Exploring the Potential of Heritage Financing

Historical marvels, such as the Great Wall of the People’s Republic of China (PRC), Myanmar’s Buddhist temples of Bagan, or Cambodia’s Angkor, evoke senses and feelings unrivalled by other attractions, and have been proven to generate economic and social value. Despite this, the broader development significance of heritage and culture often remains overlooked.

Heritage and culture are intricately connected concepts with a continuous mutual influence. Heritage, passed down by predecessors, helps in defining people’s identity, representing what distinguishes and unifies a community. It also aids in understanding  both the past and present, especially in terms of comprehending the underlying reasons for prevailing circumstances​. While heritage encompasses elements inherited from the past, culture is its present manifestation, constantly evolving. Understanding the historical context and the strategies for survival, adaptation, and prosperity becomes crucial in today's fast-paced modern society. These elements should be remembered and prioritized for the sustainable protection and utilization of heritage.

Heritage does more than just add to Gross Domestic Product (GDP). As a key component of culture, heritage influences people’s everyday actions and enables social cohesion and community identity, especially in times of change. UNESCO and ICOMOS, along with a growing number of heritage and development specialists, believe that heritage—cultural and natural, tangible and intangible—all support the identity, memory, and a sense of place, which are critical to development. Surprisingly, heritage is addressed in only one^[1] out of the 169 SDG targets. The omission is baffling, particularly considering the benefits heritage brings to each pillar of sustainability^[2]: economic, social, and environmental. 

In economics, a differentiated product is something that shares similar qualities with others yet possesses a uniqueness that commands a monetary premium. To succeed economically, businesses and communities need to distinguish themselves. For communities, heritage often serves this purpose, creating uniqueness by showcasing tradition and place-specific identity. A commercial revitalization program gains little development advantage by promoting internationally branded establishments. Instead, more benefits can be gained by showcasing a community’s distinctiveness, relying on heritage design and ideas linked to national, subnational, or better still, local characteristics. Heritage can revitalize communities and urban centers, creating jobs and income, increasing property values, and supporting small businesses that rely on existing local skills and knowledge. While economic growth is most often measured by GDP or GNP, alternative metrics such as well-being or quality of life, are now recognized as effective indicators, revealing the enhanced value that heritage conservation provides to communities and those that visit them.  

The social value of conserving historic buildings, cultural landscapes, and intangible heritage is evident in the cohesion and sense of identity they foster—much like the historic building or traditional landscape that characterizes communities. Conversely, urban planning projects that replace historic environments and public spaces with generic multi-use high-rises often fail to capture uniqueness of the areas, diminishing local and public engagement by thoughtlessly eroding a community’s traditional fabric. Heritage also embraces fundamental social norms like religious faith or gender-related aspects that form the foundation of traditional communities. Religion, for example, can be a resource for development as shown by the growth of Shari’ah Compliant Financing (SCF)^[3].  Additionally, successful health projects need to consider traditional, gender-related concepts of modesty and other traditional norms.

Not every aspect of a country or community’s past is positive, as traditional culture can reflect social tensions. However, by drawing selectively on the past, communities can conserve and innovate in ways that resonate with earlier societal achievements and broadly recognized values.  

Environmental benefits and values are amplified by cultural and natural heritage, drawing on time-tested patterns of land use, production, and consumption. Such approaches integrate communities with their local environments and can help address climate challenges, just as they have for the span of human history.

Agricultural livelihoods are fundamental to continued development progress in Asia and the Pacific. Central to many traditional agricultural practices are the values of natural resource conservation and ecosystem services (and its many co-benefits). Cultural landscapes, such as rice terraces, support livelihoods for most hillside farmers across the Asia and Pacific region through food provision, hydrological regulation, biodiversity maintenance, and nutrient recycling. Utilizing traditional or indigenous knowledge of agroforestry or intercropping helps manage water and land resources for food security, encouraging resilience through competition and diversification. Likewise, protecting sacred groves, water bodies, or mountains conserves biodiversity, retains carbon sinks, and protects gene pools for current and future food generation.

Traditional approaches to land management also help communities in adapting to the challenges posed by the climate crisis, whether in India, Cambodia, or PRC. In the flood-prone Northern Meghalaya region of India, people have long been using the roots of the local ficus elastica tree to create durable roads and paths that withstand extreme weather conditions.^[4] In Ganzhou, PRC, the 900-year-old Fushougou urban flood control system still supports fishponds and vegetable gardens within urban green spaces.^[5] In Cambodia, historical agricultural practices act as flood control systems during rainstorms and water-retaining mechanisms during times of scarce rain.^[6] Whether a living practice or a revived ancient technique, these tradition-based approaches have proven their value in the past and present, and are certain to continue providing value in the future. 

Beyond the long-recognized tourism value of heritage sites, a growing recognition emerges regarding a much broader development role for heritage. By identifying and preserving cultural heritage sites and landscapes, along with the knowledge, skills, and ideas that support them, the conservation of sustainable development solutions is facilitated.

Heritage-based approaches clearly contribute to multiple SDGs, and enhancing heritage-related conservation will aid in efforts to ‘meet the needs of the present generation without compromising the abilities of future generations to meet their own needs’.

The examples discussed spark some important questions: If innovative financing mechanisms such as blue and green bonds can support climate smart, environmentally conscious, sustainable projects, is it also time to consider innovative financing mechanisms to conserve heritage? If so, what kinds of projects could a heritage bond support?

_{^[1] SDG Target 11.4: ‘Strengthen efforts to protect and safeguard the world's natural and cultural heritage’.}