2. The Economics of Invasive Species: Lessons from Hawaii Kimberly M. Burnett University of Hawaii at Manoa Department of Economics

3. 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.

4. Hawaii as a Laboratory  Most isolated place on earth  Potential to keep things out  Lots at risk: biodiversity, tourism, “paradise”  Threats to Hawaii: Economic (market value) Ecological (nonmarket value) Miconia treeWaterEndangered species Brown treesnakePower outages, medical costs Endangered species Coqui frogProperty valuesEndangered species, influence on snake Miconia landslide, Tahiti

5. 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 Existing invader: Miconia Potential invader: Brown treesnake Explosive invader: Coqui frog

6. 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

7. Biology: How Fast Does it Grow? Island Carrying capacity (K) Kauai15,849,057 Oahu8,713,551 Maui14,133,791 Hawaii78,216,124 Where K = 100 trees per acre above 1800 mm/yr rainfall line

8. Ecology: Endangered Species

9. Hydrology: Potential Watershed Change 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 (Aquifer)

10. Watershed

11. Economics: The Value of Losing Birds & Water mgd lost recharge (annual) Total annual damages by island (millions) Island # birdsLowHighLowMediumHigh Kauai 223.23.9$91.6$154.0$234.0 Oahu 133.23.9$61.4$98.5$145.0 Maui 173.74.6$77.8$126.0$187.0 Big Island 2018.022.0$169.0$225.0$297.0

12. Economics: Cost of Control? Island Search Constant ($1000*acre) Search Coefficient (  ) Treatment Coefficient Kauai$158,490,5701.6095 $13.39 Oahu$87,135,5101.6258 Maui$141,337,9101.6089 Big Island$782,161,2401.6028

13. Current vs. Optimal Population Islandn(0)n* Kauai1,5409,171 Oahu6,8905,495 Maui111,0508,901 Hawaii315,00039,937

14. Policy Comparisons IslandPolicy Do nothing Remain at current population forever Status quo spending Optimal policy of 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

15. Miconia Recap  Population reduction optimal for most islands  Able to prevent millions of dollars in future losses by spending more today on control  May be preferable to let population increase on Kauai (search costs high relative to damage)  Difficulty with nonmarket valuation (true value of endangered birds, etc.).

16. 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)

17. Biology: Growth

18. Ecology: Biodiversity Losses

19. Economics: Damage  Damages: Power outage costs:  272 outage hours/ 2.7 m snakes = 0.0001 outage hrs/snake/yr x $1.2 million = $121.11 /snake + Biodiversity:  280,000 Oahu households x $31 x 1 bird/ K = $1.16 /snake + Medical costs:  (170*$264.35)/ 2.7 m snakes x 4 pop density = $0.07 /snake ____________________________ = $122 per snake

20. Economics: Control Cost  Methods of removal Hand capture Trapping Barriers Acetaminophen baiting Dogs in the woods  Our cost function Informed by trials on Guam Adjusted for differences in Hawaii’s environment  Marginal cost decreasing in n Catching 1 out of 1: $92.5 million Catching 1 out of 100: $335,000 Catching 1 out of max: $29.00

21. Arrival Function

22. 2 cases depending on current population  How many snakes currently present in Hawaii?  Officially zero  Conversations with scientists: could be as many as 100  Try 0 and 50 to see the range of optimal policies

23. Optimal Prevention and Control Expenditures if zero snakes control prevention

24. Optimal Prevention and Control Expenditures if 50 snakes prevention control

25. Summary of optimal policies 1 st periodOptimal population Present value n0=0n0=50n=2n0=0n0=50 Removal, x 048.1840.184-- Cost of x 075.6 million1.60 million65 million154 million y 2.94 million3.19 million 158 million195 million Arrivals 0.2160.184 -- Damage $0$243 $11,000$12,100 Total 2.94 million78.8 million4.79 million223 million349 million

26. Snake Recap  If zero snakes, focus on prevention over next ten years  If 50 snakes, funds should be directed immediately to control  May be large returns to early detection of small populations  Uncertainty about current population warrants diversification between strategies

27. 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

28. Falling Property Prices? Hedonic Pricing Theory  Build model to explain what determines the total price of a property  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 (–)

29. Study Site and Data  50,033 real estate transactions on Big Island, 1995-2005  Frog complaints registered to NWRC Hilo, 1997-2001  Use GIS to identify property transactions occurring after complaint, within 500m and 800m of frog complaints

30. Results VariableCoefficientStand. errorP-value Frog500m-0.160.010.00 Frog800m-0.120.010.00 Log Acres 0.430.020.00 Log mortgage rate-0.450.040.00 Residential structure 1.270.010.00 Year of sale 0.070.00 Improved Residential 0.230.140.10 Apartment 0.310.170.07 Commercial 0.140.260.58 Industrial 1.980.170.00 Conservation-0.190.200.34 Resort 0.320.190.09 Unimproved Residential 0.530.330.11

31. Hawaii County  Consider for a moment…0.16% may sound small, but Hawaii’s real estate is valuable!  Median value of single family home: $411,500  34,175 owner-occupied housing units  0.16%* $411,500 = $658.40 per property* 34,175 homes = $22.5 million

32. Potential impacts to neighbor islands  Keep in mind…real estate values on Maui and Oahu are considerably higher than the Big Island  Maui County 0.16%*$703,500 = $1,125 per property*25,039 = $28.2 million  Honolulu County 0.16%*$632,200 = $1,012 per property*156,290 = $158.1 million

33. Frog Recap  The presence of the coqui frog in Hawaii county has already begun to lower property values  An official complaint of the frog within 500m reduces property values on average 0.16%  If the frog spreads across all residential properties, direct damages to property values are estimated at a minimum of $22.5 million for Hawaii county, as much as $208 million for the state

34. 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

35. Directions of Future Research  Miconia Better data on: current number of trees on each island, growth, costs Spatial model  Brown treesnake Early detection/rapid response Probabilistic model Spatial 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

36. 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