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Products: Research Papers

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Recent Trends in Hawaii's Green Economy: Agriculture, Energy and Natural Resource Management

This report provides an update to the 2012 “Foundations for Hawai‘i’s Green Economy: Economic Trends in Hawai‘i Agriculture, Energy, and Natural Resource Management.” Although economic information has long been collected for many sectors in Hawai‘i, including agriculture and energy, the 2012 project was the first to collect indicators specifically for the natural resource management (NRM) sector. With financial support from Hau‘oli Mau Loa Foundation and research assistance from The Nature Conservancy, the University of Hawai‘i Economic Research Organization was tasked with collecting and analyzing information from three sectors that are key to future sustainability in Hawai‘i - energy, agriculture and natural resource management.

project report


New Perspectives on Land and Housing Markets in Hawaii

Land leasing is common in Honolulu, with many owners of residential, industrial, and commercial buildings leasing land. This report examines land and housing markets in Honolulu and the mainland United States to understand better why prices and lease rents are so much higher in Honolulu than most other US cities. Three stylized facts stand out:  

  • Census data show that Hawaii home prices were already exceptionally high in 1950.
  • Over the last six decades, inflation-adjusted land and housing prices in Honolulu register small annual real increases.
  • Honolulu’s inflation-adjusted land and housing prices have been highly volatile in the medium term since the 1960s, forcing market participants to bear high levels of risk.

WORKING PAPER


Making an Optimal Plan for 100% Renewable Power in Hawaii

The State of Hawaii has adopted the unprecedented goal of building a 100 percent renewable power system by 2045. This report identifies some of the central challenges in achieving this goal and uses the SWITCH power system planning model to identify solutions to these challenges. A 100% renewable power system must balance electricity supply and demand on two main time scales: diurnal (providing enough power each hour of the day) and seasonal (providing enough total energy on each day of the year). The diurnal balance could be achieved by installing large amounts of primarily solar production capacity, then using batteries, demand response, biofuels or hydrogen production to shift power production and/or consumption between day and night. The seasonal balance may be more challenging. Energy demand during days or weeks with low sunlight could be met by building extra solar and wind capacity, using biofuels, or using hydrogen produced during sunny months. Demand response will likely be less expensive than the other options for day-night energy balancing, and customer-sited solar may be competitive with utility-scale solar; consequently electric utilities may need to become energy integrators and market managers, rather than bulk power providers.It is unclear how much biofuel the State could use without compromising other environmental and energy independence objectives; consequently hydrogen energy storage merits serious consideration. SWITCH or similar models can be used to identify optimal long-term plans; however, a new incentive system is needed to encourage the State's utilities to develop and implement such plans, regardless of who will own the generating equipment.

white paper


Nowcasting Tourism Industry Performance Using High Frequency Covariates

We evaluate the short term forecasting performance of methods that systematically incorporate high frequency information via covariates. Our results indicate that including timely intra-period data into the forecasting process results in significant gains in predictive accuracy compared to relying exclusively on low frequency aggregates. Anticipating growing popularity of these tools among empirical analysts, we offer practical implementation guidelines to facilitate their adoption.

Working Paper


Efficient Design of Net Metering Agreements in Hawaii and Beyond

In Hawaii, like most U.S. states, households installing rooftop solar photovoltaic (PV) systems receive special pricing under net-metering agreements. These agreements allow households with rooftop solar to buy and sell electricity at the retail rate, effectively using the larger grid to store surplus generation from their panels during sunny times and return it when the sun isn’t shining. If a household generates more electricity than it consumes over the course of a month, it obtains a credit that rolls over for use in future months. Net generation supplied to the grid in excess of that consumed over the course of a full year is forfeited to the utility. 

Project Report


Balancing Opportunities and Costs in Hawaii's Increasingly Green Grid

Hawaii’s tourism-dependent economy and oil-fired power plants make it the most oil dependent state in the United States. It also has the nation’s highest electricity prices, often between 3 and 4 times the national average over the last decade. These high prices, the state’s sunny and windy climate that make it amenable to increasingly economical renewable energy, plus a relatively progressive political culture have pushed the state to adopt an ambitious goal of being 100 percent renewable by 2045. Focusing mainly on the state’s largest grid on Oahu, where most people live, we discuss the cost structure of the current electricity system, the potential benefits and challenges of growing the share of renewable energy, and make a few policy suggestions. In particular, we argue that all homes and businesses should be given an opportunity to buy and sell electricity at the marginal cost of generation. Variable pricing could greatly reduce the cost of renewable energy, and perhaps seed development of Hawaii as a technology center focused on batteries and smart machines that can help shift electricity demand to align with the variable supply of solar and wind energy.

