Hawaii implements nation’s first ‘Green Fee’ to fund climate resilience

In a landmark move to combat climate change and protect its fragile ecosystems, Hawaii has become the first U.S. state to implement a climate impact fee, colloquially termed the “Green Fee,” targeting tourists. Governor Josh Green signed the legislation into law on May 27, 2025, marking a significant step in the state’s ongoing efforts to address environmental challenges exacerbated by climate change.

Effective January 1, 2026, the state’s Transient Accommodations Tax (TAT) will increase by 0.75%, raising the total tax on nightly lodging rates to 11%. This adjustment applies to hotels, vacation rentals, and, for the first time, cruise ships, ensuring a more equitable contribution across the tourism industry. The fee is projected to generate approximately $100 million annually, earmarked for climate resilience projects such as beach replenishment, wildfire prevention, infrastructure improvements, and the establishment of a green jobs youth corps.

The initiative comes in response to the escalating impacts of climate change on the Hawaiian Islands, including the devastating 2023 wildfire in Maui that claimed over 100 lives and caused billions in damages. Governor Green emphasized the urgency of proactive measures, stating, “As an island chain, Hawaii cannot wait for the next disaster to hit before taking action. We must build resiliency now.”

While the tourism industry initially expressed concerns about potential impacts on visitor numbers, many stakeholders have since voiced support for the measure, recognizing the importance of preserving Hawaii’s natural resources. Jerry Gibson, President of the Hawaii Hotel Alliance, acknowledged the necessity of environmental funding, noting that the fee is a reasonable ask from visitors who benefit from the islands’ beauty.

The funds collected through the Green Fee will be allocated to various environmental initiatives, including invasive species control, wildlife conservation, and the development of infrastructure to withstand climate-related events.Additionally, the revenue will contribute to the Climate Mitigation and Resiliency Special Fund and the Economic Development and Revitalization Special Fund.

Hawaii’s approach reflects a growing global trend of implementing tourist taxes to mitigate the negative effects of overtourism and fund sustainability projects. Other destinations, such as New Zealand and Iceland, have adopted similar measures to balance tourism with environmental preservation.

As Hawaii leads the way with this pioneering legislation, it sets a precedent for other regions grappling with the dual challenges of promoting tourism and safeguarding the environment. The success of the Green Fee could serve as a model for sustainable tourism practices worldwide, demonstrating the potential of policy-driven solutions in addressing the pressing issue of climate change.