FEASIBILITY ANALYSIS OF
POTENTIAL REVENUE OPPORTUNITIES AT
WAO KELE O PUNA
FINAL REPORT
AUGUST 2011
Prepared for: OFFICE OF HAWAIIAN AFFAIRS
Prepared by:
TOWNSCAPE, INC.
Sub-Consultant: SMS RESEARCH
FEASIBILITY ANALYSIS OF
POTENTIAL REVENUE OPPORTUNITIES AT
WAO KELE O PUNA
FINAL REPORT
AUGUST 2011
Prepared for:
OFFICE OF HAWAIIAN AFFAIRS
Prepared by:
Sub-Consultant:
TOWNSCAPE, INC.
SMS RESEARCH
TABLE OF CONTENTS
ACRONYMS & ABBREVIATIONS ........................................................................................................................iv
EXECUTIVE SUMMARY .........................................................................................................................................v
1
Introduction and Planning Context...................................................................................................................1
2
Site Conditions ....................................................................................................................................................2
3
4
2.1
Site Description............................................................................................................................................2
2.2
Past and Present Surrounding Communities ...............................................................................................3
2.3
Natural and Cultural Resources ..................................................................................................................4
2.4
Hazards ........................................................................................................................................................6
2.5
Regulatory Requirements .............................................................................................................................8
2.6
Summary of Opportunities and Constraints...............................................................................................11
Potential Sustainable Income/Revenue Opportunities ..................................................................................13
3.1
Income/Revenue Opportunities Identification Process ..............................................................................13
3.2
Screening Criteria......................................................................................................................................14
3.3
“Top Ten” Opportunities for Feasibility and Market Analysis..................................................................15
3.4
Opportunities not included in Feasibility and Market Analysis.................................................................16
Feasibility Analysis of “Top Ten” Opportunities...........................................................................................18
4.1
Hawaiian Culture and Wao Kele o Puna Phone Applications...................................................................18
4.2
Individual Donor-Based Program .............................................................................................................25
4.3
Native and Hawaiian Cultural Plant Cultivation.......................................................................................30
4.4
Sustainable Forestry ..................................................................................................................................40
4.5
Invasive Species Extraction........................................................................................................................46
4.6
Wao Kele o Puna Makana / Virtual Shop ..................................................................................................53
4.7
Eco-Tourism and Volun-Tourism...............................................................................................................60
4.8
Overnight Retreat Destination ...................................................................................................................68
4.9
Movies and Documentaries........................................................................................................................73
4.10
“Niche” Carbon Credits ............................................................................................................................78
5
Comparative Summary of Opportunity Costs & Feasibility ........................................................................88
6
Implementation Needs and Recommendations ..............................................................................................90
7
References..........................................................................................................................................................91
Wao Kele o Puna Revenue Opportunities
Page i
TABLES
Table ES-1: Summary of Feasibility Analysis ................................................................................... vi
Table 2-1: Regulatory Requirements .................................................................................................. 8
Table 3-1: Opportunities Screening Criteria ..................................................................................... 14
Table 3-2: Opportunities for Feasibility and Market Analysis.......................................................... 15
Table 3-3: Opportunities not included in Feasibility & Market Analysis ......................................... 16
Table 4-1: Capital and Operating Costs for Wao Kele o Puna Phone App....................................... 23
Table 4-2: Five-Year Cost and Revenue Projection for Wao Kele o Puna Phone App .................... 24
Table 4-3: Examples of Maui Watershed Partnership Donation Options ......................................... 25
Table 4-4: Capital and Operating Cost for Individual Donor-based Program .................................. 27
Table 4-5: Comparative Examples for Individual Donor-based Programs ....................................... 28
Table 4-6: Five-Year Cost and Revenue Projection for Individual Donor-based Program .............. 29
Table 4-7: Five-Year Cost and Revenue Projection for Phone App + Donations-based Website .... 29
Table 4-8: Value of Crop Sales in the State of Hawaiÿi.................................................................... 33
Table 4-9: Capital and Annual Operating Costs for Plant Nursery................................................... 36
Table 4-10: Capital and Operating Costs for Agroforestry............................................................... 37
Table 4-11: Capital and Operating Costs for Sustainable Forestry................................................... 43
Table 4-12: Five-Year Cost Projection for Strawberry Guava Removal .......................................... 51
Table 4-13: Payment Process Options for Wao Kele o Puna E-store ............................................... 55
Table 4-14: Capital and Operating Cost for E-Store......................................................................... 56
Table 4-15: Capital and Operating Cost for Makuÿu Farmers Market Booth ................................... 57
Table 4-16: Wao Kele o Puna E-Store and Market Booth Breakeven Analysis ............................... 58
Table 4-17: Five-Year Cost and Revenue Projection for E-store ..................................................... 58
Table 4-18: Five-Year Cost and Revenue Projection for Makuÿu Market Booth ............................. 59
Table 4-19: Capital and Operating Costs for Ecotourism ................................................................. 64
Table 4-20: Ecotourism Pro Forma................................................................................................... 65
Table 4-21: Five-Year Cost and Revenue Projection for Ecotourism............................................... 65
Table 4-22: Ecotourism Comparison Examples................................................................................ 67
Table 4-23: Capital and Operating Costs for Overnight Retreat Facility.......................................... 70
Table 4-24: Overnight Retreat Pro Forma......................................................................................... 71
Table 4-25: U.S. National Park Film Production Permits................................................................. 73
Table 4-26: Comparative Pricing for Hawaiÿi Filming Locations .................................................... 75
Table 4-27: Average Length of Film Productions in U.S. National Parks........................................ 75
Table 4-28: Capital and Operating Costs for Movies and Documentaries........................................ 76
Table 4-29: Five-Year Cost and Revenue Projection for Movies and Documentaries ..................... 77
Table 4-30: Up-Front and Operating Costs for an Improved Forest Management Carbon Project (50
acres).............................................................................................................................. 83
Table 4-31: Carbon Project Assumptions ......................................................................................... 85
Table 4-32: 100-Year Cost and Revenue Projection Example.......................................................... 86
Table 5-1: Concept Feasibility Summary.......................................................................................... 88
Wao Kele o Puna Revenue Opportunities
Page ii
FIGURES
Figure 2-1: Site Vicinity...................................................................................................................... 2
Figure 2-2: Recent Lava Flows near Wao Kele o Puna ...................................................................... 7
Figure 2-3: Zoning in the Vicinity of Wao Kele o Puna .................................................................. 10
Figure 2-4: Opportunities and Constraints ........................................................................................ 12
Figure 3-1: Opportunity Identification and Assessment Process ...................................................... 13
Figure 4-1: Kumu hula willingness to pay for hula lei material with decreasing chance of successful
forest gathering .............................................................................................................. 35
Figure 4-2: Aerial Imagery of Strawberry Guava in Wao Kele o Puna ............................................ 47
APPENDICES
Appendix A
Appendix B
Appendix C
Appendix D
Opportunities Screening Spreadsheet
Individuals Contacted
Cost Analysis Table
Agroforestry Analysis Plant List
Wao Kele o Puna Revenue Opportunities
Page iii
Acronyms & Abbreviations
ACRONYMS & ABBREVIATIONS
%
AD
AF/RF
AGB
App
BF/acre
BLNR
CDUP
CO2
DBEDT
DLNR
DOFAW
DOT
EA
ESA
FTE
GET
GHG
GPS
HCC
HTBG
KMC
LIDAR
LLC
LUPAG
MOA
NAR
OHA
SFO
tCO2e
USDA
USGS
Percent
Avoided Deforestation
Afforestation/Reforestation
Above-Ground Biomass
(Phone) Application
Board Feet per acre (measure of timber production)
State of Hawaiÿi Board of Land and Natural Resources
Conservation District Use Permit
Carbon Dioxide
State of Hawaiÿi Department of Business, Economic Development and
Tourism
State of Hawaiÿi Department of Land and Natural Resources
Division of Forestry and Wildlife
State of Hawaiÿi Department of Transportation
Environmental Assessment
Endangered Species Act
Full-time Employee
General Excise Tax
Greenhouse Gases
Global Positioning System
Hawaiÿi Conservation Conference
Hawaiÿi Tropical Botanical Garden
Kïlauea Military Camp
Light Detection and Ranging
Limited Liability Company
Hawaiÿi County Land Use Pattern Allocation Guide
Memorandum of Agreement
State Natural Area Reserve
Office of Hawaiian Affairs
San Francisco International Airport
Ton of Carbon Dioxide Equivalent
United States Department of Agriculture
United States Geological Survey
Wao Kele o Puna Revenue Opportunities
Page iv
Executive Summary
EXECUTIVE SUMMARY
The Wao Kele o Puna rainforest is currently under joint management between the Office
of Hawaiian Affairs (OHA) and the Department of Land and Natural Resources (DLNR),
Division of Forestry and Wildlife (DOFAW) until OHA is ready to fully take over
management of the forest. The purpose of this study is to help inform OHA’s forest
management planning decisions by identifying and assessing the feasibility of
appropriate income/revenue generating opportunities for Wao Kele o Puna.
Site conditions offer a number of opportunities and constraints for potential economic
activities. Opportunities include: the rich biodiversity of the forest and its value as a seed
source, native habitat, and cultural gathering place; rich Hawaiian culture in South Puna;
and the former geothermal well site that is already cleared of vegetation and could be
used for siting of facilities. Constraints include: regulatory constraints of the State Land
Use Conservation District “protective” subzone and the DLNR Forest Reserve
designation; natural hazards at the property including lava flows, cracks, and rough
terrain; remoteness of the site, with most of it inaccessible by land; and invasive species
that are a major threat to the native forest and very costly to control.
Ten potential income/revenue opportunities were selected and analyzed for feasibility at
Wao Kele o Puna:
1. Hawaiian Culture and Wao Kele o Puna Phone Applications;
2. Individual Donor-based Programs;
3. Native and Hawaiian Cultural Plants Cultivation;
4. Sustainable Forestry;
5. Invasive Species Extraction;
6. Overnight Retreat Destination;
7. Ecotourism and Volun-tourism;
8. Wao Kele o Puna Makana / Virtual Shop;
9. Movies and Documentaries;
10. Niche Carbon Credits.
The results of the feasibility analysis are summarized in Table ES-1 below. The concepts
are listed in order of complexity and potential time involved in major land use changes,
permitting, and implementation. Risk in this table is defined as the potential for net
revenues to be less than estimated due to variables that cannot be controlled (e.g.
fluctuating demand, unreliable knowledge base, environmental conditions, etc.)
Wao Kele o Puna Revenue Opportunities
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Executive Summary
Table ES-1: Summary of Feasibility Analysis
Name
Time for
Land Use
changes &
permits
None
Time
period
before
revenue
6 months
None
1 year
None
1 year
Makana – virtual shop
None
1 year
Makana - booth at
market
Invasive Species
Extraction (400 ac)
Eco-Tourism & VolunTourism
Overnight Retreat
(40-70% occupancy)
Plant Cultivation nursery (1 ac)
Plant Cultivation –
agroforestry (10 ac)
Sustainable Forestry
(100 ac)
None
1 year
None
N/A
2 years
4 years
5-9 years
6-11 years
5-9 years
6-10 years
5-10 years
7-14 years
5-10 years
30-35 years
7 years
17 years
Movie Productions
(assumes 10 films/yr)
Individual Donor-based
Program
Phone App
“Niche” Carbon Credits
(per 50 ac managed)
Initial
Capital
Cost
Annual
Operating
Cost
Gross Annual
Revenue
potential
$15,000$25,000
$58,500$92,100
$58,600$92,200
$40,500$82,000
$28,000$77,000
$30,000$50,000
$255,000$410,000
$1,590,000$2,340,000
$920,000$1,120,000
$1,420,000$1,790,000
$1,280,000$1,870,000
$10,000$15,000
$31,700$51,700
$32,700$50,700
$143,000$195,000
$42,000$80,000
$300,000
at year 52
$265,000$450,000
$235,000$385,000
$242,000$385,000
$427,000$590,000
$130,000$180,000
$10,500 annually
High
$60,000 at year 51
Moderate
$12,500
1st year of release
$115,200 at year 5
High
Moderate
$20,800 at year 5
Moderate
$2,365,000$3,040,0003
$132,500$162,5004
Risk
No revenue
N/A
$164,000 at year 5
Moderate
$175,200-$306,600
Moderate
$350,000-$500,000
Moderate
(best case)
$600,000-$800,000
$4,550,000$14,000,000
One-time harvest
$21,300 after
establishment per
50 ac managed
High
High
High
Notes:
1
Estimated annual revenue after 4 years of operation
2
Some management costs are cumulative with additional acreage added over time, cost estimate
represents operation cost at year 5 assuming an extraction rate of 100 acres/year.
3
Cost includes studies, permits and infrastructure needed to establish a carbon credit project, as
well as strawberry guava removal and native forest restoration on 50 acres
3
Cost includes staffing, maintenance and other annual costs for 50 acres
Based on the results of the feasibility analysis, the following conclusions can be made
regarding the potential feasibility of the various alternatives:
1. None of the concepts analyzed offer an easy solution for providing potential income
to help support forest management activities at Wao Kele o Puna. Generally, potential
revenues from these concepts would be relatively low and operating costs would have
to be kept low to make a profit. Additionally, several concepts are considered risky
due to a variety of reasons including unreliable and emerging markets, environmental
hazards, lack of local knowledge, etc.
Wao Kele o Puna Revenue Opportunities
Page vi
Executive Summary
2. A donor-based conservation program would be a good way to develop awareness
early about Wao Kele o Puna and to generate limited annual revenue. It could also
benefit from the implementation of some other concepts, such as phone applications,
film productions, or ecotourism, that would help develop name recognition for Wao
Kele o Puna.
3. Several economic activities that could be conducted onsite, including plant cultivation
and forestry, are not allowable uses in the State Conservation District "protective"
subzone. Consequently, subzone designation changes or variances, and Conservation
District use permits will be required for those opportunities. Additionally, designation
of the property as "State Forest Reserve" restricts the potential uses of the property; at
a minimum, OHA will need approval from the Board of Land and Natural Resources
for any commercial activities in the Forest Reserve.
4. Most of the concepts analyzed would benefit from operating under a different entity
than a government agency. Several concepts would be best operated under a limited
liability company entity; the donor-based conservation program would be best
operated through a 501(c)3 non-profit organization. OHA could also consider
partnering or contracting with existing local companies and organizations, which
would minimize risks to OHA and provide potential economic benefits to local
communities.
5. Low-impact, small-scale visitor operations would likely not be economically profitable
on their own because large capital and operating costs would outweigh potential
income. However, they would benefit from being bundled with other opportunities
that would provide added value.
6. Native and Hawaiian plant cultivation concepts have the potential to generate some
revenue but would be risky for OHA to operate due to site conditions, varying
production yields, and limited market data. However, they offer unique opportunities
for partnership with knowledgeable professionals and/or the Puna community.
7. Opportunities that require removal of strawberry guava, including carbon credits and
forestry, are costly because there is no affordable way of removing and disposing of
(or reusing) strawberry guava.
8. Forestry offers the best opportunity for long-term return on investment, but it is
considered risky due to environmental conditions of the property.
At this time, there are important barriers to implementation of several potential revenuegenerating projects, including the classification of the property as State Land Use
Conservation District “protective” subzone and State DLNR Forest Reserve.
Implementation of those projects may require subzone designation changes, variances,
Conservation District use permits, and other BLNR approvals. OHA should develop a
master plan for Wao Kele o Puna, which will provide guidance to resource management
and other activities conducted on the property.
Wao Kele o Puna Revenue Opportunities
Page vii
1 - Introduction and Planning Context
1
INTRODUCTION AND PLANNING CONTEXT
The Wao Kele o Puna rainforest is a land that holds great cultural and biological
significance for Native Hawaiians and for the Island of Hawaiÿi. It is one of the few
remaining tracts of lowland rainforest in the State of Hawaiÿi and it provides many
benefits to the surrounding lands and communities of Puna, including watershed
recharge, native plant seed bank for Kïlauea Volcano, endangered species habitat, and
forest resources for subsistence gathering and cultural practices. It is also a sacred place
for Native Hawaiians, part of the home of the Goddess Pele.
In 1985, the State’s Board of Land and Natural Resources (BLNR) conducted a land swap
with the Estate of James Campbell, exchanging the Wao Kele o Puna Natural Area Reserve
for the Kahaualeÿa Forest Reserve, with the intent to allow geothermal development at
Wao Kele o Puna. The proposed development of geothermal power at Wao Kele o Puna
was met with considerable community opposition led by the Pele Defense Fund, which
lasted for several years. In 1994, the geothermal venture project was abandoned.
In 2002, the Campbell Estate announced its intent to sell Wao Kele o Puna. In 2006,
through a joint effort of the Pele Defense Fund, the Trust for Public Land, the Department
of Land and Natural Resources, and the Office of Hawaiian Affairs (OHA), with funding
support from the Forest Legacy Program, the property was acquired by OHA.
The property is currently under joint management between OHA and the Department of
Land and Natural Resources (DLNR), Division of Forestry and Wildlife (DOFAW) until
OHA is ready to fully take over management of the forest. The purpose of this study is to
help inform OHA’s forest management planning decisions by identifying and assessing
the feasibility of possible income/revenue generating opportunities that would be
appropriate at Wao Kele o Puna.
Wao Kele o Puna Revenue Opportunities
Page 1
2 - Site Conditions
2
SITE CONDITIONS
This chapter describes the regional setting and site conditions that will affect the
feasibility of various potential opportunities at Wao Kele o Puna, including physical,
environmental, historical, social, and regulatory factors.
2.1
Site Description
Wao Kele o Puna consists of 25,856 acres of native lowland ÿÖhiÿa-fern rainforest on the
eastern flank of Kïlauea Volcano in the District of Puna, Island of Hawaiÿi. The property is
made up of two parcels, Tax Map Key 1-2-010:002 and 1-2-010:003 (Figure 2-1).
Elevations at the property range from approximately 1,350 feet above mean sea level
(amsl) in the southeast part of the site to 2,260 feet amsl in the northwest corner of the site.
Wao Kele o Puna is bounded to the west by the DLNR’s Kahaualeÿa Natural Area Reserve
(NAR), to the north by the Keaÿau subdivision, to the east by the Kaÿohe Homesteads and
an undeveloped property owned by the Edmund Olson Trust, and to the south by the
Upper Kaimü, Kaimü-Mäkena, and Küpahua Homesteads.
Figure 2-1: Site Vicinity
Wao Kele o Puna Revenue Opportunities
Page 2
2 - Site Conditions
Access to Wao Kele o Puna is very limited. The road that is currently used to access the
forest traverses the property owned by the Edmund Olson Trust (TMK 1-2-010:001); OHA
has a formal easement for access to Wao Kele o Puna through the Edmund Olson Trust
property (Figure 2-1). There is no other road into Wao Kele o Puna at this time. DOFAW
has been working on establishing an agreement with the Keaÿau subdivision association
(Kopua) that would allow reasonable access to the property from the north side.
Additionally, a trail accesses the property on the south side; the trail is located on private
property and can be used when requested. Helicopters have also been used to access
remote areas of the forest; due to relatively windy conditions year-round and thick forest
vegetation, helicopter access can also be limited and dangerous.
2.2
Past and Present Surrounding Communities
Historical accounts indicate that Puna had rich land resources and abundant water that
supported a thriving Hawaiian agriculture that included taro, bananas, coconuts, hala,
etc. In 1823, Reverend William Ellis journeyed through Kaÿü and Puna and described the
villages visited in Puna:
“Kaimu is pleasantly situated near the sea shore, on the S.E. side of the island, standing
on a bed of lava considerably decomposed, and covered over with a light and fertile soil. It
is adorned with plantations, groves of cocoa-nuts, and clumps of kou-trees. It has a fine
sandy beach, where canoes may land with safety; and, according to the houses numbered
to-day, contains about 725 inhabitants (Ellis 1963:196).
[W]e reached Kaau [Keaÿau], the last village in the division of Puna. It was extensive and
populous, abounding with well-cultivated plantations of taro, sweet potatoes, and sugarcane; and probably owes its fertility to a fine rapid stream of water, which, descending
from the mountains, runs through it into the sea (Ellis 1963:212).”
In the early part of the 20th Century, economic development in Puna centered at ÿÖlaÿa,
with ranching and sugar plantation, and in Pähoa, where the Pähoa Lumber Mill operated
ÿöhiÿa and koa lumber operations. Lower Puna (Kaimu to Kalapana) remained a
traditional Hawaiian subsistence area. During the 20th Century, many Hawaiians moved
away from Puna during wars and for better job opportunities elsewhere. However, in the
more recent past, Puna has seen a significant population growth rate and a resurgence of
its Native Hawaiian communities.
In the 1960s and 1970s, over 50,000 subdivision lots were created in the district, most of
them as agricultural subdivisions. These subdivisions helped spur the growth of the
district’s population from 11,751 in the 1980s to 31,335 in 2000. In the recent past, Puna
has also seen a resurgence in its Native Hawaiian population; in 2000, Native Hawaiians
made up nearly 30% of the population of Puna. According to US Census records,
unemployment rates were higher among Native Hawaiians than the district average, and
approximately 27% of Native Hawaiian families in the district were below the poverty
level in 2000.
There remains a large number of Native Hawaiians in Puna that are descended from the
first families that settled in the area. For Native Hawaiian residents in the district,
subsistence practices, including hunting, fishing and gathering, supplement their incomes
Wao Kele o Puna Revenue Opportunities
Page 3
2 - Site Conditions
and also help perpetuate traditions that have been passed down through generations of
Puna Hawaiians (Matsuoka et al., 1996). Resources gathered in the forest include pigs and
goats, as well as plants such as maile, ÿieÿie, ÿöhiÿa, mämaki, koÿokoÿolau, hala, and noni for
cultural and medicinal purposes.
2.3
Natural and Cultural Resources
2.3.1
Geology and Hydrology
In general, the geology at Wao Kele o Puna is dominated by young pähoehoe basalt flows
ranging in age from 3,000 to less than 10 years old. Some ÿaÿä flows and spatter deposits
are also present. The youngest basalt flows are located in the southern and western
portions of the property and are part of Kïlauea Volcano’s East Rift Zone. A large area of
1,500- to 3,000-year old lava dominates the northern half of the property. It is surrounded
by an extensive area of approximately 500-year-old basalt that is part of the ÿAiläÿau flow
that covered nearly the entire flank of Kïlauea north of the East Rift Zone. The ÿAiläÿau
basalt flow is rich in lava tubes, some of which are amongst the longest recorded in the
world. Lava flows in the southern portion of Wao Kele o Puna range in age from 400 to
less than 10 years old. The active Puÿu Oÿo vent is located approximately 2.5 miles west of
Wao Kele o Puna, near the boundary between the Hawaiÿi Volcanoes National Park and
the State’s Kahaualeÿa Natural Area Reserve. The latest eruption that impacted Wao Kele
o Puna occurred in 2007 and affected over 1,500 acres on the western part of the property.
Annual rainfall at Wao Kele o Puna ranges from 110 inches in the southern part of the
property to 150 inches in the north. Despite these considerable rainfall amounts, there are
no surface streams on the property; rainfall is absorbed in the porous basalt flows and
lava tubes. Rains feed the Pähoa aquifer, as well as many inland and shoreline fresh-water
springs. The dikes of the Kïlauea East Rift Zone act as a confining layer that separates the
Pähoa aquifer beneath the north side of the property from the smaller Kalapana aquifer to
the south.
2.3.2
Forest Structure, Flora, and Fauna
The Wao Kele o Puna forest represents one of the few remaining tracts of native lowland
rainforest in the State of Hawaiÿi. The native forest here is dominated by ÿöhiÿa and ferns.
The forest acts as a seed source for the surrounding areas of Kïlauea Volcano that
regularly get covered with lava. This seed source is key to the regrowth of vegetation on
the slopes of the volcano. The forest also serves as a safe passage way for birds utilizing
both shoreline and upslope regions.
A vegetation study was conducted in 2008 using hyperspectral and Light Detection and
Ranging (LIDAR) aerial imagery collected in 2007 and field surveys in limited locations.
The survey indicated that across Wao Kele o Puna, ÿöhiÿa lehua (Metrosideros polymorpha)
was the dominant tree species, and the only one growing taller than 20 meters (60 feet).
Other native tree species included kopiko (Psychotria hawaiiensis), lama (Diospyros
sandwicensis), and kawau (Ilex anamola). In the 5 to 10-meter canopy range, there was a
large variety of native plants, including hapuÿu (tree ferns), and some rare native tree
species. The survey also indicated that the forest understory was often dominated by
invasive shrubs, except when there was thick ÿuluhe (Dicranopteris linearis) cover.
Wao Kele o Puna Revenue Opportunities
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2 - Site Conditions
Endangered plant species recorded at the property during the survey include haha (Cyanea
platyphylla) and maÿo hau hele (Hibiscus brackenridgii); other endangered native plants may
be present. Native birds that have been spotted at Wao Kele o Puna include the ÿiÿiwi
(Vestiaria coccinea), ÿelepaio (Chasiempis sandwichensis ridgwayi), ÿamakihi (Hemignathus
virens), ÿapapane (Himatione sanguinea), and ÿömaÿo (Myadestes obscurus). Additionally, the
endemic happy-faced spider (Theridion grallator) and the ‘Öpe‘ape‘a (Hawaiian hoary bat,
Lasiurus cinereus semotus) was also found in the forest.
Forest plant species diversity at Wao Kele o Puna appears to be well correlated with
substrate age and type. Newer basalt flows are associated with lower species diversity,
and are characterized by the dominance of ÿöhiÿa, ÿuluhe, and häpuÿu pulu. Older flows had
higher ÿöhiÿa canopy and greater native species diversity; and older flows with rougher
terrain (ÿaÿä flows instead of pähoehoe) had a large number of native tree species in low
abundance. Strawberry guava was also present in relatively high abundance in rougher
terrain areas.
The 2008 study indicated that approximately 5,000 acres of the Wao Kele o Puna forest are
infested with strawberry guava (Psidium cattleianum). Areas with the thickest strawberry
guava infestations were primarily in the central part of the property (west of the former
geothermal well head site) and along the southern border. Other invasive species of
concern identified onsite included Asian melastome (Melastoma candidum), miconia
(Miconia calvescens), Koster’s curse (Clidemia hirta), and albizia (Falcataria moluccana).
Although invasive species are generally more abundant in more accessible areas near
access routes and boundaries, the presence of a large patch of thick strawberry guava
infestation in the middle of Wao Kele o Puna suggests that the pig population in the forest
is likely a significant vector for strawberry guava infestations.
2.3.3
Archaeological and Cultural Resources
Several limited archaeological inventory surveys have been conducted at Wao Kele o
Puna, particularly in relation with geothermal development that was previously proposed
at the site. Due to the rugged terrain and thick vegetation, these surveys only cover very
limited portion of Wao Kele o Puna. Surveys generally indicated that archaeological sites
on the ground surface appeared to be more numerous in the southern part of the
property, closest to southern shore of Puna (Sweeney & Burtchard, 1996). The surveys
also indicated that there are numerous lava tubes beneath the ground surface that are rich
in Hawaiian archaeological sites, including burials (McEldowney & Stone, 1991). Some of
these lava tube systems extend for thousands of feet beneath the property.
Surface sites recorded in Wao Kele o Puna included mounds on the rim of Heiheiahulu
crater in the southeast corner of the property; a kïpuka at Puÿu Kauka in the southwest
portion of the site with plantings including banana, kukui, kopiko, kï, and ÿie ÿie; and
prehistoric and historic trails (Sweeney & Burtchard, 1996). Kï and ÿawapuhi were also
found during a reconnaissance survey near the former well site, indicating the potential
presence of plantings in other areas of the forest.
Surveys of lava tubes beneath Wao Kele o Puna have also been very limited. McEldowney
and Stone conducted a limited survey of the Pähoa lava tubes and found that at least one
lava tube extended at least 4.2 miles beneath the eastern portion of Wao Kele o Puna. One
Wao Kele o Puna Revenue Opportunities
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2 - Site Conditions
of the tubes had many Hawaiian artifacts and indications of habitation, as well as several
burials, and another tube was found to have many burials. Upper Kaimü Cave also
extends beneath Wao Kele o Puna up to Heiheiahulu but has not been surveyed. It is
likely that other lava tubes are present beneath Wao Kele o Puna and hold Hawaiian
artifacts. The lava tubes beneath Wao Kele o Puna are also important to protect because
they possess very unique and diverse native invertebrate populations, some of which are
not found anywhere else. The tree roots of the native forest above the lava tubes provide
the essential organic nutrients sustaining these subterranean ecosystems.
2.4
Hazards
Site conditions at Wao Kele o Puna also include significant hazards. These hazards
increase the difficulty of forest management and can constrain potential revenue
generation opportunities.
2.4.1
Rough Terrain and Cracks
Immediate hazards for day-to-day management at Wao Kele o Puna include large cracks
in the ground and rough terrain. Large cracks occur throughout the Wao Kele o Puna
property, and especially along the East Rift Zone. These cracks can be several thousands
of feet long and hundreds of feet deep. With the thick rainforest vegetation masking the
cracks, they present a very serious fall and injury danger. The U.S. Geological Survey
(USGS) has mapped the largest cracks in the area but a survey is needed to identify
smaller ones. In addition, hiking conditions in the forest are difficult with thick vegetation
and rough terrain, thus making management activities more hazardous. Areas with dense
strawberry guava infestations can be impenetrable.
2.4.2
Volcanic Eruptions and Earthquakes
Wao Kele o Puna is located less than 3 miles from the active Puÿu Öÿö vent and the
southern portions of the property have repeatedly been affected by lava flows during the
20th Century, as recently as 2007 (Figure 2-2).
Earthquakes are also frequent in the vicinity of Kïlauea Volcano and can have large
magnitudes. The most damaging earthquake in the recent past near Wao Kele o Puna was
a 7.2 magnitude earthquake that struck Kalapana in 1975.