Working Paper


Factors Affecting EV Adoption: A Literature Review and EV Forecast for Hawaii

Electric Vehicles (EVs) reduce or negate gasoline or diesel use in vehicles through integration with the electric grid. Both plug-in hybrid electric vehicles (PHEVs)—which can draw from a battery as well as liquid fuel—and battery electric vehicles (BEVs)—solely powered through electricity—provide the opportunity for power-sharing with the electric grid and can potentially ease the integration of sources of intermittent renewable energy. This is a potentially important technology to help reduce greenhouse gas (GHG) emissions, local air pollution, and vehicular noise.


In this paper, we review studies informing the factors that affect EV adoption. We also review and harmonize studies that develop forecasts of EV adoption over time. We select a set of forecasts that represent low, reference, and high EV adoption and apply them to Hawaii-specific EV and car sales data to provide a preliminary forecast of potential EV adoption in Hawaii.

Read the full report on the Hawaii Natural Energy Institute website


Can Energy Efficiency Standards Reduce Prices and Improve Quality? Evidence from the US Clothes Washer Market

We examine the effect of energy efficiency standards on the clothes washers market using a constant-quality price index constructed from same-model price changes for a significant majority of clothes washer models sold in the United States between 2001 and 2011. We find constant-quality prices fell over time, while quality increased, particularly around times energy standards changed. We estimate total welfare changes by assuming the difference between average price and constant-quality price indicates average quality. Further examination shows product entry and exit are associated with changes federal standard for energy efficiency. With policy changes implicitly coordinating entry and exit, average vintage sharply falls when standards change. Controlling for individual model and time effects, we find that lower average vintage is associated with more rapidly falling prices, an effect we attribute to increased competition. We also find a strong relationship between clothes washer prices and average vintage of the same manufacturer, which indicates cannibalism explains much of the declining price of clothes washers over time. We apply the same methodology to other appliances (clothes dryer, room air conditioners and refrigerators) which did not experience simultaneous efficiency standard changes between 2001 and 2011. We see the same cannibalism in the market for clothes dryers, but not for room air conditioners or refrigerators. We also find notable improvements both in the characteristics of clothes washers that directly improve energy efficiency and those that promote convenience and space-saving. Energy efficiency standards appear to facilitate more rapid innovation and price declines.

working Paper


Vog: Using Volcanic Eruptions to Estimate the Health Costs of Particulates and SO2

Kılauea volcano is the largest stationary source of SO2 pollution in the United States of America. Moreover, the SO2 that the volcano emits eventually forms particulate matter, another major pollutant. We use this exogenous source of pollution variation to estimate the impact of particulate matter and SO2 on emergency room admissions and costs in the state of Hawai‘i. Importantly, our data on costs is more accurate than the measures used in much of the literature. We find strong evidence that particulate pollution increases pulmonary-related hospitalization. Specifically, a one standard deviation increase in particulate pollution leads to a 2-3% increase in expenditures on emergency room visits for pulmonary-related outcomes. However, we do not find strong effects for pure SO2 pollution or for cardiovascular outcomes. We also find no effect of volcanic pollution on fractures, our placebo outcome. Finally, the effects of particulate pollution on pulmonary-related admissions are most concentrated among the very young. Our estimates suggest that, since the large increase in emissions that began in 2008, the volcano has increased healthcare costs in Hawai‘i by approximately $6,277,204.

WORKING PAPER


Economic Impact of the Natural Energy Laboratory Hawaii Authority Tenants on the State of Hawaii

The Natural Energy Laboratory Hawaii Authority (NELHA) contracted UHERO to estimate its economic impact on the State of Hawaii. NELHA currently accommodates 37 tenants ranging from companies bottling deep sea water to solar and biofuel companies. These tenants pay close to $2 million in rent, royalties and pass through expense directly to NELHA. In addition, they employ hundreds of people, purchase goods and services from local businesses, and invest in capital improvements at NELHA.

This research determines NELHA’s contribution to local business sales, employee earnings, tax revenues, and number of jobs in Hawaii from the expenditures of its tenants in 2013. NELHA provides additional benefits to the state of Hawaii that this study does not capture but are important to consider when evaluating NELHA’s overall footprint on the economy.

