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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: TOWNSCAPE, INC. Sub-Consultant: SMS RESEARCH

Wao Kele o Puna Revenue Opportunities Page i

TABLE OF CONTENTS

ACRONYMS & ABBREVIATIONS........................................................................................................................iv

EXECUTIVE SUMMARY .........................................................................................................................................v

1 Introduction and Planning Context...................................................................................................................1

2 Site Conditions ....................................................................................................................................................2 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

3 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

4 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

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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

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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 Opportunities Screening Spreadsheet Appendix B Individuals Contacted Appendix C Cost Analysis Table Appendix D Agroforestry Analysis Plant List

Acronyms & Abbreviations

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ACRONYMS & ABBREVIATIONS % Percent AD Avoided Deforestation AF/RF Afforestation/Reforestation AGB Above-Ground Biomass App (Phone) Application BF/acre Board Feet per acre (measure of timber production) BLNR State of Hawaiÿi Board of Land and Natural Resources CDUP Conservation District Use Permit CO2 Carbon Dioxide DBEDT State of Hawaiÿi Department of Business, Economic Development and

Tourism DLNR State of Hawaiÿi Department of Land and Natural Resources DOFAW Division of Forestry and Wildlife DOT State of Hawaiÿi Department of Transportation EA Environmental Assessment ESA Endangered Species Act FTE Full-time Employee GET General Excise Tax GHG Greenhouse Gases GPS Global Positioning System HCC Hawaiÿi Conservation Conference HTBG Hawaiÿi Tropical Botanical Garden KMC Kïlauea Military Camp LIDAR Light Detection and Ranging LLC Limited Liability Company LUPAG Hawaiÿi County Land Use Pattern Allocation Guide MOA Memorandum of Agreement NAR State Natural Area Reserve OHA Office of Hawaiian Affairs SFO San Francisco International Airport tCO2e Ton of Carbon Dioxide Equivalent USDA United States Department of Agriculture USGS United States Geological Survey

Executive Summary

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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.)

Executive Summary

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Table ES-1: Summary of Feasibility Analysis

Name Time for Land Use changes &

permits

Time period before

revenue

Initial Capital

Cost

Annual Operating

Cost

Gross Annual Revenue potential

Risk

Movie Productions (assumes 10 films/yr)

None 6 months $15,000-$25,000

$10,000-$15,000

$10,500 annually High

Individual Donor-based Program

None 1 year $58,500-$92,100

$31,700-$51,700

$60,000 at year 51 Moderate

Phone App None 1 year $58,600-$92,200

$32,700-$50,700

$12,500 1st year of release

High

Makana – virtual shop None 1 year $40,500-$82,000

$143,000-$195,000


Makana - booth at market

None 1 year $28,000-$77,000

$42,000-$80,000


Invasive Species Extraction (400 ac)

None N/A $30,000-$50,000

$300,000 at year 52

No revenue N/A

Eco-Tourism & Volun-Tourism

2 years 4 years $255,000-$410,000

$265,000-$450,000


Overnight Retreat (40-70% occupancy)

5-9 years 6-11 years $1,590,000-$2,340,000

$235,000-$385,000

$175,200-$306,600 Moderate

Plant Cultivation - nursery (1 ac)

5-9 years 6-10 years $920,000-$1,120,000

$242,000-$385,000

$350,000-$500,000 Moderate

Plant Cultivation – agroforestry (10 ac)

5-10 years 7-14 years $1,420,000-$1,790,000

$427,000-$590,000

(best case) $600,000-$800,000

High

Sustainable Forestry (100 ac)

5-10 years 30-35 years $1,280,000-$1,870,000

$130,000-$180,000

$4,550,000-$14,000,000

One-time harvest

High

“Niche” Carbon Credits (per 50 ac managed)

7 years 17 years $2,365,000-$3,040,0003

$132,500-$162,5004

$21,300 after establishment per

50 ac managed

High

Notes: 1Estimated annual revenue after 4 years of operation 2Some 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. 3Cost 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 3Cost 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.

Executive Summary

Wao Kele o Puna Revenue Opportunities Page vii

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 revenue-generating 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.

1 - Introduction and Planning Context

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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.

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

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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 sugar-cane; 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

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.

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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

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.

2 - Site Conditions


Figure 2-2: Recent Lava Flows near 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

WAO KELE O PUNA

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

GOVT LEVEL

REQUIREMENTS AND PROHIBITED USES

Forest Legacy Program Implementation Guidelines

Federal Excludes the following uses: “activities that result in extensive surface disturbance such as residential subdivisions, commercial development, and mining.”

Endangered Species Act(ESA)

Federal 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.

State Land Use Districts (HRS §205-2) Conservation District Rules (HAR §13-5)

State 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, public-purpose 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.

2 - Site Conditions


Table 2-1 (continued): Regulatory Requirements

LAW OR GUIDANCE DOCUMENT

GOVT LEVEL

REQUIREMENTS AND PROHIBITED USES

State Designation & Regulation of Geothermal Resource Subzones (HRS 205-2; HAR §13-184)

State 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.

Civil Suit No. 89-089 Pele Defense Fund vs. Estate of James Campbell

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.”

June 2006 Memorandum of Agreement (MOA) between DLNR and OHA

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).

DLNR Rules regulating activities in Forest Reserves (HAR §13-104)

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.

Hawai‘i County Land Use Pattern Allocation Guide (LUPAG)

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.

Hawaiÿi County Zoning

County Forest Reserve – no county zoning designation or rules apply.

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

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.

0 1 20.5Miles

Wao Kele o PunaOPPORTUNITIES AND CONSTRAINTSFor: Office of Hawaiian Affairs

By: Townscape, Inc.Date: June 2011

Legend

Wao Kele O Puna Property

Main Access

Surveyed Caves

Surveyed Archaeological Sites

Viewplanes

Major Roads

Other Roads

Area within 1.5 mi of access road

Cracks

Faults

High Lava Hazard

Managed Miconia

Invasive Species Dominated

High Diversity Native Forest

Olson Parcel

Government Owned Lands

County of Hawaii

State

Federal

0 5,000 10,000Feet

High DiversityNative Forest

Invasive spp.Dominated - mixed

Managedmiconia

Invasive spp.Dominated

Strawberry Guava


Strawberry Guava


Strawberry Guava

RecentLava Flow Area

OlsonProperty

State ofHawaiÿi

State ofHawaiÿi

State ofHawaiÿi

Federal

County ofHawaiÿi

Pahoa MiddleLava Tube System

Pahoa SouthernLava Tube System


Strawberry Guava

Patches dominated byStrawberry Guava

Figure 2-4: Opportunities and Constraints

Page 12

3 - Potential Sustainable Income/Revenue Opportunities


3 POTENTIAL SUSTAINABLE INCOME/REVENUE OPPORTUNITIES

3.1 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

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

GUIDANCE DOCUMENTS • OHA Strategic Plan • OHA Real Estate

Strategy • OHA-DLNR MOA • Forest Legacy

Guidelines

“OTHER” INCOME/REVENUE

GENERATING OPPORTUNITIES

• Short summary description of opportunity

• Reason for elimination

Is the opportunity appropriate, based on the criteria set forth in the guidance documents?No

Is the opportunity likely to be feasible based on a preliminary assessment of

expected costs and returns? No

Is it an income/revenue-generating opportunity specific to Wao Kele o Puna?

Yes

No

Yes

Yes



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

1 Protection and enhancement of native plant and wildlife habitat

OHA Strategic Plan DLNR-OHA MOA OHA Real Estate Strategy Forest Legacy Program Guidelines

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)



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 NOTES

1 Hawaiian Culture and Wao Kele o Puna Phone Applications

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

Non-timber forest products including: medicinal plants, culturally important plants, ornamentals, plants for seed. Market analysis to identify plants with highest market value.

5 Invasive species extraction

Strawberry guava wood - as biofuel, biochar, timber, wood crafts, chips. Market analysis to identify most cost-effective use of extracted strawberry guava wood.

6 Sustainable forestry

Need to consider potential native trees or non-native non-invasive trees that would be marketable and could be sustainably harvested at Wao Kele o Puna.

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

10 "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.



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 CONCEPT DESCRIPTION SELECTION DECISION & REASON Web-based Literature Income

Website

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

Endowment Fund

A marketing campaign would be developed to seek donations for the development of an endowment fund that could be used for 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.

Did not meet the screening criteria. Potential concerns include limited access in leased areas, negative impacts on subsistence gatherers.



Table 3-3 (continued): Opportunities not included in Feasibility & Market Analysis

OPPORTUNITY CONCEPT DESCRIPTION SELECTION DECISION & REASON Non-native non-timber Forest Products

Growing non-native 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.

Onsite Visitor Activities

Campsites 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.

Other Income Opportunities

University Research

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.

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.



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.



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 population1. 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)



continue to increase in the future, thus increasing the scale of the market beyond the “smart phone”.

4.1.1.5 Constraints

• (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.

4.1.2 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.



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 platform2. 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 “cross-compatibility” 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.



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)

$15,000 – $25,000

Development (Mobile App development 0.5 FTE; 0.5 FTE for Content creation)

$42,500 – $65,000

Permits (Approval fee for each development platform i.e. Apple, Google, etc. Assume Apple and Google, the first and second largest marketplaces)

$100 – 200

Facilities (None, Assumes the startup work can be done remotely)

$0

Equipment and Supplies (Computer hardware; Starting office supplies)

$1,000 – 2,000

Total $58,600 – $92,200

Annual Operating Costs

Staffing (Part time individual(0.5 FTE) for app management)

$25,000 – $40,000

Maintenance and Repair (App Maintenance; Server Hosting fees)

$7,600 – $10,200

Supplies $100 – $500

Other annual Costs (None)

$0

Total $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.



