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How Have Catch Shares Been Allocated?

 A unique database was created that describes the methods used to allocate shares in nearly every major catch share fishery in the world. Approximately 54% of the major catch share fisheries in the world allocated the Total Allowable Catch (TAC) solely on the basis of historical catch records, 3% used auctions, and 6% used equal sharing rules. The remaining 37% used a combination of methods, including vessel-based rules. These results confirm the widely-held belief that nearly all catch share programs have “grandfathered” private access to fishery resources: 91% of the fisheries in the database allocated some fraction of the TAC on the basis of historical catch. This publicly available database should be a useful reference tool for policymakers, academics, and others interested in catch shares management in Hawai‘i and across the globe.

To suggest edits or additions to the database, please email lynham@hawaii.edu.

Working PaperDATA FILE (XLSX)


Behind-the-counter, but Over-the-border? The Assessment of the Geographical Spillover Effect of Increased Access to Emergency Contraception

Washington was the first state to ease the prescription requirements making emergency contraception (EC) available behind-the-counter at pharmacies to women of any age in 1998. I hypothesize that the increased availability of EC affects fertility rates beyond the borders of the state that allows it. In contrast to the literature, I show that increased access to EC is associated with a statistically significant albeit economically small decrease in abortion rates in Washington counties where women had access to no-prescription EC pharmacies. Yet, there is no effect on pregnancy rates. These results are robust in a number of specifications. Finally, I find some evidence in support of the spillover effects in Idaho, but not Oregon. However, after accounting for changes in the availability of abortion services, the decrease in fertility rates in “treated” Idaho counties is rather small and models lack sufficient power to detect it.

WORKING PAPER


Investigating the Effects of Furloughing Public School Teachers on Juvenile Crime in Hawaii

 Policymakers have long been concerned about the large social costs of juvenile crime. Detecting the causes of juvenile crime is an important educational policy concern as many of these crimes happen during the school day. In the 2009-10 school year, the State of Hawaii responded to fiscal strains by furloughing all school teachers employed by the Department of Education and canceling classes for seventeen instructional days. We examine the effects of these non-holiday school closure days to draw conclusions about the relationship between time in school and juvenile arrests in the State of Hawaii on the island of Oahu. We calculate marginal effects from fewer juvenile assault and drug-related arrests, although there are no changes in other types of crimes, such as burglaries. The declines in arrests for assaults are the most pronounced in poorer regions of the island while the declines in arrests for assaults are the most pronounced in poorer regions of the island while the decline in drug-related arrests is larger in the relatively more prosperous regions.

WORKING PAPER


Economic Impacts of Inter-Island Energy in Hawaii

This study assesses the economic and greenhouse gas emissions impacts of a proposed 400MW wind farm in Hawaii. Due to its island setting, this project is a hybrid between an onshore and offshore wind development. The turbines are planned for the island(s) of Lanai and, potentially, Molokai. The project includes building an undersea cable to bring the power to the population center of Oahu. It is motivated by 1) Hawaii’s high electricity rates, which are nearly three times the national average, and 2) its Renewable Portfolio Standard mandating that 40% of electricity sales be met through renewable sources by the year 2030.

We use an economy-wide computable general equilibrium model of Hawaii’s economy coupled with a detailed dynamic optimization model for the electric sector. We find that the 400MW wind project competes with imported biofuel as a least-cost means of meeting the RPS mandate. As such, the wind project serves as a “hedge” against potentially rising and volatile fuel prices, including biofuel. Though its net positive macroeconomic impacts are small, the estimated reduction by 9 million metric tons of CO2 emissions makes the project a cost-effective approach to GHG reduction. Moreover, variability in imported fuel costs are found to be a much more dominant factor in determining cost-effectiveness than potential cost overruns in the wind project’s construction

 

Please contact Makena Coffman at makenaka@hawaii.edu for the full study.

 


Common correlated effects and international risk sharing

Correct assessment of consumption risk and its international diversification has important policy implications. However, existing studies of international risk sharing rely on the unrealistic assumptions that all economies are characterized by symmetric preferences and uniform transmission of global shocks. We relax these homogeneity constraints and compare our proposed approach with the conventional ones using a 44-year panel of 120 countries. Our results confirm that consumption is only partially smoothed internationally and risk sharing is directly related to the level of development, but we do not detect a significant increase in risk sharing during the surge in financial globalization over the last four decades.

