Maui Fire Lawyers – Maui Wildfires: Economic Problems to Linger

CINDY ELLEN RUSSELL / CRUSSELL@STARADVERTISER.COM

PHOTOS BY CINDY ELLEN RUSSELL / CRUSSELL@STARADVERTISER.COM

Wildfires have delivered a “heavy blow” to Maui’s economy and will exert costs on the county and state that will last well into the future, according to a University of Hawaii Economic Research Organization report released today.

UHERO’s latest forecast is its first assessment of how the firestorm and its aftermath will affect Maui’s economy over the next several years, and what that downturn will mean for the overall state economy.

The group’s assessment: The wildfires will lead to sharp and persistent economic losses on Maui, with limited spillovers for the rest of Hawaii’s economy.

While Maui represents about 30% of the state’s visitor industry, it comprises just over 10% of Hawaii’s overall economy, UHERO director Carl Bonham said Thursday during a virtual news conference to discuss the group’s third-quarter forecast results.

Bonham said UHERO now expects the state’s overall gross domestic product to fall about half a percentage point from its previous forecast.

“The economy will grow more slowly, and then it will sort of rebound in a sort of typical fashion after a disaster,” he said. “It will look like the state economy is doing quite well in 2025 and 2026 — not so much in 2024.

“The overall state economy will weather this Maui downturn, and we’ll actually see a boost in overall economic activity — job growth and particularly construction activity,” he said. “Overall GDP growth will be higher in 2025 and 2026 and 2027 than we had forecast before the fires.”

While UHERO expects rebuilding will boost the state’s GDP, the forecast’s authors said, “this does not capture the value of lost homes and businesses and the non-pecuniary costs of displacement, trauma, and so forth.”

Current economic costs from the fires are mounting for the county and the state. Depending on the level of federal funding, UHERO said the state could incur substantial recovery costs for the next half-decade or longer.

UHERO is forecasting real personal income and tax revenues will decline, and statewide income growth is projected to slow to below 2% in 2024.

The state Council on Revenues reduced its forecast for state general fund revenues for fiscal 2024 to just 1.3% growth, down from an earlier estimate of 4%.

However, UHERO expects that the planned reopening of unaffected areas of West Maui to tourism Oct. 8 will reduce Maui revenue losses.

Because Maui represents about 30% of Hawaii’s tourism, the island’s struggles mean the visitor industry will suffer.

Bonham said Maui lost over $13 million of visitor spending each day in the weeks following the fire when arrivals plunged by nearly 75%. He said West Maui’s tourism reopening will restart tourism in the region, but recovery is expected to ramp up gradually.

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