Assessing the Feasibility of PPPs for Cultural Heritage Enhancement in UNESCO Sites: The Case of Matera (Italy)

Abstract

The complexity of decision making about cultural heritage has drawn attention to hybrid and innovative models to support the challenge of its enhancement. In this context, public–private partnership (PPP) has emerged as a promising tool to address the public administration’s lack of financial resources. However, several barriers have hindered the wide application of PPPs to support heritage enhancement initiatives, thus highlighting the need to provide decision-making processes with appropriate methodological tools, especially in contexts such as UNESCO sites, where heritage conservation rises to a global challenge. Based on these premises, the paper proposes a methodological approach to support decision making about implementing PPPs for heritage enhancement in UNESCO sites by evaluating the financial sustainability of different PPP scenarios, while considering their ability to ensure a fair distribution of benefits between the public and the private. After providing a comprehensive picture of the relationship between PPPs and UNESCO sites in Italy, such an approach was tested on a case study, the “I Sassi di Matera” site that, over the last decades, has made PPPs a central tool for its enhancement strategy. The test results reveal the opportunities of the proposed approach to inform decision making and delve into PPP’s potential for heritage enhancement while outlining the related future research perspectives to ensure its broad scalability to other UNESCO contexts.

1. Introduction

In recent decades, the recognition of cultural heritage’s role in fostering sustainable development has promoted significant attention to its enhancement [1,2,3], intended as the management of functions and regulation of activities to disseminate cultural heritage and ensure its best use to foster culture.

However, such widespread recognition, based on the multi-dimensional benefits related to heritage enhancement, ranging from contributing to local economic development to fostering social cohesion and community empowerment [4,5,6,7], struggles to find adequate space in the implementation of the planning agenda due to the complexity embedded in enhancement interventions.

This complexity, primarily related to the cultural and technical challenge of finding an adequate balance between the preservation of the heritage assets’ system of values and the transformation instances required by the enhancement strategy, finds another crucial element in the lack of financial resources to support the implementation of the interventions and maintenance of the assets [8,9].

To address and manage the outlined complexity, both the scholarly debate and heritage practitioners have sought to overcome the traditional approach to cultural heritage management, thus embracing hybrid and innovative models that bring together different stakeholders and various funding channels, such as public–private partnerships (PPPs) [10]. PPPs can be referred to as “forms of cooperation between public authorities and the world of business which aim to ensure the funding, construction, renovation, management or maintenance of an infrastructure or the provision of a service”, through which the public sector can “benefit more from the private sector’s ‘know-how’ and methods of operation in public life [11]”.

The term PPP includes different kinds of contractual agreements between public and private entities, whose specificities vary according to national legislation. The most common type of PPP forms can be identified in:

• Concession. It is a pecuniary interest contract between the public and private sectors in which the public entrusts the private sector with the execution of works and the management of services [12]. The essential issue in this type of agreement is the transfer of the operational risks associated with the demand or supply of a good or activity to the private entity.
• Sponsorship. This is a type of contract in which the private entity economically contributes to public initiatives. In general, the private partner benefits from a return of visibility related to linking its own brand to the cultural asset.
• Private-public-people partnerships (P4). This is a no-profit contract between public and private entities to define and organize models related to enhancing and managing cultural heritage.

These different types of agreements can be interpreted from an impact investing perspective as specific typologies of investments aimed at generating positive and measurable cultural, social, and environmental impacts alongside financial returns [13,14].

Given the nature of cooperation agreements between public and private entities, PPPs bring several benefits in the cultural and policy challenge of enhancing heritage assets. First, thanks to the mobilization of private resources, they can address the persistent scarcity of public resources for cultural assets and thus reduce the public financial burden [15,16]. PPPs can also improve the efficiency and management of interventions on heritage assets by leveraging the private sector’s expertise and innovation practice [17] and enabling the coordination and distribution of tasks between the public and the private [18]. Furthermore, the flexibility and variety of the agreement forms referring to the PPP category allow for adaptation to the specificities of heritage assets or projects, which is essential to address the enhancement challenge properly [19]. Finally, the engagement of the private sector (of profit and/or non-profit nature) promotes the spread of a greater sense of social responsibility towards cultural heritage to benefit the whole community of interest [20,21].

Despite this range of benefits, several factors are hindering the widespread implementation of PPPs in the cultural heritage enhancement sector. On the private side, the complexity of the legal frameworks governing interventions on cultural heritage can produce administrative hurdles, discouraging their involvement in PPP initiatives [15]. The lack of a sound and stable economic environment or financial incentives is another factor undermining the implementation of PPPs in heritage conservation, which also limits the attraction of competitive private operators [22].

Together with them, the long-term commitment related to partnership agreements, the high level of risk, and the uncertainty of returns represent other relevant barriers to the private interest in heritage-related PPP initiatives [23].