PROJECT REPORT


Creating "Paradise of the Pacific": How Tourism Began in Hawaii

This article recounts the early years of one of the most successful tourist destinations in the world, Hawaii, from about 1870 to 1940. Tourism began in Hawaii when faster and more predictable steamships replaced sailing vessels in trans-Pacific travel. Governments (international, national, and local) were influential in shaping the way Hawaii tourism developed, from government mail subsidies to steamship companies, local funding for tourism promotion, and America’s protective legislation on domestic shipping. Hawaii also reaped a windfall from its location at the crossroads of the major trade routes in the Pacific region. The article concludes with policy lessons.

WORKING PAPER


Benefit-Cost Analysis of Watershed Conservation

The objectives of this report are (1) to review studies that estimate the relationship between watershed conservation activities and groundwater recharge in Hawai‘i and (2) to estimate the volume of freshwater yield saved per dollar invested in conservation at several sites on Hawai‘i Island. We conclude from the literature review that more work should be done to integrate information from smaller-scale studies of invasive-native water use differences into regional water balance models. This would help to inform decisions related to watershed conservation activities statewide. Using budget information obtained from the Nature Conservancy and the Division of Forestry and Wildlife as well as publicly available landcover and evapotranspiration (ET) data, we estimate the gallons of freshwater yield saved per dollar invested in watershed conservation. Under baseline conditions—a 3 percent discount rate and a 10 percent rate of spread for existing invasive plant species—roughly 400 gallons are saved on average across management sites per dollar invested. In other words, about $2.50 in present value terms is required to protect every one thousand gallons of freshwater over a 50 year time horizon. Annual benefits increase continuously as the avoided loss of freshwater yield rises over time, while conservation costs tend to be front-loaded, as a result of high fence installation and ungulate removal costs. Thus, it is important to consider the long run when comparing the benefits and costs of conservation activities.

working paper


Benefits and Costs of Implementing the IAPMO Green Plumbing and Mechanical Code Supplement in Hawaii

We calculate the benefits and costs of implementing the International Association of Plumbing and Mechanical Officials (IAPMO) 2012 Green Plumbing and Mechanical Code Supplement (GPMC) for various building types in Hawaii, with particular emphasis on water-use efficiency provisions in the code. Benefits of the GPMC are measured as water savings, where baseline usage is estimated in accordance with the 2012 Uniform Plumbing Code (UPC), which has been recently adopted by the state and will soon be adopted by the counties. We also monetize those benefits at the household level (water bill savings) and at the state level (cost savings to the water supply boards and departments throughout the state). Based on discussions with plumbers, building contractors, developers, architects, mechanical engineers, planners, and other water specialists, as well as an assessment of prices at major home improvement stores and other online retailers, we estimate the costs of GPMC compliance for new structures planned for Hawaii over the next decade. If the GPMC is implemented, the payback period is two years and the net present value assuming a discount rate of zero is $15.13 million. For a discount rate of 5%, the NPV is $11.29 million.

PROJECT REPORT
 


An Economic and GHG Analysis of LNG in Hawaii

Hawaii currently meets the majority of its electricity needs through costly oil-fired generation causing rates to be nearly four times the national average (EIA, 2013a). The "shale gas revolution" has led to rapidly declining natural gas prices within the continental U.S. The emergence of a natural gas market that is de-linked from oil prices has renewed Hawaii's interest in natural gas imports. Potentially lower natural gas prices as well as the view that it will help to reduce green house gas (GHG) emissions and increase energy supply security through domestic sourcing are major reasons why the State and key stakeholders are deliberating over importing large amounts of natural gas in liquefied form (liquefied natural gas or LNG). This study uses detailed models of Hawaii's electric sector and overall economy to estimate the impacts of Hawaii importing LNG for use in the electric sector.

WORKING PAPER


Why Does Real-Time Information Reduce Energy Consumption?

A number of studies have estimated how much energy conservation is achieved by providing households with real-time information on energy use via in-home displays. However, none of these studies tell us why real-time information changes energy-use behavior. We explore the causal mechanisms through which real-time information affects energy consumption by conducting a randomized-control trial with residential households. The experiment disentangles two competing mechanisms: (i) learning about the energy consumption of various activities, the “learning effect”, versus (ii) having a constant reminder of energy use, the “saliency effect”. We have two main results. First, we find a statistically significant treatment effect from receiving real-time information. Second, we find that learning plays a more prominent role than saliency in driving energy conservation. This finding supports the use of energy conservation programs that target consumer knowledge regarding energy use.

Published version: Lynham, J., Nitta, K., Saijo, T., & Tarui, N. (n.d.). Why does real-time information reduce energy consumption? Energy Economics. http://doi.org/http://dx.doi.org/10.1016/j.eneco.2015.11.007

Working Paper

 

 


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