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Economic Currents

Keep up to date with the latest UHERO news.

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


The Challenges of EV Efficiency In Hawaii

Earlier this month, U.S. Department of Energy launched a website that calculates “the cost of fueling a vehicle with electricity compared to a similar vehicle that runs on gasoline”.

The mission of this gadget is to encourage consumers to switch to electric cars by:

• bringing greater transparency to vehicle operating costs

• helping drivers determine how much they might save on fuel by choosing an electric vehicle (EV)

• showing the low and steady price of fueling with electricity.

Announcing the launch of the website, the new Secretary of Energy, Ernest Moniz, stated that EVs could not only save consumers on fuel, but also reduce the dependence of our nation on oil. Those goals may be harder to achieve in Hawai’i than in the rest of the nation.

First, according to the eGallon website, while it costs the average driver in the US less than a third to drive an EV than a conventional gasoline vehicle (saving them more than 68% on fuel cost*), Hawai‘i residents save only 5 cents per gallon on gasoline (less than 1.5%). That explains why the first goal (saving consumers on fuel costs) is harder to achieve in Hawai‘i.

Second, while less than 1% of US electricity is generated from oil, Hawai‘i currently generates 75% of its electricity from oil. This explains why the second goal (reducing dependency on oil) is harder to achieve through EVs in Hawai‘i.

Finally, an often-quoted goal of increased EV penetration is to lower greenhouse gas (GHG) emissions from the transportation sector—as the largest and fastest growing component of state GHG emissions. Achieving that goal is also currently easier in the rest of the nation where more than 40% of electricity comes from cleaner sources than oil and coal (i.e. renewables, nuclear, and natural gas).

Therefore, both of the objectives mentioned by the US Energy Secretary are harder to achieve in Hawai‘i, unless consumers charge their vehicles themselves, for example using their own rooftop PV systems. That way, they could save more on vehicle fuel costs and help the State reduce their reliance on oil.

 

---Iman Nasseri and Kimberly Burnett 

 

*It is worth mentioning that both this website and much of the media tend to examine “pump prices” for passenger cars. Although EVs show a lot of promise in much of the US in terms of fuel cost per miles compared with gasoline and other alternative-fueled vehicles, considering the higher capital cost of EVs than their similar class conventional gasoline vehicles (Please refer to section 2.8 of Transitions to Alternative Vehicles and Fuels), they may not look as promising in terms of overall cost per mile.


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


Expensive Exotics: Snakes in Hawaii

Last month a juvenile ornate tree snake (Chrysopelea ornate) was captured by military personnel near the airfield at Hickam Air Force Base. Inspectors from the Hawaii Department of Agriculture were notified and took custody of the foot-long snake. Ornate tree snakes are mildly venomous and are related to the brown tree snake (Boiga irregularis), which has devastated the ecosystem in Guam and threatens the environment and economy of Hawaii.

Snakes are not native to Hawaii and have the potential to invoke more than just fear in visitors and residents. The arrival and establishment of snakes could have hefty economic consequences to the state in terms of control costs and damages. Co-director of UHERO’s Project Environment, Dr. Kimberly Burnett, studied the potential economic outcome of a brown tree snake invasion in Hawaii as part of her Ph.D. dissertation. Depending on assumptions regarding control methods and population growth upon arrival, the snake could easily cost Hawaii $200-$300 million in management and damages including power outages, lost bird species and medical expenses related to snakebites. That's about equal to half the value of all the crops produced in Hawaii in 2011.  For more on the economic consequences of invasive species in Hawaii, visit UHERO’s Project Environment.

 

--Kimberly Burnett

Photo credit flying snake: Dr. Allen Allison, Bishop Museum

Photo credit brown tree snake: Kimberly Burnett, UHERO


What is a Watershed and Why Does it Matter?

Over the years, the term “watershed” has evolved from signifying the divide separating one drainage basin from another to the drainage basin itself. A drainage basin or catchment area is a section of land drained by a river and all of its tributaries. Watersheds come in all shapes and sizes, and the U.S. Environmental Protection Agency estimates that there are 2,267 watersheds in the United States and Puerto Rico alone. In Hawai‘i, much of the water captured in our watersheds eventually drains into subsurface groundwater aquifers.

Watershed conservation activities (e.g. feral animal control, non-native weed control, native reforestation) can increase the amount of water captured as groundwater recharge, which is especially important given that groundwater provides 99 percent of Hawaii’s domestic drinking water. The benefit of a healthy watershed becomes even clearer when one considers the increasing trend in water scarcity owing to a growing population, rising per capita income, and climate change. Ecosystem services generated by a watershed area extend well beyond groundwater recharge provision, however.

A previous UHERO study estimates that the present value of ecosystem services generated by natural capital embodied in the Ko‘olau Watershed is in the range of $7.4-14.0 billion, assuming that the state of the watershed remains at the status quo and groundwater is optimally managed. While the benefits associated with water resources ($4.7-9.2 billion) are by far the largest, a variety of other ecosystem services also generate substantial value: species habitats ($0.5-1.4 billion), biodiversity ($0.7-5.5 million), subsistence ($34.7-131 million), hunting ($62.8-237 million), aesthetic values ($1-3.1 billion), commercial harvest ($0.6-2.4 million), and ecotourism ($1-3.0 billion). Other services which are difficult or impossible to quantify, such as cultural importance, increase the total value further.

-- Chris Wada


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