Revised version, posted June 5, 2017

WORKING PAPER


Estimating Demand Elasticities in Non-Stationary Panels: The Case of Hawai‘i Tourism

It is natural to turn to the richness of panel data to improve the precision of estimated tourism demand elasticities. However, the likely presence of common shocks shared across the underlying macroeconomic variables and across regions in the panel has so far been neglected in the tourism literature. We deal with the e ffects of cross-sectional dependence by applying Pesaran’s (2006) common correlated e ffects estimator, which is consistent under a wide range of conditions and is relatively simple to implement. We study the extent to which tourist arrivals from the US Mainland to Hawaii are driven by fundamentals such as real personal income and travel costs, and we demonstrate that ignoring cross-sectional dependence leads to spurious results. 

Published Version: Fuleky, P., Q. Zhao , C. Bonham. 2013. Estimating demand elasticities in non-stationary panels: The case of Hawaii tourism. Annals of Tourism Research. In Press.

WORKING PAPER


The Impact of Marriage Equality on Hawai′i’s Economy and Government: An Update After the U.S. Supreme Court’s Same-Sex Marriage Decisions

The U.S. Supreme Court’s decisions in the two same-sex marriage cases have substantially increased the short-term and medium-term benefits that could accrue to Hawai‘i if the Hawai‘i State Legislature enacts legislation allowing same-sex marriages to begin in Fall 2013 or early in 2014.

RESEARCH PAPER


Forecasting with Mixed Frequency Factor Models in the Presence of Common Trends

We analyze the forecasting performance of small mixed frequency factor models when the observed variables share stochastic trends. The indicators are observed at various frequencies and are tied together by cointegration so that valuable high frequency information is passed to low frequency series through the common factors. Diff erencing the data breaks the cointegrating link among the series and some of the signal leaks out to the idiosyncratic components, which do not contribute to the transfer of information among indicators. We find that allowing for common trends improves forecasting performance over a stationary factor model based on di fferenced data. The common-trends factor model" outperforms the stationary factor model at all analyzed forecast horizons. Our results demonstrate that when mixed frequency variables are cointegrated, modeling common stochastic trends improves forecasts.

Published Version:  Peter Fuleky and Carl S. Bonham (2015). FORECASTING WITH MIXED-FREQUENCY FACTOR MODELS IN THE PRESENCE OF COMMON TRENDS. Macroeconomic Dynamics, 19, pp 753-775. doi:10.1017/S136510051300059X.  

Working Paper


Potential Benefits, Impacts, and Public Opinion of Seawater Air Conditioning in Waikïkï

This report provides a summary of an investigation by the University of Hawai‘i Sea Grant College Program into the viability and effectiveness of installing a seawater air conditioning district cooling system in Waikīkī. Seawater air conditioning (SWAC) harnesses the cooling properties of cold seawater to provide cool air for air conditioning purposes. In doing so, SWAC reduces the amount of electricity needed for air conditioning. SWAC is particularly relevant to Hawai‘i for two reasons: first, the proximity of deep, cold, ocean water to areas of high population make Hawai‘i an obvious location for implementing the technology; and secondly, with approximately 90% of its electricity generated from fossil fuels, Hawai‘i is the most fossil fuel dependent state in the nation. Unlike the rest of the U.S., where coal, natural gas, and nuclear power are called upon to meet a substantial proportion of the electricity demand, Hawai‘i relies heavily on residual fuel oil (the by-product of refining crude oil for jet fuel, gasoline, and other distillates). As a result, Hawai‘i has very high electricity prices compared to the rest of the country. SWAC has the potential to both cut the cost of air conditioning and reduce the amount of harmful emissions that are released as a by-product of generating electricity from fossil fuels.


Seawater air conditioning works by pumping cold (44-45°F), deep (1,600-1,800 feet) seawater into a cooling station (Figure 1). Here, the cold seawater is used to chill fresh water flowing in nearby pipes. The chilled fresh water is then piped into hotels for cooling purposes while the seawater (slightly warmed to 53-58°F) is pumped back into the ocean at a shallower depth (120-150 feet).

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Sustainable Development and the Hawaii Clean Energy Initiative: An Economic Assessment

 The connection between the emerging field of sustainability science and the economics of sustainable development has motivated a line of interdisciplinary research inspired by the notion of “positive sustainability.” This notion is founded on three principles or pillars: (1) adopting a complex systems approach to modeling and analysis, integrating natural resource systems, the environment, and the economy; (2) pursuing dynamic efficiency, that is, efficiency over both time and space in the management of the resource-environment-economy complex to maximize intertemporal well-being; and (3) enhancing stewardship for the future through intertemporal equity, which is increasingly represented as intergenerational neutrality or impartiality. This paper argues that the Hawaii Clean Energy Initiative (HCEI) fails to satisfy all three pillars of sustainability, and consequently fails to achieve the "sustainability criterion" put forward by Arrow, Dagupta, Daily et al: that total welfare of all future generations not be diminished. HCEI shrinks the economy, contributes negligibly to reduction of global carbon emissions, and sparks rent seeking activity (pursuit of special privilege and benefits) throughout the State of Hawaii.

