This week’s announcement by the U.S. Army Corps of Engineers that it wants to go ahead with a $2.3 billion overhaul of locks on the Upper Mississippi and Illinois rivers illustrates the economics and politics of large water projects in the United States.
Improving locks would bring some benefits to the U.S. economy, particularly to farmers in the Upper Midwest. It also might induce further damage to the already-fragile ecosystems of these rivers. The project also would cost citizens a good chunk of change. Sound economic analysis weighs against the initiative but, as in many areas, politics ultimately will decide whether the project gets built.
First, some history: Commercial navigation has existed on the Upper Mississippi River for generations. Participants in the “Grand Excursion” of 1854 arrived in St. Paul by steamboat. But until the federal government built a system of locks and dams in the 1930s, seasonally shallow water limited the size of vessels on the upper river.
That system of 29 locks was built even though the Army officer charged with making the original 1928 feasibility study concluded that the costs would exceed the benefits. That established a pattern that continues to the present.
The current system provides a 9-foot deep channel from Minneapolis to St. Louis, at which point the channel is deep and wide enough to pass barge tows without locks. Most locks on the upper river are 600 feet long, built to pass tows three barges wide and three long. Tows commonly consist of 15 barges plus the towboat and must be broken in two to cross a lock.
Some of the newer locks are 1,200 feet long, allowing full tows to pass without separating the tow in two and making it up again. In 2000, the Army Corps of Engineers, which operates the system, proposed a $1.2 billion dollar project to rebuild five locks on the Mississippi and two on the Illinois River to the newer 1,200-foot standard. They produced a study showing that the projected benefits exceeded the costs.
A career Corps analyst blew the whistle, however, relating that he had been pressured to cook the books to produce a favorable report. The Army’s Inspector General found this had occurred and a National Academy of Science study concluded that the Army Corps study was, in fact, deeply flawed. One general retired prematurely and the project was temporarily shelved.
Now it is back. The cost has nearly doubled, to $2.3 billion, and there is not even the fig leaf of a cooked study to justify the expenditure. The Bush White House does not support spending this money, but the Corps of Engineers has powerful friends in Congress and a propaganda machine that would put the Nazis’ Joseph Goebbels to shame. It has added $5.3 billion of “environmental improvements” to the package in an attempt to buy off opponents in the environmental movement.
Barge transportation on the Upper Mississippi clearly produces some benefits for society. Freight rates for barge shipments of grain, coal, salt and steel are substantially cheaper than shipments by train or truck. Farmers in the Upper Midwest get marginally higher prices for grain as a result and consumers pay marginally less for goods brought in by river.
On the cost side are the federal outlays for construction, maintenance and operation of the lock and dam system. These are considerable. Barge companies do pay a 20-cent per gallon tax on fuel. The proceeds from this, however, are substantially less than annual costs, much less amortization of original investments of public dollars.
Beside the cost to taxpayers, the navigation system harms the environment. The dams necessary to maintain a 9-foot channel are not that high, but they interrupt the natural seasonal fluctuations in river depth that are crucial to the life cycles of many plants, fish, birds and other animals. The backwaters and secondary channels that are part of a natural river system are slowly filling in with sediment in some areas.
Increasing the size of key locks might increase traffic on the Upper River and accentuate the rate of environmental degradation. Wildlife, hunting, fishing and environmental groups are united in opposition to the project.
Proponents include farm groups, large shippers such as grain and coal companies, and the barge operators.
The barge operators have the most at stake. Their revenues are directly tied to tonnage carried, and delays at locks increase their costs. Grain producers in Minnesota and neighboring states also would lose if congestion on the river increased shipping costs.
Their fears, however, probably are overstated. Higher shipping costs would lower farm level prices. But changes take place at the margin and are seldom as extreme as scare scenarios indicate. If barge rates increase, some additional grain will move by rail to Portland, Ore. There will be some increment in shipments out of Duluth. The net effect would not be catastrophic.
There is an obvious compromise here. Rebuild locks that are in bad shape to the existing 600 foot standard, just as the lock at the Ford Dam was rebuilt a decade ago. Add minor improvements such as guide walls, winches and helper tugs that engineers say could reduce delays at busy locks. Do not, however, make any changes that would greatly increase the annual capacity of the system. Do spend more money on ameliorating the ongoing environmental damage already under way.
This is only a Corps proposal, not a done deal. But Corps proposals have a way of going forward, even when the economics are horrible.
It will be interesting to see how the politics play out over time.
© 2004 Edward Lotterman
Chanarambie Consulting, Inc.