2.4.3
Vog
Recent changes in volcanic activity at Halemaÿumaÿu Crater at the summit of Kïlauea have
increased the emission of sulfur dioxide and other gases and particles from the crater;
consequently, vog has become a more significant concern on the Island of Hawai‘i in the
past few years. During normal trade wind weather, the wind blows the Kïlauea vog away
from Puna; however, during light wind conditions, thick vog can blanket the district.
Aerosols in vog are acidic and can cause health hazards, including breathing difficulties,
sore throat and eyes, and headaches, as well as reduced visibility.
2.4.4
Wind
For helicopter landing purposes, strong trade winds on the slopes of Kïlauea also
represent a hazard.
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2 - Site Conditions
Figure 2-2: Recent Lava Flows near Wao Kele o Puna
WAO KELE O
PUNA
Map courtesy of USGS shows extent of Puÿu Oÿo 2007-2010 lava flow, as well as recent flow areas
in the vicinity of Wao Kele o Puna
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2 - Site Conditions
2.5
Regulatory Requirements
There are several land use and regulatory requirements in place at this site that affect the
types of activities that can be conducted at Wao Kele o Puna. These requirements are
summarized in Table 2-1 below.
Table 2-1: Regulatory Requirements
LAW OR GUIDANCE
DOCUMENT
Forest Legacy
Program
Implementation
Guidelines
Endangered Species
Act(ESA)
State Land Use
Districts (HRS §205-2)
Conservation District
Rules (HAR §13-5)
GOVT
LEVEL
Federal
Federal
State
REQUIREMENTS AND PROHIBITED USES
Excludes the following uses: “activities that result in extensive surface
disturbance such as residential subdivisions, commercial
development, and mining.”
Regulates activities that may impact Federally-listed threatened and
endangered plant and animal species, as well as their habitats. The law
prohibits any action that causes a “taking” of any threatened or
endangered species. A “taking” is defined as harassing, harming,
pursuing, hunting, wounding, killing, trapping, capturing, or
collecting.
Wao Kele o Puna is in the Conservation District’s “Protective”
Subzone (the Conservation District’s most restrictive subzone). The
objective of this subzone is to protect valuable resources in designated
areas such as restricted watersheds, marine, plant, and wildlife
sanctuaries, significant historic, archaeological, geological, and
volcanological features and sites, and other designated unique areas.
Limits land uses in the Protective Subzone to: basic
research/education/resource evaluation data collection, kuleana land
uses (if kuleana parcels are present), removal of noxious plants without
significant ground disturbance, planting of native plants, publicpurpose uses (utilities and communication systems, recreational
facilities), plant and wildlife sanctuaries, informational/safety signs
(less than 12 square feet in size), maintenance and replacement of
existing structures, construction of structures accessory to existing
facilities, tree removal.
A Conservation District Use Permit (CDUP) is required for most
activities conducted in the Protective Subzone; an Environmental
Assessment or Environmental Impact Statement may be required in
conjunction with a CDUP.
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2 - Site Conditions
Table 2-1 (continued): Regulatory Requirements
LAW OR GUIDANCE
DOCUMENT
State Designation &
Regulation of
Geothermal Resource
Subzones (HRS 205-2;
HAR §13-184)
Civil Suit No. 89-089
Pele Defense Fund vs.
Estate of James
Campbell
June 2006
Memorandum of
Agreement (MOA)
between DLNR and
OHA
DLNR Rules
regulating activities in
Forest Reserves (HAR
§13-104)
Hawai‘i County Land
Use Pattern Allocation
Guide (LUPAG)
Hawaiÿi County
Zoning
GOVT
LEVEL
State
REQUIREMENTS AND PROHIBITED USES
Wao Kele o Puna is currently designated as Geothermal Resource
Subzone, which allows the property to be used for geothermal
development activities. DOFAW and OHA are currently working on
removing Wao Kele o Puna from this subzone as it is incompatible
with Forest Legacy Program Guidelines and with the cultural and
environmental significance of the property.
State
Ruling in favor of plaintiff Pele Defense Fund indicated that Wao Kele
o Puna landowner was enjoined from excluding “Hawaiian
subsistence or cultural practitioners who are descendants of the
inhabitants of the Hawaiian Islands prior to 1778 [including those of
other moku outside of Puna], persons accompanying them, or related
persons, from entering the undeveloped portions of the land and
using the developed portions for reasonable access to perform
customarily and traditionally exercised subsistence and cultural
practices.”
State
Prohibited forest uses stated in the DLNR-OHA MOA: Mineral
extraction, grading and excavation (except for public access, forest
management, or emergency purposes), subdividing land, commercial
and industrial uses inconsistent with Forest Legacy Program
Guidelines, signage (except for management purposes, to control
unauthorized or hazardous activities, or to acknowledge donors for
the purchase of the property).
State
Wao Kele o Puna has been designated as a Forest Reserve for the
purpose of establishing management rules for the forest. Forest
Reserve rules prohibit the following activities:
.1. to remove, kill, or injure any form of plant or animal life except as
authorized by BLNR, representative or permit;
.2. to remove, damage, or disturb natural features except as authorized
by BLNR or representative;
.3. to remove, damage or disturb historic or prehistoric remains;
.4. to remove, damage, or disturb signs or structures;
.5. to do construction or improvements except as authorized by BLNR;
.6. to solicit or sell any merchandise or services except with written
authorization by BLNR;
.7. to introduce any plant or animal except as approved by BLNR;
Reserve rules also regulate littering and sanitation, fire use, hunting
and fishing, firearms and weapons, vehicles and transportation,
animals, audio devices, and explosives and fireworks.
County
The LUPAG map identifies the Wao Kele o Puna area as Conservation.
The Hawai‘i County General Plan defines Conservation Areas as
forest and water reserves, natural and scientific preserves, open, lands
within the State Land Use Conservation District.
County
Forest Reserve – no county zoning designation or rules apply.
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2 - Site Conditions
Hawaiÿi County Zoning in the vicinity of Wao Kele o Puna is largely in the agricultural
zone, with a few pockets of small rural development zones. Agricultural zoning around
the property varies from 1- to 20-acre lot-size zones. Kahaualeÿa Natural Area Reserve,
adjacent to Wao Kele o Puna, is still designated as A-20 zone (Agricultural, 20-acre lot
size).
Figure 2-3: Zoning in the Vicinity of Wao Kele o Puna
Zoning Designations:
A: Agricultural
CV: Village Commercial
FR: Forest Reserve
RA: Residential and Agricultural
RM: Multiple-Family Residential
RS: Single-Family Residential
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2 - Site Conditions
2.6
Summary of Opportunities and Constraints
The site conditions at Wao Kele o Puna provide opportunities and constraints that will
affect the feasibility of any potential income-generating activities onsite. A summary of
the property’s major opportunities and constraints are described below and are presented
on Figure 2-4.
2.6.1
Wao Kele o Puna Opportunities
• (Environment) Wao Kele o Puna is one of the last remaining stands of lowland
rainforest in Hawaiÿi and has high native plant biodiversity, particularly in healthy
native forest stands. The native forest is an important seed source;
• (Environment) Wao Kele o Puna has a mild climate and relatively high rainfall
ranging from 110 to 150 inches annually; the forest acts as an area of recharge for the
Pähoa aquifer;
• (Environment) Wao Kele o Puna provides habitat to native birds;
• (Culture) South Puna has a rich Hawaiian history and is considered a kïpuka of
Hawaiian culture;
• (Culture) There are many culturally important plants at Wao Kele o Puna;
• (Access) There is one access road into the property and a cleared area at the end of
the road of about 5 acres (former geothermal development site), which could be used
for siting of facilities;
2.6.2
Wao Kele o Puna Constraints
• (Regulatory) Wao Kele o Puna is within the Conservation District’s Protective
subzone, which is the most limiting of subzones in terms of permitted activities;
• (Regulatory) Wao Kele o Puna is within the DLNR’s Forest Reserve. Many
commercial activities are not permitted in Forest Reserves.
• (Access) A large part of the property is too remote and rugged to be accessed by land.
Figure 2-4 shows the area of the property located within 1.5 miles of the existing legal
access road, which might be considered more accessible;
• (Hazards) Wao Kele o Puna is located near Puÿu Öÿö vent and lava flows are a
significant hazard at the property. The latest lava flow onto the property was in 2007;
• (Hazards) There are many cracks and faults along the Kïlauea East Rift Zone, which
are a significant fall hazard for people accessing the forest area;
• (Hazards) Vog could be a breathing hazard at Wao Kele o Puna during Kona winds;
when trade winds are blowing, vog gets blown away from Puna;
• (Hazards) Most of the Wao Kele o Puna rainforest area has rough terrain, which is a
potential hazard for people accessing it;
• (Historic Sites) Two lava tubes have been surveyed beneath the property and
displayed many Hawaiian artifacts, house sites, and burials. Other lava tubes are also
likely to be present beneath the property; the sites and artifacts found within those
tubes need to be protected;
• (Environment) Non-native invasive species are a major threat to the forest’s
ecosystem and biodiversity. Strawberry guava is rapidly invading various parts of
the property. Wild pigs are also a major concern as they disrupt native forest
ecosystems and spread strawberry guava seeds.
Wao Kele o Puna Revenue Opportunities
Page 11
County of
Hawaiÿi
State of
Hawaiÿi
Legend
Patches dominated by
Strawberry Guava
Wao Kele O Puna Property
Main Access
Surveyed Caves
Managed
miconia
Surveyed Archaeological Sites
Viewplanes
Major Roads
Pahoa Middle
Lava Tube System
High Diversity
Native Forest
Invasive spp.
Dominated
Strawberry Guava
Other Roads
Pahoa Southern
Lava Tube System
Invasive spp.
Dominated - mixed
Area within 1.5 mi of access road
Invasive spp.
Dominated
Strawberry Guava
Cracks
Faults
High Lava Hazard
Managed Miconia
Invasive spp.
Dominated
Strawberry Guava
State of
Hawaiÿi
Invasive Species Dominated
High Diversity Native Forest
Recent
Lava Flow Area
Olson Parcel
Government Owned Lands
County of Hawaii
State
Federal
Invasive spp.
Dominated
Strawberry Guava
State of
Hawaiÿi
Federal
Wao Kele o Puna
OPPORTUNITIES AND CONSTRAINTS
For: Office
of Hawaiian Affairs
Figure
2-4: Opportunities
and Constraints
By: Townscape, Inc.
Date: June 2011
Olson
Property
0
0
5,000
0.5
1
10,000
Feet
2
Miles
Page 12
3 - Potential Sustainable Income/Revenue Opportunities
3
3.1
POTENTIAL SUSTAINABLE INCOME/REVENUE OPPORTUNITIES
Income/Revenue Opportunities Identification Process
Possible income generating opportunities for Wao Kele o Puna were identified through
brainstorming meetings with OHA and DLNR, and through online research. A list of all
possible opportunities that could meet regulatory requirements was developed and
screened based on whether it was an opportunity specific to Wao Kele o Puna, whether it
was appropriate based on the criteria described above, and whether it was likely to be
feasible. A final list of 10 opportunities was developed through this process.
The diagram below outlines the process that was used to 1) identify potential
income/revenue opportunities for Wao Kele o Puna, 2) screen opportunities to identify
those considered appropriate for this forest, and 3) assess the economic feasibility of
potential opportunities.
Figure 3-1: Opportunity Identification and Assessment Process
All potential opportunities meeting
regulatory requirements
Background research
Brainstorming with OHA & DLNR
Is it an income/revenue-generating
opportunity specific to Wao Kele o Puna?
No
Yes
Is the opportunity appropriate, based on the
criteria set forth in the guidance documents?
No
Yes
GUIDANCE
DOCUMENTS
• OHA Strategic Plan
• OHA Real Estate
Strategy
• OHA-DLNR MOA
• Forest Legacy
Guidelines
Is the opportunity likely to be feasible
based on a preliminary assessment of
expected costs and returns?
No
Yes
“OTHER”
INCOME/REVENUE
GENERATING
OPPORTUNITIES
• Short summary
description of
opportunity
• Reason for elimination
•
•
•
•
•
•
MARKET AND FEASIBILITY ANALYSIS
(up to 10 opportunities)
Feasibility Analysis
Industry and market analysis/assessment
Five (5) year cost/revenue budget projections
Capital cost budget
Required infrastructure
Required permits, if needed
Wao Kele o Puna Revenue Opportunities
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3 - Potential Sustainable Income/Revenue Opportunities
3.2
Screening Criteria
In order to screen opportunities that would be most appropriate for Wao Kele o Puna, a
list of criteria was developed based on the following guidance documents:
• OHA Strategic Plan
• OHA Real Estate Strategy
• OHA – DLNR Memorandum of Agreement
• Forest Legacy Program Guidelines
• Findings of fact and Conclusions of Law in Pele Defense Fund vs. Estate of James
Campbell
The list of criteria is presented in Table 3-1 below; the criteria screening spreadsheet is
included in Appendix A. Opportunities with the lowest scores based on the screening
process were removed from the list of opportunities for further analysis.
Table 3-1: Opportunities Screening Criteria
SCREENING CRITERIA
SOURCE
OHA Strategic Plan
DLNR-OHA MOA
OHA Real Estate Strategy
Forest Legacy Program Guidelines
1
Protection and enhancement of native plant and wildlife
habitat
2
Respect of the sacred qualities and Hawaiian cultural
legacy of the property
OHA Strategic Plan
OHA Real Estate Strategy
PDF vs. Campbell
3
Sustainable use of the native resources of the property
OHA Strategic Plan
DLNR-OHA MOA
Forest Legacy Program Guidelines
4
Access for traditional and customary practices
OHA Strategic Plan
OHA-DLNR MOA
PDF vs. Campbell
5
Benefit to the self-sufficiency and well-being of Native
Hawaiian Communities of Moku o Keawe
OHA Strategic Plan
OHA Real Estate Strategy
6
Education, advocacy, and collaborative development
value
OHA Strategic Plan
OHA Real Estate Strategy
7
Protection and enhancement of the natural, scenic and
open-space nature of the property
DLNR-OHA MOA
Forest Legacy Program Guidelines
8
Benefit to all people with a connection to Hawaiÿi:
indirect values
OHA Real Estate Strategy
9
Protection of important recreational resources, riparian
areas, and other ecosystem values
Forest Legacy Program Guidelines
(1)
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3 - Potential Sustainable Income/Revenue Opportunities
3.3
“Top Ten” Opportunities for Feasibility and Market Analysis
Opportunities that were discussed and met the selection criteria are listed in Table 3-2
below. These opportunities are further described and analyzed in Chapter 4.
Table 3-2: Opportunities for Feasibility and Market Analysis
OPPORTUNITIES
1
Hawaiian Culture and Wao Kele o Puna
Phone Applications
NOTES
E.g. forest virtual tour, Hawaiian lunar calendar,
forest management game, native plants
identification
2
Makana / Virtual Shop:
Percentage of sales from Wao Kele o Puna inspired
book(s), children's books, artisan products, art,
forest products on website and at an offsite shop
location (e.g. at Makuÿu Market). To be considered
in conjunction with ecotourism/cultural tourism
3
Individual Donor-based Programs
E.g.: "Friends of Wao Kele o Puna", "Adopt a tree",
"Adopt a forest"
4
Native and Hawaiian cultural plant
cultivation
5
Invasive species extraction
6
Sustainable forestry
7
Overnight retreat destination
Retreat facilities with overnight stay
accommodations.
8
Eco-tourism and Volun-tourism
Tours , e.g. hiking, bird watching, volunteering
tours, etc.
9
Movies and documentaries
Short-term lease of portions of the property for
movie and documentary sets
"Niche" carbon credits
Carbon credits for restoration of native forest in
Wao Kele o Puna – “niche” credits consider other
ecosystem values in addition to carbon
sequestration.
10
Wao Kele o Puna Revenue Opportunities
Non-timber forest products including: medicinal
plants, culturally important plants, ornamentals,
plants for seed. Market analysis to identify plants
with highest market value.
Strawberry guava wood - as biofuel, biochar,
timber, wood crafts, chips. Market analysis to
identify most cost-effective use of extracted
strawberry guava wood.
Need to consider potential native trees or nonnative non-invasive trees that would be marketable
and could be sustainably harvested at Wao Kele o
Puna.
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3 - Potential Sustainable Income/Revenue Opportunities
3.4
Opportunities not included in Feasibility and Market Analysis
Opportunities that were discussed but will not be included in the Feasibility and Market
Analysis are listed in Table 3-3 below, as well as the reason why they were excluded from
further analysis.
Table 3-3: Opportunities not included in Feasibility & Market Analysis
OPPORTUNITY
Web-based Literature Income
Website
CONCEPT DESCRIPTION
SELECTION DECISION & REASON
A website would be developed to help
provide visibility for activities and products
from Wao Kele o Puna, and to help generate
support for the conservation of the forest.
Website-specific income: ads and Google ads.
Website will be a key marketing and branding
mechanism for the site that will be developed
regardless of feasibility analysis. Potential issues
with the sources of Ads and Google ads on the
website that may not be appropriate for OHA
image. Web marketing for other opportunities
(e.g. ecotourism, art, etc.) to be included in the
assessment for those opportunities.
Foundation/non-profit/Government based Income
A marketing campaign would be developed
to seek donations for the development of an
endowment fund that could be used for
Endowment Fund ongoing forest conservation operations. The
size of the endowment fund should be scaled
to the management needs for Wao Kele o
Puna.
Not a profit generator. To be considered as a
mechanism for ongoing forest conservation
funding based on annual funding needs.
Forest restoration,
sustainable
infrastructure
Grants
Seek grant funding from private foundations
and Federal Government for the support of
forest restoration and endangered species
protection actions
Not a profit generator. To be considered as a
mechanism for ongoing forest conservation
funding based on annual funding needs.
Geothermal
Royalties
10% of geothermal development profits go to
State and County; 20% of which is distributed
to OHA
Not subject to feasibility analysis; geothermal
development cannot be conducted onsite.
Native Non-Timber Forest Products
Pharmaceuticals
Lease access and collection rights to
biopharmaceutical companies for Research
and Development purposes.
Wao Kele o Puna Revenue Opportunities
Did not meet the screening criteria. Potential
concerns include limited access in leased areas,
negative impacts on subsistence gatherers.
Page 16
3 - Potential Sustainable Income/Revenue Opportunities
Table 3-3 (continued): Opportunities not included in Feasibility & Market Analysis
OPPORTUNITY
CONCEPT DESCRIPTION
Non-native non-timber Forest Products
SELECTION DECISION & REASON
Growing nonnative medicinal
plants
Growing non-native medicinal plants (e.g.
ginseng) in a greenhouse offsite and sale for
medicinal purposes (natural medicine market).
Non-native invasive plants not to be introduced
in Wao Kele o Puna.
Activity conducted offsite with plants not
from the forest - not an activity related to
the Wao Kele o Puna forest, and therefore
outside of the scope of this study.
Non-native edible
products
(strawberry guava,
lilikoi?)
Gathering and sale of edible products collected
from non-native plants in the forest.
Did not meet the acceptability criteria.
Potential concerns include negative
impacts on subsistence gatherers.
Non-native
ornamental
products (flowers)
Growing non-native ornamental plants (e.g.
flowers) in a greenhouse offsite and sale on
ornamental plant market(s). Non-native
invasive plants not to be introduced in Wao
Kele o Puna.
Activity conducted offsite with plants not
from the forest - not an activity related to
the Wao Kele o Puna forest, outside of the
scope of this study.
Construct campsites on the property and sell
camping permits.
Did not meet the acceptability criteria.
Potential concerns include hazardous
conditions and potential liability, fire
potential, spreading of invasive species,
and community concerns over increased
traffic.
Onsite Visitor Activities
Campsites
Other Income Opportunities
Lease of research area to local and off-island
universities for research and education
purposes.
Appropriateness of asking universities
(esp. UH) to pay for conducting studies
that may help understand and better
manage ecology of the site.
Water (bottling)
from Wao Kele o
Puna springs
Lease spring area(s) to water bottling company.
Did not meet the acceptability criteria.
Potential concerns include potential
impact to the aquifer and seeps, springs,
and anchialine pools in coastal areas.
Green waste
composting
Establishment of a green waste composting
facility offsite; income from taking people's
green waste and from sale of compost. Potential
concerns: spreading of invasive spp., pathogens.
Activity conducted offsite with plants not
from the forest - not an activity related to
the Wao Kele o Puna forest, outside of the
scope of this study.
University
Research
Wao Kele o Puna Revenue Opportunities
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4 - Feasibility Analysis of “Top Ten” Opportunities
4
FEASIBILITY ANALYSIS OF “TOP TEN” OPPORTUNITIES
The feasibility analysis included 1) researching existing documentation on potential
revenue concepts and 2) interviewing industry professionals and knowledgeable
individuals. A list of persons contacted is included in Appendix B.
The following sections discuss potential approaches and feasibility for the “top ten”
opportunities selected. Each section discusses the following elements:
1. Description of the income-generating concept, including assumptions made for the
purpose of feasibility and market analysis;
2. Concept strengths, weaknesses, opportunities, and constraints. Strengths are
defined as elements that make the concept desirable for Wao Kele o Puna, e.g.
social and environmental benefits. Weaknesses make the concept less desirable at
Wao Kele o Puna, e.g. hazards and environmental impacts. Opportunities are
elements that facilitate implementation of the concept, while constraints are
barriers to implementation;
3. Market analysis for the proposed goods and services provided by the concept;
4. Estimates of capital budget for project implementation and annual operating costs;
5. Five-year cost and revenue projections; and
6. Possible partnerships, alternative approaches, and bundling options (if
appropriate).
4.1
Hawaiian Culture and Wao Kele o Puna Phone Applications
4.1.1
Concept Description
A Hawaiian Culture phone application (app) would provide users with a portable
representation of the Wao Kele o Puna area, introducing both visitors and residents to the
unique cultural and environmental assets of the area.
Mobile apps can be broadly grouped into seven different categories:
• Communication apps such as social networking, voice-over-internet protocols, and
news and information apps.
• Entertainment apps such as video games, puzzles, and leisure apps.
• Multimedia apps such as image, video, audio players/viewers.
• Education apps such as informative apps designed to increase awareness and
knowledge of a topic.
• Productivity apps such as planners/organizers, financial tools, and directory
service apps.
• Travel apps such as location guides, global positioning system (GPS) apps, and
currency/weather apps.
• Utility apps such as organizers, file or profile managing apps.
A Hawaiian culture and Wao Kele o Puna Phone app is likely to fall into the education
and/or entertainment category.
Wao Kele o Puna Revenue Opportunities
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4 - Feasibility Analysis of “Top Ten” Opportunities
In addition to app categories, mobile apps range from relatively simple software
programs to complex programs involving social networking and data gathering
capabilities.
One approach is the creation of a simple app with text, photos, and limited media/video.
There is no Internet capability available with this option. Examples of this app are a
simple, image or text focused app, minimal in size such as news website or informational
mobile app. A Hawaiian Moon Calendar app would fall into this category and could
possibly function without the need for complex development or server hosting.
The time to produce this simpler mobile app is four to eight weeks (one week for
approval by the development platform and three to seven weeks to develop the app). This
simple app was quoted by a local developer to cost around $10,000 in development cost.
Another approach is the creation of a more complex Wao Kele o Puna app that would
require a longer development period. Mobile apps in this category utilize text, pictures,
and advanced media/video options with connectivity to the Internet for advanced
sharing options such as social networking.
The time needed to produce this mobile app is over three months. Also, additional time is
often required to “debug the app” and to ensure that the app is compatible with users.
Examples of this more advanced mobile app are an educational app or one that provides
guided tours of Wao Kele o Puna. This app would cost from $20,000 to over $30,000.
With a more complex app, the user could take a “virtual tour” of the area, see beautiful
scenery, or learn more about Hawaiian culture. The app would have the ability to interact
with the user both through images as well as through sound; for example a user would be
shown a picture of a native bird as well as hear bird songs. An additional option for this
app includes an identification feature to incorporate a picture taken by a smart phone and
provide a description. Ideas for this app include a native plant identification app which
could identify and differentiate between plant photos and educate its user. Landmarks
and cultural sites could also be incorporated in a similar fashion. This mobile app would
provide dual utilization as both an education and an entertainment tool.
Once the app is established, advanced features could be included to supplement the
virtual tour or sold as additional apps providing entertainment features such as a forest
management game or puzzles utilizing Hawaiian crosswords, etc.
For the purpose of this discussion, we recommend that the app consist of a virtual tour or
virtual guide to the area. We have selected this option because in discussions with local
app developers, all agreed that an app focused on a virtual tour of the area would have
the highest chance of success. Developers judged other ideas for apps such as live-action
web cameras of the area, lunar calendar or forest management game as difficult to
succeed on their own. Local developers also indicated that the market for “games” was an
exceedingly challenging market, while a web camera function was often impractical for an
app as they often had little to show users of the app.
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4.1.1.1 Assumptions and Caveats
•
•
•
The concept of a mobile phone app was expanded to include all mobile devices
such as tablet readers, touch screen devices, as well as mobile phones in order to
increase the number of available users for this revenue concept.
The app would be developed slowly over time to include further capabilities such
as entertainment and additional educational options.
The mobile app will not require a standalone office but will be managed remotely
and therefore office space rental was not included in the cost analysis.
4.1.1.2 Strengths
•
•
•
(Start-up) The startup costs are low for an app compared to the other Wao Kele o
Puna revenue concepts examined.
(Environmental) An app would utilize the property without requiring any direct
environmental impact.
(Synergies) The app is highly compatible with other revenue generating concepts,
particularly visitor-based and donor-based concepts. For example, a mobile app
may inspire interest in a non-profit website or could be used in conjunction with a
hospitality tour or retreat.
4.1.1.3 Weaknesses
•
(Risk) In order to be successful, any app developed for Wao Kele o Puna will need
to distinguish itself as strongly tied to the forest while also standing out as unique
in the large app market. The potential success of an app is difficult to gauge ahead
of its release.
4.1.1.4 Opportunities
•
•
•
(Market) Costs and barriers to entry in this marketplace are low.
(Market) The phone app industry will see substantial growth in the next five years,
to be matched by increased competition from developers due to a maturing market
as well an increasing number of user-friendly development platforms. Mobile
phone users are expected to switch from standard mobile phones to “smart
phones” which are the primary users of mobile phone apps. Nationwide in 2010,
there were over 45 million smart phone users or 19% of the US population 1. Of
these 45 million smart phone users, over a quarter of them (25.4%) are apple users,
while 9% are Google Android phone users. According to Nielson, a national
market research firm, growth in smart phones will increase in 2011 as traditional
cell phone users switch to smart phones. By the third quarter of 2011, smart phone
users will be nearly equal in numbers to traditional phone users (49 % versus 51
%).
(Market) The variety of devices which are mobile app compatible such as tablet
readers, other tablet devices and even laptop and desktop devices, will also
1
According to a research report conducted by comscore
(http://www.comscore.com/Press_Events/Press_Releases/2010/4/comScore_Reports_February_2010_
U.S._Mobile_Subscriber_Market_Share)
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continue to increase in the future, thus increasing the scale of the market beyond
the “smart phone”.
4.1.1.5 Constraints
•
•
•
4.1.2
(Competition) Competition for mobile apps is high and is likely to increase in the
next five years. User-friendly development platforms will democratize the app
development process, and may create duplication of mobile apps and affect the
originality of a Wao Kele o Puna app.
(Competition) The app will need to be a constantly evolving product in order to
stay ahead of similar mobile apps in the industry and to continue attracting new
users.
(Revenue) The commission charged by most mobile platform developers is 30% of
the sales price and will limit profit opportunities.
Market Analysis
The Wao Kele o Puna mobile app, virtual tour would most closely resemble an
“entertainment” or “educational” mobile app. The market shares of these two categories
are 11% and 5% of the iPhone app markets, respectively. The iPhone app market has over
314,644 apps (around 210,000 paid apps with the remaining apps available free). Research
done by Distimo Research found that mobile app publishers anticipate significant growth
in 2011, nearly a third of the publishers (31%) expect revenues to increase by 100% or
more, while 17% expect revenues to increase by 50% or more.
One of the key challenges for this market is not only producing a unique product but also
creating relevance for the Wao Kele o Puna product. The mobile app will need to offer a
product that will stand out among the 314,644 apps for the iPhone alone as well as
compete in other mobile app development platforms. In this respect, name recognition of
Wao Kele o Puna will need to be created through effective marketing of the app or
through other complementary revenue-generating concepts.
A further challenge is the dynamic nature of the market and the low barriers to entry.
This ensures that competition in the app market will remain high for the foreseeable
future. An additional factor to consider is that phone app buyers tend to follow trends
and, in most instances, the popularity of an app cannot be sustained over long periods of
time. App buyers will substitute apps to try a new product or will simply follow the
“bandwagon effect,” that is, purchase an app because their peers are doing the same. A
survey conducted by Distimo Research in 2011 of Google Android, the second largest
development platform, revealed that 79% of Google Android apps have been downloaded
one hundred times or less, while only 0.1% of Google Android apps were downloaded
over 50,000 times. A final factor affecting app profitability is the fact that there are many
high quality free apps also available. These free apps further increase competition in the
marketplace for mobile apps.
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4.1.3
Capital Budget and Operating Costs
The primary advantage of mobile apps is the low start-up costs and shorter timeframes
needed to introduce this product as compared to other revenue concepts. Capital costs are
presented in Table 4-1 below and include developing a business and marketing plan,
developing app content, hiring a developer to program and create an app, and obtain the
necessary approval from platforms.
We estimated that a full-time person would need approximately six months to create
content for the mobile app including researching and documenting content for app
developers and also creating media such as video and photos. Once the content of the
app is completed, app developers reported needing an estimated six months to finish
programming, developing and “debugging” an app. It is important to note that
developers were careful to note that these times may vary by project and “debugging”
and programming could easily run over by one to two months depending on the
complexity of the app. Finally, an additional week is required to gain approval from the
development platform 2.