On the public side, instead, the lack of appropriate institutional capacity or understanding of the limits and benefits of PPPs can act as a limiting factor for implementing partnerships, which often require managing greater legal procedural complexity compared to traditional approaches [24,25,26]. Additionally, public administration must struggle with the complexity of ensuring a balance of power within the partnership, thus preventing private interests from overriding public ones [27].

In this context, embracing the opportunity to unlock the potential of PPPs for cultural heritage enhancement and management requires creating “conducive institutional environments” [28] while providing innovative methodological tools to support decision-making processes. Indeed, in recent years, some misjudgments and over-optimistic projections have led to the failure of PPP initiatives, thus fueling doubts about the effectiveness of this tool in addressing the challenges posed by heritage management [29].

Such decision-making tools are more than necessary in contexts such as UNESCO sites, where the outstanding value recognized to heritage assets makes the enhancement mandate a global challenge [30], currently threatened by the lack of financial resources [31].

Based on these premises, this paper proposes a methodological path to support decision making about the implementation of PPPs for heritage enhancement in UNESCO sites by evaluating the financial sustainability of different PPP scenarios while considering their ability to ensure a fair distribution of benefits between the public and the private. From this perspective, it moves from analyzing the role of public–private partnerships in UNESCO planning with a special focus on the implemented management plans for the UNESCO Sites in Italy. Such an analysis provides a preliminary picture of the role of PPPs in UNESCO sites, which is further investigated in Section 3 through the case study of the “Sassi di Matera” site, where a tailored PPP mechanism has been defined to support built heritage enhancement. Based on the specificities of this PPP mechanism, Section 4 proposes an integrated methodological approach to evaluate the financial sustainability of the possible enhancement scenarios coherent with it toward identifying the one ensuring the optimal distribution of benefits between the public and the private. Section 5 provides the results from applying such a methodological approach to the enhancement of a heritage property in Matera. In the Conclusions section, these results are assumed as the empirical basis to outline the opportunities, limits, and future research to bring such a methodological approach to the core of decision-making processes for heritage enhancement in UNESCO sites.

2. PPPs and UNESCO: Approaches and Implementation

UNESCO, as the United Nations’ agency for Education, Science, and Culture, seeks to promote knowledge sharing and international cooperation in its areas of competencies [32].

Concerning PPP’s role in achieving its goals, in recent years, UNESCO has promoted PPPs, intended as multi-stakeholder agreements for capacity building and service support, as an education policy approach to provide education for all [33]. In this context, UNESCO’s Quality Physical Education (QPE) Guidelines represent an example of public–private partnership in international physical education against the decline of physical activities along with the associated disease risk [34].

PPPs have also been recognized as strategic in UNESCO’s actions for sciences, as testified by the Man and the Biosphere (MAB) Programme, aimed at enhancing the relationship between people and their environment in selected sites, named “biosphere reserves” [35]. This program encourages collaboration between public entities, the private sector, and local communities to manage and conserve natural resources from a sustainable perspective [36].

Moving to the cultural heritage sector, the UNESCO Creative Cities Network in 2004 [37], followed by the Convention on the Protection and Promotion of the Diversity of Cultural Expressions in 2005 [38], enshrined the principles of PPPs to support culture and creativity projects. More in detail, the Convention at Art. 15 states that the promotion of the diversity of cultural expression requires encouraging “the development of partnerships, between and within the public and private sectors and non-profit organizations, to cooperate […] in the enhancement of their capacities” [38].

This opening to PPP has also found a reflection in UNESCO’s approach to its cultural and natural world heritage [39]. Indeed, in 2002, the World Heritage Partners for Conservation Initiative (PACT) was launched to “encourage public-private partnership and set in place a framework through which a wide range of institutions, as well as individuals, can contribute to the conservation of World Heritage Sites around the world” [39]. This PACT Initiative strategy, in its revised version dating 2013, states that “partnerships with the private sector are primarily developed to raise significant financial and in-kind contributions which are indispensable in compensating for the lack of resources dedicated to conservation” [40]. Indeed, recent financial and economic crises have put pressure on state-based frameworks for heritage management, thus making it necessary to explore alternative funding models. Through encouraging private involvement, thus, UNESCO has attempted to deal with this pressure by mobilizing additional resources for the maintenance, enhancement, and development of World Heritage Sites [41]. Together with it, engaging private entities in conservation efforts aligns with UNESCO’s objective to create collaborative and multi-stakeholder platforms in the management of its sites [42].

This brief and not exhaustive excursus of the relationship between UNESCO programs and PPPs shows that, especially over the past two decades, these agreements have gained increasing importance in the UNESCO agenda across its various areas of action. However, focusing on the role of PPPs in enhancing World Heritage Sites, the impact of the outlined strategic guidelines on an operational level can be better understood only by delving into the sites’ management plans. Indeed, each site inscribed on the World Heritage List must be endowed with a management plan setting adequate preservation measures and monitoring mechanisms based on its specificities and features [39]¹.

