2019 U.S. PACIFIC ISLANDS COMPREHENSIVE ECONOMIC DEVELOPMENT STRATEGY (Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, and State of Hawaii)
Prepared by: The Pacific Basin Development Council
Prepared for: The U.S. Economic Development Administration
August 30, 2019
This report was prepared under an award from the U.S. Economic Development Administration. Award No. ED18SEA3020014. Contents
Executive Summary ...... 4 Summary Background ...... 7 Guam ...... 7 American Samoa ...... 9 Commonwealth of the Northern Mariana Islands (CNMI)...... 11 Hawaii ...... 12 Regional Trends ...... 14 Sustainable Tourism...... 14 National Security ...... 14 Labor and Workforce Development ...... 15 Broadband ...... 16 Aquaculture ...... 18 SWOT (Strengths, Weaknesses, Opportunities, and Threats) Analysis ...... 20 Regional Strengths ...... 20 Regional Weaknesses...... 21 Regional Opportunities ...... 22 Regional Threats ...... 23 Guam SWOT Overview ...... 23 American Samoa SWOT Overview ...... 26 The CNMI SWOT Overview ...... 27 Hawaii SWOT Overview ...... 28 Strategic Direction/Action Plan ...... 30 Vision Statement ...... 30 Action Plans and Implementation ...... 30 Guam ...... 30 American Samoa ...... 33 The CNMI ...... 36 Hawaii ...... 39 Evaluation Framework ...... 45 Economic Resilience ...... 50 Infrastructure Maintenance and Improvement ...... 51
2 Disaster Preparedness ...... 52 Renewable Energy ...... 56 Invasive Species Management ...... 58 Climate Change ...... 60 Going Forward ...... 64 Sources ...... 65
3 Executive Summary
The U.S. Pacific Islands Region comprises the territories of Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands (CNMI), as well as the State of Hawaii—the westernmost, and remotest, members of the U.S. political family. The region has a population of more than 1.7 million, with the majority (1.42 million) concentrated in Hawaii1. According to the latest available figures2, Guam has a population of 165,178; American Samoa, 58,500; and the CNMI, 53,890.
The most distinguishing feature of the region is its isolation from the continental United States. Hawaii is about 2,500 miles southwest of Los Angeles, California; Guam and the CNMI about 6,000 miles west; American Samoa about 4,700 miles south. Dispersed as it is across the Pacific Ocean, the region faces unique challenges, particularly related to transportation, infrastructure, and the high cost of living.
At the same time, location fuels economic growth. Proximity to major Asian markets, such as Japan, Korea, and China, has contributed in large measure to the thriving tourism industries of Guam, the CNMI, and Hawaii. American Samoa has a much smaller potential for tourism, but possesses something unique: one of the deepest natural harbors in the South Pacific. Commercial fishing fleets from Asia and the United States offload their catch at Pago Pago, the territory’s capital, in the process creating jobs at industrial tuna canneries and generating export revenue.
Location has also made the U.S. Pacific Islands Region a strategic component of U.S. national security. Positioned halfway between the continental United States and Asia, three of four jurisdictions are important to current U.S. military strategy in the Indo-Pacific Region. U.S. Department of Defense dollars have amplified economic growth throughout the region, a trend that is expected to continue as Guam prepares to absorb the relocation of 5,000 Marines and approximately 1,300 dependents from Okinawa by 2025, or as soon as the construction of facilities and training centers is complete.
Other features that impact the economies of the U.S. Pacific Islands Region are smaller population sizes and affiliation with the United States. While political status carries benefits, the application of federal laws and regulations also has some negative impacts for air and maritime transportation within the region, as well as for workforce development in Guam and the CNMI.
Tourism, the presence of the U.S. military, and construction are mainstays of development throughout the region. New opportunities are emerging in the aquaculture, renewable energy, and broadband industries. This report outlines the ways in which the region can leverage its strengths and competitive advantages to seize opportunities, weather challenges, and achieve sustained economic growth.
1 The population estimate for Hawaii was published by the U.S. Census Bureau on July 1, 2018. 2 The 2018 population for Guam was estimated by the Guam Bureau of Statistics and Plans. The American Samoa estimate comes from the Statistics Division of the American Samoa Department of Commerce in mid-2019. The population figure for the CNMI comes from the Household, Income, and Expenditures Survey conducted by the CNMI Department of Commerce in 2016.
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Separated by ocean from the rest of the world, the U.S. Pacific Islands Region is extremely vulnerable to external disturbances both environmental and economic. Because its jurisdictions rely heavily on imports and tourism, they are deeply affected by natural disasters and fluctuations in national and foreign markets. Woven through this report are goals, strategies, and actions that can mitigate the effects of a disaster and support long-term recovery efforts should one occur. The following document lays out a plan for increasing the resiliency of the region by improving infrastructure maintenance, disaster preparedness, renewable energy production, invasive species management, and climate change adaptation efforts.
Resilience is rooted in community and collaboration. Among the region’s many strengths is the strong sense of community that has long existed in the Pacific Islands. This core value shapes other values, among them an emphasis on economic opportunity for all, an abiding respect for relationships, and a belief in shared environmental responsibility.
What is the CEDS?
The Pacific Basin Development Council, established in 1980 by the governors of Guam, American Samoa, the CNMI, and the State of Hawaii, is a regional non-profit organization that advances economic and social development issues in the Pacific Islands. Among the Council’s responsibilities is the preparation of an annual regional Comprehensive Economic Development Strategy (CEDS), or a strategy-driven plan for managed growth.
Every five years, each island jurisdiction is responsible for convening a committee that invites stakeholder feedback and uses it to inform a CEDS. The process involves contributions from individuals, government, private industry, educational institutions, and non-profit organizations. The following report draws from CEDS reports, past and present, produced in each of the regional jurisdictions. For further information, visit https://pacificbasindevelopment.org/comprehensive-economic-development-strategies/.
As of July 2019, Guam had completed an updated CEDS for 2020-2025 and American Samoa for 2018-2022. The CNMI updated its 2016-2021 CEDS in 2019, as part of its response to widespread destruction wrought by Super Typhoon Yutu at the end of 2018. Hawaii completed a CEDS for 2016-2020, and is in the process of preparing for an updated CEDS. The following document draws on all of these, as well as data published by the federal Bureau of Economic Analysis, recent laws and statutes, and reports produced by local governments.
This CEDS is a snapshot of current economic, demographic, and social trends currently impacting the U.S. Pacific Islands Region. It is also a blueprint for how the public sector, in coordination with the private sector, non-governmental organizations, academic institutions, and the general public can collaborate to drive sustained development.
In addition to providing a cooperative framework for economic development coordination and planning, this report contains the following sections:
5 • Summary Background – a history of the economic circumstances in the region, as well as a discussion of its geography, population, labor force, and natural resources; • Regional Trends – a description of economic trends that impact the region; • SWOT Analysis – an analysis of regional and jurisdictional strengths and weaknesses, as well as opportunities and threats arising from engagement with global markets; • Strategic Direction – an outline of specific goals and objectives necessary for growth and a plan for achieving them; • Evaluation Framework – a set of performance measures for evaluating whether, and to what extent, goals are met; and • Economic Resilience – a discussion of the ways in which the region can avoid, withstand, and recover from catastrophic events.
6 Summary Background
This section offers a snapshot of the economic trends currently impacting the U.S. Pacific Islands Region. It begins with a profile of each island jurisdiction, which provides context for what then follows—a general overview of the strongest forces driving or hindering development in the region.
Gross domestic product (GDP) is growing, to varying degrees, within the U.S. Pacific Islands jurisdictions. According to reports published by the federal Bureau of Economic Analysis (BEA) in November 2018, Guam’s real GDP increased by 0.3% in 2016, reaching $5.21 billion in chained dollars, and by another 0.2% in 2017, registering $5.22 billion. The CNMI’s economy exploded, growing by more than 28% in 2016 to reach $1.24 billion, after expanding 25% in 2017. (For comparison, GDP in the continental United States increased 2.2% in 2017 after increasing 1.6% in 2016.) Hawaii’s GDP in 2017 was $88.1 billion, representing an increase of 1.7% from the previous year.
This section explains how and why these economies are growing. It also explains, in part, why American Samoa’s real GDP is expected to continue declining, despite a temporary uptick from $602 million in 2017 to $636 million in 2018, prompted by federal spending after Cyclone Gita. The shuttering of a major cannery in 2016 and the completion of some government-funded projects are contributing factors in this downturn.
Guam
Guam, the largest island of the Marianas archipelago, has been the westernmost possession of the United States since after the Spanish-American War in 1898. The island, which measures 30 miles in length and between four and 12 in width, has a total land area of 209 square miles. The territory has a tropical climate and a mean annual temperature of 81.5 degrees.
Known as America’s “Gateway to Asia,” Guam is located 1,620 miles southeast of Tokyo, 2,000 miles southeast of Seoul, 1,600 miles east of Manila, and 2,100 miles east-southeast of Hong Kong. Within a 2,500-mile radius of the island are more than two billion people.
According to the Guam Bureau of Statistics and Plans, the island’s population was 165,178 in 2018, representing a 4% increase since the 2010 Census. The Guam Statistical Yearbook 2017 estimated that by 2020, indigenous Chamorro people would comprise approximately 37% of the population and migrants, most of them from China, the Philippines, Japan, Korea, Taiwan, and Vietnam, would constitute 35%.
Guam is known for its possession of the most advanced telecommunications infrastructure in the Western Pacific region, which features more terminating cable connections than anywhere else in the world. This is a result of the island’s strategic positioning, which has been largely responsible for its economic growth.
Because of its proximity to Asia, Guam has long been a key location for U.S. national security interests in the Indo-Pacific Region. Military operations occupy nearly a third of the island;
7 currently Guam hosts Naval Base Guam, Andersen Air Force Base, and THAAD Missile Defense System. In 2013, the governments of Japan and the U.S. agreed to begin relocating 5,000 Marines and their dependents from Okinawa to Guam. The relocation was intended to ameliorate tensions and return land occupied since World War II to local Okinawans. It was also strategic; according to the Marine Corps Times, decentralizing Marines throughout the region was intended to mitigate the threat of an attack from China. The planned relocation, which is expected to occur in 2025 or whenever military construction projects are complete, triggered a spike in economic activity on Guam. Between 2016 and 2017, Department of Defense construction contracts increased by 310%, according to the Guam Economic Development Authority. The National Defense Authorization Act (NDAA) for FY 2018 authorized $354.6 million for military construction projects on Guam; the NDAA for the following fiscal year earmarked $448.5 million for the same. The NDAA for FY 2020, which passed the U.S. House of Representatives on July 12, 2019, allocates $310.2 million for Guam.
Economic growth on Guam has been bolstered, in part, by the rise of tourism. According to reports published by the Guam Visitor’s Bureau, approximately 1.53 million tourists visited the island in FY 2018, slightly Figure 5: A chart produced by the U.S. Bureau of Economic Analysis, November 2018 fewer than the 1.56 million who arrived during the previous fiscal year. This temporary downturn was a response to threats of nuclear warfare from North Korea. Improved relations between the U.S. and North Korea culminated in a June 12, 2018 summit between President Trump and Kim Jong-un. Tourism rebounded. Guam’s Department of Labor is forecasting a record of 1.675 million arrivals in 2020 and predicting that arrivals will surpass the two million mark sometime between 2025 and 2027.
The federal BEA reported that Guam’s real GDP rose 0.2% in 2017, after increasing 0.3% in 2016. Some economists predict zero or slightly negative growth in GDP for 2019. According to Guam’s CEDS, economic growth will continue to stall in the short-term if labor supply issues remain unresolved. Federal immigration policy continues to challenge Guam’s workforce development, particularly in the construction and health fields. For 30 years, foreign workers, many of them from the Philippines, have been performing jobs due to the lack of available local workers. Historically 95% of applications for H-2B work visas, which allow skilled workers to fill temporary jobs in all sectors except agriculture, were approved. In December 2015, the United States Citizenship and Immigration Service (USCIS) began denying most applications.
8 The economic impacts of this decision were deeply felt. The NDAA for FY 2018 partially addressed this issue, but focused mostly on ensuring that the U.S. military maintains access to foreign labor. Then, on January 19, 2019, the Department of Homeland Security removed the Philippines from a list of countries eligible for the H-2B program. While new policy gives the USCIS authority to approve H-2B petitions that serve the national interest on a case-by-case basis until the end of 2023, it is clear that the ban on foreign skilled labor from the Philippines may have a detrimental impact on Guam’s economy. The Guam Chamber of Commerce told the Guam Pacific Daily News it could be “catastrophic.” In the meantime, efforts to develop the local workforce, most notably through the Center for Micronesian Empowerment, the University of Guam, Guam Community College, Guam Trades Academy, and Guam Marianas Training Center, are ongoing.
American Samoa
American Samoa is the only U.S. possession in the southern hemisphere. Located in Polynesia, the unincorporated territory is made up of five islands and two atolls with a total area of approximately 76 square miles. Tutuila, its largest island, is the center of government and business and home to 90% of the total population, which was estimated to be 58,500 in 2019. American Samoa has a tropical marine climate, moderated by southeast trade winds. While there is little seasonal variation in temperature, tropical cyclones are common from December through March.
During World War II, the U.S. government built roads, airstrips, docks, and medical facilities to accommodate troops on American Samoa. Locals enlisted in large measure. When, in 1945, the military withdrew as suddenly as it had arrived, much of the territory’s limited workforce left for Hawaii on Navy vessels.
To revive the post-war economy, the Rockefeller Foundation financed a cannery at Pago Pago, which is home to one of the largest natural deep-water harbors in the South Pacific. Relying almost exclusively on the fish processing and packaging industry as well as federal financial aid, the territory’s economy expanded steadily. Perhaps because of the growth, there was never a serious effort to diversify its economic base.
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1 1 1 minimum wage – the fifth since 0.0% 2012 2013 2014 2015 2016 2017 2018 2007 – came on September 30, AS Unemployment Rate Forecast 2018.) Growth slowed. People left. Then, in 2009, one of two Figure 6: Data collected by the American Samoa Department of Commerce major canneries closed. The same year, a major tsunami
9 struck, creating temporary jobs and increasing federal spending for a time.
Government spending rose in 2015 with the expansion of broadband capacity and the reconstruction of a power plant, but the following year both projects reached completion. A reduction in spending coincided with the shuttering of Samoa Tuna Processors in late 2016, leading to declines in investment, tax revenues, and overall economic activity. The unemployment rate nearly doubled between 2016 and 2018, rising from 10.5% to 20.8%. Between 2017 and 2018, the government recorded a 15.7% decrease in applications for business licenses, a decline notably sharper than had been recorded in prior years.
Cyclone Gita struck American Samoa in February 2018, causing an estimated $186 million in direct and indirect damages. At least half of citizens suffered some sort of loss to property. More than 2,600 farmers lost 100% of their crops for an entire growing season, in turn depriving 15,600 people of a nutritional food supply. Upward of $20 million was paid out through the U.S. Federal Emergency Management Administration’s Individual Assistance programs and an additional $40 million came from U.S. Small Business Administration loans, intergovernmental service agreements, disaster-related grants, other federal programs, and private insurance. An influx of aid workers from the Federal Emergency Management Administration (FEMA), Red Cross, and other organizations led to a spike in economic activity.
The GDP growth in the territory was calculated at 3.9% in 2018, or 0.7% when adjusted for inflation, according to the American Samoa Economic Forecast 2019. In 2019, as the impact of grants and disaster relief funds begins to dissipate, government spending is projected to decrease by 2.8%. This coincides with a 25.6% decline in business investment, triggered by the full and final withdrawal of Samoa Tuna Processors from the territory. Government spending is expected to rise temporarily in 2020, when an estimated 8,100 workers are hired for the decennial census. Following the completion of the survey, Census employees will fall off the public payrolls. Spending is projected to decrease by an estimated 2.1% in 2021 and another 1.3% in 2022.
American Samoa’s real GDP is expected to continue declining, despite a temporary uptick from $602 million in 2017 to $636 million in 2018, prompted by federal spending after Cyclone Gita. According to the American Samoa Economic Forecast 2018-2022, real GDP is expected to drop by 3.5% in 2019, by 1.0% in 2020, by 2.3% in 2021, and by 2.0% in 2022. This continued contraction can be viewed as a return to a trend, following multiple years of unusually large capital investments.