Development costs are unlikely to increase in the future due to increased competition by
both mobile app providers and developers. Moreover, with the introduction of “crosscompatibility” apps, mobile apps that may be used across platforms, the bargaining
power of individual suppliers, i.e. development platforms, is likely to be low in the near
future.
Once the mobile app is developed, annual operating costs will include periodic
maintenance and debugging of the app, internet hosting service, and a part-time
individual to act as administrator of the app (Table 4-1). A final operating cost item is the
transaction cost required for app sales on development platforms. These transaction costs
are generally around 30% of the sales price of apps for most development platforms,
including Apple and Google.
2
Costs and timeframes gathered through interviews with local app developers.
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Table 4-1: Capital and Operating Costs for Wao Kele o Puna Phone App
Capital Costs
Studies
(Business and Marketing Plans; Structure the property as a
nonprofit LLC)
Development
$15,000 – $25,000
$42,500 – $65,000
(Mobile App development 0.5 FTE; 0.5 FTE for Content creation)
Permits
(Approval fee for each development platform i.e. Apple, Google,
etc. Assume Apple and Google, the first and second largest
marketplaces)
Facilities
(None, Assumes the startup work can be done remotely)
Equipment and Supplies
(Computer hardware; Starting office supplies)
Total
$100 – 200
$0
$1,000 – 2,000
$58,600 – $92,200
Annual Operating Costs
Staffing
(Part time individual(0.5 FTE) for app management)
Maintenance and Repair
(App Maintenance; Server Hosting fees)
Supplies
Other annual Costs
(None)
Total
$25,000 – $40,000
$7,600 – $10,200
$100 – $500
$0
$32,700 – $50,700
Assuming that the price charged for the app is $2.50, 3 that the development platform will
charge a 30% sales commission, and that annual operating costs are between $32,700 and
$50,700; the Wao Kele o Puna mobile app will need to sell between 18,700 and 29,000 apps
per year to pay for annual operating costs.
3
The average sales price of an app in 2011.
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4.1.4
Five Year Cost and Revenue Projection
A five-year cost and revenue projection is included in Table 4-2 below. The mobile app is
projected to have a high volume of sales the first year it is available for sale; however,
subsequent years will see sales decline unless significant marketing is used to promote the
app. This analysis does not include a substantial marketing budget, as it is unlikely to
offer substantial returns to the revenue concept.
Table 4-2: Five-Year Cost and Revenue Projection for Wao Kele o Puna Phone App
Revenue
Year 1
Year 2
Year 3
Year 4
Year 5
$0 (Development Phase)
$12,500 (5,000 apps)
$5,000 (2,000 apps)
$5,000 (2,000 apps)
$5,000 (2,000 apps)
Operating Cost +
sales commission
$58,600 - $92,200
$36,500 - $54,500
$34,200 - $52,200
$34,200 - $52,200
$34,200 - $52,200
End of Year 5
$27,500 (11,000 apps sold)
$197,700 - $303,300
Balance
($58,600 - $92,200)
($24,000 - $42,000)
($29,200 - $47,200)
($29,200 - $47,200)
($29,200 - $47,200)
($170,200 - $275,800)
Though sales may exceed our projections of 5,000 apps in the first year and 2,000 apps
thereafter, it is unlikely that sales will ever reach the full 18,700 – 29,000 apps needed
annually to cover the operating costs of this project.
It is important to note that this analysis takes this revenue concept as a singular project
and does not include possible cost sharing of this project with others. The primary
operating cost component included is a part-time individual to manage the app, a cost
that could be shared with other revenue concepts such as the conservation donation
website. The shared resources with the donation website would include labor for content
creation for the app, which could also be applied to a conservation website, and
administration of the app and website. A further discussion on “bundle” savings for
developing a phone app and a donation based website together are shown in Table 4-7 on
page 28.
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4.2
Individual Donor-Based Program
4.2.1
Concept Description
As Hawaiÿi’s largest lowland rainforest, Wao Kele o Puna is a unique environmental asset
for the State of Hawai’i. Supporting the conservation of this forest with donations would
be an excellent method to preserve the environmental integrity of the area. Donations can
be solicited from individuals and organizations through a website, a newsletter, direct
mail piece, or any other fundraising method. For the purpose of this feasibility analysis,
we assumed that the primary mode of donor solicitation would be through a website.
Donors would be able to contribute to Wao Kele o Puna while also learning more about
the area’s flora, fauna, and cultural significance.
A similar fundraising effort is the website for the “East Maui Watershed Partnership”. In
this website, an “adopt a fence” strategy is used to connect donors to the property and to
provide a visual product in the donors’ mind, as shown in Table 4-3 below.
Table 4-3: Examples of Maui Watershed Partnership Donation Options
Donation Options
Machete for Cutting Trail
A pair of Chainsaw Chaps
One roll of Fence
Personal Field Gear
Two Weed whackers for brushing trail
Fence Posts for one mile
Donation Amount
$25
$100
$250
$500
$1,000
$5,000
4.2.1.1 Assumptions and Caveats
•
•
•
The primary assumption for this revenue concept is that donations will be made
via a Wao Kele o Puna website with a focus on environmental conservation. The
purpose of a website is to provide enough information and images to develop
interest from potential donors. Additionally, a website is cost effective and
provides a means for interactive communication with donors. This could be
supplemented with newsletters and mail pieces to attract more funds.
Another assumption is that the Wao Kele o Puna area will be managed under a
non-profit organization or a non-profit limited liability company (LLC).
The final assumption pertaining to this revenue concept is that donor-based
fundraising will not require a standalone office but will be managed remotely and
therefore office space rental was not included in the cost analysis.
4.2.1.2 Strengths
•
•
(Environmental) Donor-based fundraising programs through a website will have
no adverse impact on the resources of the property and will provide funding
needed for management.
(Education) A website used to solicit donors will provide increased awareness and
education of the Wao Kele o Puna property.
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•
(Synergies) There is potential for synergy between this revenue concept and other
revenue concepts such as the mobile app, visitor retreat, and ecotourism and
volun-tourism concepts.
4.2.1.3 Weaknesses
•
(Competition) The primary issue for this revenue concept is to develop brand
name recognition of the property and to increase awareness of the uniqueness of
the site. This will be key in the success of a donor-based conservation program.
4.2.1.4 Opportunities
•
(Synergies) Bundling this concept with other media-based concepts will offer both
capital and operating cost savings.
4.2.1.5 Constraints
•
•
4.2.2
(Competition) There are currently over 6,000 non-profits in the state of Hawai’i,
and the challenge will be convincing donors that this is a worthwhile project
among competing non-profit organizations.
(Revenue) Interviews with Waimea Valley, Hiÿipaka LLC 4 indicated that some
donors were hesitant to donate to the park’s conservation because of Hi’ipaka’s
connection to OHA. In the interview it was explained that there was a perception
among potential donors that OHA was financially secure and therefore other
conservation non-profits had a greater need of funds. In order to overcome this
perception it may be important to emphasize that the funds generated from a
donation-based website will be used solely for conservation management at Wao
Kele o Puna and will not be used to benefit other entities.
Market Analysis
In 2010, there were over 6,000 non-profits in the State, of which 192 were environmentally
focused non-profits that raised over $64.9 million in revenue according to the National
Center for Charitable Statistics. This $64.9 million in revenue includes grants, as well as
individual and corporate giving. Nationwide, environmental non-profits received $6.15
billion or 2% of all philanthropy, representing a 2.3% growth from 2009. This trend is
expected to continue in the future 5.
The primary challenge for any fundraising campaign is being “top-of-mind” in awareness
and to maintain a sustainable donor base. Fundraising for non-profits follow economic
trends and funding may not be stable over long periods of time. Although in recent years,
environmental issues have been at the top of public awareness, there is the possibility that
this awareness could diminish in the future if other issues increase in importance.
4
5
Interview with Gail Chew, Hi’ipaka LLC.
National Center for Charitable Statistics, Report on Giving 2010.
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4.2.3
Capital Budget and Operating Costs
The estimated time required to implement this revenue concept is approximately one
year, which includes three to six months for content research and development, and six
additional months for website development and “debugging” 6. We estimated that
content development would require approximately one full-time person for six months. A
summary of capital and operating costs is provided in Table 4-4 below. Potential costs are
further detailed in Appendix C.
Annual operating expenses include a part time person to manage the site, as well as
regular debugging by an outside consultant, server hosting expenses, as well as general
supplies. Office space is not included in this analysis as it was assumed that the work
could be done remotely.
Table 4-4: Capital and Operating Cost for Individual Donor-based Program
Capital Costs
Studies
(Business and Marketing Plans; Structure the property as a nonprofit LLC)
Development
$15,000 – $25,000
$42,500 – $65,000
(Website development; 0.5 FTE for content creation)
Permits
(Domain name registration)
Facilities
(None, Assumes the startup work can be done remotely)
Equipment and Supplies
(Computer hardware; Starting office supplies)
Total
$50 – $100
$0
$1,000 – 2,000
$58,550 – $92,100
Annual Operating Costs
Staffing
(0.5 FTE for website and database management)
Maintenance and Repair
(Website maintenance; Server Hosting fees)
Supplies
Other annual Costs
(None)
Total
6
$25,000 – $40,000
$6,600 – $11,200
$100 – $500
$0
$31,700 – $51,700
Gathered through interviews with local website/app developers.
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4.2.4
Five-year Cost and Revenue Projection
Revenue projections for this concept are based on interviews and financial reports from
comparable non-profit organizations. Revenue averages for comparable conservation
focused non-profit organizations range between $100,000 and $300,000 per year (see Table
4-5 below). However, these organizations are established, well-known entities with a
long history and donor base to draw upon. It is unrealistic to assume that Wao Kele o
Puna will have the same results in a five-year projection. Instead, these numbers can be
used to provide a range for future donations and would suggest that the most Wao Kele o
Puna could attain in fundraising revenue would be on the lower threshold of around
$100,000. With increased awareness of the property and development of a large donor
base, Wao Kele o Puna may be able to raise as much funds as these similar projects in the
long term.
Table 4-5: Comparative Examples for Individual Donor-based Programs
Name of
Organization
Approximate Annual
Revenue*
Approximate
Fundraising Costs*
Honolulu Zoological
$134,000
$24,000
Society
Hawai’i Nature Center
$300,000
$150,000
Hawai’i Wildlife Center
$270,000
Hawai’i Wildlife Fund
$170,000
Hawai’i Tropical
$160,000
$63,000
Botanical Gardens
Hawai’i Audubon
$130,000
$2,000
Society
* Approximation based on 3-year average of last available tax returns. Revenue and costs do not
include “fundraising events”, but rather yearly donation campaigns.
These comparable examples also provide an estimate of fundraising costs to promote
conservation non-profits. These numbers vary greatly by organization and again provide
a simple base comparison number to estimate marketing and fundraising costs. It is
important to remember that many of these entities have a long history in their fields and
have an established reputation. Furthermore, branding and name recognition in the nonprofit industry is extremely important to raising funds and contributions. Using these
examples as a guide, an estimate for fundraising costs should be budgeted around $20,000
to $65,000. This would be comparable to organizations such as the Hawaiÿi Tropical
Botanical Gardens or the Honolulu Zoological Society. These cost and revenue numbers
do not include “event fundraising” such as a large sponsored event or gala, and are more
in-line with a donation-based website.
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Table 4-6: Five-Year Cost and Revenue Projection for Individual Donor-based Program
Year 1
Year 2
Year 3
Year 4
Year 5
End of Year 5
Potential Revenue
Potential Cost
Annual Balance
$0 (Development)
$10,000
$30,000
$50,000
$60,000
$58,500 - $92,000
$31,700 - $51,700
$31,700 - $51,700
$31,700 - $51,700
$31,700 - $51,700
($58,500 - $92,000)
($21,700 - $41,700)
($1,700 - $21,700)
$18,300 – ($1,700)
$28,300 - $8,300
$150,000
$185,350 - $298,900
($35,350 - $148,900)
Although it is challenging to predict the potential revenue of a donations based website,
increased awareness of the Wao Kele o Puna brand will over time increase the level of
donations it collects. It should be noted that the potential cost does not include
fundraising costs or marketing costs that can vary greatly by organization and by year.
As mentioned earlier an approximate number to budget for these expenses would be
between $20,000 and $65,000.
4.2.5
Bundle Options
There is potential for this revenue concept to be “bundled” with other concepts to offer
mutually beneficial awareness and marketing strategies. These “bundles” include voluntourism or visitor related activities which create interest in a non-profit and potentially its
donations based website. A voluntary donation option could be included with the
collateral material that hikers or volunteers receive.
A mobile app/website donation program bundle would be able to share the cost of an
administrator for the website-mobile app as well as developing initial content for the app.
Assuming the same level of income from the two opportunities, Table 4-7 below shows a
five-year cost-revenue projection for the combined donation website/mobile app.
Table 4-7: Five-Year Cost and Revenue Projection for Phone App + Donations-based Website
Potential Revenue
Potential Cost
Annual Balance
Year 1
Year 2
Year 3
Year 4
Year 5
$0 (Development)
$10,000 + $12,500 (5,000 apps)
$30,000 +$5,000 (2,000 apps)
$50,000 + $5,000 (2,000 apps)
$60,000 + $5,000 (2,000 apps)
$78,500 - $122,000
$39,000 - $60,000
$39,000 - $60,000
$39,000 - $60,000
$39,000 - $60,000
($78,550 - $122,000)
($16,500 - $37,500)
($4,000 - $25,000)
$16,000 – ($5,000)
$26,000 - $5,000
End of
Year 5
$177,500
$234,500 - $362,000
($57,000 - $184,500)
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4.3
Native and Hawaiian Cultural Plant Cultivation
4.3.1
Concept
This concept is to grow native plants and trees for non-timber harvest purposes. Plants
native to Wao Kele o Puna, as well as non-invasive Polynesian introductions were
considered in the analysis (see Appendix D for plant species evaluated). There are several
potential approaches to this concept:
1. Growing native and Hawaiian cultural plants can be done in a nursery for sale of
seedlings for ornamental and other purposes. In Hawai‘i, ornamental nursery and
floriculture products represent large segments of the agriculture market. Nursery
activities generally do not require an extensive land area for production and could
be conducted in the cleared area of the former geothermal well site. Nurseries
generally operate in greenhouses or under shade cloth with an irrigation system
to provide a controlled environment for seedling growth. Nursery activities in
Wao Kele o Puna would benefit from the large native seed bank that the forest
provides.
2. Growing native and Hawaiian cultural plants can also be done in an agroforestry
system for specific plant products such as lei and hula implements, Hawaiian
medicinal products, weaving materials, seeds, etc. Some Polynesian medicinal
plants, including noni and ‘awa, have sizeable international markets in the
alternative medicine industry; additionally, some native lei plants, such as maile,
also have significant local demand. Other native forest plants do not have an
existing market as people prefer collecting them for free in the forest.
Agroforestry would require an area of several acres within the forest depending
on the size of the operation and could be conducted as replanting after removal of
non-native invasive plants. Generally, agroforestry will require adequate access
and should not be conducted in pristine areas of the forest, so as not to introduce
new pests in those areas. Depending on the products sold from agroforestry,
processing facilities could be needed to prepare plant materials for market.
Although agroforestry is a traditional practice conducted in many Pacific islands,
it is rarely conducted in Hawai‘i, where intensive nursery operations are favored.
3. OHA could also lease or license areas of the forest to farmers interested in having
a nursery or agroforestry operation. Low cost leases for agroforestry could
potentially be beneficial to the local Hawaiian communities by providing forest
area for growing culturally important plants as well as potential additional
income from selling agroforestry or nursery products.
4.3.1.1 Assumptions and Caveats
• The plants considered as part of this study generally meet the elevation, climate,
and shaded forest environment that are prevalent at Wao Kele o Puna; however,
establishment success and growth of various plant species is highly dependent on
specific site conditions and horticultural experience. Plants should be evaluated
further in test plots at Wao Kele o Puna before doing large-scale planting.
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• Native plant cultivation is not an allowable use in the Conservation District
“protective” subzone; OHA would need to get a land use designation change to
“limited” or “resource” subzone or a variance in order to implement this project.
• The Forest Reserve rules under which Wao Kele o Puna limit commercial
operations; consequently, OHA would, at a minimum need BLNR approval for
implementation.
4.3.1.2 Strengths
• (Cultural) Benefits of growing plants used in Native Hawaiian traditional practices,
including medicine and crafts.
• (Environmental) Benefits of growing native forest plants through agroforestry as a
way to help reduce pressure on wild populations.
• (Environmental) A plant nursery operated onsite would provide a site for growing
seedlings for forest restoration activities.
• (Educational) Opportunity to develop knowledge and understanding of how to
grow native forest plants.
4.3.1.3 Weaknesses
• (Risk) Agroforestry is very rarely done on a commercial scale in Hawaiÿi so
commercial horticulture expertise for agroforestry plants is also limited.
• (Risk) Markets for many native forest plants are either limited because people can
gather for free in the forest, or emerging, with little or no long-term trend
information.
• (Risk) Specialty markets like medicinal plants and flowers are highly susceptible to
economic downturns.
• (Environmental) Potential for introduction of non-native invasive species through
regular access into the forest, which could impact the native forest ecosystem;
though regular monitoring should limit this potential issue.
4.3.1.4 Opportunities
• (Natural Resources) A polyculture system in the forest understory could help
reduce pest issues that have developed in monoculture harvest areas.
• (Natural Resources) For nursery purposes, the Wao Kele o Puna forest could be a
valuable seed and cutting source for native plant propagation.
• (Access) The site already has a cleared area for establishment of a nursery
• (Collaboration) Partnership interest for plant nursery.
• (Synergies) Agroforestry could provide opportunities for revenue through ecotourism and volun-tourism centered around growing Hawaiian plants.
• (Synergies) A commercial nursery operation onsite could provide plants for
commercial agroforestry and forestry activities, thus decreasing operation and
travel costs.
• (Synergies) Agroforestry could be conducted in commercial forestry areas as a way
to actively manage and utilize the land during tree growth period.
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4.3.1.5 Constraints
• (Access) There is currently very limited access into the forest; agroforestry activities
will require the establishment of adequate road or trail access to activity sites for
planting, management, and harvest.
• (Access) Wao Kele o Puna is remote with rough terrain, thus increasing travel and
production costs for a nursery or agroforestry site
• (Labor) Agroforestry is a labor intensive activity that requires on-going and largely
unmechanized plant management; labor costs in Hawaiÿi are a significant
constraint.
• (Competition) There are many well-established plant nurseries in the Hilo and
Puna area; a new plant nursery could have some difficulty breaking into the
market.
• (Competition) For several potential agroforestry plants with established markets
(ÿawa, noni, maile, etc.), there is significant competition at lower cost from
Southeast Asia and the Pacific Islands, so Wao Kele o Puna products would need to
position themselves in the market as higher end or specialty.
• (Hazards) Lava flows have the potential to impact agroforestry on the property.
• (Regulations) The current State Land Use designation of the property (Conservation
District, Limited Subzone) and its designation as a Forest Reserve do not allow for
planting and harvest of plants for commercial purposes. Land use changes and
promulgation of site-specific OHA rules for the property will need to be established
before this activity can be conducted onsite.
• (Regulations) Potential presence of Threatened and Endangered species may limit
activities; agroforestry activities will also need to work around existing natives to
protect.
• (Regulations) Potential presence of cultural and archaeological sites to protect.
• (Regulations) Agroforestry harvesting needs to be linked to processing of the
product, either through a partnership or by ownership of processing facilities. No
agricultural processing is allowed in the State Conservation District so processing
would need to be done offsite.
4.3.2
Market Analysis
Nursery and Floriculture Markets
According to agriculture data from the State Department of Business, Economic
Development and Tourism (DBEDT), floriculture and nursery production account for
nearly 15% of the total value of farm crop production in Hawaiÿi. Floriculture’s share of
the total crop value in Hawaiÿi has decreased by over 5% in recent years likely as a result
of the downturn in the U.S. Economy, which significantly affected out-of-state sales.
Amongst nursery and floriculture products, landscape trees and palms account for over
1/3 of the total value of sales; orchids and tropical cut flowers also account for significant
shares of the market.
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Table 4-8: Value of Crop Sales in the State of Hawaiÿi
Flowers & Nursery
Flowers & Nursery
Products
products
All crops
Year
($1,000)
($1,000)
(% of all crop sales)
2006
499,684
98,725
19.8%
2007
498,338
108,710
21.8%
2008
521,799
94,662
18.1%
2009
539,810
80,092
14.8%
Source: Hawaii Agricultural Statistics Service, DBEDT, Databook (2009)
Flowers & Nursery
Products – Out-ofState Sales ($1,000)
49,325
54,120
43,250
N/A
There are many well-established plant nurseries in the Hilo and Puna area. The County of
Hawaiÿi accounts for the largest share of the nursery and floriculture production in
Hawaiÿi, with 475 operations and nearly $61 million in sales in 2007 7.
Wholesale prices for nursery-grown seedlings in Hawaiÿi generally range from $5 to $10
per seedling depending on the plant type. Data on the market for native ornamental
plants are limited; however, anecdotal information from discussion with Hui Kü Maoli
Ola indicated that with increasing awareness of the impacts of non-native invasive plants,
the market for native ornamental plants is growing in Hawaiÿi 8.
Agroforestry Markets
There are a number of plants commercially sold in Hawaiÿi that require or are tolerant of
the shade provided in an agroforestry system. These plants include Hawaiian medicinal
plants such as ÿawa, mämaki and ölena; lei and hula plants such as maile or palapalai; as well
as fruiting trees, shrubs and ornamental plants. Although agroforestry is conducted in
other Pacific islands, it is a very limited to non-existent industry in Hawaiÿi at this time.
This is likely due to a combination of high land and labor costs, as well as lack of
horticultural knowledge associated with growing plants commercially in forest
environments 9. Also, agroforestry systems are more labor intensive and require larger
land areas than growing shade-tolerant plants in high density under artificial shade.
Medicinal plants
According to the American Botanical Council, United States sales of herbal products and
dietary supplements totaled an estimated $5 billion in 2009 10. According to the Medicinal
Plant Working Group, more than 60 million U.S. consumers take herbal remedies. Of the
Hawaiian medicinal plants, only ÿawa (kava kava) and noni have developed significant
shares in the herbal remedy market.
The market for ÿawa boomed in the late 1990s and then drastically decreased in the early
2000s after Germany and Switzerland (and later, other countries) banned ÿawa imports
following reports of liver toxicity. Most ÿawa bans have since been lifted after research
7
USDA, 2007 Census of Agriculture
Interview with Rick Barboza, Hui Kü Maoli Ola
9
Interview with Daidai Hopkins, Hawai‘i County R&D Agriculture Specialist
10
American Botanical Council. 2010. HerbalGram. Vol 86: 62-65.
8
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demonstrated the safety of properly processed ÿawa root. The largest producers of ÿawa
are Fiji and Vanuatu.
In Hawaiÿi, commercial ÿawa production peaked at 450,000 lbs in 2001, but was down to
25,000 lbs in 2003 11; no statistics are available for subsequent years. ÿAwa wholesale prices
have also fluctuated significantly in the recent past. The average farm price for ÿawa was
$1.30 per pound of fresh root in 2001; in 2004, with a much smaller number of farms in
production, the price increased to $4.40 per pound. Currently, the retail price for ÿawa is
approximately $30/lb for dried powder or $15-$20 if sold as fresh root (wholesale
approximately $3.50-$8 depending on quality and processing). Market sectors for ÿawa
include local kava bars that will buy fresh root or dried product, as well as online sales of
dried root products as herbal remedy. In the herbal medicine market, kava can be sold in
various forms, including as flavored powder for drinks or in capsules.
Other Hawaiian medicinal plants have limited existing markets and limited supporting
research on health benefits. Although noni is sold internationally, the production in
Hawaiÿi remains limited and risky. Generally, noni farmers need to have an established
connection with a processing facility that can produce noni juice (either through an
agreement with a facility, or by conducting processing on the farm) in order to be
successful 12. On the international market, noni farmers in Hawaiÿi have to compete with
production in the South Pacific. Noni juice currently retails online for approximately $10
to $20 per 32oz bottle, which amounts to about $2-4 per pound of fresh noni fruit (after
processing). Other Hawaiian medicinal plants, including ölena, mämaki, and pöpolo have
small local markets but very limited exposure outside of Hawaiÿi. No individual market
trend statistics are available for those plants.
Lei plants
Another agroforestry market sector that has significant local demand is the lei plant
market. One of the more economically valuable lei plants that naturally grows at Wao
Kele o Puna is maile. A maile plant will generally take 4 to 5 years to mature and may
yield 1 to 15 strands per year for a period of 5 to 7 years 13. The market for maile is largely
local, but also includes hula hälau outside of Hawaiÿi. There are no readily available
market statistics on maile sales in Hawaiÿi. Anecdotal information indicates that as much
as 20,000 maile lei are sold annually for the Merry Monarch festival 14. On Oÿahu, lei shops
generally purchase maile from Fiji, where a different and faster-growing species of maile
grows 15. On average, a single-strand maile lei is sold for approximately $15 on Hawaiÿi
Island, and a double-strand is sold for $30-40.
11
National Agriculture Statistics Service, 2004
Interview with Scott Nelson, University of Hawai’i College of Tropical Agriculture and Human
Resources
13
Interview with Jim Ferrell, horticulturist
14
Interview with Jim Ferrell, horticulturist
15
Interview with Rick Barboza, Hui K Maoli Ola
12
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Other hula plants have limited markets as
hula hälau tend to prefer gathering in the
forest rather than purchasing the plants
they need. A University of Hawaiÿi study
conducted in 1999 estimated the cost at
which kumu hula would choose commercial
purchase over forest gathering for hula
plants. The study found that as likelihood
of finding lei material in the forest
decreases, the number of kumu hula that
would choose purchasing over forest
gathering is dependent on the purchase
price. Figure 4-1 below shows the
relationship between decreasing chance of
finding hula plants in the forest and
choosing plant purchase at two prices, $36
and $18 for the materials for one dancer
(Vieth et al, 1999). Under current
conditions on the island of Hawai‘i, the
chance of finding plant materials in the
forest is still high and kumu hula will likely
not be willing to purchase hula plants.
Maile strives in forest understory
Photograph by Forest & Kim Starr
Figure 4-1: Kumu hula willingness to pay for hula lei material with decreasing chance of successful
forest gathering
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4.3.3
Capital Budget and Operating Costs
Development and operating costs were estimated for running a 1-acre nursery on the
property (Table 4-9), as well as for running a complete 10-acre agroforestry system (Table
4-10). The costs for each opportunity were estimated independently of each other;
however, combining commercial nursery production and agroforestry could provide
some capital and operational cost savings. More detailed cost estimates are included in
Appendix C.
Table 4-9: Capital and Annual Operating Costs for Plant Nursery
Capital Costs
Studies
$60,000 – $80,000
(Environmental assessment1, business plan)
Permits
(Conservation District Subzone change, Conservation District
Use Application, Grading & Grubbing permit)
Facilities
(Greenhouse, Storage shed and office, restroom, water
catchment, solar power, access trails)
Equipment and Supplies
(Irrigation system, forklift, van, planting equipment and soil,
fertilizer, pesticide)
Total
$80,000 – $120,000
$600,000 – $700,000
$180,000 – $220,000
$920,000 – $1,120,000
Annual Operating Costs
Staffing
(Management, sales, greenhouse operation, reporting, security –
4.0 FTE)
Maintenance and Repair
(Greenhouse, weed control, irrigation maintenance, other
equipment maintenance, fuel)
Supplies
Other annual Costs
(Marketing, insurance)
Total
1
$200,000 – $300,000
$20,000 – $40,000
$2,000 – $5,000
$20,000 - $40,000
$242,000 – $385,000
Environmental assessment needed for land use change and permits
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Table 4-10: Capital and Operating Costs for Agroforestry
Capital Costs
Studies
(Biological inventory survey1, archaeological inventory survey1,
environmental assessment1, agroforestry test study plots,
Agroforestry management plan / business plan2)
Permits
(Conservation District Subzone change, Conservation District
Use Application, Conservation Plan)
Facilities
(Land clearing, fencing, greenhouse, storage shed and office,
restroom, water catchment, solar power, access roads)
$150,000 – $200,000
$70,000 – $90,000
$400,000 – $600,000
Equipment and Supplies
(Irrigation system for greenhouse and forest area, tractor, mower,
forklift, van, planting equipment and soil, initial planting labor,
fertilizer, pesticide)
Total
$800,000 – $900,000
$1,420,000 – $1,790,000
Annual Operating Costs
Staffing
(Management, sales, greenhouse operation, farm operation,
reporting, security – 7.0 FTE)
Maintenance and Repair
(Greenhouse, weed control, irrigation maintenance, other
equipment maintenance, fuel)
Supplies
Other annual Costs
(Marketing, insurance3)
Total
$350,000 – $450,000
$30,000 – $50,000
$7,000 – $10,000
$40,000-80,000
$427,000 – $590,000
Notes:
1
Studies needed for land use changes and permits
2
Plan needed for sustainable forestry certification.
3
Insurance cost estimates for nursery and agroforestry are preliminary approximations based on
verbal communications with OHA’s Corporate Counsel.
4.3.4
5-year Cost & Revenue Projection
Currently, Wao Kele o Puna is included in the State of Hawaiÿi’s Forest Reserve System.
Forest reserve rules generally prohibit commercial harvest of raw materials over $10,000
in value per month, or a total of $60,000 in value per year. Commercial permits must be
obtained to harvest raw materials for commercial purposes. These restrictions would
significantly limit planting and agriculture within forest reserves. In order to conduct
commercial nursery or agroforestry activities, the activity areas would need to be
excluded from the Forest Reserve area, or OHA would need to establish its own set of
rules for Wao Kele o Puna so that the property can be removed from the Forest Reserve
system. In order for these steps to be taken the comprehensive management plan for Wao
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Kele o Puna should be completed. We estimate that the total period of time needed to
establish those exclusions or rule changes would thus range from 3 to 7 years.
