ARTICLE IN PRESS

Tourism Management 28 (2007) 83–95

www.elsevier.com/locate/tourman

Research Article

Untapped demand for heritage: A contingent valuation study

of Prinsep Ghat, Calcutta
Mousumi Duttaa,, Sarmila Banerjeeb, Zakir Husainc
a
Department of Economics, Bethune College, India
b
Department of Economics, Calcutta University, India
c
Department of Economics, Rabindra Bharati University, India
Received 9 March 2005; accepted 26 July 2005

Abstract

In view of the scarcity of financial resources, urban planners in developing countries are attempting to conserve heritage sites on a self-
financing basis through their development as visitor attraction sites. The economic justification of such programmes can be sought in
terms of the potential revenue from heritage tourism.
This approach, however, neglects the significant non-use values derived from heritage resources. Based on the contingent valuation
method, the Total Economic Value for Prinsep Ghat in Calcutta, India, is estimated using limited dependent regression models. While a
TOBIT model is used to determine the determinants of the willingness to pay, a truncated model is used to identify the characteristics of
the potential clientele. The results show the presence of a substantial untapped demand for the site that can be utilized by suitable
marketing of the site without affecting its historic appeal.
r 2005 Elsevier Ltd. All rights reserved.

Keywords: Asia; India; Built heritage; Contingent valuation; Limited dependent analysis; Urban regeneration

1. Heritage as cultural capital to the gradual decay of built-heritage with an associated

Many cities in developing countries are cradles of history
and culture, abounding in heritage buildings and sites. In
many cases, they are also areas in which economic, social
and environmental problems are concentrated. Urban
planners, however, have tended to neglect the issue of
conserving heritage sites in the urban planning and
management process. This is partly due to their pre-
occupation with proper provisioning of essential amenities.
Moreover, legal and institutional barriers1 have also
contributed to this problem by raising the transaction
costs of preserving and maintaining heritage. This has led
Corresponding author. Residence: 19 Bangur Avenue, Block B,
Calcutta 700 055, India. Tel.: +91 33 2574 5395, 98306 27937(M).
E-mail address: dmousumi@hotmail.com (M. Dutta).
1
For instance, in Calcutta, a city in India, the Tenancy Act has freezed
rent to low levels. This reduces the economic incentive to maintain sites.
Secondly, the act—along with the legal system—make removal of tenants
or even illegal squatters a very costly and time-consuming process.
loss of cultural capital.
In recent years, however, urban planners in developing
countries have recognized the merit of preserving the past.
This realization was greatly influenced by the recent
attempts of developed countries to conserve heritage in a
number of innovative ways. The emergence of the concept
of ‘adaptive reuse’ has been of crucial importance in this
context. It calls for a movement away from preservation to
conservation.2 This implies a shift of emphasis from
accurate and reverential restoration to a freer and more
creative attitude to the changes that an old building may
undergo. Instead of preserving the old heritage building as
an object of art it may now be looked upon as a product
integrated to the whole socio-economic system. Thus
planners should concentrate not only on the architectural,
cultural and historic merit of a site but view the entire stock
2
Preservation refers to keeping the heritage in its original form while
conservation means rebuilding or reusing the heritage site keeping it intact
as far as possible (Strike, 1994).

