MODELLING FUTURE HAWAIIAN HURRICANES, DAMAGE ASSESSMENT AND ECONOMIC IMPACT SCENARIOS

PREFACE AND NOTE TO THE READER

The Office of State Planning has contracted the Social Science Research Institute of the University of Hawaii to identify and evaluate options for reducing the vulnerability of the State to future hurricanes and to involve the public in that process. In order to conduct this evaluation, the project team will first attempt to evaluate a series of mitigation options, many of which have already been identified, in terms of their social and economic costs and benefits. In order to conduct such an evaluation, assumptions must be made about:

o the probability of future storms in terms of their frequency and severity;

o the potential social and economic impact of future storms of different degrees of severity;

o the potential costs of the mitigation measures being evaluated; and

o the potential costs that might be avoided if the mitigation measures are implemented.

In short, assumptions must be developed about the possible cost of damage from future storms in order to assess the potential benefits of mitigation measures being evaluated. These benefits can then be compared to the costs of the mitigation measures themselves and decision-makers can determine if the benefits outweigh the costs.

This is one of two papers prepared by the OSP Coastal Hazard Mitigation Planning Project to assist in the development of assumptions about the risks and potential costs of future hurricanes in the State of Hawaii. As will become clear to readers of both papers, the nature of the hurricane threat to Hawaii and the state of our knowledge about the climate history of Hawaii do not lend themselves to actuarial analysis. Moreover, historical information about damage from past storms is of limited value in assessing the potential damage of future hurricanes or tropical storms on any single island. Therefore, the approach adopted to estimate the potential costs of future storms in the paper prepared by Dave Kennard was to guestimate the potential impacts of a Hurricane Iwa type storm and a Hurricane Iniki type storm on each of the counties in the State.

In order to simulate the impact of an Iwa-type and an Iniki-type storm in 1992, historical information on both storms was used to determine percentages of damage and economic impact in the areas struck. These percentages were calculated in relation to the total number of houses, hotel room, and commercial structure and levels of economic activity at the time the storms struck. These percentages were then applied to the number of different kinds of structures and levels of economic activity in each of the counties in 1992. Needless to say, these guestimates are very rough and involved a whole series of assumptions which are discussed in the paper. The assumptions and method of guestimation for assent damage, economic loss, and the generation of economic activity are contained in Appendix One of the paper entitled Damage Assessment and Economic Impact Scenarios.

These papers were presented to a focus group convened on July 21, 1993, that was asked to assist in developing assumptions about the potential risks and cost of future storms. The focus group was asked for comments, criticism, and suggestions on the papers that resulted in revised drafts. However, additional comments and suggestions will continue to be welcome and should be sent to Director, Center for Development Studies, Social Science Research Institute, Porteus Hall, Room 719, University of Hawaii, Honolulu, Hawaii, 96822. They can be sent by fax to the same office at (808) 956-2884.

Michael P. Hamnett

Project Director

INTRODUCTION

Tropical cyclones are relatively infrequent but powerful disturbances to life in Hawai'i. Their destructive power was clearly demonstrated on September 11, 1992 when Hurricane Iniki passed over the Hawaiian Islands and caused over $1.6 billion in property damage. The island of Kau'ai received the brunt of the storm and all but $77 million of the damage. Hawai'i's other recent encounter with a hurricane was November 23 and 24, 1982, when Hurricane Iwa struck, again focused on Kau'ai. The statewide estimate of damage from Iwa was more than $234 million. Iwa was the first hurricane to hit Hawai'i directly since Hurricane Dot in 1959.

The seven-fold difference in damage estimates between Iniki and Iwa is due in part to the difference in the strength of the storms, in part to the increased level and value of development on Kau'ai over the ten years from 1982 to 1992, and in part to the path the storms took. The eye of Iniki passed directly over western Kau'ai, while Iwa's eye tracked several miles west of the island.

Kau'ai was particularly unlucky to have taken the brunt of both storms. Iniki has caused several statewide problems as well, not the least of which are the near collapse of the insurance industry and the impact on the state budget. These problems would have been much worse if the storm had struck one of the other islands.

