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Economic Currents

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Cost-Effectiveness of Herbicide Ballistic Technology to Control Miconia in Hawaii

UHERO is working with Dr. James Leary (CTAHR) to assess cost effectiveness of Herbicide Ballistic Technology (HBT) operations to control invasive miconia (Miconia calvescens) plants before reaching maturity. Based on studies in Costa Rica, Tahiti and Australia, we can interpret spatial and temporal implications of management driven by miconia’s fecundity, dispersal, seed bank longevity and recruitment. We find that the dispersal kernel of miconia in the East Maui Watershed is closely matched to a similar probability density function developed from miconia naturalized in North Queensland, Australia (Fletcher and Westcott 2013). In this spatial model, 99% of recruitment was within 609 m with rare stochastic events (i.e., 1%) extending out to 1644 m. Based on these biological features, one autogamous, mature plant can impact up to 850 ha (i.e., 2100 acres) of forested watershed with hundreds to thousands of dispersed progeny germinating asynchronously over several decades (Fig. 1).

Figure 1. The dispersal kernel displays as a raster layer creating an 850-ha area calculation with corresponding probability density function (color shades).

Effective management is achieved when target mortality outpaces biological recruitment. Cacho et al. (2007) coined the term ‘‘mortality factor’’ described by the simple equation: m=Pd x Pk, where the probabilities of detection (Pd ) and kill (Pk)are equal determinants of the “mortality” product. Our current Pk is 0.98 for all HBT treatments. With this effective and reliable treatment technique, management outcomes largely depend on detection (Leary et al. 2013; Lodge et al. 2006). Koopman (1946) introduced the mathematical framework for estimating the probability of detection: Pd=1-e-c, where the probability of detection asymptotically approaches 1.0 with increasing coverage (Fig. 2). In operations, imperfect detection can be compensated by frequent interventions compounding coverage levels over time, but with obvious diminishing returns (Leary et al. 2014).

Figure 2. Probability of detection (blue) and the inverse for the equally important confirmation of no targets (orange). Note gray dash connotation of a theoretically “perfect” sensor, where coverage is equal to detection and confirmation.

The variable costs for HBT operations (e.g., flight time and projectiles) are driven by target density (Leary et al 2013, Leary et al. 2014). With that knowledge, we estimate the cost to manage the area (i.e., 850 ha) impacted by the dispersal of new progeny created by a mature plant. A new mature miconia with two panicles may produce ~300-400 progeny. With a single, incipient target being such a high risk, intensive efforts should be matched to comprehensively search the entire impact area over the several decades with a level probability of detection (and equal confirmation of no targets) of all progeny recruits. For instance, with 320 propagules dispersed, Pd would need to exceed 0.9968 with coverage at 5.77 s per 100 m2 pixel totaling ~136 hours of effort over the entire impact area over four decades (Fig. 3A). Any level of coverage less than that (including 99%) would be prone to missing a target that ultimately reaches maturity and newly replenishes the seed bank (Fig. 3B). Furthermore, an overwhelming majority of search effort would actually be dedicated to the confirmation of no targets, where, for instance 87% of effort is invested in looking for 1% of the targets dispersed out to the perimeter.

Figure 3. (A) Search effort (EFT; hours) over a 43-year period to match the level of coverage with the probability of detection from a random search effort. (B) is the reproduction of 2nd generation progeny by undetected targets of the 1st generation shown as Base 10 log scale.

Based on this model, we estimate accrual of future management costs ranging from $169,000-337,000 for every mature target detected, with the increase from the base cost dependent on increasing propagule loads and the static cost to treat each those individuals detected.

- James Leary, Kimberly Burnett and Christopher Wada


 

References

Cacho, O.J., Hester, S. and Spring, D., 2007. Applying search theory to determine the feasibility of eradicating an invasive population in natural environments. Australian Journal of Agricultural and Resource Economics, 51(4), pp.425-443. 


