The Change
The U.S. Geological Survey's Hawaiian Volcano Observatory (HVO) has detected significant increases in seismic activity and ground deformation at Kilauea Volcano on Hawaii Island. These elevated indicators suggest that "Episode 40" of the ongoing eruption sequence could commence at any time. While the exact timing and scale remain uncertain, the increased volcanic unrest necessitates an immediate shift from monitoring to preparedness for businesses and property owners in vulnerable areas.
Who's Affected
Real Estate Owners (Hawaii Island) Properties situated within potential lava flow hazard zones, particularly on the south and west flanks of Kilauea, face direct risks from an imminent eruption. This includes potential lava inundation, ashfall, and hazardous gas emissions. Owners of residential, commercial, and agricultural properties in these areas must review and potentially activate their existing disaster preparedness plans. This may involve securing insurance policies, identifying evacuation routes, and establishing communication protocols with tenants or employees. Property managers should also assess critical infrastructure vulnerabilities, such as utility lines and access roads, which could be compromised.
Tourism Operators (Hawaii Island and Statewide Impacts) For tourism operators on Hawaii Island, an eruption poses immediate threats to business continuity and visitor safety.
- Visitor Safety and Itinerary Disruptions: Guided tours to volcanic sites (e.g., Hawaiʻi Volcanoes National Park) may be suspended or rerouted, impacting visitor experiences and revenue. Air and ground transportation could face delays or cancellations due to ash plumes or road closures.
- Accommodation Impacts: Hotels and vacation rentals in areas directly affected by activity or downwind of ashfall may experience cancellations and reduced bookings. Businesses relying on consistent visitor flow must prepare for potential drops in demand.
- Statewide Travel Considerations: While Kilauea is located on Hawaii Island, significant volcanic activity can influence inter-island travel decisions and overall traveler sentiment towards the Hawaiian Islands. Airlines and inter-island ferry services may need to adjust schedules. Visitor concerns about safety could lead to broader impacts on tourism across the archipelago, necessitating proactive communication strategies from all tourism stakeholders.
Investors Investors with holdings in Hawaii Island-based businesses or real estate should anticipate potential short-term economic disruptions. Companies heavily reliant on tourism or local infrastructure could experience decreased revenue. Real estate investors in affected zones may see temporary declines in property values or increased insurance premiums. Portfolio managers should assess the concentration of assets in vulnerable areas and review existing risk mitigation strategies. While past eruptions have demonstrated Hawaii's resilience, immediate volatility is a key consideration.
Second-Order Effects
An imminent Kilauea eruption can trigger a cascade of economic impacts due to Hawaii's isolated and constrained system:
- Disrupted Tourism → Reduced Air/Inter-island Capacity → Lower Visitor Numbers Statewide: Lava flows or ash could close Hilo International Airport (ITO) or impact air quality, leading to flight cancellations. This reduction in capacity, coupled with safety concerns, can dampen demand for travel to all islands, impacting sectors beyond Hawaii Island.
- Infrastructure Damage → Supply Chain Delays → Increased Operating Costs: Road closures due to lava or volcanic hazards can impede the movement of goods and services, increasing transportation costs for businesses statewide. This can exacerbate existing supply chain vulnerabilities inherent to island economies.
- Temporary Business Closures → Localized Job Losses → Reduced Consumer Spending: Businesses directly impacted by the eruption may face closures, leading to temporary unemployment and a reduction in local spending, affecting the broader island economy.
What to Do
Real Estate Owners (Hawaii Island):
- Action: Immediately review and update business continuity and disaster preparedness plans. This includes verifying insurance coverage for volcanic hazards, establishing clear communication channels with tenants/employees, identifying essential utility shut-off procedures, and mapping alternative access routes.
- Timeline: Actions should be initiated within 72 hours, given the critical urgency. Focus on any properties located in or near current hazard zones.
Tourism Operators (Hawaii Island and Statewide):
- Action: For operators on Hawaii Island, revise operational itineraries to exclude high-risk areas and identify alternative attractions. For all operators, prepare customer communication templates addressing potential disruptions, safety protocols, and flexible booking options. Ensure staff are trained on updated emergency procedures.
- Timeline: Contingency plans and communication strategies should be finalized and disseminated to staff within 72 hours. Monitor official advisories from Hawaiʻi Volcanoes National Park and the USGS Hawaiian Volcano Observatory daily.
Investors:
- Action: Assess the direct and indirect exposure of your portfolio to Hawaii Island's economy, particularly within the tourism and real estate sectors. Review risk management strategies for any identified vulnerabilities. Stay informed via updates from the USGS and local emergency management agencies.
- Timeline: A preliminary assessment of portfolio exposure should be completed within the next 14 days. Ongoing monitoring is advised.