Additionally, several land use changes and permits will also be required including the
following:
• Conservation District Subzone change from “protective” to “limited” or “resource”
to allow for agricultural activities (1-2 year process);
• Conservation District Use Permit Application for conducting agricultural activities
within the Conservation District (1-2 year process);
• Conservation Plan (as alternative to grading and grubbing permit) (less than 6
months)
Consequently, we estimate that a period of 5 to 10 years will be needed for rule changes
and permitting prior to initiation of any commercial native plant cultivation activities.
After all permits are approved, commercial native plant cultivation could be initiated.
For a nursery operation, assuming annual operating costs of approximately $350,000, the
nursery would need to sell more than 35,000 to 70,000 plants annually depending on the
seedling price ($5 to $10) in order to be revenue neutral. This is an average of
approximately 3,000 to 6,000 plants sold on a monthly basis. More plants would need to
be sold in order to recoup capital investment costs. With a nursery space of one acre that
can house 50,000 plants, this would be a feasible enterprise. Marketing and establishing
connections with potential buyers would be critical to the success of the enterprise,
particularly in the Puna/Hilo area where many nurseries are already established.
Additionally, hiring a skilled horticulturist would also be very important as commercial
propagation of native plants can be difficult.
For agroforestry, assuming annual operating costs of approximately $500,000, the
agroforestry farm would need to sell at least $50,000 of products per acre per year to be
revenue neutral. Potential revenues from different agroforestry products vary; high value
crops such as ÿawa, noni, and maile may have wholesale revenues up to $60,000 to $80,000
per acre depending on production yields. Other crops with more marginal markets would
have lower revenues and thus would have difficulty generating revenue. Other
constraints to consider with agroforestry include the plant’s maturation period, which is
species-specific and environment-specific. For example, maturation can range from 2
years for ÿawa to 4 years for noni and maile. Test plots should be conducted prior to
initiating commercial production to ensure that plants can be viable and have fast growth
in the Wao Kele o Puna environment. Additionally, having a connection to product
processing, such as a drying oven for ‘awa roots or a juicing and bottling facility for noni
juice, is critical for certain agroforestry products. Aggressive marketing and maintaining
high quality production are also essential for eliciting premium prices and having a
successful operation.
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4.3.5
Alternative: Leasing, Licensing, and Partnerships
An alternative to conducting nursery operations or agroforestry would be to lease or
license the use of cleared or degraded forest areas for nursery or agroforestry operations.
This alternative would have the benefit of providing opportunities for local community
members to grow culturally important plants and to get additional revenues from small
scale agroforestry. Also, Wao Kele o Puna offers the unique benefit of being a potential
seed or cutting source for native plants and trees.
Agricultural leases generally range from $20/acre for range land (used for cattle grazing)
up to $125/acre for crop lands. Since profits are generally lower for agroforestry than for
nurseries, lease rent should be adjusted accordingly. Presently, agroforestry is a limited
industry in Hawaiÿi, likely due to a combination of high land and labor costs, as well as
lack of horticultural knowledge associated with growing plants in forest environments.
Prior to initiating land use changes to establish agroforestry leases, OHA should conduct
a community survey to help determine the potential interest there might be for these
leases. OHA may be able to generate interest by providing an environment conducive to
new agroforestry ventures for Puna residents 16. The following capital costs would need to
be incurred by OHA before providing agricultural leases:
• Excluding the agroforestry area from the DLNR Forest Reserve and establishing
OHA rules;
• Getting land use changes and permits needed for agroforestry;
• Providing water catchment tanks;
• Providing assistance with site preparation (land clearing and fencing);
• Ensuring that road access is provided to each agroforestry plot;
• Providing cheap long-term (25-30 years minimum) leases.
OHA would need to maintain a coordinator position to ensure that leases are managed,
tenant issues are handled, and illegal activities are controlled. While agroforestry leases
may not generate much revenue for OHA they could uniquely support the surrounding
Puna community and would help lower the cost of invasive species removal.
Wao Kele o Puna can also generate interest from established nurseries. Hui Kü Maoli Ola
expressed interest in leasing land at Wao Kele o Puna and partnering with OHA to
establish a native plant nursery that would utilize cuttings and seeds from the forest 17.
Although revenues from leasing will be limited, the nursery could provide some avoided
costs for OHA by devoting some of its operation to growing plants for reforestation after
invasive species removal. Hui Kü Maoli Ola could also provide the additional benefit of
providing educational services on native forest plants to the children and community of
Puna, as they currently do on the Windward side of Oÿahu.
16
17
Interview with Daidai Hopkins, Hawai’i County R&D Agriculture Specialist
Interview with Rick Barboza, Hui K Maoli Ola
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4.4
Sustainable Forestry
4.4.1
Concept Description
This concept is to grow trees for timber harvest purposes in areas of Wao Kele o Puna that
were previously dominated by invasive plants. This concept incorporates sustainable
forest management, which does not deplete forested areas over time and helps preserve
forest ecosystems and benefits.
Timber trees considered need to have low potential for invasiveness so as to minimize
impacts on the surrounding native forest. Hardwood species identified that are noninvasive and could be compatible with site conditions include ÿÖhiÿa (Metrosideros
polymorpha), which is native in the forest, Teak (Tectona grandis), and Mindanao gum (also
called Rainbow-bark Eucalyptus – Eucalyptus deglupta). Mahogany (Swietenia macrophylla)
may also be grown in areas of deeper soils. Of these species, Mindanao gum likely offers
the highest potential as a commercial plantation timber species for Wao Kele o Puna.
ÿÖhiÿa is a slow-growing tree that would likely not be adequate as a plantation timber
species (ÿÖhiÿa currently harvested for timber is from existing stands of old growth forest).
Teak, although it has a large and stable international market, has not been planted
extensively in Hawaiÿi. Anecdotal information suggests that it may not grow well in
Hawaiÿi 18 though no field research has been conducted to determine its viability.
Forestry operations are typically established over large areas of several hundred to
several thousands of acres because the incremental additional cost of management for
additional acreage is less than the potential incremental revenue. In a sustainable forestry
operation, tree cutting and planting is
conducted on a rotational basis so as to
ensure the long-term regeneration of the
forest. Additionally, in order to minimize
impacts on forest ecosystems and soil
erosion, clear cutting is limited to areas of
120 acres or less.
Sustainable forestry is a long-term
investment. For a fast-growing species such
as Mindanao gum, tree maturation for
timber harvest purposes occurs in
approximately 20 to 25 years. For slowergrowing species, maturation can take 40 to
50 years or even longer. Because of this long
maturation period, forestry is more
susceptible to natural hazards than other
opportunities with shorter revenue cycles.
At Wao Kele o Puna, potential hazards of
concern include lava flows, vog, and strong
winds. Due to the use of heavy machinery
18
Characteristic multicolored bark of Mindanao Gum
Photograph by Forest & Kim Starr
Interview with Hal Brauner, Brauner Molding Woodworks
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for logging of trees, forestry areas would also be incompatible with other potential
opportunities in Wao Kele o Puna such as ecotourism and retreat activities during harvest
periods. The most likely location for forestry at Wao Kele o Puna would be the area of
degraded forest just north of the existing access road. This area is relatively distant from
lava flow impact zones and high-quality native forest areas, and it is easily accessible with
four-wheel-drive vehicles.
4.4.1.1 Assumptions and Caveats
• Forestry is not an allowable use in the Conservation District “protective” subzone;
OHA would need to get a land use designation change to “resource” subzone or a
variance in order to implement this project.
• The Forest Reserve rules under which Wao Kele o Puna limit commercial forestry
operations; consequently, OHA would, at a minimum need BLNR approval for
implementation.
• Although the tree species identified in this study are generally suitable to the
environmental conditions at Wao Kele o Puna; tree growth can be variable
depending on site-specific soils and other environmental conditions.
4.4.1.2 Strengths
• (Environmental) Managed forestry would help reduce the spread of invasive
plants in Wao Kele o Puna.
• (Environmental) Ecosystem and watershed benefits of removing invasive plants
and replacing with tree species that do not inhibit growth of understory plants
(reduced erosion, increased rainwater infiltration, improved habitat for birds).
• (Education) Sustainable forestry would provide opportunities for education on
sustainable management and harvest of natural resources.
• (Open Space / Recreation) Areas that are currently overgrown with invasive
species and inaccessible would become accessible for recreational or customary
practices.
4.4.1.3 Weaknesses
• (Risk) Wao Kele o Puna is close to an active lava flow area: high lava flow hazard
risk, especially over the extended period needed for forestry.
• (Environmental) Forestry areas may introduce new invasive species.
4.4.1.4 Opportunities
• (Market) Significant quantities of lumber are currently imported into the State and
the market has seen steady growth.
• (Market) There is demand and limited supply for Hawaiÿi-grown woods in the
market.
• (Synergies) Forestry could be conducted in conjunction with agroforestry (after tree
establishment period of 2 to 4 years), which would offset management costs.
4.4.1.5 Constraints
• (Capital Cost) High cost of strawberry guava clearing to develop forestry area.
• (Capital Cost) Significant costs up front, while returns are far in the future.
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• (Access) Rough terrain and remote location may cause access limitations for
logging equipment.
• (Processing) Limited infrastructure for forest product processing in Hawaiÿi. Local
processing and market should be secured prior to initiation of large-scale planting.
• (Regulations) Potential presence of Threatened and Endangered Species may limit
activities.
• (Regulations) Potential presence of archaeological and cultural resources that will
need to be protected.
• (Regulations) The current State Land Use designation of the property (Conservation
District, Limited Subzone) and its designation as a Forest Reserve severely limit
harvesting of trees for commercial purposes. Land use changes and promulgation
of site-specific OHA rules for the property will need to be established before this
activity can be conducted onsite.
• (Regulations) Sustainable forestry certification requires additional planning and ongoing costs to meet label requirements.
4.4.2
Market Analysis
A timber market study conducted in 2004 for the Department of Land and Natural
Resources found that higher value hardwoods continue to have increasing demand. The
study estimated that Hawaiÿi imports approximately 7,000,000 to 10,000,000 Board Feet
(BF) of hardwood annually. Major foreign tropical wood imports include: African
Mahogany, Genuine Mahogany, Meranti, Teak, and several species of Eucalyptus.
Plantation teak prices in international markets in June 2011 ranged from $350 to $750 per
cubic meter for wood logs 19, which is significantly lower than prices for high quality old
growth teak logs that can fetch prices upwards of $2,500 per cubic meter. Average
stumpage price for Mindanao gum in Hawaiÿi ranges from $0.45 for unmanaged yard
trees to $0.85 for higher quality wood 20. Average stumpage price for ÿÖhiÿa posts ranges
from $1.50 to $2.00 per BF.
Local production of hardwood timber is very limited, and mostly centered on the island
of Hawaiÿi. The 2004 study estimated that production on the island of Hawaiÿi was less
that 1,000,000 BF per year. The study also noted that consistency of wood quality has been
a concern with Hawaiÿi-grown woods, though there is still a strong interest in the locallygrown market. Due to the higher costs of production in Hawaiÿi than in other competing
countries, production needs to be focused on higher end and specialty timber. Koa
traditionally fills the specialty timber niche in Hawaiÿi, though several non-native species
including Mindanao gum, African Mahogany and teak also have good potential for
higher-end wood markets.
An issue to consider in marketing of locally-grown wood is the increasing cost of
international shipping and limited port facilities on the island of Hawaiÿi; consequently
local markets and local wood processors should be targeted 21.
19
International Tropical Timber Organization (ITTO), Tropical Timber Market Report, June 2011
Interview with Hal Brauner, Brauner Molding Woodworks.
21
Interview with Nick Koch, Forest Solutions, Inc.
20
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4.4.3
Capital Budget and Operating Costs
A sustainable forestry operation must be carefully planned and managed. Selective
cutting of areas no larger than 120 acres is conducted in mature stands and new trees are
planted at different time intervals to allow for on-going cycles of planting and harvesting,
and to minimize impact on the forest ecosystem and watershed. Additional requirements
to receive certification of sustainable forestry practices include: protection of water
resources, conservation of biological diversity, management of visual quality and
recreational benefits, protection of special sites, and public reporting. Certified sustainable
forestry also requires annual third-party audits paid for by the operator to ensure
appropriate on-going management.
Table 4-11 below shows capital and operating costs for a 100-acre planting area in one
rotation of planting and harvesting. Several 100-acre rotations would establish an ongoing sustainable forestry management program; economies of scale (including lower
staffing cost) will be achieved with a larger total area in sustainable forestry. More
detailed cost estimates are included in Appendix C.
Table 4-11: Capital and Operating Costs for Sustainable Forestry
Capital Costs
Studies
(Biological survey, archaeological inventory survey, forestry
management plan / business plan, environmental assessment,
fire management plan, sustainable forestry audit & certification)
Permits
(Conservation District Subzone change, Conservation District
Use Application, Conservation Plan)
Facilities1
(Land clearing, fencing, storage shed/multipurpose room,
restroom, water catchment, access roads)
Equipment and Supplies
(miscellaneous equipment, initial tree stocking, planting labor,
weed control, fertilizer application)
Total
$300,000 – $400,000
$80,000 – $120,000
$600,000 – $1,000,000
$300,000 – $350,000
$1,280,000 – $1,870,000
Annual Operating Costs
Staffing
(Forest Management – 1.0 FTE)
Maintenance and Repair
(Weed control, fence maintenance, vehicle and shed
maintenance)
Other Annual Costs2
(Insurance, sustainable forestry annual audit & fee)
Total
$80,000 – $100,000
$20,000 – $40,000
$30,000 - $40,000
$130,000 – $180,000
1
Facilities cost estimates are influenced by invasive species clearing costs, which vary widely
depending on the density of infestation and method of removal, and the amount of access roads
established.
2
Insurance cost estimate of $30,000 to $40,000 is based on an estimate provided by OHA’s
Corporate Counsel.
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While this concept assumes that no clear cutting will be conducted and existing native
trees will be preserved, it is possible that some ‘öhi‘a trees will need to be cut to allow
access. Although not detailed here, ÿöhiÿa that would need to be cut could be sold for posts
and provide some limited early revenue. Strawberry guava that is cut to establish forestry
may be sold for biochar or biofuels (refer to Section E below for strawberry guava
removal costs and potential revenues) to help offset clearing costs, though potential
income from this would be limited.
4.4.4
5-year Cost & Revenue Projection and Feasibility Assessment
Currently, Wao Kele o Puna is included in the State of Hawaiÿi’s Forest Reserve System.
Forest reserve rules generally prohibit large-scale commercial planting and harvests of
raw materials with a value of over $60,000 annually. In order to conduct commercial
forestry activities in Wao Kele o Puna, the forestry operation area would need to be
excluded from the Forest Reserve, or OHA would need to establish its own set of rules for
the entire Wao Kele o Puna property so that it can be removed from the Forest Reserve
system. In order for these steps to be taken the comprehensive management plan for Wao
Kele o Puna should be completed. We estimate that the total period of time needed to
establish these exclusions or rule changes would range from 3 to 7 years.
Additionally, several land use changes and permits will also be required including the
following:
• Conservation District Subzone Change from protective to resource to allow for
commercial forestry activities (1-2 year process);
• Conservation District Use Permit Application for conducting commercial forestry
activities within the Conservation District (1-2 year process);
• Conservation Plan (as alternative to grading and grubbing permit) (less than 6
months)
Consequently, we estimate that a period of 5 to 10 years will be needed for rule changes
and permitting prior to initiation of any commercial forestry activities.
After all necessary permits are received, forestry establishment could be initiated.
Assuming a 25-year rotation for Mindanao gum, establishment and management costs
over 24 years would range from $4,270,000 to $6,010,000 (2011 dollars). Assuming a yield
in the range of 65,000 BF/acre to 200,000 BF/ac and an average stumpage price of about
$0.70, potential revenue after 25 years, would range between $4,550,000 and $14,000,000
(2011 dollars). Due to the large range of potential yields from Mindanao gum, test plots
should be conducted on the property prior to establishing large scale plantation so that
potential tree growth rate and revenues can be more specifically determined.
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4.4.5
Possible Alternatives and Partnerships
OHA will need a knowledgeable forester to manage commercial forestry at Wao Kele o
Puna. As an alternative to hiring a full-time forester on its staff, OHA could hire a forest
management company such as Forest Solutions, Inc., as several large landowners in
Hawaiÿi do, to develop forestry management plans and to conduct long-term forest
management. This alternative could reduce long-term management costs.
Some large landowners lease land areas for forestry; generally, these leased forestry areas
are used for short-term forestry rotations where the trees are harvested after 10 years for
pulp, chips, or biofuel. Townscape was not able to confirm average forestry lease costs.
For comparison rangeland and agriculture leases range from $20 to $125 per acre; forestry
leases are likely to be closer to the lower end of this range due to the long-term
investment involved in forestry. Factors that will make it difficult for OHA to lease land at
Wao Kele o Puna for forestry include high cost of strawberry guava removal for forestry
establishment, restrictions on tree species to those that have low or no potential for
invasiveness, and potential lava flow hazards and vog.
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4.5
Invasive Species Extraction
4.5.1
Concept Description
The native forest at Wao Kele o Puna is one of the last remaining stands of lowland
rainforest in Hawaiÿi. It provides many environmental benefits to the surrounding lands
and communities of Puna, including watershed recharge, native plant seed bank for
Kïlauea Volcano, endangered species habitat, and forest resources for subsistence
gathering and cultural practices. Strawberry guava infestation is a major threat to the
native rainforest ecosystem of Wao Kele o Puna. It is estimated that approximately 5,000
acres of the property are currently impacted by dense infestations of strawberry guava,
and without control, it will continue to outcompete native plants.
A major concern associated with the control of strawberry guava is that it is very costly.
This concept identifies potential uses for strawberry guava wood that would help offset
the cost of controlling its spread. Potential existing uses identified for strawberry guava
wood include chips for smoking meat, a small specialty market in Hawaiÿi, or use of the
wood in biochar or biofuel generation, which are growing markets with significant
potential. Figure 4-2 below shows aerial imagery and LIDAR survey conducted by
Carnegie Institution that depicts areas where strawberry guava has infested the Wao Kele
o Puna forest. Strawberry guava patches appear in light green on the digital LIDAR
imagery.
Strawberry guava fruits
Photograph by Forest & Kim Starr
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Figure 4-2: Aerial Imagery of Strawberry Guava in Wao Kele o Puna
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4.5.1.1 Assumptions and Caveats
• For cost estimating purposes, we have assumed a strawberry guava removal rate of
100 acres annually.
• This concept only includes costs associated with the removal of strawberry guava;
no costs are included for replanting. Some planting cost estimates can be found in
the Native Plan Cultivation section on agroforestry or in the Sustainable Forestry
section (above).
• OHA would need BLNR approval to conduct significant strawberry guava
removal.
4.5.1.2 Strengths
• (Environmental) Ecosystem and watershed benefits of removing strawberry guava
and allowing restoration of native ecosystem (reduced erosion, increased rainwater
infiltration, improved habitat for birds).
• (Open Space / Recreation) Areas that are currently overgrown with dense
strawberry guava stands and inaccessible would become accessible for recreational
or customary practices.
4.5.1.3 Weaknesses
• (Cost) Removal of strawberry guava is very costly and no potential wood uses were
identified that would entirely offset the cost of removal.
4.5.1.4 Opportunities
• (Synergies) Accessible areas where strawberry guava is removed could be used for
other potential opportunities such as agroforestry or forestry.
• (Environmental) Strawberry guava wood could be used for the production of
biochar, a soil implement that has been shown to improve plant uptake of nutrients
and water in agriculture and that is an effective carbon sequestration method. This
option however would require more costly removal methods, as discussed below.
4.5.1.5 Constraints
• (Access) Site access is a major constraint that affects cost of removal but also
effectively limits ability to remove strawberry guava stands in more remote areas of
the property.
• (Community Concerns) Community members that use Wao Kele o Puna for
harvesting of strawberry guava fruit or wood may be opposed to remove or control
efforts in the forest.
4.5.2
Market Analysis
An Environmental Assessment (EA) released by the State Department of Agriculture in
2010 for a project proposing to release a scale insect, Tectococcus ovatus, for biological
control of strawberry guava in the State of Hawai‘i collected significant background
information on potential economic uses for strawberry guava. The report indicated the
following current uses for strawberry guava wood:
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• Firewood for smoking meat (small scale, no commercial firewood or charcoal
operation existing at this time);
• Some craft implements and tools (sold at craft fairs and stores);
The market for strawberry guava wood for smoking meat or making crafts is limited,
especially since the wood used for these activities is likely gathered for free in local forests
and gardens.
A potential market for large quantities of strawberry guava wood could be for the
manufacture of biochar. Biochar is a porous charcoal substance that is used as a soil
amendment. Biochar serves as a catalyst that enhances plant uptake of nutrients and
water, and has shown great potential to improve soil productivity. Developing interests in
organic and alternative farming methods as well as sustainability in the U.S. are creating a
growing market (though still in its infancy) for this substance 22. Biochar production can
also produce energy and effectively sequesters carbon by transforming biomass into an
inert material that has a very slow rate of biological decay.
In Puna, Hawaiÿi Biochar Products is a small-scale producer of biochar (2 tons per week)
that has seen growing local demand for their biochar products. Hawaiÿi Biochar Products
is currently in the planning phase of an expanded production facility that would accept
up to 50 tons of biomass daily and could be operational in the next 2 to 3 years. The
biomass in densely infested strawberry guava stands is estimated at about 30 tons of
wood per acre. Strawberry guava is an adequate feedstock for biochar and Hawaiÿi
Biochar Products has expressed an interest in cooperating with conservation efforts aimed
at removing strawberry guava 23. Hawaiÿi Biochar Products would likely be able to pay
$40 to $50 per ton of strawberry guava wood delivered.
Another potential option for strawberry guava wood would be for use as biofuel for
electricity generation. Several new bioenergy plants are being planned throughout the
State, including a 24-megawatt facility planned by Hü Honua on the windward side of
Hawaiÿi Island 24. On average, a 25-megawatt facility could use up to 190,000 tons of dry
strawberry guava wood 25. The energy value of strawberry guava has been measured at
8,240 British Thermal Units (BTU) per pound, which is about average for common tree
species in Hawaiÿi 26. Hü Honua indicated that they would need wood that had been left to
dry in the field to attain a moisture content of approximately 45 to 50%. This is a logistical
concern at Wao Kele o Puna where frequent rain is likely to impede wood drying. Hü
Honua also indicated that potential price for wood chips would be dependent on the
quantity and regularity of deliveries and would likely range between $25 and $35 per ton
of delivered chipped material.
22
Article by Tom Konrad, AltEnergyStocks.com
Interview with Josiah Hunt, President, Hawai’i Biochar Products
24
H Honua Bioenergy LLC website
25
Environmental Assessment, Biocontrol of Strawberry Guava, 2010
26
Physicochemical analysis of selected biomass materials in Hawaii, Turn et al, 2005
23
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4.5.3
Capital Budget and Operating Costs
Dr. Jonathan Price of the University of Hawaiÿi at Hilo conducted an evaluation of the cost
of strawberry guava removal by cutting and using herbicide. The study estimated that
removal of dense strawberry guava infestations would need approximately 50 worker
days per acre, while incipient infestations would require only about one worker day per
acre. Removal cost is also correlated with the remoteness of the area invaded with
strawberry guava. Additionally, the effectiveness of herbicide application may be reduced
in very rainy areas.
The study found the following cost estimates for strawberry guava removal by cutting
and spraying herbicide (cost estimates do not include the cost of replanting):
Incipient
invasion
Dense invasion
Infestation near roads
(<0.3 mile)
Infestations at moderate
distance from roads
(0.3 to 1.5 mile)
Remote infestations
(>1.5 mile)
$250/acre
$284/acre
$506/acre
$10,500/acre
$12,200/acre
$23,315/acre
An alternative to cutting using hand tools would be to use an all-terrain mulching
machine, which mulches trees and brush without uprooting the plants, thus causing less
environmental damage than conventional bulldozing 27. Tree Works provided a
preliminary estimate of $3,000 to 4,000 per acre for the cost of cutting and mulching
densely infested strawberry guava stands. With this method, the mulched material would
likely not be able to be recovered for sale to another party but instead would be left onsite
to biodegrade. After clearing using this alternative, the site would need to be maintained
and new strawberry guava growth would need to be treated using herbicide. This
alternative is only recommended for dense infestations due to the potential impact to
native vegetation.
Approximately 5,000 acres of land are within moderate distance (less than 1.5 mile) from
the existing access road. Within this area, we estimate that 30% of the forest is impacted
by dense strawberry guava infestations (approximately 1,700 acres), while the rest of the
area is likely impacted by incipient invasions (approximately 3,300 acres). OHA should
prioritize strawberry guava control areas where there is interest to replant with natives or
to conduct forestry/agroforestry activities.
If OHA wanted to remove 1,000 acres of strawberry guava in the vicinity of the road, the
cost would range from approximately $1,200,000 using a mulching machine in dense
infestations to $3,300,000 using only hand cutting and herbicide. Assuming a strawberry
guava biomass of approximately 30 tons/acre in densely infested areas and 1 ton/acre in
incipient infestations, the total biomass removed would be approximately 9,700 tons.
27
Interview with Mike Kraus, Tree Works.
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If hand cut strawberry guava was sold for biochar, the cost of removal could be offset by
about $400,000; consequently, using a mulching machine to remove dense strawberry
guava stands would still be more cost-effective in areas located near the existing road.
4.5.4
5-year Cost & Revenue Projection and Feasibility Assessment
The cost projection below (Table 4-12) assumes a strawberry guava removal rate of
approximately 100 acres annually using hand tools in incipient invasion areas (70%) and
mulching machine in dense infestations (30%). Under these assumptions, no revenue is
made from strawberry guava removal as the mulched material is left onsite to biodegrade
and to provide nutrients for new plantings.
Strawberry guava removal areas will also need to be monitored and retreated on a regular
basis to ensure that new growths are controlled. Cost estimates for retreatment were not
readily available; however, anecdotal information from treatment conducted by the
Volcanoes National Park indicates that management costs tend to decrease over time. For
cost estimating purposes, we assumed that monitoring and retreatment may require
approximately 1 worker day per acre on a quarterly basis ($900 per acre per year) for the
first year, and 1 worker day per acre annually ($250 per acre per year) thereafter.
Table 4-12: Five-Year Cost Projection for Strawberry Guava Removal
Five Year Cost Projection
Project Phase
Cost of first
cut
Cost of mgmt
first 2 yrs
Cost of mgmt
after 2 yrs
TOTAL
Year 1
Management Planning
$30,000
$0
$0
$30,000
Year 2
Strawberry guava removal (100
ac) + management (100 ac)
$140,000
$90,000
$0
$230,000
Year 3
Strawberry guava removal (100
ac) + management (200 ac)
$140,000
$90,000
$25,000
$255,000
Year 4
Strawberry guava removal (100
ac) + management (300 ac)
$140,000
$90,000
$50,000
$280,000
Year 5
Strawberry guava removal (100
ac)+ management (400 ac)
$140,000
$90,000
$75,000
$305,000
End of
Year 5
400 acres of strawberry guava
removed and managed
$590,000
$360,000
$150,000
$1,100,000
Given the high cost of strawberry guava removal and management, OHA should focus
control efforts on areas of high native biodiversity value that are not too distant from
existing access points. This could be either in the vicinity of the existing access road or
along the northern boundary of the property if access can be negotiated with neighboring
landowners.
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4.5.5
Possible Alternatives and Partnerships
The State Department of Agriculture has released a draft EA for the release of a
strawberry guava biocontrol, Tectococcus ovatus, which would reduce the vigor and
fruiting of strawberry guava. No other cost effective alternatives have been identified by
the State to slow the rate of strawberry guava invasion in remote areas. This will help
reduce the spread of strawberry guava in remote areas of the Wao Kele o Puna forest that
do not have adequate land-based access. In areas near the existing access road, potential
revenue generating opportunities like sustainable forestry could be established where
strawberry guava is removed, which would offset the cost of strawberry guava
management in the long run.
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4.6
Wao Kele o Puna Makana / Virtual Shop
4.6.1
Concept Description
This concept is to sell Wao Kele o Puna inspired books, artisan products, crafts and forest
products through an e-store within a website and/or an offsite location such as the
Makuÿu Farmers’ Market. These two options actually may complement each other. For
purposes of this analysis both options have been considered.
Visitor attraction websites often have an e-store component where people can make
online purchases of mementoes, arts or crafts and/or books related to the attraction.
Goods may be inventoried and mailed by the attraction or handled through a distributor.
For this concept it is assumed that merchandise would be gathered, inventoried, sold and
mailed by the Wao Kele o Puna entity.
The other option being considered is having a booth at the Makuÿu Farmers’ Market to
offer similar goods that are available through the e-store. Basically the booth would
educate visitors to the market about Wao Kele o Puna through the wares it offers and the
sharing of information. The Market is held on Sundays only. Over time when the
Makuÿu Community Center is developed a more permanent location could potentially be
acquired that would house the e-store and perhaps other activities to draw visitors such
as a hula hälau and/or crafts people onsite demonstrating their skills. The timeframe for
the Makuÿu Community Center development is five to ten years; therefore, greater detail
for this option is not included in this plan.
4.6.1.1 Assumptions and Caveats
• We have assumed that the e-store would be added on to an existing Wao Kele o
Puna website that is already developed and that the e-store would be an additional
section of the site.
• We have also assumed that a business entity such as a limited liability company
would be established for this concept.
• Another assumption is that there are a sufficient number of craftsmen, artists and
authors who can and will create products that are inspired by Wao Kele o Puna.
4.6.1.2 Strengths
• (Cultural/Education) The strength of this concept is its potential to bring
community artisans and writers together to celebrate the beauty and history of
Wao Kele o Puna.
