energy savings increase dramatically as a building life stretches over fifty years. You’re a fool or a fraud if you claim to be an environmentally conscious builder and yet are throwing away historic buildings, and their components. A heritage building is a renewable resource when it is rehabilitated; it is nothing but landfill when it is razed. Finally sustainable economic development would advance the cause of the social/cultural component of sustainable development. My professional practice is in the economic side of heritage conservation. But I truly believe that of all of the values of heritage conservation in the long run the economic value is the least important. The educational, aesthetic, cultural, and social values are far more important. Heritage conservation’s role in helping us understand who we are, where we have been and where we are going is central to the social/cultural component of sustainable development. Historic buildings are the physical manifestation of memory. Now if we go back to the graphic representation of sustainable development I would suggest that heritage conservation is, in fact, the only strategy that is simultaneously environmental responsibility, economic responsibility, and social/cultural responsibility. You cannot have sustainable development without a major role for heritage conservation, period. The established definition of sustainable development is “the ability to meet our own needs without prejudicing the ability of future generations to meet their own needs.”
The loss of historic buildings is the polar opposite of sustainable development; once they are gone they cannot possibly be available to meet the needs of future generations.
These are not normal times. We have a crisis in the economy and we have a crisis in the environment. Heritage conservation is certainly not the only strategy for reestablishing economic, environmental or cultural responsibility.
But in all three areas heritage conservation is the one indispensible strategy. Thank you for the opportunity to appear here today.