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Are you interested in the value of urban public spaces?
Our debate today works with the article titled How much are public spaces worth? Non-market valuation methods in valuing public spaces from 2023, by Jagoda Adamus, published in The Polish Journal of Economics.
This is a great preparation to our next interview with Howard Kozloff in episode 476 talking about how value and worth need to be integrated when thinking about and creating public spaces.
Since we are investigating the future of cities, I thought it would be interesting to see the social and economic values of public spaces within urban environments. This article argues that quantifying the economic significance of public areas is vital for effective urban management and development policy.
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Welcome to today’s What is The Future For Cities podcast and its Research episode; my name is Fanni, and today we will introduce a research by summarising it. The episode really is just a short summary of the original investigation, and, in case it is interesting enough, I would encourage everyone to check out the whole documentation on the WTF4Cities website where you can find the shownotes and more information on supporting the podcast. This conversation was produced and generated with Gemini LM as two hosts dissecting the whole research.
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Speaker 1: Imagine you’re just standing in, say, a sixteenth century historic city plaza. You hear the water in an ancient fountain, kids are running across the cobblestones. People are just existing together.
Speaker 2: It feels completely priceless. It is the civic heart of the community, where the history and the present of a city actually meet.
Speaker 1: Exactly. But what happens when a private developer wants to buy it? Because as cities become denser and competition for space intensifies, decision-makers have to justify keeping these public spaces open instead of selling them off for lucrative private developments. Suddenly, a city council has to put a hard numerical price tag on the soul of the city.
Speaker 2: Yeah, which is incredibly difficult. And today we’re looking at Jagoda Adamic’s research paper, How Much Are Public Spaces Worth? Non-Market Valuation Methods in Valuing Public Spaces, to ask a really difficult question: Can you actually accurately capture the full worth of a public space on a spreadsheet?
Speaker 1: Or, as you would argue, is the cultural essence of a public space a fundamentally different dimension that just defies pure economic measurement?
Speaker 2: Exactly, because I think cultural capital is an entirely distinct category, and trying to cram it into a basic economic formula is a dangerous oversimplification.
Speaker 1: For my part, I think the framework of total economic value successfully integrates all human utility, even the cultural significance, into a very comprehensive, measurable economic model.
Speaker 2: Let’s get into it then.
Speaker 1: To see why economics can capture this, you really have to look at neoclassical utility theory. Researchers like Pearce, Bohnes, and Rante outline this in the text. The core idea is simple, right? If something fulfills a human need, it has economic value. That is what total economic value, or TEV, represents.
Speaker 2: But human needs are incredibly complex.
Speaker 1: They are. But TEV is not just about the cash register ringing at the corner cafe. It captures direct use value, the literal joy of sitting on a bench But it brilliantly captures non-use value too.
Speaker 2: Like what exactly?
Speaker 1: Think about bequest value. That is the actual dollar amount a citizen is willing to pay today just to ensure their grandchildren have a plaza to gather in 30 years from now, even if they never step foot in it themselves. The cultural value you’re defending isn’t some invisible ghost, it is human utility, and that means it already lives inside the economic value.
Speaker 2: I come at it from a very different way. If we look at David Throsby’s concept of cultural capital, it becomes clear that while cultural value definitely influences economic value, they remain entirely separate categories. The cultural value of a space is profoundly multidimensional. It encompasses aesthetic, symbolic, spiritual, and historical significance. When you try to translate, say, the historical authenticity of a medieval market square into a purely economic utility metric, you are stripping away its fundamental meaning
Speaker 1: I wouldn’t say stripping it away.
Speaker 2: I think you are. You are evaluating the irreplaceable soul of a space using a calculator. You’re treating civic heritage as just another financial line item.
Speaker 1: But economics isn’t just about financial line items. It literally has the tools to price the unpriceable. We see this through revealed preference and stated preference methods.
Speaker 2: Okay. Give me an example of that.
Speaker 1: Let’s take the hedonic pricing method. Think of it like this. Imagine two completely identical houses. One overlooks a noisy highway, the other overlooks a beautiful historic plaza.
Speaker 2: The plaza house costs more.
Speaker 1: Exactly. The difference in their market price, that is the economic value of the plaza being mathematically isolated. It captures the premium people willingly pay to be near it.
Speaker 2: Sure, for a house next door.
Speaker 1: Wait, and for things without a direct market, we have contingent valuation methods, or CVM. CVM was used to price the environmental damage of the Exxon Valdez oil spill. Economists literally figured out the dollar value of a ruined beach and a destroyed ecosystem by surveying the public. If we can price an unprecedented ecological disaster, we can absolutely quantify the value of an urban square.
Speaker 2: I’m sorry, but I just don’t buy that. Let me tell you why. You are pointing to methods that have a highly specific, very narrow track record.
Speaker 1: They’re well-established methods.
Speaker 2: But a critical limitation raised right there in Adamas’ text is that these methods are mostly used for environmental goods, like national parks or highly specific tourist sites. CVM is rarely applied successfully to your typical multi-use urban public space.
Speaker 1: Just because it’s hard doesn’t mean it’s impossible.
Speaker 2: It’s not just hard, it’s chaotic. A city boulevard has overlapping utility. People commute, they shop, they socialize, they protest. You are taking tools designed to value a pristine forest or a beach and assuming they flawlessly translate to a complex civic square.
