"The reason why these places failed is because of the desire for economic development -- culture has become a commodity and people approach it in a degrading way."
It's no easy task to balance a desire for economic development and heritage preservation, says Han Li, China director of the Global Heritage Fund, a U.S. NGO.
It has partnered with the bureau of cultural heritage to evaluate Dali and come up with a management plan for the village that, if successful, would be adopted elsewhere in the province.
The organization jumped at the opportunity to undertake planning and conservation work in Dali before tourists arrive in any significant numbers.
Tourism at some of GHF's other projects in China, where the organization was brought on board after the sites were awarded UNESCO status, was not well controlled, said Li.
She is encouraged by the attitudes of local officials, who appear keen to make sure Dali does not turn into a tourist trap.
"Heritage sites can bring income and development. Our challenge is to find a way to manage this process in a way that doesn't jeopardize the heritage and the traditional way of life," says Li.
At a meeting in Dali's schoolhouse, village elders, some wearing the faded Mao suits of China's past, welcome the early plans for the village's future -- a wider road, a commercial area for hotels and a museum, plus upgrades to their homes.
Snacking on watermelon, few expressed doubts about the pending changes. "We want to preserve our way of life but progress is important too," said Yang Zhou, who wants to find a way for his two children to grow up and stay in the village.