The PCM-Maui model projects the social, economic and environmental development of Maui County starting from 1990 until 2030. The structure of the model, based on observed causal relations and correlations, and accounting for feedback loops, delays and nonlinearities, is compared to historical data from 1990 until 2008, to then project a baseline and an alternative scenario until 2030.
5.1. Baseline Scenario-Business as Usual
The baseline scenario, business as usual (BAU) assumes no changes in any of the current policies and regulations relating to water, and it mostly focuses on the future behavior of two key drivers of water demand and supply in Maui County, precipitation and visitors.
More specifically, the former is a proxy for the impact of global climate change on Maui and the effect it has on freshwater resources. Although the literature suggests that current precipitation models are inadequate at providing future precipitation levels [11
], a 2004 USGS study has shown that from 1913 to 2002, there was a downward trend in annual rainfall over much of the area of Maui [26
]. Since water resources are exclusively dependent on rainfall on Maui, any changes in the rainfall patterns and subsequent frequency and duration of droughts can affect both ground water and surface water supplies [11
], through an increase in stream flows and groundwater recharge. Further, there is a significant correlation between precipitation levels and water demand on Maui. Because long-term trends in rainfall characteristics are difficult to identify, an exponential decline is assumed, and predictions of precipitation levels from 2010 to 2030 can be derived. At 2009 total precipitation in the County is at 2.49 trillion gallons/yr, approximately 3,103 mm/yr, decreasing towards 1.31 trillion gallons/yr by 2030, or 1,614 mm/yr.
The second assumption used to simulate the BAU case is the number of visitors reaching Maui County every year. As mentioned earlier, the economy of Maui is highly dependent on visitor numbers and tourism within the region. Accounting for almost 40% of economic activity on the island [2
], changes in visitor levels have a strong impact on gross domestic product and the demand for water and other resources. Due to the economic crisis of 2008, the number of visitors to the region has declined considerably—by 18.45% over the first 5 months of 2009 [27
]. Other sources, such as the MCDB, project future levels of annual visitors based on data from 2006, but fail to incorporate the economic crisis, resulting in overoptimistic predictions [1
]. To account for the impact of the economic and financial crisis on Maui, the actual drop in annual visitors from 2007 to 2008, a loss of 374,300 annual visitors is inputted into the model, and the same growth rate projected by MCBD, 33% by 2030, is assumed.
Concerning the results of the simulation of the baseline scenario, social, economic and environmental indicators were selected to provide an overview of the projected development of Maui County. Table 2
highlights the most important results of the baseline and alternative scenarios for selected years.
Summary of findings of baseline and alternative scenario 1.
Summary of findings of baseline and alternative scenario 1.
|De Facto Population||people||134,564||169,405||194,263||226,074||259,976|
|Surface Water Production||billion gallons/year||4.54||3.84||2.76||2.18||1.61|
|PC disposable Income||USD'00/people||24,828||25,612||25,708||25,314||24,944|
|Annual Visitors||million people/year||2.39||2.34||2.30||2.71||3.12|
|Water Demand||billion gallons/year||9.51||11.59||13.70||16.26||19.42|
|Groundwater Production||billion gallons/year||4.96||7.75||10.94||14.07||15.25|
|Production from Desalination||billion gallons/year||0||0||0||0||0|
|Relative Groundwater Stock||% relative to 1990||100||96||88||78||66|
|Water Runoff||billion gallons/year||344||295||232||199||166|
|Energy Demand||billion BTU/year||18,888||29,763||40,363||49,467||63,850|
|Agriculture Revenue||million USD'00/year||213||114||127||98||60|
Concerning the social sector, total resident population is projected to increase to 195,811 people in 2030, 36% above its 2008 level. Its age distribution shows a significant reduction of population between the age 15 to 19 and the age 20 to 24 cohorts—with the diminution amplified over time. There then seems to be an inflow at later ages, indicating the possible return of these students, potentially to pursue a career on Maui, or the inflow of population from the US mainland and other countries.
With economic activity in 2007 totaling $5.53 billion (in current USD), the decline in visitors is projected to cause GDP to fall to $5.16 billion USD in 2008, a 6.7% reduction. GDP is projected to recover by 2010, after a further decline in 2009, and then follow an average growth rate of approximately 1.7% per year.
Household revenue follows a similar trend, with a negative shock occurring with the 2008 economic crisis, and then steady growth afterwards. With a drop of $391 million USD, household revenue rises to $6.95 billion USD in 2010 (nominal), increases to $9.75 billion USD in 2020, and reaches $13.33 billion USD at 2030.
Conversely, per capita real disposable income tends to stay about constant over time. With a sudden drop in 2008, per capita real disposable income drops $2,065 (chained to 2000 USD) from 2007 to $24,800 ‘00USD in 2008. Disposable income then slightly increases over time to $24,944 ‘00USD in 2030.