Fletcher C. S. and Westcott D. A.. 2013. Dispersal and the design of effective management strategies for plant invasions: matching scales for success. Ecological Applications 23:1881–1892. 


Koopman, B.O. (1946). Search and Screening. Operations Evaluations Group Report no. 56, Center for Naval Analyses, Alexandria, VA. 


Leary, J.J., Gooding, J., Chapman, J., Radford, A., Mahnken, B. and Cox, L.J., 2013. Calibration of an Herbicide Ballistic Technology (HBT) helicopter platform targeting Miconia calvescens in Hawaii. Invasive Plant Science and Management, 6(2), pp.292-303. 


Leary, J., Mahnken, B.V., Cox, L.J., Radford, A., Yanagida, J., Penniman, T., Duffy, D.C. and Gooding, J., 2014. Reducing nascent miconia (Miconia calvescens) patches with an accelerated intervention strategy utilizing herbicide ballistic technology.

Lodge, D.M., Williams, S., MacIsaac, H.J., Hayes, K.R., Leung, B., Reichard, S., Mack, R.N., Moyle, P.B., Smith, M., Andow, D.A. and Carlton, J.T., 2006. Biological invasions: recommendations for US policy and management. Ecological Applications, 16(6), pp.2035- 2054. 



The Role of Policy and Peers in EV Adoption

Electric vehicles (EVs) can be a cleaner means of transportation compared to cars with traditional gasoline engines. They have the added benefit of being able to provide support to the electric power grid—an increasingly important attribute in states like Hawaii with high levels of intermittent renewable energy. To achieve widespread deployment of EVs, we need to know why consumers choose to buy an EV rather than a traditional car. Towards this end, we have conducted two studies that evaluate the effects of state-level policy incentives in the United States and that estimate “spillover effects” from geographic peers in Hawaii who purchase EVs. Preliminary results are presented below.

State EV Policies

Though EV battery costs have fallen rapidly in the last several years, the upfront cost of EVs still remain a barrier to rapid adoption. States have implemented a range of policies to encourage consumers to purchase EVs—financial and otherwise—but it is unclear how effective these policies are at achieving additional EV uptake. We estimate the effect of policy on EV adoption using semi-annual new vehicle registrations by EV model from 2010 to 2015 and a rich dataset of consumer-oriented state-level policies designed to promote EV purchases. We focus our policy analysis on EV vehicle purchase incentives and a range of other policies like home charge subsidies, reduced vehicle license taxes or registration fees, time-of-use rates, emissions inspection exemptions, high occupancy vehicle lane exemptions, designated and free parking, and an annual EV fee (that discourages EV purchase). As a rough indicator capturing the overall number of policies that states have used to incentivize consumer EV adoption, we add the number of policies up by state, illustrated in Figure 1. We separate the “policy index” (ranging from 0 to 9) by battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) and show how it has changed over time (as shown in Figure 1 for the second half of 2011, 2013, 2015). Overall, there are more BEV policies, where California and Arizona are leaders in the number of EV policies adopted.

Figure 1. State Policy Index: BEVs (top) and PHEVs (bottom)


Our econometric estimates show that state policies positively impact EV adoption for both BEVs and PHEVs. The vehicle purchase incentive has a pronounced effect on BEV uptake. A $1,000 increase in the purchase incentive leads to an approximately 15% increase in sales of BEVs. We test these results by examining states that have ended large purchase subsidies, and find that BEV adoption declines. Other policies—aggregated together into a policy index—likewise increase EV uptake, though more so for PHEVs. This suggests that policies related to usage are perhaps more relevant for PHEVs. Each additional policy increases PHEV sales by 18%. The contrast between the effectiveness of different types of incentives for BEVs and PHEVs offers some guidance for policymakers evaluating current state policies or considering adopting new state EV policies. In sum, we find that state policies have driven additional EV uptake—extending EV purchases to consumers who would not have otherwise entered the market.

