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Economic Currents

Keep up to date with the latest UHERO news.

The UHERO Dashboard Project | Flying to Hawaii: Comparing the Cost and Frequency Across States

Posted December 19, 2014 | Categories: Hawaii's Economy, Blog

The latest installment in the UHERO dashboard project is packed with information on the cost of travel to Hawaii from the US mainland. The visitor industry is one of Hawaii’s largest, and more than 60% of all visitors to the state come from the US mainland. In this dashboard we look at how airfare and arrival patterns to Hawaii have changed over the past 20 years.

The data for this dashboard comes from the Airline Origin and Destination Survey administered by the US Bureau of Transportation Statistics. The survey gathers information on airfare, itinerary, and number of passengers from a sample of roughly 10% of all airline tickets sold by domestic carriers. Data is collected each quarter in a large database that we query for Hawaii specific information.

The detailed sample allows us to analyze fluctuations over time and across states. We count the number of passengers that booked round trip tickets to Hawaii from each state for each quarter from 1993 through the second quarter of 2014 (the most recent data available). From the prices of round-trip tickets, we calculate the median airfare for each state. For some smaller states airfares can be quite volatile from one quarter to the next due to the tiny sample size and the mix of first class, business class, and coach fares, as well as discounted and promotional fares. We also calculate an average US fare by taking a weighted average of each state’s median airfare.

Turning to the visualization, the differences in airfare and visitor volume from state to state are fairly intuitive. For the most part, tickets from the West Coast are cheaper than tickets from the East Coast. And visitor volumes from more populous states like California and Texas are higher than less populous states like Wyoming and Vermont. One interesting fact is that seasonal fluctuations in visitor volume vary significantly from state to state. For example visitor arrivals from Minnesota follow a very strong seasonal pattern, whereas visitor arrivals from Arizona does not exhibit much seasonality.

Increases in airfares in recent years may help to explain why US arrivals to the state still haven’t recovered to pre-recession levels. Between the fourth quarter of 2006 (the peak quarter for US visitor arrivals) and the second quarter of 2014, the US average airfare to Hawaii has increased by more than 50%. In addition, hotel room rates in Hawaii have increased by almost 25% during the same period. Such increases in the cost of a trip have pushed a Hawaii vacation out of reach for many would-be visitors, especially given the lackluster gains in US household income over the past decade.


view dashboard


PV Growth in Hawai'i?

Public comments regarding Hawaiian Electric’s PSIP and DGIP were due last week. Here’s a recap of what Hawaiian Electric has proposed for rooftop solar PV.

Hawai'i is characterized with small island electricity grids and some of the highest rates of solar PV penetration in the world. With over 10% of O'ahu households having PV, exceeding that of any mainland utility, the Hawaiian Electric Company and its subsidiaries have recently stalled the interconnection of new systems. The Hawai'i Public Utilities Commission ordered that further study be completed that might facilitate the adoption of more solar PV in Hawai'i. Along with circuit and power system upgrades, Hawaiian Electric's Distributed Generation Improvement Plan (DGIP) devises an alternative rate design that increases the interconnection fee and makes it more favorable to the utility to allow more households to install solar PV. Hawaiian Electric projects that DG customers could triple to upwards of 900 MW, while reducing the cost shift to non-DG customers, which they estimate to the tune of $38 million in 2013, or $31 for each non-DG customer.

In Hawaiian Electric's proposed tariff structure, referred to as "Gross Export Purchase program," all residential customer groups—current Net Energy Metering (NEM) customers, “DG 2.0” customers, and “Full Service” customers (non-DG)—incur a fixed monthly charge of $55 and pay retail rate for any energy consumed from the grid. The idea of the Gross Export Purchase Program is to account for some combination of interconnection and grid service charges. The first major proposal is to switch the NEM program to one where customers are compensated at wholesale rates rather than retail rates (similar to KIUC and many other utilities). This is to account for, as Hawaiian Electric puts it, “the value of DG to the grid.” Following the duck-shaped load curve, the bulk of electricity generation from DG occurs during the day, while peak consumption occurs in the late afternoon/early evening. Under the current rate structure, DG providers are providing “cheap” electricity while consuming “expensive” electricity. Current NEM customers will be grandfathered according to their original agreement (i.e. the utility pays retail rate in credits which expire at the end of the calendar year). Future NEM customers, called DG 2.0, will pay an additional monthly fixed charge of $16 and any excess electricity generated would be compensated at the lower rate of 16¢/kWh, reflecting that of wholesale rates.


