The Economics of Hawaii’s Invasive Species

Kimberly M. BurnettUniversity of Hawaii at Manoa

Department of Economics

What is an “Invasive Species”?

• An “invasive species” is defined as a species that is

1. non-native (or alien) to the ecosystem under consideration and

2. whose introduction causes or is likely to cause economic or environmental harm or harm to human health.

Executive Order 13112, President Clinton, 1999

• Invasive species can be plants, animals, and other organisms (e.g., microbes). Human actions are the primary means of invasive species introductions.

Hawaii as a Laboratory

• Most isolated place on earth• Lots at risk: biodiversity, tourism, “paradise”• Potential to keep things out

• Why do we see increasing invasion?• Increased trade• Globalization, disappearance of borders• Ease of mobility• Intentional introductions: driven by individual benefits;

without accounting for potential social costs

Invasive Species as Externalities

• Intentional introductions• Agriculture/Aquaculture (Apple snails)

• Horticulture (Miconia)

• Pet trade (Salvinia)

• Unintentional introductions• Floriculture trade (Coqui)

• Transport (Brown treesnake)

Outline

• Threat from invasives• Policy• Bioeconomics (interdisciplinary problem) • 3 case studies:

• Existing invader

• Potential invader

• Explosive invader

• Conclusions for economics/policy• Conclusions for biology

Threat from Invasives

• Economic:

• Direct damages to physical capital

• Direct damages to human health

• Direct damages to natural resource assets

• Ecological:

• Ecosystem change

• Water quality/ quantity

• Soil conditions

• Loss of biodiversity

• Loss of resilience

• Loss of productive resources

Threats to Hawaii

Economic

(market value)

Ecological

(nonmarket value)

Miconia Water Endangered species

Brown treesnake

Power outages, medical costs

Endangered species

Coqui Property values Endangered species, influence on snake

Miconia landslide, Tahiti

Role of Policy for Invasive Species

• Policy currently fragmented and inefficient• Black lists

• Inspections

• Control efforts

• Biological and economic tools must be used together to target policies that minimize disturbances to economy and environment

• Successful policy will integrate prevention and control decisions

Prevention and Control

Prevention

• Reduce entrance vectors

• Interdiction at source

• Interdiction at destination

Control

• Eradication

• Population reduction

• Containment

• Adaptation

Planning Optimal Policy

• Prevention and control decisions should be integrated and incorporate expected damages

• Need to include both ecological and economic factors:

Biological capacity Entrance vectorsReproduction Rate of transportRelative isolation AdaptabilityHabitat CostsCompetitors RisksPredators Damages

Biology + Economics = Bioeconomics

• Biology (and ecology and hydrology): how fast does it grow, where is it now, where is it going, how will it affect other species…

• Economics: cost of control, value of expected damages

• Show why all are necessary through case studies

The Existing Invader: Miconia calvescens

• Native to South America• Intentionally introduced to a Big

Island nursery in 1960’s• Attractive purple and green leaves• Aggressive growth• Long-lived seed bank• Shallow roots• Forms monotypic stands, dense

canopy • “Purple plague”• “Green cancer”• Present on 4 main islands

Biology: How Fast Does it Grow?

Island Carrying capacity

Kauai 15,849,057

Oahu 8,713,551

Maui 14,133,791

Hawaii 78,216,124

Molokai 3,087,479

Where K = 100 trees per acre above 1800 mm/yr rainfall line

0

100000

200000

300000

400000

500000

600000

0 2000000 4000000 6000000 8000000n

g(n)

Ecology: Endangered Species

Hydrology: Potential WatershedChange from Invasion

• Reduction in groundwater speeds up depletion of aquifer, increases water prices and need for desalination

• Increase in sedimentation decreases water quality and viability of forest and nearshore resources

Rainfall Runoff (sediments) Marine ecosystem

Watershed

Economics: The Value of Losing Birds & Water

mgd lost recharge (annual)

Total annual damages by island (millions)

Island # birds Low High Low Medium High

Kauai 22 3.2 3.9 $91.6 $154.0 $234.0

Oahu 13 3.2 3.9 $61.4 $98.5 $145.0

Maui 17 3.7 4.6 $77.8 $126.0 $187.0

Big Island 20 18.0 22.0 $169.0 $225.0 $297.0

Molokai11 N/A N/A $36.9 $68.2 $108.0

Economics: Cost of Control?

