Hawaii has made history by becoming the first state in the United States to implement a “green fee” aimed at protecting the environment and addressing the impacts of climate change. Governor Josh Green signed the fee into law after years of advocating for its passage in the Legislature. Set to go into effect next year, the fee is expected to generate around $100 million annually, with a portion of the revenue earmarked for Hawaii’s response to future disasters like the 2023 Lahaina wildfire.
The green fee, which will be funded by a 0.75 percent increase in the transient accommodations tax (TAT) paid by visitors on their hotel and short-term stays, will raise the state’s TAT to 11 percent. This translates to visitors paying an extra $3 on a $400 room stay. The revenue generated from the fee will be used to make Hawaii’s reefs, beaches, trails, mountains, and other unique environments more resilient to climate change-related challenges.
The fee has received support from key members of the local hotel industry, who recognize the urgent need to address environmental issues to maintain Hawaii’s appeal to tourists. While there have been concerns about potential drops in visitor numbers due to increased fees, industry leaders have emphasized the importance of restoring eroding beaches and removing invasive species to attract and retain visitors.
Despite the general outline of where the green fee revenue will be allocated, the specific projects and beneficiaries have yet to be determined. Governor Green stated that a process to review and select projects will begin in the fall, ahead of the fee collections starting in January. Additionally, the Legislature will play a role in deciding how the money is spent, as the fee will be directed to the state’s general fund rather than a special fund. Green reassured that there will be collaboration to ensure that the green fee dollars are used for their intended purpose of environmental protection and climate resilience projects. State agency heads and the state’s new fire marshal will play a crucial role in determining where funding for climate and conservation efforts will be allocated. This decision-making process is essential in addressing the pressing need for a dedicated source of revenue to support environmental initiatives.
Numerous local conservation organizations, including the coalition Care For ʻĀina Now, have expressed strong support for establishing a sustainable funding mechanism for conservation projects. A recent study conducted by the coalition revealed an annual conservation funding gap in Hawaiʻi of at least $560 million, with the potential for this gap to reach up to $1.69 billion in a worst-case scenario.
One proposed solution to bridge this funding gap is the implementation of an annual green fee, which could generate significant revenue for climate and conservation efforts. Fire Marshal Green has suggested that the revenue generated from the green fee could also be used to secure bonds for larger-scale projects costing hundreds of millions of dollars.
Following the failure of a fee proposal last year, Fire Marshal Green established a climate advisory team to advocate for the approval of the green fee. The team, known as the CAT, conducted interviews with stakeholders from various sectors to assess Hawaiʻi’s vulnerabilities to climate-related events and develop strategies to mitigate these risks.
The CAT’s primary objective was to enhance Hawaiʻi’s resilience to climate impacts by identifying practical solutions to reduce vulnerability. Previous proposals for green fee collection, such as arrival fees for visitors or park-usage fees, faced challenges in terms of enforcement and legality.
This year, the Legislature determined that increasing the Transient Accommodation Tax (TAT) would be the most feasible approach to implementing a green fee. Hawaiʻi became the first state in the nation to approve a green fee, following the lead of countries like Palau and New Zealand.
The approval of the green fee marks a significant milestone in Hawaiʻi’s efforts to address climate change and conservation challenges. By leveraging this dedicated source of revenue, the state can advance critical environmental initiatives and enhance its resilience to climate-related threats.
