PUHI – While state government has grown exponentially over the past decade, the amount of money devoted to management of natural resources under state control has not experienced similar growth, said Bank of Hawaii’s chief economist.
Management of those resources is a “key issue” for the island, said Paul Brewbaker, speaking Wednesday morning before the Lihue Business Association at Gaylord’s Restaurant at Kilohana.
A recent bank survey of owners of businesses large and small across the state revealed that leaders of commerce understand that money and other resources are needed to maintain the state’s undeveloped areas that are major reasons visitors choose to come to the state, Brewbaker said.
His message fell on the especially attentive ears of Sue Kanoho, executive director of the Kaua’i Visitors Bureau, who warned that the island may lose its distinctive “product,” that being its awe-inspiring physical beauty, if someone doesn’t start paying more attention to Kaua’i’s environmental resources.
Brewbaker feels one easy fix would be to make those who enjoy the mountains, backwoods and other unspoiled areas of the island pay their own way for use of such resources.
Discussing the Kaua’i economy, Brewbaker said the island “is doing a lot better than the data suggests,” and that there doesn’t appear to be as much growth as the island’s heightened economic activity level might indicate.
Small business owners and other entrepreneurs are among those making money on the island, though the visitor industry’s strength since the terrorist events of Sept. 11, 2001 continues to surprise even Brewbaker.
“Nine-11 was the mother of all tourism shocks,” even more severe on a statewide level than Hurricane ‘Iniki was to Kaua’i, he told a crowd of nearly 50 people. “Nine-11 forced people to make adjustments that they may not have made otherwise,” he said.
That tourism became on Kaua’i the source of resiliency for the island’s economy rather than a source of vulnerability speaks volumes for the industry and island, he feels.
Total visitor days on Kaua’i are up 7 percent for the first eight months of this year compared to the same period last year, and during that same period up 14 percent for domestic visitors, which comprise 85 percent of total arrivals, Brewbaker said.
County officials have contended that the high number of timeshare units, promotional efforts, the island’s awesome physical beauty, and lack of dependence on Japan and other Asian markets helped the island’s most important industry weather the terrorist storm of 13 months ago.
Brewbaker said the island’s timeshare industry is at the forefront of what is now a global tourism phenomenon, and that people are willing to pay a premium in timeshare prices and exchange values in order to come to Hawai’i and Kaua’i.
Staying global for a moment, Brewbaker acknowledged that a U.S. war with Iraq would definitely have a negative impact on travel demand, but likely would not be as devastating to the state’s top industry as U.S. Rep. Neil Abercrombie (D, urban O’ahu) recently predicted it would be.
Recent experiences show the resiliency of the destination, both Kaua’i and Hawai’i, though a war would do more to diminish shrinking foreign-market and long-haul visitor numbers, he said.
In some real ways, though, investors and the economy as a whole were buoyed by the market’s response to the Congressional Iraq force-authorizing resolution signed yesterday by Pres. George Bush, and of news that the United Nations was stepping up calls for Iraqi leader Saddam Hussein to allow weapons inspectors into his country, Brewbaker commented.
“These events are always like this,” said Brewbaker, saying uncertainties about what might happen in Iraq sent markets tumbling, and that news of potential political pressure being brought to bear sent markets upward earlier this week.
War with Iraq could force Kaua’i and Hawai’i visitor leaders to explore even more aggressive ways of regaining international and long-haul markets, while maintaining destination demand among West Coast visitors, he continued.
To explain travel demand, Brewbaker points to a Mainland city, any city, and states that travel demand has increased for people in that city to anywhere within a seven-hour plane ride from that city, and decreased outside it.
That is why Kaua’i and Hawai’i are doing well in continuing to attract Mainland visitors from the Rocky Mountains west, and not as good of a job luring East Coast visitors.
Brewbaker said two of every five visitors to Kaua’i vacations on Kaua’i only, and the island’s 5 percent unemployment rate means “the labor market’s very tight right now.”
The resiliency of the island’s tourism economy, and the economies of all the Neighbor Islands, encouraged Mainland-based airlines to rapidly redeploy long-range planes for nonstop service from the West Coast into Neighbor Island airports, he said.
The island’s construction job count increased by 10 percent from year-ago levels. The strength of construction, both residential and commercial, indicates a “strong commitment” from people making investments, possibly getting out of volatile stock markets in favor of solid real estate investment.
It also opens some investors up to potential vulnerability, should interest rates rise (as he predicts will happen, soon), and if stock and bond markets rebound (as he is also predicting).
Brewbaker said the experience of the island’s seed corn industry shows that diversified agriculture can work, and agriculture can be maintained on the island even while some agricultural lands can be sacrificed in order to accommodate four-lane highways to ease traffic congestion.
“It’s totally win-win” to use even prime agricultural lands on urban fringes for new roads or widening of existing highways, said Brewbaker, adding that it took nearly as long to drive from Lihu’e Airport to Puhi (distance roughly four miles) as it did for him to travel from his home in Kailua, O’ahu to Honolulu International Airport (distance around 15 miles) Wednesday morning.
The seed corn industry is bigger than coffee and macadamia nuts, and the rest of Kaua’i’s existing agricultural ventures also meet the test of sustainability, meaning, basically, that they don’t require government subsidies to survive, he said.
Finally, Brewbaker said the next governor, whoever she is, will have to address the issue of housing affordability, early on in her term.
Staff Writer Paul C. Curtis can be reached at mailto:mailto:email@example.com or 245-3681 (ext. 224).