Thus, the willingness to further investigate the role of PPPs in enhancing UNESCO sites requires analyzing and comparing different implemented management plans. Italy, as the nation with the highest number of World Heritage Sites in the world, represents a privileged ground to this aim. Furthermore, despite this number of sites, its public spending on cultural services, biodiversity, and landscape protection is among the lowest in Europe [43,44], thus hinting at a potential focus on PPP tools for heritage enhancement initiatives.

PPPs and UNESCO Sites: The Italian Case

Italy hosts 60 World Heritage Sites. The analysis of their management plans, aimed at understanding the role they assign to PPPs, requires careful reading of the related documents. For this reason, this analysis is limited to 45 sites for which it was possible to obtain the official management plans [45,46,47,48,49,50,51,52,53,54,55,56,57,58,59,60,61,62,63,64,65,66,67,68,69,70,71,72,73,74,75,76,77,78,79,80,81,82,83,84,85,86,87,88,89]. The 45 plans were analyzed according to the following dimensions:

• Site typology. The typology of heritage sites they deal with (cultural, natural, cultural landscape).
• Adoption year. The year of the plan’s adoption. It refers to the last version of the plan available online as of November 2024.
• Reference to PPP. This dimension considers the presence of any reference to PPPs in the analyzed plan. According to it, the management plans are distinguished into four categories: no reference to PPPs; reference to PPPs but not related to interventions on heritage assets; generic reference to PPPs for heritage assets; and reference to one or more specific PPP models.
• Proposed PPP model. Only for the management plans, including references to one or more specific PPP models for heritage assets, does this dimension explicitly outline the proposed model/models.

The results of the analysis of the 45 plans are collected in a table, fully reported in Appendix A.

Reading the information gathered through the analysis of the 45 plans allows for interesting and more detailed reflections about the relationship between PPPs and UNESCO concerning heritage sites in the Italian context.

First, it returns that 67% of the analyzed plans deal with the theme of PPP. However, only 64% of them relate the partnership to managing and enhancing heritage assets (Figure 1).

Narrowing the focus to PPPs, including reference to one or more specific PPP models, Sponsorship prevails, followed by the Concession and P4 (Figure 2).

Furthermore, the analysis of plans referring to PPPs for heritage assets, based on their adoption year, returns a growing temporal trend of interest in PPPs for managing and enhancing UNESCO sites, with a sharp peak in 2020 (Figure 3).

This trend, also reflected by the scholarly production about PPPs in the heritage field, hints at a new approach to heritage assets based on partially shifting risks and responsibilities to the private sector in its various forms.

The analysis of the 45 management plans thus seems to confirm gradual openness to the PPP tools already identified in the higher-level UNESCO’s programming with a positive temporal trend hinting at their stronger consideration in the next years. However, understanding the operational implications of their planning trajectories on an operational field requires linking each management plan to the PPP initiatives implemented in the related Italian UNESCO site.

Given the lack of an official database of these initiatives at the national level, they were first identified through a keyword search (“UNESCO” AND “Sites” AND (“PPPs” OR “Partnership”) AND “Italy”) on the Scopus database.

However, this research returned only four papers: among them, only one [90] deals with an implemented PPP initiative in Italian UNESCO sites (

Table 1. Scientific paper reporting a PPP initiative in an Italian UNESCO site (authors’ elaboration on a Scopus keyword search’s results).

Paper	Year	PPP Initiative	Reference UNESCO Site
Partnerships for heritage conservation: evidence from the archeological site of Herculaneum	2017	Herculaneum Conservation Project (HCP)	Archaeological Areas of Pompei, Herculaneum, and Torre Annunziata

).

For this reason, the search for implemented PPP initiatives was expanded to generic search engines.

The mapping of the implemented PPP initiatives in the considered 45 UNESCO sites returned three geographical areas of concentration of these initiatives (Figure 4): the first included Tuscany, Emilia-Romagna, and Veneto Regions; the second included Campania and Basilicata Region; and the last included Sicily Region.

Furthermore, connecting the presence of any reference to PPPs for heritage assets in the management plans to the existence of one or more implemented initiatives in the related site provides a clustering of the 45 UNESCO sites in four groups (Figure 5):

• No reference–No initiatives. UNESCO sites for which management plans do not refer to public–private partnerships, and there are no PPP initiatives implemented.
• Reference–Initiatives. UNESCO sites for which management plans refer to public–private partnerships and where there are PPP examples implemented.
• No reference–Initiatives. UNESCO sites for which management plans do not refer to public–private partnerships, and there are PPP initiatives implemented.
• Reference–No initiatives. UNESCO sites for which management plans refer to public–private partnerships, and there are no examples of PPPs implemented at the site itself.

The clustering highlights Reference–No initiatives as the prevailing trend in Italian UNESCO sites, thus meaning that in most cases the management plans’ guidelines toward implementing PPPs for the management and enhancement of the sites have not been reflected yet at the operational level. This result also suggests the persistence of a state-driven approach, relying on public resources as the primary financial enabler for interventions on cultural heritage—an approach which, however, is increasingly proving inadequate, especially in peripheral areas, to address such a complex and wide-ranging challenge.

