Strong Kaua’i economy thriving on diversity, UH report shows

Researchers from the University of Hawai’i have concluded that the Kaua’i economy is robust, and will only get healthier with time.

“Strength in real estate, construction and non-tourism services maintained the Kaua’i economy’s forward momentum” even after the events of Sept. 11, said economists from the UH Economic Research Organization (UHERO).

“These sectors will continue to support growth over the next two years as tourism’s cyclical recovery proceeds,” states the UHERO report on the Kaua’i economy released this week.

“Aggregate measures of economic activity confirm Kaua’i’s relative health,” such as increases in building permit numbers and value, real income, visitor arrivals, contracting labor force, service jobs, and other statistics, the study continued.

The UHERO study predicts over one million visitors will arrive on Kaua’i this year and next, marking several straight years of the island greeting over one million visitors.

“Tourism has given the island chances to diversify,” said Virginia “Gini” Kapali, director of the county Office of Economic Development. It was her idea for the county to hire UHERO to compile statistics used to display current conditions and forecast future economic trends.

Seeing something lacking in terms of getting governmental forecasts specific to Kaua’i (the last statistical abstract was released in 1994), Kapali got the OK to put out a bid for professional services for compilation of Kaua’i economic data.

The UHERO contract is $25,000 a year for three years, based on annual availability of funds, but the end result will be well worth the investment, Kapali said.

A 2002 Kaua’i data book will be released shortly, from the UHERO data, and will include census information as well as additional forecasts, she said.

The current contract calls for UHERO economists to make themselves available to county Department of Finance officials when they are preparing bond ratings and other financial documents, she said.

Further, the contract allows various county departments to feed information to UHERO, helping the UH professionals paint a more complete picture of the island and its economy, Kapali said.

“Tourism is our number-one industry,” she said, adding that something that surprised her out of the statistics was the growth of other industries.

“We are diversifying,” but not necessarily into a new industry as much as other existing industries becoming more important to the local economy, she said.

Before the data was compiled, she said she had something of a gut feeling that diversification was taking place in the Kaua’i economy, but didn’t have the quantitative measurements to prove it. Now she does.

The UHERO economists predict continued growth in both the real estate and construction sectors.

“The extraordinarily tight housing market will continue to drive expansion in the construction sector,” the report states.

The report points out some challenges, including the fact that Lihue Airport “is near its maximum operating capacity, and we may begin to see that impact tourism in coming years.”

“Kaua’i has established a tourism product that is distinct from the more urban brands dominant elsewhere in the state,” the report continues.

“Protecting that image and exploiting its unique attraction in an increasingly hectic modern world perhaps remains the most important challenge for Kaua’i in coming years.”

The report is available online at Adobe Acrobat Reader is required to use the file.

Staff Writer Paul C. Curtis can be reached at or 245-3681 (ext. 224).


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