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Products: UHERO Working Papers

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Renewable resource management with stock externalities: Coastal aquifers and submarine groundwater discharge

This paper develops a hydrologic-ecologic-economic model of groundwater use. Particularly, we model coastal groundwater management and its effects on submarine groundwater discharge, nearshore marine water quality, and marine biota. We show that incorporating the external effects on nearshore resources increases the optimal sustainable steady-state head level. Numerical simulations are illustrated using data from the Kuki’o region on the island of Hawaii. Two different approaches for incorporating the nearshore resource are examined. Including algae’s market value in the objective function results in only slightly lower rates of extraction. When a minimum constraint is placed on the stock of the keystone species, however, greater conservation may be indicated. The constraint also results in non-monotonic paths of water extraction, head level, and water price in the optimal solution.

Published: Pongkijvorasin, S., Roumasset, J., Duarte, T. K., and Burnett, K., 2010. Renewable resource management with stock externalities: Coastal aquifers and submarine groundwater discharge. Resource and Energy Economics, 32 (3), 277-291.

 working paper version


Resource management for Sustainable Development of Island Economies

What is the role of resource management in sustaining competitiveness for island economies such as the Republic of the Philippines and Hawaii? We review the history of thought on sustainable resource management and sustainable development and then turn to the threats to sustainability from the resource curse and the parallel curse of paradise. We show how the resource curse undermines the pursuit of sustainability and describe innovations in governance that can transform the curse into a blessing.

working paper


Concepts in Greenhouse Gas Regulation: A Primer on Meeting ACT 234

In 2007, Hawaii became the second State after California to adopt binding greenhouse gas reductions targets in ACT 234. The legislation follows the example set by California in attaining 1990 levels of greenhouse gas emissions by the year 2020. The State of Hawaii Department of Health Clean Air Branch is tasked to regulated emissions through the use of market-based mechanisms - essentially building a market for greenhouse gas pollution. While ACT 234 was in many ways modeled after California’s AB32, it is also recognized that Hawaii has unique economic and environmental characteristics. Hawaii will require policies tailored to its island features. This briefing provides a primer on greenhouse gas regulation options and how they might be applied to the case of Hawaii.

UHERO project Report


An Overview of U.S. Regional and National Climate Change Mitigation Strategies: Lessons for Hawai‘i

The challenge of reducing greenhouse gas emissions will differ from place to place, although it is particularly unique in the case of islands. Islands tend to be highly oil and tourism-dependent. Questions as to what type of market-based mechanism, such as cap-and-trade or a carbon tax, and what type of regional partnerships will be appropriate for an island economy are questions that Hawaii policy-makers face. A 10-member Task Force was created as a result of ACT 234 to develop the work plan for reaching the target reduction. This briefing is designed to help the Task Force and others to better understand what climate mitigation policies have been developed elsewhere, the choices made in developing the policy architecture, what types of economic and environmental analyses support these policy decisions, and how examples of other states, regional cooperatives, and international initiatives may be applicable to the case of Hawaii.

Uhero Project report


Financial Integration in the Pacific Basin Region: RIP by PANIC Attack?

We exploit advances in panel data econometrics to test whether real interest parity holds in the Pacific Basin region. We test for a unit root in the difference between either the US, Japanese or Euro area real interest rate and the real interest rates from a panel of eleven Pacific Basin economies. Unlike extant studies which test for RIP using panel data, we use Bai and Ng’s (2004) PANIC test which allows for a very general model of cross-section dependence, including the possibility of cross-unit cointegration. Ignoring the possibility of cross-unit cointegration can lead to severe size distortions and to an over-rejection of the null hypothesis of a unit root. We overturn earlier findings based on first generation panel tests, and demonstrate that cross-unit cointegration lead to incorrect conclusions. We find that RIP holds in the Pacific region. Real interest rates converge to the US rate. We find no support for the hypothesis that Pacific Basin real interest rates converge to either the Japanese or Euro area rates.

Published: “Financial Integration in the Pacific Basin Region: RIP by PANIC Attack?” with Somchai Amornthum, Journal of International Money and Finance, Vol. 30, October 2011, 1019-1033.

working paper


Environmental Resources and Economic Growth

This chapter assesses the nature and degree of environmental degradation and resource depletion in China and their relationship to economic activity and envi- ronmental policies. We describe regulatory and other policies and consider their political economy determinants. Inasmuch as this objective can only be partially achieved, we hope to contribute to a research agenda for environmental and resource economics in China.

Book Chapter


Beyond the lamppost: Optimal prevention and control of the Brown Tree Snake in Hawaii

We develop an integrated model for the prevention and control of an invasive species. The generality of the model allows its use for both existing and potential threats to the system of interest. The deterministic nature of arrivals in the model enables clear examination of the tradeoffs inherent when choosing between prevention and control strategies. We illuminate how optimal expenditure paths change in response to various biological and economic parameters for the case of the Brown Tree Snake in Hawaii. Results suggest that it is more advantageous to spend money finding the small population of snakes as they occur than attempting to prevent all future introductions. Like the drunk that looks for his keys only where the light is, public policy may fail to look “beyond the lamppost” for snakes that have already arrived but have not yet been detected. Actively searching for a potential population of snakes rather than waiting for an accidental discovery may save Hawaii tens to hundreds of millions of dollars in future damages, interdiction expenditures, and control costs.