Source: Hawaiian Electric Companies, 2014. Hawaiian Electric Power Supply Improvement Plan (PSIP).

The second proposal is to quicken interconnection for what is termed the “non-export option.” It allows customers to offset their electricity use so long as they do not send excess generation to the grid. The non-export option includes several variations. There are those that operate in parallel with the distribution system (grid-interactive) and with or without customer-side energy storage; and those that are independent from the grid (non-parallel operation) and with energy storage. A type of parallel non-export system without energy storage is an over-installed system under Hawaiian Electric’s Standard Interconnect Agreement—where there is a possibility for energy to “leak” back to the grid, though the customer receives no compensation. On the other hand, systems configured for non-parallel operation serve only an isolated load, thereby negating any possibility for reverse power flow into the distribution network. As filed in Docket 2014-0130, non-parallel systems are therefore eligible to bypass the full screening process under Rule 14H. Systems that have the potential to operate in parallel may also be granted expedited approval if reverse power protection measures, such as stand-alone inverters, is installed.

Will it Increase PV Installations?

The underlying question remains—will PV installations increase under Hawaiian Electric’s proposal? Certainly the change away from retail to wholesale rates for NEM customers, along with technical upgrades, increases utility revenue and its incentive to allow for more PV system connections. It also decreases potential customers incentive to install solar PV – though arguably the return on investment has been remarkably high and customers are still likely to install even if incentives decline slightly. Moreover, there is an element of increased fairness to non-DG customers through the revised NEM rates (assuming savings are passed through accordingly). So the answer is, it depends. On the continued decline of PV system costs, tax credits, the cost of battery technology and electricity rates. Whereas a decline in battery technology costs might lead to increased solar PV yet fewer connections to the grid, declining electricity rates would have the opposite effect. Within Hawaiian Electric’s proposal, they also project substantial cost savings primarily due to the introduction of LNG. This, however, is a more long-term endeavor than the granting of near-term solar PV permits.

- Sherilyn Wee and Makena Coffman


Understanding the Links Between Local Ecological Knowledge, Ecosystem Services, and Resilience

UHERO’s Project Environment has received funding from the National Science Foundation to participate in an interdisciplinary, international project that spans the natural and social sciences as well as the terrestrial and marine spheres. UHERO is partnering with scientists, resource managers, cultural practitioners and private landowners in Hawaii and Fiji. The project has two distinct parts; the first examines the relationship between local ecological knowledge and social, economic, and ecological outcomes across twenty rural villages in Fiji. The second part of the project explores the effects of different management and climate change scenarios on ecosystem services and indicators of resilience in three Pacific island watersheds.

For Part 1 of the project, we will focus on twenty rural coastal communities across four districts in Fiji. The team will collect household and village-level data within each of the four districts on ecological knowledge, customary skills and intergenerational knowledge. This will be matched to new and existing data collected from nearby forests and reefs. The goal is to develop an index of local ecological knowledge, as well as an index of social-ecological resilience, and examine relationships between these new indices and other ecological, social and economic outcomes. Of particular interest is the influence of local ecological knowledge on our indicators of resilience.



In Part 2 we will conduct three in-depth case studies at the watershed level, focused on quantifying ecological, cultural, and economic values of various land/ocean uses and covers, and their implications for resilience to climate change. The three watersheds were chosen where collaborators have long-term studies to leverage strong existing relationships with landowners, resource managers and users. The watersheds include Kaupulehu on the leeward coast of Hawaii Island, Haena on the north shore of Kauai, and Kubulau on southwestern Vanua Levu.

