Economy: Growth and Transformation
Tracks the decline of plantation agriculture, the rise of tourism, and the shifts prompted by the energy crisis and broader economic pressures.
Boom and Balance
The early 1970s marked a period of rapid economic expansion in Hawai‘i, driven by tourism, defense spending, and construction. In 1974, authorized housing units reached a record-breaking 19,142, contributing to a total of 84,340 units built between 1970 and 1975—an average of 14,057 units per year, the highest in Hawai‘i’s history.
Tourism soared to unprecedented heights, with visitor numbers doubling from two million in 1970 to four million by 1976. The construction industry surged to meet this demand, reaching a record 19,142 authorized housing units in 1974. Meanwhile, defense spending tied to the Vietnam War funneled billions into the islands, reinforcing Hawai‘i’s strategic importance in the Pacific.
On September 13, 1975, the Aloha Stadium opened in ‘Aiea, a milestone that reflected Hawai‘i’s ambitions for growth and modernization. This 50,000-seat facility stood as a symbol of the state’s unprecedented construction boom.
Governor Burns celebrated these trends, describing the economic boom as a source of “jobs, opportunities, and family security.” However, the pace of development raised concerns about sustainability. Critics warned of Hawai‘i’s growing dependence on external markets and questioned the long-term viability of its tourism-driven economy.
View the background image.
Preserving Niumalu: A Community’s Fight Against Displacement in Kaua‘i
Niumalu, on the southeast side of Kaua‘i, was home to low- and moderate-income families, primarily Hawaiian and Filipino, who cultivated vegetable gardens and raised livestock. In the early 1970s, Niumalu became the center of a contentious battle over land use. The Kanoa Estate, which owned the land, sought to rezone the area for a resort and condominium development, leading to fierce resistance from the 40 families living there. They organized as the Niumalu-Nawiliwili Tenants Association, fighting eviction and presenting their own vision for the community’s future. Their efforts brought attention to the displacement caused by tourism-driven development and the loss of argricultural lands.
Though the conflict reflected broader struggles over land use and cultural preservation in Hawai‘i, it also stood as a testament to the resilience and solidarity of Niumalu’s residents. Learn more about this pivotal moment in Kaua‘i’s history in the April 2, 1974 issue of The Hawaii Observer: A Community Fights Back.
The End of the Vietnam War and the Energy Crisis
In 1973, Hawai‘i experienced a major transition with the conclusion of the War in Vietnam. On January 27, the U.S. brokered a peace accord that ended its military involvement, reshaping Hawai‘i’s economic landscape. During the war, the islands served as a crucial staging ground and logistical hub, benefiting from significant defense-related expenditures. This strategic role, while diminished post-war, remained vital to America’s Cold War interests, maintaining Hawai‘i’s place as a linchpin in the Pacific. Despite these ongoing geopolitical connections, the abrupt reduction in military spending signaled an economic shift, highlighting the state’s vulnerability to changes in federal priorities.
The October 1973 Yom Kippur War set off a global petroleum embargo by the Organization of the Petroleum Exporting Countries (OPEC), disrupting energy supplies and plunging the United States into recession. The crisis was particularly severe for Hawai‘i, which relied almost entirely on imported oil for energy.
In response, the 1974 Hawai‘i State Legislature enacted a comprehensive energy policy. This included the establishment of the Hawai‘i Natural Energy Institute (HNEI), the Natural Energy Laboratory, and the creation of an Energy Resources Coordinator. The legislation also introduced petroleum-use regulations and energy planning measures. These initiatives embedded energy management into statewide governance, marking a decisive shift toward reducing dependence on imported fuels.
View the background image.
The Energy Crisis of 1973
The OPEC oil embargo led to soaring energy costs, spurring Hawai‘i to prioritize renewable energy and establish institutions like the Hawai‘i Natural Energy Institute.
With 92% of the state’s energy dependent on imported petroleum, the Arab oil embargo of 1973 underscored the urgency of addressing Hawai‘i’s energy vulnerability. State and industry leaders, including HECO, faced difficult choices as they balanced continued reliance on petroleum with efforts to develop alternative energy sources such as geothermal, solar, wind, and ocean-thermal power. Advocates pushed for a bold transition toward renewable energy within a decade, while reports emphasized Hawai‘i’s unique geographical advantages and the need to capitalize on natural resources to reduce dependence on oil. This moment marked a turning point in Hawai‘i’s recognition of energy resilience as key to its economic and environmental future. Learn more about Hawai‘i’s energy future in the 1975 issue of Hawai‘i Observer: Energy Challenges and Opportunities.
Agriculture’s Decline
While urban centers thrived, rural areas suffered from the collapse of Hawai‘i’s agricultural industry. Once the backbone of Hawai‘i’s economy, agriculture experienced a steep decline in the 1970s as global competition and shifting economic priorities reshaped the islands. Sugar and pineapple plantations, which had long dominated the landscape, became less profitable, leading to widespread closures. Global competition, rising labor costs, and changing market demands rendered these industries less profitable. Foreign growers could produce sugar and pineapples at a fraction of the cost, and the diversification of Hawai‘i’s economy into tourism and other sectors shifted priorities away from agriculture.
The state responded with initiatives to diversify rural economies, exploring industries like aquaculture, tropical fruit processing, and modular home construction. While these efforts had limited success, they reflected a growing recognition of the need to move beyond the plantation model that had dominated Hawai‘i for over a century.
