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Products: Wada, Christopher

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Do Natural Disasters Make Sustainable Growth Impossible?

We consider the prospects for sustainable growth using expected utility models of optimal investment under threat from a natural disaster. Extension of a discrete, two-period model, to continuous time over an infinite time horizon permits the analysis of sustainability under uncertainty regarding adverse events, including both one-time and recurrent disasters. Natural disasters, with destruction of productive capital, disrupt the optimal consumption and utility paths, but the Arrow et al. (2004) sustainability criterion is still satisfied even without adding strong or weak sustainability constraints. We also consider a separate natural resource sector and show that, except for extreme cases, the optimal steady state level of the renewable resource is not affected by the possibility of natural disasters. In the case of catastrophic events, however, damage to the resource system may be severe enough to push the system below a critical value tipping point, undermining the prospects of long-run sustainability.

WORKING PAPER


Assessing the Costs of Priority HISC Species in Hawaii

Over the past decade, funding for the Hawaii Invasive Species Council (HISC) has ranged from less than $2 million per year in the three years following the recent economic downturn, up to almost $6 million in FY2015. The HISC website provides total award amounts for past projects, but it is difficult to attribute exact dollar amounts to specific species for projects that target multiple species. As a starting point, we consider the number of times each invasive species was designated as a target over the period FY2005-2015. While this list does not necessarily represent species that generated the largest economic damages or species for which the most spending has occurred, it is a list of species getting the most attention by HISC. For the most part, the top ten have remained fairly consistent over time, although in recent years, axis deer, albizia, and ivy gourd have received noticeably more attention.

PROJECT REPORT


Sustainable Agriculture Irrigation Management: The Water-Energy-Food Nexus in Pajaro Valley, California

The water-energy-food (WEF) nexus is quickly becoming one of the most critical global environmental challenges of the twenty first century. However, WEF systems are inherently complex; they typically are dynamic and span multiple land or agro-ecosystems at a regional or global scale. Addressing this challenge requires a systems approach to optimal and sustainable resource management across multiple dimensions. To that end, using Pajaro Valley (California) as a case study, our research aims to (1) highlight synergies and tradeoffs in food and water production, (2) build a dynamic framework capable of examining intertemporal resource relationships, and (3) detail the steps required to develop incentive-compatible financing of the resulting management plans when benefits are not distributed uniformly across users. Using a stylized model, we find that in the long run, inland growers benefit from the halting of seawater intrusion (SWI) due to overpumping of groundwater. We also calculate that the water provided by the proposed College Lake Multi-Objective Management Program—a plan designed to halt SWI and support sustainable water and agricultural development in the region—will generate net revenue of $40-58 million per year, compared to an annualized cost of less than $3 million. An equal cost-sharing plan would be desirable if the benefit of the project exceeded $1,268 per year for each well owner. Since this may not necessarily be the case for smaller well owners, one possible alternative is to allocate costs in proportion to expected benefits for each user.

WORKING PAPER


The Economic Value of Groundwater in Obama

Worldwide, freshwater is important not only for direct consumption but also for its role in the production of a variety of goods and services. For example, water is used for cooling nuclear reactors and as an input for the production of energy via hydroelectric processes. Freshwater also is essential for the production of food, including crops and livestock. Recognizing these synergies and identifying tradeoffs are key components of water-energy-food (WEF) nexus research (Taniguchi et al., 2013; Loring et al., 2013; Giampietro et al., 2014). In this study, we focus on Obama City, Japan, where groundwater is used directly for domestic and commercial consumption and for melting snow. Stored groundwater also provides an indirect benefit: submarine groundwater discharge (SGD) from the aquifer supports the nearshore ecology, including a locally important fishery. Using this case study, we document some common challenges that arise when undertaking WEF research and outline an example of an integrated approach that combines multiple modes of analysis to overcome those obstacles.

WORKING PAPER


Cost-Benefit Analysis of Disaster Mitigation Infrastructure: The Case of Seawalls in Otsuchi, Japan

Disaster management problems often pose the same types of challenges that environmental governance problems do; they involve decision-makers at various levels and can transcend political boundaries. We conduct a benefit-cost analysis of a disaster adaptation strategy in Otsuchi, which was undertaken shortly after the 2011 Tohoku earthquake and tsunami devastated the region. Results indicate that present value net benefits from the planned seawall are positive, even if expected damages are low, provided that the wall is capable of reducing damage by at least 50%. A hybrid method of governance may, however, be effective at increasing the benefit-cost ratio.

WORKING PAPER


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


Methods of the Water-Energy-Food Nexus

This paper focuses on a collection of methods that can be used to analyze the water-energy-food (WEF) nexus. We classify these methods as qualitative or quantitative for interdisciplinary and transdisciplinary research approaches. The methods for interdisciplinary research approaches can be used to unify a collection of related variables, visualize the research problem, evaluate the issue, and simulate the system of interest. Qualitative methods are generally used to describe the nexus in the region of interest, and include primary research methods such as Questionnaire Surveys, as well as secondary research methods such as Ontology Engineering and Integrated Maps. Quantitative methods for examining the nexus include Physical Models, Benefit-Cost Analysis (BCA), Integrated Indices, and Optimization Management Models. The authors discuss each of these methods in the following sections, along with accompanying case studies from research sites in Japan and the Philippines. Although the case studies are specific to two regions, these methods could be applicable to other areas, with appropriate calibration.

