A Preliminary Estimate of the Regional and Federal Economic Benefits of Nourishment at Waikiki Beach: Fid-Bau Portal

A Preliminary Estimate of the Regional and Federal Economic Benefits of Nourishment at Waikiki Beach

Lent, Linda K.

Waikiki Beach, one of the most famous in the early 1900's, largely has all but disappeared today. Erosion has taken such a toll that most of the public beach in the densely developed part of Waikiki is mediocre or non-existent. By any measure tourism in Waikiki is languishing. Tourism in Waikiki is critical not only to the region's economy, but also to the Island of Oahu and the State of Hawaii. Moreover, the contribution to the US economy is significant. However as Waikiki Beach has lost sand, so too has the region's status as a destination beach been eroded. From 1990 to 2000, the World Travel Organization [WTO, annual] estimates that international tourist arrivals worldwide increased 57%. During the same period, arrivals in Hawaii increased 0.3%. The Waikiki Beach Erosion Control project was authorized for construction by the US Army Corps of Engineers in 1965. Though the authorized plan included placement of sand along the entire 2.25 mile length of Waikiki Beach, the only segment constructed by the Corps was an 1800 foot section owned by the Army adjacent to Fort DeRussy in 1969 using non-appropriated funds from the operation of military post exchanges, theatres and military clubs. The improvement at Fort DeRussy was continued and eventually completed in 1987. In 1991, a reevaluation report found the only measure of Federal benefits at Waikiki beach were those associated with use as a recreation beach. In keeping with Federal policy, all benefits related to tourism expenditures were considered local in nature and not examined or measured. As Federal budget policy did not allow participation in projects whose primary benefits were recreation, the improvements were recommended for State consideration. In 1991, the State placed 2,500 cubic yards of sand along a 1,500 foot stretch at Kuhio Beach. The State project fell considerable short of the specifications set forth in the reevaluation report, placing less sand and failing to include a critical storm damage extension. As required by Congress, this presentation reports on one component of a 2^nd reevaluation study of Waikiki Beach undertaken in 2002. The paper traces tourism expenditures through the local, State and national economies and examines the incident of benefits at each level. The full economic value of tourism expenditures at Waikiki is estimated to exceed $5 billion. Preliminary estimates of the economic losses due to erosion in Waikiki indicate that $181 million in tourism industry purchases are lost each year due to erosion in Waikiki. These losses involve more than 5,000 jobs. Federal losses are substantial. Expenditures by international tourists for US goods and services represent exports to the US economy. Losses in exports from the erosion are estimated at $67 million annual. When US residents choose to visit Waikiki Beach in lieu of competing foreign destinations, the visitor expenditures represent avoided imports to the US economy. Losses in avoided imports (US visitors choose foreign destinations instead of Waikiki) are estimated at $41 million annually. More rigorous analysis will be used to refine the estimates in the next phase of research activity.