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Economic Currents

Keep up to date with the latest UHERO news.

Hawaii's Energy Future

Last week's Asia Pacific Clean Energy Conference has focused the spotlight on Hawaii's energy future. Governor Abercrombie opened the conference with a strong commitment to installing an undersea cable between Oahu and Maui. The Blue Planet foundation unveiled their "Energy Report Card" during a keynote address by Henk Rogers. Meanwhile, recent coverage by NPR discussed switching to natural gas as an alternative to Hawaii's oil dependence. 

The Hawaii Clean Energy Initiative set the vision for the state to move toward renewable and cleaner sources of energy. There are numerous pathways and decision on the best pathway is fraught with debate.

The Governor's comments juxtaposed to strong resistance to the undersea cable suggests that there needs to be on-going discussion of what energy portfolios will likely emerge in separated versus linked islands scenarios - including environmental and economic impacts.

Moreover, there is also concern over the high cost of energy. As many renewable sources are still relatively costly (or difficult to locate) there is also consideration of switching to natural gas as a "bridge fuel." The future price of liquefied natural gas is uncertain and, while it is cleaner burning than oil, there is concern that its full environmental impact is not necessarily an improvement over the status quo.

In addition, environmental groups such as Blue Planet in their "energy report card" bring up concerns about the lack of guiding policy for the transportation sector. Policies that complement transportation as well as electricity have a place in the discussion as well.

UHERO's ongoing research is looking at ways to cost-effectively achieve GHG reduction and meet the state's clean energy goals.

---Makena Coffman

The Water-Energy-Food Nexus

The water-energy-food nexus is one of the most important and fundamental global environmental issues facing the world today. The US Geological Survey estimates that the United States used 201 billion gallons per day (bgd) of freshwater for thermoelectric power generation and 128 bgd for irrigation in the year 2005. Combined, energy generation and irrigation accounted for roughly 80% of all water withdrawals over that period. At the same time, energy is a key input for the production of freshwater. A 2006 study prepared for the California Energy Commission estimated that the electricity required to process one million gallons of water in a typical urban water system ranges from 4,000 kWh per million gallons in Northern California to 12,700 kWh in Southern California, and water-related energy use comprised over 19% of total energy use in the state. Although the wide range in values suggests that water-related energy use depends on a variety of location-specific factors, the interconnectedness of the resources is clear.

As demand for each of the resources grows, examining tradeoffs will become especially important. For example, biofuels may be developing into a viable alternative to petroleum, but the implications for water resources will be considerable. The UHERO Project Environment team will be working with the Research Institute for Humanity and Nature to develop a framework capable of quantifying such tradeoffs. The project will focus heavily on coastal regions in the Asia-Pacific “Ring of Fire”. For more on economic approaches to water and energy management, visit UHERO’s Project Environment.

---Christopher Wada

Coastal Zone Management in Hawaii

Hawaii has 750 linear miles of coastline that include all of our beaches, an array of cliffs, bays and other features that count among our most treasured natural resources. Development of these resources is a key source of economic growth, but ensuring that this development is carried out in a manner that preserves, protects and (where possible) restores them is important for their long term value.

Since 1975 a permitting system administered by each county has been the primary vehicle for managing development of the coastal zone. To support decision making in the permitting process, The UHERO Project Environment team collaborated with the State Office of planning to review the way benefits provided by the program are evaluated.

Project Environment was asked to identify a set of key ecosystem services to study, selecting the services on the basis of their measurability and expected value. The final list included public access, beach and shoreline protection, marine resources, and scenic and open space. Other important but difficult to measure benefits, discussed but not incorporated in the methodological assessment, include those related to cultural values and practices.

The UHERO team visited various project sites in each of the four counties across the state and concluded that benefits of the permitting process are very site-specific, rendering a statewide assessment via benefit transfer – a valuation method that adjusts estimated values from studies completed in other locations – impractical. Instead, original valuation methods were recommended for each site, depending on the type of ecosystem service protected or enhanced, site characteristics, and the type and number of users, among other things. For example, an encroachment removal and dune restoration project at Charley Young Beach (Kihei, Maui) was estimated to have doubled the usable beach width, while expanding view corridors, reducing erosion, and replenishing sand dunes. Estimating the value of each of those benefits requires different data and methods.



