One year ago today, on May 3, 2018, Kilauea volcano on Hawaii Island began spewing lava that destroyed hundreds of homes and disrupted thousands of lives in areas that had been designated high-risk lava zones. On May 20, 2018, Grassroot Institute of Hawaii President Keli’i Akina wrote in The Wall Street Journal about how Hawaii legislators created the incentive for people to live in those zones, by tinkering with market forces and introducing a grave moral hazard. Click here to read the Wall Street Journal version, or see the full article below.
Lava flows from the Hawaiian volcano Kilauea have destroyed at least 26 homes and disrupted thousands of lives in the past two weeks. Reading this news, you might wonder why some Hawaii residents have chosen to live at the foot of an active volcano. The strange truth is that the state government encourages them.
Kilauea, located on the southeast side of the Big Island, is one of the most active volcanoes in the world. In geologic terms, it has been continuously erupting since 1983, when a lava flow destroyed 16 homes in a subdivision called Royal Gardens. Seven years later, what remained of the town of Kalapana was flattened by another Kilauea eruption, which ended up burying more than 100 homes, a church and a store.
The destruction caused in the early 1990s cost private insurers millions of dollars, prompting them to stop insuring property in the most vulnerable areas, called Lava Flow Hazard Zones 1 and 2. The market had efficiently determined that there was too much risk in living close to Kilauea. Had that thinking prevailed, the current eruption might have done far less damage.
Unfortunately, the Hawaii state government stepped in. In 1991 the legislature created the nonprofit Hawaii Property Insurance Association, which provides policies to people who can’t buy them on the market. But private insurers are forced to join the HPIA as a condition of doing business in the state. They split the HPIA’s expenses, profits and losses in proportion to their market share. In essence, Hawaii law requires all private insurers to pool their resources to subsidize policies in Lava Zones 1 and 2.
Ordinarily, people would be hesitant to build homes in a place that’s too hazardous to insure, but here the Legislature’s actions created incentives. The result was a housing boom on the edge of an active volcano. By 2008 there were more than 2,400 HPIA policies in the area, providing more than $700 million of insurance to the highest-risk lava zones in Hawaii.
Over the past week, about 2,000 people have had to evacuate the small subdivision of Leilani Estates as 19 different volcanic fissures opened in the ground. Residents have had to contend with earthquakes, lava, noxious gases and fire. Some chose not to insure their homes, because even with the help of the HPIA, lava insurance isn’t cheap. Others are trying to cope with the need to be covered for earthquakes and fire, too. Many wonder whether they will have a home to return to at all.
The state Legislature’s failure isn’t only economic—it’s moral. Hawaii’s lawmakers put citizens in danger by giving them an incentive to live in an area that the market had deemed too risky to insure. The families who have lost their homes have been ill-served by their representatives. After this disaster is over, Hawaii’s leaders should wind down the HPIA. This will allow natural price mechanisms to provide valuable, even humanitarian, information regarding the areas in Hawaii that are simply too dangerous to build in.
Mr. Akina is president and CEO of the Grassroot Institute of Hawaii.