The analysis of the role of PPPs in Italian UNESCO sites thus seems to confirm the existence of a well-established planning interest in these tools’ potential to promote a more efficient management and enhancement of heritage sites. However, investigating the relationship between the plans’ contents and the initiatives in the sites reveals that this interest struggles to have significant operational impacts. From this perspective, the Italian case is an emblematic empirical field of observation of the issues raised in the scholarly debate and strengthens the opportunity to provide an appropriate methodological approach to orient the decision making toward the effective implementation of PPP initiatives in this field.

3. Assessing the Feasibility of PPPs for Heritage Enhancement: A Methodological Approach

The analysis of the Italian UNESCO sites confirms the existence of some barriers to the implementation of PPPs for heritage enhancement, already highlighted by the academic debate on the theme [22,23,24,25,26,27]. The opportunity to deal with these barriers toward fully understanding PPP’s possible contribution and unlocking its potential for heritage enhancement, while avoiding the repetition of past mistakes [29], requires providing appropriate methodological approaches to properly support the decision making in the field. This methodological approach requires preliminarily identifying the PPP options available for the heritage sites considered and then evaluating them in terms of

• Their financial sustainability both from the public and the private sides. This task, from the private side, requires verifying the achievement of an average ordinary profit through the PPP initiative. On the public side, instead, it requires verifying that the initiative does not produce any loss for the administration or that these losses are within its budget constraints.
• Their ability to ensure a fair distribution of benefits between the public and the private entities involved in the partnership agreement.

To this aim, the proposed methodological approach is structured in five steps (Figure 6):

• Definition of the decision context. This step requires building a comprehensive knowledge frame of the site under analysis and of the planning and regulatory instruments relevant to the implementation of PPP initiatives in the site.
• Definition of the enhancement initiative. Based on the features of the heritage assets considered in the UNESCO site and their system of values, this step delves into defining a suitable and compatible enhancement initiative, meeting both public and private interest in concerning restoration or maintenance interventions needed and intended functions or activities [91].
• Definition of the scenarios. Based on the evidence from the previous phase, this step requires defining the PPP scenarios for heritage enhancement compatible and coherent with the existing planning guidelines and regulatory constraints for the considered UNESCO site.
• Financial Sustainability Assessment. This phase represents the core evaluation task in the designed methodological approach, aimed at verifying the different scenarios’ financial sustainability and implications from the public and private sides. From a methodological perspective, it rests on a cost–benefit analysis limited to the financial cash flows [92], which are discounted according to the following Equation (1):

$$\sum {\displaystyle \frac{R-C}{q^n}}$$

(1)

• where $R$ stands for the revenues related to the enhancement initiatives; $C$ is given by the sum of the construction and the management costs; and $q^n={\left(1+n\right)}^n$ is the discount factor, based on the definition of the discount rate $r$.
  The financial sustainability of the enhancement initiative can be comprehensively assessed, for each defined scenario, both from the public and private perspective, by referring to three profitability indicators [93]. The former is the Net Present Value ($NPV$), which is obtained as (2)

  $$NPV=\sum _{t=0}^N{\displaystyle \frac{{CF}_n}{q^n}}$$

  (2)
• where $N$ is the time horizon for the analysis; ${CF}_n$ is the cash flow for the year $n;a q^n$ is the discount factor for the year $n.$ According to this profitability indicator, the financial sustainability is verified when the $NPV$ is higher than zero. The other profitability indicators are the Internal Rate of Return ($IRR$) and the Payback Period (PBP). The $IRR$ is the discount rate setting the $NPV$ of all cash flows equal to zero [94,95]. On its own, it does not indicate the project’s financial sustainability but must be compared with the discount rate used in the analysis: it must be higher than the discount rate [96]. Finally, the PBP is the time required to recover the investment costs.
• To this aim, for each defined scenario, after selecting an appropriate time horizon and estimating the related revenues and costs to be properly distributed over time, the three profitability indicators were calculated for the public and the private entities involved in the initiative. These indicators thus allow for a first performance check about the enhancement scenarios [97], aimed at excluding the ones that do not meet the private entity’s return expectations and the public administration’s budget restrictions.

5.

Choice of the favorable scenario. This last step, limited to the enhancement scenarios that have passed the first performance check, involves comparing these scenarios to identify the one ensuring the most equitable distribution of benefits between the public and the private sectors. Thanks to this second performance check, it is possible to understand which PPP scenario ensures the best distribution of benefits.

The willingness to better understand the opportunities and challenges of the proposed methodological approach to support decision-making processes about heritage enhancement in UNESCO sites calls for its test on a case study. To this aim, the analysis of 45 Italian sites (Annex A) returns the site “The Sassi and the Park of the Rupestrian Churches of Matera” as an interesting case study. Indeed, as highlighted by its management plan, the PPP is promoted as a tool for heritage enhancement by a law dated 1987 (L. n. 771/1986) and is widely implemented to this day. This long-term institutional support for the PPP tool, with its scale of action extended to the urban dimension, hints at the existence of a “conducive institutional environment” for PPP initiatives [28] and, thus, make it a valuable observation field of PPP’s potential for the heritage sector.

