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1. Introduction
Governments around the world seek to impose policies protecting different types of cultural values. The most famous examples of this are the sites belonging to the UNESCO world heritage list. Cultural values are often exhibited in buildings, and as argued by Lazrak et al. (2014) cultural values are closely related to a city’s identity. At the same time, as it may be economically warranted to preserve cultural values in our societies, there are however, other competing goals. With limited resources, it is difficult, to not say impossible, to preserve all cultural values, not least concerning real property and land use. As societies change land use must change with it. But how do we determine what cultural values should be preserved, and which cultural values, or in the narrative of the current paper, which buildings that will have to give away for the developing society. When it comes to real property, and urban economics, there is a simple decision rule. An efficient land use is one where all land is used in its most valuable state (O`Sullivan, 2012). We can exemplify with a current trade-off that is not uncommon to observe in today’s society. In the past decade, all countries have experienced an unprecedented urbanization. People are moving from rural areas to cities. This has all kinds of benefits, cities work as engines of growth and urbanization has led to increased prosperity (Black and Henderson, 1999; Glaeser, 2012). There are of course downsides, expanding cities (urban sprawl) mean more transportation, congestion and pollution (Duranton and Turner, 2011, 2012). In addition, when more people move to cities; existing buildings and city plans, that served the needs of fewer people, have become obsolete (Quigley and Raphael. 2005). Not seldom do existing buildings also house significant cultural values, but the value of the land they are occupying is higher for some other use, for example as high rise buildings providing housing for the many. By laws of scarcity, the fewer of these culturally significant buildings we have left, the higher will we value them. This would imply that there is some optimal level of protection that the government can provide, in terms of building protection acts.
This paper concerns valuation of cultural values in real property. The...