There exists in American Samoa large and untapped potential for the development of tourism. According to a survey by the South Pacific Tourism Organization in 2017, between 2016 and 2017 regional tourism grew by 3.1%, but in American Samoa the industry contracted at a rate of 0.3%. A thriving environment and robust indigenous culture make American Samoa an ideal place for the industry to develop.
There is also potential for the establishment of knowledge industries, facilitated by recent investments in broadband. Planners have suggested agriculture, telecommunications, and light manufacturing as other options for diversification.
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Commonwealth of the Northern Mariana Islands (CNMI)
The CNMI, the youngest member of the United States political family, became a territory by agreement with the federal government in 1978. Located just north of Guam, the jurisdiction is part of the Marianas archipelago and consists of 14 islands with a total land area of 183.5 square miles. The most populated of these are Saipan, Rota, and Tinian. In 2016, when the latest figures were published, the population was approximately 53,900.
The CNMI is at the border of the Mariana Trench, the deepest known place on earth, and possesses thick forest, a healthy source of groundwater, and two active volcanoes that lend it “significant geothermal energy potential,” according to the U.S. Energy Information Administration. Its climate is tropical with little variation, though typhoons can occur in the rainy season from July to November. In October of 2018, Saipan and Tinian were hit by Super Typhoon Yutu, which has since been characterized as the strongest storm to occur in the United States since 1935.
Proximity to Asian markets has historically been an economic advantage for the CNMI. In the 1980s, the territory developed a thriving textile industry, which at its height generated an annual $2 billion. The population skyrocketed due to an influx of foreign workers. When the World Trade Organization decided in 2005 to lift quotas on non-member nations, the CNMI lost the competitive advantage it had enjoyed as a provider of textiles to the U.S. market. Direct revenues dropped from $80 million to $13 million in 2008. According to the CNMI Department of Commerce, the industry effectively collapsed in 2009, leading to a 32% decline in gross business revenues and, ultimately, to outmigration.
Following the collapse of the textile industry, the territorial government began searching for other sources of revenue. In 2014, a law that later came to be known as the Casino Law made Saipan, the CNMI’s capital, a hub for gambling. The emergence of a gaming industry created jobs and other spin-off effects, such as the construction of hotels and the proliferation of retail outlets. The territory’s economy, which had grown at a rate of 3.8% in 2015, experienced explosive growth in 2016. GDP climbed by 28.6% to $1.24 billion. Though GDP per capita was still less than half that of the 50 U.S. states, that year the CNMI recorded one of the fastest- growing economies in the world. According to the CNMI Department of Commerce’s Economic Indicator Report, between 2011 and 2016 the number of tourists in the territory increased by 90%, most of them from South Korea and China. In 2017, more than 659,700 tourists visited the territory. Real GDP jumped by 25.1%. The Mariana Visitor’s Authority’s Tourism Figure 8: Data from the Bureau of Economic Analysis Development Sustainability and Feasibility Study, published in
11 2017, noted that “although the market is booming, the current situation where relatively quick returns are generated without considerations to longer term impacts is not sustainable.” The disturbance to tourism created by Super Typhoon Yutu in October 2018 added further proof of the need for economic diversification. The storm forced the closure of four hotels on Saipan and the cancellation of international flights, resulting in a 21.5% drop in the number of visitors that year.
FEMA’s reimbursements for losses caused by Super Typhoon Yutu offer a temporary economic stimulus. The total amount of storm-related damage has yet to be calculated, but could reach $800 million, according to a representative from FEMA’s Office of External Affairs. FEMA has obligated an estimated $135 million in public assistance funds to the CNMI government to help defray costs and losses; of this, $69.3 million is for victims and $17.5 million for housing assistance.
There are efforts to expand tourism in the CNMI. The impending relocation of 5,000 Marines from Okinawa to Guam, likely to take place in 2025, is expected to stimulate the industry. The Department of Defense purchased a 40-year lease for the Tinian airport in order to make upgrades and construct a new military facility. Japan’s Skymark Airlines, a Tokyo-based budget carrier, began flying to Saipan in early 2019. This new route is likely to result in a rebound in the Japan market. In addition to growth in tourism, improved enforcement of tax laws is expected to contribute to positive economic development for the CNMI.
However, growth is restrained in the CNMI by the impact of Public Law 110-229, which extended federal immigration law to the territory beginning in November 2009. Like Guam, the CNMI has long relied on foreign labor to fill gaps created when skilled residents leave to live and work on the continental United States and due to the lack of available local workers. Much of this outmigration results from economic circumstances; according to the latest figures, published in 2016, more than 55% of residents lived in poverty. P.L. 110-229 sought to phase out the territory’s foreign worker program. To ease the transition, it established the Commonwealth of the Northern Mariana Islands-Only Transitional Worker Program (CW), which allows employers to apply for permission to use temporary foreign labor in industries except agriculture.
The CW program, originally intended to end in 2014, has been extended twice in response to advocacy efforts by CNMI lawmakers. It is due to expire on December 31, 2029 per P.L. 115- 218, the Northern Mariana Islands U.S. Workforce Act of 2018, signed by President Trump on July 24, 2018. Longer-term solutions have yet to be agreed on, but efforts continue toward the retention of a sustainable foreign workforce. On June 25, 2019, President Trump also signed Public Law 116-24, which provided CNMI-only permanent resident status to more than 1,000 people, most of whom had arrived legally as guest workers.
Hawaii
The State of Hawaii is the world’s most isolated populated island chain, located at the northernmost point of Polynesia. The most recent population estimate for Hawaii – 1.42 million – was published by the U.S. Census Bureau in July 2018. Hawaii comprises four counties: Kauai, Maui, Hawaii, and Oahu. In 2017, the state’s current-dollar GDP was $88.1 billion.
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Hawaii’s climate is tropical and humid, cooled by trade winds. Since much of its natural area has been filled in for agriculture or urban development, wetlands now make up less than 3% of the landmass. Development has put pressure on Hawaii’s environment and infrastructure, but innovation is rife and the state government is on track to meeting its goal of 100% clean energy by 2045.
Tourism generates much of Hawaii’s economic activity. In contrast to Guam and the CNMI, where the majority of visitors are from Asian markets, about two-thirds of the travelers who visit Hawaii come from the continental United States. Tourism does not appear to be tapering. According to the Hawaii Tourism Authority’s 2017 Annual Visitor Research Report, the industry achieved new records in arrivals that year, marking the fifth consecutive year of record growth. A total of 9,404,346 visitors came by air or by cruise ships in 2017, representing an increase of 5.3% from 2016. Visitor spending increased by 5.6%, generating a record $16.81 billion. In 2018, a total of 9,954,548 visitors spent 6.8% more than tourists the year prior, bringing spending in nominal dollars to $17.82 billion, according to the Hawaii Tourism Authority.
The state’s strategic location in the Indo-Pacific region has made it an ideal base for the U.S. military, which remains a significant economic driver. More than 146,000 military members and their dependents across the state represent the Army, Navy, Air Force, Marines, Coast Guard, and National Guard, according to the Hawaii Defense Economy project developed through the Hawaii Department of Labor and Industrial Relations with support from the U.S. Department of Defense (DOD). A DOD Office of Economic Adjustment Study showed that for FY 2017, defense spending in Hawaii totaled $6.5 billion.
Beyond tourism and defense, the state’s CEDS lists healthcare, research and technology, agriculture and food production, energy, manufacturing, and the creative arts as key industries with potential to drive development. Figure 9: Data from U.S. Bureau of Economic Analysis
According to the Department of Business, Economic Development and Tourism, which released its 2019 Statistical and Economic Report in March of 2019, the state’s economy is expected to grow by 1.2% in 2019 and 1.4% in 2020, 2021, and 2022.
13 Regional Trends
Sustainable Tourism
Visitor arrivals have been generally increasing in every jurisdiction except American Samoa. Arrivals for Guam increased between 2014 and 2018 from 1.34 million to more than 1.53 million. The number of arrivals to the CNMI increased from about 433,900 to more than 659,700 over the same period. In 2013, 8.2 million people visited Hawaii; in 2018, the number broke 9.9 million. In 2017, 19,987 people arrived in American Samoa, and more than half of them were visiting relatives.
Due to their limited landmasses, island environments are disproportionately vulnerable to the degradation of land and natural resources. It is important that tourism, which is a major driving force for the regional economy, is promoted and developed in a sustainable fashion. This will require sound planning by tourism and state officials to ensure that island infrastructure and land and natural resources are taken into account while determining maximum numbers of tourists as measurable objectives.
An increased focus on eco- and indigenous-centered tourism is one way to address environmental and cultural impacts related to tourism. Today, more tourists are seeking environmentally responsible travel experiences; the region’s natural beauty and traditional focus on conservation prepare it to grow a thriving ecotourism industry. Surveys also show that today’s tourists are seeking more authentic experiences, searching to understand how people in other parts of the world live. With thriving indigenous cultures of Chamorros, Carolinians, Samoans, and Native Hawaiians in the U.S. Pacific Islands Region, indigenous-centered tourism is an industry that can also be embraced and enhanced moving into the future.
U.S. National Security
Because of their U.S. affiliation and strategic locations, Guam, the CNMI, and Hawaii will continue to be important to U.S. national security interests in the Indo-Pacific Region. According to the latest figures from the federal Bureau of Economic Analysis, defense spending exceeded $2 billion for Guam in 2015. A report produced for FY 2017 by the Office of Economic Adjustment with the U.S. Department of Defense pegged defense spending in Hawaii at $6.5 billion.
The forthcoming relocation of 5,000 Marines from Okinawa to Guam heralds an uptick in construction contracts and economic activity for Guam and the wider region, including the CNMI. In November 2018, the CNMI government granted the Department of Defense a 40-year lease for the Tinian airport, paving the way for a new Divert Activities and Exercises facility estimated to cost $21.9 million. Due to adamant opposition from political and community leaders, it remains to be seen whether the Department of Defense will be successful in its proposal to conduct live-fire training on Tinian and bombing exercises on the remote northern island of Pagan.
14 Labor and Workforce Development
The labor and workforce development issues outlined elsewhere in this report will continue to be priorities for the economies of Guam and the CNMI, which rely on foreign workers. While incremental progress has been made in some of these areas, there are other labor and workforce issues to consider which necessitate more regional, permanent, and sustainable solutions. Super Typhoon Yutu, which hit the CNMI in 2018, highlighted the critical importance of resolving these issues urgently. Nearly four out of every 10 homes were affected during a time when housing was already scarce. According to damage assessments performed by the American Red Cross, 5,910 homes were destroyed or suffered major damage. Construction became necessary but the availability of labor to do this work was limited by federal actions preventing construction companies’ access to necessary foreign labor. A week after the disaster, DOD and FEMA officials announced a program in collaboration with the CNMI called the Temporary Emergency Tent and Roofing Installation Support (TETRIS). Under TETRIS, more than 1,000 uniformed service members mobilized in support of the relief efforts. Seabees from the 30th Naval Construction Regiment and the 254th Red Horse Squadron were activated to install tents and perform emergency repairs for the thousands of affected homes. In February 2019, Governor Ralph DLG Torres submitted testimony before the House Committee on Natural Resources, saying: “The Department of Defense and FEMA have experienced the challenges we live with daily when it comes to labor and have created new pathways to work around them. I ask that you consider their experience and join it with the experiences of our private sector partners who are struggling to grow our economy and hire our people in the face of the restrictions imposed on us by Washington, DC.” As mentioned elsewhere in this report, Guam will continue to face workforce development challenges with the H-2B visa program, particularly in the construction and health fields.
Hawaii is not as far away from the continental United States as Guam and the CNMI, and there is an ample supply of workers for its main industries of tourism and defense. Due to the state’s high cost of living, however, workers are deciding to move to the continental United States to live. The sectors that are adversely being impacted by this outmigration include nurses and doctors in the health sector and teachers in the public schools system.
Hawaii’s teacher shortage crisis has spurred action by education and political leaders. In addition to absorbing the cost of living, teachers have one of the lowest salaries in the nation ($46,790 income for a licensed teacher). The state’s 3.5% teacher vacancy rate at the start of the 2017-18 school year was among the highest of the 15 largest school districts in the U.S., according to Chalkbeat, an education-focused news site. According to the Hawaii State Teacher’s Association (HSTA), the number of teacher resignations jumped 61% between the 2010-11 and 2017-18 school years, from 529 to 852. Teacher vacancies also rose 51% from 2011-12 to 2017- 18 from 377 to 571.
One way that Hawaii is attempting to address the teacher shortage is through increased collaboration between the Hawaii Department of Education at the University of Hawaii at Manoa College of Education, which have partnered to establish the “Grow our Own” initiative in an attempt to help substitute teachers in the school system get the necessary educational and
15 certification training needed to become full-time teachers. After completion of the program, participants must commit to three years of teaching in Hawaii’s public middle and high schools in high-need subject areas like math, science, English, Hawaiian language, or world languages. The program, championed by State Senator Michelle Kidani, Chair of the Education Committee, started with an initial $600,000 in state appropriations in 2017, and received $400,000 in 2018.
Broadband
Broadband capacity is increasing within the region, though the cost of connectivity in the territories remains among the highest in the nation. In 2011, global nonprofit One Economy and think-tank New America Foundation conducted a survey of the Pacific territories, adding their findings to a National Broadband Map and confirming the region had the most expensive internet access in the United States. Since then, improvements have been made, though slow, expensive internet continues to prevent residents of remote islands in some parts of the region from fully utilizing tools such as e-commerce, e-learning, telemedicine, and communicating with the rest of the world.
Guam is unique because in addition to satellite connectivity, it sits on cables that connect the United States and Asia, running to places like Hawaii, California, Japan, China, and Southeast Asia. In June of 2019, the government of Guam signed an agreement that authorizes the construction of the Gateway Network Connections (GNC) facility, which will serve as Guam’s first combined cable landing station and data center. This announcement anticipates the installation of several new undersea fiber optic cables on Guam in coming years, including the 100G cables scheduled to land in 2019 and 2020. Planned cables will connect Tokyo and Guam, Sydney and Guam, and Hong Kong and Guam. The GNC building, which is scheduled for completion in 2020, will house 250 racks of capacity and two megawatts of power and will be engineered to withstand Category 5 hurricanes and flooding. The GNC site will cement Guam’s role as a vital intersection for high-speed networks which service technology companies, cloud- serve providers, academic institutions, and content providers.
In 2015, a storm-related break in an undersea cable crippled communication within and outside of the CNMI, impacting emergency response, financial systems, and travel. Although the event was resolved in a matter of days, the widespread impact on the community prompted private investment in a second fiber optic cable. In 2017, the U.S. Army Corps of Engineers announced the final approval for the Docomo Pacific ATISA submarine fiber-optic cable system, which spans approximately 173 miles, connecting the CNMI to Guam. In July 2019, Docomo Pacific, a Japanese firm, expressed concern about the language of the National Defense Authorization Act for FY 2020. Section 852 of the bill states that contracts for the procurement of telecommunication services or the installation of telecommunication infrastructure will be awarded to contractors fully owned by persons in the United States. Docomo has said the bill compromises its ability to deliver the First Responder Network Authority (FirstNet) network, a nationwide network platform to enhance communications across the public safety community, in both Guam and the CNMI.
In American Samoa, the high cost of internet has stalled attempts to establish a call center, a potentially productive enterprise given the population is literate and English speaking (like other jurisdictions in the U.S. Pacific Islands) and the territory is seven time zones away from the East
16 Coast of the United States. An undersea cable was laid in 2009, linking American Samoa to Hawaii and increasing bandwidth in the territory from 20 megabits per second to 1 gigabit per second. The cost, borne by Bluesky and the government of American Samoa, was passed on to a relatively small number of consumers. (Currently Bluesky charges $115 per month for speeds of 383 kilobytes per second.) The American Recovery and Reinvestment Act funded the $90+ million Broadband Linking American Samoa Territory project, a 200-mile inter-island cable network connecting six islands.
In June 2018, private companies from New Zealand and the United States laid a $500 million, 9,320-mile cable connecting Australia, New Zealand, American Samoa, Hawaii, and Oregon, with branches to facilitate future connections to New Caledonia, Fiji, and Tonga. The cable, called Hawaiki, has a design capacity of 42 terabytes per second and sets the stage for the development of new industries.