IslandSearch Constant

($1000*acre)Search Coefficient

()Treatment Coefficient

Kauai $158,490,570 1.6095

$13.39

Oahu $87,135,510 1.6258

Maui $141,337,910 1.6089

Big Island $782,161,240 1.6028

Molokai $30,874,790 1.6

Current Population?

Island n(0)

Kauai 1,540

Oahu 6,890

Maui 111,050

Hawaii 315,000

Molokai 0

Optimal Population

Island n(0) n*

Kauai 1,540 9,171

Oahu 6,890 5,495

Maui 111,050 8,901

Hawaii 315,000 39,937

Molokai 0 0

Policy Comparisons

Island Policy

Do nothingRemain at

current population forever

Status quo spending

Optimal policyof population

reduction and maintenance

Oahu $3.08 b $10.5 m $16.9 m $10.4 m

Maui $4.6 b $73.5 m $51.7 m $17.2 m

Recap

• Population reduction optimal for most islands.

• May be preferable to let population increase on Kauai (search costs high relative to damage)

• For Molokai, optimal to spend on prevention and keep at zero

• Difficulty with nonmarket valuation (true value of endangered birds, etc.).

The Potential Invader: Brown Treesnake

• Native to New Guinea/Australia• Accidentally introduced to Guam

during WW2• Heavy transport btw Guam and

Hawaii (esp. military)• 8 intercepted at HI ports since 1980• Survived trip from Guam to Texas

for months in a washing machine• Hitchhikes in wheels of airplanes,

hidden in cargo• Mildly venomous • “Just a matter of time” (and money)

Biology: Growth

Ecology: Biodiversity Losses

Economics: Damage

• Based on Guam,• Power outage costs: $121.11 /snake

• Snakebite costs: $0.07 /snake

• Biodiversity: $0.32 – $1.93 /snake• Loomis and White (1996)

• Total expected damages: $122.31 per snake

Economics: Control Cost

• Catching 1 out of 1: $100 million (?)

• Catching 1 out of 100: $100,000

• Catching 1 out of 39m: $0.64

Arrival Function

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0 2 4 6 8 10 12

Annual arrivals

Prevention expenditure (millions)

Optimal Prevention and Control Expenditures

C(x*)=$10 m

y*=$ 84,000

prevention

control

$6 m

Optimal population n = 543

Policy Comparisons

Current population

(uncertain!)

Status quo spending Optimal policy

0 $106 m $81 m

50 $101 m $87 m

Recap

• If zero snakes, spend heavily on prevention

• If more than zero snakes, spend on control

• May be large returns to early detection of small populations

• Uncertainty about current population warrants diversification between strategies

The Explosive Invader: Coqui Frog

• Native to Puerto Rico• Introduced to Hawaii late 1980s

through nursery trade• Spread to 4 islands by

movement of plant material and intentional introductions

• No external tadpole stage; does not require standing water; 2 week breeding cycle

• Have attained some of the highest densities ever observed for terrestrial amphibian populations (up to 133,000 per ha on Hawaii)

• New populations being reported weekly

“ko-KEE”Full chorus

Coqui photos: USDA/APHIS/NWRC Hilo Field Station

Falling Property Prices?Hedonic Pricing Theory

• Wish to explain determinants of total property price• Some things add to price, others subtract

• Structural • Number of rooms, number of bathrooms, square footage (+)• Acreage (+)