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 Operating Cost + sales commission

Balance

Year 1 $0 (Development Phase) $58,600 - $92,200 ($58,600 - $92,200) Year 2 $12,500 (5,000 apps) $36,500 - $54,500 ($24,000 - $42,000) Year 3 $5,000 (2,000 apps) $34,200 - $52,200 ($29,200 - $47,200) Year 4 $5,000 (2,000 apps) $34,200 - $52,200 ($29,200 - $47,200) Year 5 $5,000 (2,000 apps) $34,200 - $52,200 ($29,200 - $47,200)

End of Year 5 $27,500 (11,000 apps sold) $197,700 - $303,300 ($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.



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 Donation Amount Machete for Cutting Trail $25 A pair of Chainsaw Chaps $100 One roll of Fence $250 Personal Field Gear $500 Two Weed whackers for brushing trail $1,000 Fence Posts for one mile $5,000


• 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.



• (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.


• (Synergies) Bundling this concept with other media-based concepts will offer both capital and operating cost savings.

4.2.1.5 Constraints

• (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 LLC4 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.

4.2.2 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 future5. 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 Interview with Gail Chew, Hi’ipaka LLC. 5 National Center for Charitable Statistics, Report on Giving 2010.



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 non-profit LLC)

$15,000 – $25,000

Development (Website development; 0.5 FTE for content creation)

$42,500 – $65,000

Permits (Domain name registration)

$50 – $100


$0

Equipment and Supplies (Computer hardware; Starting office supplies)

$1,000 – 2,000

Total $58,550 – $92,100


Staffing (0.5 FTE for website and database management)

$25,000 – $40,000

Maintenance and Repair (Website maintenance; Server Hosting fees)

$6,600 – $11,200

Supplies $100 – $500


$0

Total $31,700 – $51,700

6 Gathered through interviews with local website/app developers.



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 Society

$134,000 $24,000

Hawai’i Nature Center $300,000 $150,000 Hawai’i Wildlife Center $270,000 Hawai’i Wildlife Fund $170,000 Hawai’i Tropical Botanical Gardens

$160,000 $63,000

Hawai’i Audubon Society

$130,000 $2,000

* 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 non-profit 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.



Table 4-6: Five-Year Cost and Revenue Projection for Individual Donor-based Program

Potential Revenue Potential Cost Annual Balance

Year 1 $0 (Development) $58,500 - $92,000 ($58,500 - $92,000) Year 2 $10,000 $31,700 - $51,700 ($21,700 - $41,700) Year 3 $30,000 $31,700 - $51,700 ($1,700 - $21,700) Year 4 $50,000 $31,700 - $51,700 $18,300 – ($1,700) Year 5 $60,000 $31,700 - $51,700 $28,300 - $8,300 End of Year 5 $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 volun-tourism 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 $0 (Development) $78,500 - $122,000 ($78,550 - $122,000) Year 2 $10,000 + $12,500 (5,000 apps) $39,000 - $60,000 ($16,500 - $37,500) Year 3 $30,000 +$5,000 (2,000 apps) $39,000 - $60,000 ($4,000 - $25,000) Year 4 $50,000 + $5,000 (2,000 apps) $39,000 - $60,000 $16,000 – ($5,000) Year 5 $60,000 + $5,000 (2,000 apps) $39,000 - $60,000 $26,000 - $5,000 End of Year 5 $177,500 $234,500 - $362,000 ($57,000 - $184,500)



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.


• 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.



• 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.


• (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 eco-

tourism 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.



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.



Table 4-8: Value of Crop Sales in the State of Hawaiÿi

Year All crops ($1,000)

Flowers & Nursery Products ($1,000)

Flowers & Nursery products

(% of all crop sales)

Flowers & Nursery Products – Out-of-State Sales ($1,000)

2006 499,684 98,725 19.8% 49,325 2007 498,338 108,710 21.8% 54,120 2008 521,799 94,662 18.1% 43,250 2009 539,810 80,092 14.8% N/A Source: Hawaii Agricultural Statistics Service, DBEDT, Databook (2009) 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 20077. 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 Hawaiÿi8. 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 environments9. 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 200910. 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 8 Interview with Rick Barboza, Hui Kü Maoli Ola 9 Interview with Daidai Hopkins, Hawai‘i County R&D Agriculture Specialist 10American Botanical Council. 2010. HerbalGram. Vol 86: 62-65.



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 200311; 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 successful12. 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 years13. 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 festival14. On Oÿahu, lei shops generally purchase maile from Fiji, where a different and faster-growing species of maile grows15. 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 12 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



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.

Figure 4-1: Kumu hula willingness to pay for hula lei material with decreasing chance of successful forest gathering

Maile strives in forest understory Photograph by Forest & Kim Starr



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 (Environmental assessment1, business plan)

$60,000 – $80,000

Permits (Conservation District Subzone change, Conservation District Use Application, Grading & Grubbing permit)

$80,000 – $120,000

Facilities (Greenhouse, Storage shed and office, restroom, water catchment, solar power, access trails)

$600,000 – $700,000

Equipment and Supplies (Irrigation system, forklift, van, planting equipment and soil, fertilizer, pesticide)

$180,000 – $220,000

Total $920,000 – $1,120,000


Staffing (Management, sales, greenhouse operation, reporting, security – 4.0 FTE)

$200,000 – $300,000

Maintenance and Repair (Greenhouse, weed control, irrigation maintenance, other equipment maintenance, fuel)

$20,000 – $40,000

Supplies $2,000 – $5,000

Other annual Costs (Marketing, insurance)

$20,000 - $40,000

Total $242,000 – $385,000

1Environmental assessment needed for land use change and permits



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)

$150,000 – $200,000

Permits (Conservation District Subzone change, Conservation District Use Application, Conservation Plan)

$70,000 – $90,000

Facilities (Land clearing, fencing, greenhouse, storage shed and office, restroom, water catchment, solar power, access roads)

$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)

$800,000 – $900,000

Total $1,420,000 – $1,790,000


Staffing (Management, sales, greenhouse operation, farm operation, reporting, security – 7.0 FTE)

$350,000 – $450,000

Maintenance and Repair (Greenhouse, weed control, irrigation maintenance, other equipment maintenance, fuel)

$30,000 – $50,000

Supplies $7,000 – $10,000

Other annual Costs (Marketing, insurance3)

$40,000-80,000

Total $427,000 – $590,000

Notes: 1Studies needed for land use changes and permits 2Plan needed for sustainable forestry certification. 3Insurance 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



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.



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 residents16. 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 forest17. 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 Interview with Daidai Hopkins, Hawai’i County R&D Agriculture Specialist 17 Interview with Rick Barboza, Hui K� Maoli Ola



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 non-invasive 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 Hawaiÿi18 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 slower-growing 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 Interview with Hal Brauner, Brauner Molding Woodworks

Characteristic multicolored bark of Mindanao GumPhotograph by Forest & Kim Starr



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.


• 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.


• (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.



• (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 on-going 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 logs19, 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 wood20. 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 locally-grown 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 targeted21.

19 International Tropical Timber Organization (ITTO), Tropical Timber Market Report, June 2011 20 Interview with Hal Brauner, Brauner Molding Woodworks. 21 Interview with Nick Koch, Forest Solutions, Inc.



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 on-going 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)

$300,000 – $400,000

Permits (Conservation District Subzone change, Conservation District Use Application, Conservation Plan)

$80,000 – $120,000

Facilities1

(Land clearing, fencing, storage shed/multipurpose room, restroom, water catchment, access roads)

$600,000 – $1,000,000

Equipment and Supplies (miscellaneous equipment, initial tree stocking, planting labor, weed control, fertilizer application)

$300,000 – $350,000

Total $1,280,000 – $1,870,000


Staffing (Forest Management – 1.0 FTE)

$80,000 – $100,000

Maintenance and Repair (Weed control, fence maintenance, vehicle and shed maintenance)

$20,000 – $40,000

Other Annual Costs2

(Insurance, sustainable forestry annual audit & fee) $30,000 - $40,000

Total $130,000 – $180,0001Facilities 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. 2Insurance cost estimate of $30,000 to $40,000 is based on an estimate provided by OHA’s Corporate Counsel.



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.



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.



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



Figure 4-2: Aerial Imagery of Strawberry Guava in Wao Kele o Puna




• 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.


• (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:



• 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 substance22. 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 guava23. 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 Island24. On average, a 25-megawatt facility could use up to 190,000 tons of dry strawberry guava wood25. 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 Hawaiÿi26. 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 23 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



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):

Infestation near roads (<0.3 mile)

Infestations at moderate distance from roads

(0.3 to 1.5 mile)

Remote infestations (>1.5 mile)

Incipient invasion $250/acre $284/acre $506/acre

Dense invasion $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 bulldozing27. 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.



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


$140,000 $90,000 $25,000 $255,000


$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.



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.



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.


• 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.




• (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

• (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.

4.6.2 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



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 Additional 2.5% for Currency Conversion. Additional 1% for international payments

Nonprofit $0 2.2% (<$10K) 1.9% (>$10K)

$0.30 Same as Business

Google Checkout - Fairly Recent Payment Method and not as popular as Paypal Business $0 2.9% (<$3K)

2.5% ($3K - $10K) 2.2% ($10K - $100K) 1.9% (>$100K)

$0.30 Credit card currency charges apply. Additional 2% for international orders.

