Economic Impact of the City and County of Honolulu’s Department of Environmental Services on the State of Hawai‘i in Fiscal Year 2024

Executive Summary

The Department of Environmental Services (ENV) provides essential wastewater and solid waste services for the City and County of Honolulu, and its operations and capital investments contribute significantly to the local economy. This analysis estimates the economic impact of ENV’s fiscal year 2024 expenditures using the Hawai‘i State Input-Output multipliers published by the Department of Business, Economic Development and Tourism.

• $461 million in local ENV expenditures generated a total of $937 million in statewide output of goods and services.
• ENV’s spending supported approximately 4,300 jobs across the state.
• The $283 million in household earnings generated by ENV’s activities benefited workers across multiple industries.
• State tax revenues grew by over $52 million as a result of ENV-related activity.
• In the area of Construction, ENV activities resulted in 1932 jobs, $442 million in output, $144 million in labor income, and $26 million in state tax revenue.

These figures highlight more than just short-term economic activity. They underscore ENV’s role as a local engine of employment and income, while also investing in infrastructure that protects public health, safeguards natural resources, and supports O‘ahu’s future growth.

Introduction

The City and County of Honolulu’s Department of Environmental Services (ENV) contracted the University of Hawai‘i Economic Research Organization (UHERO) to estimate its economic impact on the State of Hawai‘i. ENV plans, directs, operates and maintains Honolulu’s wastewater and solid waste management programs, which include 2,100 miles of sewer lines, 72 wastewater pump stations, nine wastewater treatment plants, three solid waste transfer stations, seven refuse and recycling convenience centers, seven solid waste collection base yards, one active landfill, and one waste-to-energy facility (H-POWER). In doing so, they employ hundreds of people, purchase goods and services from local businesses, and invest in capital improvements every year. This study estimates ENV’s contribution to local business sales, employee earnings, state tax revenue, and number of jobs in Hawai‘i from its expenditures in fiscal year 2024 (FY24). It should be noted, however, that ENV provides additional benefits to the City and County that this study does not capture but are important to consider when evaluating ENV’s overall impact. Beyond directly contributing to the local economy, ENV’s activities help keep the community sanitary and aesthetically pleasing and the surrounding terrestrial and marine environment healthy for both residents and visitors.

Data and Methods

ENV generates activity in the local economy through business sales, employee earnings, tax revenue, and job creation. Data on labor earnings and ENV-related expenditures were collected for two major spending categories: (i) day-to-day operations and (ii) longer-term capital improvement plans (CIP). Expenditure types were further classified using the North American Industry Classification System (NAICS) industry descriptions. The total economic activity generated in the State of Hawai‘i by ENV was then estimated using the Department of Business, Economic Development & Tourism’s (DBEDT) 2017 Hawai‘i State Input-Output (I-O) Model,^[1] which accounts for all sales and purchases made by firms in each sector of the local economy, thus capturing the interdependence among industries, government, and households.

Operating Expenditures

Operating expenditures were obtained from the City and County of Honolulu Sewer Fund Financial Statements for June 2024.^[2] Spending in FY24 totaled approximately $238 million and fell into eight broad categories: depreciation and amortization, administrative and general, utilities, contractual services, fringe benefits, materials and supplies, fuel and lubricants, and maintenance. Through discussions with ENV administrators and staff, each spending category was assigned to one or more of the 20 economic sectors defined in the DBEDT I-O model.^[3] Because we are interested in estimating the impact of local expenditures (i.e., not those flowing out of Hawai‘i to mainland or international businesses), local spending shares were assigned to each operations category based on the corresponding state-level shares reported in DBEDT’s I-O tables. ENV operating expenditures by category, corresponding DBEDT industry sectors, and local expenditure shares are summarized in Table 1.

Table 1. ENV Operating Expenditures by Category, FY24

ENV Category	DBEDT Industry Sector	Expenditures (thous. 2024$)	Share of Expenditures in Hawai‘i
Depreciation and amortization	Finance and insurance	$94,293	90%
Administrative and general	Labor	$52,190	84%
Utilities	Utilities	$25,110	96%
Contractual services	Professional services	$15,578	94%
Contractual services	Business services	$15,578	95%
Fringe benefits	Labor	$19,543	84%
Materials and supplies	Other manufacturing	$13,403	38%
Fuel and lubricants	Other manufacturing	$1,239	38%
Maintenance	Mining and construction	$742	84%
Total		$237,675