Figure 10: Map from hawaikicable.co.nz Hawaii ranks high for both connectivity and speed. According to a Broadband Deployment Report released in 2018 by the Hawaii Department of Commerce and Consumer Affairs, 95.3% of the state’s population, in both urban and rural areas, had access to fixed broadband at the end of 2016 and 99.8% had access to Mobile LTE. Between December 2016 and December 2017, the state’s mean download speed increased from 81 to 102 megabits per second (Mbps) and its median from 53 to 65 Mbps.
In 2017, the 9,000-mile SEA-US fiber cable was laid in response to growth in demand for broadband, connecting Indonesia, the Philippines, Guam, Hawaii, and California.
As well as boosting growth, increasing the region’s broadband capacity will also enhance its resilience during and after times of disaster. All jurisdictions in the U.S. Pacific Islands Region have Statewide Interoperability Coordinators—people who work with emergency response teams across all levels of government to implement a strategy for interoperability, or for increasing the capacity of hardware and software from multiple manufacturers to seamlessly communicate.
17 Because improved technology allows long-haul submarine consortium cables to forego landing and bypass Hawaii, the state’s government created the Hawaii Broadband Initiative to re-position Hawaii as a welcoming home for all new trans-Pacific submarine fiber optic cable projects. To achieve this, Hawaii plans to build a secure, open access, carrier neutral, multi-tenant cable landing station and provide terrestrial backhaul connectivity options to connect data centers and major content repositories to the trans-Pacific cables. This broadband infrastructure will serve as a regional and international interexchange and cross-connect platform for broadband communications in the Pacific Basin. With a landing station in Hawaii, the state intends to make submarine cable landings quicker and less costly than the current option of building private cable landing stations.
A robust, resilient broadband network will attract new industries to Hawaii and increase opportunities for major economic drivers, including the Department of Defense, the tourism sector, and the application of the future, examples of which include machine learning, augmented intelligence, a smart energy grid, autonomous vehicles, virtual and augmented reality, big data, and cloud computing.
Aquaculture
Due to pressure from commercial fleets, nearly all of the world’s fish stocks are fully fished or overfished. The U.S. National Oceanic and Atmospheric Administration (NOAA) has identified aquaculture as an important solution to the problem. There are efforts underway in the region to develop aquaculture, both in marine and freshwater ecosystems, as a means of achieving economic growth while also practicing responsible environmental management. In all of the U.S. Pacific Islands, there is high local demand for seafood and heavy reliance on imports, which makes aquaculture an important element of food security.
Traditionally, indigenous people in the Pacific Islands prioritized conservation and sustainability. Today, community-based organizations are making efforts to reclaim this heritage by developing aquaculture projects that advance both sustainability and economic growth. In Hawaii, supporters and practitioners of loko i’a—traditional Hawaiian fishponds—formed Hui Malama Loko I’a to empower each other and advocate for the restoration of fishponds throughout the state. In 1990, a statewide assessment found 488 loko i’a sites although many were either beyond repair, unrecognizable, or in degraded condition.
One example of restoration success is Paepae O He’eia, a nonprofit organization on the island of Oahu dedicated to restoring an ancient Hawaiian fishpond and educating people about the process. Developing this method of fish cultivation expands the potential of aquaculture to include saltwater farming; recognizing this, in 2015 Governor David Ige signed into law Act 230, which waives certain requirements for, and advances, fishpond restoration projects.
In 2014, Hawaii’s aquaculture industry experienced record high sales, generating $78.2 million—a 40% increase in sales compared to 2012. Products supported by The Natural Energy Laboratory of Hawaii Authority (NELHA), which brings ashore high-quality supplies of warm surface and cold deep seawater 24 hours a day, sold best. In 2017, aquaculture sales totaled $76.4 million, slightly lower than three years prior. On April 17, 2019, Governor David Ige announced
18 the opening of Hawaii’s first aquaculture accelerator, based at NELHA’s Ocean Science and Technology Park in Kailua-Kona on the island of Hawaii. The accelerator will receive $4.5 million per year for three years, intended to nurture three cohorts of 10 to 12 aquaculture technology startups annually.
Guam, which imports an estimated $10 million worth of seafood each year, is also making efforts to develop aquaculture. In May 2019, Governor Lou Leon Guerrero signed Executive Order 2019-12, creating the Guam Aquacultural Task Force. Led by representatives from the Guam Department of Agriculture and Guam Economic Development Authority, the task force includes members of the Guam Environmental Protection Agency, University of Guam, and Guam Community College, and the Guam Department of Education, among other stakeholders. The Guam Aquaculture Development and Training Center at the University of Guam, also known as the Fadian Hatchery, is currently undergoing a $2 million renovation made possible through a public-private partnership. The University of Guam has developed a pathogen-free shrimp and is prepared to produce this for local consumption and for export.
Some effort has been made to expand aquaculture in the CNMI. The territorial government drafted an Aquaculture Development Plan for 2011-2015 to nurture the growth of its own fledgling industry. In February 2017, the Northern Marianas College opened an aquaculture development center.
19 SWOT (Strengths, Weaknesses, Opportunities, and Threats) Analysis
This section considers the U.S. Pacific Islands Region in relation to the rest of the world. As is the case anywhere else, engagement with a global economy carries both risk and reward.
Following is an analysis of the region’s SWOT profile. This section addresses how the region and each of its jurisdictions can leverage its natural strengths, manage and transform its weaknesses, take advantage of potential opportunities, and mitigate threats to growth in order to achieve sustained and sustainable economic development.
Regional Strengths
People. For reasons both cultural and geographic, island communities are tightly knit. Though the tide of global markets has eroded tradition to a large degree, there remains in the region a deeply rooted respect for family and neighbor among indigenous communities, as well as among diverse immigrant populations. Island people have always observed the law of reciprocity, understanding that mutual sharing creates mutual benefit. On some islands within the region, people still live subsistence lifestyles and barter resources. In these economies, social capital is critical. In other, more developed places, the sense of mutuality still persists in some areas. People activate, whether to host functions or support social initiatives. This spirit of collaboration is an important tool in the process of building economic and environmental resilience.
Location. Global positioning is a key strength for the jurisdictions of the U.S. Pacific Islands Region. In most of them, U.S. National Security has energized spending. With the exception of American Samoa, which relies more heavily on tuna canneries than on tourism, proximity to major Asian markets has also driven economic activity. The region’s tourism marketability continues to bear fruit. In Guam, the CNMI, and Hawaii, the number of visitors is expected to keep rising. American Samoa’s industry, though small, also has potential for development.
U.S. Affiliation. Affiliation with the United States brings economic stability, not only through federal assistance and funding but also through the protection of the U.S. military. In FY 2015, U.S. financial assistance to the Pacific territories amounted to $405.91 million for Guam, $136.48 million for American Samoa, $20.10 billion for Hawaii, and $105.99 million for the CNMI. The territories’ affiliation with the U.S. also guarantees investors a certain level of legal protection over business dealings—an advantage given the instability of some countries in the region, including other independent Pacific Island nations.
U.S. National Security. As described in other areas of this report, Guam, the CNMI, and Hawaii will continue to be important to U.S. national security interests in the Indo-Pacific Region because of their U.S. affiliation and strategic locations.
Traditional Knowledge/Conservation. Prudent resource management has long been a mainstay of indigenous island cultures. For thousands of years, these peoples lived in harmony with their environments, observing seasonal harvests and periodic bans on fishing, collecting seafood, and planting in certain areas to maintain the health of the ecosystems that fed them. This heritage is being leveraged in support of environmentally sustainable initiatives. Traditional knowledge can
20 be a useful tool for both natural resource management issues and economic development strategies for sustainable tourism and other industries.
Regional Weaknesses
Island Economies. Smaller jurisdictions have smaller labor pools, smaller budgets, and lesser potential for economies of scale. Regional economies are largely dependent on tourism and national security; growth in these two unpredictable areas has tempered the drive to diversify. Further, reliance on imports results in higher prices on commodities and materials.
Transportation. One of the region’s strengths—its location—is also a weakness. Distance from the continental United States means better access to Asian markets, but also makes domestic transportation a challenge, due largely to air cabotage laws that require travel between two U.S. destinations to be on U.S. carriers and the Jones Act, a federal maritime law requiring ships that conduct commerce between two U.S. ports to be U.S. flagged, U.S. manned, and U.S. made. The high cost of importing materials hampers business and timely infrastructure maintenance.
Labor and Workforce Development. Many islands lack available local workers and also experience “brain drain,” or the outmigration of educated or skilled labor. The loss of local labor affects all industries, most notably in the construction and health sectors. In response, businesses tend to recruit employees from Asia; as a result, federal immigration policy can have considerable impact on workforce supply in the region, particularly for Guam and the CNMI.
Natural Disasters. One of the most significant implications of the region’s location, isolation, and remoteness is extreme vulnerability to disastrous weather events such as typhoons and hurricanes. This is exacerbated by climate change, which is likely to intensify storm activity. As sea levels rise and oceans acidify and king tides become more frequent, it is critical for the region to focus on improving infrastructure, information networks, emergency preparedness, and local production of food and energy. Presently, jurisdictions in the region import up to seven times more than they export. There is economic opportunity in focusing on local production.
Climate Change. The impacts of rising temperatures and sea levels will be disproportionately felt in the U.S. Pacific Islands Region. Coastal flooding, king tides, saltwater intrusion into freshwater tables, and erosion are likelier to affect impact and food security in the Pacific Islands than anywhere else in the world, not only because island environments are exposed and vulnerable but also because agriculture and fishing are vital suppliers of nutritional needs for populations with high obesity rates. The impacts of climate change threaten infrastructure and buildings, including military facilities. This has flow-on effects for national security; a report published by the Department of Defense in January 2019 identifies 79 military installations and lists two-thirds of them as vulnerable to flooding. Through the Strategic Environmental Research and Develop Program and Environmental Security Technology Certification Program, the Department of Defense invests in research focused on improving the department’s understanding of climate-related risks to installations and mission. It is critically important that political leaders in the region work collaboratively with all stakeholders, including DOD, to develop and implement multi-sector climate change adaptation strategies, drawing on both traditional knowledge and science to chart the way forward.
21
Regional Opportunities
Sustainable Tourism. Concern about the impact of tourism on the environment and infrastructure, the embrace of indigenous cultures, and the influence of traditional knowledge on conservation make the region a fertile place for the development of new sustainable tourism strategies.
Renewable Energy. As the world becomes more aware of the relationship between fossil fuels and climate change, demand for renewable energy continues to grow. The region, with its tropical climates, possesses ample solar, wind, and geothermal resources. All U.S. Pacific Islands jurisdictions have strategies for renewable energy and are committed to reducing their reliance on fossil fuels.
Aquaculture. Demand for aquaculture grows as fish stocks diminish under pressure from commercial fleets and recreational overfishing of nearshore waters. There are commercial efforts underway in the region to develop aquaculture, both in marine and freshwater ecosystems, as a means of achieving economic growth. Traditionally, indigenous people in the Pacific Islands prioritized conservation and sustainability. Today, community-based organizations are making efforts to reclaim this heritage by pursuing aquaculture projects that advance both responsible resource management and measured economic development. Government and private sector leaders have also recognized the great potential for this emerging industry and are undertaking ways to advance aquaculture production.
Broadband. Increasing the region’s broadband capacity will advance economic development and strengthen resilience in times of disaster. Increasing connectivity will also enable jurisdictions to utilize tools such as e-learning and telemedicine, as well as to establish knowledge-based industries such as e-commerce and the application of the future.
U.S. National Security. Guam, the CNMI, and Hawaii will continue to be important to U.S. national security interests in the Indo-Pacific Region because of their U.S. affiliation and strategic locations. In the long term, however, it would behoove the Department of Defense to address local communities’ socioeconomic issues in order to understand their concerns about the impact of military activity on the environment, housing, infrastructure, and indigenous communities.
Conservation Initiatives. Given the willingness of the U.S. Pacific Islands Region to support ambitious conservation initiatives, the region can be a hub for conservation research and other initiatives. Federal, state, territorial, and non-profit based organizations’ initiatives and research should continue to help the region protect lands and natural resources, while also drawing researchers to the region to learn about coral reef and ocean protection, climate change adaptation, invasive species management, and watershed protection, among other issues. Hawaii Green Growth (HGG) is an example of a successful public-private partnership in this area. Sponsored by such diverse entities as The Nature Conservancy, Hawaiian Airlines, and Papahanaumokuakea Marine National Monument, HGG seeks to connect generations of indigenous knowledge and systems-thinking with modern science, technology, and policy in
22 order to find scalable solutions to environmental problems. The partnership, which is an outgrowth of the IUCN World Conservation Congress in Honolulu in 2016, is working to advance a green economy within an island context. In November 2018, the United Nations invited HGG to become one of the world’s first Local2030 sustainability hubs. These are intended to bring together leaders from national, regional, and local governments, as well as representatives from the U.N., private sector, civil society, charities, and academia to develop and implement solutions that advance the 2030 Agenda for Sustainable Development at the local level.
Regional Threats
Labor and Workforce Development. Failure to address federal immigration restrictions in a long-term, sustainable way, particularly in Guam and the CNMI, will have detrimental economic impacts. While there continue to be efforts to address these issues, there should be a more coordinated, regional, and permanent federal approach.
Unsustainable Tourism. Unsustainable tourism can have a negative impact on the environment, infrastructure, and quality of life in the U.S. Pacific Islands Region. This is why it is critical that economic development planning prioritizes sustainability and managed growth.
U.S. National Security. As previously stated, Guam, the CNMI, and Hawaii will continue to be important to U.S. national security interests in the Indo-Pacific Region. In the long term, however, DOD should seek to understand local concerns about the impacts of military activity on the environment, housing, infrastructure, and indigenous communities.
Federal Laws and Regulations. Federal transportation laws governing air cabotage and maritime transportation will continue to be some of the greatest challenges to the economic development of Guam, the CNMI, and American Samoa. Federal immigration laws will continue to be problematic for Guam and the CNMI, which rely on foreign labor. The federal government will need to evaluate long-term solutions for these jurisdictions to ensure the availability of workers. Territorial leaders need to also increase capacity within their own local workforce through educational and training opportunities.
Other areas of federal concern include addressing Medicaid funding caps for the U.S. territories, federal reimbursement for the Earned Income Tax Credit, and adequate federal reimbursement associated with unrestricted migration under the Compact of Free Association with the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau into the United States. Guam and Hawaii absorb most of the migration from the Freely Associated States at a financial impact of between $100-$150 million annually.
Guam SWOT Overview
Guam’s CEDS for 2020-2025 counts among the territory’s strengths its strategic location, multiethnic population, infrastructure, connectivity, U.S. financial and banking laws, defense industry, training facilities, and deep-water harbor. The report identifies some weaknesses, including the smallness of the economy, a shortage of skilled and specialized labor, restraints
23 imposed by federal policies, dependence on imports, and a lack of economic diversification. Storms, labor issues, and global geopolitical forces are among possible threats to Guam’s development; opportunities exist in technology, domestic production, transportation, defense, tourism, and ecotourism. Guam’s CEDS identifies the following as leading sectors and provides a SWOT analysis for each.
