Mapping circular financing models for cultural and natural ...

Mapping circular financing models for cultural and natural ...

Mapping circular financing models for cultural and natural heritage regeneration Antonia Gravagnuolo, Luigi Fusco Girard (IRISS CNR) Francesca Romana Medda (UCL) Exeter, 19th June 2018 | Circular Economy Disruptions Academic Symposium Contacts: [email protected] | | @CLIC_EU Summary Background Horizon 2020 CLIC project

Circular financing models First conclusions BACKGROUND Towards safe, resilient, inclusive and sustainable cities: the role of cultural heritage and lansdscape TARGET 11.4 Strengthen efforts to protect and safeguard the worlds cultural and

natural heritage Circular Economy (71): We commit ourselves to transition to a circular economy while facilitating ecosystem conservation, regeneration, restoration and resilience in the face of new and emerging challenges.

Towards safe, resilient, inclusive and sustainable cities: the role of cultural heritage and lansdscape Urban Agenda for the EU Partnership Circular Economy + Partnership Cultural heritage (in progress) Pathways to a circular economy in cities and regions European Commission (2014) Towards a circular economy: A zero waste programme for Europe. Brussels, 2.7.2014 COM(2014) 398 final. Brussels. European Commission (2015) Closing the loop An EU action plan for the circular economy, 2.12.2015 COM(2015) 614 final. Brussels. The Urban Agenda for the EU was launched in May 2016 with the Pact of

Amsterdam. It represents a new multi-level working method promoting cooperation between Member States, cities, the European Commission and other stakeholders in order to stimulate growth, liveability and innovation in the cities of Europe and to identify and successfully tackle social challenges.

The European Year of Cultural Heritage 2018 Insights from the Decision (EU) 2017/864 of the European Parliament and of the Council of 17 May 2017 on a European Year of Cultural Heritage (2018): Programmes and policies in fields such as culture, education, agriculture and rural development, regional development, social cohesion, maritime affairs, environment, tourism contribute directly and indirectly to the protection, enhancement, innovative reuse and promotion of Europes cultural heritage National contributions additional to co-financing at Union level, including through flexible funding mechanism such as publicprivate partnerships or crowd-funding, can be considered in order to support the objectives of the

European Year of Cultural Heritage. Promote research and innovation in relation to cultural heritage, facilitate the uptake and exploitation of research results by all stakeholders, in particular public authorities and the private sector, and facilitate the dissemination of research results to a broader audience The European Year of Cultural Heritage 2018 Cultural heritage and cultural landscape regeneration many issues: Few public resources for recovery and maintenance of cultural heritage Low innovation and management capacity of the public sector that owns many heritage assets (as well as large European religious heritage owned by

ecclesiastical bodies) Scarce investments from private owners (e.g. in historic areas) Scarce evidence-base of the positive multidimensional impacts of cultural heritage and landscape regeneration Horizon 2020 CLIC project Horizon 2020 Framework Programme for Research and Innovation - Grant Agreement 776758 | 15 Research and Practice Partners from 9 EU Countries | Total funding 5 M Funded under the Call SC5-22-2017 Innovative financing, business and governance models for adaptive re-use of cultural heritage Partnership

CULTURAL HERITAGE / LANDSCAPE ADAPTIVE REUSE and CIRCULAR ECONOMY CLIC develops, tests and validates innovative circular business, financing and governance models to place cultural heritage adaptive reuse as at the forefront for the implementation of a European model of circular economy and circular city-region centered on the regeneration of cultural and natural capital Circular models Leveraging Investments in Cultural heritage adaptive reuse

Key concepts of the CLIC project: cultural heritage adaptive reuse, circular economy, circular city/territory. But why these keywords are put together? Circular Economy and Cultural heritage (and landscapes) adaptive reuse have similar objectives: - to enlarge the time horizon of resources, ideally in an indefinite time (enlarging the perspective of here and now and introducing a longer time horizon in choices) - to enlarge the set of values / objectives including also ecological and social ones in choices However, cultural heritage and landscape are absent from the physical-spatial context of emerging circular city/cityregion models. The Circular Economy aims to reduce the growing entropy generated by our current production-consumption economic models. The Circular Economy promotes and it is founded on a culture of cooperation, that reduces social entropy, improving resilience. In this perspective, the Circular Economy can help the effectiveness of economic processes, but also to stand against

the growing forces of fragmentation and atomization of the European society, stimulating more social cohesion. Circular models Leveraging Investments in Cultural heritage adaptive reuse Adaptive reuse of abandoned and underused cultural heritage / landscape supports a circular economy in cities and regions, for example by: Re-using abandoned buildings, structures, sites and landscapes turning wastes into resources Recovering the embodied energy of buildings / sites / landscapes Avoiding soil consumption (reducing the need of new soils for human activity) Regenerating knowledge (traditional knowledge, skills and craft, local ecological knowledge) Enhancing ecosystem health thus contributing to human health