Kilauea Volcano, iliyoanguka mnamo Mei 3, 2018, iliharibu nyumba na kuharibu maisha ya maelfu ya watu katika maeneo yaliyoorodheshwa kama maeneo ya hatari ya lava. Rais wa Taasisi ya Grassroots ya Hawaii, Keli Akinda, aliandika katika jarida la The Wall Street Journal mnamo Mei 20, 2018 jinsi wabunge wa Hawaii waliunda motisha kwa watu kuishi katika maeneo hayo, kwa kuingilia nguvu za soko na kuanzisha hatari kubwa ya maadili. Bonyeza hapa kusoma toleo la Wall Street Journal, au angalia makala kamili hapa chini. Mvua ya lava kutoka volkano ya Kilauea nchini Hawaii imeharibu nyumba 26 na kuharibu maisha ya maelfu ya watu nchini humo. "Kama unaona, unaweza kuwa na wasiwasi kuhusu nini hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa hawa """"" Ukweli wa ajabu ni kwamba serikali ya jimbo inawatia moyo. Kilauea, iliyo upande wa kusini-mashariki wa Kisiwa Kikuu, ni mojawapo ya volkano zenye utendaji mkubwa zaidi ulimwenguni. "Kutokana na hali ya hewa, eneo hilo limekuwa likiporomoka tangu mwaka 1983 wakati lava ilipoharibu nyumba 16 katika eneo la ""Royal Gardens.""" Miaka saba baadaye, mji wa Kalapana uliharibiwa na milipuko ya Kilauea, na nyumba zaidi ya mia moja, kanisa na duka zikateketezwa. Uharibifu huo uliosababishwa na mafuriko ya lava uliwafanya wajasiriamali wa kibinafsi wawekee mamilioni ya dola, na kuwafanya waache kuwahakikishia mali katika maeneo yaliyoathiriwa zaidi, yanayoitwa Lava Flow Hazard Zones 1 na 2. Soko lilikuwa limedokeza kwa usahihi kwamba kulikuwa na hatari kubwa sana ya kuishi karibu na Kilauea. Ikiwa kufikiri hivyo kungekuwa kumetawala, mlipuko wa sasa ungeweza kufanya uharibifu mdogo sana. Kwa kusikitisha, serikali ya jimbo la Hawaii iliingilia kati. Mwaka 1991 Bunge la Marekani lilianzisha shirika lisilo la faida la Hawaii Property Insurance Association, ambalo linatoa bima kwa watu ambao hawawezi kununua bima kwenye soko. Kampuni za bima za kibinafsi zinapaswa kujiunga na HPIA kama sharti la kufanya biashara katika jimbo hilo. Wao kugawanya gharama HPIA ya, faida na hasara kwa uwiano wa sehemu yao ya soko. Sheria ya Hawaii inahitaji kampuni zote za bima za kibinafsi kuunganisha rasilimali zao ili kusaidia sera za Lava Zone 1 na 2. Kwa kawaida, watu wangekuwa na kusita kujenga nyumba katika mahali ambayo ni hatari sana bima, lakini hapa hatua za Bunge kuundwa motisha. Matokeo yakawa kwamba nyumba nyingi zilijengwa kwenye ukingo wa volkano iliyokuwa ikifanya kazi. Kufikia mwaka 2008, kulikuwa na zaidi ya mikataba 2,400 ya HPAA katika eneo hilo, ikitoa zaidi ya $ 700 milioni ya bima kwa maeneo ya lava yenye hatari zaidi huko Hawaii. Watu 2,000 wamehamishwa katika eneo la Leilani Estates, baada ya milipuko 19 ya volkano kutokea. Wakazi wamelazimika kukabiliana na matetemeko ya ardhi, lava, gesi zenye kudhuru na moto. Baadhi walichagua kutokuwa na bima ya nyumba zao, kwa sababu hata kwa msaada wa HPIA, bima ya lava si ya bei nafuu. Wengine wanajaribu kukabiliana na uhitaji wa kufunikwa kwa tetemeko la ardhi na moto, pia. Wengi wanajiuliza ikiwa watakuwa na nyumba ya kurudi. Kushindwa kwa Bunge la Jimbo si kiuchumi tu bali ni kimaadili. Wabunge wa Hawaii waliwaweka raia katika hatari kwa kuwapa kichocheo cha kuishi katika eneo ambalo soko lilikuwa limeona kuwa hatari sana kuwahakikishia. Familia ambazo zimepoteza nyumba zao zimetumiwa vibaya na wawakilishi wao. Baada ya msiba huu kumalizika, viongozi wa Hawaii wanapaswa kuondoa HPIA. Hii itaruhusu utaratibu wa bei ya asili kutoa habari muhimu, hata ya kibinadamu, kuhusu maeneo ya Hawaii ambayo ni hatari sana kujenga. Akina ni Rais na Mkurugenzi Mtendaji wa Taasisi ya Grassroot ya Hawaii.