1. Agriculture: Despite efforts from local producers, Guam’s consumer base has relied heavily on imported food items. According to Guam Import Data for 2018, the territory received a total of $12 million worth of food and beverage imports to feed its growing population. As a tropical island with ample land and access to federal and government funding, the territory is suitable for agriculture. Challenges include a lack of reported statistics, the seasonality of the industry, low income elasticity, the inability of producers to meet market demand, frequent changes in zoning approvals, rising utility costs, and weak protections for critical lands. Natural threats include tropical storms, typhoons, and the impact of invasive species. 2. Aquaculture: According to the Center for Tropical and Subtropical Aquaculture, Guam produced a total of 111 tons of seafood in 2012. These species include freshwater prawn, marine shrimp, eel, tilapia, carp, catfish, milkfish, mangrove crab, mullet, and ornamental carp. The construction for a new $6 million fishermen’s co-operative commenced in mid- 2017. Rapid industry growth, coupled with clean and vast ocean space and the presence of research institutions, lends aquaculture strong potential as a key driver of development. A growing population means growing demand locally for seafood. Weaknesses in this area include the complexity of permits, high overhead costs, a lack of capacity and qualified labor, and inconsistent quality; threats include tropical storms, typhoons, flooding, coastal erosion, and increasing regulations. 3. Architecture and Engineering: In 2018, UOG signed a $5.4 million contract for the construction of the School of Engineering building. This will provide students with three new classrooms, three laboratories, and the possibility of a full engineering program. The growth of educational programs, training opportunities, scholarships, and partnerships is bolstering the industry. Employment figures have reflected tremendous increase in STEM-related occupations; in 2018, the Guam Department of Labor reported employment in architecture and engineering occupations to be 940. The number of training programs and professional services are limited, and funding shortages and the stagnation of construction—driven largely by federal policy that seeks to phase out foreign labor—pose threats to the industry’s development. 4. Construction: Guam is in the early stages of an economic surge and a number of large capital improvement projects are funded and build ready. Infrastructure, secured banking services, tax benefits for local companies, Department of Defense dollars, and the IRS- designed “Opportunity Zones” program can and likely will contribute to the growth of the construction industry. Constraints include the pace of bureaucracy, relatively higher costs of equipment and supplies, the phasing-out of foreign workers and a lack of available local labor. Threats include tropical storms, political tension in the Asia-Pacific region, and a possible rise in the cost of transportation. 5. Economic Opportunity Zones: The federal tax bill known as The Tax Cuts and Jobs Act (TCJA), which was enacted in December 2017, allows for each state and territory to designate no more than 25% of low-income census tracts as Opportunity Zones. In April
24 2018, the Governor of Guam identified 25 Qualified Opportunity Zones. The TCJA serves as a critical tool to promote job creation and long-term investment for economically distressed communities, under certain conditions, to be eligible for preferential tax treatment. This initiative encourages the growth of small, minority-owned businesses, generates public and private revenue, increases investment and jobs in low- income areas, contributes to the repatriation of local and U.S. companies, and can lead to the creation and retention of new industries. However, the program is new and limited to a five-year tax recovery timeframe. Real estate development and transactions are minimal. Not all low-income areas are enticing for investors and most have a small market base. Threats to the success of this program include the instability and interference of federal policy, a lack of urgency to resolve the issue of H-2B visa restrictions, and competition with other Opportunity Zones throughout the U.S. 6. Military: Guam has the only substantial U.S. military facilities in the Western Pacific and is located in close proximity to potential conflict zones in Asia. The island has a deep-water harbor with 17,000 linear feet of wharf space and significant airfield capability, as well as the capacity to repair surface vessels, aircraft, and combat equipment. The U.S. government has options to relocate military fleets, equipment, and personnel from time to time to either increase or decrease the U.S. military presence in Guam. Although the local government cannot predict whether or when such adjustments may occur, the military presence in Guam is generally expected to increase. The NDAA in FY 2018 included approximately $354.6 million for military construction in Guam. The federal and military buildup has high potential for unprecedented growth but is tempered by regulations, fixed cost contracts with caps, changing procurement guidelines, lack of adequate labor, and political uncertainty and tension in the Asia- Pacific region. 7. Financial Institutions: Because it is a U.S. territory, Guam presents itself to local and foreign investors as a safe place to do business. There are two state banks, two Guam chartered commercial banks, two foreign banks, two off-shore lending facilities, and 11 finance companies licensed in Guam. The combined total assets of all financial institutions for 2017 add up to $3.7 billion. In addition to accessing support infrastructure and a growing domestic market, companies licensed in Guam are eligible for tax benefits and the Opportunity Zones program. Threats to investment include a lack of cyber security, limited capital for large borrowers, and an overreliance on tourism, military, and the local government sector, in addition to the small size of the domestic economy and the territory’s vulnerability to external shocks. 8. Green Technology: The development and implementation of green technology will open up new market opportunities and provide scalable models for the region and other countries facing similar environmental challenges. Opportunities exist for retrofitting business and residential infrastructure to implement technology, and the development of environmentally-friendly technology has the potential to create jobs. However, start-up costs are high and access to technology is limited, as is the level of community interest and government assistance. 9. Healthcare: In 2018, there were a total of 33,016 senior citizens living on Guam. There is a need for additional healthcare options for them and for all residents. The growth potential for the healthcare industry is strengthened by the presence of 124 doctors and 91 medical clinics, as well as existing infrastructure, resources, and demand. In healthcare
25 there are opportunities to provide increased access to quality services, reduce expenses associated with going overseas for medical diagnosis and treatment, encourage small businesses, collaborate on a regional level, and create jobs. The industry’s weaknesses include a lack of existing professional programs on Guam, limited resources, a small economy, and the capital-intensive nature of healthcare. Threats include lack of grants and the tendency of local government to interfere and overregulate the industry. 10. Telecommunications: Guam is equipped with 3G, 4G, and 5G broadband coverage and considered to be the most technologically connected among the surrounding islands in the Pacific. Guam’s market remains competitive with three major companies providing fixed lines and mobile services to meet the needs of the community. In 2018, the Guam Community College announced its latest initiative that will prepare high school students for work in the sector. As a regional hub with advanced fiber-optic capabilities, Guam has high growth potential in the area of telecommunications. Opportunities exist in big data, data-driven growth and efficiency, and targeting a military market. Weaknesses include a shortage of equipment and skilled technical workers; threats include a lack of cybersecurity. 11. Tourism: Tourism accounts for 17.7% of the island’s total GDP and 60% of its annual business revenue. According to the Guam Visitor’s Bureau (GVB), the industry employs more than 18,000 residents. The Guam Tourism 2020 Plan was developed by GVB to achieve a paradigm shift that would help Guam capitalize on its potential to become a world-class, first-tier resort destination of choice; specific strategies include adding 1,600 rooms by 2020, pursuing conference business, reaching two million arrivals, achieving a 33% increase in spending by extending the length of stay from three days to four, and promoting the ecotourism and education tourism experiences. UOG has several programs that facilitate education tourism, including the English Adventure Program that has grown by more than 2,000% since it began in 2008. Guam is suited for growing tourism because of its proximity to major Asian markets and the presence of internationally recognized hotels and retail outlets. There are opportunities to improve public and private infrastructure and improve the quality of the product, given these strengths and this high level of potential. Weaknesses include a level of service that needs improvement, high operating costs, and inadequate public and private infrastructure. Threats include natural disasters, overwhelming capital improvement requirements, and the impacts of disruptive world events and increased global competition. 12. Transportation: In response to steady increases in passenger and cargo volume, Guam’s air and sea terminals have invested well over $200 million in the past five years to improve services. There is large potential to grow the transportation industry, given Guam’s geographic proximity to Asia, its infrastructure support system, and the availability of federal and local funding. Threats to development of the industry include the relatively high cost of equipment and supplies, federal laws, political tension between the U.S. and North Korea and/or China, and tropical storms. There are opportunities to capitalize on the forthcoming military buildup and to expand into Asia-Pacific markets.
American Samoa SWOT Overview
Among American Samoa’s most notable strengths, according to its CEDS 2018-2022, is access to ocean resources. The success of the fishing and processing industries has led to the
26 construction of related infrastructure that can facilitate the development of new industries, such as aquaculture.
The territory’s political status lends it federal grant support, tax exemptions, stability, and duty- free access to the U.S. Grants directly accounted for more than 20% of the territory’s GDP in 2017. There is a need to broaden access to federal funding opportunities, which are often not pursued due to a lack of information or understanding or unfair federal laws and regulations.
Businesses operating in the territory have a comparative advantage over competitors in the continental United States because the cost of labor is relatively low. Goods produced in American Samoa are eligible for the “Made in USA” label, a designation that reflects high environmental and health standards.
While political affiliation with the U.S. brings advantages, it also means changes in an executive administration can have widespread impacts. The territory’s CEDS lists political transitions as a primary threat to economic development.
Another threat to development is a drug epidemic that threatens the productivity of the workforce and squeezes the healthcare system. Due in part to its remoteness and uncompetitive wages, the territory has long struggled with securing and retaining high quality healthcare practitioners.
Expanding into new industries is vital for growth, given American Samoa has long been disproportionately reliant on federal spending and tuna canneries. There are obstacles on the path to achieving diversification, among them restrictive commercial lending policies, high bank fees, and overly crowded banking institutions. The 2018-2022 CEDS lists the possible departure of U.S. banking institutions as a threat to economic development; the recent withdrawal of the Bank of Hawaii from American Samoa amplifies this concern.
Recent investments in telecommunications infrastructure yield opportunities for the development of new industries such as customer service, data entry, and sales. There are also ample opportunities in tourism and ecotourism. Due to its robust culture and stunning natural beauty, the territory is a well suited for the development of these industries and other associated industries linked to fisheries, such as charter tours. The primary barriers to establishing tourism are a lack of frequent, affordable air transportation and restrictive cabotage laws.
The CNMI SWOT Overview
The 2019 update to the CNMI CEDS identifies access to Asian markets as a primary driver of economic growth. The gaming industry continues to attract Chinese tourists, who can apply to enter the territory without a visa and have become the linchpin for economic activity generated at the casinos. The growth of gaming has prompted the emergence of other sectors – retail, finance, security, construction, information technology, and professional services among them. Proximity to Asian markets, together with a political status as a U.S. territory, makes the CNMI an ideal place for foreign investment.
The CNMI CEDS views the territory’s governance structure as a strength, even if it implies vulnerability to the fluctuations of global geopolitics. The CNMI enjoys the protection of U.S.
27 financial and legal systems, which promote trust among foreign investors. Affiliation with the United States enables participation in various programs, such as the EB-5 investment program and the New Market Tax Credit program, that are attractive to foreign investors.
Another key strength is the construction of a second fiber-optic cable, which creates competition in the telecommunications industry and strengthens the territory’s resilience by increasing its connectivity and diversifying its economic base. In 2017, the U.S. Army Corps of Engineers announced the final approval for the Docomo Pacific ATISA submarine fiber-optic cable system, which spans approximately 173 miles, expanding connectivity in the Marianas.
The CNMI CEDS identifies a lack of exportable natural resources as a key weakness. The territory possesses ample marine resources but lacks the infrastructure to harvest and export them in ways that would produce a meaningful economic contribution. There are also no land-based resources in high demand for export markets.
The territory has a unique history of labor involving foreign workers on temporary visas. As the government attempts to shift this situation, encouraging greater reliance on resident workers, the dearth of experienced, available labor threatens economic growth. The CNMI CEDS identifies as a primary threat the provisions in U.S. Public Law 110-229, which prohibit the long-term use of low-cost labor from nearby Asian markets. H.R. 5956 (P.L. 115-218), the Northern Mariana Islands U.S. Workforce Act of 2018, postpones the phase-out of foreign workers to the end of 2029 but the future of the workforce remains uncertain.
As is the case for most remote islands, infrastructure is a weakness; the cost of transportation hinders regular maintenance and the volume of visitors adds pressure to seaports, airports, and systems that generate power and water. Aging infrastructure restricts the expansion of the territory’s logistical supply line. Another threat to development is the fact that land ownership is limited to indigenous peoples. This is a cultural and environmental strength but an economic challenge, as financial institutions are unable to own property. Lending rates are high and there are limited windows of opportunity in which to foreclose and unload real estate held as collateral. Efforts are underway to expand land ownership in the CNMI.
The planned relocation of Marines from Okinawa to Guam presents opportunity for the CNMI, as it will likely result in infrastructure upgrades and higher numbers of tourists.
Hawaii SWOT Overview
The Hawaii 2016-2020 CEDS report identifies innovation as a strength. When resources are limited, people become resourceful; innovation is a skill often borne of isolation.
The destination’s brand is another strength. Popularized by the media and carefully managed by the tourism industry, the state is a heavily impacted vacation spot. The number of jobs in the hospitality and tourism industry is growing at a pace 11.59% faster than the national average. Earnings in the industry are also higher than average. Other strengths include a sense of community, access to renewable energy resources, and multiculturalism.
28 The report also lists weaknesses, beginning with a high cost of living due to steep real estate prices and the cost of imported products. There are others besides, including a lack of trust between people and their government, aging infrastructure, and geographic isolation.
According to the CEDS, opportunities abound in Hawaii. The report focuses first on the state’s potential as a test bed for projects in the renewable energy industry. Hawaii has access to sources of clean energy and progressive policies; its publicized goal is to run on 100% clean energy by 2045. The second opportunity is in astronomy, aerospace, and aviation. In 1986, NASA financed the Mauna Kea Science Reserve and the first telescope built atop Mauna Kea, a mountain on the island of Hawaii. Since then, the state has been widely recognized for its contributions to astronomy. It has also long been in the running as a potential site for the establishment of an aerospace industry. In 2015, the state legislature approved seed funding to establish an international flight training center and advanced aviation degree program at the University of Hawaii at Hilo.
Other opportunities for economic growth include broadband expansion and the diversification of the tourism industry. The Hawaii CEDS identifies strong leadership in the public and private sectors as a contributor to growth.
The CEDS also addresses the growing sense of polarization within the community, calling it a threat to development. As tourism and money continue to transform the state’s economic landscape, the gap between rich and poor grows. Climate change, sea level rise, and ocean acidification—all branches of the same tree—are other noteworthy threats to development.
29 Strategic Direction/Action Plan
Each jurisdiction in the region has created an itemized strategic plan designed to advance its economic development. Whether, and to what extent, these goals are met will be determined by the evaluation measures presented in the section following this one.
Vision Statement
These strategic plans intend to make the region more competitive in a global economy, while also prioritizing an equitable distribution of wealth, economic resilience, and prudent environmental management.
Growth in the region has not been proportional, as evidenced by such indicators as participation in food stamp programs and rates of homelessness. This CEDS seeks to raise the standard of living while simultaneously valuing diversity, health, education, cultural traditions, environmental stewardship, and collaboration.
Action Plans and Implementation
This section identifies projects, programs, and activities identified by each jurisdiction as necessary for advancing its specific development goals.
Guam
In Guam’s 2020-2025 CEDS is a list of capital improvement projects aiming to achieve specific development goals. The highest-priority projects are as follows:
1. Agricultural export market development: Estimated to cost $300,000, this project offers Guam the opportunity to break into a new market by providing heat treatment for agriculture and allowing tourists to return to their countries with local produce. Acquisition of a high temperature forced air or vapor heat treatment unit would allow Guam’s farmers access to the readily available tourist market and spur development of later bulk shipping markets to neighboring countries; a collateral benefit would be to increase the availability of homegrown produce for Guam’s consumers. 2. Aquaculture hub: A feasibility study into whether Guam can become a regional hub for aquaculture has the potential to diversify the island’s economy and create additional jobs. Estimated to cost $200,000, the study will establish partnerships with worldwide industries for food safety and training and increase capacity for research, education, and sales. 3. Assessment of a potential circular economy in Guam: Estimated to cost $200,000, this project will cultivate public-private partnerships that will contribute to turning waste into new products. 4. Consolidated survey center: The UOG Consolidated Survey Center, estimated to cost $500,000, will serve as a comprehensive technical assistance center that will provide assistance to key local government agencies who regularly collect data for the purpose of reporting, evaluation, and support of technical assistance studies in Guam.