Nonprofit $0 Same as business

Same as Business

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)

Currency conversion fee for international payments

29 www.etsy.com/sell



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 per-transaction 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)

$20,000 - $30,000

Retail sales license $500 - $2,000

Equipment and Supplies (Van, Digital Camera, Misc. )

$20,000 - $50,000

Total $40,500 - $82,000


Staffing (Administration, recruit artisans, pick up pieces, store them, upload digital images, maintain site – 1 FTE)

$40,000 – $80,000

Maintenance and Repair (including supplies) (Rent storage space, web hosting, van upkeep, fuel)

$10,000 - $20.000


$1,000 - $3,000

Total $51,000 - $103,000



Table 4-15: Capital and Operating Cost for Makuÿu Farmers Market Booth

Capital Costs

Studies (Business plan)

$2,500 - $10,000

Permits (GET License)

$500 - $2,000

Equipment and Supplies (Display tables, accessories, van, cleaning supplies)

$20,000 - $50,000

Other (Brochures to hand out at Market describing WKOP) $5,000 - $15,000

Total $28,000 - $77,000


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)

$5,000 - $20,000


$2,000 - $6,000

Total $27,000 - $66,000

4.6.4 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.



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)

Net $ 8 $ 12

Assume 20% commission Assume 30% commission

# of items to sell to break even to Annual Operating Expenses 9,250 3,250

Total sales $ 370,000 $ 130,000 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 Potential Cost + Cost of Goods Sold

Annual Balance

Year 1 Meeting with Artisans, gathering inventory,

establishing web presence

$56,500 ($56,500)

Year 2 $28,8001 $74,000 + $23,040 ($68,240) Year 3 $57,6002 $74,000 + $43,080 ($59,480) Year 4 $86,4003 $74,000 + $69,120 ($56,720) Year 5 $115,2004 $74,000 + $92,160 ($50,960) Cumulative at Year 5 $288,000 $579,900 ($294,900)

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



Table 4-18: Five-Year Cost and Revenue Projection for Makuÿu Market Booth

Potential Revenue Potential Cost + Cost of Goods Sold

Annual Balance

Year 1 Meeting with Artisans, gathering inventory,

establishing web presence

$48,000 ($48,000)

Year 2 $8,3201 $39,000 + $5,824 ($36,504) Year 3 $12,4802 $39,000 + $8,736 ($35,256) Year 4 $16,6403 $39,000 + $11,648 ($34,008) Year 5 $20,8004 $39,000 + $14,560 ($32,760) Cumulative at Year 5 $58,240 $244,768 ($186,528)

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 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.



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



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.



• (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.


• (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.



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.

32 DBEDT Data Book 2009 33 Hawaii Tourism Authority, State Park Survey of Visitors 2007 34 Hawai’i Tropical Botanical Gardens interview 06/15/11.

Boardwalk in the rainforest at Hawaiÿi Tropical Botanical Garden Photograph courtesy of http://www.htbg.com/



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)

$175,000 - $250,000

Equipment and Supplies (Equipment for volun-tourism, van, cleaning supplies)

$30,000 - $60,000

Other (Marketing expenses including brochure development and website enhancement)

$10,000 - $30,000

Total $255,000 - $410,000


Staffing (Administration, sales, tour guide, volunteer coordinator, security, maintenance, manager and cleaning – 3.5 FTE)

$160,000 – $230,000

Maintenance and Repair (including supplies) (Maintenance, cleaning, van upkeep, fuel)

$5,000 - $20.000

Other annual Costs (Marketing, insurance)35 $100,000 - $200,000

Total $265,000 - $450,000

4.7.4 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.



As seen in Table 4-22 on page 65, guided tours at similar attractions charge about $30 to $50 per person36 (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

Avg Pax/hike

15

$ per pax $ 20

# of pax to breakeven 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

Potential Revenue Potential Cost Annual Balance Year 1 Permitting Process

(studies + CDUA) $40,000 ($40,000)

Year 2 Permitting Process $15,000 ($15,000) Year 3 Development $274,500 ($274,500) Year 4 $109,500 $329,500 ($220,000) Year 5 $164,250 $329,500 ($165,250) Cumulative at Year 5 $273,750 $988,500 ($714,750)

36 Hawaii Tropical Botanical Garden website; and World Botanical Garden website



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 e-store and may work well with an overnight retreat if the two were somehow separated but complementary.



Table 4-22: Ecotourism Comparison Examples

Similar Sites Maui Tropical Plantation Hawaiÿi Tropical Botanical Garden World Botanical Gardens

Location Waikapu, Maui Onomea, Hawaiÿi Umauma, Hawaiÿi Description Working plantation with

tropical fruits & flowers 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. 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.

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.

Tours Tram tours 30 to 40 minutes

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.

Adult Tour Price $15 $30 to $50 $33 plus tax, lunch +$10

Child Tour Price $5 $13 plus tax, lunch +$10

Onsite Services Lunch. Store, Weddings & Special Events

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

Memberships $25 for students and up to $10,000

Website 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

Contact 808-242-8983

mauitropicalplantation.com

http://www.hawaiigarden.com/

http://www.worldtropicalgardens.com/



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.


• 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

• (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

37 Interviews with Kumu Hula



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.


• (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

• (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.

4.8.2 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 state38 but not on island that may want to use the facility. In addition there are 40 hula hälau in Japan39 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 39 Mele.com on June 7, 2011 40 Iwalani Kalima Interview



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 night41. 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)

$190,000 – $250,000

Permits (Conservation District Use Application, Grading & Grubbing, Building)

$40,000 – $60,000

Facilities (Overnight retreat building w/ 30-person capacity, water catchment, solar photovoltaic power, grey water system, composting toilets; hula mound)

$1,200,000 – $1,800,000

Equipment and Supplies (Beds, kitchen supplies, appliances, tables, chairs, vans)

$150,000 – 200,000

Other (Marketing expenses including brochure development and website enhancement)

$10,000 - $30,000

Total $1,590,000 – $2,340,000


Staffing (Administration, sales, security, maintenance, manager and cleaning – 2.5 FTE)

$125,000 – $165,000

Maintenance and Repair (including supplies) (Maintenance, cleaning, van upkeep, fuel)

$10,000 - $20,000

Other annual costs1 (Marketing, insurance)

$100,000 - $200,000

Total $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



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 night42. 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.

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 30

$ per pax $ 40

Avg # of nights 3

# of pax to breakeven 7,675

# of group nights 256

# of group reservations 85

Occupancy Rate 70%

42 Interview with KMC Marketing Person

Cottage facilities at Kïlauea Military CampPhotograph courtesy of http://www.kmc-volcano.com/



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.



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 Percentage of Film Permits

Small Productions (1-10 people); 80% Midsize Production (31-50 people) 17% Large Productions (70 or more people) 3%


• 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 non-profit 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.



• (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.


• (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

• (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.

4.9.2 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.



Table 4-26: Comparative Pricing for Hawaiÿi Filming Locations

Estimated Price per Day Additional Pricing Location Amenities

State Land Some areas are free; $100 for some areas

Attendant Fee: $40/hour

None

Hawai’i Volcano National Park

$150 small production (1-10 people); $250 Midsize (11 – 30 people); $500 Large (31 – 49 people); $750 Major Production (over 50 people)

$150 permit application fee.

None

Honolulu County Land

$20 Standard Production; $300 Major Production

None None

Kualoa Ranch $2,500 Major Production; $1,500 Half Day Production; $1,000 Holding cost

None Electricity, Water, and attendant available

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 Frequency

Less than one week 92% Less than one month 5% One to three month 1% Over three months 2%



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)

$15,000 – $25,000

Permits (None)

$0


$0

Equipment and Supplies (None)

$0

Total $15,000 – $25,000


Staffing (0.25 FTE)

$10,000 – $15,000

Maintenance and Repair (None)

$0

Supplies $0


$0

Total $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.



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 Potential Cost Balance

Year 1 $5,250 $27,500 - $45,000 ($22,250 - $39,750) Year 2 $10,500 $10,000 - $15,000 $500 – ($4,500) Year 3 $10,500 $10,000 - $15,000 $500 – ($4,500) Year 4 $10,500 $10,000 - $15,000 $500 – ($4,500) Year 5 $10,500 $10,000 - $15,000 $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.



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



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


• 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.



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


• (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. 46 Interview with Keith Unger, McCandless Ranch, June 23, 2011. 47 Interview with Bart Simmons and David Rokoss, Ecosystem Restoration Associates, June 14, 2011.



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.



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.



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)

$200,000 - $300,000

Physical Infrastructure (storage shed/multipurpose room, restroom, water catchment, access roads)

$1,000,000 -$1,200,000

Equipment and Supplies (miscellaneous equipment)

$30,000 - $50,000

Total $1,575,000 -

$2,030,00

Fixed Annual Operating Costs

Staffing (Forest Management)

$80,000 - $90,000

Supplies (Stocking of seedlings, herbicide, fertilizer)

$90,000 - $110,000

Operations, Maintenance and Repair (site clearing, planting, weed control, fence maintenance, vehicle and shed maintenance)

$700,000 - $900,000

Other annual Costs (Insurance, carbon project monitoring and reporting & fee)

$40,000 - $60,000

Total $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: 1Studies 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.



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.