4.6.1.3 Weaknesses
•
(Demand) The weakness of the concept is the difficulty in linking what is offered
through the e-store and market to Wao Kele o Puna. When visitors purchase
goods at an attraction it’s often as a memento of their visit. Unless Wao Kele o
Puna offers a visitor experience it may be harder to attract buyers for its products.
In addition it may be challenging for potential purchasers to see the connection
between what is sold and Wao Kele o Puna.
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4.6.1.4 Opportunities
•
(Cultural) Members in the community believe there is an opportunity to distribute
products for local artisans and craftsmen who are reluctant to sell to the public.
This reluctance may be due to a humble nature of the artisan, their lack of time to
sell or distribute their products, and/or other factors related to selling art.
4.6.1.5 Constraints
•
•
4.6.2
(Supply) A challenge for both retail options is finding artisans and book sellers that
offer unique products that cannot be found on other sites or at other locations. The
products would also need a meaningful connection to Wao Kele o Puna or else this
retail option could be a totally separate stand-alone entity.
(Demand) An additional challenge is selling higher quality art or craft pieces
through an e-store. Those websites that are able to sell higher priced pieces
generally offer a known artisan and/or have an established reputation that buyers
know and trust.
Market Analysis
E-stores are frequently a part of an overall website – there are literally hundreds of
Hawaiÿi websites with e-store connections including non-profit organizations, visitor
attractions, museums and environment-related sites. The challenge is to attract people
who feel a connection with Wao Kele o Puna, who will then access the website, and want
to purchase items that remind them of the location. Therefore Wao Kele o Puna must
have a stand-alone presence, the website must attract visitors and the e-store must be
appealing and simple to purchase products.
The Makuÿu Farmers Market is one of twenty markets on the island of Hawai’i. Based on
their website there are approximately 135 vendors at the market each Sunday morning.
Based on observations this market is well attended by both residents and visitors. The
challenge is to differentiate the Wao Kele o Puna “booth” from the other booths offering
arts, books and other products.
Waimea Falls Park on Oÿahu has both an e-store and a store onsite. Based on an interview
in 2010 sales of goods was approximately $366,000 and approximately 98% of all retail
merchandise sold was through the onsite store. The majority of the items sold are lower
priced logo items purchased as a memento. 28 To support the local artisan community the
Park encourages local artisans to sell their products through their store and to
demonstrate their craft onsite. Having demonstrations on site has proven challenging
because many of the artisans work fulltime and do their crafts during their free time.
Additionally, most of the items sold at the onsite store are lower priced items rather than
quality artisan products.
28
Interview with Gail Chew 06/11
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4.6.2.1 Possible Online Options Discussion
There are online websites, such as “Etsy” that enable artists to sell their pieces through the
Internet. In the case of Etsy, the website replaces the role that Wao Kele o Puna would
play by being the distributor. In fact Etsy specifically says that that a “collective may not
be an entity that represents multiple artists by contract.” 29 Therefore websites such as
these would be competition for Wao Kele o Puna, rather than a complementary sales
engine.
In addition to dedicated websites, there are different ways that Wao Kele o Puna could set
up the payment process for their e-store website. The table below illustrates some of the
options.
Table 4-13: Payment Process Options for Wao Kele o Puna E-store
Upfront
Cost
Monthly Cost
(% of Sales)
Per
Transaction
Cost
Other Notes
Paypal - Most Websites/Developers use Paypal
Business
$0
2.9% (<$3K)
2.5% ($3K $10K)
2.2% (>$10K)
$0.30
Nonprofit
$0
2.2% (<$10K)
1.9% (>$10K)
$0.30
Additional 2.5%
for Currency
Conversion.
Additional 1% for
international
payments
Same as Business
Google Checkout - Fairly Recent Payment Method and not as popular as Paypal
Business
$0
Nonprofit
$0
2.9% (<$3K)
2.5% ($3K $10K)
2.2% ($10K $100K)
1.9% (>$100K)
Same as
business
$0.30
Same as
Business
Credit card
currency charges
apply. Additional
2% for
international
orders.
Same as Business
American Express – “AcceptPay”. Very Few Websites/Developers use “AcceptPay” or
“PaySimple”
Business/Nonprofit
$10
2.89% + $30.00
$0.15
(AMEX)
$0.29
(Mastercard,
Visa, others)
29
Currency
conversion fee for
international
payments
www.etsy.com/sell
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Items could also be sold through a large third-party website such as Amazon or Ebay.
Per-transaction commissions for Amazon and Ebay are shown below:
• Amazon: Approximately 15% (20% for Jewelry, 15 percent + $1.35 for books)
• Ebay: Approximately 12% for immediate purchase, 9% for auction type purchases.
The Amazon or Ebay options would have lower initial set up costs, however the pertransaction cost is very high. In addition for all these options including Amazon or EBay
the labor expense of meeting with artisans, taking the pictures uploading them to the site,
packing and shipping purchased items, etc., would continue to be the same. Therefore for
purposes of the discussion on revenue, we have assumed a $.30 per transaction cost and
included that as part of the cost of goods sold.
4.6.3
Capital Budget & Operating Costs
Capital budget and operating cost estimates for the E-store and Makuÿu Market options
are summarized in Table 4-14 and Table 4-15 below. More detailed cost estimates are also
included in Appendix C.
Table 4-14: Capital and Operating Cost for E-Store
Capital Costs
Studies
(Website upgrade, Business plan)
Retail sales license
Equipment and Supplies
(Van, Digital Camera, Misc. )
Total
$20,000 - $30,000
$500 - $2,000
$20,000 - $50,000
$40,500 - $82,000
Annual Operating Costs
Staffing
(Administration, recruit artisans, pick up pieces, store them,
upload digital images, maintain site – 1 FTE)
Maintenance and Repair (including supplies)
(Rent storage space, web hosting, van upkeep, fuel)
Other annual Costs
(Marketing, insurance)
Total
Wao Kele o Puna Revenue Opportunities
$40,000 – $80,000
$10,000 - $20.000
$1,000 - $3,000
$51,000 - $103,000
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Table 4-15: Capital and Operating Cost for Makuÿu Farmers Market Booth
Capital Costs
Studies
(Business plan)
Permits
(GET License)
Equipment and Supplies
(Display tables, accessories, van, cleaning supplies)
Other
(Brochures to hand out at Market describing WKOP)
Total
$2,500 - $10,000
$500 - $2,000
$20,000 - $50,000
$5,000 - $15,000
$28,000 - $77,000
Annual Operating Costs
Staffing
(Administration, recruit artisans, pick up pieces, store them,
upload digital images, maintain site – 0.5 FTE)
$20,000 – $40,000
Maintenance and Repair (including supplies)
(Rent storage space, weekly cost of booth, packaging, van
upkeep, fuel)
Other annual Costs
(Marketing, insurance)
Total
4.6.4
$5,000 - $20,000
$2,000 - $6,000
$27,000 - $66,000
5-year Cost and Revenue Projection
The Farmers’ Market option could be operating within six to twelve months with that
time primarily dedicated to getting a General Excise Tax (GET) license, locating the
artisans and craftsmen, signing contracts, picking up and storing the inventory,
purchasing booth display tables, etc. An e-store could be operating fairly quickly once a
website had been developed, then many of the similar steps to getting a GET license, and
interacting with the artisans would be the same.
Generally artisans offer “distributors” 20 to 50% of the sales price for their services
depending on the amount of effort the distributor puts into the sale. 30 Table 4-16 shows a
scenario for the e-store assuming the average sales price of the product is $40 and the
negotiated commission is 20% - the e-store would have to sell 8,625 items annually to
break even with operating expenses. The Farmers’ Market scenario assumes a 30%
commission which would require the sale of 2,833 items annually to break even with
operating expenses. That would mean approximately 54 items sold per week at an
average price of $40.
30
Interviews with artists and galleries, art shops.
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Table 4-16: Wao Kele o Puna E-Store and Market Booth Breakeven Analysis
RETAIL
E- store
Farmers’ Market
Total Sales
$ 370,000
$130,000
Cost of Goods Sold
$ 296,000
$ 91,000
Operating Expenses
$ 74,000
$ 39,000
$
$
Net Income
-
-
Worksheet - Retail
Average Sales Price of item
$ 40
$ 40
Average cost of goods sold
$ (32)
$ (28)
$8
$ 12
Assume 20% commission
Assume 30% commission
9,250
3,250
$ 370,000
$ 130,000
Net
# of items to sell to break even
to Annual Operating Expenses
Total sales
As shown in Table 4-14 and Table 4-15 below, it will be a challenge for the Wao Kele o
Puna entity to establish a positive income-generating retail operation within the five-year
time frame of this discussion. An E-store requires many hits to the website, then a reason
to look, and to buy. The Farmers’ Market is limited by the number of times it is open per
week and the operating costs. The cost of establishing a retail presence by itself will
require a dedicated commitment.
In each of the tables below we have assumed that the initial capital costs will be incurred
in Year One.
Table 4-17: Five-Year Cost and Revenue Projection for E-store
Potential Revenue
Year 1
Year 2
Year 3
Year 4
Year 5
Meeting with Artisans,
gathering inventory,
establishing web presence
$28,8001
$57,6002
$86,4003
$115,2004
Potential Cost + Cost of
Goods Sold
$56,500
Annual Balance
$74,000 + $23,040
$74,000 + $43,080
$74,000 + $69,120
$74,000 + $92,160
($68,240)
($59,480)
($56,720)
($50,960)
Cumulative at Year 5
$288,000
$579,900
Notes:
1
Assumes two pieces of art sold per day at $40 per piece
2
Assumes four pieces of art sold per day at $40 per piece
3
Assumes six pieces of art sold per day at $40 per piece
4
Assumes eight pieces of art sold per day at $40 per piece
Wao Kele o Puna Revenue Opportunities
($56,500)
($294,900)
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Table 4-18: Five-Year Cost and Revenue Projection for Makuÿu Market Booth
Potential Revenue
Year 1
Year 2
Year 3
Year 4
Year 5
Meeting with Artisans,
gathering inventory,
establishing web presence
$8,3201
$12,4802
$16,6403
$20,8004
Potential Cost + Cost of
Goods Sold
$48,000
Annual Balance
$39,000 + $5,824
$39,000 + $8,736
$39,000 + $11,648
$39,000 + $14,560
($36,504)
($35,256)
($34,008)
($32,760)
Cumulative at Year 5
$58,240
$244,768
Notes:
1
Assumes four pieces of art sold per week at $40 per piece
2
Assumes six pieces of art sold per week at $40 per piece
3
Assumes eight pieces of art sold per week at $40 per piece
4
Assumes ten pieces of art sold per week at $40 per piece
4.6.5
($48,000)
($186,528)
Possible Alternatives & Partnerships
An e-store is an excellent opportunity to generate additional revenue for an established
property and website. By itself it will not generate sufficient revenue to be self-sustaining,
but to supplement other activities including tourism or a retreat facility; it would likely be
a good addition.
The Farmers’ Market could make sense as a way to build awareness of activities at Wao
Kele o Puna in addition to selling arts or books.
Over time if a Wao Kele o Puna visitor site is established at the possible Makuÿu
Community Center, then a natural extension would be to include a retail presence.
Visitors could then shop while waiting for the van that would take them into the forest
and upon their return purchase items as a memento of their experience. This option
would require additional build out expenses to add retail space to the visitor center.
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4.7
Eco-Tourism and Volun-Tourism
4.7.1
Concept Description
This concept is to offer culturally appropriate and environmentally sensitive experiences
at the site – teach about the site, its history and culture. There are multiple approaches
that are possible for this concept:
1. Offer the Wao Kele o Puna site to companies who provide eco-tours on island or
non-profits such as the Audubon Society to do bird watching, experience a rain
forest or view native flora and fauna. The Activities and Attractions Association
list six companies on Hawai’i Island that offer Eco-tours on land. 31 The most
common are hiking tours of the volcanoes, waterfalls, gardens, etc. The challenge
is to offer an experience that cannot be found elsewhere on island. While these
companies charge a great deal for the experience, the revenue potential to the
landowner for this option is relatively small because there are so many similar
opportunities on the island that it is unlikely a company would pay a high price if
anything for access to the site, especially for quieter activities such as hiking. They
may pay more for locations that allow adventure type activities (for which they
can charge more) such as zip line or off-track biking, but these activities may not
be consistent with the Hawaiian sense of place that is Wao Kele o Puna. Groups
from non-profit organizations may want to visit or hike through the site given the
number of birds and types of flora and fauna, however they pay relatively little for
the opportunity and already do tours of the Volcano area.
2. Develop the rainforest area of the site as a destination visitor attraction, similar to
the Hawaiÿi Tropical Botanical Garden (HTBG) in Onomea. A basic experience
would be to offer guided hikes through the rain forest. The difference in this
option is instead of having another company sell and conduct hikes through the
forest, OHA would create a Wao Kele o Puna business that provides the
experiences. Creating a visitor destination experience requires higher startup costs.
However, this option ensures that the history and culture of the area that is shared
with visitors is culturally sound and correct. This option also has more potential to
generate revenue over the long term.
3. Offer volun-tourism opportunities. This option encourages and enables
groups/individuals to volunteer their time to do activities that benefit the Wao
Kele o Puna site such as remove invasive species, clear trails, plant native flora,
etc. Volun-tourism may be a way to offset the costs of clearing and planting at the
site, but it is unlikely to be a revenue-generator. If the infrastructure for
supporting eco-tourism is already developed, then it will be more economically
feasible to bring volunteers onsite. Bringing volunteers to a site is an excellent
way of generating interest and a sense of pride; volunteers are also much more
likely to become members and make a donation.
31
Hawaii Activities and Attractions Association website
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Given the three options, this analysis will review the second option of providing guided
hikes through the forest because it provides for the greatest revenue potential and would
better enable to offer volun-tourism over time.
The basic experience would include:
• Visitors signing up for the hike(s) over the Internet or by phone;
• Visitors traveling to Makuÿu Community Center (to be developed) WKOP visitor
site where they pay their fees and meet their guide;
• A guide to drive them in a van to the site where there is a gathering place and
restroom facilities;
• The guide to talk about the site, its culture and history, flora and fauna, wildlife,
etc., during a one- to two-hour hike.
• Easily accessible trail(s) approximately three to five miles in length.
• Water and perhaps light refreshments are available at the end of the hike back at
the gathering place.
• The guide to drive visitors back to Makuÿu Community Center where there may be
a gift shop or other activities to experience before they leave.
4.7.1.1 Assumptions and Caveats
The feasibility analysis for this concept is based on the following assumptions:
• A business entity, such as an LLC, will be created to operate this activity.
• OHA will need a Conservation District Use Permit in order to build a structure
onsite can be obtained.
• OHA will need BLNR approval to operate commercial tours on the property.
• Affordable insurance can be acquired for the activities as described.
• Trails can be cleared through the rain forest.
• The experience offered is unique in comparison to other hiking experiences
available on island.
• Visitors can gather at Makuÿu Community Center or a place where they can safely
leave their cars and take a van to the Wao Kele o Puna site. Transferring to a van is
a way to minimize the traffic through the communities around Wao Kele o Puna
and to ensure that visitors are guided through the experience while on site. The
Community Center is not likely to be built for a minimum of five years therefore
this is possibly a concept that can be implemented after that time.
• Volun-tourism once established would be focused on reducing invasive species
and replanting native forest plants.
4.7.1.2 Strengths
•
•
(Education) The strength of this concept is that the Wao Kele o Puna entity controls
the visitor experience: where they hike; what they learn; and how they interact
with the natural elements, thus maximizing the potential for positive learning
while minimizing potential environmental impacts.
(Education) This concept is a very good way of increasing awareness and
understanding of threatened natural and cultural resources of Wao Kele o Puna
and Hawaiÿi and could foster greater respect for their conservation.
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•
•
(Environment) Volun-tourism could be a good way of increasing awareness while
helping to minimize the cost of invasive species control at Wao Kele o Puna.
(Synergies) This concept leads more naturally into additional ways to generate
revenue such as visitors becoming members of the non-profit organization, buying
items from the store and accessing the website when they return home. An
additional benefit of control is that the WKOP “story” is true and consistent.
4.7.1.3 Weaknesses
•
(Environment) Regularly bringing people onsite for ecotourism activities may
introduce invasive species along hiking trails.
4.7.1.4 Opportunities
•
•
(Existing Resources) A possible opportunity may be to attract some of the visitors
who go to Volcanoes National Park, the most popular attraction in the State, and
located just next to Wao Kele o Puna.
(Synergies) With the infrastructure in place to accommodate eco-tourism visitors,
volun-tourism can also be accommodated.
4.7.1.5 Constraints
•
•
•
•
•
(Market) The most important limiting factor on the success of this concept is the
need to create a unique experience that would differentiate Wao Kele o Puna from
other on-island destinations while maintaining the integrity of the forest and site.
(Market) Wao Kele o Puna will have to build sufficient name awareness to attract
visitors, especially to compete with the Volcano National Park and State Parks
nearby.
(Utilities) One challenge is the fact that there are no existing utilities onsite or in
the vicinity; consequently, facilities constructed onsite will need to be eco-friendly
and utilize alternate energy sources such as solar or wind.
(Hazards) An additional challenge will be ensuring the safety of visitors and
volunteers requiring clear paths and signage and a means of keeping visitors away
from fissures and other potentially dangerous areas.
(Permits) Land use permits to build the structure will be required.
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4.7.2
Market Analysis
Approximately 1.2 million people go to the Volcano National Park every year. 32 This is
the most popular attraction in the State. Ideally this would mean 1.2 million people
passing by WKOP, however not everyone enters the Park from the Hilo-side. In fact
estimates are that most visitors enter from the Kona side of the property. So if we
estimate 30% of all visitors to the park enter from the Hilo-side, that would mean
approximately 360,000 visitors travel within five to six miles of the property. Lava Tree
State Park is the closest State Park to Wao Kele o Puna that tracks attendance. 33 In 2007,
about 44,000 people, both visitors and residents, went to this park. Visit to this park is
free.
Looking at similar attractions - HTBG in Päpaÿikou offers walks/hikes through rain
forests, local flora and fauna in addition to other activities. They say they average
approximately 80,000 paid visitors (we believe that
this number includes island residents attending
private functions held at the site) a year. 34 An
advantage that HTBG has is they are located along a
major thoroughfare, they have multiple amenities
including hosting events for residents and they have
been welcoming guests since 1984 (more details at
the end of this document). Maui Tropical Gardens
averages about 100 paid visitors a day for its tram
tours, reaching approximately 36,500 paid visitors a
year. Note both of these attractions offer food and
beverage and have a gift shop as a complementary
means of generating revenue.
The attendance number quoted by HTBG suggests
that there is a market for hikes through gardens and
rainforests on the island of Hawaiÿi. From Hawaiÿi
Tourism Authority reports we know that
approximately 102,000 visitors to Hilo backpack,
hike and/or camp. However it is unlikely that
WKOP could attract more visitors to a paid
experience than the 44,000 visitors a year that Lava
Tree State Park attracts.
Boardwalk in the rainforest at Hawaiÿi
Tropical Botanical Garden
Photograph courtesy of
http://www.htbg.com/
32
DBEDT Data Book 2009
Hawaii Tourism Authority, State Park Survey of Visitors 2007
34
Hawai’i Tropical Botanical Gardens interview 06/15/11.
33
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4.7.3
Capital Budget and Operating Cost
Table 4-19 below summarizes capital and operating cost estimates for creating and
running an eco-tourism entity at Wao Kele o Puna.
Table 4-19: Capital and Operating Costs for Ecotourism
Capital Costs
Studies
(Architectural site design, engineering site design, Business
plan)
$20,000 - $30,000
Permits
(Conservation District Use Application, Grading & Grubbing
Permit, Building Permit)
$20,000 – $40,000
Facilities
(Onsite building that includes restrooms and a shaded area,
clearing of trails, interpretive signage, off-site gathering place
where guests can park their cars and transfer to vans, includes
restrooms)
Equipment and Supplies
(Equipment for volun-tourism, van, cleaning supplies)
Other
(Marketing expenses including brochure development and
$175,000 - $250,000
$30,000 - $60,000
$10,000 - $30,000
website enhancement)
Total
$255,000 - $410,000
Annual Operating Costs
Staffing (Administration, sales, tour guide, volunteer
4.7.4
coordinator, security, maintenance, manager and cleaning – 3.5
FTE)
Maintenance and Repair (including supplies) (Maintenance,
cleaning, van upkeep, fuel)
Other annual Costs (Marketing, insurance) 35
$160,000 – $230,000
Total
$265,000 - $450,000
$5,000 - $20.000
$100,000 - $200,000
5-year Cost & Revenue Projection
Given the number and types of permits including CDUP, grading and grubbing, building
and DLNR authorization for commercial tours in the Forest Reserve that would be
required to develop this option, we estimate that it will take a minimum of two years to
acquire the permits. It will take another one to two years to clear access to a site near the
rainforest, develop the business plan, clear the trails, locate a Visitor Center offsite and
build the group gathering place. In year five if we assume that WKOP has developed a
unique and attractive experience, sufficient name awareness and compelling marketing,
then guided tours could be made available at WKOP.
35
Insurance quotes are difficult to obtain for locations and activities such as the one described,
therefore based on very ballpark estimates from several sources, we have stated a broad range to
reflect this uncertainty. Likewise marketing costs can vary significantly based on the goals of the
operation.
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As seen in Table 4-22 on page 65, guided tours at similar attractions charge about $30 to
$50 per person 36 (most offer self-guided tours for free). In addition to hikes/walks/tours
these locations sell refreshments onsite and rent out the property for special events.
Because Wao Kele o Puna would have more limited amenities when it opens we estimate
a starting price of $20 per person for adults for a guided tour of Wao Kele o Puna. At this
price it will take approximately 16,000 paid hikers per year to breakeven with operating
expenses (Table 4-20). This is approximately 30% of all visitors to Lava Tree State Park.
Table 4-20: Ecotourism Pro Forma
Eco Tourism/Hikes
Total Sales
$ 329,500
Operating Expenses
$ 329,500
Net Income
$ -
Hike Assumptions
15
Avg Pax/hike
$ per pax
# of pax to breakeven
$ 20
16,475
# of hikes
1,098
# of hikes/day
3.01
In the first year of operations it is unlikely that over three hikes per day each with 15
people will be possible. Even with heavy promotions the most that can be estimated is an
average of one hike per day with fifteen people – 5,475 paid visitors for total revenue of
$109,500. This is a little over 10% of the visitors to Lava Tree State Park and a lower price
when compared with similar types of attractions. However, over the course of five years,
assuming the total capital costs are included in the first year of development, the loss
would be approximately $715,000.
Table 4-21: Five-Year Cost and Revenue Projection for Ecotourism
Year 1
Year 2
Year 3
Year 4
Year 5
Cumulative at Year 5
36
Potential Revenue
Permitting Process
(studies + CDUA)
Permitting Process
Development
$109,500
$164,250
Potential Cost
$40,000
Annual Balance
($40,000)
$15,000
$274,500
$329,500
$329,500
($15,000)
($274,500)
($220,000)
($165,250)
$273,750
$988,500
($714,750)
Hawaii Tropical Botanical Garden website; and World Botanical Garden website
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4.7.5
Possible Alternatives and Partnerships
The option of charging other Eco-adventure companies to use the site is an attractive
alternative because it eliminates many of the capital and operating expenses required.
However, access to the rainforest, restrooms and an onsite gathering place would likely
still have to be developed. Under this scenario the fee paid by an outside firm would be
considerably less – for example access to Hawaiÿi Volcanoes National Park requires a
commercial use authorization and fees that range from $25 plus $5 per person for groups
of one to six, to $75 for vans with seven to ten people and $100 for mini-buses with 16 to
25 people. Wao Kele o Puna would have to offer an experience unlike any other on island
to attract ecotourism companies to pay a fee to access the site. It is unlikely that the fee
could be set higher than the rate tour companies pay at Hawaiÿi Volcanoes National Park.
Volun-tourism is a natural addition to ecotourism. Once access, the onsite gathering place
and restrooms were developed, and a volunteer coordinator hired then volun-tourism
would be a means of offsetting costs for clearing invasive species and/or planting new
flora. Note: it is unclear what the cost of insurance would be for volunteers to work
onsite.
The Ecotourism concept would definitely benefit from and enhance a website with an estore and may work well with an overnight retreat if the two were somehow separated
but complementary.
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Table 4-22: Ecotourism Comparison Examples
Similar Sites
Location
Description
Maui Tropical Plantation
Hawaiÿi Tropical Botanical Garden
World Botanical Gardens
Waikapu, Maui
Working plantation with
tropical fruits & flowers
Onomea, Hawaiÿi
501(c)3 scientific & educational non-profit. 40-acre valley The Hawaiÿi Tropical Botanical
Garden is a museum of living plants that attracts photographers, gardeners, botanists,
scientists, and nature lovers from around the world. The Garden's collection of tropical plants
is international in scope. Over 2,000 species, representing more than 125 families and 750
genera, are found in this one-of-a-kind garden.
Umauma, Hawaiÿi
Been open since July 4, 1995 as a
botanical garden destination on the big
island of Hawaiÿi. Exhibit the largest
variety of plants in the state of Hawaiÿi
with thousands of species. The chosen
site included the previously concealed
waterfalls now known as Kamaee Falls.
The falls are acclaimed by many visitors
to be the most pristine waterfalls in the
state of Hawaiÿi. In addition to the
waterfalls the rainforest walk is arguably
the most peaceful place in the Gardens.
The 40-acre valley is a natural greenhouse, protected from buffeting tradewinds and blessed
with fertile volcanic soil. Throughout this garden valley, nature trails meander through a true
tropical rainforest, crossing bubbling streams, passing several beautiful waterfalls and the
exciting ocean vistas along the rugged Pacific coast.
The Hawaiÿi Tropical Botanical Garden is a 501(c)(3) Scientific and Educational non-profit,
whose mission is to serve as a nature preserve and sanctuary, a living seed bank, and a study
center for trees and plants of the tropical world. The Garden is dedicated to the collection and
display of the world's tropical plants, and to the education of both children and adults about
the plight of the world's rainforests. At a time when rainforest plants are disappearing at an
alarming rate, the Garden is working to preserve as many species as possible for the benefit of
future generations.
Tours
Tram tours 30 to 40
minutes
Adult Tour Price
$15
Child Tour Price
$5
Onsite Services
Lunch. Store, Weddings &
Special Events
Memberships
Website
Contact
Self guided any time. Guided tours arranged individually for groups with a minimum of six
participants, $30 to $50 per person depending on additional gifts included in the package
Self-guided anytime. Guided tours
arranged individually.
$30 to $50
$33 plus tax, lunch +$10
$13 plus tax, lunch +$10
Site may be rented for a minimum of 4 hours for $2000/$500 per additional hour. Weddings
for $3,500.
World Botanical Gardens is planning to
grow the garden sanctuary. Other plans
for the Gardens includes development of
a visitor center, which will contain a gift
shop, snack bar, and restrooms.
Currently offer visitors free juice, fruit
and flowers with online coupon
$25 for students and up to $10,000
Book tours, store, maps
Information on site, tours, e-store that sells tropical bouquets, a garden book and tropical
apparel
Information on site and tours, e-store
mauitropicalplantation.com
www.hawaiigarden.com
www.worldtropicalgardens.com
808-242-8983
mauitropicalplantation.com
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4.8
Overnight Retreat Destination
4.8.1
Concept Description
This concept involves providing a facility that could host visiting groups (hälau, native
practitioners or artists) where people can stay overnight, share their craft, learn about
flora/fauna that are used in their art, and be inspired by the site.
The idea behind this concept is that groups such as hula hälau from other islands and
Japan frequently want to explore areas around Hawai’i Island that relate to the mele they
learn or the instruments they use. Ideally there would be a place for them to set up a
home base, gather as a group, cook their meals, share their stories and their dance in a
setting that is natural and secluded. 37
In addition to hula hälau there are painters, craftsmen, artisans, writers and other groups
that like to gather together to share thoughts, skills, camaraderie, in a natural setting –
some groups may prefer to have meals catered, others will prefer to cook meals
themselves – there should be options available.
Currently, there is no place on island that can accommodate up to 30 people at an
inexpensive price. Kïlauea Military Camp offers similar accommodations, but their
dormitories are larger and their cabins are smaller. Groups that include non-Hawai’i
guests may want to stay at the site during the week, however Hawaiÿi groups are likely to
prefer weekends, except during Merrie Monarch Week when all accommodations are full.
4.8.1.1 Assumptions and Caveats
•
•
•
•
OHA will need to get a Conservation District Use Permit to build an
environmentally friendly overnight facility on the property.
OHA will need BLNR approval to operate a commercial retreat on the property.
We have also assumed that the existing road is adequate to access the facility and
that groups arrive by two or three vans rather than multiple vehicles.
One caveat is that in order for the retreat to be permitted in the protective subzone,
it needs to be considered a "public purpose use" so it has to be open to the public at
large; however, OHA would be able to target their marketing if they desired.
4.8.1.2 Strengths
•
(Culture) The strength of this concept is that it aligns with and brings together
several stated OHA strategic goals including: pae ÿäina sustainability, value history
and culture, and participation in cultural activities.
4.8.1.3 Weaknesses
•
37
(Capital) Due to the remote location of the facility in the Conservation District and
in a State Forest Reserve, a significant amount of capital will be needed to conduct
planning and permitting, and for construction of the retreat facility. The potential
weakness of this concept is whether or not it can generate sufficient revenue to
Interviews with Kumu Hula
Wao Kele o Puna Revenue Opportunities
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break even or exceed operating costs and payback capital expense in order to
contribute to the sustainability of Wao Kele o Puna as a whole.
4.8.1.4 Opportunities
•
•
(Market) The popularity of hula in Japan and the connection with many Kumu Hula
in Hawai’i offers an opportunity to bring select groups to the island and to Wao
Kele o Puna.
