1/ Assumes average haul 903 miles and an average of 15,103,868 ton-miles per employee (1975 average Class À barge lines which handled 33% total internal barge ton-miles). 2/ Assumes average haul 806 miles and an average of 1,560,100 ton-miles per employee (1975 U.S. railroad average).

At a time when unemployment is of national concern,

it is counter-productive for the Federal Government to continue to finance navigation-related waterway projects.

Certainly the

net loss of jobs should be quantified and appear as a cost item in the Corps' benefit/cost ratio.

In making the economic transportation study, the

Corps assumed there would be no change in modal share of traffic. This is completely unfounded. With the substantial public expenditure in waterway facilities, which has not been borne

by the barge lines and, therefore, not reflected in their rates, the modal share has been shifting for some time in favor of

barge transportation as shown on the next page:

SOURCE:

Transportation Facts & Trends, Transportation
Association of America.

While rail ton-miles increased 34% during the above 26year period, barge ton-miles increased 400%. The above clearly demonstrates the Corps' inaccurate conclusion that modal share will not change in the future. The rail share of national intercity transportation has been declining and barge share sharply increasing. This has not occurred as a result of relative rail/barge economies, but because rail is a full-cost mode and barge is not.

IV.

SUGGESTED NAVIGATION PROJECT CRITERION

The Corps of Engineers has a history of underestimating project costs and overestimating traffic and benefits. Corps' economic studies on Locks & Dam 26 indicate they have little knowledge of transportation rates and total shipper-incurred cost via barge or barge/truck vs. rail. Therefore, three things must be done before Locks & Dam 26 (or any other waterway project) is approved for construction:

1. DOT must prove the proposed waterway facility provides needed added transportation capacity for all modes.

2.

It

is unwise to provide additional barge capacity and simul-
taneously create excess capacity by depriving the rail-
roads of existing and growth traffic.

DOT must determine the new facility is economically
justified and provides needed transportation benefits
to the nation. This not only would involve measuring
benefits to barge operators and barge shippers but
losses to railroads and rail shippers.

3. After the project has met the challenge of providing
needed added transportation capacity and is economically
justified, the third criterion must be for users to pay
the full construction, operation and maintenance cost
of (1) the new facility, and (2) the balance of the
inland waterway system.

V. CONCLUSIONS

It is apparent the Corps of Engineers has not prepared an adequate transportation economics study to measure benefits and adverse effects.

The Corps' latest strategy to

obtain authorization for a new dam with one lock and study

the size of the second lock during construction does not give Congress the opportunity to measure the cost and effects of the total project. There is no intention of building

only one lock at Alton.

Therefore, the proposal to Congress should be based on the Corps' best alternative for the total project after proper transportation studies have been completed by the Department of Transportation. Included with the Alton project proposal to Congress should be the Corps' plans for the entire Upper Mississippi and Illinois Waterway System. Only after this information is divulged can the system project be properly analyzed.

The fate of the Midwestern railroads is in the balance, based on the decision of Congress on Locks & Dam No. 26.

STATEMENT OF

ROBERT H. HAVEMAN

ECONOMIST

BEFORE THE

SUBCOMMITTEE ON WATER RESOURCES

OF THE

SENATE COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

95TH CONGRESS, 1ST SESSION

APRIL 19, 1977