Exploring value capture mechanisms for heritage protection under public leasehold systems: A case study of West Lake Cultural Landscape

Many protected areas are struggling to achieve financial stability and meet the costs associated with managing a World Heritage Site. These problems may be solved or eased by value capture as a source of public revenue; this revenue is usually then applied to infrastructure investment. Our study first proposes a framework for analyzing world heritage finance and then argues that the increase in "windfall" value should be captured and transferred to land owners in World Heritage Sites. We reviewed the value capture mechanisms described in previous studies under public leasing systems. Based on our theoretical framework, only three value capture mechanisms were found to be suitable for heritage protection, namely, the land-transfer fee at the initial auction, the deed tax at the transaction stage, and the property tax at the tenure stage. Using a transaction costs and capture effect framework, this paper explains the differences among these mechanisms. The results show that these value capture mechanisms have advantages and disadvantages for different aspects of transaction costs. The land-transfer fee at the initial auction carries risks such as maintaining the legitimacy of the government and preventing corruption. The deed tax requires stronger enforcement, while the property tax drains the government's energy via negotiations with the public. With regard to the capture effect, the property tax performs best; therefore it is the most suitable value capture mechanism.