0261-5177/$ - see front matter r 2005 Elsevier Ltd. All rights reserved.
doi:10.1016/j.tourman.2005.07.021
 ARTICLE IN PRESS
84 M. Dutta et al. / Tourism Management 28 (2007) 83–95
of heritage as potentially useful for sound economic, social
and ecological purposes by creating opportunities for
urban regeneration based on their possible use and intrinsic
existence value (Cantacuzzino, 1989).
While restored buildings and sites can be reused in many
ways, an important category of such uses has been to
utilize them as visitor attraction sites to tap the rapidly
burgeoning demand for tourism in general, and heritage
tourism in particular (Cossons, 1989; Davies & Prentice,
1995; Hovinen, 1995; Light & Prentice, 1994; Pearce, 1989).
The principal resources for heritage tourism are the
material remains of the past—in the form of historic
buildings, archaeological sites, monuments and cultural
artefacts (Konrad, 1982; McNulty, 1993). With the
expansion of tourism, however, the term heritage is
extended to include those things inherited from the past
that can be selected for promotion as tourism products
(Prentice, 1992) through development of new infrastructure
(e.g., the expansion of the hotel and transport sector) and
new functions, like leisure, amusement, entertainment,
shopping, etc. (Peattie & Moutinho, 2000).
However, the problem facing cash strapped policy-
makers in LDCs is whether the huge expenditure involved
in restoring and maintaining heritage sites is economically
justified. This involves estimating the benefit from conser-
ving the site. The total value of conservation consists not
only of the revenue generated from promoting heritage
tourism, but the benefits that can be enjoyed even without
accessing the site. While the former can be estimated on the
basis of observed market behaviour, the total value can be
estimated using only Stated Preference methods.3
This paper focuses on a heritage site of a specific South-
Asian city, Calcutta—an old but active metropolitan city in
India. The site is Prinsep Ghat, a river front structure
having an important historical and aesthetic value. The site
has easy accessibility from different corners of the city and
also from the outskirts. The riverfront is a popular
attraction for Calcutta’s residents. Consequently, it can
be commercially developed utilizing its heritage appeal.
The paper reports the results of a survey employing
conjoint choice questions to elicit people’s preferences for
an urban regeneration project that changes the aesthetic
and use character of the heritage site.
The paper is organized as follows. In the next section the
existing literature is briefly reviewed. The history of the site
is presented in the third section. This is followed by a
description of the survey methodology. In the next section,
motivations underling decision (not) to contribute is
examined; this is followed by a descriptive and econometric
analysis of the determinants of WTP. These results are then
3
The problem, therefore, is being approached from a social perspective
and not from that of manager’s. The latter perspective would involve a
comparison of the costs with the revenue that can be generated from
heritage tourism; from a social perspective, it is the total value of the
conservation programme, and not the potential revenue from tourism,
that is relevant.
used to estimate Total Economic Value (TEV) of the site.
The last section draws policy conclusions.
2. Estimating demand for heritage—a review of literature
The feasibility of using heritage as a capital can be
studied using two approaches. One category of studies has
attempted to forecast tourism demand using demand
elasticities (Gunadhi & Boey, 1986) and various versions
of the ARIMA model (Akal, 2004; Chu, 2004; Goh & Law,
2002). However, these methods are based on the existing
demand for a site or region that has already been revealed
in the tourism market by visitors to the site.
The second approach takes a broader perspective. It
highlights all possible types of benefits accruing from built
heritage. Based on Mitchell and Carson (1989), these
benefits can be classified as follows:
(1) Use Value: (a) Commercial value: Tourism to such
heritage sites can generate income and employment in
ancillary industries like hotel, transport, etc. This flow of
income and real estate value comprise of commercial value
of the site. (b) Recreational value is the satisfaction derived
from leisure-based activities.
(2) Non-use value: (a) Existence value: The mere existence
of the site affords satisfaction to a person in the form of
deriving pride in his heritage. (b) Vicarious value: This is
the satisfaction derived from leaving open the option to
another member of his generation to derive direct use value
from the built heritage. (c) Bequest value: The fact that an
individual allows the future generation the option to enjoy
the site also has some value.
(3) In the presence of uncertainty, two types of benefits
emerge: (a) Option Value: Preservation of the heritage site
allows its adaptive reuse in the future. Option value is the
risk premium arising from risk aversion of individuals with
respect to uncertainty about future availability. (b) Quasi-
option value: This is the premium paid to prevent an
activity that would have foreclosed a better-informed
decision at a latter time. The underlying assumption is
that a learning process may enable the agent to obtain a
new use value from a heritage site.
To estimate all these values the TEV (comprising of both
use and non-use values) must be taken into account.
Recent definitions of conservation have increasingly fo-
cussed on such non-marketed and non-use benefits gener-
ated by cultural resources (Mossetto, 1994, pp. 81–84). It is
difficult to estimate the total value for this type of urban
regeneration and restoration project because many of the
services that they provide to the public—including aesthetic
quality, comfort, sense of neighbourhood identity, city
character, preservation of cultural and historical heritage,
access to outdoor space—are non-market benefits (Alberini,
Riganti, & Longo, 2003).
Environmental economists have shown that, in the
presence of a strong link between a marketed good and
the resource being valued, Willingness to Pay (WTP) for an
increase in non-marketed goods/services can be measured
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M. Dutta et al. / Tourism Management 28 (2007) 83–95
using revealed preference methods like Travel Cost method
or Hedonic Pricing method. However, when there is weak
or strong seperability between the resource being valued
and a marketed good, the problem of missing markets for
non-use values reduces the ability of revealed preference
methods to capture the TEV of goods with significant non-
use values; stated preference methods involving direct
questioning of respondents become relevant. Of stated
preference methods, the Contingent Valuation Method
(CVM), first used by Davies (1963) for the marginal
valuation of Maine Woods in USA, is currently ‘‘by far the
most popular technique for measuring total value for
goods having significant passive use value’’ (Carson,