30 5. Construction of a new wharf and land reclamation: A proposal to create new wharf space totaling 2,900 lineal feet of sheet piles and 3,000 lineal feet of reclaimed land will cost $35 million, create 73 new jobs, and provide room for additional economic activity and the accommodation of larger military vessels. 6. Construction of a new hatchery: With the high demand for pathogen-free shrimp throughout Asia, Guam has an opportunity to develop its first real export produce. However, in order to create a facility capable of launching an aquaculture industry, the hatchery is in dire need of $2.5 million worth of infrastructure improvements. 7. Construction of Sinajaña Marketplace (Farmers’ Market): The key goal to the project is to develop a Farmer’s Market within our community and install 35 permanent overhead metal frame stalls in the parking lot of the Sinajaña Community Center Complex. The Farmer’s Market will provide opportunities for small businesses to market and sell their products. 8. Cruise ship feasibility study: The fruition of this project, estimated to cost $250,000, could potentially introduce $51 million into the local economy and $778,634 into the government’s tax base. 9. Develop an agricultural strategic plan: An agricultural strategic plan will lay out action steps addressing agricultural production, environmental impact factors, supply market and demand, policy infrastructure, and additional amenities that come from coordinated, strategic input. 10. Drainage improvements at E.T. Calvo Memorial Industrial Park: Over the years, and particularly during the recent typhoons, the property including the roadway easements for traffic circulation within the industrial park have been subjected to flooding caused by heavy rains and storm water runoff coming from as far north as the airport area. This situation has caused not just health and safety hazards in the past, but caused certain disruptions to businesses and their customers within the area. The project will require a $3 million design and construction of an appropriate storm water drainage system for the entire E.T. Calvo Memorial Park. 11. Drainage improvements at Harmon Industrial Park: The property is owned by the Government of Guam and was subsequently leased to GEDA for 99 years (1969-2068) for management under its Industrial Parks Program. There are seven lots within the industrial park which have been sublet to various entities in both the private and public sectors for light to moderate industrial/commercial type uses, and continues to employ over 130 people annually. Drainage improvements worth $500,000 will help develop potential new industries and continue the generation of jobs, gross sales, and GRT. 12. Education Tourism (UOG Capital Improvement for Education Tourism): The UOG Capital Improvement for Education Tourism Project would ensure that UOG has the facilities necessary to accommodate a greater number of students as part of international exchange programs, therefore increasing UOG’s capabilities to foster education tourism in Guam. Through the building of an International Dormitory, UOG’s housing capacity would increase by 300. The project is estimated to cost $56 million. 13. Guam Commercial Kitchens cottage industries: The features of the GCK propose a commercial shared-use kitchen design that provides the foundation for food entrepreneurs to change from a home-based kitchen to a food company. Entrepreneurs will have the tools and access to technical support to test and develop new food and non-food products that will lead to new business growth and job creation. The recent and growing interest in
31 developing and promoting natural products like medicinal herbs requires a local diagnostic laboratory that can conduct analytical testing to assist both food and non-food entrepreneurs in addressing their product quality needs and to provide product assurances that meet local and federal regulations for food and non-food products. 14. Guam domestic fisheries program: Guam’s domestic ocean fisheries consist of a few hundred small-scale fishermen operating personal trolling and bottom fishing boats. Its aquaculture fisheries operate mostly on a small-scale basis and consist of roughly 100 farmers, with less than 25 farmers comprising the most of the $300,000 to $750,000 in gross annual sales. This $200,000 proposal will also identify assistance needs of the industry, facilitate needed financing of projects, coordinate outreach to remote farmers and fishermen, and assist in compliance with federal environmental regulations. 15. Guam Fisherman’s Cooperative Association Marina Authority: Both the Agat Marina and the Hågatña Marina have suffered numerous typhoons and years of neglect. The conditions are hazardous and the main concern is that the next major typhoon will not only destroy the docks but a large majority of the vessels as well. This $7.5 million project will culminate in a public-private partnership to manage the marinas. 16. Hagåtña Riverwalk Esplanade (Marine Corps to Chalan Santo Papa Juan Pablo Dos): The key goal of this project is to construct a new Riverwalk Esplanade on both sides of the Hagåtña River. The $6.5 million project will establish a vibrant Riverwalk Esplanade that will have a positive economic impact for the capital city of Hagåtña. 17. Marina Development: Through the $4.5 million construction of a 150-boat slip marine and shoreline facility to promote the marine industry, the economy can potentially realize $25 million in annual revenue from tourism activities within the marina, in addition to providing for an opportunity for larger-scale domestic fisheries. 18. Multi-agency aquaculture education program: The purpose of creating an aquaculture curriculum at the secondary school level, estimated to cost $1.25 million, is to provide jobs, develop the workforce, improve revenue, and reduce the need for imports. 19. Relocation of electrical power distribution and transmission systems underground at GEDA industrial parks: In light of the recent super typhoons that impacted Guam, GEDA is moving electrical power distribution and transmission systems at industrial parks underground. This is being proposed as a practical, long-term solution for mitigating impact and hardening the current system, and is likely to cost $14 million. 20. Resource innovation and solutions network incubator implementation project: This project will implement the missing component of this regional strategy: a circular economy incubator focused on innovation and solutions to resource efficiency and effectiveness challenges. New and emerging circular economy ventures will develop sustainable and renewable technologies in the energy, water, transportation, built environment, and food sectors, among others, to create value and economic development opportunities from solid waste streams. 21. UOG capital improvement for healthcare education and employment opportunities: Projections in Guam are for an increase in those 60 years and older to grow by 4.14% each year, with 15% of the population being seniors by 2020. The increasing elderly population will impact the health and social systems, which are in need of significant improvements to meet the increasing demand. The current job vacancy rate (unfilled, available positions) for Certified Nursing Assistants (CNAs) in Guam is 45%. This is much greater than the U.S. national vacancy rate of 22%. This is a $12 million project
32 aimed at increasing the diversity of training programs in the healthcare sector, resulting in increased job opportunities and improved healthcare.
American Samoa
The territory’s CEDS 2018-2022 identifies three broad goals and offers strategies and actions toward achieving them.
• Goal 1: Build a robust business environment and business ecosystem o Objective 1: Address the Fair Minimum Wage Act of 2007 and its negative impacts ▪ Evidence suggests that five minimum wage increases since 2007 have contributed to the closure of two tuna canneries. American Samoa’s competitive advantage is rooted in the territory’s low labor costs. o Objective 2: Improve efficiency of bureaucracy ▪ Currently business owners face delays in procuring licenses, permits, certificates, and approvals. o Objective 3: Explore options to expand business financing and improve access to capital ▪ Bank of Hawaii is ceasing operations in the territory; ANZ Bank has decelerated business lending in recent years in order to minimize risk; Development Bank of American Samoa has limited capital resources; and Territorial Bank of American Samoa has only recently begun to accept loan applications. In the context of this lending landscape, procuring capital to support a new business is a challenge. o Objective 4: Pursue improvements to business services ▪ The growth and evolution of the local economy will require improvements to business services, or upgrades to mobile point of sale systems, telecommunications network support, cyber security, data center support, business analytics, and other information technology services. o Objective 5: Formalize territorial investment guide program o Objective 6: Support innovators and entrepreneurs ▪ Given recent upgrades to connectivity, American Samoa is no longer a prohibitive place for innovators and entrepreneurs. The Hawaiki cable paves the way for the creation of a new, knowledge-based industry. o Objective 7: Capture data more effectively o Objective 8: Eliminate outdated laws or regulations that negatively impact business ▪ It is important that non-essential regulations be reviewed regularly to determine continued relevance. o Objective 9: Continue to assess government-owned properties to ensure adequate space is available to support business growth ▪ Availability of land is a significant issue, given the territory comprises 72 square miles in total. o Objective 10: Incentivize local business investment to create jobs and strengthen industry
33 ▪ In addition to encouraging external investment in the territory, incentives to encourage local businesses to invest in emerging industry are necessary. o Objective 11: Pursue opportunities that will support efforts to lower cost of doing business o Objective 12: Address cyber security risks to territory
• Goal 2: Strengthen current industries and develop new industries, such as tourism and internet-based business o Objective 1: Strengthen fishing and tuna canning industry o Objective 2: Explore and develop new industries, leveraging the BLAST fiber- optic network, Hawaiki submarine cable, and other information technology resources o Objective 3: Continue the development of the tourism industry ▪ Greater effort should be invested into stakeholder coordination, community involvement, and collaboration. The scope of the tourism industry master plan has been broad and may benefit from a more focused approach. o Objective 4: Continue the development of the agribusiness industry ▪ Rich in fertile soil, sunshine, and rain, American Samoa has always been an agricultural hotspot. Since the sixties, efforts have been underway to grow agribusiness. The territory has made significant headway in developing technologies and farming processes, such as hydroponics. Locally grown produce is not being sold in supermarkets, supporting import substitution efforts. Diversification of crops has also improved. Efforts to improve efficiency and productivity, as well as to produce value-added products and supply herbal medicinal products, should be explored and pursued. o Objective 5: Continue the development of the aquabusiness industry ▪ The Samoan culture has thrived for thousands of years as a result of effective use of ocean resources. Thus far, this long-standing tradition has not translated into successful commercial development of these resources, with the exception of the tuna canneries. Recent advancements in aquaculture technologies and practices, such as open ocean fish farming, have reemphasized the value of the territory’s proximity to ocean environments where these aquaculture techniques could be effectively employed. o Objective 6: Continue the development of the creative industry ▪ An improved understanding of the prevailing trends in this industry is key in identifying new opportunities for income generation. o Objective 7: Improve the territory’s capacity to identify, pursue, and secure additional federal support through grant and other federal programs o Objective 8: Pursue opportunities to promote light manufacturing opportunities where feasible o Objective 9: Pursue opportunities to transition specific health care services to the private sector where feasible
34 ▪ Opportunities to leverage the territory’s new internet connectivity to improve delivery and quality of health care services should be assessed.
• Goal 3: Strengthen secondary economic development support systems o Objective 1: Improve workforce development initiatives ▪ Cultivating a highly trained workforce enhances the territory’s socio- economic stability and primes the economy for growth. Typically, workforce development duties and responsibilities fall under state government agencies. However, in a small, insular economy, efforts to build a strong workforce are often more efficient when ownership is shared by the public and private sectors. For the past several years, efforts to educate and prepare the youth of American Samoa for postsecondary progression has primarily leaned towards traditional four-year university degrees, and has largely ignored training opportunities in trade professions. A redesigned approach must incorporate work-based learning strategies that align with the territory’s economic development plans. Key areas of focus include STEM, business, hospitality, and customer service programs. o Objective 2: Improve financial literacy of community ▪ Understanding the benefits of budgeting, saving, investing, financial planning, and moving away from a cash-based society can strengthen the territory’s fiscal foundation. o Objective 3: Create synergy through improved coordination, communication, and cooperation between federal and local governments ▪ The U.S. cabotage laws are one example of federal regulations that were intended to protect U.S. businesses and workers, but have had unintentional, negative impacts on many small U.S. jurisdictions; there are many others. o Objective 4: Mobilize and encourage non-governmental organizations (NGOs) to participate in economic development ▪ The territory has a wealth of largely untapped resources available in organizations such as the American Samoa Chamber of Commerce (ASCOC), various industry associations, military veterans, faith-based groups, ethnic groups, and other non-profit organizations. Adopting a more collective approach to economic development is paramount, especially in a small, community-based territory. o Objective 5: Support collaborative efforts to address socioeconomic and/or environmental issues that have an adverse impact on our ability so support economic development objectives ▪ American Samoa is facing obesity and drug epidemics, both of which have significant implications for the future of the territory. Climate change is a growing risk, leading to the erosion of shorelines and a gradual loss of other natural resources. Efforts to address these issues should be integrated into all development plans.
35 The Commonwealth of the Northern Mariana Islands
The CNMI produced an update to its CEDS in 2019, prompted by needs and weaknesses exposed by Super Typhoon Yutu, which struck in October 2018. The CEDS Commission invited members of the community to propose projects, which were later entered into a database and ranked using a pivot table. Projects were evaluated based on the extent to which they would offer public benefit, propel industry growth, support new or emerging industries, line up with the SWOT section of the CEDS, encourage workforce development, promote economic circulation within the CNMI, and impact the environment and infrastructure. In and through this process, the following were identified as the territory’s highest priorities:
1. Development of a comprehensive vocational and technical training facility ($8.2 million) a. The Northern Marianas Trade Institute (NMTI) is the major institution that provides the technical skills training necessary to enable U.S. citizen residents to replace foreign workers in the CNMI. NMTI offers industry recognized certification in Welding, Automotive Technology, Electronic Systems Technology, HVAC Electrical, Carpentry, Plumbing, Culinary Arts, Hotel & Restaurant Operations, etc. These trades are the critical positions currently held by foreign workers as identified by the CNMI Department of Labor. The 2017 Government Accountability Office report pinpoints NMTI’s role in curbing the CNMI’s dependence on foreign labor. NMTI is seeking funding to develop a plan and then construction of a facility that would accommodate the number of students and the programs the institution offers. NMTI enrollment has increased dramatically within the last five years, from 49 students in SY 2014-15 to 634 students in SY 2017-18. NMTI has outgrown its current facility (a former garment factory), which is located in a wetland area that is affected by severe flooding of its classrooms during heavy rains. Additionally, the area does not provide sufficient space for students and faculty parking. If provided the opportunity to offer its services in a well designed and typhoon proof vocation and technical trades facility, NMTI will significantly expand its role to the development of the CNMI economy and the replacement of foreign workers with U.S. citizens. 2. Passenger loading bridges replacement ($16 million) a. Commonwealth Ports Authority (CPA) has current contract for replacement of three bridges. Typhoon Yutu caused damage to all six. CPA intends to allocate funds for replacement of additional three. 3. Garapan storm drain improvement ($750,000) a. With Garapan having the highest concentration of commercial development, residences, and tourist activity, water quality in the adjacent lagoon areas is often impacted by land-based sources of pollution. Polluted/contaminated stormwater runoff discharges directly into the lagoon from the Dai-Ichi and Hafa Adai drainages. The Dai-Ichi drainage will soon have a CDS system in place to address these concerns; however, the Hafa Adai drainage still requires attention. This project proposes to rehabilitate the Garapan storm drains, replacing broken and worn out grates, cleaning out collection chambers to allow for better flow, removing sediment and sludge from sediment traps, inlets, and grates, removing
36 sediment from connector pipes between inlets and manholes, removing sediment and sludge from open canals, and providing outreach to reduce contaminants from entering the drains. 4. Replacement of Northern Marianas College (NMC) buildings and facilities lost to Super Typhoon Yutu ($58 million) a. During Super Typhoon Yutu, nearly all of the Northern Marianas College’s classrooms and administrative facilities were destroyed. Of the college’s 37 classrooms, 35 were classified as sustaining major or total damage through FEMA’s post-disaster assessment of the college. As the CNMI’s only accredited post-secondary educational facility, the reconstruction and hardening of the college’s infrastructure is critical towards supporting the CNMI’s economic development and workforce resiliency needs. Because nearly all classrooms, computer labs, nursing labs, and other facilities were decimated by Super Typhoon Yutu, the College is currently conducting classes in temporary tents. Despite this less-than-ideal situation for thousands of individuals seeking to expand their training and professional growth, NMC continues its commitment to fostering the development of the CNMI’s workforce. Leaders are cognizant that lacking a functioning college facility will in the mid- to long-term deter enrollment at the College. The potential out-migration and loss of the CNMI’s college-aged population to other regions will leave lasting impacts on the CNMI’s economic development, resiliency, and overall stability. 5. Revenue management information system upgrade ($5 million) a. The CNMI Department of Revenue and Taxation cannot currently access timely, accurate information across all locations and tax types, so the goal of becoming an efficient, fully integrated operation remains out of reach. This upgrade will enable the department to file tax returns, make payments, and view and manage their business and individual tax accounts online. 6. Quartermaster shoreline enhancement ($7.2 million) a. As recommended by the 2017 Garapan Area Shoreline Assessment Study, six (6) T-head groins need to be constructed to retain sand at the shoreline. 7. Underground power cables in the Garapan tourist district ($20 million) a. This project would involve placing all utility lines in the Garapan tourist area underground for the purpose of beautification and strengthening resilience against typhoons or other natural disasters. 8. Rehabilitate/replace/upgrade the Sadog Tasi Waste Water Treatment Plant ($25 million) a. The plant’s original design was compromised when the last renovation was done and Commonwealth Utilities Corporation was short of revenue to do repairs correctly. This reduced plant efficiency, which needs to be restored due to projected population growth on Saipan. The Sadog Tasi Plant treats the wastewater for customers in the northern portion of the island. 9. Elementary classrooms a. The CNMI Public School System has identified a need for additional classrooms at existing elementary school sites. 10. Leak detection and repair on all three islands ($5 million) a. The purpose of this project is to identify leaks, theft, and jungle line situations that are not on an easement or in the ROW. The project would have an immediate
37 benefit because it would prioritize the found problems by size leak or pipe, location, and neighborhood/commercial benefit. The work would be performed by a third-party contractor. 11. New modular reuse wastewater treatment process for Kagman Homesteads ($4 million) a. Kagman does not have a working on-site treatment facility for any part of the homestead. Every property relies on septic systems. A recent hydraulic report monitoring certain elements, minerals and contaminants in the groundwater determined that the Kagman area was being affected by a high percentage of nitrates primarily due to septic systems. This is a problem that will eventually need to be addressed. The focus of the proposed modular process from Upflow Sludge Blanket Filtration Clarifier System is that its compact, low cost to operate, low labor requirement, and produces reuse quality effluent for recharge and irrigation if needed. 12. Design and implementation of CHCC-operated financial management and logistics system ($500,000) a. Implementation of a CHCC operated financial management system independent of the CNMI government will enable the Corporation to better manage its resources and assets during disasters, recovery, and routine operations. The system will also be inclusive of warehouse and supply-chain management. 13. Main and secondary road improvements at Saipan International Airport ($5 million) a. This project would repave the roads leading around the airport property and add needed signage for highways. 14. Construction of Route 323 – Industrial Drive Road ($6.5 million) a. This project will see the construction of 1.1 miles of road, with widened roadway, drainage, ponding basins, road signage and a weigh station. Route 323 services the Port of Saipan, which is the main point-of-entry for all goods and significant supplies for the island. Since this road serves as the main entry for shipping containers originating from the mainland U.S. and Asia, a weighing station facility will be included to monitor and enforce weight limits of containers hauled on Saipan’s roads. Additionally, plans are underway for the Port to serve as a second point-of-entry for the CNMI’s tourism market through the accommodation of cruise ship lines, making this project economically significant, with potential to expand the CNMI’s tourism industry. 15. Expand lower base sewer project ($2 million) a. This project would eliminate old sewers and two lift stations, helping to decrease annual operational and maintenance costs. 16. Document scanning and imaging project ($300,000) a. The CNMI Department of Revenue and Taxation faces challenges safeguarding confidential paperwork and finding available storage space for it. It is imperative to image these records and files into digital form to preserve these tax documents for future access. This project will include the costs of scanners, data storage, and the cost of an off-site location of these data. 17. Sugar Dock revitalization and enhancement project ($2.7 million) a. Sugar Dock only serves as a favorite location for local residents but it caters to commercial fishermen and recreational boating and sports businesses, serving as a primary launching point. It also serves as a secondary port of entry between the
38 islands, facilitating economic activity through the transshipment of goods. Ferry services, once offered through this port, can re-emerge and flourish with the revitalization of this dock. This will move people throughout the islands in a time when the U.S. military plans on re-establishing its presence on Tinian through the construction of the Tinian Divert Airfield, Tinian Harbor project, and numerous capital improvement projects. The investment will guarantee long-term benefits in terms of providing critical mobility between the islands, biosecurity in commercial fishing, and increased recreational activities for the community and for investors. Adding a port of entry will also increase resiliency. 18. Northern Marianas sports facilities ($5 million) a. Northern Marianas Sports Association envisions its national federation members becoming close working partners with Northern Marianas College to develop various training programs both for athletes and for sports-industry professional development. 19. Architectural/engineering design and construction of the COTA fixed route bus transfer stations ($900,000) a. This project will include the construction of bus lanes, canopies, lighting, pedestrian crosswalk, sidewalk, seating, passenger information, bicycle storage and other features. As for the Kagman Bus Transfer Station, it will be modest in size and it will be situated at the vicinity of the New Kagman Supermarket/Proposed Public Park. The Kagman Station (park-and-ride concept) will include A/E design and construction of canopy, seating, passenger information, bicycle storage, limited parking spaces and other features. 20. Runway resurfacing ($22 million) a. This project involves the replacement of two inches of asphalt of the entire runway surface in order to meet FAA standards for life expectancy.
