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A new report published Aug. 31 by the Economic Research Organization at the University of Hawaii, or UHERO, evaluates the impacts from the recent Maui wildfires and challenges that need to be addressed to recover.
Four separate wildfires broke out on the Valley Isle on Aug. 8, including one that destroyed much of historic Lahaina town and killed 115.
"We are exploring appropriate frameworks for assessing the devastating impacts of the Maui wildfires, their ongoing effects and the challenges that will need to be faced to achieve a full recovery," the report, which was authored by 16 UHERO faculty, research fellows and staff members, stated. "These areas include economic forecasting, housing and urban economics, regional economic development, environmental economics, environmental science, labor economics, public health, public finance, and governance."
UHERO's first publication after the fires, the report is "much more than just an economic impact and [our] typical forecast report, Executive Director Carl Bonham said during a news conference Thursday. "It really is intended to take a fairly high-level view of some of the key issues that the community — the Maui community, the state as a whole, the federal government — will be facing in the rebuilding process and the recovery process. Really, it's just the first of what we expect will be an extensive amount of research that we want to do to try to help the Maui community with that recovery process over the years to come."
Bonham said UHERO will release a full forecast report for Maui and Hawaii in a few weeks.
Economy
In addition to killing at least 115, the Lahaina blaze destroyed more than 2,300 structures, the report noted.
According to the report, buildings destroyed in the popular tourist destination include visitor accommodations and short-term vacation rentals that provided roughly 1,500 rooms and normally accommodated about 4,000 tourists.
"Businesses in Lahaina generated more than $70 [million] per month in revenue in accommodation, food services, retail sales and other categories, and they employed about 8,500 individuals," UHERO noted.
But the economic impacts of the Maui fires extend beyond Lahaina, the report said. In addition to damage from fires outside of Lahaina, the report also said that West Maui, which includes Kaanapali and other resort areas, supplies about half of the Valley Isle's total visitor accommodations and is now closed to visitors.
According to the report, West Maui has more than 10,000 rooms in hotels, timeshares and vacation rentals — about half of Maui's total visitor accommodation capacity.
"In the immediate aftermath of the inferno, the number of visitors to the island dropped by about three-quarters, adversely impacting businesses and their employees in other parts of Maui," UHERO said. "With about $270 daily spending per visitor to Maui, the loss of revenue adds up to more than $13 [million] per day. To put these numbers in perspective, the initial disaster relief provided by FEMA [Federal Emergency Management Agency], HUD [U.S. Department of Housing and Urban Development] and other agencies amounts to less than $20 [million], including $5 [million] in initial rental assistance. Private and public support for Maui will help mitigate economic activity losses for those directly affected by the fires, but other than regular unemployment benefits, the collateral damage from lost visitor spending will not be replaced by federal support."
And with 45,000 fewer visitors to Maui, the report noted, too, that many hotel rooms and short-term rentals are now being used by displaced residents and emergency responders. Spending by those groups, however, "differs substantially" from visitors, UHERO said, and businesses that rely on tourist spending "will continue to experience a dramatic decline in sales until visitors return in greater numbers."
Although visitor numbers may recover in the coming months, UHERO said it may take years to reach pre-fire numbers.
And while providing vacant hotel rooms and vacation rentals to individuals who have been displaced by the fire offers "immediate relief and mutual benefit," the report said in the long-term, creating housing solutions is "vital" for the island's economic revival.
"Every 1,000 units not rented to tourists translates to a potential $30 million monthly loss for local businesses, suggesting a prolonged recovery for our workforce," the report said.
UHERO also estimates the state in August will lose about $30 million in Transient Accommodations Tax and General Excise Tax revenue from visitors to Maui, and these losses will "continue each month that visitors are missing." Additionally, UHERO estimates Maui County's TAT revenues will decline by about $5 million per month and property tax revenue will decline by at least $10.5 million for the 2023-24 fiscal year.
Housing
According to UHERO, approximately 2,000 homes were lost in Lahaina, representing 3% of Maui's entire residential housing stock.
Citing Maui County property data, the report noted that the value of structures within the burned area totaled more than $880 million, with most of the value in structures that were completely destroyed.
According to the report, residential structures in the burned area were valued at $554 million, commercial and industrial structures were valued at $262 million and tourist accommodations were valued at $65 million.
"Compounding the loss of supply, displaced families are now searching for housing in one of the nation's most expensive markets," the report noted. "While temporary housing options are being rolled out, the prospect of waiting years for permanent replacement housing means that many households will be confronted with difficult decisions about whether it is possible for them to find suitable housing on the island."
Rebuilding
According to UHERO, regulations guiding building designs, height limits, setbacks from the ocean, energy-efficiency of new homes and public infrastructure may need to be amended "in order to restore the best aspects of historic Lahaina, honor its incalculable importance to the Native Hawaiian community, and enable integration of the rebuilt community into an island environment facing issues of scarce natural resources, drier conditions, and rising sea levels. "
A central challenge will be rebuilding in a manner that maintains "relatively affordable housing and allows people of all incomes to live in or very near Lahaina," the report noted.
Meanwhile, fast-tracking and expanding projects already included in the Maui County Comprehensive Affordable Housing Plan is critical in "accelerating recovery and preventing a damaging increase in Maui’s already extreme housing burden," the report stated.
"In addition to accelerating existing projects, relaxing Maui’s onerous housing restrictions, streamlining development of multi-family housing with higher density on smaller footprints can benefit not only the displaced Lahaina residents but the entire island," UHERO said.
Governance
The success of Maui's recovery "depends crucially" on effective governance of those recovery efforts, the report noted.
"This will involve a range of institutions including state and county governments, local nonprofits, community groups, FEMA and other federal agencies," the report notes. "There is a danger that post-disaster governance will be hobbled by bureaucratic turf battles and fragmented jurisdictions of authority. This could slow the recovery process, lead to an inefficient allocation of resources, and result in a wasteful duplication of effort.
"Additional problems are likely to emerge because of the vast scale of the recovery project. This favors centralized decision making that risks leaving residents feeling unheard and disempowered. This is made worse by the fact that trust in government is typically lower after a major disaster. Low voter turnout in West Maui may indicate that trust in government was low even before the August wildfires."
Establishing a special local post-disaster governance system that could bypass "typical policies and procedures" may allow Maui to avoid some of those common pitfalls, UHERO said.
The full report can be found online here.