Flores, & Mitchell, 2001, pp. 109).
Over the years, a consensus has emerged that CVM can
estimate the use value accurately—stated WTP for use
values have been found to be similar to actual WTP in field
and laboratory experiments (Bishop, Heberlein, & Kealy,
1983; Dickie, Fisher, & Gerking, 1987; Kealy, Dovidio, &
Rockell, 1988). Whether this is also true for non-use values,
however has remained a major source of contention
(Diamond & Hausman, 1994; Hausman, 1993). Critics of
CVM also point to the different types of strategic biases
that may also creep in as a result of the hypothetical nature
of the survey. Free riding (Brubaker, 1982; Marwell &
Ames, 1981) or warm glow effects (Seip & Strand, 1992)
has been observed in CVM studies. These biases, however,
are not specific to CVM and do not render the method
invalid (Arrow et al., 1993).
In spite of persistent criticism, the cautious acceptance of
CVM by the Blue Ribbon Committee4 set up by National
Oceanographic and Atmospheric Administration (NOAA)
to evaluate the validity of CVM has set the final seal of
approval. The report also spells out a set of rigorous
guidelines according to which such surveys should be
undertaken (Arrow et al., 1993). This has led to the
increasing adoption of this method in various fields,
including cultural economics. Epstein (2003) argues that,
despite all its limitations, CV remains the best method to
aggregate preferences for cultural resources.
Despite the plethora of CV studies (Carson et al., 2001)
only a small fraction is devoted to valuing cultural
resources—and even less for heritage resources (Noonan,
2003). Examples of such studies valuing heritage are
Alberini et al. (2003), Bille Hansen (1997), Morey and
Rossman (2003), Navraud and Ready (2002), Santagata
and Signorello (2000), and Sanz, Herrero, and Bedate
(2003). CVM has also been used for checking feasibility of
promoting tourism for natural resources in a number of
cases (Laarman & Gregersen, 1996; Lee, 1997; Lee & Han,
2002; Hooi & Ying, 2004). Noonan (2003) reports that
most of these applications are in the context of developed
countries. Out of the 65 CV surveys of cultural resources
covered by him only five studies were for developing
countries—one each for Argentina, Mexico, Morocco,
4 6
Chaired by Kenneth Arrow and Robert Solow.
85
Peru and Tanzania. However, many developing Asian
countries also abound in heritage sites. Given low levels of
per capita income in these countries, it is necessary to
evaluate the demand for such sites using the CVM in order
to judge their potential as a possible tourist attraction site.
The present study differs with respect to its methodology
from similar CVM studies. Firstly, unlike other studies
based mostly on OLS regression method (Hooi & Ying,
2004) or dichotomous choice models (Laarman & Greger-
sen, 1996; Lee, 1997; Lee & Han, 2002), it uses a TOBIT
regression model to identify the determinants of WTP for
improving the site. Secondly, the study employs the
regression results to quantify the TEV of the site. Thirdly,
the target group to whom heritage can be marketed has
also been identified using a truncated regression model.
3. A brief history of Prinsep Ghat5
The Prinsep Ghat was the largest, the grandest, and the
most beautiful of the different Ghats of Imperial Calcutta.
It is slightly to the south of a popular promenade by the
River Hooghly. The Ghat was rectangular in shape,
designed like the Greek Parthenum. There were two marble
lions—one reclining, the other standing—near the landing
place.6 The Ghat itself was named after Sir James Prinsep
(1799–1830), former Assay Master in the Calcutta Mint.
The exact date of construction of Prinsep Ghat is
unknown, though it is documented to be in existence at
least since 1843. Lord Ellenborough was the first Viceroy to
depart from this Ghat. Their Royal Highnesses, Edward
VII and George V also landed here during their visit to
Calcutta. Ships used to land here directly from England
carrying the Viceroy, troops and civilians from different
sections of the population. Of the latter, the most colourful
and eagerly awaited were the ‘fishing fleet’—the group of
unmarried English girls sent to India by their desperate
parents to capture a husband during the Winter Balls.
The construction of the Howrah Station opened up an
alternative land route between Bombay and Calcutta. This
led to the decay in importance of the Prinsep Ghat. Lord
Curzon was the last Viceroy to depart from this Ghat, in
1905. Later on the river receded westwards, away from the
Ghat. It slowly fell into disuse and its landing place became
ruined. It is only in 2000, the Public Works Department
(PWD) of the West Bengal Government started a program
to renovate the Ghat and beautify its surroundings.
4. Methodology
4.1. Selection of the sample
A CVM study was undertaken to explore the possibility
of urban regeneration via development of heritage tourism
5
The history of Prinsep Ghat is based on Doig (ns), Mitra (1980), Mitra
and Mitra (1988).
In 1977 the lions were removed to Fort William.
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Table 1
Description of the data
Income groups % of sample Occupational % of sample
population groups population
0–5000 21.54 Formal 45.30
services
5001–10,000 19.34 Business 12.15
10,001–15,000 15.47 Professional 13.81
15,001–20,000 17.68 Dependents 14.93
20,001 & above 25.97 Manual and 13.81
informal
services
Note: Dependents include housewives, unemployed and retired persons.
in a commercial basis around this site. The survey period
began in August 2002 and continued up to January 2003.
The survey elicits preferences of the residents of Calcutta
because it was presumed that any change in the site would
primarily influence the welfare of the residents of the city.
Others may hold both use and non-use values for Prinsep
Ghat, but this has been ignored at this stage of the
research.
The sample size was initially 203 individuals. Despite the
desirability of using the random sampling method, the
sample was drawn in a purposive manner to achieve a
balance between different income, occupation education
and religious group (Table 1). While trying to obtain a
sample with a socio-economic pattern similar to that of
Calcutta, the primary focus was on ensuring a sufficient
number of observations in each category. While this limits
the extent to which the results can be generalized
(population mean, for instance, can no longer be estimated
from the sample means), this enables us to avoid possible
problems that may have been encountered in estimating the
regression models used to estimate TEV in Section 7.
CV surveys can be administered in various ways—
through mail, telephonic and face-to-face interviews. Mail
surveys can be easily administered, but as literacy levels are
low in Calcutta, it was expected that the response rate
would be very low following this method. Further, it is
impossible to check whether the respondent understands
the questions. While this problem can be avoided in the
case of telephonic surveys, visual cues cannot be used. In
both these methods, low-income respondents get dropped
