The Economics of Invasive Species:Lessons from Hawaii

Kimberly M. BurnettUniversity of Hawaii at Manoa

Department of Economics

What is an “Invasive Species”?

An “invasive species” is defined as a species that is1. 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

Potential to keep things out

Lots at risk: biodiversity, tourism, “paradise”

Threats to Hawaii:

Economic

(market value)

Ecological

(nonmarket value)

Miconia tree Water Endangered species

Brown treesnake Power outages, medical costs

Endangered species

Coqui frog Property values Endangered species, influence on snake

Miconia landslide, Tahiti

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

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 (K)

Kauai 15,849,057

Oahu 8,713,551

Maui 14,133,791

Hawaii 78,216,124Where 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

(Aquifer)

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 Island20 18.0 22.0 $169.0 $225.0 $297.0

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

$1,000*potential acres( , ) 13.39 *C n x x

n

Current vs. 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

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

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.).

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

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000

population

growth

Ecology: Biodiversity Losses

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

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

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)

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

Optimal Prevention and Control Expenditures if zero snakes

2 4 6 8 10 12 14t

0.5

1

1.5

2

2.5

3

3.5

4Millions of $

control

prevention

Optimal Prevention and Control Expenditures if 50 snakes

2 4 6 8 10 12 14t

0.5

1

1.5

2

2.5

3

3.5

4Millions of $

prevention

control

Summary of optimal policies

1st period Optimal population

Present value

n0=0 n0=50 n=2 n0=0 n0=50

Removal, x 0 48.184 0.184 - -

Cost of x 0 75.6 million 1.60 million 65 million 154 million

y 2.94 million 3.19 million 3.19 million 158 million 195 million

Arrivals 0.216 0.184 0.184 - -

Damage $0 $243 $243 $11,000 $12,100

Total 2.94 million 78.8 million 4.79 million 223 million 349 million

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

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

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 (–)

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

Results

Variable Coefficient Stand. error P-value

Frog500m -0.16 0.01 0.00

Frog800m -0.12 0.01 0.00

Log Acres 0.43 0.02 0.00

Log mortgage rate -0.45 0.04 0.00

Residential structure 1.27 0.01 0.00

Year of sale 0.07 0.00 0.00

Improved Residential 0.23 0.14 0.10

Apartment 0.31 0.17 0.07

Commercial 0.14 0.26 0.58

Industrial 1.98 0.17 0.00

Conservation -0.19 0.20 0.34

Resort 0.32 0.19 0.09

Unimproved Residential 0.53 0.33 0.11

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

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

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

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 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

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