Hawaii
The Hawaii 2016-2020 CEDS categorizes objectives and action plans according to prioritized industry clusters. Below are those clusters, as well as specific objectives and actions intended to advance their development.
Hospitality and Tourism • Objective: Improve local infrastructure to accommodate and balance the needs of visitors and residents o Monitor local infrastructure o Assist other counties in building capacity to service international flights o Provide eco and green tourism opportunities aligned with community input • Objective: Perpetuate local expertise and cultural harmony o Capitalize on Hawaii’s strengths to enrich the experience and lives of guests and residents o Recognize and edify the rich resource of practitioners aligned with multi-cultural values, arts, and practices by creating a Living Legends program to stimulate local enterprises o Compile and showcase Living Legends
39 • Objective: Educate residents and guests about the law and spirit of aloha o Reach out to residents and guests through tourism and social media channels o Display the Law of Aloha on all flights/cruise ships into Hawaii o Link on all visitor websites • Objective: Redefine and diversify Hawaii as a destination of choice o Support the Hawaii Tourism Authority in its initiatives to transform the meetings and conventions market by producing a marketing video that features advantages and significant value o Identify new tourism markets o Support the effort to attract more national and international conferences
National Security • Objective: Redefine and diversify Hawaii as a destination of choice o Expand research opportunities with federal national security partners and agencies o Increase local procurement of federal contracts, goods, and services o Strengthen local business capacity to secure federal contracts o Build awareness of opportunities and the process of doing business with military • Objective: Expand workforce pipeline o Align educational pathways with national security needs in Hawaii o Support and develop training programs for local residents • Objective: Foster healthy relations between military and local communities o Improve community engagement and education about military o Broaden collaboration o Organize community awareness and education on the value of the military and affiliated branches o Develop plan for building relationships between community and military
Healthcare • Objective: Invest in telemedicine to improve access to and complement existing healthcare services; support business development o Increase access to a broader array of quality services o Identify the location and type of telemedicine services that would be most significant to a community o Expand telemedicine hubs • Objective: Attract and maintain an adequate number and array of physicians and health and wellness practitioners o Conduct a survey on the challenges of attracting and maintaining physicians and health practitioners in Hawaii o Create incentives to attract and retain physicians and health and wellness practitioners o Promote healthcare as a viable career pathway o Promote the benefits of practicing in Hawaii o Expand healthcare academies in public schools • Objective: Promote technological innovation and entrepreneurship in healthcare and wellness o Collaborate with academic, public, and private sectors to identify needs and
40 opportunities for innovation o Convene and establish a Statewide Steering Committee to coalesce data and align opportunities o Create a healthcare accelerator o Organize healthcare start-up events o Work with the University of Hawaii Innovation Initiative and the Aloha + Challenge • Objective: Promote enterprises that inspire a lifestyle of wellness o Increase understanding of the value of wellness among residents o Brand Hawaii as a wellness destination o Publicize wellness services
Research, Innovation, and Technology • Objective: Provide a supportive environment for research and innovation and the transfer of technology to spur economic growth o Enlist the support of policymakers, educational administrators, and others to provide the facilities, resources, and incentives that nurture and enable research, innovation, and technology o Create hands-on career pathways for students, which may include workforce opportunities in line with the Aloha + Challenge Green Workforce and Education goals • Objective: Adopt meaningful community engagement with research and innovation o Work with the Hawaii Business Roundtable to leverage support from the public and private sectors to link investors, entrepreneurs, and companies with resources to develop innovations and technologies into viable businesses o Convene community forums in every county to determine how research and innovation will provide benefit to the community o Utilize a variety of communication channels to inform the community about the value of research and innovation and the people who conduct the work o Publicize the research at Hawaii’s institutions • Objective: Expand Science, Technology, Education, and Math (STEM) pathways o Work with educational institutions of all levels to expand STEM curricular and opportunities for students to engage in STEM o Work with children and youth groups (e.g., 4-H, Boys and Girls Clubs, Girl Scouts) to offer STEM activities in their programs • Objective: Encourage businesses to provide mentors to schools and informal student programs on entrepreneurship o Provide awards and recognition to outstanding mentors and student entrepreneurs • Objective: Ensure adequate bandwidth throughout the state o Lay broadband cable • Objective: Provide business support services o Develop services that respond to needs at all stages of business growth o Support services that cover mentoring, publicity (marketing), and capital o Continue to develop an investor pool and local projects to be invested in • Objective: Develop and grow the technology industry to help businesses flourish o Develop and manage a network of incubation services and facilities for
41 technology companies o Assist technology companies in raising start-up capital o Provide business development services for businesses in the technology sector
Agriculture and Food Production • Objective: Expand market reach of local producers to institutions and the military o Align existing and new policies and procedures o Assist farmers and retailers to achieve food safety certification • Objective: Increase access to agricultural lands with affordable, long-term leases and necessary infrastructure o Increase the number of agriculture parks o Maintain and repair state agriculture irrigation systems • Objective: Grow the next generation of farmers and entrepreneurs in agriculture, aquaculture, and mariculture o Expand outreach and technical and business assistance o Create incubator/accelerator sites and programs for emerging farmers and entrepreneurs o Create and strengthen agriculture, aquaculture, and mariculture entrepreneurial pathways in schools and in organizations serving youth o Support food trucks, farmers markets, agri-tourism, aqua-tourism, and other forms of entrepreneurism o Create greater awareness of the agriculture, aquaculture, and mariculture career fields o Develop partnerships between industry and academia to recruit and prepare students for careers in agriculture, aquaculture, and mariculture • Objective: Develop meaningful forums for listening and sharing with the community on agriculture, aquaculture, and mariculture entrepreneurship o Regularly inform the community about the changing landscape of agriculture, aquaculture, and mariculture o Promote understanding of the science and economics of agriculture, aquaculture, and mariculture o Convene a millennial conference on the future of agriculture, aquaculture, and mariculture • Objective: Support pest prevention, control, and management o Increase number of agriculture inspectors o Increase funding for these initiatives o Conduct research on most effective technology and practices • Objective: Invest in and subsidize infrastructure to revitalize agriculture, aquaculture, and mariculture o Use technology to enable more affordable practices o Increase number of and access to processing, handling, and production facilities o Increase number of and access to livestock slaughtering, processing, and finishing facilities o Explore programs for sharing resources among farmers o Encourage efficient distribution systems to move food to market • Objective: Increase demand for, supply of, and access to locally grown foods
42 o Expand and improve branding and labeling programs to identify local foods o Support consumer education programs
Energy • Objective: Utilize a full portfolio of renewable energy resources o Align policies and processes o Accelerate the adoption of storage o Support research and development in new technologies • Objective: Expand energy efficiency and sustainable practices o Invest in more forms of public transportation o Create incentives for energy efficient behavior and practices at home and in workplaces o Optimize the use of waste for energy production • Objective: Improve awareness and understanding about energy resources and practices among homeowners, businesses, and government o Increase investment in ongoing community-based energy education o Employ multiple partners in delivering outreach and education • Objective: Update the electrical grid infrastructure o Establish partnerships and capital to build, maintain, and enhance infrastructure
Manufacturing • Objective: Increase the number of, and foster stronger partnerships between, Small Business Innovation Research (SBIR) companies and federal labs with the intention of bringing more resources and knowledge to technology and manufacturing companies in Hawaii o Support programs that cover the entrepreneurial aspects of manufacturing o Support and create initiatives such as the Hawaii on the Hill Initiative to provide national exposure to manufacturers of Hawaii products • Objective: Focus on revenue growth by expanding into new markets locally, nationally, and internationally to be more globally competitive o Continue to work with the Chamber of Commerce of Hawaii on increasing the voice of the manufacturing industry in Hawaii o Evaluate and assess barriers to markets outside of Hawaii and develop strategies to support innovative solutions and actions to address the barriers (i.e. Jones Act, land use policies, and tax reform affecting manufacturers) o Provide support for manufacturers with a focus on prototyping and 3-D printing • Objective: Reduce costs and increase workforce competency for Hawaii’s manufacturing industry o Work with the appropriate organizations as well as private education providers on training Hawaii’s manufacturing workforce by leveraging both federal and state training programs o Develop a system of engagement between the education, research, development, training, and manufacturing stakeholders to solve problems
Creative Industries • Objective: Invest in innovative and emerging technologies to allow Hawaii’s creative
43 products to better compete in the global market o Establish creative lab accelerators o Establish a creative media fund to support Hawaii-based content development across multiple disciplines and platforms o Leverage tourism marketing resources to advance broadcast, web, and mobile channels showcasing Hawaii’s creative clusters o Support the creative sector to position Hawaii as a cultural creative hub • Objective: Continue building public-private partnerships in digital media and film o Build on, reinforce, and expand on the telling of Hawaii’s history to inspire creative business development solutions based on multicultural integration o Establish policies to support creative media infrastructure development o Strengthen collaborations with film, music, tech, and new media industries • Objective: Continue the development and fostering of new ideas, content, and local talent o Work with local programs that foster the growth of Hawaii’s middle school and high school digital media and recording programs • Objective: Develop and grow the creative industry sector in Hawaii by increasing access to business mentors, increasing export/distribution, building workforce expertise, and providing facilities o Continue to provide mentoring and access to market specific decision-makers, investors, and distribution outlets o Continue workforce development programs to prepare students for creative industry jobs o Continue to provide accelerator programs for creative industry start-up projects o Continue to support maintenance and development of facilities
44 Evaluation Framework
Below is a list of indicators that can measure the impact of actionable items identified in the previous section of this report. The performance metrics are critical to tracking the success of the various recommended actions and gauging the return on investing in them. Given the inconsistency among the jurisdictions on the collection of data, PBDC intends to work with each jurisdiction to develop a uniform and implementable evaluation framework.
Measures identified in CEDS for regional jurisdictions include: 1. Gross domestic product; 2. Jobs created or retained; 3. Investment; 4. Unemployment rate; 5. Per capita income; 6. Revenues from major export industries; 7. High school graduation rates; 8. College graduation rates; 9. Diversification/number of industries; and 10. Consumer spending.
On the following pages are data sets for all jurisdictions pertaining to gross domestic product, per capita income, and consumer spending, derived from the federal Bureau of Economic Analysis.
45 GDP:
46 GDP Growth:
47 Per Capita Income:
48 Consumer Spending:
49 Economic Resilience
Building resilience to external shocks, such as natural disasters, the exit of a significant employer, or the impacts of climate change, is a critical component of any economic development strategy. The process involves anticipating risk, evaluating how the risk can impact key assets, and creating a mitigation plan.
Because of its isolation, exposure to natural disasters, and dependence on foreign markets and powers, the U.S. Pacific Islands Region is particularly vulnerable to external disturbances. Due to transportation challenges, there is little probability of redundancy, particularly of economic infrastructure. Therefore, it is critical to develop strategies that ensure a quick and collaborative recovery from external shocks.
Examples of past shocks include:
• Federal legislation or administration action. The denial of H2-B visas for Guam, the cap on the CW program for the CNMI, and the imposition of the federal minimum wage in the CNMI and American Samoa made considerable economic impacts. • Fluctuations in global tourism. Economies that depend heavily on tourism are greatly affected by acts of terrorism, such as the toppling of the World Trade Centers in 2001 and North Korea’s threats to Guam and Hawaii in early 2018, as well as other unanticipated threats to national and global security that cause a reduction in travel. • Collapse of a significant employer. Tuna processing is the basis of American Samoa’s economy; the closure of a major cannery in 2009 was a significant blow. There are concerns about the possible departure of StarKist, the last remaining cannery. • Extreme weather events. Natural disasters have broad and far-reaching economic implications. In 2018, Cyclone Gita caused $186 million worth of direct and indirect damages to American Samoa. Later that year, Super Typhoon Yutu struck Tinian and Saipan, destroying infrastructure and thousands of homes; the cost of damages is still being calculated, but estimated to exceed $800 million. Natural disasters that occur within source markets for its tourism industry also have negative consequences for regional economies.
Resilience is characterized by an economy’s capacity to weather events like these and others. There are two separate but equally important methods for establishing resilience. The first involves steady-state initiatives—long-term efforts, such as diversifying an economic base, building a workforce that can move between jobs, and promoting preparedness among businesses. The second method focuses on responsive initiatives, or developing the capacity of relevant agencies to respond—for example, by defining and delegating responsibilities, establishing a process for regular communication, and synchronizing recovery plans.
Presently, efforts to build resilience in the region are focused on five primary areas: infrastructure maintenance and improvement, disaster preparedness, renewable energy, invasive species management, and climate change. Among the region’s advantages in this endeavor are cultural resilience to globalization and indigenous knowledge that values the environment as a self-sustaining unit of interconnected and interdependent parts.
50 Infrastructure Maintenance and Improvement
Infrastructure is a considerable challenge for remote places. A failure to maintain and upgrade it regularly increases an economy’s vulnerability to the impacts of a natural or manmade disturbance or disaster. As territorial governments seek to strengthen the resilience of their economies in anticipation of rising seas and increasingly intense storms, infrastructure upgrades are of critical importance.