Speaker 1: I see why you think that, but let me give you a different perspective. Just because an urban space is complex doesn’t mean the mechanism is flawed. Think of non-market valuation like mapping a complex genome.
Speaker 2: A genome?
Speaker 1: Yeah. Early on, we couldn’t sequence the whole thing But the fundamental tools worked. Today, with things like choice experiments, we can essentially sequence the DNA of a park.
Speaker 2: I think that’s a bit of a stretch.
Speaker 1: No, really. We can present respondents with specific trade-offs and literally isolate the exact dollar value a citizen places on preserving a historic statue versus, say, installing a new playground. The methodology is sound. It just requires a broader, more rigorous application.
Speaker 2: That’s a compelling argument regarding the mechanics, I’ll give you that. But have you considered that applying an economic lens inherently distorts what a public space is meant to be in the first place?
Speaker 1: Distorts it how?
Speaker 2: Sociologists define a public space by free, equal access, and interpersonal exchange. But economics relies on resource limitation theory. It inherently treats public spaces as scarce goods.
Speaker 1: Because they are scarce. Space in a city is finite.
Speaker 2: Yes, but look at how economists treat that. When a plaza gets crowded, economists reclassify it as a club good. They use averting behaviour methods, which literally measure what people spend to avoid something.
Speaker 1: Like measuring traffic detours.
Speaker 2: Exactly. Like driving 10 extra miles to circumvent a congested 30 kilometre per hour traffic zone in the city centre. By focusing entirely on the cost of avoidance, the economic model misses the tragedy of the lost social connection. It just measures the friction.
Speaker 1: You call it a tragic loss of social connection when a plaza gets crowded, but let’s be pragmatic here. Ignoring scarcity doesn’t make it disappear. Public spaces suffer from the free rider effect. They get congested.
Speaker 2: But slapping a price on the congestion doesn’t solve the social loss.
Speaker 1: It does, though, because if we don’t treat them as a scarce resource, they get ruined for everyone. By using economics to understand the exact damage costs of that congestion or the costs of defensive behaviours, cities are financially incentivized to protect them.
Speaker 2: So it’s just about financial incentives?
Speaker 1: It’s about realism. Economists call public spaces merit goods, things society should have access to regardless of their ability to pay. Acknowledging scarcity through economics doesn’t destroy the merit good. It provides the empirical data required to justify funding it rather than letting it fall into disrepair.
Speaker 2: Okay, providing funding justification is fine, but it forces a dangerous conceptual leap regarding substitutability. The economic framework assumes that if a good provides utility, it can be seamlessly replaced by another good providing the same utility.
Speaker 1: And it can. Look at substitution methods, specifically the replacement cost method. Let’s say a private shopping mall takes over the traditional functions of a public square.
Speaker 2: Which is happening all the time.
Speaker 1: So it provides a place to walk, sit, and gather out of the rain. Economics can calculate the exact cost to replace or reproduce those lost public services. This proves economic models capture spatial function. If a developer destroys a historic park, the replacement cost method tells us exactly what they owe the public to recreate those services elsewhere.
Speaker 2: I have to reject that entirely. The text explicitly warns against the benefit transfer method and introduces the concept of genius loci.
Speaker 1: The spirit of a place?
Speaker 2: Yes, the spirit of a place. Public spaces are historically and culturally unique. You cannot simply transfer the value of one space to another. And a shopping mall, no matter how many benches it has, can never truly replace the authenticity value of a historic city square.
Speaker 1: But it replaces the function.
Speaker 2: Function isn’t everything. When you rely on substitution methods, you assume interchangeability. The uniqueness of public spaces inherently breaks the economic assumption of substitutability. A sixteenth century plaza has a spiritual and historical capital that a newly paved commercial courtyard simply does not possess, no matter what the replacement cost model dictates.
Speaker 1: I’m not convinced by that line of reasoning because ultimately, while public spaces are uniquely complex, rigorous non-market valuation methods give cities the crucial armour they need.
Speaker 2: Armor against who? Developers?
Speaker 1: Yes. It might sound cold to our listeners to price out a community gathering space, but without contingent valuation, without hedonic pricing, without calculating total economic value, city planners go into negotiations with private developers totally empty-handed.
Speaker 2: So it’s the lesser of two evils.
Speaker 1: It’s the language of reality. Private investment speaks the language of capital. Economics provides the necessary language for the survival of these spaces. It translates genius loci into a metric that prevents a developer from bulldozing it in the first place.
Speaker 2: While those economic tools certainly offer a pragmatic defence in a boardroom, we must maintain a conceptual boundary. Reducing spiritual, historical, and authentic cultural capital to mere economic utility risks treating irreplaceable civic heritage as interchangeable commodities. Because if we convince ourselves that the full value of a square is just its non-use value plus its option value, we lose the vocabulary to protect things simply because they’re culturally sacred.
Speaker 1: Yeah, that is a fair point. Yet I think we both clearly agree on one fundamental takeaway from the research here: public spaces are vital attractors. They really determine a city’s competitiveness and its residents’ quality of life.
Speaker 2: Completely agreed. And we also converge on the fact that traditional market pricing, looking merely at real estate square footage or commercial income, utterly fails to capture their true importance to human wellbeing.
Speaker 1: Absolutely. Understanding the true worth of our cities requires looking through multiple lenses.
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