Table 4-31: Carbon Project Assumptions

Total available acres 5,000

Acres to be cleared and managed every year 50

Difference in biomass1: native vs. invaded forest

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 Difference in Biomass = (Native Forest AGB) – (Invaded Forest AGB)

2http://www.fs.fed.us/psw/publications/hughes/psw_2008_hughes002.pdf 3AGB assumed to be 50% carbon

http://www.fs.fed.us/psw/publications/hughes/psw_2008_hughes002.pdf



Table 4-32: 100-Year Cost and Revenue Projection Example

YEAR

Area generating Revenue (acres)1

Potential Revenue for that

year ($2.50 per credit)

Potential Cost for that year Balance

Year 12 0 $0 $2,582,300 ($2,582,300) Year 10 50 $21,288 $1,068,500 ($1,047,213) Year 25 800 $340,608 $1,256,000 ($915,393) Year 50 2,050 $872,808 $1,568,500 ($695,693) Year 75 3,300 $1,405,008 $1,881,000 ($475,993) Year 100 4,500 $1,937,208 $2,193,500 (256,293) Cumulative over 100 Years

4,500 $89,111,523 $159,101,300 ($69,989,778)

Notes: 1It 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. 2Year 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.

The

San Francisco Airport “Climate Passport” kiosk



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-60-times-the-market-rate/ 53 Interview with Sandra Gillis, State Department of Transportation Airports Division Property and Business Development Office, July 22, 2011

http://www.hico2.org/index.html

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

Time period before

revenue

Initial Capital

Cost

Annual Operating

Cost

Gross Annual Revenue potential

Risk

Movie Productions (assumes 10 films/yr)

None 6 months $15,000-$25,000

$10,000-$15,000

$10,500 annually High

Individual Donor-based Program

None 1 year $58,500-$92,100

$31,700-$51,700


Phone App None 1 year $58,600-$92,200

$32,700-$50,700

$12,500 first year of

release

High

Makana – virtual shop None 1 year $40,500-$82,000

$143,000-$195,000


Makana - booth at market

None 1 year $28,000-$77,000

$42,000-$80,000


Invasive Species Extraction (400 ac)

None N/A $30,000-$50,000

$300,000 at year 52

No revenue N/A

Eco-Tourism & Volun-Tourism

2 years 4 years $255,000-$410,000

$265,000-$450,000


Overnight Retreat (40-70% occupancy)

5-9 years 6-11 years $1,590,000-$2,340,000

$235,000-$385,000

$175,200-$306,600 Moderate

Native and Cultural Plant Cultivation - nursery (1 ac)

5-9 years 6-10 years $920,000-$1,120,000

$242,000-$385,000

$350,000-$500,000 Moderate

Native and Cultural Plant Cultivation – agroforestry (10 ac)

5-10 years 7-14 years $1,420,000-$1,790,000

$427,000-$590,000

(best case) $600,000-$800,000

High

Sustainable Forestry (100 ac)

5-10 years 30-35 years $1,280,000-$1,870,000

$130,000-$180,000

$4,550,000-$14,000,000

One-time harvest

High

“Niche” Carbon Credits (per 50 ac managed)

7 years 17 years $2,365,000-$3,040,0003

$132,500-$162,5004

$21,300 after establishment per

50 ac managed

High

Notes: 1Estimated annual revenue after 4 years of operation 2Some 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. 3Cost 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 3Cost includes staffing, maintenance and other annual costs for 50 acres



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.



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 non-profit 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.

References


7 REFERENCES Asner, Gregory P. et al. 2008. Environmental and Biotic Controls over Aboveground Biomass

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Chamberlain, Andrew and Feliz M. Ventura. 2010. Paying for the “American Power Act”: An

Economic and Distributional Analysis of the Kerry-Lieberman Cap-and-Trade Bill. Chamberlain Economics Policy Study No. 2010-06.

Columbia Carbon, LLC. 2011. Improved Forest Management Methodology for Quantifying

GHG Removals and Emission Reductions through Increased Forest Carbon Sequestration on Non-Federal U.S. Forestlands. American Carbon Registry.

Conte, Marc N., Christian Giardina, Neil Hannahs, James B. Friday, James Greenwell. 2009. The

Emission-Reduction Potential of Native Forest Restoration in Hawaiÿi. Report to the State of Hawaiÿi Greenhouse Gas Emissions Reduction Task Force.

Cannarella, Ronald. 2010. Hawaiÿi Statewide Assessment of Forest Conditions and Trends:

2010 An Assessment of Our ÿÄina. Department of Land and Natural Resources, Division of Forestry and Wildlife.

Druecker, Michael and Pow-foong Fan. 1976. Hydrology and Chemistry of Ground Water in

Puna, Hawaiÿi. Groundwater: Vol. 14, No. 5. Dudley, Nicklos S. and James E. Quinn. 2004. Hawaii Hardwood Market Study. Prepared for

the State of Hawaiÿi, Department of Land and Natural Resources. Dudley, Nicklos S. and Jodi Yamasaki. 2000. Specialty Crop Production in a Forest Understory:

Olena, Maile, Palapalai and ÿAwa. Hawaii Agriculture Research Center, Forestry Report 2.

Elevitch, Craig, Wilkinson, Kim M., and Friday, J. B. 2006. Species Profile for Pacific Island

Agroforestry: Acacia koa (Koa and Acacia koaia (Koaiÿa). www.traditionaltree.org. Friday, J. B., Carol Cabal, and John Yanagida. 2000. Financial Analysis for Tree Farming in

Hawaiÿi. University of Hawaiÿi, CTAHR. Resource Management. Friday, J. B. and Darrell A. Herbert. 2006. Species Profile for Pacific Island Agroforestry:

Metrosideros polymorpha (ÿÖhiÿa lehua). www.traditionaltree.org. Geometrician Associates, LLC. 2010. Draft Environmental Assessment, Biocontrol of

Strawberry Guava by its Natural Control Agent for Preservation of Native Forests in

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Gert Jan Spriensma. (2011). App Distribution Becomes A Global Game. Distimo Research. Hawaii Audubon Society. (2007 - 2010). Tax Form 990. Retrieved June 2011, from

http://www2.guidestar.org/ Hawaii Nature Center. (2007 - 2010). Tax Form 990. Retrieved June 2011, from

http://www2.guidestar.org/ Hawaiÿi Tropical Botanical Gardens. (2007 - 2010). Tax Form 990. Retrieved June 2011, from

http://www2.guidestar.org/ Hawaiÿi Wildlife Center. (2007 - 2010). Tax Form 990. Retrieved June 2011, from

http://www2.guidestar.org/ Hawaii Wildlife Fund. (2007 - 2010). Tax Form 990. Retrieved June 2011, from

http://www2.guidestar.org/ Honolulu Zoological Society. (2007 - 2010). Tax Form 990. Retrieved June 2011, from

http://www2.guidestar.org/ Hunt, Josiah, et al. 2010. The Basics of Biochar: A Natural Soil Amendment. University of

Hawaiÿi, CTAHR, Soil and Crop Management. International Tropical Timber Organization (ITTO). 2011. Tropical Timber Market Report. Vol.

16: No.11. Koch, Nicholas, Marius Ellis, and Willie Rice. 2005. Hönaunau Forest Management Plan. Forest

Solutions, Inc. Martin, Roberta. 2008. Interim Report on Field Study of Vegetation Composition in Wao Kele

o Puna Reserve, Puna District, Hawaiÿi. Pacific Ecosystem Assessment Services, LLC. McEldowney, H. and F. D. Stone. 1991. Survey of Lava Tubes in the Former Puna Forest

Reserve and on Adjacent State of Hawaiÿi Lands. Department of Land and Natural Resources, State Historic Preservation Division.

McGregor, Devianna P. Research in Action: Ethnohistory of Puna. National Center for Charitable Statistics. (2010). Data Analysis Tools. Retrieved May 2011, from

http://www.nccs.urban.org/tools/index.cfm Nelson, Scot C. 2001. Noni Cultivation in Hawaiÿi. University of Hawaiÿi, CTAHR. Fruits and

Nuts.

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http://www.nccs.urban.org/tools/index.cfm

References


Nelson, Scot C. 2006. Species Profiles for Pacific Island Agroforestry: Morinda citrifolia (noni), ver. 4. In: Elevitch, C.R. (ed.). http://www.traditionaltree.org

Nelson, Scot C. 2011 (revised). Farm and Forestry Production and Marketing Profile for Kava

(Piper methysticum). In: Elevitch, C.R. (ed.). Specialty Crops for Pacific Island Agroforestry. http://agroforestry.net/scps

Nielson. (2011). US Smartphone Market. Nielson Research. Pandey, D. and C. Brown. 2000. Teak: A Global Overview. Excerpted from Unasylva, An

International Journal of Forestry and Forest Industries: Vol. 51, 2000/2. Peters-Stanley Molly, et al. 2011. Back to the Future, State of the Voluntary Carbon Markets

2011. A Report by Ecosystem Marketplace & Bloomberg New Energy Finance. Robbins, Christopher S. 2000. Mahogany Matters: The U.S. Market for Big-Leafed Mahogany

and Its Implications for the Conservation of the Species. TRAFFIC North America. Shehata, Sabry. Economic Feasibility of Nursery Operations in Hawaiÿi. In: Hawaiian

Agricultural Products. http://www.hawaiianagriculturalproducts.com Skolmen, Roger G. 2000. Some Woods of Hawaii, Properties and Uses of 16 Commercial

Species. University of Hawaiÿi, College of Tropical Agriculture and Human Resources (CTAHR), Cooperative Extension Service.

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Department of Agriculture, National Agricultural Statistics Service. 2010. Statistics of Hawaiÿi Agriculture: 2008.

State of Hawaiÿi, Department of Land and Natural Resources, Division of Forestry and Wildlife

(DOFAW). 2002. Draft Management Plan of the Ahupuaa of Puuwaawaa and the Makai Land of Puuanahulu.