(Market) Local artisan groups frequently look for gathering places to meet and
share their craft in a private setting.
4.8.1.5 Constraints
•
•
•
4.8.2
(Permits) A significant constraint for the implementation of this concept is the fact
that Wao Kele o Puna is currently designated as a State Forest Reserve and is in the
Conservation District “protective” subzone. Operating a retreat within a State
Forest Reserve will need to be approved by the Board of Land and Natural
Resources and would be problematic if special permits are required for guest
access and overnight stay. Additionally, a CDUP would also be needed to be able
to operate the retreat within the Conservation District.
(Capital) Due to the location of the retreat facility in a relatively remote area,
distant from paved roads and utilities, construction will be more costly and
logistically more difficult.
(Hazards) Wao Kele o Puna is located near the active Pu‘u Ö‘ö vent and it is
possible that lava flows could impact or destroy retreat facilities if they are not
transportable.
Market Analysis
The primary market for this facility is off-island hula hälau, (plus artist groups, cultural
practitioners) seeking a place to be together in a private setting where they can bond, do
their activities, and learn about the flora/fauna of the Wao Kele o Puna area. There are
approximately 181 hula hälau in the state, 33 of which are located on Hawaiÿi Island.
Therefore there are 148 hälau within the state 38 but not on island that may want to use the
facility. In addition there are 40 hula hälau in Japan 39 where there is an active interest in
the hula, many of the kumu hula of these hälau are from Hawaiÿi.
One estimate of usage is 10 to 15 hula hälau groups per year organized by one Kumu
Hula. 40 Hawaiÿi State groups would be more likely to use the facility over weekends,
while outside Hawaiÿi groups may be likely to use the facility during the week or for
longer periods of time. Arts groups have used facilities in Waimea where they use dorm
facilities at Hawaiÿi Prep, and gather at homes or workshops to share glass blowing or
ceramic techniques.
There is definitely a market for gathering places offered at reasonable prices; however it is
unclear whether the demand is sufficient to warrant the initial capital investment.
Kïlauea Military Camp (KMC) offers cottages and dormitories. To reserve a cottage
38
Mele.com on June 7, 2011
Mele.com on June 7, 2011
40
Iwalani Kalima Interview
39
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requires a military connection while dormitories may be reserved by non-profit groups
and schools. Cottages average about $150 per night and can accommodate two to six
people. The dormitory facility (110 beds) averages rates between $14 and $21 per person
per night 41. KMC staff estimates their facility has an occupancy rate of 55% and it is still
able to be profitable because many of its staff is part-time, the initial facility has long been
paid off, and the unique location within Hawaiÿi Volcanoes National Park.
4.8.3
Capital Budget and Operating Costs
Table 4-23 below summarizes the capital and operating cost estimates for developing and
running an overnight retreat facility at Wao Kele o Puna. Additional costing details are
included in Appendix C.
Table 4-23: Capital and Operating Costs for Overnight Retreat Facility
Capital Costs
Studies
(Architectural site design, engineering site design,
Environmental Assessment, Business plan)
Permits
(Conservation District Use Application, Grading & Grubbing,
Building)
$190,000 – $250,000
$40,000 – $60,000
Facilities
(Overnight retreat building w/ 30-person capacity, water
catchment, solar photovoltaic power, grey water system,
composting toilets; hula mound)
Equipment and Supplies
(Beds, kitchen supplies, appliances, tables, chairs, vans)
Other
(Marketing expenses including brochure development and
website enhancement)
Total
$1,200,000 – $1,800,000
$150,000 – 200,000
$10,000 - $30,000
$1,590,000 – $2,340,000
Annual Operating Costs
Staffing
(Administration, sales, security, maintenance, manager and
cleaning – 2.5 FTE)
Maintenance and Repair (including supplies)
(Maintenance, cleaning, van upkeep, fuel)
Other annual costs1
(Marketing, insurance)
Total
$125,000 – $165,000
$10,000 - $20,000
$100,000 - $200,000
$235,000 – $385,000
Notes:
1
Insurance quotes are difficult to obtain for locations and activities such as the one described,
therefore based on very approximate estimates from several sources, we have stated a broad range
to reflect this uncertainty. Likewise marketing costs can vary significantly based on the goals of
the operation.
41
Interview with KMC Marketing Person
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4.8.4
5-year Costs & Revenue Projections
Given the land use approvals and permits required for this option it is unlikely that the
facility can be completed within the five year scope of this discussion. We anticipate that
it could take up to 5 years for land use approvals and permits to be put in place for this
opportunity. However if the process moves
forward faster than anticipated, the following
discussion estimates revenue potential.
The closest competitor is KMC which offers
dormitory facilities (110 beds) at rates
between $14 and $21 per person per night 42.
At this price range, the retreat would not be
able to cover its operating costs, even at full
capacity.
Table 4-24 shows a scenario with nightly rate
of $40 per person. Under this scenario, the
facility would need to have an occupancy rate
of 70% to break even with operating expenses
and the number of group reservations
required annually would be 85. This is a very
high occupancy rate that would be a
challenge to sustain. An additional potential
revenue generator that could be added on to
this concept could be a catering option for
groups that do not want to cook their meals.
Cottage facilities at Kïlauea Military Camp
Photograph courtesy of http://www.kmcvolcano.com/
Table 4-24: Overnight Retreat Pro Forma
Retreat
Total Sales
$ 307,000
Operating Expenses
$ 307,000
Net Income
$
-
$40 price per person, occupancy 70%
# of pax/group
$ per pax
Avg # of nights
# of pax to breakeven
# of group nights
# of group reservations
Occupancy Rate
42
30
$ 40
3
7,675
256
85
70%
Interview with KMC Marketing Person
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4.8.5
Possible Alternatives and Partnerships
This concept naturally ties in with other proposed concepts being evaluated especially the
retail options of the e-store and Makuÿu market, a website and membership subscriptions
for Wao Kele o Puna, and volun-tourism. Once people stay onsite and experience the
forest, they are significantly more likely to want to purchase items related to the area,
download a phone application, volunteer to help protect the forest, and/or make
contributions to sustain the site over time.
Native plant cultivation would be particularly appealing to groups, especially if the plants
had a connection to their dance, arts and/or crafts. The plants would enhance the
educational aspects of the site as well as complement the experience. It may be possible
that some of the plants could be available for sale to the group during their stay and may
be a source of revenue.
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4.9
Movies and Documentaries
4.9.1
Concept Description
Showcasing the beautiful, unspoiled Wao Kele o Puna scenery for film projects would be
an excellent way to protect the property while expanding public awareness of the area.
Again, similar to other media related endeavors, this revenue-generating concept has the
capacity to complement and enhance other revenue concepts. Utilizing the property in
films and documentaries also requires low startup costs and low costs to operate.
Film shoots can categorize into larger “blockbuster” productions, smaller and mid-sized
productions, and still photography productions. For the purpose of this analysis, this
report examines smaller and mid-sized productions as well as still photography
productions. Large scale “blockbuster” productions, although lucrative, were not
included in this analysis as it would likely take years for the site to build up a reputation
in order to attract these productions. For comparison purposes, Table 4-25 below shows
statistics for the types of film productions occurring in U.S. National Parks.
Table 4-25: U.S. National Park Film Production Permits
US National Park - Size of Production
Small Productions (1-10 people);
Midsize Production (31-50 people)
Large Productions (70 or more people)
Percentage of
Film Permits
80%
17%
3%
4.9.1.1 Assumptions and Caveats
• For the purpose of this feasibility analysis, we assumed that the Wao Kele o Puna
property ownership would be transferred to a non-profit organization or a nonprofit LLC and would not remain under current State land jurisdiction. This
assumption is significant because if the land were to stay under State land
jurisdiction it could be subject to State land requirements for access and fees, with
only permits required (no additional fees).
• It was assumed that the site would have appropriate road access and that the site
would allow film and heavy equipment traffic to the site, within reason.
• We also assumed that the site would have limited or no access to electricity and
water. Moreover, in order to preserve the area’s environment, film production
would be limited to low noise filming so as not to disturb native fauna.
• Finally, we also assumed that the film coordination tasks of Wao Kele o Puna
would not require a standalone office but would be managed remotely and
therefore office space rental was not included in the cost analysis.
4.9.1.2 Strengths
•
•
(Environment) This concept would have limited impact on the resources of the
property due to the limited area and period of use.
(Education) Movies and documentaries can help develop awareness of the unique
resources of Wao Kele o Puna.
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•
(Start-up) This concept has low capital and operating costs compared to other
potential revenue opportunities for Wao Kele o Puna.
4.9.1.3 Weaknesses
•
(Environment) Increased traffic to the area may bring in invasive species and
spread nonnative flora and fauna in Wao Kele o Puna. Also, environmental
degradation could occur to the area due to careless use by filmmakers.
4.9.1.4 Opportunities
•
•
(Environment) Wao Kele o Puna offers moviemakers physical characteristics that
cannot be found in other areas such as lava flows, fissures, and forest ecosystems.
(Synergies) Filming on the site is compatible with other revenue generating
options. There are opportunities for Wao Kele o Puna to “bundle” visitor related
activities such as a visitor retreat with the film related concept.
4.9.1.5 Constraints
•
•
•
4.9.2
(Access) The site’s isolation will be a challenge to attract film crews. Many film
productions prefer to film on Oÿahu or near easily accessible areas due to the large
volume of equipment needed to run a successful film set.
(Access) Road access to the site could be challenging if road issues are not resolved
and/or neighboring communities are opposed to heavy equipment traffic through
the area.
(Competition) There are several competing film sites around the State of Hawai’i;
many of these locations are well established and may offer more attractive
amenities than Wao Kele o Puna would not offer such as electrical or water access.
Without these additional amenities or name recognition, the Wao Kele o Puna site
would need to charge lower fees to attract potential film productions.
Market Analysis
Due to the cyclical nature of film production and its dependence on a number of factors, it
is difficult to provide a broad overview of the market for film sets for Wao Kele o Puna.
The market for film locations is volatile with some years bringing in substantial revenue
while film locations may be dormant for decades.
For decades, the State of Hawai’i has served as a premier film location for film and
television producers. Demand for filming on Hawai’i Island has increased through the
years; however, the majority of productions still take place on Oÿahu. Due to the low cost
associated with this concept, the primary limiting factor is determining if the disruption a
film production could create, either through environmental degradation or through
interruption of another revenue concept, is worth the value of filming on the property.
Table 4-26 below shows pricing for similar filming locations.
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Table 4-26: Comparative Pricing for Hawaiÿi Filming Locations
Estimated Price per Day
State Land
Hawai’i Volcano
National Park
Honolulu County
Land
Kualoa Ranch
Some areas are free;
$100 for some areas
$150 small production (1-10
people);
$250 Midsize (11 – 30 people);
$500 Large (31 – 49 people);
$750 Major Production (over 50
people)
$20 Standard Production;
$300 Major Production
$2,500 Major Production;
$1,500 Half Day Production;
$1,000 Holding cost
Additional Pricing
Location
Amenities
Attendant Fee:
$40/hour
$150 permit
application fee.
None
None
None
None
Electricity,
Water, and
attendant
available
None
Kualoa Ranch is able to charge higher location fees due to the property’s brand name as
well as the availability of electricity, water, and an attendant for assistance. Public
locations such as state and county land, as well as National Park properties are not able to
charge high fees due to regulations and possibly the lack of amenities. A critical
difference is that Kualoa Ranch is privately owned and is able to restrict access to the film
location, while public location filming must contend with public access to the site.
Assuming Wao Kele o Puna is to be structured as a nonprofit LLC, the site could negotiate
a higher price with a film production in exchange for restricted public access. The next
consideration is to estimate how long the property would be used for a typical film shoot.
The length of time a film production uses the location varies by film shoot. In 2007,
national data was gathered from the United States National Park Service to determine the
length time and size of typical film production. As shown in Table 4-27 below, demand
for filming on US National Park land is primarily for small productions (80%) and for
short productions that require less than a week (92%). Filming on US National Park land
provides a close comparison of the demand for filming in scenic areas.
Table 4-27: Average Length of Film Productions in U.S. National Parks
US National Park –
Length of Production
Less than one week
Less than one month
One to three month
Over three months
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Frequency
92%
5%
1%
2%
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4.9.3
Capital Budget and Operating Costs
Assuming Wao Kele o Puna follows the example of similar film locations, there will be
low startup costs required to utilize the property for film and documentaries. In most
instances, the film production is responsible for providing the necessary insurance and is
liable for any damages done to the property. In some instances, an attendant is required
to accompany the film production and is paid through an assessed fee to the production.
The time required to establish this revenue option would be less than a year as the only
requirements would be to establish a nonprofit LLC and complete protocols for filming
such as establishing rules and regulations. The capital and operating costs of the project
are shown in Table 4-28 below.
Table 4-28: Capital and Operating Costs for Movies and Documentaries
Capital Costs
Studies
(Site Plan – devise rules and regulations for the site; structure the
property as a nonprofit LLC)
Permits
(None)
Facilities
(None, Assumes the startup work can be done remotely)
Equipment and Supplies
(None)
Total
$15,000 – $25,000
$0
$0
$0
$15,000 – $25,000
Annual Operating Costs
Staffing
(0.25 FTE)
Maintenance and Repair
(None)
Supplies
Other annual Costs
(None)
Total
$10,000 – $15,000
$0
$0
$0
$10,000 – $15,000
The property would on average need to attract 10 small film productions per year in order
to cover costs. It is important to note that this analysis takes this concept as a singular
project and does not include possible cost sharing with other projects. The primary
operating cost component included is a part time individual to coordinate film
productions, a responsibility that can be shared with other revenue concepts. “Bundling”
this revenue concept with visitor-related concepts such as the visitor retreat and/or
ecotourism, could provide cost savings for this concept as all of the operating costs are for
staffing to manage the site and film coordination. Staffing costs could be shared by these
concepts if a person were available on the property to manage and operate the visitor
retreat or ecotourism tours and act as a coordinator for film productions.
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4.9.4
5-year Cost and Revenue Projection
The cost and revenue projection (Table 4-29) assumes that Wao Kele may be able to attract
up to 10 small productions annually in the first five years of operation. Wao Kele o Puna
would likely not attract medium or large productions in the first few years due to the
site’s limited name recognition, remoteness and lack of amenities. Also assumed is that
each filming project would take approximately one week to complete.
Table 4-29: Five-Year Cost and Revenue Projection for Movies and Documentaries
Potential Revenue
Year 1
Year 2
Year 3
Year 4
Year 5
$5,250
$10,500
$10,500
$10,500
$10,500
Potential Cost
$27,500 - $45,000
$10,000 - $15,000
$10,000 - $15,000
$10,000 - $15,000
$10,000 - $15,000
Balance
($22,250 - $39,750)
$500 – ($4,500)
$500 – ($4,500)
$500 – ($4,500)
$500 – ($4,500)
End of Year 5
$47,250
$67,500 - $105,000
($20,250 - $57,750)
*Assumes at most 10 film projects a year. Except for the first year, where only half a year is
available. In this case, potential revenue is 5 film projects and a quarter-time person is needed to
staff the property.
Generating greater revenue levels over time will depend on attracting medium to large
film productions that use the property for extended periods. These large productions
tend to require exclusive use of the property and may disrupt other revenue generating
activities such as a tourism retreat. These productions, while lucrative, also may cause
damages to the environment that a smaller production would not.
There are opportunities for the film production concept to be “bundled” with nearly all
other revenue concepts; the concept could complement a mobile app or donation-based
website, as well as a sustainable forestry or nursery; assuming that filming does not
disrupt operations or vice versa. The bundle that creates the largest opportunities for
synergy and cost savings is to combine this concept with visitor-related activities. This
would provide labor cost savings while generating greater awareness of Wao Kele o Puna
and increasing visitor interest.
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4.10 “Niche” Carbon Credits
4.10.1 Concept Description
In our daily lives, we produce greenhouse gases (GHG) through the production of fossil
fuels. Greenhouse gases trap heat in the atmosphere and are considered the primary
factor in global climate change. One of the most common GHGs is carbon dioxide (CO2),
which is a by-product of traditional energy generation from the burning of fossil fuels.
Companies and individuals can estimate their carbon footprint, and work toward carbon
neutrality by reducing emissions and by offsetting their remaining carbon output.
Some countries and regions have mandated carbon emission restrictions that cap
allowable emissions and have a system where emissions allowances are distributed or
auctioned off. This system is called a “cap and trade” system, because member firms that
do not have enough allowances to cover their emissions can purchase another firm’s
unused credits. Other countries, like the United States, have voluntary carbon markets,
where companies or individuals may purchase carbon allowances, also called carbon
credits, to build a “green” image. Carbon credits are the equivalent of a tradable permit
that allows the holder to emit one ton of carbon or carbon dioxide equivalent (tCO2e).
Carbon credits are often called carbon offsets in the voluntary market.
Carbon projects generate carbon credits through a variety of means. Forest carbon
projects involve a distinct and intentional change in land management practices on a
specified area that leads to an increase in carbon storage over time. Some typical types of
forest carbon projects include:
• Avoided Deforestation (AD):
Reducing emissions by avoiding deforestation, typically from conversion to
agriculture or real estate development.
• Improved Forest Management (IFM):
Employing forest management strategies that enhance carbon storage over the
status quo management regime. Strategies could include reduced or avoided
logging, silviculture practices that increase carbon sequestration rates,
enhancement of native forests, and expanded conservation and buffer areas.
• Afforestation/Reforestation (AF/RF):
Afforestation is the establishment of forests on lands that were not historically
forested. Reforestation is the establishment of forests on lands that were
previously forested, but were subject to land use changes, such as conversion to
ranching.
For Wao Kele o Puna, IFM is the most likely option, because there is an existing forest
(eliminating AF/RF) and there is little chance of conversion to other uses due to the land
ownership, State Land Use designation, terrain, and potential lava flow hazard. IFM
would include removal of strawberry guava and replanting with native species. At this
time, it is estimated that about 5,000 acres of the property are densely infested with
strawberry guava. This area would be the focus of an initial carbon project.
A forest carbon project could be configured in many different ways. For the purposes of
this preliminary feasibility analysis, a hypothetical forest carbon project was designed for
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Wao Kele o Puna. This hypothetical project assumes that the 5,000 acres of forest densely
infested with strawberry guava will be the site of the initial project. Previous studies have
shown that native forests produce greater biomass than alien-dominated forest, thereby
holding more carbon. 43 Therefore, converting alien-dominated forest to native forest will
sequester additional carbon, which may be sold as carbon offsets. Only the projected
increase in carbon sequestration that would be achieved by switching from current
management practices to improved IFM strategies can be counted toward carbon sales.
A carbon project can only count the increase in carbon sequestration from management
that would not have occurred without the sale of carbon to fund it. Although it is likely
that OHA will engage in at least some forest management at Wao Kele of Puna, the type
and level of effort has not yet been determined because the management plan is currently
being developed. For the purposes of this study, it was assumed that conversion of the
entire 5,000 acres of strawberry guava to native forest can be counted toward the sale of
carbon offsets.
The hypothetical project assumes that 50 acres of strawberry guava will be cleared and
replanted with native forest species, including ÿöhiÿa, each year. After ten years of growth,
the replanted native forest will have sequestered enough carbon to be able to generate
revenue from the sale of carbon offsets. The increase in carbon that would be sequestered
in a native forest in comparison with an alien-dominated forest is based on the difference
in biomass observed in low elevation native and alien-invaded forests in a 2008 study,
Environmental and Biotic Controls over Aboveground Biomass Throughout a Tropical Rain
Forest. 44
4.10.1.1 Assumptions and Caveats
• An IFM carbon project may include a conservation focus only, or a conservation
focus with commercial thinning of some trees. In a voluntary market, the most
desirable IFM strategies would include the use of native species. Based on the
assessment of the “Sustainable Forestry” opportunity, no native trees are
considered feasible for commercial timber production at Wao Kele o Puna.
Therefore, only the IFM with a conservation focus was considered at this time.
• Further study may indicate that commercial thinning of native trees will bring
increased revenue. If the commercial thinning option is selected, OHA will need to
consider the assumptions and caveats, permitting, and land use designation
changes of the “Sustainable Forestry” option.
• OHA may need to get a land use designation change to “resource” subzone or a
variance in order to implement this project in the Conservation District
“protective” subzone.
• OHA may also need BLNR approval for implementation of this project in a Forest
Reserve.
43
Asner, Gregory P., R.F Hughes, T.A. Varga, D.E. Knapp, and T. Kennedy-Bowdoin. 2008.
Environmental and Biotic Controls over Aboveground Biomass Throughout a Tropical Rain Forest.
Ecosystems.
44
Asner, Gregory P., R.F Hughes, T.A. Varga, D.E. Knapp, and T. Kennedy-Bowdoin. 2008.
Environmental and Biotic Controls over Aboveground Biomass Throughout a Tropical Rain Forest.
Ecosystems.
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4.10.1.2 Strengths
• (Environmental) IFM would restore native forest trees to areas that are currently
infested with invasive strawberry guava.
• (Environmental) Ecosystem and watershed benefits of removing strawberry guava
and replanting with native tree species and perhaps encouragement of native forest
biodiversity (reduced erosion, increased water infiltration, improved habitat for
birds).
• (Education) An IFM carbon project would provide opportunities for education on
climate change, greenhouse gases, and the carbon market.
• (Cultural) Areas that are currently overgrown with invasive species and
inaccessible could become accessible for customary practices.
4.10.1.3 Weaknesses
• (Risk) Wao Kele o Puna is close to an active lava flow area: high lava flow hazard
risk, especially over the extended period needed for carbon sequestration.
• (Market) United States forestry-based carbon projects are currently only eligible for
the voluntary carbon market, reducing the potential price for carbon credits.
• (Market) The feasibility of forest carbon projects is untested in Hawaiÿi. The two
carbon projects initiated in Hawaiÿi have not yet begun selling carbon offsets,
although their projects were announced at least two years ago. Hawaiian
Mahogany on Kauai has been working for the past 18 months on getting the proper
certifications. 45 McCandless Ranch on Hawaiÿi island has decided to not do carbon
projects in lieu of conservation easements. 46
4.10.1.4 Opportunities
• (Market) There have been several proposed bills to create a cap and trade system in
the United States. If this legislation goes into effect, demand (and thus, price) for
carbon credits would increase significantly.
• (Synergies) The costs of a forest carbon project could include many costs that OHA
would incur as a land manager anyway. However, since carbon credits can only be
sold for carbon that would not have otherwise been sequestered, a carbon project
could not benefit from those savings. 47 However, a carbon project could help to
offset the management costs for lands that would not have been managed, given
OHA’s projected budget allocation for Wao Kele o Puna.
• (Synergies) Carbon projects could be conducted in conjunction with sustainable
forestry and invasive species extraction, which could add revenues and offset
management costs even more. Again, a carbon project would have to show that
the management actions would not have been implemented in the absence of the
project.
45
Interview with William Cowern, Hawaiian Mahogany, June 15, 2011.
Interview with Keith Unger, McCandless Ranch, June 23, 2011.
47
Interview with Bart Simmons and David Rokoss, Ecosystem Restoration Associates, June 14,
2011.
46
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4.10.1.5 Constraints
• (Capital Cost) High cost of strawberry guava clearing.
• (Capital Cost) Significant costs up front to get certified and verified.
• (Regulations) Potential presence of Threatened and Endangered species may limit
activities.
• (Regulations) Potential presence of archaeological and cultural resources that will
need to be protected.
• (Regulations) May need several land use changes and permits, if a commercial
thinning aspect of the carbon project.
4.10.2 Market Analysis
Because the US carbon market is voluntary, demand fluctuates with the health of the
economy. The recession caused many voluntary buyers to redirect their spending, but in
2010, the market rebounded, exceeding 2009 volumes by 34% (33.2 MtCO2e). 48 The
average price of credits transacted on the voluntary market in 2010 was $6 per tCO2e. The
voluntary US market is currently selling carbon credits at about $4 - $6 per credit. 49 Of the
credits transacted in 2010, 46% (28 MtCO2e) were supplied by land-based projects (as
opposed to renewable energy, methane control, and other projects). The forecasted
growth in the carbon market by 2015 exceeds the projected number of credits in project
pipelines, indicating that there is room for additional suppliers. 50
If the US enacts cap and trade legislation, the price of carbon credits would increase. The
most recent “American Power Act” was proposed by John Kerry and Joseph Liebermann
in March 2010, and phases in power plants, transportation fuels, and other GHG
producers in 2013, and large industrial sources and natural gas distributors in 2016.
Additionally, a “price collar” is initially set at $12 per credit (indexed to inflation plus 3%)
and increases to $25 per credit (indexed to inflation plus 5%).
Currently, there are opportunities to market voluntary carbon credits within the US. In
particular, the local hospitality industry would benefit from the “green” image that would
be created by restoring the native ecosystem, as well as by offsetting their carbon
footprint. Prominent hotel chains on three islands have shown interest in local forest
carbon projects, although interest decreased for projects that would produce low
biodiversity and focus primarily on timber production from non-native species. 51
48
Bloomberg New Energy Finance and Ecosystem Marketplace, 2011, Back to the Future: State of
the Voluntary Carbon Markets 2011, p.iii.
49
Interview with Bart Simmons and David Rokoss, Ecosystem Restoration Associates, June 14,
2011
50
Bloomberg New Energy Finance and Ecosystem Marketplace, 2011, Back to the Future: State of
the Voluntary Carbon Markets 2011, p.vii.
51
Personal communication with Bart Simmons and David Rokoss, Ecosystem Restoration
Associates, June 14, 2011.
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4.10.3 Capital Budget and Operating Costs
Development and operating costs were estimated for a 5,000-acre forest carbon project,
the estimated acreage of forest that is currently infested by strawberry guava. This
acreage was used to maximize the amount of carbon that could be sequestered by
changing management practices and converting invasive-dominated forest to native
forest.
Cost items for the forest carbon project were broken down into three main categories:
• Up-Front (One Time) Costs: for items that are needed to set up the operation. This
includes various studies, permit and approval applications, construction of
physical infrastructure, and purchasing of equipment and supplies.
• Operating Costs: for ongoing costs that must be paid each year. Cost items include
staffing; supplies (such as seedlings, fertilizers, etc.); operations, maintenance and
repair (such as 50 acres of site clearing and replanting each year)
• Operating Costs (every 50 acres): After 50 acres of forest is cleared and replanted
every year, the accumulated acreage must be maintained. These costs account for
the ongoing management of the accumulated acreage, after it has been replanted
with native species.
As part of the up-front costs, several studies, permits, approvals, and certifications will be
required including the following:
• Study to identify the appropriate carbon offset opportunities for Wao Kele o Puna
(improved forest management only, improved forest management with commercial
thinning, etc.) and to determine the amount of carbon that could be sequestered
under each opportunity;
• Environmental Assessment (including all of the necessary associated studies) for a
Conservation District Use Application;
• Conservation Plan (as an alternative to a grading and grubbing permit);
• Project Design Document (establishing the project parameters and methods, third
party verification and validation, and project registration).
Cost estimates for the Improved Forest Management Carbon Project are included in Table
4-30 below. More detailed costs are included in Appendix C.
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Table 4-30: Up-Front and Operating Costs for an Improved Forest Management Carbon Project
(50 acres)
Up-Front (One Time) Costs
Studies
(Biological survey1, archaeological inventory survey1,
environmental assessment, fire management plan, studies to
identify carbon offset opportunities that best suit Wao Kele o
Puna conditions, studies to determine how much carbon could
be sequestered using specified IMF strategies,)
$345,000 – $480,000
Approvals and Permits
(Conservation District Use Application, Conservation Plan,
Development of the Project Design Document, third party
validation, third party verification, and registration as a carbon
offset provider)
Physical Infrastructure
(storage shed/multipurpose room, restroom, water catchment,
access roads)
Equipment and Supplies
(miscellaneous equipment)
Total
$200,000 - $300,000
$1,000,000 $1,200,000
$30,000 - $50,000
$1,575,000 $2,030,00
Fixed Annual Operating Costs
Staffing
(Forest Management)
Supplies
(Stocking of seedlings, herbicide, fertilizer)
Operations, Maintenance and Repair
(site clearing, planting, weed control, fence maintenance, vehicle
and shed maintenance)
Other annual Costs
(Insurance, carbon project monitoring and reporting & fee)
Total
$80,000 - $90,000
$90,000 - $110,000
$700,000 - $900,000
$40,000 - $60,000
$910,000 $1,160,000
Cumulative Operating Costs (for every 50 acres)
Operations, Maintenance and Repair
(on-going forest & weed, management – 1 worker day/acre
annually)
$12,500 per 50 acres
Total
$12,500 per 50 acres
Notes:
1
Studies associated with the Environmental Assessment
Costs for strawberry guava removal could be reduced if a road is constructed to access the
densely infested areas, allowing a mulcher to be brought in. However, it is unlikely that
the expected revenues would be sufficient to cover even these reduced costs.
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4.10.4 5-year Cost & Revenue Projection
On-the-ground forest carbon project actions would be similar to normal forest
management practices and would thus be allowed in the current state land use district.
However, before proceeding, OHA would need to develop its comprehensive
management plan and establish its own set of rules for the entire Wao Kele o Puna
property so that this action can be properly designed within the context of managing the
larger property. We estimate that the total period of time needed to establish the
management plan and rule changes would range from 3 to 7 years.
The studies, permits, approvals, and certifications listed in Table 4-30 will also require a
considerable amount of time:
• Study to identify the appropriate carbon offset opportunities for Wao Kele o Puna
and to determine the amount of carbon that could be sequestered (6-12 months)
• Environmental Assessment, including all of the necessary studies (6-12 months)
• Conservation Plan (less than 6 months)
• Project Design Document (6-12 months)
Therefore, it would take about six to ten years before a forestry carbon project could be
initiated with all of the required permits, approvals, and certifications.