4. Assessing the Feasibility of the Sub-Concession for Cultural Heritage Enhancement: The Case of the UNESCO Site “I Sassi di Matera”

4.1. Introduction to the “I Sassi di Matera” Site

Matera, located in the Basilicata Region, in the core of southern Italy (Figure 7), is a place that seems frozen in time thanks to its settlements embedded in the calcarenite rock (a type of limestone), the so-called “Sassi” [98].

• The origin of this site is not definable: several studies date this origin back to the Neolithic period [99]. The ancient city is located on an overhanging spur of the Gravina, a long and deep fault that is a typical consequence of erosion phenomena on limestone soils. Its uniqueness stems from the local inhabitants’ ability to carve stone and transform private caves into real dwellings (Figure 8) [100].

Figure 8. Sassi of Matera view (photo by authors, 2024).

Figure 8. Sassi of Matera view (photo by authors, 2024).

Over the centuries, Matera has experienced alternating periods of cultural and economic growth and significant decline. From an urban development perspective, the period between the 17th and the 18th centuries brought along a relevant expansion and redesign of the city’s structure, which reflects the socio-economic prominence of ecclesiastic organizations and stylistically flows the influences of Southern Italian Baroque: the addition of new elements as churches and convents defines the cardinal points of an urban lozenge shape, thus creating new urban axes [101]. Such a period of prosperity and growth gave way to a phase of significant decline and poverty in the 19th and 20th centuries, which drew national and international attention thanks to Carlo Levi’s book “Christ Stopped at Eboli”. Indeed, the images of extreme poverty brought to light by the writer triggered a profound reflection on the human condition and the destiny of the town.

Based on this renewed attention, the rebirth of the city started in 1950 with the visit of Alcide De Gasperi, the President of the Italian Republic. After this event, innovative ad hoc legislative tools were defined to improve the hygienic and living conditions of the Sassi’s inhabitants by planning both restoration interventions of the existing housing and the construction of new housing estates. In 1952, therefore, two-thirds of the inhabitants of Matera were forced to leave their homes and move to the new districts, built according to modern standards, thus triggering a relevant transformation process of the city’s social fabric and a radical change in Matera’s identity [102,103]. These interventions also led to a new conception of the historical area of the “Sassi”. The Sassi were considered not only as a historical center but also as an anthropological-cultural center, the physical testimony of a peasant world transformed into an urban context [104]. Therefore, an international competition of ideas was launched in 1974 to recover these places, during which many restoration and reuse projects were presented. This competition paved the way for the approval of four official recovery plans in 1979, led by the concept of urban vitality as the best means of preserving and transmitting history and culture. Of the four pilot plans, only two were realized. From this moment on, the “Sassi di Matera” have undergone a process of growing value recognition and enhancement [105], whose main milestones are (Figure 9).

• 1986, with Law n. 771/86, which establishes the concession of the public properties in the Sassi from the state to the Matera municipality and the possibility for the municipality to enhance them through a PPP mechanism: the sub-concession to private citizens [106].
• 1993, the year of inclusion of the “The Sassi and the Park of the Rupestrian Churches in Matera” (in Italian: I Sassi e il Parco delle Chiese Rupestri di Matera) site in the World Heritage List [107].
• 2019, when Matera is the “European Capital of Culture” [108].

4.2. The Sub-Concession Mechanism for the “Sassi di Matera” Enhancement

Law n. 771/1986 marks a turning point for the full heritage recognition and enhancement of the “Sassi”. First, it grants them the status of national heritage to be preserved and protected by promoting their regeneration and reuse through productive, tourism, educational, and cultural functions. This law was enacted in response to the abandonment and decay of the properties in the “Sassi” area after the population relocation led by the need to ensure minimum hygiene and living standards. Together with it, it was aimed to provide the “Sassi“, as the historical heart of the city, into a vital part of the urban structure, thus avoiding the risk of turning it into an open museum of rocky architecture. This change of attitude towards the “Sassi” heritage assets is formalized through their concession from the Italian State to the Municipality of Matera and the provision of the possibility for a further concession from the municipality to private individuals.

Indeed, concerning the establishment of the concession from the State to the Matera municipality, Art. 11 in the law states that “the Minister of Finance […] shall transfer to the Municipality of Matera the State-owned buildings and areas included in the two-year implementation programs, in concession free of charge, for ninety-nine years, in the state in which they are found and with the relative charges and rights” [106]. Focusing on the possibility for the municipality to resort to a PPP mechanism, represented by the sub-concession to private individuals, it is made explicit in Art. 4, which states that “The municipality may sub-contract part of the assets and the related interventions to be carried out […] to individuals or associates, housing cooperatives or their consortia who apply for it” [106].

This law thus provides the sub-concession mechanism with a central role in the restoration and recovery of these heritage assets in the UNESCO site of Matera while assigning to local businesses and inhabitants an active part in the regeneration program.