In Guam, the anticipated relocation of 5,000 Marines from Okinawa by 2025 has energized territorial and federal leaders to address the infrastructure needs of the civilian population and increased number of military personnel and dependents. Guam is also focusing on developing infrastructure for exporting produce and upgrading its hatchery in order to advance the aquaculture industry. There is a plan to develop a Farmer’s Market, providing opportunities for small businesses to market and sell their products, and to create an incubator for food sellers. A proposal to construct a new wharf, estimated to cost $35 million, aims to accommodate economic activity and larger military vessels. Guam’s CEDS prioritizes drainage improvements at two industrial parks, the construction of an esplanade on both sides of the Hagåtña River, an upgrade at two marinas following years of typhoon-related damage and neglect, and a $14 million redesign of power distribution and transmission systems at industrial parks. The latter project will involve moving these systems underground in order to mitigate the impact of severe weather.
In American Samoa, an interagency working group is developing a strategy to strengthen and build additional resilience into key infrastructure systems, including those related to power, water, telecommunications, and, transportation. The initiative is being led by the Governor’s Office and the Department of Commerce. Though the territory faces major challenges in the process of upgrading infrastructure, it also has fully-developed ocean freight systems. These are a legacy of the tuna canning industry and constitute a comparative advantage in the introduction and development of new industries, such as light manufacturing, agribusiness, and aquabusiness. In February 2019, Governor Lolo Moliga appealed to the U.S. Senate Committee on Energy and Natural Resources for an additional $5 million to design a new dock and repair the Ronald Reagan Marine Railway, which facilitates the repair of purse seiners and long liners that offload their catch at Pago Pago. Recent investments in a submarine fiber-optic cable and a $90+ million local fiber-optic network give the territory an opportunity to develop an Information Communication Technology (ICT) industry or a Business Process Outsourcing (BPO) industry and to explore other knowledge-based initiatives, such as telemedicine and e-learning.
Like the other U.S. Pacific Islands territories, the CNMI has aging facilities and equipment that threaten its economic growth. Outdated seaport facilities are a stumbling block for cost-effective inter-island shipping, and impact costs and completion schedules for development projects. Government revenues have long been diverted from infrastructure to other community needs. The territory’s infrastructure development fund, established in 1978, has remained at $27.72 million dollars for 41 years; its contents are now shared between Guam, American Samoa, and the U.S. Virgin Islands. The upcoming relocation of 5,000 Marines from Okinawa to Guam is prompting investment in infrastructure in the CNMI. In November 2018, the CNMI government granted the Department of Defense a 40-year lease for the Tinian airport, paving the way for a
51 new Divert Activities and Exercises facility estimated to cost $21.9 million. The 2019 update to the CNMI CEDS prioritizes funding for replacing passenger loading bridges damaged by Super Typhoon Yutu; storm drain improvements; upgrades to buildings at facilities at Northern Marianas College damaged by Yutu; shoreline enhancements; moving power cables in the tourist district underground; upgrades to the wastewater treatment plant in the northern portion of Saipan; repair of leaks in pipes; improvements to roads and the runway at Saipan International Airport; the revitalization of Sugar Dock; and construction of a fixed bus transfer station. The CEDS also points to a need for the construction of an industrial road to serve as the main entry for shipping containers from the mainland U.S. and Asia.
Comprehensive data is available for Hawaii, where infrastructure is deteriorating to a degree that impedes the state’s ability to compete effectively in the global economy. In 2019, the American Society of Civil Engineers (ASCE) Hawaii Chapter released a Hawaii Infrastructure Report Card that gave an overall grade of D+, with stormwater systems and dams receiving a D- and D, respectively. Ninety-three percent of Hawaii’s dams are high-hazard, which means their failure could result in loss of life or property.
The state’s airports, which serviced 37.6 million passengers in 2018, are in fair condition after being renovated as part of the Department of Transport Airports Division’s $2.7 billion Hawaii Airports Modernization Program, which began in 2013. Roadways are among the most congested in the nation and the ACSE report card identifies a $23 billion gap in funding to address this problem over the next 20 years. State schools have an estimated capital expenditure gap of $88 million. Hawaii has three sites on the National Priorities List for hazardous waste management. Delaying upgrades to infrastructure compounds both cost and risk.
One of the most important federal grants programs addressing infrastructure for the U.S. territories is the Capital Improvement Project (CIP) grants program at the U.S. Department of the Interior’s Office of Insular Affairs. For FY 2018, the Office of Insular Affairs provided infrastructure funding of $6.9 million to Guam, $10.6 million to American Samoa, and $5.6 million to the CNMI. Annually, the current program is capped at $27.72 million. An increase to $100-$200 million should be explored to adjust for inflationary costs incurred since the current program was established in 1978 and to account for current infrastructure needs.
Disaster Preparedness
The U.S. Pacific Islands Region is prone to natural disasters, including coastal erosion, droughts, earthquakes, floods, hazardous materials, high surf, landslides, lightning strikes, soil hazards, tropical cyclones, tsunamis, volcanoes, and wildfires. These have dramatic impacts on small islands with heavily concentrated economies.
Compounding this vulnerability is the heavy regional reliance on imported goods and fuel. There are no large warehousing systems for storing supplies in case of emergency. Parts for repairing infrastructure are not readily available in the region and transportation can take time. Geographic isolation necessitates early identification, coordination, deployment, and tracking of resources to ensure on-time arrival of necessary items.
52 Disaster preparedness involves creating databases of resources and assets, establishing systems for tracking and reporting weather, setting up a communication chain, disseminating evacuation plans, identifying recovery partners, and engaging the community in all of these efforts. One of the most important steady-state strategies for disaster planning is the prioritization of local food, fuel, and energy production. If basic needs are being met by internal sources, external forces become less consequential. Disaster preparedness also involves having a plan for infrastructure restoration, housing recovery, and the quick reestablishment of social services in the wake of an extreme event.
The Pacific Islands have experience recovering from disasters, both recently—examples include Super Typhoon Yutu in October 2018 and the eruption of Kilauea on the island of Hawaii in May 2018—and throughout history. By learning from past mistakes and integrating best practices into current plans, communities can strengthen their resilience to the whims of nature, which have always dictated life in the region. All four U.S. Pacific Islands jurisdictions have FEMA-approved hazard mitigation plans, which make them eligible for disaster-related funding after a disaster declaration. However, they have yet to complete enhanced mitigation plans, which would make them eligible for increased federal funding after a disaster declaration. In order to receive approval for an enhanced plan, each state or territory must demonstrate it has completed a comprehensive mitigation plan and is capable of managing increased funding to achieve its mitigation goals. As of April 23, 2019, only 13 states in the U.S. had received FEMA approval of their enhanced state mitigation plans.
In January 2018, the governments of Guam, American Samoa, and the CNMI opted into the nationwide public-safety broadband network, a system made available through a public-private partnership between AT&T and the First Responder Network Authority (FirstNet), an independent authority within the U.S. Department of Commerce, at no cost to the territories. The network ensures the public safety community has access to a highly secure wireless broadband, facilitating the sharing of information and enhancing the region’s resilience. Currently Docomo Pacific, a Japanese firm selected to deliver the FirstNet network to Guam and the CNMI, is lobbying against the NDAA for FY 2020, which would limit foreign carriers from providing telecommunications services to U.S. first responders and military personnel.
In February 2018, the government of Guam produced a Catastrophic Typhoon Plan, which simulates a Category 5 typhoon and outlines an appropriate response. The report considers a multi-agency approach that includes centers and staff based overseas, such as the Regional Response Coordination Center in Oakland, California and the National Response Coordination Center based in Washington, D.C., as well as field-level operational facilities and staff from the FEMA Incident Management Assistance Team, Joint Field Office, Unified Coordination Group, and Unified Coordination Staff.
The objectives of the Catastrophic Typhoon Plan are as follows:
1. Promote effective land use planning and regulation, as well as public awareness, in order to reduce damage from natural hazards; 2. Improve infrastructure development standards with special attention to mitigating the increasing flood hazard;
53 3. Develop and implement projects aimed at reducing the risk of damage and destruction of existing assets and infrastructure from the full range of natural disasters threatening the territory; 4. Improve building codes and standards, as well as training programs, in order to reduce damage from strong winds, earthquakes, and tsunamis; 5. Develop public information and education programs in order to reduce disaster damage from strong winds, earthquakes, and tsunamis; and 6. Fund related planning projects to strengthen mitigation standards, research, education, and outreach efforts.
The Guam Department of Homeland Security’s Office for Civil Defense updates its emergency response plan annually. The 2014 Guam Hazard Mitigation Plan is a comprehensive assessment of the territory’s particular vulnerabilities and summary of its historical hazard record, which includes both natural disaster and disease, as well as a cross-sectoral and collaborative strategy for disaster mitigation. The territory also takes preemptive measures to increase its resilience. An example is its building code. In light of the island’s location—in a seismically active zone and on a typhoon belt—the government of Guam has adopted and policed a building code far stricter than most U.S. cities, which mandates structural designs that minimize the destructive effects of both earthquakes and typhoons. While the adoption of a stringent building code has reduced the loss of life and property from natural disasters, it has also significantly increased construction costs.
Another example of disaster preparedness planning is the work being done by the American Samoa Coastal Management Program (ASCMP). Key efforts include Geographical Information Systems (GIS) mapping, which allows for sharing information among responders. The GIS unit of ASCMP has, in the wake of Cyclone Gita in February 2018, been collecting data, updating a web portal, and creating a centralized geodatabase for all government agencies. By assessing whether structures were conforming to permit laws, the team achieved the relocation of poorly located businesses and six billboards. The wetlands management team of ASCMP has been conducting outreach in schools, highlighting the importance of protecting wetlands and their surrounding environments through cleanups, planting workshops, and education about conservation. ASCMP was, at the time of the second quarter performance report for FY 2018, creating tsunami evacuation maps in collaboration with the American Samoa Department of Homeland Security and the National Oceanic and Atmospheric Administration.
The CNMI Office of Homeland Security & Emergency Management published its mitigation plan in August 2014. The document seeks to reduce vulnerability to hazards, improve public awareness around land use and planning by mapping hazard-prone zones, improve the insurance industry’s risk management, and promote community-based prevention and preparedness activities. The plan considers climate change and the likelihood of increased typhoon intensity, noting that the estimated potential loss to structures from typhoon intensity is approximately $97 million, plus an additional $230 million in damage to their contents. About 16,000 people, according to these estimates, would potentially be at risk of injury or death. The mitigation strategies laid out in the 2014 plan are intended to save lives and minimize injuries, reduce damage to property and the environment, and ease the financial burden of a disaster.
54 In 2017, the Governor of the CNMI and a regional FEMA representative signed off on the CNMI Catastrophic Typhoon Plan, which simulates a Category 4 typhoon based on Typhoon Soudelor, which struck the CNMI in 2015, and then maps out an appropriate response. The plan acknowledges that the greatest challenges to disaster response in the Pacific region are time and distance, and that the timely transportation of resources and labor is crucial. The planning process undertaken to create both of these documents for the CNMI involved assessing the territory’s particular vulnerabilities and prioritizing inter-agency coordination as a means of increasing resilience to disaster.
Super Typhoon Yutu, which struck in 2018, revealed weaknesses in disaster response. The CNMI’s Planning and Development Advisory Council created a Socioeconomic and Disaster Risk Reduction Taskforce, which began meeting in January 2019. This group aims to produce a final plan by the end of 2020.
The extent to which the State of Hawaii has coordinated its response plans, according to the National Disaster Economic Recovery Strategy, can be instructive for the rest of the region. Through the National Disaster Preparedness Training Center, the Department of Homeland Security/FEMA National Preparedness Directorate delivers training and education.
The state also coordinates with other organizations involved in making communities more resilient. In partnership with the Waikiki Business Improvement District Association, the Center completed a recovery plan for Waikiki, a tourism hub on the island of Oahu. It also has plans to continue pursuing uniformity among response plans, in order to increase the state’s ability to weather all shocks, including diseases, infrastructure failures, terrorism, and malicious cyber- activity.
In May 2016, Honolulu was selected to join the Rockefeller Foundation’s 100 Resilient Cities network, based on its track record as a hotbed of innovation and its commitment to building resilience. The network enables cities around the world to access resources that help them to weather social, economic, and environmental challenges. Hawaii faces many of these, given its aging infrastructure, vulnerability to natural disaster and sea level rise, and large population of homeless people which prompted the governor to declare a state of emergency in 2015. Joining the international 100 Resilient Cities network cements Hawaii’s role as a leader in the global movement to build resilience.
The Hawaii CEDS identifies small businesses as the foremost gap in resilience. Findings show that businesses with 25 employees or less are considerably less prepared for disasters. To encourage small businesses to spend time and resources on emergency preparedness, the CEDS suggests that the government offer financial incentives such as state tax rebates. Other recommended actions include:
• Support funding for programs that offer low-interest disaster loans and technical assistance to small businesses in recovery; • Explore government funding and assistance at the county and state levels that can support recovery efforts; • Expand insurance coverage for small businesses;
55 • Increase participation of small businesses in Community Emergency Response Training (CERT); • Disseminate information pertaining to CERT; • Increase resiliency of utilities and infrastructure including electricity, communication, roads, water, and sewer, which impact small businesses; and • Provide centralized and user-friendly information.
Hawaii also has an Emergency Operations Plan, produced in May 2017, which outlines the state’s vulnerabilities and lists the responsibilities of federal, state, and county governments, as well as non-government organizations and the private sector, in the event of a disaster. Following Hurricane Maria, which devastated the U.S. territory of Puerto Rico in 2017, leaders in Hawaii collaborated with staff at the National Disaster Preparedness Center to learn valuable lessons for application at home. There were additional meetings after Hurricane Harvey, which struck in August 2017, between leaders at Honolulu’s Office of Climate Change, Sustainability & Resiliency and Houston-based disaster preparedness experts about the value of having a long- term recovery plan in order to fully leverage FEMA disaster funds.
In April of 2018, the island of Kauai in the State of Hawaii received nearly 50 inches of rain in 24 hours—the most rainfall ever recorded in the U.S. This disaster prompted officials to issue more calls to action on climate change and the reduction of carbon pollution.
Renewable Energy
Importing petroleum products is not only costly; it can also be an unreliable method of sourcing energy in the event of an emergency. Increasing the region’s capacity to produce its own electricity is an important means of increasing its overall resilience to external shocks, whether a spike in the price of fuel or an extreme weather event that prevents tankers from reaching island jurisdictions. By limiting use of petroleum products, regional jurisdictions can also register a contribution, albeit small, toward global efforts to mitigate climate change. Renewable energy also brings economic opportunity to islands that possess a seemingly limitless supply of sun and wind.
In Guam, an increasing number of residents are installing solar photovoltaic panels. The island’s first commercial solar facility began operating in 2015. According to the U.S. Energy Information Administration, the facility can generate enough electricity to serve 10,000 homes. In August 2018, Guam Power Authority (GPA) signed contracts with two companies to each provide 60 megawatts of solar power generating capacity. Both projects are expected to come online by 2021 and will provide enough electricity for an estimated 24,000 homes. Combined, the three solar power projects are expected to enable GPA to meet Guam’s goal of having 25% of its electricity come from renewables by 2021.
American Samoa has adopted a goal to source 50% of its energy from renewable resources by 2025 and 100% by 2040. In 2016, the island of Ta’u converted to 100% solar photovoltaic electricity generation, and by 2017, 90% of the entire Manu’a island group had followed suit.
56 In mid-2018, the monthly residential electricity rate in American Samoa was more than 2.5 times the average of the 50 states, owing largely to the price of fuel and transportation, but the territory is close to the equator and there is large potential to expand its use of solar energy.
In the CNMI, where most people get their electricity from imported petroleum products, generators and infrastructure are aging. The CNMI government enacted a renewable portfolio standard (RPS) in 2006, which was amended later. The most recent RPS required that 20% of electricity supplies be obtained from renewable resources by 2016, but only if there was a cost- effective way to meet the standard. Progress has been limited. There are active volcanoes in the CNMI, lending it potential to produce geothermal energy.