from the survey.7 Therefore, the face-to-face interview
method was employed, following the recommendations of
the NOAA panel (Arrow et al., 1993). This method allows
greater control over the interview and the use of visual aids
arousing interest and awareness.8
7
In Calcutta, many respondents will not be able to read the mail order
questionnaire. At least 25% of the total population do not have a postal
address; even more lack telephones.
8
The danger with this method, however, is that the response may
become dependent on the manner in which the survey is administered by
the interviewers. To avoid this problem the need to speak in a neutral
Educational groups % of Religion % of
sample sample
population population
Primary education & less 9.39 Hindu 75.69
High school education 16.02 Islam 12.71
Graduate 30.95 Christian 7.18
Post-graduate and above 22.65 Others 4.42
Professional qualification 20.99
As pointed out before, the CVM has been criticized for
its hypothetical nature—as Scott claimed ‘‘ask a hypothe-
tical question and you will get a hypothetical response’’
(Scott, 1965, p. 37). This may generate invalid responses or
outliers. In defence, CVM practitioners argue that the
share of invalid or inconsistent responses is low and focus
on identifying such observations.9 Unfortunately there is
no established theoretical guideline to identify outliers or
invalid responses. Further, as pointed out by Hanley and
Spash (1993), very large bids need not necessarily represent
outliers. They argue that economic value is based on
effective demand; thus if such bids represent a genuine
response and if the income level of respondents is
commensurate with their bid, then there is no justification
for excluding them. Therefore, non-zero bids have been
checked for their consistency by comparing WTP with
respect to variables like attitudes towards heritage, knowl-
edge about the site, socio-economic background, etc.
Scatter plots of WTP against income were prepared and
observations with WTP significantly higher/lower than the
average WTP of his/her income group were identified. The
attitude, educational level and specific traits of the
respondent were considered using his/her filled-in ques-
tionnaire to check whether the response was justified;
otherwise the observation was dropped. This process was
repeated for variables like literacy level, knowledge about
Prinsep Ghat, attitude towards development and heritage,
and occupation groups. It was found that 22 responses
were inconsistent; these were discarded. The results are,
therefore, for 181 observations only.
(footnote continued)
manner and avoid giving cues was emphasized during training of
interviewers. The possibility of any interviewer bias manifested through
variations between the WTPs obtained by the interviewers was subse-
quently tested using non-parametric methods (the Kruskall-Wallis H-test
and Mann-Whitney U-test) and found to be absent.
9
It has also been pointed out that even market data reported by seller
and buyers during marketing surveys is misstated in an attempt to
influence market conditions (Boyle & Bergstorm, 2001, p. 199). Thus the
problem of invalid responses is not unique to CVM and does not
invalidate this method.
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4.2. Contingent scenario and respondents’ preferences
Since, the respondents have to indicate their choice in an
(constructed and therefore) unfamiliar market, they must
be provided with complete information about the resource
being valued (Fischoff & Furby, 1988; Sagoff, 1988). While
it has been acknowledged that consumers in actual markets
do not base their choices on the entire information set, the
subset on which the choice is made is not known and varies
across consumers. This calls for provisioning of complete
information in the contingent scenario (Munro & Hanley,
2001). However, too much of information can lead to
‘‘cognitive overload’’ (Boyle & Bergstorm, 2001); further,
the information provided in actual markets is rarely perfect
(Munro & Hanley, 2001), so that the issue becomes one
of providing the optimal information about the commodity
characteristics and services provided by it, and the
availability of substitutes.10 It is also essential for the
scenario to be believable and neutral (Mitchell & Carson,
1985).
After briefing respondents about the history of the site
and on the recent Government step undertaken by the
Government to restore Prinsep Ghat, a hypothetical
scheme was presented before the respondents. This
scenario described how the Government was planning to
promote the tourism potential of the site by beautifying the
riverside, introducing boating facilities and river based
recreational activities, setting up theme restaurants and
retail outlets selling artefacts would generate recreational
value, income and employment opportunities. But, in view
of scarcity of funds, the Government was proposing to
raise funds directly from the public. The respondents were
asked to state their maximum WTP for this programme.
To avoid any spurious emotions affecting responses,
respondents were reminded that their income is limited
and has alternative uses. Again to avoid any embededness
bias, respondents were requested to think only about
Prinsep Ghat and not about the other heritage sites of
Calcutta.11
CVM studies have showed that the payment vehicle and
its institutional context can influence response (Mitchell &
Carson, 1985; Rowe & Chestnut, 1983). The pilot survey
for Prinsep Ghat had revealed that, in view of the disparity
in socio-economic status of the respondents, it was difficult
to design a payment vehicle that would be commonly
accepted. To avoid a bias against the bid vehicle,
alternative means of payment were offered to the
respondent—cash or cheque, monthly deductions through
electricity bills, or any other medium of payment.
The survey reveals that both recreational and commer-
cial use values are significant. Many of the respondents
10
Again, the problem is the absence of a set of accepted operational
guidelines.
11
Given the unique nature of the conservation programme in Calcutta
and nature of the site, the chances of embeddedness occurring is possibly
low.
87
believed that the spot could be developed as a tourist
attraction with theme restaurants and outlets selling
artefacts with historical associations. Even peddlers re-
sponded positively to such ideas as they realize that this
would generate employment and income. However the
commercial use value could be increased further if the site
is developed properly. Only a few argued that commercial
use of the site may affect the historical and aesthetic value
of the site—that is, commercial development was not
complementary to conservation.
4.3. Elicitation of bid and willingness to pay
There are various methods of eliciting the WTP—open-
ended, referendum, iterative bidding game and payments
card. It has been pointed out that, given imperfect
information and the time constraint facing the respondent,
the open-ended format typically leads to understatement
(Bateman, Langford, & Rasbash, 2001).
In contrast, dichotomous formats resemble market