In each watershed we will collect new terrestrial data on vegetative composition, canopy cover, and indicators of habitat connectivity. Marine ecological surveys will include reef fish assemblages, benthic cover, species composition, biomass, and trophic structure. Ecosystem and cultural services for land and ocean uses will be calculated based on existing data, ecological characteristics, participatory mapping, and interviews.

To understand what combination of land-use practices best enhance social-ecological resilience under different climate change scenarios, we will evaluate the levels and resilience of ecosystem services under multiple future scenarios of climate change and management. These scenarios will represent a range of likely future climates crossed with a range of possible management decisions for each of the three watersheds. After developing an understanding of the ecological, cultural, and economic benefits of each of the management scenarios, we will then assess the costs of various management regimes under different climate change scenarios. The team can then identify a series of “optimum” scenarios – those that appear to maximize resilience indicators and emphasize the cultural, economic and ecological values identified to be of interest to the community members, land managers, and other stakeholders.

Our dual focus on Hawaii and Fiji provides a spectrum of cultural values and land and ocean uses, from functional agroforestry and traditional subsistence fishing in Fiji, to systematic habitat conservation and restoration in Hawaii. As a result, we can capture a wide spectrum of land management paradigms and their potential outcomes under different climate change scenarios, and our results can inform decision making elsewhere in Hawaii, in the Pacific, and throughout coastal areas more broadly.

-Kim Burnett and Cheryl Geslani


UHERO Fellow Interview Series: Tim Halliday

Posted September 4, 2014 | Categories: Q&A, Blog

Sumner La Croix interviewed UHERO Fellow Tim Halliday about his Social Science and Medicine paper in July 2014. For more on this paper, see Tim's blog post here.

1. Tell us something about yourself ...

I earned my PhD from Princeton in 2004. I have been at UH-Mānoa since then. I am also a fellow at the Institute for the Study of Labor Economics (IZA) in Bonn, Germany. My research lies in the field of human resource economics, which encompasses labor, population and health economics and tends to be very data intensive. These days I have been working a lot on inequality in various guises. One recent project is on the evolution of wage distributions in the United States and Mexico since the latter part of the 1980's. Another uses Bayesian econometric techniques to estimate the inter-generational transmission of health status.

 2. Is this a good summary of your results: Unemployment kills!

More-or-less. This work seems to be suggesting that poor macroeconomic conditions do increase mortality risks but only for working-aged men. There is no such association for the elderly or for women. In some way, this makes sense since working-age men have the strongest attachment to the labor force. One important point is that this is one of the few studies that uses individual level data; others typically use aggregate state-level mortality rates which can be hard to measure. These studies actually show the opposite, namely, that poor macroeconomic conditions are associated with lower mortality, even, for the elderly. While we do not understand why there is this difference between the results at the differing levels of aggregation, we can say two things for sure. First, mortality is very easy to measure at the individual level; you are either alive or dead and that is easy to verify. On the other hand, a mortality rate for a given state is actually hard to measure because it is defined as the number of deaths in that state during a given period of time divided by the states population at a point-in-time. The fact that the denominator is moving is what makes this a challenge. Second, related work has shown that job displacement kills you. This work also uses microdata. It is a lot easier to reconcile my findings with this literature than the "recessions are good for you" literature with it.

3. Were you surprised to find such a big effect?

Yes, but there really isn't another study out there that does exactly what I did, so there is not a comparison that we can make. I find that a one percentage point increase in the unemployment rate results in about 24 more deaths per 100,000 workers which in epidemiological terms is quite large. However, the US economy has business cycles which means that the unemployment rate goes up and then comes down. So, over a prolonged period, on net, my estimates would indicate a smaller number of deaths since some years would be good, but that it is so responsive was surprising. Bottom line is that more work needs to be done using other large individual level data sets from the US to see what we get in other contexts.