As stated in Art. 3, implementing the law requires the definition of biennial implementation programs, which must identify the properties to be addressed, the admitted interventions, and the intended functions for them, thus allowing the achievement of the restoration and enhancement objectives. Another interesting aspect of the law (Art. 10) is represented by the provision of different criteria for allocating properties to private individuals according to their intended use. These provisions, defined in specific municipal regulations, state that [106]

• Residential properties can be assigned to people who are already assignees of residential housing in the “Sassi”, thus recomposing the housing units, improving their overall habitability, and supporting the citizens of Matera.
• For commercial, craft, and non-residential properties, priority in the allocation is given to entities registered with the local Chamber of Commerce that already own a property adjoining the one subject to the sub-concession.
• For properties devoted to cultural activities, the municipal administration can directly choose the private partner for the sub-concession.

The outlined provisions thus set the ownership of a property adjacent to the public ones included in the implementation program as an interesting requirement to be granted their concession. Such a requirement, indeed, has a dual purpose: on the one hand, it allows for a natural selection of users in favor of Matera resident citizens; on the other hand, it works toward a systemic approach to the recovery of the Sassi by giving the possibility for private individuals to expand their activities while improving heritage properties’ maintenance condition.

The procedure to obtain a sub-concession on public property requires meeting the criteria set by Law n. 771/86 and presenting a recovery project that clearly defines its objectives, possible actions, and the estimate of the intervention costs. For the cost estimate, the municipality periodically issues a maximum price per square meter that can be granted for each type of eligible intervention. The costs can be partially borne by the public administration (up to a maximum of 50% of the eligible costs) if there is available funding for this aim. Based on the type of proposed intervention, the municipality thus assesses whether the sub-concession should be fee-based, requiring the payment of a fee, or not. Such a fee establishes the financial conditions governing the relationship between the two parties (public and private) for a period equal to 30 years, which is the duration of the concession. The assessment of the concession fee rests on specific guidelines, which relate to several parameters: the planned investment; the value of the public property; and its maintenance costs, location, and intended use.

4.3. The Methodological Approach Implementation to the “I Sassi di Matera” UNESCO Site

The brief excursus of the main contents of Law n. 771/86 and the related implementing regulations with their innovative and topical points in approaching the PPP issue add further elements to support its choice as a suitable case study for the research purposes. In this context, it is thus worth delving into the opportunities and challenges of the proposed methodological approach by focusing on an enhancement initiative for a heritage property located on this site and falling under the scope of action of the biennial program implemented, according to Law n. 771/86.

This enhancement initiative can be identified in the expansion of restaurant business by a private entrepreneur through the granting of a sub-concession for a public property neighboring the existing restaurant. The property is in the heart of the “Sasso Caveoso” (in Italian) and of the UNESCO site (Figure 10).

Its choice rests on the fact that the property falls within the scope of action of Law n. 771/86 and that it was possible to access historical data about the existing business activity, retrieved from its financial statement, and the project on the asset toward obtaining the sub-concession.

Testing the methodological approach (Figure 6) on this enhancement initiative requires applying and adapting it to its specificities (Figure 11).

Since the main elements framing the decision context and the enhancement initiative to be analyzed have already been defined, it is possible to focus on the first core step in the approach, which this the Definition of the scenarios. Given the regulatory framework provided by Law n. 771/86, the need to ensure coherence with it and the related implementation plans call for identifying the concession model as the suitable PPP alternative for implementing the enhancement initiative. Since the law considers both the possibility of no contribution and partial contribution for the interventions from the public administration, this model can be specified in two scenarios. Together with them, a third scenario can be grounded on the PPP model of the lease, since it approaches the enhancement initiative with a similar rationale to the concession in terms of responsibility sharing between the public and the private. Therefore, the next phase in the methodological approach, that is, the Financial Sustainability Assessment, is applied to three scenarios:

• First scenario—Enhancement concession with contribution. In it, the public asset is assigned to the private for 30 years, and the public administration partially funds the renovation intervention.
• Second scenario—Enhancement concession without contribution. According to this scenario, the public asset is granted to the private party for 30 years, but the renovation intervention is all in charge of the private.
• Third scenario—Enhancement lease. In it, the private party pays a rent fee to be granted with the use of the asset and totally bears the renovation costs.

The Financial Sustainability Assessment phase, aimed at expressing a feasibility judgement of the three PPP scenarios defined for the enhancement initiative, requires calculating the three profitability indicators (NPV, IRR, PBP) from public and private perspectives. For each scenario, according to the hypothesis behind them, it is first necessary to define the input factors for the evaluation, represented by the time horizon for the analysis, the costs and the revenues, and the discount rate.