WORKING PAPER


The Impact of Same-Sex Marriage on Hawai‘i’s Economy and Government

This report provides quantitative and qualitative measures of the impact of same-sex marriage on Hawai`i’s economy and government. We find that marriage equality is likely to lead to substantial increases in visitor arrivals, visitor spending, and state and county general excise tax revenues. We estimate that fewer than 100 spouses will be added as beneficiaries to public and private employer-provided health insurance plans. The size of the gains from marriage equality depends critically on upcoming rulings by the U.S. Supreme Court on the constitutionality of California’s Proposition 8 and the Defense of Marriage Act.  

WORKING PAPER

 

 


A dynamic approach to PES pricing and finance for interlinked ecosystem services: Watershed conservation and groundwater management

A theory of payment for ecosystem services (PES) pricing consistent with dynamic efficiency and sustainable income requires optimized shadow prices. Since ecosystem services are generally interdependent, this requires joint optimization across multiple resource stocks. We develop such a theory in the context of watershed conservation and groundwater extraction. The optimal program can be implemented with a decentralized system of ecosystem payments to private watershed landowners, financed by efficiency prices of groundwater set by a public utility. The theory is extended to cases where land is publicly owned, conservation instruments exhibit non-convexities on private land, or the size of a conservation project is exogenous. In these cases, conservation investment can be financed from benefit taxation of groundwater consumers. While volumetric conservation surcharges induce inefficient water use, a dynamic lump-sum tax finances investment without distorting incentives. Since the optimal level of conservation is generated as long as payments are correct at the margin, any surplus can be returned to consumers through appropriate block pricing. The present value gain in consumer surplus generated by the conservation-induced reduction in groundwater scarcity serves as a lower bound to the benefits of conservation without explicit measurement of other benefits such as recreation, biodiversity, and cultural values.

 

Published Version: Roumasset, J., Wada, C.A., 2013. A dynamic approach to PES pricing and finance of interlinked ecosystem services: Watershed conservation and groundwater management. Ecological Economics. 87, 24-33.

 

WORKING PAPER

 


How China’s Approved Destination Status Policy Spurs and Hinders Chinese Travel Abroad

China’s “Approved Destination Status (ADS) policy allows citizens of mainland China to take pleasure trips abroad on group package tours to countries that have negotiated and implemented agreements with China. In this paper, we examine the reasons for this unique preferential and incremental travel liberalization system and how it affects mainland Chinese outbound pleasure travel.

 Working Paper

 


What Should Be the Appropriate Tax Base for Online Travel Companies' Hotel Room Sales?

This essay examines the current dispute between state and local governments in the U.S. and online travel companies (OTCs) over the appropriate hotel occupancy tax base for online hotel bookings. It addresses the question of what should be the appropriate tax base in designing hotel occupancy tax statutes. It argues that the appropriate tax base should be the full rental prices of the hotel rooms paid by consumers inclusive of online travel company markups and service fees and not the discounted net rates paid by the OTCs to their hotel suppliers.

Published: Mak, J. 2012. What Should Be the Appropriate Tax Base for OTCs’ Hotel Room Sales? Pages 775-786  Tax Analysts. Tax Analysts, Falls Church, Virginia. 

 

 


The Economics of Groundwater

We provide synthesis of the economics of groundwater with a focus on optimal management and the Pearce equation for renewable resources. General management principles developed through the solution of a single aquifer optimization problem are extended to the management of multiple resources including additional groundwater aquifers, surface water, recycled wastewater, and upland watersheds. Given an abundant (albeit expensive) substitute, optimal management is sustainable in the long run. We also discuss the open-access equilibrium for groundwater and the conditions under which the Gisser-Sanchez effect (the result that the present value generated by competitive resource extraction and that generated by optimal control of groundwater are nearly identical) is valid. From the models and examples discussed, one can conclude that optimization across any number of dimensions (e.g. space, time, quality) is driven by a system shadow price, and augmenting groundwater with available alternatives lessens scarcity and increases welfare if timed appropriately. Other rules-of-thumb including historical cost recovery, independent management of separate aquifers, and maximum sustainable yield are inefficient and may involve large welfare losses.

Working Paper


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