Hawaiian Home Lands: Economic Waste, Cultural Preservation and Fundamental Reform

The Hawaiian Home Lands program enacted by the U.S. Congress in 1921 placed 200,000 acres of government land in trust for the use of native Hawaiians. This program - now with assets valued at well over $700 million - long ago evolved into a special type of public housing program in which the Hawaii territorial and then state governments developed, assigned and controlled the use of residential land. This article investigates the extent to which reform of the program could increase the value of benefits delivered to native Hawaiians. It builds on the economic literature on land and housing policy reform and Native American property rights. The reform alternatives that we analyze all employ the same total amount of program resources. The first alternative is lump-sum grants that provide fee title to existing homeowners, and money from the sale of other program assets to other native Hawaiians. Additional alternatives provide financial assistance for the rental and purchase of housing. The existing program and the proposed alternatives yield both private and public benefits. The public benefits are the inalienability of land which yields cultural and political externalities, and the more equitable distribution of program resources. Our quantitative estimates of private benefits reveal the extent of potential inefficiency in each program. We also determine the minimum value of the existing program's public benefits that would make it more beneficial to native Hawaiians than a lump-sum grant program.