State of Hawaiÿi, DOFAW. 2007. A Photographic Survey of the Border Areas of Wao Kele o

Puna Forest Reserve. State of Hawaiÿi, Department of Land and Natural Resources, Natural Area Reserves System

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Swanson, Don. 2010. Hawaiian Oral Tradition Clarifies 400 Years of Volcanic Activity at

Kïlauea. Hülili: Multidisciplinary Research on Hawaiian Well-Being, Vol. 6. Sweeney, Maria T. K. and Greg C. Burtchard. 1996. Archaeology in the Kïlauea East Rift Zone,

Part II: A Preliminary Survey, Kapoho, Kamäÿili and Kïlauea Geothermal Subzones, Puna District, Hawaiÿi Island. Oak Ridge National Laboratory. For the U.S. Department of Energy.


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Turn, Scott Q., Vheissu Keffer, Keith Beers. 2005. Physicochemical Analysis of Selected

Biomass Materials in Hawaiÿi. University of Hawaiÿi, Hawaiÿi Natural Energy Institute, School of Ocean and Earth Sciences and Technology.

U.S. Department of the Interior. (2007). Benefit-Cost/Unfunded Mandates Act Analysis Small

Business and Regulatory Flexibility Act Analysis. U.S. Fish & Wildlife Service. 2010. Halakau Forest National Wildlife Refuge Comprehensive

Conservation Plan. Vieth, Gary R. et al. 1999. Alternatives to Forest Gathering of Plant Materials for Hula Lei

Adornment. University of Hawaiÿi, CTAHR, Resource Management.

APPENDIX A

Opportunities Screening Spreadsheet

WAO KELE O PUNA - CRITERIA FOR SELECTING INCOME PRODUCING OPPORTUNITIESNON-MARKET VALUE CRITERIAApril 28, 2011

E

SOURCE + 0 -SCORE WEIGHT

Website Phone apps

"Gift Shop" and demo Halau: sale of book(s), children's books, artisan products,

WKOP inspired art

Conservation Subscription / Individual donor‐based

programs: "Friends of Wao Kele o Puna", "Adopt a tree",

"Adopt a forest"

Endowment Fund

Native plant cultivation: medicinal plants and culturally important

plants ('awa, mamaki, lei plants, hula plants, ?)

IN THE FOREST

Native plant cultivation: ornamental plants and plants for seed (maile, hapuu, 'ulu, hala, ?)IN THE FOREST

PharmaceuticalsInvasive species extraction ‐invasive species (strawberry guava) as biofuel / biochar


OHA Strategic Plan (2) DLNR-OHA MOA (1)OHA Real Estate Strategy (1)Forest Legacy Program Guidelines (1)

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 is likely to negatively impact native plant/wildlife habitats

+5, 0, -5

0 0 0 5 0 5 5 0 5

2

Respect of the sacred qualities and Hawaiian cultural legacy of the property (WKOP spiritual importance as home of Pele, important cultural and religious activities, importance as source for abundant springs of Puna; Puna as important center for hula and regenerative power, importance of hala forests, maile scent, hapu'u pulu in mo'olelo of Puna)

OHA Strategic Plan (2)OHA Real Estate Strategy (1)PDF vs. Campbell (1)

Activity emphasizes respect for the sacred quality / cultural legacy of WKOP?

Activity does not affect or is neutral

Activity is considered to not be respectful of the sacred quality and cultural legacy of WKOP?

+4, 0, -4

4 4 4 4 4 4 4 0 0

3Sustainable use of the native resources of the property. (Sustainable use is the management of resources so as to maintain ecological balance to avoid depleting resources)

OHA Strategic Plan (2)DLNR-OHA MOA (1)Forest Legacy Program Guidelines (1)

Activity is a sustainable use of the native resources of the property or does not require the extraction of WKOP resources

N/AActivity is likely to deplete the native resources of the property

+4, -4

4 4 4 4 4 4 4 4 4

4Access for traditional and customary practices. ( Hunting included as an important customary and subsistence activity of Native Hawaiian communities of Puna)

OHA Strategic Plan (2) OHA-DLNR MOA (1)PDF vs. Campbell (1)

Activity does not restrict people's access to the property for traditional and customary practices

Activity could minimally restrict people's access for traditional and customary practices to some limited portions of WKOP

Activity is likely to significantly restrict people's access to the property by traditional and customary practitioners

+4, 0, -4

4 4 4 4 4 0 0 0 0

5

Benefit to the self-sufficiency and well-being of Native Hawaiian Communities of Moku o Keawe (direct benefits - provides jobs, job training, provide potential income source, culturally important activity for community, promotes self-governance)

OHA Strategic Plan (2)OHA Real Estate Strategy (1)

Activity provides avenues for enhancement of self-sufficiency and/or well-being of Native Hawaiians


Activity could negatively impact self-sufficiency, and/or well-being of Native Hawaiians

+3, 0, -3

3 3 3 0 0 3 3 0 0

8

Education, advocacy, and collaborative development value(Education: demonstrations, classes, guided tours, written information, videos, etc.; Advocacy: active support of WKOP, donating, volunteering; Collaborative development: partners, learning exchange)


Activity promotes education, advocacy, and/or collaborative development beneficial to the property


Activity negatively affects potential for education, advocacy, and/or collaborative development beneficial to the property

+3, 0, -3

3 3 3 3 3 3 3 0 0

6

Protection and enhancement of the natural, scenic and open-space nature of the property. (Considerations: potential visual impacts of fences vs. invasive species infestation; how activity might restrict access)

DLNR-OHA MOA (1)Forest Legacy Program Guidelines (1)

Activity promotes the protection and enhancement of the natural, scenic and open-space nature of the property(general funding only does not meet criterion)


Activity diminishes the natural, scenic and open-space nature of the property

+2, 0, -2

0 0 0 2 0 2 2 0 2

7

Benefit to all people with a connection to Hawaii: indirect values (Inherent value of conservation of WKOP, to people that may be far away, to future generations; inherant and indirect cultural values)

OHA Real Estate Strategy (1)Activity enhances well-being for the community at large (indirect benefits)


Activity reduces well-being for the community at large

+1, 0, -1

1 1 0 1 1 1 1 0 1

9

Protection of important recreational resources, riparian areas, and other ecosystem values (watershed function: freshwater supply, carbon sequestration, bird corridor, seed bank)


Activity promotes the protection of important recreational resources, riparian areas, and other ecosystem values of WKOP (general funding only does not meet criterion)


Activity could impact important recreational resources, riparian areas, and other ecosystem values

+1, 0, -1

0 0 0 0 0 1 1 0 1

TOTAL 19 19 18 23 16 23 23 4 13

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.

CRITERION

WAO KELE O PUNA - CRITERIA FOR SELECTING INCOME PRODUCING OPPORTUNITIESNON-MARKET VALUE CRITERIAApril 28, 2011

SOURCE + 0 -


OHA Strategic Plan (2) DLNR-OHA MOA (1)OHA Real Estate Strategy (1)Forest Legacy Program Guidelines (1)

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 is likely to negatively impact native plant/wildlife habitats

2

Respect of the sacred qualities and Hawaiian cultural legacy of the property (WKOP spiritual importance as home of Pele, important cultural and religious activities, importance as source for abundant springs of Puna; Puna as important center for hula and regenerative power, importance of hala forests, maile scent, hapu'u pulu in mo'olelo of Puna)

OHA Strategic Plan (2)OHA Real Estate Strategy (1)PDF vs. Campbell (1)

Activity emphasizes respect for the sacred quality / cultural legacy of WKOP?


Activity is considered to not be respectful of the sacred quality and cultural legacy of WKOP?

3Sustainable use of the native resources of the property. (Sustainable use is the management of resources so as to maintain ecological balance to avoid depleting resources)

OHA Strategic Plan (2)DLNR-OHA MOA (1)Forest Legacy Program Guidelines (1)

Activity is a sustainable use of the native resources of the property or does not require the extraction of WKOP resources

N/AActivity is likely to deplete the native resources of the property

4Access for traditional and customary practices. ( Hunting included as an important customary and subsistence activity of Native Hawaiian communities of Puna)

OHA Strategic Plan (2) OHA-DLNR MOA (1)PDF vs. Campbell (1)

Activity does not restrict people's access to the property for traditional and customary practices

Activity could minimally restrict people's access for traditional and customary practices to some limited portions of WKOP

Activity is likely to significantly restrict people's access to the property by traditional and customary practitioners

5

Benefit to the self-sufficiency and well-being of Native Hawaiian Communities of Moku o Keawe (direct benefits - provides jobs, job training, provide potential income source, culturally important activity for community, promotes self-governance)


Activity provides avenues for enhancement of self-sufficiency and/or well-being of Native Hawaiians


Activity could negatively impact self-sufficiency, and/or well-being of Native Hawaiians

8

Education, advocacy, and collaborative development value(Education: demonstrations, classes, guided tours, written information, videos, etc.; Advocacy: active support of WKOP, donating, volunteering; Collaborative development: partners, learning exchange)


Activity promotes education, advocacy, and/or collaborative development beneficial to the property


Activity negatively affects potential for education, advocacy, and/or collaborative development beneficial to the property

6

Protection and enhancement of the natural, scenic and open-space nature of the property. (Considerations: potential visual impacts of fences vs. invasive species infestation; how activity might restrict access)

DLNR-OHA MOA (1)Forest Legacy Program Guidelines (1)

Activity promotes the protection and enhancement of the natural, scenic and open-space nature of the property(general funding only does not meet criterion)


Activity diminishes the natural, scenic and open-space nature of the property

7

Benefit to all people with a connection to Hawaii: indirect values (Inherent value of conservation of WKOP, to people that may be far away, to future generations; inherant and indirect cultural values)

OHA Real Estate Strategy (1)Activity enhances well-being for the community at large (indirect benefits)


Activity reduces well-being for the community at large

9

Protection of important recreational resources, riparian areas, and other ecosystem values (watershed function: freshwater supply, carbon sequestration, bird corridor, seed bank)


Activity promotes the protection of important recreational resources, riparian areas, and other ecosystem values of WKOP (general funding only does not meet criterion)


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)

3) Screening process: scores below 10 were considered to not meet acceptability criteria.