Regenerating local identity, sense and meaning of places, thus contributing to wellbeing Regenerating micro-communities that take care of their common heritage (the Heritage Community) contributing to social cohesion and the development of a civic infrastructure for the circular city Cultural heritage and landscape regeneration / reuse strengthens the relational perspective of the Circular Economy: the relationship between human being, community and nature Cultural heritage regeneration / adaptive reuse strengthens the complex concept of value proposed by the circular economy model focusing on the complex social value (Fusco Girard, 1987) of heritage for society (see for example the Faro Convention on the value of cultural heritage for society 2005) Circular financing models Cultural and natural heritage regeneration

Cultural heritage value is derived through the evolving interrelationship between history, ecosystems and culture, and is therefore often seen as a form of impure public good investment in which the public sector is the major investor. Despite its importance, however, few studies today provide comprehensive coverage of the financial aspects and investment mechanisms involved in the perpetuation of cultural heritage. In fact, choosing appropriate modes of financing cultural heritage and allocations of the public investments continues to stir debate. Furthermore, the role of public sector, as sole investor and supplier of cultural heritage redevelopment, is disputable. From a financial point of view the non-used cultural heritage is a "cost". Its creative functional re-use can reduce this "cost" transforming it in an investment. To implement operationally the reuse / regeneration of cultural and natural heritage, innovative financing, business and governance circular models should be identified, to mobilize new investments, with the aim of

creating shared value, in particular through cooperative, synergistic, sharing and solidarity economic models (e.g. engaging social enterprise and the impact investing sector). Cultural and natural heritage regeneration Cultural and natural heritage abandoned / underused sites can be turned from a cost into a productive investment - through innovative financing tools, business and governance models SOURCE: WWW.EXPRESS.CO.UK/NEWS/WORLD/487727 SOURCE: HTTPS://CREATIVECH-TOOLKIT.SALZBURGRESEARCH.AT/CASESTUDY_TYPE/INDUSTRIALHERITAGE/

16 Cultural and natural heritage regeneration CLIC aims to map existing financing models and identify circular mechanisms to finance cultural and natural heritage regeneration/reuse leveraging the potential of private investments to generate positive environmental, social and economic impact The objective of this study is to map out the cultural heritage investment market as it exists today, and to examine case studies and theoretical approaches in order to offer the widest possible coverage of good practice and innovative investment mechanisms relating to cultural heritage, or mechanisms that have a potential to

be successfully employed also for cultural heritage. What can be defined as circular financing model? Cultural and Natural Heritage Investment Complex Return on Investment: Direct Revenues Public; Private; Public-Private;

Public-Private-People partnerships External effects Indirect Avoided costs Other types of return on capitals regeneration: social, environmental, cultural Multidimensional IMPACTS

N. of visitors / year (tickets sold, etc..) Other functions/activities that have an economic return Impacts on real estate market Impacts in terms of jobs created (direct, indirect, induced) Quality of the physical scenario / landscape

External effects on health / wellbeing Other external effects in terms of intangible and symbolic values regeneration What can be defined as circular financing model? win-win-win = positive impact for all stakeholders Synergies, partnerships and cooperation approaches Owner

Public People (community) User / citizen Capital investor Private Social (hybrid third sector)

Social entrepreneur / NGO / Foudations / Third sector Entrepreneur The role of Social and Solidarity Economy (SSE) in the Circular Economy The SSE is a form of reciprocity that includes an interest in the commons and the community,

towards social and environmental goals. By placing people above profit, and linking the SHORT TERM RETURN with LONGER TERM BENEFITS FOR SOCIETY, the SSE makes its value system explicit, toward more equitable labor conditions and participative decision making, but also aims toward social wellbeing and the democratization of the economy overall. (Moreau et al., 2017) Different types of investment: some spectrum The Returns Continuum Framework for evaluation of impact investments