Once the project is initiated and assuming OHA could clear and replant 50 acres of forest
per year, it would take 100 years to clear the 5,000 acres of strawberry guava. After 100
years, the annual cost to OHA would be $2,193,500 while the expected revenue generated
at a selling price of $5 per credit ($2.50 of which would go to OHA after paying a project
partner for marketing and sales of the credits), would be $1,937,208, a loss of $256,293
(2011 dollars). Over the 100-year life of the project, OHA would have expended
$159,101,300, while only making $89,111,523 (Table 4-32). Therefore, cumulative project
costs greatly exceed potential cumulative revenues. This project could still supplement
management actions that OHA would like to implement, but it would not be a revenue
generator as evaluated in this scenario.
It should be noted that if a cap and trade system is legislated and the maximum $25 per
credit market price is reached, OHA could expect to generate sufficient cumulative
revenues over a 100-year project to cover the cumulative cost of the forest carbon project,
even after paying its project partner $5 per credit.
Wao Kele o Puna Revenue Opportunities
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4 - Feasibility Analysis of “Top Ten” Opportunities
Table 4-31: Carbon Project Assumptions
Total available acres
Acres to be cleared and managed every
year
Difference in biomass1:
native vs. invaded forest
5,000
50
340.5 Mg
per ac
Aboveground biomass (AGB)
– native forest2
896.5 Mg
per ac
AGB – invaded forest2
556.0 Mg
per ac
Difference in carbon3: native vs. invaded
170.3 tCO2e
per ac
Estimated increase in the amount of
carbon that would be sequestered by
implementing the carbon project
851,500 tCO2e
per acre
Number of credits that could be sold
170.3 credits
per ac per year
Price per carbon credit on the market
$5 per credit
Revenue per carbon credit to OHA
$2.50 per credit
Notes:
1
2
3
Difference in Biomass = (Native Forest AGB) – (Invaded Forest AGB)
http://www.fs.fed.us/psw/publications/hughes/psw_2008_hughes002.pdf
AGB assumed to be 50% carbon
Wao Kele o Puna Revenue Opportunities
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4 - Feasibility Analysis of “Top Ten” Opportunities
Table 4-32: 100-Year Cost and Revenue Projection Example
Area
generating
Revenue
(acres)1
0
50
800
2,050
3,300
4,500
Potential
Revenue for that
year
($2.50 per credit)
$0
$21,288
$340,608
$872,808
$1,405,008
$1,937,208
Potential Cost
YEAR
Balance
for that year
Year 12
$2,582,300
($2,582,300)
Year 10
$1,068,500
($1,047,213)
Year 25
$1,256,000
($915,393)
Year 50
$1,568,500
($695,693)
Year 75
$1,881,000
($475,993)
Year 100
$2,193,500
(256,293)
Cumulative
over 100
4,500
$89,111,523
$159,101,300
($69,989,778)
Years
Notes:
1
It is assumed that the replanted native forest will require at least 10 years before it will have
increased its carbon sequestration above baseline amounts and therefore have excess carbon for
sale.
2
Year 1 of project implementation, assuming all permitting, certifications, and financing is in place.
4.10.5 Possible Alternatives
An alternative to selling carbon credits in the carbon trading market is to sell them
directly to consumers via kiosks that would be located at high-traffic, high greenhouse
gas-emitting locations, such as airports. In 2009, the San Francisco Airport (SFO) became
the first airport to offer carbon offsets via their “Climate Passport” program where
passengers may purchase carbon offsets at three kiosks located at various terminals.
San Francisco Airport “Climate Passport” kiosk
T
h
e
Wao Kele o Puna Revenue Opportunities
Page 86
4 - Feasibility Analysis of “Top Ten” Opportunities
The consumer uses the kiosk to calculate the amount of carbon that they will be
producing as a passenger of a particular flight. A set charge (SFO charges $13.50 for each
ton of carbon) is applied to the amount of carbon that the passenger would purchase to
offset their flight. The passenger has the option of purchasing the carbon offset or
declining. The SFO program is operated by 3Degrees, an environmental commodities
trading firm that retires the amount of carbon offsets purchased by the customer. The
offsets are used to fund management of the Garcia River Forest, 100 miles from San
Francisco in Mendocino County, California. Additionally, $1.50 per ton of carbon is also
allocated to the SFCarbon Fund, which invests in greenhouse gas reduction projects in
San Francisco.
One noteworthy detail is that the cost of each ton of carbon is significantly higher than the
market price of carbon offsets. At the time the kiosks were implemented, carbon was
selling for less than a dollar per credit. One website reported that a ton of carbon offset on
the Chicago Climate Exchange was selling for $0.20, 60 times less than what was being
offered at the SFO kiosk. 52 Readers of various articles on the carbon offset kiosks
commented that even though the offsets were verified by a third party, they were
skeptical as to what the revenue would be used for.
The only comparable operation in Hawaiÿi was a carbon offset program that the Hawaiÿi
Conservation Alliance is using for their Hawaiÿi Conservation Conference (HCC) to be
held in August 2011. HCC has partnered with the company HiCO2.org to allow
attendees to offset the carbon emitted by their travel by funding koa forest restoration at
the Hakalau Forest National Wildlife Refuge on Hawaiÿi island. The average cost of
traveling interisland was calculated at $16 per round trip, or about $47 per metric ton of
carbon. The HCC carbon offsets are purchased via a website,
http://www.hico2.org/index.html, rather than at a kiosk.
If a carbon offset kiosk were to be pursued, it would best be installed at Honolulu
International Airport, where traffic volumes are much higher than at either the Hilo or
Kona airports on Hawaiÿi island. Additionally, the Honolulu airport services longer
flights on average, thereby generating more revenue per transaction. The State
Department of Transportation (DOT) Airports Division has not had any internal studies
or discussion regarding carbon offset kiosks and consequently has no policies or pricing
regarding them. 53 In order for DOT to make a decision on whether or not to allow these
types of kiosks and determine a pricing scheme, they would need a presentation on the
proposed concept. Some factors that DOT would take into consideration are their
agreement with blind vendors for concessions and the impact of kiosks on the aesthetics
of the airport and overall visitor’s experience.
52
Watts Up With That? “Carbon Offset Kiosk at SFO Sells Carbon Credits at 60 Times the Market
Rate” Published on September 18, 2009. Retrieved on July 20, 2011.
http://wattsupwiththat.com/2009/09/18/carbon-offset-kiosk-at-sfo-sells-carbon-credits-at-60times-the-market-rate/
53
Interview with Sandra Gillis, State Department of Transportation Airports Division Property and
Business Development Office, July 22, 2011
Wao Kele o Puna Revenue Opportunities
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5 - Comparative Summary of Opportunity Costs & Feasibility
5
COMPARATIVE SUMMARY OF OPPORTUNITY COSTS & FEASIBILITY
Table 5-1 summarizes feasibility parameters of the concepts analyzed in this feasibility
study for comparison purposes. The concepts are listed in order of complexity and
potential time involved in major land use changes, permitting, and implementation. Risk
in this table is defined as the potential for net revenues to be less than estimated due to
variables that cannot be controlled (e.g. fluctuating demand, unreliable knowledge base,
environmental conditions, etc.)
Table 5-1: Concept Feasibility Summary
Name
Time for
Land Use
changes &
permits
None
Time
period
before
revenue
6 months
None
1 year
None
1 year
Makana – virtual shop
None
1 year
Makana - booth at
market
Invasive Species
Extraction (400 ac)
Eco-Tourism & VolunTourism
Overnight Retreat
(40-70% occupancy)
Native and Cultural
Plant Cultivation nursery (1 ac)
Native and Cultural
Plant Cultivation –
agroforestry (10 ac)
Sustainable Forestry
(100 ac)
None
1 year
None
N/A
2 years
4 years
5-9 years
6-11 years
5-9 years
6-10 years
5-10 years
Movie Productions
(assumes 10 films/yr)
Individual Donor-based
Program
Phone App
“Niche” Carbon Credits
(per 50 ac managed)
Initial
Capital
Cost
Annual
Operating
Cost
Gross Annual
Revenue
potential
$15,000$25,000
$58,500$92,100
$58,600$92,200
$10,000$15,000
$31,700$51,700
$32,700$50,700
$10,500 annually
High
$60,000 at year 51
Moderate
High
$40,500$82,000
$28,000$77,000
$30,000$50,000
$255,000$410,000
$1,590,000$2,340,000
$920,000$1,120,000
$143,000$195,000
$42,000$80,000
$300,000
at year 52
$265,000$450,000
$235,000$385,000
$242,000$385,000
$12,500
first year of
release
$115,200 at year 5
Moderate
$20,800 at year 5
Moderate
7-14 years
$1,420,000$1,790,000
5-10 years
30-35 years
7 years
17 years
Risk
No revenue
N/A
$164,000 at year 5
Moderate
$175,200-$306,600
Moderate
$350,000-$500,000
Moderate
$427,000$590,000
(best case)
$600,000-$800,000
High
$1,280,000$1,870,000
$130,000$180,000
High
$2,365,000$3,040,0003
$132,500$162,5004
$4,550,000$14,000,000
One-time harvest
$21,300 after
establishment per
50 ac managed
High
Notes:
1
Estimated annual revenue after 4 years of operation
2
Some management costs are cumulative with additional acreage added over time, cost estimate
represents operation cost at year 5 assuming an extraction rate of 100 acres/year.
3
Cost includes studies, permits and infrastructure needed to establish a carbon credit project, as
well as strawberry guava removal and native forest restoration on 50 acres
3
Cost includes staffing, maintenance and other annual costs for 50 acres
Wao Kele o Puna Revenue Opportunities
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5 - Comparative Summary of Opportunity Costs & Feasibility
Based on the results of our analysis, the following conclusions can be made regarding the
potential feasibility of the various alternatives:
1. None of the concepts analyzed offer an easy solution for providing potential
income to help support forest management activities at Wao Kele o Puna.
Generally, potential revenues from these concepts are relatively low and operating
costs would have to be kept low to make a profit. Additionally, several concepts
are considered risky due to a variety of reasons including unreliable and emerging
markets, environmental hazards, lack of local knowledge, etc.
2. Several economic activities that could be conducted onsite, including plant
cultivation and forestry, are not allowable uses in the State Conservation District
"protective" subzone. Consequently, subzone designation changes or variances,
and Conservation District use permits will be required for those opportunities.
Additionally, designation of the property as "State Forest Reserve" restricts the
potential uses of the property; at a minimum, OHA will need approval from the
Board of Land and Natural Resources for any commercial activities in the Forest
Reserve.
3. Most of the concepts analyzed would benefit from operating under a different
entity than a government agency. Several concepts would be best operated under
a limited liability company entity; the donor-based conservation program would
be best operated through a 501(c)3 non-profit organization. OHA could also
consider partnering or contracting with existing local companies and
organizations, which would minimize risks to OHA and provide potential
economic benefits to local communities.
4. A donor-based conservation program would be a good way to develop awareness
about Wao Kele o Puna and to generate limited annual revenue. It could benefit
from the implementation of some other concepts including ecotourism, film
productions, and phone apps that would help develop brand recognition for Wao
Kele o Puna.
5. Low-impact small-scale visitor operations would likely not be economically
feasible on their own because large capital and operating costs would outweigh
potential returns. However, they would benefit from being bundled with other
opportunities that would provide added value, such as phone apps or a makana.
Small-scale visitor operations do have the benefit of increasing awareness of Wao
Kele o Puna
6. Native and Hawaiian plant cultivation concepts have the potential to generate
some revenue but would be risky for OHA to operate due to site conditions,
varying production yields, and limited market data. However, they offer unique
opportunities for partnership with knowledgeable professionals and/or the Puna
community.
Wao Kele o Puna Revenue Opportunities
Page 89
5 - Comparative Summary of Opportunity Costs & Feasibility
7. Opportunities that require removal of strawberry guava, including carbon credits
and forestry, are costly because there is no affordable way of removing and
disposing of strawberry guava.
8. Foresty offers the best opportunity for long-term return on investment, but it is
considered risky due to environmental conditions of the property.
6
IMPLEMENTATION NEEDS AND RECOMMENDATIONS
Based on this feasibility analysis, some recommendations can be made regarding concept
implementation and funding for forest management:
1. Revenues from income concepts at Wao Kele o Puna that are used for
management of the forest should be considered as potential match funding for
grants from Federal agencies and potential private donors. Although grants are
subject to economic downturns and are competitive, the unique resources of Wao
Kele o Puna make it a good candidate for grant funding. Either OHA or a nonprofit entity could be eligible for Federal government grants; however, as a
government entity, OHA may not be eligible for most private foundation grants.
2. The property is currently designated as a State Forest Reserve and thus subject to
DLNR’s Forest Reserve rules. Those rules are incompatible with several potential
revenue concepts for Wao Kele o Puna. Consequently, OHA will at a minimum
need to get approval from the Board of Land and Natural Resources to be able
implement these revenue concepts.
3. OHA should develop a master plan for the property, which will help guide
resource management and other activities on the property.
4. Some individuals have expressed interest in partnering with OHA on some
potential revenue opportunities (e.g. Hui Kü Maoli Ola interest in developing a
plant nursery); these potential partnerships could provide excellent opportunities
for concepts that would benefit the community and would help support the
management of the forest. As part of the master planning process, OHA should
identify whether other potential partnership opportunities may exist.
Wao Kele o Puna Revenue Opportunities
Page 90
References
7
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Wao Kele o Puna Revenue Opportunities
Page 94
APPENDIX A
Opportunities Screening Spreadsheet
WAO KELE O PUNA - CRITERIA FOR SELECTING INCOME PRODUCING OPPORTUNITIES
NON-MARKET VALUE CRITERIA
April 28, 2011
E
CRITERION
SOURCE
OHA Strategic Plan (2) DLNROHA MOA (1)
1 Protection and enhancement of native plant and wildlife habitat OHA Real Estate Strategy (1)
Forest Legacy Program
Guidelines (1)
Respect of the sacred qualities and Hawaiian cultural legacy of
the property
(WKOP spiritual importance as home of Pele, important
OHA Strategic Plan (2)
2 cultural and religious activities, importance as source for
OHA Real Estate Strategy (1)
abundant springs of Puna; Puna as important center for hula
PDF vs. Campbell (1)
and regenerative power, importance of hala forests, maile
scent, hapu'u pulu in mo'olelo of Puna)
OHA Strategic Plan (2)
Sustainable use of the native resources of the property.
DLNR-OHA MOA (1)
3 (Sustainable use is the management of resources so as to
Forest Legacy Program
maintain ecological balance to avoid depleting resources)
Guidelines (1)
Access for traditional and customary practices.
4 ( Hunting included as an important customary and subsistence
activity of Native Hawaiian communities of Puna)
Benefit to the self-sufficiency and well-being of Native Hawaiian
Communities of Moku o Keawe
5 (direct benefits - provides jobs, job training, provide potential
income source, culturally important activity for community,
promotes self-governance)
Education, advocacy, and collaborative development value
(Education: demonstrations, classes, guided tours, written
8 information, videos, etc.; Advocacy: active support of WKOP,
donating, volunteering; Collaborative development: partners,
learning exchange)
6
OHA Strategic Plan (2)
OHA-DLNR MOA (1)
PDF vs. Campbell (1)
+
0
Activity protects and enhances native
plant and wildlife habitats of the
property
(Activities that only provide general
funding that may be used towards
protection don't meet this criterion)
Activity does not provide
protection of native
plants/wildlife habitats
Activity emphasizes respect for the
sacred quality / cultural legacy of
WKOP?
Activity does not affect or is
neutral
Activity is a sustainable use of the
native resources of the property or does
not require the extraction of WKOP
resources
N/A
Activity could minimally restrict
Activity does not restrict people's
people's access for traditional
access to the property for traditional and
and customary practices to
customary practices
some limited portions of WKOP
Activity provides avenues for
OHA Strategic Plan (2)
enhancement of self-sufficiency and/or
OHA Real Estate Strategy (1)
well-being of Native Hawaiians
Activity does not affect or is
neutral
Activity promotes education, advocacy,
OHA Strategic Plan (2)
Activity does not affect or is
and/or collaborative development
OHA Real Estate Strategy (1)
neutral
beneficial to the property
Protection and enhancement of the natural, scenic and openDLNR-OHA MOA (1)
space nature of the property.
Forest Legacy Program
(Considerations: potential visual impacts of fences vs. invasive
Guidelines (1)
species infestation; how activity might restrict access)
Activity promotes the protection and
enhancement of the natural, scenic and
Activity does not affect or is
open-space nature of the property
neutral
(general funding only does not meet
criterion)
Benefit to all people with a connection to Hawaii: indirect
values (Inherent value of conservation of WKOP, to people that
Activity enhances well-being for the
7
OHA Real Estate Strategy (1)
may be far away, to future generations; inherant and indirect
community at large (indirect benefits)
cultural values)
Activity promotes the protection of
Protection of important recreational resources, riparian areas,
important recreational resources,
and other ecosystem values
Forest Legacy Program
riparian areas, and other ecosystem
9
(watershed function: freshwater supply, carbon sequestration, Guidelines (1)
values of WKOP
bird corridor, seed bank)
(general funding only does not meet
criterion)
Activity does not affect or is
neutral
Activity does not affect or is
neutral
-
SCORE
WEIGHT
Activity is likely to negatively impact
native plant/wildlife habitats
+5, 0, -5
Activity is considered to not be
respectful of the sacred quality and
cultural legacy of WKOP?
Activity is likely to deplete the native
resources of the property
Activity could negatively impact selfsufficiency, and/or well-being of
Native Hawaiians
+3, 0, -3
Activity negatively affects potential
for education, advocacy, and/or
collaborative development
beneficial to the property
+3, 0, -3
Activity diminishes the natural,
scenic and open-space nature of
the property
+2, 0, -2
TOTAL
Assumptions: 1) Activities ranked based on assumptions made on management practices, site restrictions (see opportunities assumptions spreadsheet)
2) CRITERIA WEIGHTING: based on guidance documentation for the management of WKOP (per RFP)
OHA Strategic Plan is overarching guidance document for OHA actions and management decisions ‐ weight = 2
Other guidance documents: OHA Real Estate Strategy, DLNR‐OHA MOA, Forest Legacy Guidelines each weighted =1
Each criterion is assigned a weight based on which guidance document(s) it was included in (see "source" column)
3) Screening process: scores below 10 were considered to not meet acceptability criteria. Invasive species extraction ‐
invasive species (strawberry guava) as biofuel / biochar
Pharmaceuticals
0
0
0
5
0
5
5
0
5
4
4
4
4
4
4
4
0
0
4
4
4
4
4
4
4
4
4
4
4
4
4
4
0
0
0
0
3
3
3
0
0
3
3
0
0
3
3
3
3
3
3
3
0
0
0
0
0
2
0
2
2
0
2
1
1
0
1
1
1
1
0
1
0
0
0
0
0
1
1
0
1
19
19
18
23
16
23
23
4
13
+4, -4
+4, 0, -4
Activity could impact important
recreational resources, riparian
areas, and other ecosystem values
Phone apps
+4, 0, -4
Activity is likely to significantly
restrict people's access to the
property by traditional and
customary practitioners
Activity reduces well-being for the
community at large
Website
Native plant cultivation: Native plant cultivation: medicinal plants and ornamental plants and culturally important plants for seed (maile, plants ('awa, mamaki, lei hapuu, 'ulu, hala, ?)
plants, hula plants, ?) IN THE FOREST
IN THE FOREST
Conservation Subscription / "Gift Shop" and demo Halau: Individual donor‐based Endowment sale of book(s), children's programs: "Friends of Wao Fund
books, artisan products, Kele o Puna", "Adopt a tree", WKOP inspired art
"Adopt a forest"
+1, 0, -1
+1, 0, -1
WAO KELE O PUNA - CRITERIA FOR SELECTING INCOME PRODUCING OPPORTUNITIES
NON-MARKET VALUE CRITERIA
April 28, 2011
conomic Opportunities
CRITERION
SOURCE
OHA Strategic Plan (2) DLNROHA MOA (1)
1 Protection and enhancement of native plant and wildlife habitat OHA Real Estate Strategy (1)
Forest Legacy Program
Guidelines (1)
Respect of the sacred qualities and Hawaiian cultural legacy of
the property
(WKOP spiritual importance as home of Pele, important
OHA Strategic Plan (2)
2 cultural and religious activities, importance as source for
OHA Real Estate Strategy (1)
abundant springs of Puna; Puna as important center for hula
PDF vs. Campbell (1)
and regenerative power, importance of hala forests, maile
scent, hapu'u pulu in mo'olelo of Puna)
OHA Strategic Plan (2)
Sustainable use of the native resources of the property.
DLNR-OHA MOA (1)
3 (Sustainable use is the management of resources so as to
Forest Legacy Program
maintain ecological balance to avoid depleting resources)
Guidelines (1)
Access for traditional and customary practices.
4 ( Hunting included as an important customary and subsistence
activity of Native Hawaiian communities of Puna)
Benefit to the self-sufficiency and well-being of Native Hawaiian
Communities of Moku o Keawe
5 (direct benefits - provides jobs, job training, provide potential
income source, culturally important activity for community,
promotes self-governance)
Education, advocacy, and collaborative development value
(Education: demonstrations, classes, guided tours, written
8 information, videos, etc.; Advocacy: active support of WKOP,
donating, volunteering; Collaborative development: partners,
learning exchange)
6
OHA Strategic Plan (2)
OHA-DLNR MOA (1)
PDF vs. Campbell (1)
+
0
Activity protects and enhances native
plant and wildlife habitats of the
property
(Activities that only provide general
funding that may be used towards
protection don't meet this criterion)
Activity does not provide
protection of native
plants/wildlife habitats
Activity emphasizes respect for the
sacred quality / cultural legacy of
WKOP?
Activity does not affect or is
neutral
Activity is a sustainable use of the
native resources of the property or does
not require the extraction of WKOP
resources
N/A
Activity could minimally restrict
Activity does not restrict people's
people's access for traditional
access to the property for traditional and
and customary practices to
customary practices
some limited portions of WKOP
Activity provides avenues for
OHA Strategic Plan (2)
enhancement of self-sufficiency and/or
OHA Real Estate Strategy (1)
well-being of Native Hawaiians
Activity does not affect or is
neutral
Activity promotes education, advocacy,
OHA Strategic Plan (2)
Activity does not affect or is
and/or collaborative development
OHA Real Estate Strategy (1)
neutral
beneficial to the property
Protection and enhancement of the natural, scenic and openDLNR-OHA MOA (1)
space nature of the property.
Forest Legacy Program
(Considerations: potential visual impacts of fences vs. invasive
Guidelines (1)
species infestation; how activity might restrict access)
Activity promotes the protection and
enhancement of the natural, scenic and
Activity does not affect or is
open-space nature of the property
neutral
(general funding only does not meet
criterion)
Benefit to all people with a connection to Hawaii: indirect
values (Inherent value of conservation of WKOP, to people that
Activity enhances well-being for the
7
OHA Real Estate Strategy (1)
may be far away, to future generations; inherant and indirect
community at large (indirect benefits)
cultural values)
Activity promotes the protection of
important recreational resources,
Protection of important recreational resources, riparian areas,
riparian areas, and other ecosystem
and other ecosystem values
Forest Legacy Program
9
values of WKOP
(watershed function: freshwater supply, carbon sequestration, Guidelines (1)
(general funding only does not meet
bird corridor, seed bank)
criterion)
Activity does not affect or is
neutral
Activity does not affect or is
neutral
Invasive species extraction Non‐native edible forest ‐ strawberry guava wood products (strawberry guava, (for timber, wood crafts, lilikoi?)
chips)
-
3) Screening process: scores below 10 were considered to not meet acceptability criteria. Hula/cultural practice retreats / artist retreats / visitor retreats Cultural and Eco‐tourism tours (hiking, bird watching, volunteering tours)
Campsites
Movies and documentaries
Carbon credits
University Research
Water (bottling) from WKOP springs
Activity is likely to negatively impact
native plant/wildlife habitats
0
5
5
0
‐5
0
0
5
5
0
0
0
0
4
0
4
0
0
0
‐4
4
4
4
4
4
4
4
4
4
4
4
0
0
0
4
4
0
0
0
0
‐2
0
3
3
0
3
3
0
0
3
0
0
3
3
0
3
3
0
3
0
0
2
2
2
2
2
2
2
0
0
0
1
1
0
0
0
1
1
1
0
0
1
1
1
1
1
0
1
0
‐1
6
13
19
17
6
21
13
13
13
2
Activity is considered to not be
respectful of the sacred quality and
cultural legacy of WKOP?
Activity is likely to deplete the native
resources of the property
Activity is likely to significantly
restrict people's access to the
property by traditional and
customary practitioners
Activity could negatively impact selfsufficiency, and/or well-being of
Native Hawaiians
Activity negatively affects potential
for education, advocacy, and/or
collaborative development
beneficial to the property
Activity diminishes the natural,
scenic and open-space nature of
the property
Activity reduces well-being for the
community at large
Activity could impact important
recreational resources, riparian
areas, and other ecosystem values
TOTAL
Assumptions: 1) Activities ranked based on assumptions made on management practices, site restrictions (see opportunities assumptions spreadsheet)
2) CRITERIA WEIGHTING: based on guidance documentation for the management of WKOP (per RFP)
OHA Strategic Plan is overarching guidance document for OHA actions and management decisions ‐ weight = 2
Other guidance documents: OHA Real Estate Strategy, DLNR‐OHA MOA, Forest Legacy Guidelines each weighted =1
Each criterion is assigned a weight based on which guidance document(s) it was included in (see "source" column)
Sustainable forestry
APPENDIX B
Individuals Contacted
WAO KELE O PUNA
INDIVIDUALS CONTACTED
Townscape, Inc. and SMS Consulting
Contact Name
Bob Freitas Jr.
Gail Chew
Affiliation
Artist with MAMo
(Hawaiian art Hui)
Primary Opportunity
Other opportunities
WKOP Halau and "Gift Shop"
Retail options
Movies &
documentaries
Toni Davis
Hi'ipaka (Waimea Valley) WKOP Halau and "Gift Shop"
Attractions & Activities
Association
Ecotourism
Ken Schmitt
Hike Maui
Julie
Maui Tropical Plantation Ecotourism
Hawaii Tropical Botanical
Gardens
Ecotourism
Retreat
Ecotourism
Conservation
Subscription
Audubon Society
Ecotourism
Hawaii Forest & Trail
Kumu Hula of Hula
Halau O Kou Lima
Ecotourism
Kilauea Military Camp
CTAHR Forestry
Extension
Retreat
Sustainable Forestry
Hal Brauner
Hawaiian Mahogany
Brauner Molding
Woodworks
Scott Salsen
Oils of Aloha
Hawaii Island Kukui Nut
Products
Jim Quinn
Hawaii Island Hardwoods Sustainable Forestry
Nick Koch
Sustainable Forestry
Agroforestry
Nick Dudley
Forest Solutions, Inc.
Hawaii Agriculture
Research Center
Native Plant Cultivation
Sustainable Forestry
Heidi Bornhorst
Hawaii Gardens
Native Plant Cultivation
Craig Elevitch
Agroforestry.net
Native Plant Cultivation
Sustainable Forestry
Rick Barboza
Hui Ku Maoli Ola
Native Plant Cultivation
Sustainable Forestry
Scot Nelson
UH CTAHR
Hawaii County R&D
Agriculture specialist
Native Plant Cultivation
Sustainable Forestry
Native Plant Cultivation
Sustainable Forestry
Ron Pacheco
Iwalani Kalima
Arlene
J B Friday
Bill Cowern
Daidai Hopkins
Retreat
Sustainable Forestry
Carbon Credits
Sustainable Forestry
Sustainable Forestry Kukui Nut Market
Sustainable Forestry Kukui Nut Market
WAO KELE O PUNA
INDIVIDUALS CONTACTED
Townscape, Inc. and SMS Consulting
Contact Name
Affiliation
Primary Opportunity
Other opportunities
Jim Ferrell
Retired horticulturalist
Native Plant Cultivation
Sustainable Forestry
Mike Kraus
Tree Works
Invasive Species Extraction
Sustainable Forestry
Josiah Hunt
David Rokoss
Hawaii Biochar Products Invasive Species Extraction
Ecosystem Restoration
Associates (ERA)
Carbon Credits
Ecosystem Restoration
Associates (ERA)
Carbon Credits
Keith Unger
McCandless Rach
Carbon Credits
Sustainable Forestry
William Cowern
Carbon Credits
Sustainable Forestry
Sandra Gillis
Hawaiian Mahogany
DOT Airports Division,
Property and Business
Devt Office
David Takayama
Oceanit
Mobile App
Daniel Leuck
IKAYZO inc.
Mobile App
Sandi Ichihara
Hawaii State Film Office
Film
John Mason
Big Island Film Office
Film
Dave Kozuki
Peoplebridge
Honolulu Zoological
Society
Website
Bart Simmons
Dyanna Okazaki
Carbon Credits
Website
APPENDIX C
Cost Analysis Table
WAO KELE O PUNA
Cost Analysis Table
Townscape, Inc.
August 2011
Development Cost Factors
Concepts
Consulting Costs (special consultant fees)
Consulting Needed
Cost
Physical Infrastructure development cost per unit
(including buildings, facilities, access, utilities)
Element
Approvals and permits required
Permit
Cost
Specialized Equipment cost (machinery,
vehicles, etc.)
Item
Cost
Cost
E-store
Likely a part of establishing an overall
WKOP website - add to cost below.
TOTAL
Makuu Market
Establish a business entity
Van to pick up items from
artists and take to storage
facility.
$30,000
$1,000
Website development
$10,000
Digital camera to take
picture of items to post on
site.
Business Plan
$15,000
Misc. equipment
Studies
$25,000 Permits
$0 Facilities
LU permits if halau:
$5,000 grading/grubbing, building
permits
Business Plan
If halau, structure for halau + shop, restroom, utilities,
Cost
TOTAL ESTIMATED
CAPITAL COST
Credit card
processing.