To get a sense of the negative economic impact of these destructive storms and the potential benefits of various hazard mitigation recommendations, this report presents the possible economic impact of an Iniki-type and an Iwa-type hurricane striking any single one of the counties of Hawai'i. The estimates are confined to damage in the county and ignore the collateral damage to adjacent counties. Damage reports from Hurricane Iwa and Hurricane Iniki provide the basis for the estimation. These reports include: Hurricane Iwa's Economic Impact on Hawai'i, by the Governor's Ad Hoc Committee on the Economic Impact of Hurricane Iwa, January 1983, and Imua: Kau'ai Beyond Hurricane Iniki, by the Governor's Economic Recovery Committee, January 1993. The underlying data was drawn from the State of Hawai'i Data Book, 1992.

The damage assessment and economic impacts provided in the reports were merely the best estimates available at the time the reports were prepared. However, within the context of modeling the impact of a hypothetical storm, the data are sufficient to provide the order of magnitude of the storm's impact. It is also important to note that the reports cover only the easily quantifiable physical asset damage and economic impacts. They do not measure other intangible costs such as the effects on plant and wild life, the human suffering and the post-storm stress on families, or other social costs.

The report lists two sets of estimates. The first is damage to private and public property. Private property is broken down into residential (structures and personal property), commercial (accommodations, visitor facilities and other commercial property, and public utilities), and agriculture. Public property is restricted to non-federal public property and clean-up costs. The second set of estimates addresses the income and employment effects. These focus on the employment and income generated in the construction industry during the rebuilding phase, and the employment and income lost in the visitor industry.

ESTIMATED ASSET DAMAGE

The estimated total damage to private and public property from an Iniki-type storm is listed in Table 1 and shown in Graph 1. High and low estimates (+25% and -25%) are also provided in Table 1. The estimated asset damage from an Iniki-type storm striking only the City and County of Honolulu is $18,658 million. If the storm were to strike only the County of Maui instead, the estimated asset damage is $3,598 million; and if it were to strike only the County of Hawai'i, $3,520 million.

Table 2 lists the estimated total asset damage from an Iwa-type storm. The estimated asset damage from an Iwa-type storm striking only the City and County of Honolulu is $6,025 million. If it were to strike only the County of Maui instead, the estimated damage is $1,135 million; if it were to strike only the County of Hawai'i, $1,119 million; and only the County of Kau'ai, $492 million. Graph 2 also illustrates these losses.

A range of + 25% is given with the total asset damage estimates. This + 25% in our analysis accounts for various factors which could alter the amount and pattern of destruction. One important factor is the path of the storm. A difference of a few miles to the east or west in the path of the storm can have a large impact on the storm's damage. Likewise the intensity of the storm and topographical features -- e.g. whether a mountain range blocks and redirects the wind, or funnels and accentuates it -- can also have a big impact on the level of damage.

Other estimates of the damage exist. One, done by a San Francisco-based engineering firm, EQE International, estimated the damage from Iniki

Graph 1 INIKI: ASSET DAMAGE

Graph 2 IWA: ASSET DAMAGE

directly striking O'ahu at between $14 billion and $24 billion. A Sedgwick Payne report estimated that damage from a storm with 135-mph gusts striking O'ahu would be about $13.7 billion in insured Homeowners and Personal Fire losses. A second study assumed the O'ahu exposure to be $42.75 billion and the Probable Maximum Loss to be 30%, and generated an estimated hurricane loss of $12.8 billion. A third study estimated the Homeowners, Dwelling Fire and Commercial losses from an Iniki-type storm striking O'ahu to be $21.5 billion. One newspaper report cited a damage estimate to O'ahu from an Iniki-type storm at $35 billion (110% of the 1992 Gross Assessed Valuation of Improvements on the island of O'ahu). Our + 25% range encompasses most of the estimates made to date.

There are several reasons to believe that our damage estimate for the City and County of Honolulu is an underestimate. Federal property is not included in the damage estimate. Pearl Harbor Naval Base, Hickam Air Force Base, Barber's Point Naval Air Station, Schofield Barracks, Wheeler Air Force Base, and Kaneohe Marine Corps Air Station, among others, will suffer damage and will be the responsibility of the federal government. Hurricane damage to Federal property will, however, have a large spill-over effect on the Hawaiian economy, as the military provides a major source of employment and income generation.

The pattern of a tropical cyclone in the northern hemisphere means that the northeastern edge of the storm has the most powerful winds. If the storm were to go over the center of the island of O'ahu, the downtown and Waikiki areas, as well as Kaneohe and Kailua, would be hit by this intense northeast edge. It is likely that the damage intensity ratios on O'ahu would be higher than the Kau'ai average ratios used in the analysis.