CRITERION

conomic Opportunities

Non‐native edible forest products (strawberry guava,

lilikoi?)

Invasive species extraction ‐ strawberry guava wood (for timber, wood crafts,

chips)

Sustainable forestry

Hula/cultural practice retreats / artist retreats / visitor retreats

Campsites

Cultural and Eco‐tourism tours (hiking, bird

watching, volunteering tours)

Movies and documentaries

Carbon credits

University Research

Water (bottling) from WKOP springs

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

APPENDIX B

Individuals Contacted

WAO KELE O PUNAINDIVIDUALS CONTACTED

Townscape, Inc. and SMS Consulting

Contact Name Affiliation Primary Opportunity Other opportunities

Bob Freitas Jr.Artist with MAMo (Hawaiian art Hui) WKOP Halau and "Gift Shop" Retail options

Gail Chew Hi'ipaka (Waimea Valley) WKOP Halau and "Gift Shop"Movies & documentaries

Toni DavisAttractions & Activities Association Ecotourism Retreat

Ken Schmitt Hike Maui Ecotourism

Julie Maui Tropical Plantation EcotourismHawaii Tropical Botanical Gardens Ecotourism

Audubon Society EcotourismConservation Subscription

Ron Pacheco Hawaii Forest & Trail Ecotourism

Iwalani Kalima Kumu Hula of Hula Halau O Kou Lima Retreat

Arlene Kilauea Military Camp Retreat

J B Friday CTAHR Forestry Extension Sustainable Forestry

Bill Cowern Hawaiian Mahogany Sustainable Forestry Carbon Credits

Hal BraunerBrauner Molding Woodworks Sustainable Forestry

Oils of AlohaSustainable Forestry - Kukui Nut Market

Scott SalsenHawaii Island Kukui Nut Products

Sustainable Forestry - Kukui Nut Market

Jim Quinn Hawaii Island Hardwoods Sustainable Forestry

Nick Koch Forest Solutions, Inc. Sustainable Forestry Agroforestry

Nick DudleyHawaii 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 Native Plant Cultivation Sustainable Forestry

Daidai HopkinsHawaii County R&D Agriculture specialist Native Plant Cultivation Sustainable Forestry

WAO KELE O PUNAINDIVIDUALS 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 Hawaii Biochar Products Invasive Species Extraction

Bart SimmonsEcosystem Restoration Associates (ERA) Carbon Credits

David RokossEcosystem Restoration Associates (ERA) Carbon Credits

Keith Unger McCandless Rach Carbon Credits Sustainable Forestry

William Cowern Hawaiian Mahogany Carbon Credits Sustainable Forestry

Sandra Gillis

DOT Airports Division, Property and Business Devt Office Carbon Credits

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 Website

Dyanna OkazakiHonolulu Zoological Society Website

APPENDIX C

Cost Analysis Table

WAO KELE O PUNACost Analysis Table

Townscape, Inc. August 2011

Consulting Needed Cost Permit Cost Element Cost Item Cost Element Cost Element Cost E-store

Likely a part of establishing an overall WKOP website - add to cost below. Establish a business entity

Van to pick up items from artists and take to storage facility.

$30,000 Credit card processing.

Website development $10,000 Digital camera to take picture of items to post on site.

$1,000

Business Plan $15,000 Misc. equipment $500

TOTAL Studies $25,000 Permits $0 Facilities $0 Equipment $31,500 Supplies $0 Other $0 $56,500 Makuu Market

Establish a business entityVan to pick up items from artists and take to storage facility.

$30,000 Display tables & table cloths for the market $1,000

Brochures describing WKOP and the connection with the artist.

$10,000

Business Plan $5,000LU permits if halau: grading/grubbing, building permits

If halau, structure for halau + shop, restroom, utilities, Misc. equipment $1,000 Display accessories, shelving, etc., $1,000 Credit card processing(2%)

GET License

TOTAL Studies $5,000 Permits $0 Facilities $0 Equipment $31,000 Supplies $2,000 Other $10,000 $48,000

Architect (site design)Assume 5% of bldg cost $75,000 Establish a business entity.

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

Beds, kitchen appliances - stove, oven, sink, toilets, showers, sinks, tables, chairs,

$100,000 Pots & pans for the kitchen. Dishes & glasses. Cleaning materials - brooms, mops, dusters.

$5,000 Brochure $10,000

Engineer (site design + utilities)Assume 5% of bldg cost $75,000

CDUP (requires EA and CIA, Forestry Management Plan)

$30,000 Hula mound (Assume 400 sf, $40/sf) $20,000 2 vans for guests $80,000 Website $10,000

Planner - Env Assessment +CIA $50,000 Grading &grubbing permit $10,000 Water catchment $6,500 Business Plan $15,000 Building permit $10,000

TOTAL Studies $215,000 Permits $50,000 Facilities $1,526,500 Equipment $180,000 Supplies $5,000 Other $20,000 $1,996,500

Architect (site design)Assume 5% of bldg cost $5,000 CDUP (for signage, trails,

and rest facility) $15,000 Visitor center: site for restrooms, gathering of groups as they wait for tours to begin, provision of water/refreshments. Assume $200/sf, 500 sf; Assume visitor center is offsite

$100,000 Van for visitors $40,000 Supplies for the restroom and cleaning supplies. Water cooler, refrigerator.

$2,000 Brochure $10,000

Engineer (site design + utilities)Assume 5% of bldg cost $5,000 Grading & Grubbing (for

visitor center) $5,000 Access trails (for visitors - $500/miAssume five mi. trails $2,500 Equipment for voluntourism

activities $5,000 Misc. supplies $5,000 Website $10,000

Business Plan $15,000 Building permit (for visitor center) $5,000 Interpretive Signage $40,000

BLNR authorization for commercial tours in Forest Reserve

$5,000 Shaded gathering site + composting toilet facilities on property (for tours + volunteers) - Assume $100/sf, 500sf +$10,000 compost toilet $60,000

TOTAL Studies $25,000 Permits $30,000 Facilities $202,500 Equipment $45,000 Supplies $7,000 $20,000 $329,500

Biological survey of forestry areas (native plants, T&E species)(Assume 50 person.days for field)

$120,000Conservation District Subzone change to "Resource"

$30,000

Site Preparation (clearing) Assume: no clear cutting, near access road, mixed incipient & dense invasive infestations (50%/50%), incipient = 1 worker.day/ac, dense = 50 worker.day/ac; avg over area: 25 worker.day/ac, $200/worker.day + $50/ac equipment; $5,050/acALTERNATIVE: $250/ac. incipient infestation (by hand), use gyro track for dense infestation: $4,000/ac; average: $2,125/ac

$212,500 Miscellaneous eqpt $10,000 Initial stocking: 500 stems/ acre - $2 per stem $100,000

Archaeological Inventory Survey of forestry areas + Cultural Impact Assessment + Preservation Plan(Assume: 40 person.days for field)

$120,000CDUP (requires EA and 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

Professional Forester (Forestry Mgmt Plan incl. Business Plan) $50,000 Conservation Plan (or

grading/grubbing permit) $20,000 Equipment Storage Shed, multipurpose room, restroom, enclosed fertilizer / pesticide storage, parking - $100/SF $200,000 Initial herbicide application (2

times) - $500 /ac. $50,000

Planner - Env Assessment $50,000 Water catchment for fire suppression - $6,500/tank $6,500 Fertilizer - $300 /ac. $30,000

Fire Management Plan $5,000 Optional: Nursery (see nursery cost assumptions below) Weed control andFertilizer (years 2-5) - $200/ac $80,000

Sustainable Forestry Auditing & Certification $15,000 Optional: Access Roads (unpaved) - $40/ft, assume 1 mi for 100ac. $212,000

TOTAL Studies $360,000 Permits $80,000 Facilities $731,000 Equipment $10,000 Supplies $310,000 $1,491,000 Plant Nursery

Planner - Environmental Assessment + CIA $50,000

Conservation District Subzone change to "Limited"

$30,000 Greenhouse - $10/SF Assume 40,000 SF of greenhouse, with shadecloth (no glass) $400,000 Irrigation system / fogger for

greenhouse - $2/SF $80,000

Initial stocking: 50,000 plants/acreDibble tubes, pots, soil, etc. for initial propagation of native plants - assume $1/plant

$50,000

Business Plan $15,000 CDUP (requires EA) $30,000 Equipment Storage Shed, multipurpose room, restroom, enclosed fertilizer / pesticide storage, parking - $100/SF $200,000 Forklift (?) $15,000 Fertilizer - $1,000/ac $1,000

Grading/grubbing permit (incl. engineering) $20,000 Water catchment (for irrigation and fire suppression) - $6,500/tank $6,500 Van for deliveries $30,000 Herbicide - $300/ac $300

Solar Photovoltaic electricity generator $20,000 Miscellaneous eqpt $10,000

Access trails (for gathering) - $500/miAssume 5 mi. trails $2,500

TOTAL Studies $65,000 Permits $80,000 Facilities $629,000 Equipment $135,000 Supplies $51,300 $960,300

Eco-Tourism & Voluntourism

Sustainable Forestry

Hula/Cultural Practice Retreat, Artist Retreat, Visitor Retreat

WKOP Halau and Makana

Concepts Consulting Costs (special consultant fees) Approvals and permits requiredPhysical Infrastructure development cost per unit

(including buildings, facilities, access, utilities) Initial Supplies (plants, etc.) Other capital cost (marketing)

Development Cost FactorsTOTAL ESTIMATED

CAPITAL COSTSpecialized Equipment cost (machinery,

vehicles, etc.)