Geographic Peer Effects for Teslas

We also examine the role of geographic peers in EV uptake in Hawaii. Hawaii provides an excellent case for studying peer effects because it has strong EV adoption, the second highest amongst U.S. states in EVs per capita (IHS Markit, U.S. Census Bureau, 2010 – 2015). Although federal and state governments offer a variety of consumer incentives, the decision to adopt EVs may also extend beyond economic and policy motivations to include behavioral and social components. Social networks, also called “peer effects,” could have a potentially large influence on vehicle choice if people are influenced in their decision to adopt an EV by peer decisions to adopt EVs. Our second study examines peer effects defined by geographic networks, i.e., by visual observations of EVs registered in one’s neighborhood. Using zip code-level EV registration data from 2013-2016 for Hawaii, we exploit a three-month gap between adoption decisions and deliveries of Teslas to estimate presence and size of peer effects. Tesla EVs were important for reigniting interest in EVs more generally and amount to 13% of registered EVs on Maui, Oahu, and Hawaii Island. Our econometric analysis identifies statistically significant neighborhood effects. Figures 2 and 3 illustrate EV and Tesla uptake, respectively, by zipcode on Oahu, Maui, and Hawaii Island; Kauai is omitted due to data limitations.

Figure 2. EV Adoption on Oahu, Maui and Hawaii Island

 

Figure 3. Tesla Adoption on Oahu, Maui and Hawaii Island

We find that geographic-based peer effects generate one additional Tesla sale for every 26 Teslas sold in a zip code. How meaningful the magnitude of these peer effects may be is likely contextual. If for example policy focused specifically on marketing to peers and social networks, this may not provide much gain. However, as a pure spillover effect, peer effects can be meaningful. If, for example, Hawaii were to offer a second round of vehicle purchase subsidies, the peer multiplier effect estimated in our analysis would increase the additional Teslas purchased by 4-5% over each year of the vehicle’s life. As a lower bound, this amounts to roughly 1 additional Tesla per zipcode as a result of peer effects. One note of caution: whether the peer multiplier for Teslas—a very high-end vehicle—will translate as the peer multiplier for other lower-priced EVs, such as the Nissan Leaf or Chevy Volt, remains an open question.

- Sherilyn Wee, Makena Coffman and Sumner LaCroix


References

IHS Markit. (2016). Dataset of New Vehicle Registrations by state 2010-2015.

U.S. Census Bureau. (2010-2015). 2010-2015 American Community Survey 1-Year Population Estimates.


Science and Community Engagement to Improve Water Management in Hawaii

‘Ike Wai (from the Hawaiian ‘ike, meaning knowledge, and wai, meaning water) is a five-year National Science Foundation project. The multidisciplinary research team from UH Manoa and Hilo will collect new geophysical and groundwater data, integrate these data into detailed groundwater models, and generate an improved understanding of subsurface water location, volume and flow paths. Data and outputs from ‘Ike Wai will be used to develop decision making tools to address challenges to fresh water scarcity from climate variability, increasing population demands, and water contamination.

UHERO Project Environment researchers will work with stakeholders to develop land-use scenarios, with a particular emphasis on potential areas for watershed restoration. Recharge values and restoration costs will be estimated for these scenarios and used as inputs to the groundwater model. Assumptions about development and population growth will be used to project consumption on the demand side, and the groundwater model will then allocate pumping spatially to minimize declines in water levels and deterioration in water quality due to seawater intrusion (SWI). Results from the pumping simulations can then be compared with current estimates of sustainable yield. We will also estimate the return on investment in watershed restoration for each of the scenarios.