Similarly, the extremely high winds such a storm would create would be forced between the tall buildings downtown and in Waikiki, creating areas of low pressure and pulling out windows and furnishings. This would cause more damage than was experienced on Kau'ai. And since businesses in Honolulu may be more technologically dependent than those on Kau'ai, the loss of power and communications may have a bigger impact.

Finally, the initial stage of recovery may be longer on O'ahu. Kau'ai was fortunate that it had the resources and infrastructure of O'ahu nearby to provide immediate assistance and to act as a staging area for supplying the recovery. A post-hurricane O'ahu would not be so fortunate. Almost everything would

have to be flown in from the West Coast, five hours away, or shipped, requiring several days. The immediate recovery would be much slower.

On the other hand, one reason to believe that the damage levels in this analysis for the City and County of Honolulu might be overestimated is that many of the buildings in the downtown and Waikiki areas have been engineered and constructed to higher standards than those on Kau'ai. These would then suffer less structural damage and therefore require less costly repairs.

GAINS TO ECONOMIC ACTIVITY

Reconstructing the structural damage (to residential structures, visitors accommodations, and other business damage) will require mostly skilled construction labor for repairs. This enormous task will provide substantial employment opportunities for the various Counties and the State work force. Much of the cost of reconstruction will be borne by entities outside of Hawai'i (to the degree that the Federal Government and private insurance companies can and will absorb the damage costs). In the short run reconstruction will be an injection of funds into the Hawaiian economy, offsetting some of the economic losses.

It is important to remember that there is an opportunity cost to the work and income generated from the repair of hurricane damage. The workers repairing structures are not building new ones. No new income is generated unless previously unemployed workers are employed in the hurricane recovery, or unless workers are working "overtime" to meet the higher demand. The marginal gain is small.

The first half of Table 3 lists the construction repair work (to residential structures, visitor accommodations, and other businesses damaged) estimated for both storms. For the Iniki-type storm, the value ranges from $12 billion on O'ahu to $1 billion on Kau'ai; for the Iwa-type storm, the damage estimates range from $3.6 billion on O'ahu to $300 million on Kau'ai.

The total value of construction in the State in 1991 was $3.3 billion, as shown in the bottom half of Table 3. The General Excise tax base for construction was $4.3 billion. The construction industry provided 33,500 jobs statewide in 1991, so approximately $129,400 of the construction tax base supported each job.

Table 4 lists the building work force requirements after the storm. Reconstruction of the City and County of Honolulu after an Iniki-type storm would require an estimated 92,600 workers. This is more than 3.5 times the existing County work force. If the entire State construction work force could be applied to the reconstruction, the required time is approximately 2.75 years. After an Iwa-type storm, reconstruction of the City and County of Honolulu would require an estimated 28,400 workers to repair the damage, slightly more than the County work force. The entire State construction work force would require slightly less than one year to complete the repairs. Similarly, the reconstruction demand exceeds the availability of local workers in other counties.

In 1991 the average annual wage in the construction industry was $37,800. Table 4 lists the wage income generated by the post-storm reconstruction work. After an Iniki-type storm, the range is from $3,500 million on O'ahu (over + 3 years) to $298 million on Kau'ai (over one to six years, depending on the degree to which workers from the other Counties find work on Kau'ai). After an Iwa-type storm, the range is from $1,429 million on O'ahu to $125 million on Kau'ai.

The long recovery times are in part determined by the relatively small labor force. One way to speed up the recovery process is to import workers, or to shift unemployed workers over from the service industries suffering significant hurricane damage. Unfortunately, there are limits on the ability of workers from outside the state and workers unemployed in other industries to supplement the pool of construction workers. The post-storm housing shortage makes it difficult to accommodate outside construction workers, and workers in other industries often lack the skills required. Both factors reduce the absorption rate. A shortage of building materials will also slow reconstruction. In addition, there will be a substantial opportunity cost of construction foregone as resources are transferred to the post-hurricane reconstruction effort.

