The Inter-regional Economic Impact of the Reduction in Tourism Following the Maui Wildfires

What the paper says

Hawai‘i’s economy, heavily specialized in tourism, is particularly vulnerable to shocks that disrupt tourism numbers. The Maui economy is even more dependent on tourists, and the extraordinary losses from the 2023 wildfires in Lahaina and Kula continue to dampen tourist numbers. To help understand the wider economic effects of the Maui wildfires, we quantify the statewide reduction in tourism spending in 2023 and 2024 and use the inter-county input output tables to construct a model to estimate the corresponding loss in its economic contribution. Our analysis reveals a steep contraction in Maui’s economy and traces negative spillovers from reduced spending on Maui to other counties in Hawai‘i, particularly Honolulu. Relative to the 12-month pre-wildfire baseline, the tourism expenditure shock implies an average employment impact of about 18,000 jobs in Maui County over September–December 2023, narrowing to just over half that magnitude, on average, throughout 2024. In late 2023, travel substitution toward Hawaiʻi Island and Kauaʻi was largely offset by declines on Oʻahu, leaving the total similar in magnitude to Maui alone. In 2024, statewide impacts amounted to approximately 23,100 full-time equivalent jobs and $2.3 billion in output, as the short-term substitution effects dissipate. Although the fires occurred on Maui, up to 28% of losses occur in other counties—predominantly Honolulu—largely through supply-chain linkages. The findings show how supply-chain linkages spread losses across counties, while demand-side substitution across counties provides limited, but temporary, and uneven buffering against these spillovers.