Published: Burnett, K. M., D'Evelyn, S., Kaiser, B. A., Nantamanasikarn, P. and Roumasset, J. A., 2008. Beyond the lamppost: Optimal prevention and control of the Brown Tree Snake in Hawaii. Ecological Economics, 67 (1), 66-74.

working paper version


Optimal Prevention and Control of Invasive Species: The Case of the Brown Treesnake

This dissertation examines the optimal management of a nuisance species that threatens but is not thought to be prevalent in an ecosystem. The three central chapters focus on integrated prevention and control of the Brown Treesnake (Boiga irregularis) in Hawaii.

dissertation


Learning-by-catching: Uncertain invasive-species populations and the value of information

This paper develops a model of invasive species control when the species’ population size is unknown. In the face of an uncertain population size, a resource manager’s species-control efforts provide two potential benefits: (1) a direct benefit of possibly reducing the population of invasive species, and (2) an indirect benefit of information acquisition (due to learning about the population size, which reduces uncertainty). We provide a methodology that takes into account both of these benefits, and show how optimal management decisions are altered in the presence of the indirect benefit of learning. We then apply this methodology to the case of controlling the Brown Treesnake (Boiga irregularis) on the island of Saipan. We find that the indirect benefit—the value of information to reduce uncertainty—is likely to be quite large.

Published: D'Evelyn, S. T., Tarui, N., Burnett, K. and Roumasset, J. A., 2008. Learning-by-catching: Uncertain invasive-species populations and the value of information.  Journal of Envrionmental Management, 89, 284-292.

working paper version


Models of Spatial and Intertemporal Invasive Species Management

Prepared for the NCEE Valuation for Environmental Policy: Ecological Benefits Conference April 23-24, 2007.

uhero project report


Collusive Duopoly: The Economic Effects of Aloha and Hawaiian Airlines’ Agreement to Reduce Capacity

In the aftermath of the terrorist attacks on September 11, 2001 (9/11), Congress passed the Aviation and Transportation Security Act (ATSA). Section 116, Air Transportation Arrangements in Certain States, provided a foundation for Aloha Airlines and Hawaiian Airlines to obtain temporary antitrust immunity for their agreement to coordinate a reduction in passenger seat capacity on routes between Hawaii’s five major interisland airports. While the provision did not apply only to Hawaii, it applied only to intrastate flights, and only Hawaiian and Aloha Airlines, among U.S. airlines, took advantage of this statute to jointly reduce passenger capacity in the wake of sharply declining demand for air travel after 9/11. The limited antitrust exemption provides a rare opportunity to examine the economic effects of collusively reducing capacity in a duopolistic market. We present an economic analysis of the agreement, and advance the testable hypothesis that capacity reduction will result in fare increases. We also demonstrate empirically that reductions in passenger capacity under the agreement did contribute to sharply rising airfares in Hawaii’s interisland air travel market. Our analysis suggests that explicit agreement is more effective in reducing competition than tacit collusion in a tight oligopoly. Moreover, our empirical findings indicate that, following the expiration of the agreement, tacit collusion may have been sufficient to enable the parties to continue their supra-competitive pricing. We also document the entry of a third interisland carrier following the increase in interisland fares, and the price war that followed. Finally, our empirical results provide an economic foundation for the policy implications that we advance in our concluding section.

 

Published: “Collusive Duopoly: The Effects of the Aloha and Hawaiian Airlines” Agreement to Reduce Capacity,” with James Mak and Roger Blair, Antitrust Law Journal, Vol. 74, No. 2, 2007, 409-38.

WORKING PAPER

 

The Economic Value of Watershed Conservation

Watershed conservation creates benefits within and beyond the management area of interest. Direct benefits are those realized in the watershed itself, such as improved water quality and quantity, and biodiversity protection. Additionally, the health of a watershed has profound implications on near-shore resources below its reaches, including beaches and coral reefs. This chapter reviews the major benefits of watershed conservation and discusses the economic value of these activities.

working paper


Economic lessons from control efforts for an invasive species: Miconia calvescens in Hawaii

Once established, invasive species can rapidly and irreversibly alter ecosystems and degrade the value of ecosystem services. Optimal control of an unwanted species solves for a trajectory of removals that minimizes the present value of removal costs and residual damages from the remaining population. The shrubby tree, Miconia calvescens, is used to illustrate dynamic policy options for a forest invader. Potential damages to Hawaii’s forest ecosystems are related to decreased aquifer recharge, biodiversity, and other ecosystem values. We find that population reduction is the optimal management policy for the islands of Oahu, Maui, and Hawaii. On the island of Kauai, where tree density is lower and search costs higher, optimal policy calls for deferring removal expenditures until the steady state population is reached.

Published: Burnett, K. M., Kaiser, B. A., and Roumasset, J. A., 2007.  Economic lessons from control efforts for an invasive species: Miconia calvescens in Hawaii. Journal of Forest Economics, 13, 151-167. 

Working Paper version


Staff Support at UH Manoa: A Comparative Analysis

This study provides a comparative analysis of the staff support at the University of Hawai’i at Mānoa (UHM), its peer group (Peer), and all 4-year public Doctoral/Research-Extensive Universities (DREU).i To evaluate whether UHM is providing too little or too much staff support to students and faculty, we compare the ratio of full-time equivalent (FTE) staff to FTE enrollment and the ratio of FTE staff to FTE faculty across the three groups of schools. In addition to aggregate staff comparisons, we also evaluate specific support staff categories: executive, administrative, and managerial; other professional (support/service); technical and paraprofessional; clerical and secretarial; skilled crafts; and service/maintenance.

UHero project report


Labor Market Effects of Employer-Provided Health Insurance

This is an experimental study in economics of mandated benefits. Most individuals who have health insurance in the US obtain it through their employer. Some states either have or are considering government mandates that require employers to provide insurance to all full-time workers. We use an experimental laboratory to investigate possible effects of alternative health insurance regulations on the competitive labor market performance. We find that mandating the insurance for all workers creates labor market distortions; whereas mandating the insurance only for full-time workers leads to a higher coverage then under no mandate, an increased number of part-time workers, but does not necessarily lower market efficiency.

working paper


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