LOSSES TO ECONOMIC ACTIVITY

The visitor industry dominates the Hawaiian economy, and it is where the disruption caused by a hurricane will have its biggest impact. Table 5 lists the annual and monthly visitor expendituresfor each county. Table 6 lists by county the economic activity that is generated by visitor expenditures. Each month in 1991 visitors to Honolulu on average spent $493 million, generating $871 million in total sales, $294 million in income and $55 million in tax revenue. In Maui County they spent on average $218 million per month, generating $386 million in total sales, $130 million in income and $24 million in tax revenue; in Hawai'i County they spent $100 million, generating $178 million in total sales, $60 million in income and $11 million in tax revenue; and in Kau'ai County they spent $102 million, generating $180 million in total sales, $61 million in income and $11 million in tax revenue. These figures represent the potential losses for each month after the storm in which no tourists arrive.

Table 7 lists loss estimates in the tourist industry during the first year after the hypothetical storms used in the analysis. For the Iniki-type storm, tourism is assumed to return to 75% of the pre-storm level in the fourth quarter after the storm. In the Iwa case, tourism recovers by the third quarter after the storm. Graph 3 illustrates the losses in tourism sales for each of the four counties in the case of Iwa-type and Iniki-type storms.

During the year after an Iniki-type storm the City and County of Honolulu would lose $6,534 million in sales from decreased tourism, $2,206 million in income and the County and State would lose $411 million in tax revenue. The County of Maui would lose $2,895 million in sales, $978 million in income and the County and State would lose $182 million in tax revenue. The County of Hawai'i would lose $1,332 million in sales, $450 million in income and the County and State would lose $84 million in tax revenue. The County of Kau'ai would lose $1,349 million in sales, $455 million in income and the County and State would lose $85 million in tax revenue. The losses from an Iwa-type storm would be approximately 40% of the Iniki losses. Graph 4 illustrates the potential losses in tax revenue for each of the four counties in the case of Iwa-type and Iniki-type storms.

State and County tax collection in 1991 was $3,333.6 million. The losses from an Iniki-type storm striking O'ahu would reduce tax collections by about one-eighth, or 12%.

Graph 3 LOST TOURISM SALES IN IWA-TYPE AND INIKI-TYPE STORM SCENARIOS

Graph 4 LOST TAX REVENUE IN IWA-TYPE AND INIKI-TYPE STORM SCENARIOS

The statewide effects from the loss of tourism in this analysis are probably overstated in the case of the Counties of Maui, Hawai'i and Kau'ai. Tourists whose vacation plans have been disrupted by a hurricane are likely to go to one of the other islands. For example, at the time of Hurricane Iniki the number of unoccupied rooms on the other islands was greater than the number of occupied rooms on Kau'ai, and tourists could easily switch to one of the undamaged resort areas. Indications are that Maui and Hawai'i have enjoyed an increase in tourism as a result of this tourist displacement since Iniki.

The statewide effect of the hypothetical storms used in this analysis has probably been understated for the City and County of Honolulu. Tourists who come to Waikiki may be less likely to go to the other islands; given extensive damage to the airport and the need to fly in relief supplies, getting to the other islands may be problematic. Also considering the negative publicity from the news reports of the hurricane damage to Honolulu, it would not be surprising to see decreased tourism on the other islands.

Potential unemployment and job losses are difficult to estimate. Employers may choose to maintain workers in the short run, especially if they expect to recover quickly. Likewise, workers may exit the work force (to work on their own house, or leave the county) or find employment in one of the recovery-driven industries (construction or government). However, estimates from Kau'ai indicate that an Iniki-type storm would cause a first quarter job loss of about half of those jobs supported by the tourist industry. This would decline to about 15% in the fourth quarter.

Potential losses in the tourist industry would be partially offset by gains in the construction industry and in government supported recovery employment. The estimates of the net effect on Kau'ai after Iniki indicate an employment rate of 25% in the first quarter after the storm falling to 10% in the fourth quarter after the storm. Graph 5 shows that in the City and County of Honolulu this would translate into a loss of 111,300 jobs in the first quarter and 44,500 in the fourth; in the County of Maui it would translate into 14,300 jobs in the first quarter and 5,700 in the fourth; in the County of Hawai'i it would translate into 15,000 jobs in the first quarter and 6,000 in the fourth; and in the County of Kau'ai it would translate into 7,200 jobs in the first quarter and 2,900 in the fourth.

After an Iwa-type storm the tourist industry losses would be much smaller, and probably more temporary than those after an Iniki-type storm. The

Graph 5 POTENTIAL JOB LOSS IN AN INIKI-TYPE STORM SCENARIO

estimate of the statewide job loss after Hurricane Iwa was slightly smaller than the job gain in the construction industry. There would be some initial dislocation after the storm, but no net loss in employment, with perhaps even a small gain.