4.3.1. First Scenario—Enhancement Concession with Contribution

The first scenario is based on the hypothesis of a sub-concession contract between the municipal administration and the private party that receives a non-refundable contribution to partially cover the intervention costs on the asset. Coherently with Law n. 771/86, the duration of this PPP is set at 30 years. Focusing on the costs and revenues to be assessed as input data for the discounted cash flow calculation, for the private, they can be split into investment costs, management costs, and revenues. The investment costs include

• The costs for the extraordinary maintenance/renovation interventions on the property under concession. They are estimated through a detailed cost estimation, based on the project attached to the sub-concession request, and amount to EUR 250,000.00.
• The costs for purchasing equipment and furniture related to the activity. They are estimated through a market analysis based on the information provided by the private entrepreneur and amount to EUR 100,000.00.
• The marketing expenses and the professional fees, which are, respectively, estimated as 8% of the renovation cost, thus amounting to EUR 20,000.

The appraisal of management costs, instead, rests on the historical data retrieved from last year’s financial statements of the company. They include different cost items: consultancy services, utilities, cleaning services, maintenance, insurance, and employees. It is worth underlying that, based on the regulations of the municipality and given the total amount of the renovation costs, the private is not required to pay a fee for the concession. Thus, the management costs are EUR 92,000.00 for the first year of business activity and EUR 96,200.00 for the following years because of an expected increase in the employees’ salaries. Moving to the yearly revenues, their estimation rests on the definition of an average daily receipt and an average occupancy rate of 50%, thus resulting in EUR 168,750. Together with them, which are directly related to the restaurant, a further revenue in this scenario is the contribution provided by the public administration. This contribution, equal to 50% of the eligible intervention cost, as defined by the municipality, amounts to about EUR 36,349.

Based on these assumptions, the obtained cash flows have been discounted with a discount rate of 8%, thus leading to an NPV of EUR 380,746.00, an IRR of 19.5%, and a PBP of 8.53 years.

From the public sector point of view, instead, there are no financial revenues in this scenario, while the costs can be placed equal to the contribution for the intervention on the assets, which is equal to EUR 36,349.00. Such a cost, discounted at 4% [Guide to Cost-Benefit], returns an NPV of EUR 34,951.76. The IRR cannot be defined, while it makes no sense to speak about the PBP.

4.3.2. Second Scenario—Enhancement Concession Without Contribution

This second scenario is equal to the first one, except for the contribution from the public administration, which is not considered. For this reason, from the private side, the NPV is equal to EUR 347,089.02, the IRR is 17.5%, and the PBP is 9.49 years. From the public side, instead, there are no financial costs and revenues, and the definition of financial profitability indicators makes no sense.

4.3.3. Third Scenario—Enhancement Lease

The third scenario rests on the hypothesis of an enhancement lease contract to rule the partnership between the administration and the private entrepreneur. For this reason, starting from the private side, most of the assumptions behind the financial sustainability assessment are equal to the previous scenario, except for

• the time horizon for the analysis, which is set at 12 (6 + 6) years as the typical duration of a rent contract for commercial properties in Italy;
• there being an additional yearly cost represented by the rent fee to the municipality. It is estimated based on the average OMI rent value for commercial properties for the semester 2024 [109] and depreciated with the amortization rate of the renovation work. Based on these assumptions, the depreciated yearly rent fee is equal to EUR 9471 for the first year and is yearly updated to consider price variations;
• the discount rate for the analysis, given the higher risk of the partnership, is increased by 1%, coming to 9%.
• Based on these assumptions, the private financial feasibility assessment must refer to an NPV of EUR −17,650.54, an IRR of 7.9%, and a PBP of 12.75 years. From the public side, instead, the time horizon is set at 61 years, which is the residual duration of the concession of the property from the state to the municipality. There are no costs, while the revenues are placed equal to the rent fee paid by the private entrepreneur, which is considered every 12 years with two years of vacancy between one contract and the following one. Finally, as for the private, the discount rate comes to 5% due to the risk premium increase. For the public, thus, the NPV is EUR 476,255.66, while the PBP is 0 (Figure A1 and Figure A2 in Appendix B).

The results of the financial profitability assessment for the third scenario complete the information layer for the first performance check and the choice of the favorable PPP enhancement scenario, which are described in the following section.

5. Results

The financial sustainability assessment, implemented for all three PPP scenarios, allows for a preliminary performance assessment of their suitability as a supporting tool for the enhancement initiative of the selected heritage property in the UNESCO site “I Sassi di Matera”. A comparative reading of the results obtained in terms of financial performance indicators (NPV, IRR, PBP) (

Table 2. Comparative reading of the results (authors’ elaboration). n.d.* = not defined.

		NPV [EUR]	IRR	PBP [Years]	Convenience Judgement
Scenario 1	Private	380,746	19.5%	8.53	Yes
	Public	−34,952	n.d.*	n.d.*	Yes
Scenario 2	Private	347,089	17.5%	9.49	Yes
	Public	n.d.*	n.d.*	n.d.*	Yes
Scenario 3	Private	−17,651	7.9%	12.75	No
	Public	476,256	n.d.*	1.00	yes

) indeed shows that the third scenario, based on the PPP model of the enhancement lease, is not profitable from the private point of view.