The new field data and groundwater modeling efforts will help to improve current sustainable yield estimates. With recharge likely to change in the future due to climate change and land use decisions (e.g. watershed restoration), sustainable yield should also be variable. Although, current estimates of sustainable yield do not account for ecological and customary uses, several stakeholders have shown interest in developing a framework to do so. We will therefore look at how submarine groundwater discharge (SGD) along the coast varies with pumping and simulate the effects of different SGD constraints. We will also estimate the costs, in terms of restricting groundwater pumping, of enforcing those constraints. That is, we will: (1) compare projected groundwater consumption under each scenario to new sustainable yield estimates that account for both SWI and SGD, and (2) estimate the potential costs of maintaining pumping below sustainable yield.


Michael Roberts Receives Agricultural & Applied Economics Association’s Quality of Research Discovery Award

UHERO congratulates Michael Roberts, recipient of the Agricultural & Applied Economics Association’s Quality of Research Discovery Award for his article, "Who Really Benefits from Agricultural Subsidies? Evidence from Field-level Data." Michael will be recognized during the AAEA 2017 Annual Meeting this summer in Chicago.

Michael Roberts is a UHERO Research Fellow, Professor of Economics and co-founder of UHERO's Energy Policy and Planning Group


Raising Property Taxes to Improve Public Schools

Posted February 3, 2017 | Categories: Hawaii's Economy, Blog

Hawaii’s public school teachers’ union (HSTA) is back at the State Legislature this session to ask lawmakers to help find more money to pay teachers and other education expenses. HSTA was at the Legislature last year to lobby for a 1% increase in the State’s 4% general excise and use tax (GET) to fund K-12 public education. That effort failed. HSTA is back again with a new plan. The plan calls for an amendment to the State’s Constitution that would allow the State to impose an “education surcharge” on the counties’ real property taxes on residential “investment property”. Hawaii’s Constitution currently only allows the counties to levy a property tax. The proposed amendment includes a daily room tax on tourist accommodations which State lawmakers can enact without a constitutional amendment.

The proposed amendment (SB 683) reads as follows: “Shall the Legislature fund a quality public education for all of Hawaii’s children, including the recruitment and retention of teachers; lower class sizes; special education program; and career and technical education, art, music, Hawaiian studies, and Hawaiian language instruction by establishing a surcharge on residential investment property and visitor accommodations?” HSTA estimates that the two taxes would generate $500 million in revenues each year. (By comparison, data from the State’s Comprehensive Annual Financial Report for fiscal year 2016 show State tax revenues collected from all sources totaled $6.454 billion and expenditures on lower education was $2.522 billion.) That money would be set aside in a special fund for education. The real intent is to generate more money to pay teachers in order to address a teacher shortage crisis, which HSTA President Corey Rosenlee said is “…going to make it very difficult to attack a lot of those other problems that are affecting education.” The proposed amendment requires the approval of voters; thus, lawmakers can escape blame for raising taxes. Pretty clever. But lawmakers will still be on the hook for passing bills to implement the proposed amendment. Senate bill SB 686 specifies what will be taxed and at what rates. It is a highly discriminatory bill.

Unfortunately, the current proposal put forth by HSTA to tax investment properties and visitor accommodations is seriously flawed. Consider the property tax surcharge proposal. What are residential “investment properties”? HSTA defines residential investment property as any residence that doesn’t have a homeowner exemption. To qualify for a homeowner exemption, the residence must be its owner’s principal residence. U.S. Census data (American Community Survey) show that in 2015, 56.9% of the 450,572 occupied housing units in Hawaii were owner-occupied, and 43.1% (181,028 units) were occupied by renters. The average household size in occupied rental units was 2.83. Thus, there are a lot of renters living in HSTA’s “investment properties.” A property tax surcharge on investment property is also a tax on renters in Hawaii.

Authors of SB 686 recognized the potential negative impact of their plan on renters. SB 686 states: “This part shall not apply to property rented for an amount no greater than $1,500 per month, not including any applicable maintenance fees, utility fees, and services charges.”

