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Products: UHERO Working Papers

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Optimal Management of a Hawaiian Coastal Aquifer with Near-Shore Marine Ecological Interactions

We optimize groundwater management in the presence of marine consequences of submarine groundwater discharge (SGD). Concern for marine biota increases the optimal steady-state head level of the aquifer. The model is discussed in general terms for any coastal groundwater resource where SGD has a positive impact on valuable near-shore resources. Our application focuses of the Kona Coast of Hawai’i, where SGD is being actively studied and where both near-shore ecology and groundwater resources are serious socio-political issues. To incorporate the consequences of water extraction on nearshore resources, we impose a safe minimum standard for the quantity of SGD. Efficient pumping rates fluctuate according to various growth requirements on the keystone marine algae and different assumptions regarding recharge rates. Desalination is required under average recharge conditions and a strict minimum standard, and under low recharge conditions regardless of minimum standards of growth.

working paper

Limits to Growth: Tourism and Regional Labor Migration

The paper provides a methodology for considering the carrying capacity and limits to growth of a labor-constrained mature tourism destination. A computable general equilibrium model is used to examine the impacts of visitor expenditure growth and labor migration on Hawaii's economy. Impacts on regional income, welfare, prices, sector-level output, and gross state product are considered under alternative migration scenarios. Labor market constraints impose limits to growth in real visitor expenditures. Labor market growth with constrained visitor demand generates falling per capita household welfare.  

working paper


An Economic Assessment of Biological Control for Miconia calvescens in Hawaii

Biocontrol, the introduction of organisms to control an unwanted species, has been cited as a powerful method to manage the invasive species Miconia calvescens in Hawaii. In addition to ecological advantages, biocontrol is often regarded as less costly than traditional methods despite the large initial investment. Currently, miconia in Hawaii is treated through aerial and manual operations, which cost over $1 million annually. Biocontrol for miconia in Hawaii began in 1997 and the search for more agents continues today. Although biocontrol for miconia has already begun, prior to this study no assessment of its economic justifiability had been done. This research evaluates the present value of net benefits of miconia biocontrol in Hawaii. Cost data were gathered from scientists in charge of biocontrol programs. Benefits were defined as the cost-savings of current control methods. Two different biocontrol programs were modeled: control achieved by a single agent, and control achieved by a suite of agents. In addition, different dispersal rates and efficacies of biocontrol and two release dates were modeled. Because most costs of biocontrol are incurred before the release of a successful agent and the benefits are only realized post-release, each scenario was evaluated over a 50-year time horizon. The results indicate a positive present value of net benefits in all scenarios, ranging from $12.8 million to $36.1 million. Thus, biocontrol for miconia in Hawaii appears to be economically justifiable. This research should enable scientists, economists and policy makers to make informed decisions about the optimal management of Miconia calvescens in Hawaii.

working paper

Spatial Economic Analysis of Early Detection and Rapid Response Strategies for an Invasive Species

Economic impacts from invasive species, conveyed as expected damages to assets from invasion and expected costs of successful prevention and/or removal, may vary significantly across spatially differentiated landscapes. We develop a spatial-dynamic model for optimal early detection and rapid response (EDRR) policies, commonly exploited in the management of potential invaders around the world, and apply it to the case of the Brown treesnake (Boiga irregularis) in Oahu, Hawaii. EDRR consists of search activities beyond the ports of entry, where search (and potentially removal) efforts are targeted toward areas where credible evidence suggests the presence of an invader. EDRR costs are a spatially dependent variable related to the ease or difficulty of searching an area, while damages are assumed to be a population dependent variable. A myopic strategy in which search only occurs when and where current expected net returns are positive is attractive to managers, and, we find, significantly lowers present value losses (by $270m over 30 years). We find further that in the tradeoff between search costs and damages avoided, early and aggressive measures that search some high priority areas beyond points of entry even when current costs of search exceed current damages can save the island more ($295m over 30 years). Extensive or non-targeted search is not advised however.

working paper

Global Production Networks in Electronics and Intra-Asian trade

The growth of East Asia’s intra-regional trade is driven largely by increased component trade within global electronics production networks. Data on both electronics trade and production elucidate a pattern of specialization in which upper- and middle-income countries produce sophisticated components and lower-income countries assemble lower- value-added final goods. There is evidence of increasing sophistication within the electronics sector by the Newly Industrialized Economies and to a lesser extent by ASEAN countries. Despite the marked increase in intra-regional trade, developing East Asian countries remain heavily dependent on developed-country markets. When Western export demand rapidly contracted during the 2008-2009 economic crisis, these specialization patterns led the rapid diffusion of the business cycle shock throughout the East Asian region.

working paper


Wither The Economics of Agricultural Development?

In spite of healthy demand for a renaissance in economic policy for agricultural development, the academic supply response is found wanting. The infusion of public economics into the economics of agricultural development, which thrived during the 1970s and 80s, has stagnated due to the lack of foundations in transaction costs, dynamics, and the co-evolution of specialization and governance. Many of the policy ideas found in the World Bank’s, WDR 08, for example, reflect a post-modern tendency to seek and destroy market failures with new mandates and subsidies for farmer cooperatives, microfinance, crop insurance, and land reform. The new development microeconomics favors form over substance and overemphasizes multiple equilibria, trap theories, new market failures, and the new case for social insurance. Empirical research has likewise suffered from the quest for clever instruments and methods instead of informative results that estimate parameters of established theories, distinguish between competing theories, or challenge theory to explain empirical patterns. These latest fads and fancies have distracted economists from the quest for fundamental explanations of development patterns, especially the nature and causes of specialization as an engine of growth. The stage is set for young dynamic scholars to develop new tools of analysis to explain empirical patterns in behavior and organization in developing agriculture and to build the foundations of a public microeconomics of development.

working paper


Inclusionary Zoning: Implications for Oahu's Housing Market

This report describes Oahu’s housing market and summarizes results from an analysis of the effect of inclusionary zoning (“IZ”) on this market. Inclusionary Zoning policies have failed in other jurisdictions, and are failing on Oahu. IZ reduces the number of “affordable” housing units and raises prices and reduces the quantity of “market- priced” housing units.

