Coqui frogs and the decline of property values on the island of Hawaii

1
Coqui frogs and the decline of property values on
the island of Hawaii

• Kimberly Burnett
• University of Hawaii at Manoa
• Department of Economics
• Brooks Kaiser
• Gettysburg College/UH Manoa
• Department of Economics

2
Project overview

• Objective Does the presence of the frog on or
  near a property result in a decline in that
  propertys value?
• NOTE! This study considers only impact on
  property value, thus should be considered a lower
  bound estimate of actual economic costs from the
  frog
• Analysis does not include
• Impacts to agriculture, horticulture industries
• (double hit in reduced sales and increased
  costs)
• Any potential ecological damages

3
Model

• Built a model to explain Hawaii County property
  prices that depends on
• Square footage, how many rooms
• How many acres
• Strength of market (proxy with mortgage rate)
• Year of sale
• District (Puna, S. Hilo, N.Hilo, Hamakua, N.
  Kohala, S. Kohala, North Kona, South Kona, Kau)
• Zoning class (agriculture, apartment, unimproved
  residential, improved residential, conservation,
  industrial, resort, commercial)
• Finally, presence or absence of frog (within 500
  m of the property)

4
Data

• Hawaii County
• Sample
• 50,033 real estate transactions between 1995-2005
• Omit sales that fall within the lowest or highest
  1 of prices
• 37,228 properties, each changes hands 16 times
  (average 1.2 times), for a total of 46,405
  transactions
• Frog complaints registered to USDA/APHIS Wildlife
  Services
• Use GIS to match verified frog complaints
  1997-2001 to property transactions
• Generate indicator variables for whether property
  is within 500m of previous complaint

5
Outlier, excluded (over 100,000 ac)
6
District Level Summary Statistics
District Number of Transactions Average of properties within 500 m of frog complaint
Puna 20,914 17
South Hilo 4,163 37
North Hilo 412 0
Hamakua 683 2
N. Kohala 1,452 1
S. Kohala 4,595 21
N. Kona 7,871 33
S. Kona 1,427 14
Kau 5,049 0
7
Puna Close-up
Transactions
Frogs within 500 m
Frogs within 800 m
8
Results

• Find that coqui frogs do impose localized damages
  to real estate values
• The per-transaction reduction in value when frog
  complaints have been lodged within 500m appears
  to be about 0.16, holding constant all other
  characteristics
• Consider for a moment0.16 may sound small, but
  Hawaiis real estate is valuable!

9
Hawaii County

• Median value of single family home 411,500
• (UHERO 2006)
• 34,175 owner-occupied housing units (DBEDT 2000)
• 0.16 411,500 658.40 per property 34,175
  homes
• 22.5 million

10
Potential impacts to neighbor islands

• Keep in mindreal estate values on Maui and Oahu
  are considerably higher than the Big Island
• Maui County
• 0.16703,500 1,125 per property25,039
• 28.2 million
• Honolulu County
• 0.16632,200 1,012 per property156,290
• 158.1 million

11
Conclusions

• The presence of the coqui frog in Hawaii county
  has already begun to lower property values
• An official complaint of the frog within 500m
  reduces property values on average 0.16
• If the frog spreads across all residential
  properties, direct damages to property values are
  estimated at a minimum of 22.5 million for
  Hawaii county, as much as 208 million for the
  state

12
1997-2001 1997-2007
13
Mahalo funders and friends
James Roumasset (Principal Investigator), UHM
Economics Will Pitt, USDA/APHIS/WS Mindy
Wilkinson, DLNR/DOFAW Earl Campbell, USFWS