CONCLUSIONS

Estimates of the economic losses from an Iwa-type and an Iniki-type storms are summarized in Table 8. While these guestimates are based on a whole series of assumptions about storm damage in each of the counties, they give some sense of the levels of damage that might be possible. As discussed the above, there are compelling reasons to believe that the losses from a direct hit of an Iniki-type storm on Honolulu could yield economic losses that are much higher.

The analysis contained in this paper focused on potential damage from only two types of storms. As indicated in the first paper in this series on the hurricane history of Hawaii, damage can also be expected from storms of both lower intensity and ones which do not pass so near or directly over one of the inhabited islands of the State. Therefore, in considering the potential for future hurricane and tropical storm damage, readers are reminded that the scenarios analyzed here are only two among many that could be derived from the climate history of Hawaii.

APPENDIX

This report presents estimates of the potential economic impact of an Iniki-type storm and an Iwa-type storm striking each of the counties of Hawaii. The modeling of the potential hurricane damage rests on the assumptions that the overall damage patterns resemble those on Kau'ai after Iwa and Iniki, and that the estimates of damage from Iniki and Iwa are applicable. From these and other data, primarily from the current State Data Book, estimates of asset damage and economic impacts have been generated.

While it is impossible to calculate precisely how a hurricane might affect a specific area, the differences in storm characteristics are too wide and there is too much variability in topological and structural features, the estimates are still useful. They give a sense of the order of magnitude of the potential destruction and allow for the preliminary evaluation of effectiveness of policy recommendations.

A brief description of how the estimates were calculated follows. The asset damage estimates are presented first, followed by the estimates of the economic impacts.

ASSET DAMAGE

Residential Property

The American Red Cross surveyed the damage to residential units shortly after both storms. The "street sheets" rated every house on every street with damage on a scale of: 0 = no damage; 1 = minor damage; 2 = major damage; and 3 = destroyed. The results were tabulated, and the category counts formed part of the basis for Federal Emergency Management Agency (FEMA) reports and action.

The island-wide percentage of damage to the stock of residential units by storm and by classification is:

Iniki Iwa

Destroyed 8% 3%

Major damage 30% 9%

Minor damage 41% 18%

----- -----

TOTAL 79% 30%

In both storms about 10% of residential units suffering damage were destroyed. In Iniki a higher proportion suffered major damage (37% to 30%), while a smaller proportion suffered minor damage (51% to 60%).

The value of the damage was estimated to be:

Destroyed $168,666 (the 1991 average estimated value of

a new single family home on Oahu)

Major damage $ 35,000 (the estimated amount used on the

American Red Cross street sheets)

Minor damage $ 1,000 (used in the Imua report)

The damage ratios and values were applied to the housing stock in each county as of April 1, 1992,

Count of Housing Units (4/1/92)

Honolulu 288,805

Maui 45,941

Hawai'i 53,421

Kau'ai 19,439

to construct the residential structure damage estimates in each county for both storms. The Imua study reported the estimated damage to personal property to be approximately 45% of the estimated structural damage, so the residential asset damage estimates are:

RESIDENTIAL ASSET DAMAGE, BY COUNTY & BY STORM

(in $ millions)

Iniki Iwa

Structures Pers Prop Structures Pers Prop

Honolulu $ 7,046 m $ 3,171 m $ 2,422 m $ 1,090 m

Maui $ 1,211 m $ 504 m $ 385 m $ 173 m

Hawai'i $ 1,303 m $ 587 m $ 448 m $ 202 m

Kau'ai $ 474 m $ 213 m $ 163 m $ 73 m

Commercial Property

The Imua study divided commercial property into three subgroups: visitor facilities and infrastructure; non-visitor facilities; and public utilities. Visitor facilities and infrastructure was further divided into accommodations and non-accommodations. There was no separate grouping for industrial property.