• Neighborhood/Accessibility• Proximity to public transportation, school districts, other amenities (+/–)• Zoning (+/–)

• Environmental• Presence of coqui (–???)• Elevation (+)

• Financial• Mortgage rates (–)• Buyer in HI (–)

• Derive implicit value of each characteristic from explicit price of property using multiple regression analysis

Study Site and Data

• 50,033 real estate transactions on Big Island, 1995-2005

• 9 main districts (see map) divided into 10 sub-districts each to control for neighborhood characteristics

• SFLA to represent structure

• Frog complaints registered to NWRC Hilo, 1997-2001

• Use GIS to identify property transactions occurring after complaint, within 500m and 800m of frog complaints

• Financial variables• Prices deflated using West Urban CPI • 30 year mortgage rates from Federal Reserve• Buyer residing in HI used to control for information effects

Percentage of Transactions with Frog Complaints Prior to Sale

RegionAverage

PriceFrogs500m

Frogs800m

Average Acres N. Obs.

Puna $26,555 19.3% 34.1% 2.6 24,019

S Hilo $126,141 5.7% 23.2% 10.8 4,443

N Hilo $283,383 7.0% 7.0% 18.2 633

Hamakua $154,732 10.0% 25.5% 38.2 928

N Kohala $202,599 33.7% 42.9% 10.4 1,758

S Kohala $409,796 37.3% 48.4% 6.8 3,479

N Kona $334,393 13.2% 33.9% 2.9 6,733

S Kona $773,204 23.5% 40.6% 21.7 2,064

Kau $25,179 15.1% 23.8% 8.7 5,981

Puna Close-up

Frogs within 500 m

Frogs within 800 mTransactions

Impact on Property Price

Variable Frogs 500m Frogs 800m

Frogs -135,957*** (19327) -6,816 (7845)

SFLA 67*** (4) 64*** (4)

Assessed Land Val 0.5*** (0.2) 0.5*** (0.2)

Acres 471** (190) 474** (191)

Mortgage rate (monthly)

-25,494*** (4043) -17,237*** (3917)

Buyer in HI -24,981*** (9470) -24,969*** (9479)

Constant 212,062*** (28833) 139,301*** (27384)

Number of observations 50,033 50,033

Adj R2 0.2 0.2

***,** indicate statistical significance at 99% and 95% confidence respectively Huber-White Robust Standard errors in parentheses.

Recap

• Presence of frogs have a negative impact on property value

• Tells us nothing about optimal policy (don’t know the response of population to spending)

• Need to build model of frog population response to spending if want to evaluate policy options

Limitations• General

• Nonmarket values controversial/hard to measure

• Miconia• How to deal with seed bank (is zero really zero?)• Lack of spatial considerations

• Brown treesnake• “Not here”, so…• Uncertain about population• Uncertain about annual arrivals• Unknown control costs• Lack of spatial considerations

• Coqui• Ecological threats not accounted for

Directions of Future Research

• Miconia• Better data on: current number of trees on each island, growth,

costs, locations• Brown treesnake

• Early detection/rapid response• Probabilistic model

• Coqui• Real estate analysis: increase years of BI data, add Maui data• Calculate lost profits to horticultural industry from

• Reduced revenues from lost sales if infested• Increased costs from removing frogs for certification

• Model the increase in potential viability of brown treesnake and accompanying increase in potential damages (biodiversity loss, power supply and medical expenses) due to coqui prey base

Conclusions • Invasive species can cause real economic damage

• Eradication not necessarily preferred over population maintenance or adaptation

• An ounce of prevention not necessarily “worth a pound of cure”

• Optimal policy will depend on economic as well as ecological characteristics of an invasion

• Essential to consider benefits versus costs over some time horizon

Acknowledgements

James Roumasset, Brooks Kaiser, William Pitt, Sean D’Evelyn, and Porntawee

Nantamanasikarn