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Title: Commercial Navigation on the Upper Mississippi River: An Economic Review of its Development and Public Policy Issues Affecting Minnesota
Authors: Christianson, Rodney W.
Keywords: navigation
water transport
public policy
water resources development
minnesota
Issue Date: Oct-1974
Publisher: Water Resources Research Center, University of Minnesota
Citation: Christianson, Rodney W. 1974. Commercial Navigation on the Upper Mississippi River: An Economic Review of its Development and Public Policy Issues Affecting Minnesota. Water Resources Research Center.
Series/Report no.: WRRC Bulletin
75
Abstract: Development of the Upper Mississippi River and its major tributaries have been of great importance for the economic and social well-being of Minnesota. Water development projects such as the nine-foot navigation channel have provided a cheap transportation route in which important commodities such as coal and petroleum can be shipped into Minnesota, white the abundant harvest of grain in Minnesota and surrounding states can be moved out to domestic and foreign markets at low freight costs. In addition, development of the Upper Mississippi River has increased recreational opportunities, and has provided a more productive and usable habitat for fish and wildlife. However, the Upper Mississippi has been developed primarily as a transportation artery, and important considerations such as ecological processes and environmental values of America's largest and most unique river system often have been neglected and even destroyed in a few areas. Opposition to further development is strong. Inland water transport is a significant carrier of domestic cargo, accounting for about 14% of the total traffic. During the past decade the inland waterways increased their cargo carried by 46% (62% when the Great Lakes are excluded). By increasing the absolute amount of freight carried greater than the average (42%), the inland waterway's relative share of total freight traffic has also grown over the past decade. Also development of the Upper Mississippi River into a major inland waterway has been even more significant for Minnesota and the Midwest than for much of the rest of the nation. Past and present development of the Upper Mississippi River and its tributaries, both by the public and private sectors, has been extensive,. Public funds (mostly federal) have not only provided the nine-foot navigation channel, but also numerous harbors and fleeting areas along the Upper Mississippi and its tributaries. Private investment in terminals, towing vessels, and barges has been and continues to be substantial. In spite of these huge costs, the real cost of inland waterway shipment is still lower on most waterways per ton-mile than the least cost alternative. A transportation model, based on competitive assumptions and employing a derived demand analysis, is presented. The model predicts that there will be an increase in demand for transportation services in general, and barge services in particular. However, derivation of the elasticity of demand for barge services revealed that the demand for barge services will become more elastic in the future. Planning and feasibility studies of commercial navigation projects on the Upper Mississippi River (and on the waterways) have emphasized economic developmental values and expansion of waterway capacity while giving little attention or even ignoring environmental values and ecological processes. Planning has been undertaken at three government levels--national, regional, and state. The national study recommended better evaluation procedures, more equitable cost-sharing policies (user charges), and coordination of all modes of transportation to achieve a more efficient national transportation system. However, regional and state plans are often formulated to meet conditions and needs that existed in the past. These studies have tended to emphasize continued subsidization and expansion of water development projects to aid commercial navigation. The current issues in commercial navigation which affect Minnesota basically involve a resolution of the conflict between developmental and environmental values. Such is the issue of dredging to maintain the 9-foot navigation channel on the Upper Mississippi River. Without maintenance dredging barge traffic would come to a halt on the Upper Mississippi causing irreparable economic harm. But environmentalists contend that the Corps' present method of dredging and depositing of dredge spoil causes irreparable environmental damage by blocking the flow of backwater sloughs. The dredging issue reduces to one of what cost is the public willing to bear to preserve environmental values being destroyed by present methods of dredging and placement of dredge spoil. However, instead of the general public bearing the cost, users of the 9-foot navigation channel could be required to pay the full costs of environmentally sound dredge spoil disposal. With a system of user charges in effect, environmental values would be better accounted for and barge transportation would be assigned to its most efficient position in the national transportation system. There needs to be a better balance between developmental and environmental values in present and future commercial navigation projects. Administrative-legal procedures and institutions, which include environmental impact statements, inter-agency cooperation and agreement, and lawsuits, will help insure that environmental interests (both government agencies and citizen groups) effectively communicate their values into the decision-making process. However, the market, or pricing system, is also an effective communications device. Establishing a pricing system through the imposition of user charges which requires that users of inland waterways pay the full costs (economic and environmental) of providing navigation facilities would insure that developmental and environmental values are better balanced in future commercial navigation projects.
URI: http://purl.umn.edu/93150
Appears in Collections:Bulletins, 1965-1995

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