Capital Improvement Plan Expenditures

FY24 CIP expenditures were provided by ENV staff. Although the spending categories are different, the procedure for organizing the data was analogous to the approach used for operating expenditures. The estimated $302 million of FY24 CIP spending was spread across six categories (corresponding DBEDT sectors in parentheses) plus labor: construction (mining and construction), design (professional services), equipment (other manufacturing), inspection (professional services), land (real estate and rentals), and planning (professional services). Again, local spending shares were assigned to each category based on DBEDT’s corresponding state-level shares. Note that while annual operating expenses are relatively stable, CIP projects often span multiple years and capital expenditures tend to be more variable. The economic impacts calculated in this analysis are representative of FY24 and should be viewed as a benchmark that must be adjusted upward or downward appropriately for future years in accordance with expected future spending. CIP expenditures by category, DBEDT industry sectors, and local expenditure shares are summarized in Table 2.

Table 2. ENV Capital Improvement Plan Expenditures by Category, FY24

ENV Category	DBEDT Industry Sector	Expenditures (thous. 2024$)	Share of Expenditures in Hawai‘i
Construction	Mining and construction	$246,188	84%
Design	Professional services	$13,458	94%
Equipment	Other manufacturing	$6,306	38%
Inspection	Professional services	$15,940	94%
Land	Real estate and rentals	$2	97%
Planning	Professional services	$11,917	94%
Labor	Labor	$8,154	84%
Total		$301,965

Personal Consumption Expenditures

The values reported in column 3 of Tables 1 and 2 include all expenditures within each sector, not yet adjusting for exports and personal consumption expenditures (PCE) from labor earnings. A substantial portion of labor earnings will be injected back into the economy in the form of household purchases of goods and services. As such, PCEs are treated as a separate producing sector in the model with a conversion ratio between labor earnings and PCEs of 84.2%, based on DBEDT’s 2017 I-O Transaction Table for Hawai‘i. This indicates that roughly 84% of employees’ earnings are spent in the local economy. Through discussions with ENV staff, we identified labor earnings in the operating and CIP expenditures data and adjusted the values accordingly. The resulting in-state expenditures, CIP plus operating, by DBEDT industry sector are reported in Table 3.

Table 3. Retail Level In-State Expenditures by DBEDT Industry Sector, FY24

Industry Sector	In-State Expenditures (thous. 2024$)
Mining and construction	$208,301
Other manufacturing-Equipment	$2,404
Other manufacturing-Materials	$5,581
Utilities	$24,191
Finance and insurance	$85,270
Real estate and rentals	$2
Professional services	$53,563
Business services	$14,772
Personal consumption expenditures	$67,244
Total	$461,327

Retail, Wholesale, and Transportation Margins

The final step before computing the economic impacts of ENV’s expenditures is to convert the in-state retail level expenditure data collected from ENV into producer level expenditures by industry categories identified in the DBEDT I-O transaction table. This is necessary because all transactions in the DBEDT I-O model are valued at producer prices, and hence the economic multipliers used to estimate the economic impacts are based on producer level data. Producer price expenditures equal retail price expenditures less retail, wholesale, and transportation margins.^[4] A detailed description of this process can be found in UHERO’s 2012 NELHA Economic Impact study.^[5] Table 4 shows the resulting producer level expenditures for all sectors, as well as retail, wholesale, and transportation expenditures.

Table 4. Producer Level In-State Expenditures by DBEDT Industry Sector, FY24

Industry Sector	In-State Expenditures (thous. 2024$)
Mining and construction	$208,301
Other manufacturing-Equipment	$1,713
Other manufacturing-Materials	$3,223
Utilities	$24,191
Finance and insurance	$85,270
Real estate and rentals	$2
Professional services	$53,563
Business services	$14,772
Retail trade	$1,847
Wholesale trade	$974
Transportation	$228
Personal consumption expenditures	$67,244
Total	$461,327

Input-Output Analysis

The producer level expenditures in Table 4 correspond to the direct effect of ENV’s activities on the Hawai‘i economy. For example, ENV spent a total of $14.8 million directly on business services. The business services sector in turn spent some of those dollars on other local goods and services. This indirect action leads to a multiplier effect. In addition, there is an induced effect that refers to the changes in household spending that result from changes in earnings through direct and indirect effects. In other words, for every dollar spent in a given industry, the direct effect is the original dollar, the indirect effect is the additional spending by industries created by that dollar, and the induced effect is the additional spending by households in the economy from increased income as a result of that original dollar spent. To evaluate the short-term impact of ENV expenditures in FY24 on the State of Hawai‘i, we use Type II multipliers from DBEDT’s 2017 I-O model. The Type II multipliers are widely used in real-world applications, as they capture the direct, indirect, and induced effects per dollar of spending in each sector of the economy. The impacts are computed by multiplying the expenditures by their respective Type II multipliers to arrive at output, earnings, state tax revenue, and jobs.

