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East Maui Water License Auction Looms, Threatening Agricultural Planning

·5 min read·👀 Watch

Executive Summary

The Department of Land and Natural Resources (DLNR) has clarified that proposed East Maui water licenses will be subject to a public auction, not a direct award, shifting long-term water security for agricultural users. Agriculture producers must prepare for competitive bidding and potential shifts in water access.

  • Agriculture & Food Producers: Face uncertainty in water access and increased costs due to potential auction dynamics.
  • Real Estate Owners: May see impacts on agricultural land values and development potential depending on auction outcomes.
  • Investors: Should reassess the risk profile of water-dependent agricultural ventures in East Maui.
  • Action: Monitor DLNR auction announcements and prepare for bidding strategies.

Watch & Prepare

Medium Priority

Ignoring this could lead to missed opportunities to bid on or prepare for a new water license auction, impacting long-term agricultural planning and investment.

Monitor DLNR announcements for the East Maui water license auction. Be prepared to research bidding processes, potential costs, and alternative water strategies if your operation depends on these sources.

Who's Affected
Agriculture & Food ProducersReal Estate OwnersInvestors
Ripple Effects
  • →Increased water license costs → Higher operating expenses for East Maui agriculture → Potential for increased food prices for local consumers and reduced competitiveness for exported agricultural products → Strain on food security and local supply chains.
  • →Uncertainty in water access for agriculture → Reduced investment in agricultural land and infrastructure → Decline in local food production capacity → Increased reliance on imported food, exacerbating supply chain vulnerabilities.
Spectacular aerial view of narrow river flowing among lush tropical trees growing on agricultural fields on sunny day in countryside
Photo by Tom Fisk

East Maui Water License Auction Looms, Threatening Agricultural Planning

The Department of Land and Natural Resources (DLNR) has clarified its approach to East Maui surface water licenses, signaling that a public auction, rather than a direct award, will determine future allocations. This clarification, presented before the Board of Land and Natural Resources (BLNR), means that established agricultural operations and potential new entrants must prepare for a competitive bidding process for water rights that have historically been more stable.

The Change

Previously, there was an expectation that entities like Mahi Pono might receive long-term water licenses directly. However, DLNR has explicitly stated that the current agenda item (D-7) pertains to authorizing a public auction for specific government surface waters in East Maui. This indicates a move towards a more market-driven allocation of a critical natural resource. While the exact timeline for the auction has not been set, this clarification shifts the fundamental understanding of how water access will be secured in the region going forward. Interested parties should anticipate a formal public process, likely involving bids and associated costs, to secure or maintain water licenses.

Who's Affected

  • Agriculture & Food Producers: This is the most directly impacted group. Farmers, ranchers, and food producers relying on East Maui's surface water face immediate uncertainty regarding their long-term water security. A public auction implies that access will likely go to the highest bidder or those who can meet specific criteria set by DLNR, potentially increasing operational costs or even displacing existing users. Those planning new agricultural ventures or expansions will need to factor in the cost and complexity of participating in a water license auction. The potential for increased water costs could also affect the viability of certain crops and livestock operations. Aquaculture operations, also water-intensive, will face similar challenges.

  • Real Estate Owners: Property owners in East Maui, particularly those with land leased for agricultural purposes or with development potential, should be aware of how water allocation changes might affect land values and use. If water becomes scarcer or more expensive for agricultural lessees, it could impact rental income for landowners. Furthermore, areas that previously relied on consistent water access for agricultural use might see shifts in land use suitability, potentially affecting long-term development plans and property valuations, especially for agricultural-zoned lands.

  • Investors: Investors with portfolios including Hawaiian agricultural companies, land trusts, or real estate in East Maui need to reassess the risk associated with water access. The introduction of an auction mechanism adds a layer of financial and operational risk. Investment in water-dependent agricultural businesses will require a more thorough due diligence process, considering the potential for higher water costs and competitive allocation. This regulatory shift could also influence the attractiveness of investing in new agricultural projects in the region.

Second-Order Effects

  • Increased water license costs → Higher operating expenses for East Maui agriculture → Potential for increased food prices for local consumers and reduced competitiveness for exported agricultural products → Strain on food security and local supply chains.
  • Uncertainty in water access for agriculture → Reduced investment in agricultural land and infrastructure → Decline in local food production capacity → Increased reliance on imported food, exacerbating supply chain vulnerabilities.

What to Do

Agriculture & Food Producers: Begin assessing current water usage and dependencies. Research the typical costs and processes involved in water license auctions in other jurisdictions. Engage with DLNR and BLNR to understand the auction parameters as they are developed. Consider forming consortia with other agricultural users to strengthen bidding positions or explore alternative water sources.

Real Estate Owners: Review existing agricultural leases for provisions related to water supply and cost fluctuations. Monitor land values and market trends for agricultural properties in East Maui. Understand how potential changes in water availability might impact the desirability and productivity of your land for future agricultural tenants or development.

Investors: Conduct a thorough review of existing investments in East Maui agriculture, focusing on water security and operational cost projections. Monitor DLNR announcements regarding the water license auction timeline and criteria. Adjust risk assessments for agricultural ventures in the region to account for the new bidding environment and potential cost increases.

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