The estimated damage to visitor accommodations from Iniki was based on a survey of Kau'ai's visitor rooms for the Hawaii Hotel Association by PKF-Hawaii which found 54% of the 7,616 surveyed to be damaged at an average value of $75,600 per room. These were applied to the count of visitor accommodations as of Spring, 1992 to estimate damage:

VISITOR ACCOMMODATION DAMAGE AFTER AN INIKI-TYPE STORM

Total Units Damaged Cost

Honolulu 37,279 20,131 $1,522 m

Maui 19,552 10,558 $ 798 m

Hawai'i 9,170 4,952 $ 374 m

Kau'ai 7,778 4,200 $ 318 m

Table 600 of the 1993 Data Book lists a decline of 954 visitor accommodation units on Kau'ai in 1983, the year after Iwa (pre-Iwa = 5,147, post-Iwa = 4,193). The 18.5% decline is the estimate for an Iwa-type storm:

VISITOR ACCOMMODATION DAMAGE AFTER AN IWA-TYPE STORM

Total Units Damaged Cost

Honolulu 37,279 6,897 $ 521 m

Maui 19,552 3,617 $ 273 m

Hawai'i 9,170 1,696 $ 128 m

Kau'ai 7,778 1,439 $ 109 m

The estimated damage to non-accommodations after Iniki was based on a survey of 128 visitor related businesses on Kau'ai by Harry Spiegelberg & Associates for DBEDT. The estimated overall damage per employee was $10,500. DBEDT also used this estimate to construct the estimated damage to the non-visitor facilities. The two categories are merged into "Visitor & other facilities" and the estimated damage is the damage per employee times the number of non-agriculture, non-government employees in each county:

NON-VISITOR ACCOMMODATION DAMAGE

AFTER AN INIKI-TYPE STORM

(non-agriculture & non-government jobs in $ millions)

Job Count Damage

Honolulu 325,300 $ 3,416 m

Maui 43,800 $ 460 m

Hawai'i 38,750 $ 407 m

Kau'ai 21,650 $ 227 m

The Hurricane Iwa report lists total business damage at $63.9 million, $11.5 million of which was to public utilities, and $0.9 million was on Maui and Hawaii. Approximately 87% of the damage occurred on Kau'ai, and of the $41.5 million in non-public utility damage, "most of the business damage appears to have been suffered by visitor industry facilities on Kau'ai, which have not as yet been comprehensively surveyed for valuation of damages." If the same ratio of damage to accommodations occurred as with Iniki, there was $17.3 million in damage. Given the 12,250 non-agriculture, non-government workers on Kau'ai in 1982, the damage per employee is $1,400, or adjusted for inflation, $2,250. (CPI rose 159.6% from 1982 to 1992.) The estimated non-accommodation damage from an Iwa-type storm by county is:

NON-VISITOR ACCOMMODATION DAMAGE AFTER AN IWA-TYPE STORM

(non-agriculture & non-government jobs in $ millions)

Jobcount Damage

Honolulu 325,300 $ 732 m

Maui 43,800 $ 99 m

Hawai'i 38,750 $ 87 m

Kau'ai 21,650 $ 49 m

Iniki caused a reported $139 million in damage to public utilities. Using the number of electric utility customers as a proxy for the measure of public utility property, the damage per customer was $281,000. The estimated public utility damage by county is:

PUBLIC UTILITY DAMAGE AFTER AN INIKI-TYPE STORM

($ millions)

Customers Damage

Honolulu 255,176 $1,484 m

Maui 48,519 $ 282 m

Hawai'i 53,351 $ 316 m

Kau'ai 23,917 $ 139 m

The State-wide estimated damage to public utilities after Iwa was $11.5 million. Assuming the same Kau'ai share as with other business damage (87%), the cost per customer was $55,000 times the inflation factor (159.6%) yields the estimated cost per customer of $88,000, and an estimated public utility damage by county of:

PUBLIC UTILITY DAMAGE AFTER AN IWA-TYPE STORM

($ millions)

Customers Damage

Honolulu 255,176 $ 225 m

Maui 48,519 $ 43 m

Hawai'i 53,351 $ 48 m

Kau'ai 23,917 $ 21 m

Non-Federal Government Property

The damage to non-federal government property is assumed to be proportional to number of non-federal government employees. Iniki caused $67 million in damage to State and County property, or $21,000 per worker. The estimated damage by county is:

NON-FEDERAL GOVERNMENT DAMAGE

AFTER AN INIKI-TYPE STORM

($ millions)

Workers Damage

Honolulu 57,600 $1,210 m

Maui 5,900 $ 124 m

Hawai'i 8,300 $ 174 m

Kau'ai 3,200 $ 67 m

Iwa caused 24.9 million in damage to State and County property: $6 million to the County of Kau'ai, $0.8 million to the City and County of Honolulu; and $18.1 million to the State. If the State damage is proportioned as the County damage, the total damage on Kau'ai was $22 million (88%), and the damage per employee was $8,600 times the inflation adjustment, or $13,800. The estimated damage by county is:

