Categorized | Business, Featured

UH analysis shows NELHA adds $87.7M to state economy


A new analysis by the University of Hawaii’s Economic Research Organization has found NELHA’s economic output to the greater Hawaii economy was $87.7 million in 2010.

Here’s the executive summary from the report:

The Natural Energy Laboratory Hawaii Authority (NELHA) is a state agency that operates a unique and innovative ocean science and technology park in Kailua-Kona on the island of Hawaii. NELHA’s assets include office and laboratory facilities, infrastructure, pristine natural resources, and leasable open land for use by tenant research, education, and commercial projects.

NELHA contracted the University of Hawaii Economic Research Organization (UHERO) to estimate its economic impact on the State of Hawaii.

Specifically, this research determined NELHA’s contribution to local business sales, employee earnings, tax revenues, and number of jobs in Hawaii from the expenditures of its tenants in 2010.

To estimate expenditures made by NELHA tenants in 2010, UHERO researchers developed a survey where expenditures were broken down into 11 named categories and respondents were asked to provide total expenditures in 2010 and the share of these expenditures that were paid to Hawaii vendors. UHERO received responses from 23 NELHA tenants (out of 41).

These expenditures represented 85 percent of total expenditures made by NELHA tenants in 2010. Expenditure levels for the survey non-respondents we estimated using various techniques.

Total NELHA tenant expenditures were estimated at $81.0 million, of which approximately $49.6 million (or 58 percent) were paid to Hawaii entities.

Following a standard approach, UHERO defined economic impact to be the direct, indirect, and induced economic activities generated by the tenant’s spending in the Hawaii economy. The 2007 20-sector Inter-County input-output (I-O) model of the State of Hawaii prepared by the Hawaii Department of Business, Economic Development and Tourism was used to evaluate these impacts.

The estimated impact of NELHA’s in-state expenditures in 2010 on the State’s output (sales), earnings, and tax revenues was estimated to be $87.7, $24.7, and $4.5 million, respectively.

Furthermore, not only do NELHA tenants employ hundreds of people but their expenditures also contribute to hundreds of other jobs in the larger Hawaii economy (583 total, including NELHA employees).

Finally, NELHA receives on average about $2 million per year from the State. One way to look at the State’s return on these expenditures is to consider what the state’s investment has provided in terms of the net impact from NELHA. Each dollar the state invests yields a leverage of about $42.8.

In other words, every dollar the State spends on NELHA generates $42.8 of output in the Hawaii economy. (For a comparison, the UHM’s leverage calculated by UHERO for the fiscal year 2007 was approximately $5.34 per state dollar.)

Finally, NELHA provides additional benefits to the state of Hawaii that this study does not capture but are important to consider when evaluating NELHA’s overall footprint on the economy.

Over a quarter of NELHA’s tenants are involved in research activities. The research activities and in some cases education components contribute to Hawaii through investment in human capital and knowledge spillovers, which are important in a budding technology and innovation community.

An increase in the research intensity has a large impact on the share of high value added occupations in a community. Hence, an important payoff from research activities is the types of jobs it creates within the economy.

These are highly skilled, highly productive, engaged citizens that benefit the community.

To read the complete report, click on the PDF button:

NELHA Economic Impact

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