transactions (Desvousges, Smith, & McGivney, 1983)
and, under certain conditions, result in truth telling
becoming the optimal strategy (Hoehn & Randall, 1987).
Within the dichotomous format, the referendum method
has the defect that it fails to elicit actual WTP. So this
survey employed the iterative bidding method.12
In the absence of any accepted method to determine the
starting bids, the suggestion made by Cooper (1993) and
Kanninen (1995)—that they be determined on the basis of
information gained from pilot surveys—has been followed.
Three starting bids (SBID) were used—yearly amounts of
Rs. 575 (the highest start bid—referred to as HSBID), Rs.
375 (referred to as MSBID) and Rs. 125 (termed LSBID).13
One problem with starting bids is that respondents faced
with an unfamiliar situation may interpret them as
indicative of the true value of the resource and use it as a
reference point.14 This may create an anchoring bias
(Boyle, Bishop, & Welsh, 1986; Rowe, d’Arge, & Brook-
shire, 1980). However, the relationship between the initial
bid and the response is not inconsistent with utility
maximizing behaviour (Farmer & Randall, 1995; Hane-
mann, 1994). Further, anchoring has been observed even
for market goods (Cooper & Loomis, 1992 and Shapiro,
1968).
CVM surveys ask respondents whether they would
contribute for a specific period or not.15 During the pilot
survey, however, information was sought on both the
12
The payments card is not popularly used as it is difficult to construct,
particularly for heterogeneous communities in LDCs.
13
The starting bid has been stated in Rupees (Rs.)/month. Restating the
chosen WTP in Rs./year and allowing the respondent the option to revise
the choice made earlier has rechecked the response. Rupee is the Indian
currency; it is approximately equal to about two US cents.
14
For a citation of literature, refer to Bateman et al. (1995).
15
In CVM studies the bid vehicle can bias stated WTP. To avoid bias
respondents have been offered a choice of alternative instruments of
payment: cash/cheque, via electricity bills, user fees and any other forms.
 ARTICLE IN PRESS
88 M. Dutta et al. / Tourism Management 28 (2007) 83–95
Table 2
Estimates of willingness to pay
Group Observations Median Mean Standard
deviation
All 181 375.00 613.06 732.75
observations
Positive 140 550.00 792.60 742.87
LWTP
contribution amount and preferred period of payment. It
was found that the period of payment varied across
individuals significantly. For instance, most of the higher
income respondents prefer one-shot payment, while low-
income respondents prefer to pay a low sum over a longer
period. In the study, therefore, Lifetime Willingness to Pay
(LWTP) was used instead of WTP. This is defined as WTP
per annum multiplied by number of years for which the
individual is willing to pay. In the cases where an individual
was willing to pay for the rest of his or her life, the
expectation of life at present age was calculated from Life
Tables to find the approximate years of payment. Taking
LWTP, rather than WTP, can be justified on the grounds
that preservation of heritage sites is not a once-and-for-all
task, but a continuous responsibility.
The average and median LWTP for Prinsep Ghat is
given in Table 2. While Mean is the commonly used
measure of Central Tendency, Median WTP is also
reported in studies as it remains unaffected in the presence
of extreme values. It can be seen that the median is lower
than mean. This implies that majority of the respondents
are willing to pay less than the mean WTP.
5. Motivations underlying WTP decision
Subsequently, the motivations underlying WTP decision
are analysed on the basis of the reasons cited by
respondents for contributing or not after obtaining the
WTP for the site. This once again tests the consistency of
preferences.
It is found that 77.35% of respondents are willing to pay
whereas 22.65% are not willing to pay. The major causes
for zero response are summarized in Table 3. An important
trend emerges from a study of the diverse motives. Very
few people (only 4% of respondents not paying) feel that
conservation of Prinsep Ghat is unimportant. Analysing
the income profile of the non-contributors and their stated
reasons for not paying indicates that lack of income is the
main reason for not contributing. This leads them to argue
that the funds should be raised from visitors or provided by
the Government.
An analysis of the reasons for positive willingness to
contribute (Table 4) reveals that the presence of recrea-
tional use value is not an important factor. This is because
of the availability of substitutes in other parts of the city,
Calcutta—the lawns of the nearby Victoria Memorial Hall
for instance. However, the non-use values and potential
commercial use value are important factors explaining
willingness to contribute.16
6. Analysis of preferences
The next step of the analysis attempts to find out the
causal factors influencing the responses.
6.1. Selection of the attributes
The causal factors expected to be relevant in explaining
WTP are as follows:
Family Income (FINCOME), Expenditure on travelling
for leisure to places outside Calcutta (EXP), Education
(GRAD), Attitude towards heritage (revealed through
the extent of his agreement with five statements—AT1,
AT2, y AT5), Knowledge about Calcutta’s heritage
sites (KNOW), Number of museum visits in last three
years (MUSEUM), and Attraction of built heritage
during travels (BUILDING) are expected to influence
WTP favourably (expected sign of the regression
coefficient is positive). Whether s/he had heard the
name of the site (HEARD), or had visited it (VISIT) and
the respondent’s knowledge about the present condition
of the site (AWARE) are also important, and were
expected to affect WTP positively. In addition, the value
of the Start Bid (SBID) and the gender of the interviewer
(GINT) were also hypothesized to influence WTP.
Finally, the responses were expected to be sensitive with
respect to occupation of the respondent, his/her age,
gender and religion.
A list of variables on which information has been
collected is given in Appendix A.
6.2. Correlation analysis
The correlation coefficient between each of these
variables and LWTP has been estimated to check their
degree of association. In many cases the correlation
coefficients are found to be significantly high (Appendix B).
As expected, the simple correlation between LWTP and
educational qualification (whether the respondent is at
least a graduate), family income and travelling expenditure
are significantly positive. On the other hand, the correla-
tion coefficient of LWTP with occupation is significantly
negative. The codes for occupations have been arranged in
such a manner that higher ranks imply both lower income
and awareness levels. Hence negative correlation between
LWTP and occupational structure is quite expected. The
relation between LWTP and start bid is also significantly
positive.
16
Epstein (2003), however, warns that even CVM may miss some
components of the non-use value of cultural resources.
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M. Dutta et al. / Tourism Management 28 (2007) 83–95 89

