The Economic Impact of Kava on the Pacific Islands

November 22, 2019

The Economic Impact of Kava on the Pacific Islands

Pacific Islander Economies, Foreign Aid, and Kava

For millennia, kava has been intertwined with Pacific Islander culture both shaping it and being shaped by it. With the rise of kava use and popularity outside the Pacific Islands, kava has been increasingly impacting the economies of Pacific Island countries and specifically their reliance on foreign aid.

Pacific Island countries are considered to be quite vulnerable because of their geographic remoteness, exposure to frequent natural disasters, and susceptibility to climate change. Because of this vulnerability, Pacific Island countries receive a significant amount of aid totaling to about 6.5% of the regions GDP. International aid takes up 31% of the regions GDP when excluding Papua New Guinea and Fiji.

Pacific Islander countries have thus been advised that “they must develop exports that will cut down on their needs for overseas financial aid.” For several reasons, kava seemed to be the perfect export to help Pacific Island countries move towards economic independence. This is particularly the case in rural areas where “earnings from the kava boom are changing lives for the better.”

Kava Changing Lives for the Better

Vanuatu’s combined revenues from exports and domestic sales of kava are now “higher than those from tourism.” And reportedly, “some farmers [are] using kava earnings to finance their children’s education, while kava earnings had funded a solar power ‘revolution’ for much of the rural population, who were excluded from the national electricity grid.” Furthermore, many of the cars purchased on the island were “paid for in cash with kava money” where a “[Toyota] Land Cruiser costs the equivalent of about 1,500 tons of raw kava.” The returns can reportedly be as high as $118,000 per acre (after four years) which is much higher than competing crops. In other words, kava is the “best horticultural opportunity [Pacific Island] countries have ever seen.”

As such, kava bans and restrictions in Europe which lead to kava imports drastically decreasing and almost entirely halting can be devastating on the economies of Pacific Island countries. Kava manufacturers pointed out the negative implications bans saying that there are several small scale farmers on the island who rely on kava as their main source of income. One manufacturer pointed out the impact of the ban on Vanuatu saying that, “If a ban comes into place it will affect them and also affect kava markets in Vila because we will start to lay off people and this will affect Vanuatu’s economy.”

Are there hidden agendas at play?

Framing kava within an economic context can then raise concerns regarding bans, regulations, and suspicions surrounding kava: Do they reflect a desire to keep Pacific Island economies in the ground and to force them into continual reliance on outside aid? Donor countries—like Australia and China for instance—could be seen as “illustrat[ing] their regional interests by where they choose to put their cash.” This has generally been broken down in an article by the Lowy Institute, however, the way the rising kava industry plays into it remains to be seen—especially considering that the biggest donor country, Australia, happens to have one of the harshest stances against kava.

References

  1. https://www.lowyinstitute.org/the-interpreter/follow-money-how-foreign-aid-spending-tells-pacific-priorities
  2. https://kavasociety.nz/blog/2018/2/5/the-complex-presence-of-kava-in-the-western-world-a-fascinating-perspective-from-dr-huffman
  3. https://asia.nikkei.com/Economy/Surge-in-kava-demand-spurs-export-boom-for-Pacific-nations

 





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