In the United States and the world, Hawaii is leading the charge for clean energy. In 2015, according to the U.S. Energy Information Administration, the state was importing 91% of the energy it consumed, though it had the fourth-lowest per capita consumption rate because of its mild and tropical climate. The same year, it became the first state in the nation to enact a mandatory Renewable Portfolio Standards requirement to generate 100% of electricity sales from renewable sources by 2045. According to the Energy Resources Coordinator’s Report on the Status and Progress of Clean Energy Initiatives and the Energy Security Special Fund, as of December 2017 targets were being exceeded. That year, solar power provided half of Hawaii’s renewable generation, primarily because of the growth of distributed rooftop solar photovoltaic electricity generation, which has nearly doubled since 2014.
Under HRS 269-96 (EEPS statute), the Hawaii Public Utilities Commission established standards that will maximize cost-effective energy-efficiency programs and technologies. The goal for EEPS is a reduction of electricity consumption by 4,300 gigawatt-hours by 2030.
Hawaii Energy (HE), which serves all of the islands except for Kauai, continues to be a major contributor to the state’s EEPS goals. Hawaii Energy encourages and rewards smart energy decisions which will allow the state to reach 100% clean energy faster and cheaper through energy efficiency and conservation. From July 1, 2018 through March 31, 2019, the program invested over $18 million to reduce greenhouse gas emissions by nearly one million tons.
As of May 2019, Hawaii has 206 LEED certified projects and 231 registered projects. This totals 437 total projects for a gross square footage of over 50.5 million gross square feet. Utilizing less energy and water, LEED-certified spaces save money for families, businesses and taxpayers; reduce carbon emissions; and contribute to a healthier environment for residents, workers and the larger community.
Since 1996, the contracts awarded through the Hawaii State Energy Office total more than $507.1 million, according to a report prepared in December 2017 by the Department of Business, Economic Development & Tourism. Over the lifetime of the contracts, the state is expected to have saved an estimated $1.2 billion on electricity. Hawaii is just one of nine states nationally to eclipse the half-billion-dollar threshold for energy performance contract investment, according to a report published by the Hawaii State Energy Office in July 2019.
57 By November 2018, Hawaii was one of seven states with utility-scale generation from geothermal energy; 3.2% of its net electricity generation came from geothermal sources in 2017, according to the U.S. Energy Information Administration. There are also numerous large solar projects under development or procurement expected to go online in 2019 and more projects scheduled for completion by 2022.
A report released in April 2018 by nonprofit organization Elemental Excelerator found that achieving the goal of 100% renewable energy by 2045 would save Hawaii up to $7 billion, and generate as many as 3,500 jobs.
Increasing the region’s capacity to produce its own energy is a key component of building its resilience to external shocks, as well as ensuring that both the environment and economy will thrive into the future.
Invasive Species Management
The introduction of non-native species can threaten the availability of water and food, impair human health, cause economic damage, and undermine security. Invasive species can have immediate and serious consequences for small, vulnerable islands that rely heavily on their natural resources. Furthermore, the cultural identity of indigenous Pacific people is closely tied to the ecological integrity of the environment. As a result, the impacts of invasive species are widely felt. Increasing the region’s resilience to these impacts involves careful and evolved environmental management, which in turn prepares regional governments and communities to deal with other threats, such as climate change or economic downturn.
According to the National Climate Assessment published in 2018, Hawaii is home to 31% of the nation’s plants and animals listed as threatened or endangered, and less than half its landscapes are still dominated by native plants. A similar picture describes most of the U.S. Pacific Islands.
In 2014, governments from around the region collaborated with the U.S. Department of Defense to produce a lengthy and comprehensive plan now known as the RBP, or the Regional Biosecurity Plan for Micronesia and Hawaii. The RBP was, in part, a response to concerns about the environmental impact of relocating thousands of military personnel from Okinawa to Guam. American Samoa, given its distance from Hawaii and Micronesia, was not included in the RBP. The plan acknowledges Guam as the main transport hub for the rest of Micronesia and Hawaii as a major hub for much of the Pacific Region, including Micronesia. Entry of any pest or disease into either hub could result in rapid movement throughout the entire region. The RBP also acknowledges the interplay between invasive species and other trending issues in the region, including climate change, public health, green development, conservation, food security, and economic growth.
Because there are relatively few entry points in the region, monitoring the transfer of vessels and goods is more feasible than elsewhere in the world. In developing functional biosecurity mechanisms, the region can serve as an international model. The RBP assesses the risks of introducing invasive species to three areas: terrestrial ecosystems, freshwater ecosystems, and marine ecosystems. To mitigate these, it offers biosecurity recommendations such as securing funding, enhancing coordination among and across agencies, focusing on prevention, developing
58 early detection and rapid response mechanisms, monitoring and tracking species, eradicating where feasible, promoting education and outreach, supporting research, designing and implementing policy, and restoring damaged habitats.
In 2016, the U.S. Territories Invasive Species Coordinating Committee—a body of representatives from territorial governments, including American Samoa—signed a Memorandum of Understanding committing its signatories to the prevention, eradication, and control of invasive species as well as the protection and restoration of natural and cultural resources from their detrimental effects.
The same year, the Governor of the CNMI established the CNMI Invasive Species Council comprised of representatives from the departments of Lands and Natural Resources, Finance, Commerce, the Bureau of Environmental and Coastal Quality, Northern Marianas College, Commonwealth Ports Authority, Marianas Visitors Authority, and Commonwealth Healthcare Corp., among others. The Council released an Invasive Species Strategy and Action Plan in June 2017, which describes the nature and extent of the invasive species in the CNMI and proposes specific actions to minimize both the threat of new invasive species and the negative impacts of existing invasive species. The document acknowledges that public health, tourism, food security, and self-sufficiency are all under threat and much damage has already been done, most of it irreversible. It outlines the way forward, including such steps as regional coordination, improved data collection, forest restoration, and management of the environmental impact of the U.S. military’s presence in the CNMI.
The CNMI Department of Lands and Natural Resources published an Action Plan for Oryctes rhinoceros 2018-2023, which explains standard operating procedures for eliminating the coconut rhinoceros beetle, recently discovered on the island of Rota, and provides a framework for addressing other invasive species.
In 2017, the American Samoa Invasive Species Task Force (ASSIST) produced a strategy and action plan to guide the management of invasive species in the territory. The plan aims to increase awareness of the critical threat invasive species pose, encourage collaboration in minimizing the threat, and improve decision-making by sharing data and information. The report identifies the following goals:
1. Enhance the capacity of the government and partners to take urgent action by reviewing the legal framework, developing new legislation, encouraging collaboration across and among agencies, harmonizing plans with other regional bodies, and promoting education and outreach. 2. Enhance the capacity of the committee, government, and community to make informed, science-based decisions about managing invasive species. This will involve monitoring the list of concerning species, conducting assessments of priorities (using both science and traditional knowledge), and sharing data through both tangible and digital databases. 3. Prioritize prevention and develop early detection protocols to deal with invasive species. This will involve conducting a risk assessment; implementing a wide range of biosecurity measures at points of entry, along priority pathways, and in already impacted areas; and establishing a monitoring and reporting network.
59 Because red fire ants were estimated to cost Hawaii an annual $211 million and brown tree snakes an estimated $2.14 billion, collaboration between federal, state, and county agencies led to the publication of a comprehensive biosecurity plan in December 2016. The Hawaii Interagency Biosecurity Plan 2017-2027 encourages better coordination among industries and agencies, renewed focus on human health impacts, enhanced control of established pests, increased staff and inspections for inter-island travel, import substitution programs to support local food production, and outreach activities. It also acknowledges the importance of reaching and maintaining agreements with other jurisdictions, maintaining inspection facilities, and providing the Department of Agriculture with the authority and staff to inspect non-agricultural items.
Climate Change
There is international, regional, and scientific consensus that climate change is a priority-level concern for the global community, and that for oceanic nations the matter is especially pressing. Rapid warming of the atmosphere and oceans is causing sea level rise that threatens development and food security; this is particularly true for low-lying nations with narrow economies. Recent studies estimate that up to 3.2 feet of global sea level rise could occur as early as 2060 and that it is plausible for the sea to rise more than six feet by the end of the century, according to a Sea Level Rise Vulnerability and Adaptation Report prepared by the Hawaii Climate Change Mitigation and Adaptation Commission. This kind of change will make the already vulnerable region more prone to coastal flooding, erosion, and erratic weather patterns that affect food security. Rising sea temperatures also herald increasingly intense storm events. The region is taking this concern seriously and adapting laws, processes, and practices as a means of increasing the resilience of the Pacific Islands to climate change.
The U.S. Global Change Research Program announced the release of Volume II of the Fourth National Climate Assessment in November 2018. Until recently scientists have believed that by 2100, increases of between one and four feet in global sea level are very likely, with higher levels than the global average occurring in the U.S. Pacific Islands. New research detailed in the National Climate Assessment shows that without reductions in global greenhouse gas emissions, the previously predicted level could more than double.
Chapter 27 of the report, which focuses on the U.S. Pacific Islands region, warns that rising temperatures, changing rainfall patterns, sea level rise, and an increased risk of extreme drought and flooding are threats to water supply, terrestrial habitats and the goods and services they provide, coastal communities, fisheries and coral reefs, and indigenous peoples and knowledge. One likely impact is a change in farming methods that could lead to an increased dependence on imported food of little nutritional value. This is a priority public health concern, given Pacific Islanders have the highest rates of obesity and diet-related diseases in the region.
Indigenous cultures are resilient, and their resilience has enabled island communities to survive several millennia. These communities have weathered extreme events and responded to change through adaptive mechanisms based on traditional knowledge that has evolved over many generations. This knowledge is helpful in adaptation efforts because it builds on intergenerational sharing of observations of changes in climate-related weather patterns, ocean phenomena, and phenology. In addition to renewed efforts to preserve and perpetuate this
60 knowledge, there is a regional focus on policies that ensure sustainable resource management. Marine-managed areas, such as those designated under the Micronesia Challenge and the Papahānaumokuākea Marine National Monument in Hawaiii, demonstrate a commitment by multiple partners to conserve marine resources.
Early intervention includes taking steps now to bolster infrastructure, such as redesigning areas to allow for periodic inundation and flooding, reverting natural areas to facilitate a return to original drainage patterns, and building social networks to take immediate actions and plan future responses. Social cohesion is already strong in many Pacific Island communities. The Pacific Islands Climate Change Cooperative (PICCC), a conservation alliance comprised of local, state, federal, indigenous, and non-governmental member organizations from the U.S.- affiliated Pacific Islands, produced a climate change adaptation report in 2017 to guide planning and decision-making in the region.
The report recommends the following as pillars of any planning strategy:
1. A focus on zoning and land-use planning so as to minimize future impacts of coastal flooding and erosion; 2. Scenario planning for forest and watershed management, given prevailing concerns about how climate change will impact precipitation patterns and stream discharges and therefore affect municipal water supply and agriculture; 3. Prioritization of managing coral reef and marine systems, as these are the most vulnerable of ecosystem classes to the near-term effects of climate change; 4. Widespread outreach and education; 5. An emphasis on renewable energy and energy efficiency, in order to mitigate as well as adapt to climate change; and 6. Commitment to food security, which involves assessing the vulnerability of current crops and fish stocks, as well as identifying potential crop alternatives and fishery conservation measures. Food security is a central tenet of adaptation efforts; this is particularly true in the region, where many people continue to live subsistence lifestyles. Many indigenous people possess inherited knowledge about the environment and a sense of collective responsibility for its stewardship and management.
According to the PICCC report, at climate change adaptation workshops in CNMI, Guam, and American Samoa, the following near-term actions were identified as priorities for regional jurisdictions:
1. Create full-time climate coordinator positions; 2. Integrate climate change into job descriptions within government agencies; 3. Build GIS capacity to better assess vulnerabilities; 4. Sustain natural infrastructure like coastal mangroves, wetlands, and natural drainage systems since manmade infrastructure can put undue pressure on natural resources; 5. Design environmentally sound buildings and infrastructure; 6. Climatize existing programs, plans, and projects by building capacity within and across local agencies; and
61 7. Incorporate climate change language amendments into existing statutes and administrative rules.
The American Samoa Department of Commerce produced a Territorial Climate Change Adaptation Framework in August 2012, which acknowledges the territory’s particular vulnerabilities, among them limited size, limited landmass, high population density, continued population growth, isolation and high transportation costs, limited natural resources, stressed ecosystems, and limited available funding. Already the territory is facing the loss of coastal lands due to increased erosion caused by sea level rise, the degradation of coral reef systems due to changes in water temperatures and acidity levels, an increased dependence on off-island food sources due to a projected decrease in local food production as a result of changes in rainfall patterns, severe storm systems, higher rates of pest infestation, and decreases in near-shore fish stocks. All of this impacts not only the environment but also public health and the economic potential of vulnerable industries, including tourism, agriculture, recreation, commercial fishing, and exports of natural resources. To address these realities, the report identifies four main priorities:
1. Coral reef and mangrove ecosystem management, which involves raising awareness about climate change among youth, improving solid waste management, and encouraging environmental stewardship. 2. Consideration of human settlement and infrastructure, which involves updating energy systems, conducting assessment audits on existing buildings and enforcing revised building codes, and implementing a coastal hazard assessment. 3. Prioritization of human health, in and through developing response plans for natural disasters, increasing the participation of youth in policy planning, and integrating climate change education into school curricula. 4. Management of agriculture, forestry, and water resources, which involves promoting agro-forestry, improving education and outreach, and teaching farmers to use more sustainable practices.
The government of American Samoa is prioritizing environmental management as a means not only to adapt to climate change but also to propel economic growth. For example, the American Samoa Coastal Management Program (ASCMP) sponsors the Fautasi Coastal Challenge Village Ecotourism project, which assesses the potential of developing an ecotourism industry by encouraging coastal stewardship.
In August 2019, Guam Governor Lou Leon Guerrero signed an executive order establishing the climate change resiliency commission, a mechanism for coordinating the territorial government’s response to climate change. The commission’s mandate is to achieve data-based outcomes in eight key areas: energy, water resources, ocean and land resources, infrastructure and community resiliency, development planning, food security, public health and safety, and greenhouse emissions. Members have yet to be appointed.
Hawaii has also prioritized climate change adaptation. A University of Hawaii study took into account factors such as topography, underwater landscape, erosion, and wave energy, then
62 concluded that, as sea levels rise and storms intensify, one-third of the state’s shorelines are moderately to highly vulnerable to coastal flooding. The findings were published in July 2018.
In 2017, the Hawaii Climate Change Mitigation and Adaptation Commission produced the Sea Level Rise Vulnerability and Adaptation Report to assesses the state’s vulnerability to sea level rise. The report also makes some pertinent recommendations for reducing the jurisdiction’s sensitivity to coastal flooding and increasing its capacity to adapt accordingly. Over the next 30 to 70 years, coastal flooding is projected to impact approximately 6,500 structures and 19,800 people in certain areas, particularly on Oahu, the state’s urban center. This kind of damage would render more than 25,800 acres of land unusable; the estimated value of these impacts exceeds $19 billion, according to the 2017 report.
The report makes the following recommendations to guide planning:
1. Support sustainable land use and community development; 2. Prioritize smart urban redevelopment outside the Sea Level Rise Exposure Area (SLR- XA) and limit exposure within it; 3. Incentivize improved flood risk management; 4. Enable legacy beaches to persist with sea level rise by setting aside funding for land acquisition and beach restoration, which may include realigning roads and other structures or nourishing sands; 5. Preserve Native Hawaiian culture and communities with sea level rise by developing protocols to manage cultural assets and creating a mitigation strategy in consultation with Native Hawaiian communities; 6. Protect nearshore water quality by reviewing existing laws, regulations, and best management practices, as well as crafting and implementing new laws, regulations, and best management practices; 7. Develop innovative and sustainable financing and incentives to support adaptation to sea level rise; 8. Support research, assessment, and monitoring; and 9. Promote collaboration and accountability, given adaptation will require difficult decisions and the input of many agencies and sectors.
63 Going Forward
It is vital that all the jurisdictions in the U.S. Pacific Islands Region work collaboratively to build their strengths, overcome their weaknesses, and increase their levels of resiliency to disaster. Over the next 12 months, the Pacific Basin Development Council will be working on developing and enhancing mechanisms to facilitate the kind of collaboration necessary for achieving managed economic growth in the region.
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