Table 3
Distribution of persons by reasons for not paying

Reasons for not paying Number of respondents Percentage

I feel that conservation of Prinsep Ghat is unimportant 4 6.15

There are more serious problems requiring our attention 11 16.92
The Fund should be raised from visitors to Prinsep Ghat 9 13.85
Only high income groups should contribute 8 12.31
I want to contribute, but I have no spare income 10 15.38
It is the responsibility of the Government, etc. 17 26.15
Others 6 9.23
Total 65 100.00

Note: Respondents had been allowed to opt for more than one option. This explains why the column total of ‘Number of Respondents’ (65) does not tally
with number of persons refusing to pay (41).

Table 4
Distribution of persons by reasons for paying

Reasons for not paying Number of respondents Percentage

Regular/occasional visitor to Prinsep Ghat 7 2.28

Prinsep Ghat should be protected to keep option of visiting open for future 103 33.55
It is our duty to protect heritage sites 97 31.60
Prinsep Ghat should be protected to generate income from tourism 97 31.60
Payment is mandatory 3 0.98
Total 307 100.00

Note: Again, there is a discrepancy between the total of 307 and number of respondents with positive WTP (140); this is owing to the fact that respondents
were allowed to cite three reasons for their positive WTP.

Contrary to maintained belief, no significant association
is observed between LWTP and attitudes towards Calcutta’s
heritage, whether a person heard about the site or visited the
site, whether s/he is aware of the history and current
position of the site, age of the respondent, his/her attraction
towards built heritage while travelling for leisure, and the
number of museum visits in last three years. Correlation
analysis, by itself, is incomplete and has to be supplemented
by further statistical analysis examining the existence of
causal relationship between a group of variables and a
dependent variable.
6.3. Choice of appropriate econometric model
The method of estimation to be applied in case of a
CVM study depends on the structure of bidding. If the
bidding is of close-ended type, the relevant estimation
method would be LOGIT/PROBIT.17 These dichotomous
choice models are subjected to severe criticism in terms of
their limited ability to account for the restrictions imposed
by underlying economic theory (Hanemann & Kanninen,
2001). In fact the censored regressions based on open-
ended referendum are expected to produce more realistic
estimates of the WTP in a hypothetical market.
In this study, all persons who are not willing (or able) to
pay for the restoration and development of the site are
reported to have a zero WTP. However, this group is not
homogenous and can be further divided into two sub-
groups: While some people have zero WTP, others may
have value the site negatively. The latter group is against
conservation of the site for various reasons: they may feel
that there are other important problems requiring atten-
tion, or they may think that any attempt to reuse the site
will degrade its historical and aesthetic value, etc. For all
practical purposes it is not possible to obtain any estimate
of the negative WTP. So the negative value of the
dependent variable is conceptually possible, but not
actually observable. Thus, the dependent variable is
practically censored and the problem of ‘limited depen-
dence’ is encountered.
Thus,
LWTP ¼ LWTP
if LWTP
40;
(1)
LWTP ¼ 0 otherwise:
The resulting sample is said to be a censored sample. For
all our observations with LWTP ¼ 0, we only know that
LWTP*p0; that is,
PðLWTP ¼ 0Þ ¼ PðLWTP
p0Þ. (2)

17
A LOGIT model has been estimated. However, as the results are
disappointing (with only occupation and as significant variables) the
results have not reported. One of the causes of poor result with LOGIT
model is it works with binary relations, thereby loosing valuable
information.
In other words, a probability mass (a ‘spike’) at LWTP ¼ 0
is being inserted. Since cases where LWTP* ¼ 0 (the first
sub-group) cannot be distinguished from cases where
LWTP*o0 (the second sub-group), the use of the TOBIT
model to identify the factors affecting LWTP for entire
 ARTICLE IN PRESS
90 M. Dutta et al. / Tourism Management 28 (2007) 83–95
sample seems appropriate. Such a model can be used to
predict the total economic value of the site.
Some additional analyses are undertaken based exclu-
sively on the positive responses. Thus the regression is
truncated at LWTP ¼ 0. This truncated analysis would be
especially useful in studying the characteristics of the
potential clients of the renovated site. This is useful in
designing the nature of renovation and the marketing
strategy. For instance, if the major tourists are educated
middle-class family groups then the provision of entertain-
ment services should be designed accordingly to match
their tastes and preferences.
In this paper two regression models are estimated using
the LIMDEP package:
(a) Model I: TOBIT Model;
(b) Model II: Truncated Model.18
6.4. Regression results
Initially, LWTP has been regressed on all variables
expected to have significant association with it. Since the
t-values of some variables were very low, the models were
re-estimated dropping the variable with the lowest t-value
in each step. The results of the final iterations are presented
below:
TOBIT Model:
LWTP ¼ 1632:45 þ 583:09 AT3 þ 0:003 EXP
ð2:23Þ ð1:86Þ ð2:07Þ
þ 374:57 GRAD þ 2:17 SBID .
ð2:73Þ ð7:54Þ
Log Likelihood Function: 1149.801.
Truncated Model:
LWTP ¼ 12627:37 þ 2808:80 AT3 þ 0:02 EXP
ð2:18Þ ð1:85Þ ð3:64Þ
þ 2212:54 GRAD þ 1443:64 SERVICE
ð2:88Þ ð2:57Þ
þ 1339:61 PROF þ 1565:59 BUS
ð2:16Þ ð2:33Þ
 927:59 DAGE1  1242:13 DAGE3 þ 957:14 GINT .
ð2:59Þ ð2:18Þ ð2:68Þ
Log Likelihood Function: 1149.801.
[The t-ratios are given in parentheses.]
18
In Models I and II the exact values for SBID have been used and
treated as a quantitative regressor. In another variant of the truncated
model (say, Model III), SBID has been used as a qualitative variable. To
capture the differential effect of SBID variations on WTP two intercept
dummies were constructed. In construction of these dummies the relevant
question becomes: which SBID to take as the reference category?
Theoretically, the estimation results should be the same irrespective of
which SBID is used as the reference category. The estimation results are
the same whether LSBID or HSBID is taken as the reference category.
Surprisingly, slightly different results are obtained on taking MSBID as
the reference category—the coefficients of this model differ from the
earlier variants even after the final iteration. Since, Model II captures the
effects of a greater number of variables, only this Model has been
reported.
In Models I and II, AT3, EXP and GRAD are
significantly positive. The truncated regression further
shows that occupation of the respondents is also important
in explaining LWTP. In Model II the coefficients of
DAGE1 and DAGE3 are negative. The negative sign of
DAGE1 results from the younger people having less
nostalgic feelings about Calcutta’s past compared to
middle-aged persons. With regard to DAGE3, the older
people may have a greater feeling for the past, but it is
unlikely that this feeling will be reflected in the form of
monetary payments as these people generally have less
command over buying decisions and face greater uncer-
tainty due to their dependence. The results of the truncated
models also indicate that respondents generally state a
higher WTP to impress female interviewers. This aspect,
however, is not relevant in identifying the target group—
which was the objective for estimating the truncated
model.
The TOBIT model considers all individuals—both who
are willing and not willing to pay. It is used to project the
demand for developing the site as tourist attraction site.
The truncated model, on the other hand, provides a picture
of the effect of different motivations underlying the
response of individuals. It indicates that educated persons,
high-income households, middle-aged persons, working in
service sector or engaged in business or professional
activities are potential user of the resource. The latter
dimension becomes important in developing marketing
strategies for the post-restoration phase.
ð3Þ
6.5. Omitted variables
Some variables—gender, religion and family income of
the respondent, his/her attitudes (except AT3) towards
heritage, his/her awareness about the site, his/her museum
visits in the last 3 years, knowledge about Calcutta’s
heritage sites, etc.—expected to be related to WTP had to
be dropped from the final regression because of their low
t-values. One explanation is that the effects of these
variables are captured through other variables, which are
present in the final iteration of the models. To check the
ð4Þ validity of this possibility the correlation matrix between
the variables appearing in the final results and some of the
important omitted variables has been estimated using the
Pearson Correlation Coefficient19 (Tables 5 and 6).
From these correlation matrices, it is apparent that the
included regressors and several excluded variables are
highly correlated. So explicit inclusion of all the expected
influences are barred by the potential problem of multi-
collinearity. The list of factors, finally identified as
determinants of LWTP are reported in Table 7.
19
Although we have presented the regression results for Attitudes taken
separately, we had also experimented with an index based on [1] all 5
attitudes [2] the last 3 attitudes. The best regression result was obtained for
AT3.
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M. Dutta et al. / Tourism Management 28 (2007) 83–95 91