Despite this decline, agriculture in Hawai‘i has not disappeared entirely. Today, a growing focus on diversified agriculture, small-scale farms, and local food sustainability reflects a reimagining of agriculture’s role in Hawai‘i’s future.
View the background image.
The Waning Days of Hawai‘i’s Plantation Economy
The closure of sugar plantations reverberated across the islands, especially in rural communities on neighbor islands like Kaua‘i, Maui, and Hawai‘i Island. These communities, long reliant on plantation jobs for economic stability, were thrust into a period of uncertainty and economic hardship. Local businesses that supported plantation workers also suffered, contributing to widespread economic decline in areas historically tied to agriculture.
Pineapple growers faced similar challenges. As reported in the Hawai‘i Observer in 1973, the industry struggled with high production costs, fierce foreign competition, and a transition to fresh fruit markets in an attempt to stay viable.
By the mid-1990s, once-thriving plantations became remnants of the past. In 1996, the closure of one of the last sugar plantations on Hawai‘i Island, marked the end of an era. The history of sugar in Kaʻū offers a poignant reminder of how deeply agriculture shaped Hawai‘i’s identity.
Learn about the history of sugar on Hawaiʻi Island in Kaʻū Sugar: A Town Remembers, PBS HAWAIʻI (1996).
Addressing the Housing Crisis
By 1970, Hawai‘i faced an acute housing shortage that had become a central challenge for the state, driven by rapid population growth, rising housing costs, and the limitations of existing development policies. Recognizing the urgency of the crisis, the legislature established the Housing and Finance Development Corporation (HFDC), the precursor to today’s Hawai‘i Housing Finance and Development Corporation (HHFDC). This new entity was tasked with stimulating residential development, increasing affordable housing options, and addressing the growing demand for homes across the islands.
Despite these initial efforts, the housing crisis continued to dominate public discourse throughout the decade. Concerns over the availability of affordable housing led to significant policy shifts. In November 1976, Hawai‘i voters approved a constitutional amendment granting the state broader powers to intervene in the housing market. This amendment enabled the state to provide or assist with housing, undertake slum clearance initiatives, and rehabilitate substandard areas, reflecting the increasing willingness of both the government and the public to tackle the crisis head-on.
That same year, Governor George Ariyoshi launched another ambitious initiative to address the housing crisis by creating the Hawai‘i Community Development Authority (HCDA). The HCDA was established to oversee and implement strategic urban development projects, focusing on revitalizing areas like Kaka‘ako. This district, once an industrial and underutilized zone, became the centerpiece of Hawai‘i’s efforts to balance urban growth with community needs. The HCDA’s work in Kaka‘ako aimed to create a vibrant urban community with mixed-use development, integrating residential, commercial, and recreational spaces.
View the background image.
Evolving O‘ahu: Balancing Growth and Preservation
In 1974, Honolulu’s General Plan Revision Program outlined four potential paths for O‘ahu’s development, igniting debates about the island’s future. These scenarios addressed critical issues such as urban growth, sustainability, and long-term planning, reflecting growing concerns about balancing development with environmental preservation and cultural identity. As reported in the Hawai‘i Observer, the revision marked a pivotal moment in O‘ahu’s planning history, highlighting the need to manage population growth, protect rural areas, and ensure a sustainable future for the island. Explore Planning the Future of O‘ahu (1974) in the Hawaii Observer.
Two years later, the 1976 revision of the General Plan refined these ideas, setting forth a framework to guide O‘ahu’s development through the year 2000. The revised plan focused on limiting population growth in urban areas, promoting rural preservation, and designating ‘Ewa as the site for a major metropolitan center. This vision aimed to create a more balanced and sustainable island, ensuring that development met the needs of both current residents and future generations. Learn more in this Hawaii Observer article A Revision to the General Plan (1976).
Foundations for the Future: Hawai‘i’s Planning Legacy
Even before the energy crisis, Hawai‘i’s economic boom inspired a focus on long-term planning. Commissions such as the Commission on the Year 2000 and the State Commission on Population and the Hawaiian Future tackled issues ranging from urban sprawl to resource management. These efforts culminated in the passage of the Hawai‘i State Planning Act in 1978, institutionalizing comprehensive planning as a cornerstone of state governance.
Despite its booming tourism, construction, and defense sectors, Hawai‘i faced structural challenges, including a declining agricultural industry and a growing housing crisis. The energy crisis underscored the islands’ susceptibility to global disruptions, prompting leaders to rethink the pursuit of endless growth.
Caught between rapid economic expansion and the uncertainties of global crises, Hawai‘i’s leaders used tools like planning commissions to navigate these tensions. This period of transformation laid the groundwork for a more sustainable and balanced future, shaping the state’s strategies for addressing economic, environmental, and social challenges. The energy crisis and planning initiatives of the 1970s marked a pivotal moment in Hawai‘i’s history, blending ambition with pragmatism to create a roadmap for the state’s future.
View the background image.
Hawai‘i State Planning Act
The Hawai‘i State Planning Act, enacted in 1978, was a landmark piece of legislation that institutionalized long-term planning as a core function of state governance. The Act established a comprehensive framework to address the challenges of rapid urban development, resource management, and economic sustainability. It emphasized the importance of aligning state and county policies to balance growth with environmental protection and social equity.
Key priorities included safeguarding agricultural lands, promoting energy independence, ensuring affordable housing, and fostering sustainable economic development.
Explore the archival records of the State Plan Policy Council, the government body charged with developing the State Plan.
