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This short study was undertaken at the request of Chairman Stafford of the Senate Committee on Environment and Public Works to provide information on issues relating to inland waterway development. Peyton L. Wynns of CBO's Natural Resources and Commerce Division prepared the analysis under the general supervision of David L. Bodde and Everett M. Ehrlich.
 

Alice M. Rivlin
Director
July 1983
 
 

The Congressional Budget Office has prepared this study to assist the Congress in considering adjustments to federal policy with respect to inland waterway development. The paper consists of three parts. The first briefly summarizes some of the major issues facing the Congress in the development of inland waterway policy. The discussion focuses on financing the costs of the inland water system. Four questions in particular are considered: Who should bear the costs of the system? How should a proper level of cost recovery be determined? What alternative types of charges are available? And how should capital costs be treated.

The second part reviews a major study of inland waterway user charges undertaken by the Administration to assess the economic impacts of user charges.¹ The study, which seems sound in its analytic method, arrives at several conclusions: That user charges designed to recover the system's full costs would be substantially above the levels of current fees; that barge operators and grain shippers are the two groups that stand to be adversely affected to any measurable extent by the institution of user fees set to recover the system's full costs; and that the consequences of uniform user fees levied systemwide would differ from those of fees set at different rates for different segments.

The third part of the paper deals directly with the impact on grain shippers of waterway user charges higher than the current level of less than 1 cent per bushel. (Levied as a tax on gasoline, the current user charge is in fact divided among shippers, consumers, and carriers.) It concludes that user charges designed to recover waterway operating and maintenance costs would result in charges of about 4 cents per bushel of grain delivered. Full recovery not only of operating and maintenance costs but also of all capital investments in the year expenditures were made would raise total charges to approximately 10 cents per bushel. Proposals that would limit capital recovery to new projects and spread recovery over a project's life would result in user charges averaging 6 cents per bushel. The level of user charges faced by individual shippers would vary markedly, depending on such factors as the type of user charge, the availability of other modes of transport, and the responses of competing carriers (primarily rail). Finally, to the extent that foreign grain-importing nations continued to use variable import levies in the attempt to isolate their domestic markets from international price fluctuations, a significant portion of any U.S. user charge would likely be passed on to foreign governments.

This document is available in its entirety in PDF.

1. See U.S. Department of Transportation and U.S. Department of Commerce, Inland Waterway User Taxes and Charges (February 1982).