Table 5 is run to obtain estimated values of a, b1 and b2.20 The

Alternative attitudes: a correlation analysis alternative values of the Starting Bid (0, 125, 375 and 575)
Incorporated variable AT1 AT2 AT5
and the average expenditure on travelling (EXP) estimated
for each sub-group are substituted in the above equation to
AT3 0.337** 0.166* 0.149* get the estimated LWTP (corresponding to each value of
the SBID) for that particular sub-group.
**Correlation is significant at 0.01 level (2-tailed).
*Correlation is significant at 0.05 level (2-tailed). Though there should have been four equations, the first
sub-group has only one observation; so the stated value
of the respondent’s LWTP is used for the first category
Table 6 (Table 8).
Socio-economic factors: a correlation analysis From the estimated LWTP of five equations median
LWTP is calculated for non-graduates. Similarly, median
Incorporated variable HEARD VISIT AWARE FINCOME MUSEUM
LWTP is estimated for the group GRAD ¼ 1 from eight
DAGE 0.213** 0.190* 0.177* equations of relevant sub-groups. The median values are
GRAD 0.217** 0.264** 0.460** 0.210** then multiplied by the total number of non-graduates and
EXP 0.428** 0.215** graduates respectively. Using Census data and the Socio-
**Correlation is significant at 0.01 level (2-tailed). economic Profile for Calcutta prepared by CMDA
*Correlation is significant at 0.05 level (2-tailed). (Chatterjee et al., 1999), the total number of non-graduates
and graduates above 25 years in the city have been
estimated to be 2,684,199 and 499,314, respectively.
Multiplying the class specific median LWTP by this figure,
Table 7 and adding the two figures, TEV of Prinsep Ghat is
Relation between regressors appearing in final iteration and excluded estimated to be Rs. 686,186,540 only. Although the figure
regressors obtained for TEV appears very large, it is actually based on
a very modest payment of less than Rs. 300 (about USD
Included variables Include effects of Excluded variables
6.67) spread over a period. However, despite precautions,
AT3 AT1, AT2, AT5 the estimates of TEV may suffer from embededness. So we
DAGE HEARD, VISIT, have scaled down the TEV by assuming that 50% of the
AWARE
promised value will actually be paid. This corresponds to
GRAD HEARD, AWARE,
FINCOME, the recommendations of the NOAA Panel (Arrow et al.,
MUSEUM 1993). The resultant TEV is Rs. 34,309,327.
EXP FINCOME, The total costs of renovating Prinsep Ghat was Rs.
MUSEUM 1,900,000 only. Assuming that 10% of this amount is spent
AT4, BUILDING,
as annual maintenance, the annual expenditure on Prinsep
KNOW, RELIGION
Ghat turns out to be Rs. 190,000 only, which is much less
than the value of the site. The surplus indicates the
presence of an untapped demand for urban regeneration
7. Total economic value of Prinsep Ghat centred around the Prinsep Ghat. It is further estimated
that the principal amount necessary to generate the annual
Finally the total economic value (TEV) of Prinsep Ghat maintenance cost of the site is Rs. 2,714,285.71. This
to residents of Calcutta Metropolitan Area is estimated amount can be obtained if respondents pay only 0.4 % of
using the TOBIT regression model. Here the relevant their stated WTP!
causal determinants of WTP are AT3, EXP, GRAD and Before passing on to the concluding section, one
SBID. Information on AT3, EXP and SBID are not observation is in order. The TEV reported has been
available for the relevant population as a whole. But estimated for a given scenario. It is possible to increase the
information on GRAD is obtained for the residents of TEV by modifying the scenario enhancing the value of
Calcutta Metropolitan Area from the Calcutta Metropo- Prinsep Ghat even more. This has important implications
litan Development Authority Socio-economic Household for heritage preservation and optimal land use in densely
Survey of 1996–97 (Chatterjee, Bhattacharya, & Halder, populated areas.
1999) and Directorate of Census Operation, West Bengal
(1991). 8. Conclusion
Based on the educational levels and attitudes towards
heritage the sample is divided into four sub-groups (see In recent years, an important justification of conserva-
Fig. 1). For each of these sub-groups the regression tion in developing countries was that they could be used as
equation
20
The intercept dummy includes the effect of other variables (AT3 and
LWTP ¼ a þ b1 EXP þ b2 SBID (5) GRAD).
 ARTICLE IN PRESS
92 M. Dutta et al. / Tourism Management 28 (2007) 83–95

GRAD=0 GRAD=1

AT3 = 0 AT3 = 1 AT3=0 AT3 = 1

SBID=0 SBID=125 SBID=375 SBID=575SBID=0 SBID=125 SBID=375 SBID=575 SBID=0 SBID=125 SBID=375 SBID=575SBID=0 SBID=125 SBID=375 SBID=575

Median LWTP1 Median LWTP2

Fig. 1. Categories used for estimating TEV.