Omidyar network, SSIR 2017 SOURCE: BANNIK ET AL., 2017 Different types of investment: some spectrum The EVPA spectrum for investment categorization (European Venture Philanthropy Association) SOURCE: EVPA Different types of investment: some spectrum From pure Public investment to Private intervention Financial Spectrum

SOURCE: MEDDA F, 2012 23 Financing tools for cultural and natural heritage regeneration Transferring Development Rights, Land Value Capture ArtBonus (Heritage Tax Credit mechanisms), EcoBonus, SismaBonus Use-not-own models (e.g. Valore Paese in Italy) Crowdfunding

Payments for Ecosystem Services Social Impact Bonds Phylantropic grants Planning level based on real estate values capture/transfer Public incentive to stimulate micro private investments Recovery and use of spaces involving one or more entrepreneurs having a clear business plan for N years Community support to heritage recovery

and restoration Direct payments to ecosystem services providers Bonds for activities able to produce high social / environmental impact Grant to NGO/businesses able to open entire new markets ART BONUS in Italy The law of 29 July 2014, n. 106, as part of the "Urgent provisions for the protection of cultural heritage, the development of culture and the

revival of tourism", introduced to Article 1 - "Artbonus", a tax credit to favor the liberal donations to support of culture. The 2016 Stability Law has stabilized and made permanent the Art bonus, 65% tax relief for liberal donations to support culture. The Art Bonus allows a tax credit, equal to 65% of the amount donated, to those who make donations in support of the Italian public cultural heritage. 25 ART BONUS in Italy

There is a limit for eligible liberal disbursements: Capital Companies: 5 per thousand of yearly revenues Physical persons: 15% of taxable income The tax bonus will be deducted in three annual installments directly from the income declaration of the reference year. 26

ART BONUS in Italy Key figures 1638 interventions, of which: 355 concluded 1178 Maintenance, Restoration and Protection (type A) 431 Support for places of culture (type B) 29 Structural works (type C) 873 in Northern Italy 609 in Central Italy (of which only 84 in Lazio, where Roma is located) 164 in Southern Italy and Islands 27

Recovery and use: Valore Paese in Italy Lighthouses reuse in Italy National Agency for Public Goods Recovery and use: Valore Paese in Italy Lighthouses reuse in Italy National Agency for Public Goods In 2 years a number of 24 historic lighthouses has been assigned a reuse project 9 historic lighthouses with the first Call in 2015 and 15 historic lighthouses, towers and coastal buildings in 2016 Thanks to the projects assigned, the State will have a revenue in the next two years of 760.000 (340.000 from the first Call and 420.000 from the second Call) Investments of 6 Million Euro in 2015 and 11 Million Euro in 2016, for a total of 17

Million of direct investment and an economic output of 60 Million in 2 years: 20 M with the first Call and 40 M with the second Call 300 new jobs (100 in 2015 and 200 in 2016) Crowdfunding for culture and cultural heritage Crowdfunding for culture and cultural heritage Phylantropic Grants - The role of Foundations, Ethical

and proximity Banks to co-finance cultural heritage / landscape regeneration projects Phylantropic Grants GIVING CIRCLES in Asia How it works: Mostly 3 years projects Fixed amount granted per year Entrepreneurial capacity shared from investors to granted organizations Enhanced capabilities through learning by doing Results delivered, impact created, self-assessment

Development of new projects Can be applied to cultural heritage? First conclusions Towards a conceptualization of circular financing models for cultural and natural heritage regeneration Circular finance for cultural and natural heritage regeneration should foster: Impact in multiple dimensions (cultural, social, environmental) multidimensional Return on Investment supported by viable business models

Local benefit (generating value at local level) Win-win-win solutions: towards Public-Private-Social/People partnerships Synergies and cooperation, empowering Social and Solidarity Economy actors and Social enterprise Towards a conceptualization of circular financing models for cultural and natural heritage regeneration From linear to circular financing models for cultural heritage / landscape adaptive reuse governance arrangements innovation Public investment and

management Public-Private-Partnerships Public-Private-Social/People Partnerships entrepreneurship / business model innovation Grant / Impact only Impact first - Sub-commercial or Capital preservation

ROI + Impact Thank you! Antonia Gravagnuolo, Luigi Fusco Girard (IRISS CNR) Francesca Romana Medda (UCL) Exeter, 19th June 2018 | Circular Economy Disruptions Academic Symposium Contacts: [email protected] | | @CLIC_EU

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