For the first scenario, instead, the negative financial performance from the public side is likely compatible with the administration budget availability, thus hinting at considering this enhancement scenario as a viable alternative together with the second one.

The first performance check, based on assessing the PPP scenarios’ sustainability from a merely financial perspective, leads to the exclusion of the third scenario and brings the first and the second ones to the last step in the proposed methodological approach (Figure 12). Once the compatibility of the PPP scenarios with the private profit expectation and the public budget constraints has been verified, this last step allows for steering the decision toward the PPP model, ensuring the most equitable distribution of benefits between the public and the private sector.

From this perspective, the comparison of the first and second PPP scenarios for the enhancement initiative of the considered heritage asset returns the latter one, based on an enhancement concession with no contribution, as the alternative ensuring the fairest distribution of benefits between the public and the private party. Indeed, while providing the private with a robust profit and the cost recovery within a time frame significantly shorter than the reference period for the analysis, it does not charge the public with part of the investment costs. Furthermore, even if the financial analysis does not return any explicit benefit to the public, the investment brings along several cultural and social implications, such as the preservation and the rescue from abandonment of a heritage asset, fully coherent with the public administration’s mission for a UNESCO site. For this reason, thanks to this second performance check, the enhancement concession with no contribution emerges as the PPP model ensures better support for implementing the defined enhancement initiative in the “I Sassi” UNESCO site.

6. Conclusions

The paper deals with the challenge of unlocking the potential of PPPs for cultural heritage enhancement and management with a special focus on UNESCO sites. As clearly emerging from the academic debate on the topic and from the empirical analysis of the relationship between management plans and the implementation of PPP initiatives in Italian sites, there are still several administrative, cultural, and economic barriers calling PPP’s effectiveness into question when dealing with cultural heritage enhancement.

To this aim, this paper proposes a methodological approach to support decision-making about implementing PPPs for heritage enhancement in UNESCO sites by evaluating the financial sustainability of different PPP scenarios while considering their ability to ensure a fair distribution of benefits between the public and the private.

The methodological approach test on a case study in the “Sassi di Matera” UNESCO site, which compares three PPP scenarios for implementing an enhancement initiative related to reusing a heritage asset as a restaurant, allows for a better focus on its opportunities.

First, thanks to its systematic articulation in phases and provision of accurate metrics for each considered scenario, it provides public entities with a clear path to follow toward endorsing a PPP initiative for heritage enhancement and with a sound set of information to support their decisions and negotiate or reframe the terms of the partnership with the private party. Furthermore, the definition of the scenarios based on a thorough analysis of the planning, regulatory, and cultural context of reference, without resorting to standard PPP models, endows the proposed methodological approach with the flexibility and adaptability required when dealing with the uniqueness and specificities of heritage assets.

Such an aspect calls for the scalability of the proposed methodological approach to other UNESCO sites that, differently from Matera, have not yet explored the opportunities of PPPs to address the challenge of managing and enhancing their heritage of “outstanding value”. To this aim, the proposed methodological approach offers an operative and evidence-based support to cultural policies and UNESCO efforts toward disseminating other World Heritage contexts to embark the “PPP journey”. Specifically, the provision of ad hoc guidelines and recommendations, focusing on the challenges and opportunities related to PPP implementation and including operational tools for their context-based assessment, as the one proposed in the paper, can be crucial. These guidelines and recommendations should clearly stress the importance of properly understanding the readiness of a specific site and its community of stakeholders to undergo a PPP initiative in the heritage field. Such a readiness can be assessed by verifying the existence of a shared system of interests as the basis for building the partnership; the availability of the potential “partners” to effectively contribute with their resources and expertise; and the existence of a sound governance structure able to manage possible social and cultural tensions [X]. Indeed, the existence of an appropriate environment stands as a prerequisite for leveraging the benefits from partnership initiatives to be further evaluated through catered operative tools.

Focusing on the proposed methodological approach as an operative support to the outlined policy challenge, the commitment to creating new international ecosystems of PPPs in UNESCO sites requires overcoming the current limits of the methodological approach, which can hinder a comprehensive assessment toward fully aware decision making. First, the mere financial perspective behind the feasibility assessment can be flanked by an “economic” perspective [110] that, through monetizing social and cultural costs and benefits, can ensure a more complete evaluation of the public convenience in resorting to PPPs. Together with it, enhancing the current methodological apparatus, limited to the cost–benefit analysis, can help solve specific issues that can emerge during the decision-making process. For instance, multi-criteria analysis can help perform a participatory and multi-dimensional pre-assessment of the PPP scenarios to be evaluated from a financial/economic feasibility perspective. Again, integrating the financial sustainability assessment into a Public Sector Comparator model can strengthen the decision argument in favor or against PPPs by comparing the defined PPP models with a fully public sector project delivering the same service. These improvements are also required to effectively assess a broader spectrum of PPP initiatives by including Private–public–people partnerships (P4) scenarios, based on involving no-profit entities, which are globally emerging as key actors in the activation and innovation of heritage enhancement and management experiences [111,112].