Page 1



Concepts Consulting Costs (special consultant fees) Approvals and permits requiredPhysical Infrastructure development cost per unit

(including buildings, facilities, access, utilities) Initial Supplies (plants, etc.) Other capital cost (marketing)

Development Cost FactorsTOTAL ESTIMATED

CAPITAL COSTSpecialized Equipment cost (machinery,

vehicles, etc.)Agroforestry

Biological survey of agroforestry areas(native plants,T&E species)(Assume 20 person.days for field)

$50,000

Conservation District Subzone change to "Limited" $30,000

Site Preparation (clearing) Assume: no clear cutting, near access road, mixed incipient & dense invasive infestations (50%/50%), incipient = 1 worker.day/ac, dense = 50 worker.day/ac; avg over area: 25 worker.day/ac, $200/worker.day + $50/ac equipment; $5,050/acALTERNATIVE: $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 $20,000

Initial stocking: 10,000 plants/acre Dibble tubes, pots, soil, etc. for initial propagation of native plants - assume $1/plant

$100,000

Archaeological Inventory Survey of ag areas + Cultural Impact Assessment + Preservation Plan (Assume: 12 person.days for field)


$30,000 Fencing - $12/ft , 3,000 ft of fence $36,000 Irrigation system in forest - $1.25/SF $550,000

Planting labor and equipment - assume 10 worker.day/ac, $2,500/ac

$25,000

Planner - Environmental Assessment $50,000 Conservation Plan (or grading/grubbing permit) $20,000 Greenhouse - $10/SF

Assume 10,000 SF greenhouse, with shadecloth (no glass) $100,000 Tractor $50,000 Herbicide - $300/ac $3,000

Professional Forester (Agroforestry Mgmt Plan incl. Business Plan) $30,000 Equipment Storage Shed, multipurpose room, restroom, enclosed

fertilizer / pesticide storage, parking - $100/SF $200,000 Mower $10,000 Fertilizer - $300/ac $3,000

Water catchment (for irrigation and fire suppression) - $6,500/tank $13,000 Forklift (?) $15,000

Solar Photovoltaic electricity generator $20,000 Van for deliveries $30,000 Access Roads (unpaved) - $40/ft, assume 3,000ft $120,000 Miscellaneous eqpt $10,000

TOTAL Studies $180,000 Permits $80,000 Facilities $510,000 Equipment $685,000 Supplies $131,000 $1,586,000

Hiring a developer. Website Development Cost $40,000 Domain Name registration $50 None $0 Computer $2,000 None $0

The cost of half a years time for one person to help coordinate and develop content for the website

$25,000

Cost to incorporate an Nonprofit LLC

Business and Marketing Plan $15,000TOTAL $80,000 $50 $0 $2,000 $0 $82,050

If incorporated as a nonprofit LLC - need to hire a consultant to set up None 0 None. Trade off: on-site utilities vs. truck everything in 0 None 0 None 0

Initial Branding of Wao Kele o Puna

Cost to set up rules, regulations, as well as pricing and constraints of the site. Assumed similar in cost to a business plan.

$15,000

TOTAL $15,000 $15,000

Mobile Application Development Cost $40,000

Approval from Development Platform (This cost is per development platform - so one for apple, one for google, etc) Assume at least two platforms

$200 None 0 None 0 Computer, Hardware, starting office supplies 2000

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

$25,000

Cost to incorporate an Nonprofit LLC

Business and Marketing Plan $15,000TOTAL $80,000 $200 $0 $2,000 $0 $82,200

Forest Management Plan w/ BMPs for removal & replanting (or this could be included under the comprehensive management plan)

$50,000

TOTAL $50,000 $0 $0 $0 $0 $0 $50,000

CO2 sequestration studies $75,000

Project Design Document + Third Party verification/validation and registration of project

$150,000 Equipment Storage Shed, multipurpose room, restroom, enclosed fertilizer / pesticide storage, parking - $100/SF $200,000 Miscellaneous eqpt $50,000

Biological survey of forestry areas (native plants, T&E species)(Assume 100 person.days for field)


$50,000 Water catchment for fire suppression - $6,500/tank $32,500

Archaeological Inventory Survey of forestry areas + Cultural Impact Assessment + Preservation Plan(Assume: 50 person.days for field)

$150,000 Conservation Plan (or grading/grubbing permit) $50,000 Access Roads (unpaved) - $40/ft, assume 4 mi $844,800

Planner - Env Assessment $50,000 Optional: Nursery (see nursery cost assumptions above

Fire Management Plan $5,000TOTAL $430,000 $250,000 $1,077,300 $50,000 $0 $1,807,300

Niche Carbon Credits

Conservation Subscription

Movies and Documentaries

Hawaiian Culture Phone App

Invasive Species Extraction (Strawberry Guava)

Native Plant Cultivation

Page 2



E-store

TOTALMakuu Market

TOTAL

TOTAL

TOTAL

TOTALPlant Nursery

TOTAL

Eco-Tourism & Voluntourism

Sustainable Forestry

Hula/Cultural Practice Retreat, Artist Retreat, Visitor Retreat

WKOP Halau and Makana

ConceptsStaff Annual Cost Element Cost Element Cost 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.

$25,000 Rental of space to store art items. $1,800 Credit card processing fee. None $0

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 $1,000

Web Hosting $1,200Fuel Cost $5,000

Staff $60,000 Maintenance $13,000 $1,000 $0 $74,000

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

$25,000 Cost of booth at the market is $25 per day. $1,200 Credit card processing fee, None $0

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.

Space to store art items. (If rented) $1,800 Advertising & promotion to attract people to store/ $1,500

Fuel Cost $5,000 Ongoing display materials, bags/boxes for sales. Signage. $2,000 Insurance $2,500

Staff $25,000 Maintenance $10,000 $4,000 $39,000

Admin + sales - 1 person (arrangements with groups, residents, etc. handle inquiries, book groups, manage the calendar, the billing and the accounting.)

$60,000 Maintenance & cleaning supplies. Replacement of dishes, pots/pans, soap, etc., $5,000

Ongoing promotional costs, brochures, mailings, advertising.

$75,000 None $0

Fulltime security + maintenance + manager - 1 person. $60,000 Van maintenance $2,500 Insurance $75,000

Cleaning person - 1/2 time $25,000 Fuel $5,000

Staff $145,000 Maintenance $12,500 $150,000 $307,500

Tour guide + volunteer coordinator - 1 person for up to 30 visitors/d $60,000 Maintenance and cleaing supplies. Soap and paper towels in the restrooms. $2,000

Ongoing promotional costs - brochures, mailing, advertising.

$75,000 None $0

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

Staff $195,000 Maintenance $9,500 Other $125,000 $329,500

Forest Manager - 1 person full time (operation, hiring and oversight of contract work, security, maintenance, monitoring & reporting)Annual cost

$90,000 On-going Forest, weed, water catchment, road maintenance - $150/ac $15,000 Insurance $20,000

Vehicle maintenance + fuelAssume: 10-yr life $4,000 Sustainable Forestry

annual audit $500

Shed maintenanceAssume: 20-yr life $5,000 Sustainable Forestry

Fee (SFI) $500

Fence maintenance ($0.5/ft/yr)Assume: 15-yr life $5,000

Staff $90,000 Maintenance $29,000 Supplies Other $21,000 $140,000

1 manager:sales (orders, invoices), operations, deliveries, oversight of work and maintenance, monitoring & reporting $90,000 Fertilizer / Weed control - $1,000/ac $1,000 Greenhouse supplies

($500/mth) $6,000 Marketing $20,000

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)

$100,000 Greenhouse maintenance and repair Assume 10-yr lifetime $6,000 Insurance $10,000

Security - 1 person full time $50,000 Irrigation maintenance & repairAssume 10-yr lifetime $2,000

Equipment (van, forklift, etc.) maintenanceAssume 10-yr lifetime $5,000

Fuel $6,000

Staff $240,000 Maintenance $20,000 Supplies $6,000 Other $30,000 $296,000

Staffing requirements (operation, security, monitoring & reporting) Maintenance and upkeep costs (supplies, repair, equipment)Other project-specific operation costs (fees,

licensing, marketing, etc.)

Operating CostsTOTAL ESTIMATED OPERATING COSTOther on-going costs

Page 3



ConceptsAgroforestry

TOTAL

TOTAL

TOTAL

TOTAL

TOTAL

TOTAL

Niche Carbon Credits

Conservation Subscription

Movies and Documentaries

Hawaiian Culture Phone App

Invasive Species Extraction (Strawberry Guava)

Native Plant Cultivation

Staffing requirements (operation, security, monitoring & reporting) Maintenance and upkeep costs (supplies, repair, equipment)Other project-specific operation costs (fees,

licensing, marketing, etc.)

