2. The Economics of Hawaii’s Invasive Species 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 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

5. Invasive Species as Externalities Intentional introductions Agriculture/Aquaculture (Apple snails) Horticulture (Miconia) Pet trade (Salvinia) Unintentional introductions Floriculture trade (Coqui) Transport (Brown treesnake)

6. Outline Threat from invasives Policy Bioeconomics (interdisciplinary problem) 3 case studies: Existing invader Potential invader Explosive invader Conclusions for economics/policy Conclusions for biology

7. 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

8. Threats to Hawaii Economic (market value) Ecological (nonmarket value) MiconiaWaterEndangered species Brown treesnake Power outages, medical costs Endangered species CoquiProperty valuesEndangered species, influence on snake Miconia landslide, Tahiti

9. 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

10. Prevention and Control Prevention Reduce entrance vectors Interdiction at source Interdiction at destination Control Eradication Population reduction Containment Adaptation

11. Planning Optimal Policy Prevention and control decisions should be integrated and incorporate expected damages Need to include both ecological and economic factors: Biological capacityEntrance vectors ReproductionRate of transport Relative isolationAdaptability Habitat Costs CompetitorsRisks PredatorsDamages

12. 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

13. 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

14. Biology: How Fast Does it Grow? IslandCarrying capacity Kauai15,849,057 Oahu8,713,551 Maui14,133,791 Hawaii78,216,124 Molokai3,087,479 Where K = 100 trees per acre above 1800 mm/yr rainfall line

15. Ecology: Endangered Species

16. 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

17. Watershed

18. 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 Molokai 11N/A $36.9$68.2$108.0

19. 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 Molokai$30,874,7901.6

20. Current Population? Islandn(0) Kauai1,540 Oahu6,890 Maui111,050 Hawaii315,000 Molokai0

21. Optimal Population Islandn(0)n* Kauai1,5409,171 Oahu6,8905,495 Maui111,0508,901 Hawaii315,00039,937 Molokai00

22. 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

23. 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.).

24. 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)

25. Biology: Growth

26. Ecology: Biodiversity Losses

27. 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

28. Economics: Control Cost Catching 1 out of 1: $100 million (?) Catching 1 out of 100: $100,000 Catching 1 out of 39m: $0.64

29. Arrival Function

30. Optimal Prevention and Control Expenditures C(x*)=$10 m y*=$ 84,000 prevention control $6 m Optimal population n = 543

31. Policy Comparisons Current population (uncertain!) Status quo spending Optimal policy 0 $106 m$81 m 50 $101 m$87 m

32. 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

33. 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

35. 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

36. 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

38. Percentage of Transactions with Frog Complaints Prior to Sale Region Average Price Frogs 500m Frogs 800m Average AcresN. Obs. Puna$26,55519.3%34.1%2.624,019 S Hilo$126,1415.7%23.2%10.84,443 N Hilo$283,3837.0% 18.2633 Hamakua$154,73210.0%25.5%38.2928 N Kohala$202,59933.7%42.9%10.41,758 S Kohala$409,79637.3%48.4%6.83,479 N Kona$334,39313.2%33.9%2.96,733 S Kona$773,20423.5%40.6%21.72,064 Kau$25,17915.1%23.8%8.75,981

39. Puna Close-up Frogs within 500 m Frogs within 800 m Transactions

40. Impact on Property Price VariableFrogs 500mFrogs 800m Frogs-135,957*** (19327) -6,816 (7845) SFLA 67*** (4) 64*** (4) Assessed Land Val 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 observations50,033 Adj R 2 0.2 ***,** indicate statistical significance at 99% and 95% confidence respectively Huber-White Robust Standard errors in parentheses.

41. 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

42. 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

43. 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

44. 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

45. Acknowledgements James Roumasset, Brooks Kaiser, William Pitt, Sean D’Evelyn, and Porntawee Nantamanasikarn