The final report discusses potential valuation methods for seven case studies throughout Hawaii, and includes a primer on valuation methods, with pros and cons, as well as data requirements for each. For more on economic valuation of environmental services in Hawaii, visit UHERO’s Project Environment.

-- Christopher Wada

An Insight on the Cost of Paradise

Whether visitors or residents in Hawai‘i, we are all aware of the high cost of living in paradise. One major contributing factor is the cost of energy. Households in Hawai‘i pay 4 times more than the average US household and nearly 7 times the households in Utah, where the residential energy cost is the cheapest in the nation.* While the US average for April 2013 hovered at 12 cents/kwh, Hawai‘i paid 37 cents/kwh for electricity in the residential sector.**

Breaking down residential energy consumption by source provides more insight into the high cost of living in Hawai‘i. While households in Hawai‘i supply their energy needs mainly by electricity (90%) at $110/mmbtu (equivalent to 37 cents/kwh), the two major sources in the US—natural gas and electricity—each comprise 42% of energy consumption, at roughly $5/mmbtu (equivalent to 1.7 cents/kwh) and $35/mmbtu (equivalent to 12 cents/kwh), respectively (see Figure 1). Hence, Hawai‘i is not only consuming a larger share of electricity, but also at skyrocketing prices. In contrast, the US is consuming a smaller portion from electricity at significantly discounted prices compared to Hawai‘i. This, combined with a large share of cheap natural gas in the US household consumption portfolio explains the large disparity in the cost of energy—particularly in the residential sector—in Hawai‘i and the US. Note however that switching to natural gas in Hawai‘i is not straightforward because of the logistics and infrastructure costs (liquefaction, shipping, regasification) of bringing natural gas to Hawai‘i.


-- Sherilyn Wee



*http://www.eia.gov/state/seds/data.cfm?incfile=/state/seds/sep_sum/html/sum_pr_res.html&sid=US **http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_5_6_a

Most of Hawaii's commercial seafood is imported, but recreational catch tips the scales back

Hawaii sits in the middle of the largest ocean on earth. So the majority of the seafood consumed on these islands must then come from local waters, right? The answer might surprise you.

The average 2000 to 2009 annual commercial consumption in Hawaii was 38.9 million pounds per year, which is roughly 28.5 pounds per capita. It goes without saying that the residents and visitors of Hawaii eat a lot of seafood, approximately 12.6 more pounds per capita than the U.S. as a whole. Only 37% of that 38.9 million pounds of commercial seafood comes from local waters. However, it is important to keep in mind that Hawaii's population also eats a wide variety of seafood, and like any other state, demands certain species that must be imported. 

There are no marine recreational fishing license requirements in Hawaii and therefore no exact recreational catch data, but DLNR and NOAA jointly conduct a survey on recreational fishers. If we add their recreational estimate to commercial sources, then that significantly changes the distribution of where our seafood comes from. Of all the seafood consumed in Hawaii, the percentage of local seafood is pushed up to 51%.


With the addition of recreational catch total consumption for Hawaii goes up to 50.4 million pounds, which translates to roughly 36.9 pounds per capita. This means recreational and subsistence catch add an additional 8.4 pounds of seafood consumption annually per capita for the state of Hawaii. Recreational and subsistence fishing, hunting and gathering are important components of local consumption, and should be considered as part of the solution for optimal food security.

This information is essential to assess the market competitiveness of local versus imported seafood. It is important for the formulation of public policies that are intended to promote further development of Hawaii fisheries and the aquaculture industry. You can read more about this research in the Joint Institute of Marine Atmospheric Research report, the CTAHR Extension article (Economic Issues, EI-22), and the article in Marine Fisheries Review. Future research directions include an improved estimate of continental U.S. imports and transshipments, the level of non-commercial seafood supply flow into the retail sector and import flows directly to commercial retail and food service establishments. This research was made possible with funding support from NOAA’s Hawai‘i Seafood Program (Award No. NA09NMF4520171) conducted in the College of Tropical Agriculture and Human Resources (CTAHR) at the University of Hawaiʻi at Mānoa.

- Cheryl Geslani and Kimberly Burnett

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