Operating CostsTOTAL ESTIMATED OPERATING COSTOther on-going costs

1 manager:sales (orders, invoices), operations, oversight of work and maintenance, deliveries, monitoring & reportingAnnual cost

$90,000 Fertilizer / Weed control - $200/acAnnual cost $2,000

Processing (Assuming partnership with existing processors/distributors) $0 Marketing $30,000

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)

$250,000 Greenhouse maintenance and repair - Annual costAssume 10-yr lifetime $2,000 Packaging - Assuming

$200/mth for packaging needs $2,500 Insurance $20,000

Security - 1 person full timeAnnual cost $50,000

Irrigation maintenance & repairAnnual costAssume 10-yr lifetime

$6,000 Greenhouse supplies ($200/mth) $2,500

Equipment (van, tractor, forklift, mower, etc.) maintenanceAnnual cost Assume 10-yr lifetime

$10,000 Other farming supplies ($200/mth) $2,500

Fence maintenance & repair ($1/ft/yr) $3,000

Fuel $6,000

Staff $390,000 Maintenance $29,000 Supplies $7,500 Other $50,000 $476,500Half 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 Server Hosting (server cost can be shared with mobile app and virtual "gift shop" option) $1,200 Marketing Cost None $0

$10,000 a year to hire a contractor to debugg or maintain the site in case there are problems $10,000 Domain Name Renewal $50 Website upkeep,

updates every week?

General Equipment and Supplies (includes internet, office supplies, etc) $500

Staff $35,000 Maintenance $1,750 Supplies $0 $36,750Half time attendant to coordinate and manage film schedules, issues, etc. $25,000 None 0 Marketing Cost None $0

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.

General supplies and equipment (general overhead, postage, etc)

500

Staff $25,000 Maintenance Supplies $500 $25,500

Annual Maintanance of the app; debugging $9,000 Server Hosting (server cost can be shared with conservation subscription and virtual "gift shop" option)

$1,200 Marketing Cost None $0

A half-time administrator to coordinate the application $25,000General Supplies and equipment (general overhead, postage, etc)

$500

Staff $34,000 Maintenance $1,200 Supplies $500 $35,700

Assume: 100 acres annually, 30% dense & 70% incipientIncipient invasion removal cost: $250/ac w/ hand tools and herbicideDense infestation removal cost: $4000/ac w/ mulching machine

$140,000 On-going herbicide control in treated areas $5,000

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)Staff $140,000 Maintenance $5,000 Supplies $0 $145,000

Forest Manager - 1 person full time (operation, sercurity, monitoring & reporting)Annual cost

$90,000 On-going Forest, weed, water catchment, road maintenance - $150/ac $2,500 Initial stocking: 500 stems/

acre - $2 per stem $50,000 Insurance $30,000

Assume OHA management staff to do periodic checks of property Vehicle maintenance + fuelAssume: 10-yr life, for 100 years $4,000

Planting labor and equipment - $500/ac (assuming 2 worker.day/ac)

$50,000 Monitoring $10,000

Shed maintenanceAssume: 20-yr life for 100 years $5,000 Herbicide application (2

times) - $500 /ac. $2,500

Site Preparation (clearing) Assume: no clear cutting, dense invasive infestations, dense = (60 worker.day/ac @ $200/worker.day = $12,000 per acre) @ 50 acres

$600,000 Fertilizer - $300 /ac. $25,000

Fencing - $12/ft, 6,000ft $72,000 15000Staff $90,000 Maintenance $683,500 Supplies $142,500 $916,000

Page 4

APPENDIX D

Agroforestry Analysis Plant List

WAO KELE O PUNAForestry and Agroforestry Plants consideredTownscape, Inc.

Bold = already present onsite

Agroforestry Species

Potential market sector(s) [timber, wood carving, food/spice,

medicinal, fragrance, flowers/lei/hula implements,

ornamental plants]

Considerations and Potential Concerns of WKOP environment for

species Potential Yields Price

Expected maturation period

(before 1st harvest)

High-value Tropical Hardwoods

Ohia

Moderate-value timber; very slow growing for timber purposes; may be more appropriate for ornamental or pole markets;Honey; small market

Slow-growing tree; native to the forest

2,000-3,000 bf/ac (500-600 ft3/ac)

$1.50-$2 per BF for 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 PunaGrowth speed can be problematic and several trials in HI have shown poor growth potential (phone discussion w. H. Brauner)

Approx. 25-30,000 BF/ac assuming 109 stems/ac harvested in 35-45 year rotation

high quality wood: $4,300 per thousand board feetlow quality (plantation): $350-600 per m3 internationally ($830-$1,416 per 1,000 BF) Ease of access affects stumpage price 35-45 years

Mahogany (S. macrophylla) high-value timber; stable market

Shallow soils - may be possible in kipuka with deeper soils

$930-1150 per cubic meter 35-45 years

Rainbow-bark Eucalyptus (Mindanao gum)

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 has continued demand for this wood and not enough supply; stable local and mainland market

Limited potential for invasivenessFast growingNeed to secure seed / seedling supply

low est. 65,000 BF/ac + in 25-yr rotationYields of up to 215,000+ BF/ac have been reported in Hawaii (Brauner) and elsewhere (World Agroforestry Center.org)

Stumpage price: $0.45 to $0.85 depending on wood qualityLower wood prices are for unmanaged yard trees 20 years

Other tropical trees for potential timber and non-timber products

Kamani

timber, artisan / cultural: leimedicinal: oil cosmetics: oilInternational market - mainly supplied by other countries (South Pacific) - limited wood or oil production in Hawaii.

Elevation is high for kamani but may be able to growNeed processing connection

50-200 lbs whole nuts / tree / year, or about 2-20 lbs oil per tree per year(approx. 1,800 lbs oil per acre per year)

oil - retail: $10 / oz bottlewood - retail: $5-15/board-foot

4-5 years for oil20 years for craft wood

Lamatimber, fruitLimited market Slow growing

Too slow-growing for commercial No info found N/A

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 would amount to about $10/gallon

Potential to become invasive if not properly managed

approx 175 lbs nuts / tree / year(with 80 trees / ac., approx. 14,000 lbs nuts / ac; or approx 2,800 lbs oil / ac.)

oil - retail: $19/lbNuts (cosmetic industry): 35 cents per lbBiodiesel: less than 5 cents / lb

Hala

artisan - weavingLimited commercial market, low price

Need to have a connection with local weavers

Ulu

Food: breadfruitLimited commercial market; some groups are trying to revive it as a commercial food product / sustainable island food source (Breadfruit Institute)

Harvesting and processing can be tricky - short shelf life 350 to 1,000 lbs /tree/year

Wauke

artisan / cultural: cloth (kapa)Limited commercial market - potential for some increase with revival of Hawaiian art / use of kapa for hula. No info found No info found No info found

WAO KELE O PUNAForestry and Agroforestry Plants consideredTownscape, Inc.

Bold = already present onsite

Agroforestry Species

Potential market sector(s) [timber, wood carving, food/spice,

medicinal, fragrance, flowers/lei/hula implements,

ornamental plants]

Considerations and Potential Concerns of WKOP environment for

species Potential Yields Price

Expected maturation period

(before 1st harvest)

Ohe (Hwn bamboo)

"timber" , artisanlimited market currently: poles (for fencing, displays, etc.) because of limited local production; but some groups are trying to develop for construction/houses (in Hilo)

Clumping bamboo species only (non-invasive); No info found No info found No info found

Hawaiian / Polynesian Plants for established markets included ornamentals, food, spice

Noni

medicinal, cosmetics Risky market - subject to economic downturns; farming needs to be linked with processing, Needs branding and high quality recognition to compete - international (south Pacific - already suppying cheaper, low quality noni juice)

Plantations already well established in Puna, Noni would benefit from a polyculture agroforestry system, good understory plant; monoculture areas have developed pest issues; Link farming to processing - potential local partners??

71,000 lbs fruit / ac.100 lbs fruits yields approx. 40-50 lbs juice or 4.5-5 gal

Depends on quality of juice. Competition with other countries for low-quality juice.Online prices - $10-20 for 32oz bottleor approx. $140,000/ac of production

Will bear fruit after 1 year; Good harvest after 4-5 years

Awa (kava)

medicinalCurrently 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

Awa would benefit from a polyculture agroforestry system, good understory plant; monoculture areas have developed pest issues;

20-60 lbs fresh product / plantassuming low density 500 plants/ac, yeild would be about 10,000-30,000 lbs/ac

retail: $15-20/lb fresh root; $30/lb dry product (equivalent to $7.50/lb fresh root)Assume wholesale $3.50-$8 depending on product 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 require onsite processing facility, including roasting equipment.

25 pods/tree; with 400 trees / ac, yield up up to 900 lbs dried beans / acre

No Hawaii-specific market info

Olena spice (turmeric), medicinal No info found No info found No info found No info foundHawaiian / Polynesian Plants for alternative markets and emerging natural medicine markets

Hapu'u ornamental Growth is too slow - 1 inch/year Growth too slow

Palapalai lei No info found No info found No info found

Maile

lei: study done over 3-year period estimated approx. 20,000 leis bought each year for the Merry Monarch event

"wild" plant - little farming experience/info Many people have tried and not done it rightNaturally occurring in WKOP; prime lands have high humidity and are cool - additional management required at higher temperatures. Need wind and sun protection.

From 1 to 15 strands per plant per year depending on growing method and conditions for about 5-7 years. Establishment period: 4-5 yearsCan plant up to 2,000 plants per acre

Retail: $15 and up for single strand lei; $30-40 for double-strand 4-5 years

Mamaki medicinal, tea"wild" plant - little farming experience/info No info found

Ohelo berry

food (jam, etc.)medicinalOhelo berry cultivar released by USDA in 2010 to try to encourage agricultural production to minimize impact on natural environmentsEmerging market - high risk

Elevation may be too low for ohelo berry, which generally strives above 2,000 feet elevation No info found 1 year

wao kele o puna - office of hawaiian affairs · feasibility analysis of potential revenue...

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