Total employment appears to be following a decreasing exponential trend, as persons employed increases from 81,200 in 2010, to 89,300 in 2020 and leveling off to 93,000 people by 2030. The decreasing trend occurs due to the limiting factors within the economy of Maui, such as land available for agriculture, lower growth within tourism and capital available for investment, as well as for a higher reliance on technology and the services sector.
The amount of agriculture land is projected to slightly decrease over the simulation period. Historically, 406,248 acres of land was available for agriculture, whereas 404,049 acres were allocated to agriculture in 2000. Future projections indicate that cultivated land will be 400,518 by 2030. Differently, cultivated land, a subset of agriculture land, halved between 1990 and 2008, probably due to water stress (decreasing precipitation), declining profitability and higher competition—from abroad—in the agriculture business.
As discussed earlier, the reduction in precipitation due to climate change has a direct impact on water demand and supply. As agricultural, commercial and residential sectors develop and continue to use water, water demand is projected to increase as water available from precipitation declines. With a slight reduction in demand due to the recession of economic activity in 2008, demand grows to 13.7 billion gallons/yr in 2010, 16.3 billion gallons/yr in 2020 and 19.4 billion gallons/yr in 2030.
With reduced precipitation feeding groundwater and surface water levels, the total supply of water on Maui is reduced over time, as depicted by the projection of the amount of water in aquifers, relative to its 1990 level (see Table 2
With the projected growing demand for water, supplies of water are projected to eventually reach a maximum level and begin to decline as stocks are eventually depleted in the 2 main aquifers currently used for groundwater production. This is consistent with a variety of studies that project demand to surpass supply by 2020 [2
]. Although, due to the fact that these studies do not incorporate recent changes in economic activity, such as the reduction in visitors caused by the 2008 economic crisis, the point at which demand exceeds supply at 2020 seems prudent. By incorporating the reduction in visitors and the consequent reduction in gross domestic product, our model projects that the supply of water will reach a maximum at around 2024 and begin to level off as the main aquifers begin to be chronically depleted below their sustainable level.
The baseline scenario assumes that no investment will be allocated to the exploitation of aquifers in the Hana region or in other areas where the capital cost of such a project would be overwhelming and restrictive. With 13.7 billion gallons/yr in 2010, the total supply of water reaches a maximum at 17.2 billion gallons/yr in 2024, and then decreases to 16.8 billion gallons/yr in 2030. The maximum limit at which these aquifers can be exploited has been assumed to be the sustainable yield indicated by the Center for Water Resource Management, which is about 40% above current levels. It is assumed that once reaching this limit, aquifers will begin to degrade, the system in which they are contained will break down and the level at which they can be pumped will diminish [26
5.2. Alternative Scenario—Implementing Policies and Regulations
After having investigated the outcome of the baseline scenario, a variety of policies and regulations are incorporated to analyze the change and impact on future projections. There are three policies that are simultaneously implemented within this scenario.
The first is the instream flow regulations that have been widely discussed within the County of Maui, and have become a contentious issue. The instream flow standards recommended by the Commission on Water Resources Management include the streams such as Honopou being capped at 1.79 Mgal/day, Hanehoi at 1.72 Mgal/day, Piinaau at 3.56 Mgal/day, Waiokamilo at 3.17 Mgal/day and Wailuanui at 1.97 Mgal/day. These are just 5 streams that have been selected within a 27-stream system, which is part of a network totaling over 100 streams. For the purposes of the simulation, the average value over the 5 streams was calculated and knowing that more streams will be regulated over time, it is assumed that the amount of streams being imposed with these standards will be 60 streams.
The second policy implemented into the analysis is the increase of water use efficiency (or voluntary conservation) over time. As time progresses, new practices emerge and technology processes improve to allow for the more efficient distribution and consumption of water, as well as an increase in conservation of the resource. With diversion infrastructure having been implemented over 100 years ago, there is a considerable amount of loss within the system, as well as inefficiencies throughout the process. Moreover, it is reasonable to assume that technologies or practices will be implemented that reduces the necessity for water at the residential, commercial and agricultural levels over time. Within this simulation, a 20% increase in water efficiency by 2030 is incorporated into the model.
The last policy that is measured within the model is the scenario of investing in and developing a desalination plant on Maui. An option that is being considered on Maui, a desalination plant would allow for the increase of the water supply by treating brackish water through reverse osmosis. For the purposes of the model, it is assumed that a plant that can bring the levels of the Central Aquifer System to its sustainable yield. As mentioned earlier, the Aquifer is currently being pumped at 168% above its sustainable yield, which translates into 18 Mgal/day above its threshold. Currently, a desalination plant on Maui with an expandable capacity of 5 Mgal/day of useful water is being discussed, with capital costs ranging around $50 million USD [28
]. Assuming that the excess 18 Mgal/day is satisfied with these plants, a $180 million USD investment is required in 2010 to increase water supply by 18 Mgal/day by 2012. It is assumed that it is a one-time investment, requiring two years to reach full capacity and having a capital lifetime of 30 years.