Results

In FY24, ENV expenditures totaled $461 million in Hawai‘i. When including indirect and induced benefits from these activities, ENV had a total impact on the output of goods and services in the state of $937 million or just over double the value of expenditures. They also generated $283 million in labor income, $52 million in state taxes, and 4,266 jobs statewide. Table 5 reports the impacts of ENV’s in-state expenditures on output, earnings, state tax revenue, and employment by industry. For example, ENV spent $208 million locally in the mining and construction industry in FY24 (Table 4). The impact on Hawai‘i’s larger economy of this spending in the mining and construction industry was $442 million in output (sales), $144 million in employee earnings, $26 million in state tax revenue, and 1,932 jobs.

Table 5. ENV’s Economic Impacts by Industry Sector, FY24

Industry Sector	Output (thous. 2024$)	Earnings (thous. 2024$)	State Taxes (thous. 2024$)	Jobs (#)
Mining and construction	$442,395	$143,732	$26,386	1,932
Other manufacturing	$6,597	$975	$143	17
Utilities	$40,906	$7,442	$1,639	103
Finance and insurance	$184,230	$45,998	$9,338	804
Real estate and rentals	$3	$0.5	$0.1	0
Professional services	$118,536	$43,120	$7,480	649
Business services	$32,262	$11,818	$2,023	213
Retail trade	$3,426	$1,010	$200	23
Wholesale trade	$1,827	$485	$69	7
Transportation	$494	$131	$38	2
PCEs	$106,559	$28,419	$5,223	517
Total	$937,235	$283,130	$52,540	4,266

Our results suggest that ENV is a sizable source of economic activity in Hawai‘i. Figure 1 illustrates ENV’s total contribution to the state’s economy in comparison to similar sized economic sectors. ENV’s output for FY24 was equivalent to 158% of the total agriculture, forestry, fishing, and hunting output statewide, 76% of the output from educational services, or 71% of the output from management of companies and enterprises.^[6]

Conclusion

In summary, ENV’s fiscal year 2024 expenditures delivered a substantial boost to Hawai‘i’s economy. An estimated $461 million in local spending generated over $937 million in total output, $283 million in household earnings, $52 million in state tax revenues, and over 4,200 jobs when accounting for direct, indirect, and induced effects. Most of this activity was concentrated in the construction industry–about $442 million in output and more than 1,900 jobs–but benefits also extended to the professional services, finance and insurance, utilities, and business services sectors, among others, underscoring the breadth of ENV’s local supply chain. While this analysis focuses on in-state spending for a single fiscal year, and therefore offers a conservative estimate, it highlights the fact that ENV is a significant driver of economic activity for O‘ahu and the State, while fulfilling its role of providing critical wastewater and solid waste services. Beyond these immediate economic effects, ENV’s investments support the health and safety of residents, protect natural resources, and strengthen the infrastructure that supports long-term growth and resilience.

Acknowledgements

Funding for this project was provided by the City and County of Honolulu’s Department of Environmental Services (ENV). We are grateful to Roger Babcock, Paul Christiansen, Daniel Brieck, Lisa Kimura, and Lynette Smith for sharing the expenditure data required to conduct the impact analysis and providing direction and guidance on how to organize and interpret the data.

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^[1]  https://dbedt.hawaii.gov/economic/reports_studies/2017-io/

^[2]  https://www.honolulu.gov/bfs/wp-content/uploads/sites/62/2025/01/CC-Sewer-Fund-FS-2024-Final.pdf

^[3]  Contractual services was split equally between professional and business services based on guidance from ENV.

^[4]  Appendix C in DBEDT’s Hawaii State Input-Output Study: 2017 Benchmark report. https://files.hawaii.gov/dbedt/economic/reports/IO/2017_state_io_study.pdf

^[5] https://uhero.hawaii.edu/wp-content/uploads/2024/01/UHERONELHAimpactstudy-final.pdf

^[6]  Output for comparable sectors measured as GDP in calendar year 2024: https://data.uhero.hawaii.edu/#/search?id=21&data_list_id=20&view=chart