Table 8
Estimation of class specific median LWTP

GRAD Attitude Sample SBID Intercept Coeff of SBID Coeff of EXP AverageExp Projected LWTP Median

GRAD ¼ 0 AT3 ¼ 0 1 No regression could be fitted 275 205.1026

AT3 ¼ 1 46 0 123.686 1.1703 0.006 6035.56 87.4724
125 58.81506
375 351.3901
575 585.4501
GRAD ¼ 1 AT3 ¼ 0 6 0 169.494 0.9705 0.0037 21500 89.944 273.9935
125 31.3685
375 273.9935
575 468.0935
AT3 ¼ 1 129 0 147.551 2.4354 0.0027 21804.65 88.6787
125 215.7463
375 824.5963
575 1311.676

cultural capital to maintain the site on a self-funding basis
by developing it as a visitor attraction site. This approach
has been justified by estimating tourism demand (based
only on use values) for the heritage sites. On the basis of
this study of Prinsep Ghat, this paper argues that this
approach underestimates the total benefits from such
programmes as it ignores the considerable non-use and
non-market values stemming from such programmes.
The survey reported in this paper estimates median
LWTP of Prinsep Ghat to be Rs. 375. Using a TOBIT
model, the bid function was estimated identifying the
determinants of LWTP. It was found that attitude of the
respondent, educational level, and expenditure on tourism
determined WTP. Further, these variables also captured
the effects of other variables like family income, religion,
knowledge about the site, frequency of museum visits, etc.
on WTP. Using this regression model the TEV was re-
estimated. It was found that even if respondents paid only
0.4% of their stated WTP, this would justify the conserva-
tion of Prinsep Ghat.
Although the purposive sampling method used in this
survey limits the confidence with which these results can be
generalized for policy making, this study does validate the
starting proposition that the use of heritage as a cultural
capital can be economically justified. However, it is not
enough to test for viability. Given the high opportunity
costs of funds in LDCs policy makers also have to initiate
steps to mobilize funds and ensure that conservation
programmes are financially viable from a management
perspective. This calls for steps like converting our
hypothetical scenario to reality and mobilizing funds from
potential clientele. The results of the truncated model
indicates the socio-economic characteristics of the group
that can be targeted during commercial development of
such sites: educated persons, persons with high income
levels, middle aged persons, those working in the service
sector, or engaged in business, or professionals, and their
families would form the prospective customer group.
Although this paper has focussed on the demand side,
supply side considerations may also play important role in
this context. The extent to which this special type of
tourism development is possible depends on the presence
of suitable structures in terms of accessibility, space
availability (Shackley, 1998; Swarbrooke, 1995), on the
financial capacity of public and private partners, on their
planning and marketing ability, and on the political will
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M. Dutta et al. / Tourism Management 28 (2007) 83–95 93

(Jansen-Verbeke & Lievois, 1999). It may also involve
selection between alternative sites. Tools like multinomial
LOGIT with random utility modelling (RUM) may be
appropriate for such purposes. This type of exercise would
be essential for the civic authority to carry out in
prioritising the sites to be selected for such development.
Acknowledgements
The study was funded by a Minor Research Project
grant of the University Grants Commission, Eastern Zone,
India. Insightful comments and suggestions from Robin
Mukherjee, Dipankar Coondoo and Sugata Sen Roy are
gratefully acknowledged. The usual disclaimers apply.
BUILDING ¼ if built heritage attracts the respondent
while travelling for leisure
KNOW ¼ respondent’s knowledge about heritage sites
in Calcutta
SBID ¼ start bid
HSBID ¼ high start bid ( ¼ Rs. 575.00)
MSBID ¼ medium start bid ( ¼ Rs. 375.00)
LSBID ¼ low start bid ( ¼ Rs. 125.00)
GINT ¼ 1 if the interviewer is female; 0, otherwise.
Appendix B. Correlation matrix between LWTP and socio-
economic variables

Appendix A. List of variables Variables Para- Non- Variables Para- Non-

metric parametric metric parametric
AT1 ¼ 1 for agreement that Calcutta’s heritage is AT1 0.060 0.052 AWARE 0.058 0.005
something to be proud of AT2 0.008 0.014 DAGE 0.012 0.032
AT2 ¼ 1 for agreement that value of the city would not AT3 0.104 0.084 RELIGION 0.012 0.002
be the same without its heritage buildings and sites AT4 0.015 0.056 GRAD 0.283** 0.266**
AT3 ¼ 1 for agreement that heritage sites need to be AT5 0.008 0.074 FINCOME 0.209** 0.235**
conserved to promote socio-cultural environment of the HEARD 0.061 0.062 OCCUP 0.263** 0.218**
city VISIT 0.030 0.063 EXP 0.209** 0.236**
AT4 ¼ 1 for agreement that all heritage buildings and MUSEUM 0.121 0.135 BUILDING 0.084 0.071
KNOW 0.052 0.064 SBID 0.414** 0.626**
sites should be conserved
AT5 ¼ 1 for agreement that developmental projects **Correlation is significant at 0.01 level (2-tailed).
harming heritage should not be implemented
HEARD ¼ 1 if the respondent heard of the Prinsep
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