U.S. Census data show that in 2015, the median monthly gross rent in Hawaii was $1,438. Forty-seven percent of the occupied rental units, or 84,562, had a gross monthly rent of $1,500 or more; those units housed about 240,000 people. However, property values and rents vary among the counties, with Honolulu at the top. Home ownership is also lower on Oahu compared to the Neighbor Islands. Thus, the education surcharge will have a disproportionate impact on Oahu renters.

There’s more. The tax on rental properties priced above $1,500 per month will drive up their monthly rents; but it may also drive up the rents of exempt units as some renters switch out of the higher priced units into the lower priced units.

SB 686 requires the counties to administer and collect the education property surcharge. It won’t be easy for the counties to sort out which properties qualify for this exemption. Counties don’t have information on which properties without homeowner exemptions are rented and for how much. And rents also can change periodically requiring constant adjustment to the $1,500 exemption threshold.

The education surcharge tax rates, set on a sliding scale, are not modest. For example, for FY 2016 to FY2017, the Honolulu County property tax rate for “residential” properties is $3.50 per $1,000 net taxable property for all properties except Residential A properties (valued at $1 million and above) which are taxed at a higher rate of $6 per $1,000 net taxable property. In SB 686, the lowest property tax rate is $3.50 per $1,000 for properties valued at below $500,000. Thus, an owner of an investment property in Honolulu worth less than half a million dollars can expect to see his (her) combined City and State property tax bill double. For an investment property valued between $500,000 and under $750,000, the combined property tax bill will be 2.29 times the previous County-only tax bill. SB 686 is also silent on whether the valuation thresholds will be properly indexed to allow for changes in housing prices. In the absence of indexing, more and more investment property owners will be pushed into higher tax rates as housing prices rise.

Taxes are sometimes levied to discourage certain kinds of behavior—e.g. smoking and drinking. We call them “sin taxes.” But the most important reason to levy taxes is to raise revenue to pay for public services that we desire. The tax is the price of the services consumed. Households whether they own or rent and send their children to our public schools consume a public service that is not produced at zero cost. HSTA’s education tax surcharge proposal gives homeowners with exemptions a discount on the consumption of public education services. What is the rationale for that? Is it because owner-occupants can less afford the additional tax than renters? A good tax system should be equitable as well as pay for public services that we collectively value the most. The HTSA proposal is patently unfair.

The education surcharge on visitor accommodations is arguably even more bizarre than the property tax surcharge. SB 686 states: “The education surcharge on visitor accommodations shall be imposed statewide on all visitor accommodations, regardless of occupancy.” In other words, it is also levied on vacant units. Rates are set at $3 per day for units that rent for less than $150 per day, and $5 per day for units that rent for $150 per day or more. Thus, the visitor accommodation tax is not an occupancy tax like the State’s transient accommodation tax (TAT); it is essentially a property tax.

Hawaii’s TAT is a tax on consumption even though it is levied on sellers (hoteliers); the TAT is passed on to consumers/tourists. A property tax is a tax on capital (including land). In my own research on the distribution of the burden of the hotel property tax, I came to the conclusion, that an increase in hotel property taxes in Hawaii cannot be fully passed on to hotel guests. With the TAT, hotel guest bills include a separate line item stating the amount of TAT payable by the guest. If hoteliers wish to visibly pass on the visitor accommodation tax to guests in the same way, what is the appropriate amount to list on the guest bill since the tax levied per occupied room varies from hotel to hotel depending on the hotel occupancy rate?

Finally, HSTA’s plan puts the cart before the horse. Ideally, one should first have a detailed implementation plan for what is needed to create a “quality” state-wide public education system then figure out how best to fund it. HSTA’s current proposal seems to say, “Give us more money and we’ll figure out how best to spend it.” Apparently, HSTA is hoping that voters will be more willing to raise taxes that appear to target tourists and wealthy property investors. Hawaii’s public schools may need more money, but HSTA’s plan is not the way to raise it.

- James Mak and Carl Bonham

Addendum (2/5/2017):
HSTA does have a report (Schools Our Keiki Deserve) that articulates many reasons why public schools need more money.


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