Published version: Endo, A., K. Burnett, P. Orencio, T. Kumazawa, C. Wada, A. Ishii, I. Tsurita, and M. Taniguchi. 2015. Methods of the water-energy-food nexus. Water 7, 5806-5830.

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


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


The Economic Impact of Astronomy in Hawai‘i

The astronomy sector in Hawaii generates economic activity through its purchases from local businesses, its payment to its employees, and spending by students and visitors. In collaboration with the Institute for Astronomy, a survey was designed to obtain information from astronomy related entities about in-state expenditures. The collected survey data was used to estimate the astronomy sector’s total economic activity in each of Hawaii’s counties for the calendar year 2012. Following a standard Input-Output approach, we define economic impact to be the direct, indirect, and induced economic activities generated by the astronomy sector’s expenditures in the state economy, taking into account inter-county feedback and spillover effects.

Local astronomy related expenditures in calendar year 2012 were $58.43 million, $25.80 million, $1.28 million, and $2.58 million in Hawaii, Honolulu, Kauai, and Maui counties respectively. Total astronomy related spending in the state was $88.09 million. Including indirect and induced benefits and adjusting for inter-county feedback and spillover effects, the astronomy sector had a total impact of $167.86 million statewide. The largest impact was found to be in Hawaii County ($91.48 million), followed by Honolulu County ($68.43 million). Impacts were found to be relatively small in Maui County ($5.34 million) and Kauai County ($2.61 million). In addition to contributing to output, astronomy activities generated $52.26 million in earnings, $8.15 million in state taxes, and 1,394 jobs statewide.

PROJECT REPORT


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
 


Incentivizing interdependent resource management: watersheds, groundwater, and coastal ecology

Managing water resources independently may result in substantial economic losses when those resources are interdependent with each other and with other environmental resources. We first develop general principles for using resources with spillovers, including corrective taxes (subsidies) for incentivizing private resource users. We then analyze specific cases of managing water resources, in particular the interaction of groundwater with upstream or downstream resource systems.

Published version: Burnett, Kimberly, Sittidaj Pongkijvorasin, James Roumasset, and Christopher A. Wada. "Incentivizing interdependent resource management: watersheds, groundwater and coastal ecology". Handbook of Water Economics. Cheltenham, UK: Edward Elgar Publishing, 2015. Print.

WORKING PAPER


Groundwater Economics without Equations

In many parts of the world, irrigation and groundwater consumption are largely dependent on groundwater. Minimizing the adverse effects of water scarcity requires optimal as well as sustainable groundwater management. A common recommendation is to limit groundwater extraction to maximum sustainable yield (MSY). Although the optimal welfare-maximizing path of groundwater extraction converges to MSY in some cases, MSY generates waste in the short and medium term due to ambiguity regarding the transition to the desired long-run stock level and failure to account for the full costs of the resource. However, the price that incentivizes optimal consumption often exceeds the physical costs of extracting and distributing groundwater, which poses a problem for public utilities facing zero excess-revenue constraints. We discuss how the optimal price can be implemented in a revenue-neutral fashion using an increasing block pricing structure. The exposition is non-technical. More advanced references on groundwater resource management are also provided.

WORKING PAPER


The Good, Bad, and Ugly of Watershed Management

Efficient management of groundwater resource systems requires careful consideration of relationships — both positive and negative — with the surrounding environment. The removal of and protection against “bad” and "ugly" natural capital such as invasive plants and feral animals and the enhancement of “good” capital (e.g. protective fencing) are often viewed as distinct management problems. Yet environmental linkages to a common groundwater resource suggest that watershed management decisions should be informed by an integrated framework. We develop such a framework and derive principles that govern optimal investment in the management of two types of natural capital — those that increase recharge and those that decrease recharge — as well as groundwater extraction itself. Depending on the initial conditions of the system and the characteristics of each type of natural capital, it may make sense to remove bad capital exclusively, enhance good capital exclusively, or invest in both activities simultaneously until their marginal benefits are equal.

WORKING PAPER


Optimal Joint Management of Interdependent Resources: Groundwater vs. Kiawe (Prosopis pallida)

Local and global changes continue to influence interactions between groundwater and terrestrial ecosystems. Changes in precipitation, surface water, and land cover can affect the water balance of a given watershed, and thus affect both the quantity and quality of freshwater entering the ground. Groundwater management frameworks often abstract from such interactions. However, in some cases, management instruments can be designed to target simultaneously both groundwater and an interdependent resource such as the invasive kiawe tree (Prosopis pallid), which has been shown to reduce groundwater levels. Results from a groundwater-kiawe management model suggest that at the optimum, the resource manager should be indifferent between conserving a unit of groundwater via tree removal or via reduced consumption. The model’s application to the Kona Coast (Hawai‘i) showed that kiawe management can generate a large net present value for groundwater users. Additional data will be needed to implement full optimization in the resource system.

WORKING PAPER


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