Economics ETDs

Publication Date



This thesis addresses the economic issues affecting investment in architectural conservation. The potential benefits of conserving architecturally and/or historically significant structures are private benefits accruing to the owners and positive externalities accruing to the public, such as increases in tourism and land values (to the extent these benefits are not internalized by the owners), option values, and existence values. If all of these benefits are not recognized and accounted for, an undervaluation of architectural conservation generally results, which inevitably leads to misallocation of resources. Other possible constraints to investment in architectural conservation include the slow, and sometimes costly, information process, use of inadequate information, and poor appraisal methods.

A neoclassical private investment decision model is used to isolate the institutional factors that can affect investment in architectural conservation--construction costs and returns, zoning, building codes, tax laws, depreciation schedules, allowable deductions, the interest rate, and financing. Historically, several of these variables have favored the new construction alternative. Recently, however, this situation has been altered through the introduction of new tax laws, zoning programs, and financing methods. With the exception of liberal zoning allowances for new construction, the institutional factors affecting private investment now appear to favor the conservation of buildings listed in the National Register, the official U.S. inventory of significant structures. Buildings not listed in the Register are at a disadvantage because of their inability to take advantage of some of the new tax laws, although other tax preferences, zoning programs, and financing methods may be available to stimulate private investment in the conservation of these buildings.

The use of tax incentives has been found to be an ineffective and inefficient means to stimulate private investment in architectural conservation. Therefore alternative techniques such as zoning programs, tax increment financing, and direct government investment are suggested as appropriate means of encouraging architectural conservation. The cost of these programs can be measured as foregone opportunity costs. The benefits of externalities associated with architectural conservation must be accurately measured if resources are to be efficiently allocated. The bidding game technique is suggested as an appropriate method to quantify these values. To accomplish this end, a questionnaire must be devised to elicit from a visitor to an architectural conservation area his willingness to pay for a public good by estimating consumer surplus and option value (if it exists). The aggregate discounted value of the present and future externalities can then be included in the net benefit comparison of alternative development projects in order to optimize public welfare.

The National Historic Preservation Act of 1966 states that the government is responsible for aiding private investment in architectural conservation. By stimulating private investment in architectural conservation through incentive programs, the goal of more efficient allocation of resources concurrently with conservation of architecturally and historically significant structures can be promoted.

Degree Name


Level of Degree


Department Name

Department of Economics

First Committee Member (Chair)

Alfred Leroy Parker

Second Committee Member

Ronald G. Cummings

Third Committee Member

Albert Marion Church III



Document Type


Included in

Economics Commons