NON-FEDERAL GOVERNMENT DAMAGE

AFTER AN IWA-TYPE STORM

($ millions)

Workers Damage

Honolulu 57,600 $ 795 m

Maui 5,900 $ 81 m

Hawai'i 8,300 $ 115 m

Kau'ai 3,200 $ 44 m

Agriculture Property

The Agriculture losses from Iniki were estimated to be $78 million, or 138% of the 1991 market value of crop and livestock sales in Kau'ai. The estimated damage to agriculture property by county is:

AGRICULTURE LOSSES AFTER AN INIKI-TYPE STORM

($ millions)

Market Sales Damage

Honolulu $ 170.7 m $ 236 m

Maui $ 144.4 m $ 200 m

Hawai'i $ 182.5 m $ 252 m

Kau'ai $ 56.4 m $ 78 m

The agricultural crop losses on Kau'ai were $14.9 million. The reported state-wide damage to agricultural structures was $5.2 million. If they are proportioned as crop losses, the total agricultural losses on Kau'ai are $19.4, or 32% of the market value of crop and livestock sales in 1982 ($60.5 million). The damage estimate by county is:

AGRICULTURE LOSSES AFTER AN IWA-TYPE STORM

($ millions)

Market Sales Damage

Honolulu $ 170.7 m $ 55 m

Maui $ 144.4 m $ 46 m

Hawai'i $ 182.5 m $ 59 m

Kau'ai $ 56.4 m $ 18 m

Clean-up Costs

The final item is the clean-up cost. After Iniki the clean-up cost was an estimated $48 million, or 3.2% of the asset damage estimate. The estimated clean-up cost and total damage estimates are:

INIKI: CLEAN-UP COSTS AND TOTAL DAMAGE

($ millions)

Subtotal Clean-up Total

Honolulu $18,085 $ 573 $18,658 m

Maui $ 3,489 $ 110 $ 3,599 m

Hawai'i $ 3,413 $ 108 $ 3,521 m

Kau'ai $ 1,516 $ 48 $ 1,564 m

IWA: CLEAN-UP COSTS AND TOTAL DAMAGE

($ millions)

Subtotal Clean-up Total

Honolulu $ 5,840 $ 185 $ 6,025 m

Maui $ 1,100 $ 35 $ 1,135 m

Hawai'i $ 1,087 $ 34 $ 1,121 m

Kau'ai $ 477 $ 15 $ 492 m

ECONOMIC IMPACTS

Construction Repair

It is assumed that most of the structural damage (residential, accommodations and other businesses) will require mostly skilled construction labor for repairs. To determined the labor needs for the repair work, the current construction value per worker is needed. This ratio is the 1991 General excise tax base for contracting ($4,334 million) divided by the 1991 state-wide jobcount in the contract construction industry (33,500), or $129,373. The structural damage totals are divided by the construction value per workder to calculate the number of workers needed, and then multiplied by the average annual wage ($37,791) to calculate the estimated total wages, assuming the number of workers were employed for a year.

It is important point to remember that there is an opportunity cost to the work and income generated from the structural repairs of hurricane damage. The workers replacing structures are not building new ones. No new income is generated unless previously unemployed workers are now employed in the repair work, or unless workers are working "overtime" to meet the higher demand.

Visitor Industry Losses

To calculate the impact on the visitor industry, it was assumed that tourism returns after the storm, slower after an Iniki-type storm, and faster after an Iwa-type storm. The percentage of 1991 tourist expenditures by quarter after the storm is assumed to be:

1st Q 2nd Q 3rd Q 4th Q

Iniki 0% 25% 50% 75%

Iwa 25% 75% 100% 100%

The estimated annual expeditures and related data can be calculated as the sum of the products of the recovery rate coeffecients and the average monthly amounts for visitor expenditure, total expenditure, total sales, inomce and tax revenue. The difference between the estimated visitor expenditures and the actual 1991 is the estimated lost expenditures.

Employment Effects

The Imua report indicates that the estimated increase in unemployment rises to 25% in the first quarter and declining to 10% by the end of the year after an Iniki-type storm. However, recent reports from the Department of Labor and Industrial Relations suggest that the initial rise in unemployment might be less, approximately 16%. It still appears that the unemployment rate will be at least as high as 10% a year after the storm.