UHERO Project Report

Alternative Policies for US Economic Recovery

Recovery has begun in the United States and global economies. The US recovery is likely to be anemic by historical standards, raising the possibility that additional stimulus may be desirable. The President and Democrats in Congress have called for a “jobs bill,” and the Federal Reserve has demonstrated that it has a flexible toolkit for providing additional liquidity if deemed appropriate. The possible need for such stimulus will come up against the reality of an expanding public debt on the one hand, and inflationary concerns on the other. In this paper, I use simulations of the IHS Global Insight Model to assess the potential impact on the recovery path of alternative macro policies.

working paper


Greenhouse Gas Emissions in Hawaii: Household and Visitor Analysis

This paper focuses on petroleum use and greenhouse gas emissions associated with economic activities in Hawai‘i. Data on economic activity, petroleum consumption by type (gasoline, diesel, aviation fuel, residual, propane), and emissions factors are compiled and analyzed. In the baseline year 1997, emissions are estimated to total approximately 23.2 million metric tons of carbon, 181 thousand metric tons of nitrous oxide, and 31 thousand metric tons of methane in terms of carbon-equivalent global warming potential over a 100-year horizon. Air transportation, electricity, and other transportation are the key economic activity responsible for GHG emissions associated with fossil fuel use. More than 22 percent of total emissions are attributed to visitor expenditures. On a per person per annum basis, emission rates generated by visitor demand are estimated to be higher than that of residents by a factor of 4.3 for carbon, 3.2 for methane, and 4.8 for nitrous oxide.

The full publication can be found at: http://www.sciencedirect.com/science/article/pii/S0140988309001133 

The Dog ATE my Economics Homework! Estimates of the Average Effect of Treating Hawaii’s Public High School Students with Economics

Hawaii is one of 27 states that do not require testing of public high school students regarding their understanding of economics. We report results for the first economics test administered to a large sample of students in Hawaii public high schools during the Spring 2004 semester. Our analysis focuses on evaluating the impact of a semester-long course in economics on student scores on a 20-question, multiple-choice economics test. We specify and estimate a regression analysis of exam scores that controls for other factors that could influence student performance on the exam. While student scores on the economics exam are relatively low, completion of an economics course and participation in a stock market simulation game each add about one point to student scores.

working paper

Analysis of Introduction of Plug-in Electric Hybrid Vehicles to Honolulu

The primary aim of this study is to understand the benefits and barriers which might be associated with the introduction of PHEV technology to Hawaii. This analysis illustrates that PHEV’s represent a much larger and more pervasive strategic opportunity than is generally appreciated in the State. Specific interests that guided our research were:

  • To estimate the impacts which relatively modest PHEV penetration rates might have on Hawaii’s GHG emission and fuel substitution goals.
  • To determine whether PHEV’s could be introduced to Hawaii without triggering major generating capacity additions.
  • To consider whether PHEV’s might play a role in optimizing the use of renewable wind resources that might otherwise be un-usable.
  • To assess the role of PHEV’s in the Hawaii’s attempt to control GHG emissions.

UHERO project report

Targeting Hawaii Greenhouse Gas Emissions Reductions: Emission Forecasts and Their Implications for Act 234

Act 234 calls for the state of Hawai‘i to return its greenhouse gas (GHG) emissions to 1990 levels by 2020. Under a business as usual environment, we forecast Hawai’i’s 2020 emissions to be between 18 and 34 percent above 1990 levels. Since transportation and electricity account for about 75 percent of Hawai’i’s GHG emissions, most likely a large share of the reductions will need to come from these sectors for Hawai’i’ to comply with Act 234.

Uhero project report

Using the Property Tax to Appropriate Gains from Tourism

This paper describes and evaluates the merits of Kauai County’s use of the property tax to capture rents from tourism and provide property tax relief to local homeowners. Because tourist accommodations are more capital intensive than other real estate, Kauai’s proposal to split the standard uniform rate into two separate rates—one on land and the another higher rate on improvements—results in heavier tax burdens for the tourist industry relative to other sectors of the local economy. We conclude that such an approach works well for Kauai and communities that desire slower and lower density development but may not work as well for others that wish to encourage tourism investment.

working paper

The Value of a Wave: An Analysis of the Mavericks Region Half Moon Bay, California

This study was commissioned by the Save the Waves Coalition to determine the value of the Mavericks surf area to the local community and beyond. 

working paper

Small State, Giant Tax Credit: Hawaii’s Leap into High Technology Development

This paper chronicles the evolution of Hawaii’s high technology tax credits, describes their provisions and the ensuing problems in attempting to ascertain whether or not they have achieved the results desired by lawmakers who passed them, and offers lessons that other states can use when designing their own business investment tax credit programs.

Published: Kato, A., S. LaCroix, J. Mak. 2009. Small State, Giant Tax Credit: Hawaii's Leap into High Technology Development. Pages 641-652 State Tax Notes. Tax Analysts, Falls Church, Virginia.

working paper version

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