4. How did you get interested in this topic?

When I was starting out in graduate school, I had initially wanted to work in development and much of my work is in developing countries. However, at that time, many of my advisers who had been working on savings and consumption started to think about health and how it fits into life-cycle economic behavior. This actually seemed like a natural progression since health is probably the most important component of human welfare. So, during one meeting with my adviser, Chris Paxson, she had mentioned Chris Ruhm's work on recessions and health tangentially. This work is pretty much the consequence of that specific interaction.

5. Are there policy implications?

Yes. In fact, Harvey Brenner of Johns Hopkins who is probably the godfather of this literature has testified before the US Congress on numerous occasions. Although I am not sure if knowing that recessions increase mortality risks makes good stewardship of the macro-economy any more of a moral imperative; perhaps it does but it would be important even without these mortality effects. These results would possibly affect other cost-benefit calculations. For example, environmental regulations will confer long-term benefits down the pike but one immediate cost that might be ignored could be these mortality effects if the regulations increase unemployment.

Actually, I presented this paper once and Edward Lazear, who was the second George Bush's chief economic adviser, was in the audience. He told me that the auto bailout, of which he was the chief architect, probably prevented the unemployment rate from going up a full percentage point. He said that my work tells how many lives this policy saved.


How Do We Measure Social-Ecological Resilience?

Two UHERO graduate researchers, Alex Frost and Cheryl Scarton, attended a field course about social-ecological resilience of island systems in Nadave, Fiji. Participants of the field course were students and environmental practitioners from places throughout the Pacifc like Fiji, Vanuatu, Micronesia and the Solomon Islands.

On day three of the field course, the group took an early morning boat ride to Viwa, an island community of 30 households that is largely food and water self-sufficient. The home stay experience immersed participants in a traditional village lifestyle to apply terrestrial and marine survey methodologies learned from previous days.

Based on western standards and traditional economic measure like income, labor, and production, Viwa would be considered impoverished. The residents’ primary income is through selling excess fish and crops at the market and organization of a home stay immersion program. The island has intermittent power at night from a diesel generator, water comes from a thoughtfully engineered catchment system, and the intermittent power limits access to television and Internet.

From a lens that focuses on social and natural capital versus human and financial capital, Viwa is ecologically and socially wealthy. There is strong community cohesion - every Monday is a rotating social work day, where residents take the time to help one family plant, weed or harvest. Everybody shares excess harvest and people have time for leisure and storytelling. They are always joking, laughing and singing. The knowledge of agroforestry and management of fisheries is passed down through observation and application between generations that do not harm the health of the soil and encourages biodiversity, both are key indicators of sustainability.

How resilient is Viwa island? The common definition of resilience is “the capacity of a system to absorb disturbances or shocks and adapt accordingly while still retaining the same function and structure (McClanahan et al. 2012).” Economically speaking, global financial collapse will probably not affect Viwa at all, but the increasing demand of marine resources from Asia is pressuring people to over harvest. Ecologically, it seems the biggest challenge is invasive species, but heterogeneity of the agroforestry system minimizes the spread of pests and disease, compared to monoculture agriculture. Additionally, they have social mechanisms in place to prepare for extreme events like hurricanes. The island is especially vulnerable to sea level rise, coral bleaching, and shifts in weather patterns (such as a long drought). The village residents are working to develop an extensive water infrastructure system in the future to connect water pipes with an adjacent island. Still, the village faces many social challenges. Younger generations are adapting to the expectations of the market economy by working off island, which leads to a loss of traditional ecological knowledge. Concurrently the growing island population requires further clearing of the land for more housing.

 Overall, the week-long intensive field course brought together faculty, students, and experts to disseminate and learn various methods and tools to measure social-ecological resilience. The forum encouraged network building between the University of Hawai’i and University of South Pacific. The variety of perspectives helped increase participant capacity to challenge existing mental models and assumptions. The experience inspired students to develop future interdisciplinary research on island resilience and identify opportunities to mitigate complex challenges that face Pacific nations, like the impacts of climate change.

- Alex Frost and Kim Burnett


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