Many towns and cities in countries of the developing world contain a historic centre comprising streets, buildings and traditional activities that have resisted the forces of modernisation. However, the inexorable pressures of population growth and urban expansion often pose a serious threat to these heritage assets which are seen as standing in the way of progress. This paper considers the application of the principles and methods of heritage economics to the evaluation of investment in the conservation of urban heritage in towns and cities in developing countries. The characteristics of cultural heritage in this environment are considered and the choices facing urban planners are discussed. The paper outlines the methodology of investment appraisal of projects aimed at adaptive re-use of urban heritage assets, with specific reference to the scarcity of appropriate data in the typical developing country situation. To illustrate the application of ex post investment appraisal methods to urban heritage conservation projects in Third World cities, two examples from studies in Macedonia and Jordan are discussed.