When running the simulation, the first variable to analyze is the effect these policies have on the demand of water. Within this scenario, the demand for water decreases from the baseline case. Due to the increase in efficiency, less water is demanded for the same rate of use. With a 20% increase in efficiency by 2030, there is a 5.3% drop in demand in 2015, a 9.4% reduction in 2020 and a 16.5% decrease—16.2 billion gallons/yr vs. 19.4 billion gallons/yr, by 2030.
Water supply in the alternative scenario will be mostly attained from desalination and groundwater use. Groundwater production, as a share of total supply, moves from 80% in 2010 in the BAU, to 35% in 2012 thanks to the investment in the desalination plant. Due to increasing water demand over time, groundwater production grows back to 54% by 2030. Desalination water production is able to satisfy about 45% of water demand in 2012 (74% of residential use), with the remaining 20% being produced from surface water. The figures above refer to the total supply of water satisfying demand from the residential, commercial, industrial, religious and agriculture sector, excluding the amount needed for irrigation, following the classification of the USGS study on groundwater availability, as well as the 2007 Water Use and Development Plan on Maui.
An interesting outcome of this scenario on water supply is the reduction of groundwater production below the maximum sustainable level of the aquifers currently being overproduced. As indicated within the baseline scenario, the supply of water is capped at the sustainable yield, and supply begins to diminish after 2024, once the maximum level is reached. With this investment to increase the supply of water, that maximum is not reached within the simulation period, and remains within the sustainable yield throughout the simulation horizon.
As more of the fraction of groundwater production is satisfied by desalination, there is a cost associated with implementing such a decision. Firstly, there is an increase in electricity demand, caused by the estimated 0.015 kWh/gallon used by the desalination plant. Total electricity demand increases initially by 6.26 GWh/yr in 2011 as the desalination plant comes online, and peaks at 7.16% above the baseline scenario at 199.81 GWh/yr of energy demanded in 2012. Since the capital efficiency of the plant decreases over the 30 years, a slight reduction in energy consumption is experienced over time and there is only a 5.02% increase in energy demand compared to the baseline scenario in 2030. This translates into an increase of 20 MW of power generating capacity, which can cost between $10–40 million, depending the energy source considered.
Furthermore, there are additional costs associated with building a desalination plant to satisfy growing demand on Maui. When water is processed, liquid waste is created that contains toxic components. With high salt concentrations and other chemicals used within the process, it is estimated that for every gallon of useable water generated, 1.4 gallons of polluted water are created. This results in 8.7 billion gallons/yr of wastewater generated at the peak of production in 2013, and approximately 167 billion gallons of wastewater created throughout 2030.
Lastly, the initial cost of the desalination plant is a major factor to take into account. Currently, $180 million USD is approximately 40% of planned government expenditure (FY 2009–2010) and 15% of private investment in 2008, which shows the scale of undertaking such a project. If actions are taken to increase water supply to satisfy exceeding demand, funding for such developments must be readily available, which may not be the case.
The regulation of instream flow has become a contentious issue on Maui due to the diversion of natural stream systems for agriculture in the late 1800s, as mentioned earlier. By increasing the level of water within the streams, less water is being diverted for agriculture, thus decreasing the amount available for irrigation. By imposing this regulation, there will be a reduction of 2.5% of water allocated to irrigation compared to the baseline scenario in 2010. This will increase to 9.8% in 2020, and reach a 13.98% decline by 2030. Thus, 54.74 billion gallons/yr are diverted by 2030.
The impact on the agriculture sector is indicated by the change in revenue compared to the baseline scenario. In 2010, revenue is projected to decrease by 2.51%, or $3.2 million USD’00, due to lower water availability, and reaches a reduction of 9.87%, or $9.62 million USD’00 in 2020. By 2030, the reduction in revenue is only 0.93%, at $560,272 USD’00. It should be noted that due to the decreasing trend in precipitation over time, the agriculture sector if projected to feel pressure throughout the simulation period, and the implementation of instream flow regulations only marginally decrease projected revenues. The decreasing rate of revenue reduction within the trend can be associated with the increase in water efficiency use—which limits the impact of decreasing water availability, as the agriculture sector reduces water demand over time as technology and maintenance of the diversion system allows for the more efficient use of water.
When analyzing employment levels in the agriculture sector within the alternative scenario, jobs are strongly correlated and influenced by the availability of water. As water levels decrease, the amount of jobs lost in the sector increase. In 2010, 41 jobs are lost, a reduction of 2.5%. In 2020, 123 jobs are lost, at which point the decline reaches its maximum rate in 2023 and then begins to subside. This can be attributed to the increase in energy efficiency causing a reduction in water demand over time, which results in a smaller fraction of the baseline scenario lost; only 7 jobs lost in 2030, or a 0.98% reduction.
Of difficult analysis are the potential impacts of water availability on specific locations and companies, such as HC&S. In fact, it can be reasonably expected that the company would be forced to close operations before its water supply reduces to zero. In this respect, the identification of a tipping point would require more careful research but would certainly add value to the analysis, as HC&S employs about 800 people on Maui and largely contributes to the GDP generated by the agriculture sector.