$31,500 Supplies
Van to pick up items from
artists and take to storage
facility.
Establish a business entity
Other capital cost (marketing)
Element
Cost
$500
$0 Equipment
WKOP Halau and Makana
Initial Supplies (plants, etc.)
Element
$30,000
Misc. equipment
Display tables & table cloths for the
market
$1,000 Display accessories, shelving, etc.,
$0 Other
Brochures
describing
$1,000 WKOP and the
connection with
the artist.
$0
$56,500
$10,000
Credit card
$1,000 processing
(2%)
GET License
TOTAL
Studies
Architect (site design)
Assume 5% of bldg cost
Hula/Cultural Practice
Retreat, Artist Retreat,
Visitor Retreat
Engineer (site design + utilities)
Assume 5% of bldg cost
TOTAL
Eco-Tourism &
Voluntourism
Planner - Env Assessment +CIA
Business Plan
Studies
$5,000
Archaeological Inventory Survey of
forestry areas + Cultural Impact
Assessment + Preservation Plan
(Assume: 40 person.days for field)
Professional Forester (Forestry Mgmt
Plan incl. Business Plan)
Planner - Env Assessment
Fire Management Plan
TOTAL
Plant Nursery
CDUP (requires EA and
CIA, Forestry Management
Plan)
$50,000
Grading &grubbing permit
$15,000
Building permit
$215,000 Permits
$75,000
Engineer (site design + utilities)
Assume 5% of bldg cost
Studies
Sustainable Forestry Auditing &
Certification
Studies
$0 Facilities
Grading & Grubbing (for
visitor center)
Building permit (for visitor
center)
BLNR authorization for
commercial tours in Forest
Reserve
$25,000 Permits
$15,000
$0 Equipment
One overnight retreat building (minimum thirty beds, restroom
facilities, kitchen, dining hall/meeting room).
Assume: 5,000 sf each, incl. grey water system + compost toilet (no
septic system), $300/sf (higher cost for remote location)
$1,500,000
$100,000
$30,000 Hula mound (Assume 400 sf, $40/sf)
$20,000
2 vans for guests
$80,000
$10,000 Water catchment
$10,000
$50,000 Facilities
$6,500
$1,526,500 Equipment
Visitor center: site for restrooms, gathering of groups as they wait for
$15,000 tours to begin, provision of water/refreshments.
Assume $200/sf, 500 sf; Assume visitor center is offsite
$5,000
Access trails (for visitors - $500/mi
Assume five mi. trails
$2,500
$5,000 Interpretive Signage
$5,000
Equipment for voluntourism
activities
$10,000
$5,000 Brochure
$10,000
Website
$180,000 Supplies
Supplies for the restroom and
$40,000 cleaning supplies. Water cooler,
refrigerator.
$5,000 Misc. supplies
$20,000
$2,000 Brochure
$10,000
$5,000 Website
$10,000
$7,000
$20,000
Shaded gathering site + composting toilet facilities on property (for
tours + volunteers) - Assume $100/sf, 500sf +$10,000 compost toilet
$60,000
$45,000 Supplies
Conservation District
$120,000 Subzone change to
"Resource"
$212,500 Miscellaneous eqpt
$10,000
CDUP (requires EA and
$120,000 CIA, Forestry Management
Plan)
$30,000 Fencing - $12/ft, 8,400ft
$100,000
Planting labor and equipment $500/ac (assuming 2
worker.day/ac)
$50,000
$200,000
Initial herbicide application (2
times) - $500 /ac.
$50,000
Fertilizer - $300 /ac.
$30,000
Weed control and
Fertilizer (years 2-5) - $200/ac
$80,000
Conservation Plan (or
grading/grubbing permit)
$20,000
$50,000
Equipment Storage Shed, multipurpose room, restroom, enclosed
fertilizer / pesticide storage, parking - $100/SF
Water catchment for fire suppression - $6,500/tank
$5,000
$6,500
Optional: Nursery (see nursery cost assumptions below)
$15,000
Optional: Access Roads (unpaved) - $40/ft, assume 1 mi for 100ac.
$360,000 Permits
Conservation District
$50,000 Subzone change to
"Limited"
Business Plan
$15,000 CDUP (requires EA)
$80,000 Facilities
Greenhouse - $10/SF
Equipment Storage Shed, multipurpose room, restroom, enclosed
fertilizer / pesticide storage, parking - $100/SF
$20,000 Water catchment (for irrigation and fire suppression) - $6,500/tank
Solar Photovoltaic electricity generator
$65,000 Permits
$400,000
Irrigation system / fogger for
greenhouse - $2/SF
$200,000 Forklift (?)
$6,500 Van for deliveries
$20,000 Miscellaneous eqpt
Access trails (for gathering) - $500/mi
Assume 5 mi. trails
$80,000 Facilities
Initial stocking: 500 stems/ acre $2 per stem
$329,500
$100,000
$212,000
$731,000 Equipment
$30,000 Assume 40,000 SF of greenhouse, with shadecloth (no glass)
$30,000
$1,996,500
$40,000
$202,500 Equipment
$50,000
$48,000
$10,000
$5,000 Other
Site Preparation (clearing)
Assume: no clear cutting, near access road, mixed incipient & dense
invasive infestations (50%/50%), incipient = 1 worker.day/ac, dense =
$30,000 50 worker.day/ac; avg over area: 25 worker.day/ac, $200/worker.day
+ $50/ac equipment; $5,050/ac
ALTERNATIVE: $250/ac. incipient infestation (by hand), use gyro
track for dense infestation: $4,000/ac; average: $2,125/ac
Planner - Environmental Assessment +
CIA
Studies
$100,000 Van for visitors
Pots & pans for the kitchen. Dishes
& glasses. Cleaning materials brooms, mops, dusters.
$2,000 Other
$30,000 Facilities
Grading/grubbing permit
(incl. engineering)
TOTAL
$31,000 Supplies
Beds, kitchen appliances stove, oven, sink, toilets,
showers, sinks, tables,
chairs,
Establish a business entity.
CDUP (for signage, trails,
$5,000
and rest facility)
Biological survey of forestry areas (native
plants, T&E species)
(Assume 50 person.days for field)
Sustainable Forestry
$75,000
Architect (site design)
Assume 5% of bldg cost
Business Plan
TOTAL
$5,000 Permits
$10,000 Supplies
Initial stocking: 50,000 plants/acre
Dibble tubes, pots, soil, etc. for
$80,000
initial propagation of native plants assume $1/plant
$15,000 Fertilizer - $1,000/ac
$30,000 Herbicide - $300/ac
$310,000
$1,491,000
$50,000
$1,000
$300
$10,000
$2,500
$629,000 Equipment
Page 1
$135,000 Supplies
$51,300
$960,300
WAO KELE O PUNA
Cost Analysis Table
Townscape, Inc.
August 2011
Development Cost Factors
Concepts
Consulting Costs (special consultant fees)
Approvals and permits required
Agroforestry
Conservation District
Subzone change to
$50,000 "Limited"
Biological survey of agroforestry
areas(native plants,T&E species)
(Assume 20 person.days for field)
Native Plant Cultivation
Physical Infrastructure development cost per unit
(including buildings, facilities, access, utilities)
Archaeological Inventory Survey of ag
areas + Cultural Impact Assessment +
Preservation Plan (Assume: 12
person.days for field)
CDUP (requires EA and
$50,000 CIA, Forestry Management
Plan)
Planner - Environmental Assessment
$50,000
Professional Forester (Agroforestry
Mgmt Plan incl. Business Plan)
$30,000
Conservation Plan (or
grading/grubbing permit)
Specialized Equipment cost (machinery,
vehicles, etc.)
Site Preparation (clearing)
Assume: no clear cutting, near access road, mixed incipient & dense
invasive infestations (50%/50%), incipient = 1 worker.day/ac, dense =
$30,000 50 worker.day/ac; avg over area: 25 worker.day/ac, $200/worker.day
+ $50/ac equipment; $5,050/ac
ALTERNATIVE: $250/ac. incipient infestation (by hand), use gyro
track for dense infestation: $4,000/ac; average: $2,125/ac
$21,000
Irrigation system / fogger for
greenhouse - $2/SF
$30,000 Fencing - $12/ft , 3,000 ft of fence
$36,000
Irrigation system in forest $1.25/SF
$20,000
Conservation Subscription
Studies
Hiring a developer. Website
Development Cost
$40,000 Domain Name registration
The cost of half a years time for one
person to help coordinate and develop
content for the website
$25,000
Initial stocking: 10,000 plants/acre
Dibble tubes, pots, soil, etc. for
initial propagation of native plants assume $1/plant
Planting labor and equipment $550,000 assume 10 worker.day/ac,
$2,500/ac
$25,000
$50,000 Herbicide - $300/ac
$3,000
Equipment Storage Shed, multipurpose room, restroom, enclosed
fertilizer / pesticide storage, parking - $100/SF
$200,000 Mower
$10,000 Fertilizer - $300/ac
$3,000
$13,000 Forklift (?)
TOTAL ESTIMATED
CAPITAL COST
$100,000
$100,000 Tractor
Solar Photovoltaic electricity generator
Access Roads (unpaved) - $40/ft, assume 3,000ft
$80,000 Facilities
$180,000 Permits
$20,000
Other capital cost (marketing)
Greenhouse - $10/SF
Assume 10,000 SF greenhouse, with shadecloth (no glass)
Water catchment (for irrigation and fire suppression) - $6,500/tank
TOTAL
Initial Supplies (plants, etc.)
$15,000
$20,000 Van for deliveries
$120,000 Miscellaneous eqpt
$510,000 Equipment
$30,000
$10,000
$685,000 Supplies
$1,586,000
$131,000
$50 None
$0 Computer
$2,000 None
$0
$50
$0
$2,000
$0
Cost to incorporate an Nonprofit LLC
Business and Marketing Plan
TOTAL
$15,000
$80,000
If incorporated as a nonprofit LLC - need
to hire a consultant to set up
None
Cost to set up rules, regulations, as well
as pricing and constraints of the site.
Assumed similar in cost to a business
plan.
Movies and Documentaries
TOTAL
None. Trade off: on-site utilities vs. truck everything in
0
None
0
None
0
$15,000
$15,000
$15,000
Mobile Application Development Cost
Hawaiian Culture Phone
App
0
$82,050
Initial Branding
of Wao Kele o
Puna
The cost of half a years time for one
person to help coordinate and develop
content for the website
Approval from Development
Platform (This cost is per
development platform - so
$200
one for apple, one for
google, etc) Assume at
least two platforms
$40,000
None
0
None
Initial Branding
of Wao Kele o
Puna
Computer, Hardware, starting office
2000
supplies
0
$25,000
Cost to incorporate an Nonprofit LLC
Business and Marketing Plan
TOTAL
Forest Management Plan w/ BMPs for
removal & replanting (or this could be
included under the comprehensive
management plan)
Invasive Species Extraction
(Strawberry Guava)
TOTAL
Biological survey of forestry areas (native
plants, T&E species)
(Assume 100 person.days for field)
Archaeological Inventory Survey of
forestry areas + Cultural Impact
Assessment + Preservation Plan
(Assume: 50 person.days for field)
Planner - Env Assessment
Fire Management Plan
TOTAL
$200
$0
$2,000
$0
$82,200
$0
$0
$0
$50,000
$50,000
$50,000
CO2 sequestration studies
Niche Carbon Credits
$15,000
$80,000
$0
Project Design Document +
Third Party
$75,000
verification/validation and
registration of project
CDUP (requires EA and
$150,000 CIA, Forestry Management
Plan)
$150,000
Conservation Plan (or
grading/grubbing permit)
$150,000
Equipment Storage Shed, multipurpose room, restroom, enclosed
fertilizer / pesticide storage, parking - $100/SF
$50,000 Water catchment for fire suppression - $6,500/tank
$200,000 Miscellaneous eqpt
$50,000
$32,500
$50,000 Access Roads (unpaved) - $40/ft, assume 4 mi
$50,000
$5,000
$430,000
$0
$844,800
Optional: Nursery (see nursery cost assumptions above
$250,000
$1,077,300
Page 2
$50,000
$0
$1,807,300
WAO KELE O PUNA
Cost Analysis Table
Townscape, Inc.
August 2011
Operating Costs
Concepts
Staffing requirements (operation, security, monitoring & reporting)
Staff
Annual Cost
E-store
TOTAL
Makuu Market
$25,000 Rental of space to store art items.
$1,800 Credit card processing fee.
Half of a full time person to monitor the site and handle tax
acknowledgements, information requests; plus $10,000 a year to hire a
contractor to debugg or maintain the site in case there are problems
$35,000 Ongoing shipping materials, postage
$5,000 Insurance
Web Hosting
Fuel Cost
$60,000 Maintenance
Staff
$25,000
More staff needed if halau + makana - Assume seven days a week, 10am
to 6pm - 1 1/2 to 2 fulltime. Some part time. Tasks include sales,
stocking, balancing the cash, banking, managing the inventory, etc., Still
need the person to work with the artisans and/or order stock to be sold.
TOTAL
Hula/Cultural Practice
Retreat, Artist Retreat,
Visitor Retreat
TOTAL
Eco-Tourism &
Voluntourism
TOTAL
Staff
$60,000
Fulltime security + maintenance + manager - 1 person.
Cleaning person - 1/2 time
Staff
None
Space to store art items. (If rented)
$1,800
Advertising & promotion to
attract people to store/
$0
None
$2,000 Insurance
$10,000
$2,500
$39,000
$4,000
$2,500 Insurance
$75,000
$25,000 Fuel
$5,000
$12,500
$307,500
Tour guide + volunteer coordinator - 1 person for up to 30 visitors/d
Ongoing promotional costs $2,000 brochures, mailing,
advertising.
$75,000 None
Admin + sales - 1 person (arrangements with other tour operators or tour
groups, residents, etc. handle inquiries, book groups, manage the
calendar, the billing and the accounting.)
$60,000 Van maintenance
$2,500 Insurance
$50,000
Full time security + maintenance - 1 person.
$50,000 Fuel + utilities
$5,000
Cleaning person - 1/2 time
$25,000
$195,000 Maintenance
$90,000
On-going Forest, weed, water catchment, road
maintenance - $150/ac
Vehicle maintenance + fuel
Assume: 10-yr life
Shed maintenance
Assume: 20-yr life
Fence maintenance ($0.5/ft/yr)
Assume: 15-yr life
Staff
$90,000 Maintenance
1 manager:sales (orders, invoices), operations, deliveries, oversight of
work and maintenance, monitoring & reporting
$90,000 Fertilizer / Weed control - $1,000/ac
Greenhouse maintenance and operation staff for seed/cutting harvest,
planting, watering, pest control, checking plant health - 2 full time per 1
acre of production (2 staff, $50,000 each)
Security - 1 person full time
$100,000
$50,000
Greenhouse maintenance and repair
Assume 10-yr lifetime
Irrigation maintenance & repair
Assume 10-yr lifetime
Equipment (van, forklift, etc.) maintenance
Assume 10-yr lifetime
Fuel
Staff
$240,000 Maintenance
$0
$150,000
Maintenance and cleaing supplies. Soap and
$60,000
paper towels in the restrooms.
Staff
$0
$5,000
$60,000 Van maintenance
$145,000 Maintenance
$74,000
$1,500
$75,000 None
Maintenance & cleaning supplies. Replacement of
dishes, pots/pans, soap, etc.,
$0
$1,000
$1,000
$1,200 Credit card processing fee,
TOTAL ESTIMATED
OPERATING COST
Other on-going costs
Element
Cost
Ongoing promotional costs,
$5,000 brochures, mailings,
advertising.
Sustainable Forestry
TOTAL
$1,200
$5,000
$13,000
Cost of booth at the market is $25 per day.
Fuel Cost
Ongoing display materials, bags/boxes for sales.
Signage.
$25,000 Maintenance
Admin + sales - 1 person (arrangements with groups, residents, etc.
handle inquiries, book groups, manage the calendar, the billing and the
accounting.)
Forest Manager - 1 person full time (operation, hiring and oversight of
contract work, security, maintenance, monitoring & reporting)
Annual cost
TOTAL
Plant Nursery
Other project-specific operation costs (fees,
licensing, marketing, etc.)
Element
Cost
1/2 time staff member to recruit artisans and pick up pieces. Take pictures
of the pieces and post on the website. Handle the sales of the pieces.
Transfer of funds from the customer to the business to the artisan.
Packing & shipping. Ongoing customer inquiries and service.
1/2 time staff member to recruit artisans and pick up pieces. Set up the
booth on Saturdays, bring out the pieces, handle the sales by cash or
credit card, pack the sales, break down at the end of the day. Do the
accounting and settling with the artists
WKOP Halau and Makana
Maintenance and upkeep costs (supplies, repair, equipment)
Element
Cost
$9,500 Other
$15,000
$0
$329,500
$125,000
Insurance
$20,000
$4,000
Sustainable Forestry
annual audit
$500
$5,000
Sustainable Forestry
Fee (SFI)
$500
$5,000
$29,000 Supplies
$1,000
Greenhouse supplies
($500/mth)
$6,000
Other
$21,000
$6,000 Marketing
$20,000
Insurance
$10,000
$140,000
$2,000
$5,000
$6,000
$20,000 Supplies
Page 3
$6,000 Other
$30,000
$296,000
WAO KELE O PUNA
Cost Analysis Table
Townscape, Inc.
August 2011
Operating Costs
Concepts
Staffing requirements (operation, security, monitoring & reporting)
Other project-specific operation costs (fees,
licensing, marketing, etc.)
Maintenance and upkeep costs (supplies, repair, equipment)
TOTAL ESTIMATED
OPERATING COST
Other on-going costs
Agroforestry
1 manager:sales (orders, invoices), operations, oversight of work and
maintenance, deliveries, monitoring & reporting
Annual cost
Native Plant Cultivation
Agroforestry and greenhouse maintenance and operation staff for
seed/cutting harvest, planting, watering, pest control, checking plant health
- 1 full time per 2 acre of production
(5 staff, $50,000 each - Annual cost)
Security - 1 person full time
Annual cost
TOTAL
Conservation Subscription
Staff
$90,000
$250,000
Fertilizer / Weed control - $200/ac
Annual cost
$2,000
Greenhouse maintenance and repair - Annual cost
Assume 10-yr lifetime
$2,000
$6,000
Irrigation maintenance & repair
$50,000 Annual cost
Assume 10-yr lifetime
Equipment (van, tractor, forklift, mower, etc.)
maintenance
Annual cost
Assume 10-yr lifetime
$10,000
Fence maintenance & repair ($1/ft/yr)
$3,000
Fuel
$6,000
$390,000 Maintenance
Half of a full time person to monitor the site and handle tax
acknowledgements, information requests (assuming this person can be
shared with the virtual gift shop person);
$25,000
$10,000 a year to hire a contractor to debugg or maintain the site in case
there are problems
$10,000 Domain Name Renewal
Staff
Half time attendant to coordinate and manage film schedules, issues, etc.
Server Hosting (server cost can be shared with
mobile app and virtual "gift shop" option)
Movies and Documentaries
TOTAL
There will also be an "attendant" cost to ensure that film productions are
following the rules and are not abusing the property - this cost will be an
add on to the price of the film set rental and will not generate additional
revenue.
Staff
Annual Maintanance of the app; debugging
Invasive Species Extraction
(Strawberry Guava)
$2,500 Insurance
$20,000
Greenhouse supplies
($200/mth)
$2,500
Other farming supplies
($200/mth)
$2,500
$7,500 Other
$50,000
None
$0
$476,500
Website upkeep,
updates every week?
$500
$1,750 Supplies
0
$36,750
$0
Marketing Cost
None
$0
General supplies and
equipment (general overhead, 500
postage, etc)
$25,000 Maintenance
Server Hosting (server cost can be shared with
$9,000 conservation subscription and virtual "gift shop"
option)
Supplies
$25,000
Staff
$34,000 Maintenance
$1,200 Supplies
$140,000 On-going herbicide control in treated areas
$5,000
$140,000 Maintenance
$5,000 Supplies
$25,500
$500
$1,200 Marketing Cost
General Supplies and
equipment (general overhead,
postage, etc)
A half-time administrator to coordinate the application
Assume: 100 acres annually, 30% dense & 70% incipient
Incipient invasion removal cost: $250/ac w/ hand tools and herbicide
Dense infestation removal cost: $4000/ac w/ mulching machine
Packaging - Assuming
$200/mth for packaging needs
$50
Hawaiian Culture Phone
App
TOTAL
$30,000
$1,200 Marketing Cost
$35,000 Maintenance
$25,000 None
$0 Marketing
$29,000 Supplies
General Equipment and Supplies (includes
internet, office supplies, etc)
TOTAL
Processing (Assuming
partnership with existing
processors/distributors)
None
$0
$500
$500
$35,700
$0
$145,000
Monitoring and retreatment: 4 worker days/ac/yr first 2 years ($900/ac/yr)
Monitoring and retreatment: 1 worker day/ac/yr after 2years ($250/ac/yr)
TOTAL
Staff
Forest Manager - 1 person full time (operation, sercurity, monitoring &
reporting)
Annual cost
Assume OHA management staff to do periodic checks of property
Niche Carbon Credits
$90,000
On-going Forest, weed, water catchment, road
maintenance - $150/ac
$2,500
Vehicle maintenance + fuel
Assume: 10-yr life, for 100 years
Planting labor and equipment $4,000 $500/ac (assuming 2
worker.day/ac)
Shed maintenance
Assume: 20-yr life for 100 years
$5,000
Site Preparation (clearing)
Assume: no clear cutting, dense invasive
infestations, dense = (60 worker.day/ac @
$200/worker.day = $12,000 per acre) @ 50 acres
TOTAL
Staff
Fencing - $12/ft, 6,000ft
$90,000 Maintenance
Initial stocking: 500 stems/
acre - $2 per stem
Herbicide application (2
times) - $500 /ac.
$600,000 Fertilizer - $300 /ac.
$72,000
$683,500 Supplies
Page 4
$50,000 Insurance
$30,000
$50,000 Monitoring
$10,000
$2,500
$25,000
15000
$142,500
$916,000
APPENDIX D
Agroforestry Analysis Plant List
WAO KELE O PUNA
Forestry and Agroforestry Plants considered
Townscape, Inc.
Bold = already present onsite
Potential market sector(s)
[timber, wood carving, food/spice,
medicinal, fragrance,
Considerations and Potential
flowers/lei/hula implements,
Concerns of WKOP environment for
Agroforestry Species
ornamental plants]
species
Potential Yields
Price
High-value Tropical Hardwoods
Moderate-value timber; very slow
growing for timber purposes; may
be more appropriate for
ornamental or pole markets;
Slow-growing tree; native to the
2,000-3,000 bf/ac (500-600 $1.50-$2 per BF for
Ohia
Honey; small market
forest
ft3/ac)
posts/poles
Teak
high-value timber; stable
international market; plantation
teak is generally lower quality than
old growth and has much lower
prices
Acidic soils - may be possible; has
been grown in Puna
Growth speed can be problematic
and several trials in HI have shown
poor growth potential (phone
discussion w. H. Brauner)
Shallow soils - may be possible in
high-value timber; stable market kipuka with deeper soils
timber for moulding, panneling,
doors, cabinets; fiber, veneer;
limited production in Hawaii
though it is a good quality wood
that is of interest to millers and
contractors; H. Brauner in Hilo
Limited potential for invasiveness
Rainbow-bark
has continued demand for this
Fast growing
Eucalyptus
wood and not enough supply;
Need to secure seed / seedling
(Mindanao gum)
stable local and mainland market supply
Other tropical trees for potential timber and non-timber products
Approx. 25-30,000 BF/ac
assuming 109 stems/ac
harvested in 35-45 year
rotation
Lama
timber,
artisan / cultural: lei
medicinal: oil
cosmetics: oil
International market - mainly
supplied by other countries (South
Pacific) - limited wood or oil
production in Hawaii.
timber, fruit
Limited market
Kukui nut
oil: cosmetics, biodiesel;
shells: biochar;
Local market for use as cosmetic
oil is pretty much saturated; at this
time not an economical option for
biodiesel - 5 cents/lb of nuts
Potential to become invasive if not
would amount to about $10/gallon properly managed
Kamani
Hala
Ulu
Wauke
artisan - weaving
Limited commercial market, low
price
Food: breadfruit
Limited commercial market; some
groups are trying to revive it as a
commercial food product /
sustainable island food source
(Breadfruit Institute)
artisan / cultural: cloth (kapa)
Limited commercial market potential for some increase with
revival of Hawaiian art / use of
kapa for hula.
high quality wood: $4,300
per thousand board feet
low quality (plantation):
$350-600 per m3
internationally ($830$1,416 per 1,000 BF)
Ease of access affects
stumpage price
35-45 years
$930-1150 per cubic
meter
Mahogany (S.
macrophylla)
low est. 65,000 BF/ac + in
25-yr rotation
Yields of up to 215,000+
BF/ac have been reported
in Hawaii (Brauner) and
elsewhere (World
Agroforestry Center.org)
50-200 lbs whole nuts / tree
/ year, or about 2-20 lbs oil
Elevation is high for kamani but may per tree per year
be able to grow
(approx. 1,800 lbs oil per
Need processing connection
acre per year)
Too slow-growing for
Slow growing
commercial
approx 175 lbs nuts / tree /
year
(with 80 trees / ac., approx.
14,000 lbs nuts / ac; or
approx 2,800 lbs oil / ac.)
Expected
maturation period
(before 1st
harvest)
35-45 years
Stumpage price: $0.45 to
$0.85 depending on wood
quality
Lower wood prices are
for unmanaged yard trees 20 years
oil - retail: $10 / oz bottle 4-5 years for oil
wood - retail: $5-15/board- 20 years for craft
foot
wood
No info found
N/A
oil - retail: $19/lb
Nuts (cosmetic industry):
35 cents per lb
Biodiesel: less than 5
cents / lb
Need to have a connection with local
weavers
Harvesting and processing can be
tricky - short shelf life
350 to 1,000 lbs /tree/year
No info found
No info found
No info found
WAO KELE O PUNA
Forestry and Agroforestry Plants considered
Townscape, Inc.
Bold = already present onsite
Potential market sector(s)
[timber, wood carving, food/spice,
medicinal, fragrance,
Considerations and Potential
flowers/lei/hula implements,
Concerns of WKOP environment for
Agroforestry Species
ornamental plants]
species
Potential Yields
"timber" , artisan
limited market currently: poles (for
fencing, displays, etc.) because of
limited local production; but some
groups are trying to develop for
Clumping bamboo species only (nonOhe (Hwn bamboo) construction/houses (in Hilo)
invasive);
No info found
Hawaiian / Polynesian Plants for established markets included ornamentals, food, spice
medicinal, cosmetics
Risky market - subject to
economic downturns; farming
Plantations already well established
needs to be linked with
in Puna,
processing,
Noni would benefit from a polyculture
Needs branding and high quality agroforestry system, good understory
plant; monoculture areas have
recognition to compete 71,000 lbs fruit / ac.
developed pest issues;
international (south Pacific Link farming to processing - potential 100 lbs fruits yields approx.
already suppying cheaper, low
local partners??
40-50 lbs juice or 4.5-5 gal
Noni
quality noni juice)
Price
Expected
maturation period
(before 1st
harvest)
No info found
No info found
Depends on quality of
juice. Competition with
other countries for lowquality juice.
Online prices - $10-20 for
32oz bottle
or approx. $140,000/ac of
production
Will bear fruit after
1 year; Good
harvest after 4-5
years
Awa (kava)
medicinal
Currently still good market for awa
- both locally (kava bars) and
mainland US - but can be risky.
Consider processing (drying,
getting ready for fresh-frozen
shipment) onsite
retail: $15-20/lb fresh
root;
$30/lb dry product
20-60 lbs fresh product /
(equivalent to $7.50/lb
Awa would benefit from a polyculture plant
fresh root)
agroforestry system, good understory assuming low density 500 Assume wholesale $3.50plant; monoculture areas have
plants/ac, yeild would be
$8 depending on product
developed pest issues;
about 10,000-30,000 lbs/ac quality & processing
2-3 years
Cacao
Food/spice, small market in early
stages of development in Hawaii,
high risk,
Hawaii has not yet developed
unique regional characteristics /
significant specialty markets for
cacao so viability is low;
Limited chocolate processing
facilities in HI (one in Kona)
Needs shade, benefits from an
agroforestry system, good understory
plant;
Also benefits from polyculture
systems to minimize pest issues;
Cacao can be sold as pods, wet
beans, or dry beans; dry beans
25 pods/tree; with 400 trees
require onsite processing facility,
/ ac, yield up up to 900 lbs No Hawaii-specific
including roasting equipment.
dried beans / acre
market info
Olena
spice (turmeric), medicinal
No info found
No info found
Hawaiian / Polynesian Plants for alternative markets and emerging natural medicine markets
No info found
No info found
No info found
Hapu'u
ornamental
Palapalai
lei
No info found
"wild" plant - little farming
experience/info
Many people have tried and not done
it right
Naturally occurring in WKOP; prime
lei: study done over 3-year period lands have high humidity and are
estimated approx. 20,000 leis
cool - additional management
bought each year for the Merry
required at higher temperatures.
Monarch event
Need wind and sun protection.
"wild" plant - little farming
medicinal, tea
experience/info
food (jam, etc.)
medicinal
Ohelo berry cultivar released by
USDA in 2010 to try to encourage
agricultural production to
minimize impact on natural
Elevation may be too low for ohelo
environments
berry, which generally strives above
2,000 feet elevation
Emerging market - high risk
From 1 to 15 strands per
plant per year depending on
growing method and
conditions for about 5-7
years.
Establishment period: 4-5
years
Retail: $15 and up for
Can plant up to 2,000
single strand lei; $30-40
plants per acre
for double-strand
Maile
Mamaki
Ohelo berry
Growth is too slow - 1 inch/year
No info found
Growth too slow
4-5 years
No info found
No info found
1 year