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The Nation's Inland

Waterway System and
Rural America

Dennis M. Brown The Nation's inland waterway system—the internal network of rivers
and the Great Lakes - St. Lawrence Seaway, plus coastal water-
ways—provides a low-cost means of transporting bulky goods over
long distances. Inland waterways, critical in moving farm commodi-
ties, inputs, and other raw materials, face a number of challenges.
These include the deterioration of many locks and dams, particularly
on the Upper Mississippi - Illinois River system, and the controversy

y facilitating the recip-
rocal movement of over the best use of the waterway system in the Pacific Northwest.
farm commodities and
inputs, such as grain
and fertilizer, the U.S. inland water-
way system is crucial to the
Nation's agricultural sector. Its vital
role is underscored by the fact that between Minneapolis and St. Louis, were also constructed on many of
most of the Nation's agricultural because this portion is less naviga- the Mississippi's main tributaries,
production occurs inland, far from ble in its natural state than the including the Illinois, Ohio, and
both domestic and foreign markets. lower section of the river. Arkansas Rivers. Navigability on the
Covering more than 25,000 miles Large-scale commercial use of Missouri River, another important
of navigable inland waterways (fig. the river began in the early 19th tributary, was enhanced by straight-
1), the system contains: (1) the century (Fruin and Baumel), but its ening portions of it downstream
Mississippi River and its tributaries; utility was soon overshadowed by from Sioux City, Iowa.
(2) the Columbia - Snake River sys- the Erie Canal, which was complet- Today, agricultural products, in
tem; (3) the Great Lakes - St. ed in 1825 and facilitated the particular, corn and soybeans, are
Lawrence Seaway; and (4) other east-west movement of goods. the primary commodities transport-
rivers, canal systems, and coastal Previously, goods were moved ed on the Mississippi, accounting
waterways. down the Mississippi through New for over half of all tonnage shipped
Mississippi River—Stretching Orleans and subsequently routed on the upper portion (Casavant). In
over 2,300 miles from its source in through New York City. Competition 1996, nearly 55 percent of total
Minnesota to the Gulf of Mexico, from the railroads, along with the U.S. corn exports and 40 percent of
this river is central to the Nation's difficulties of navigating an unpre- soybean exports were transported
waterway transportation system, dictable river, kept the Mississippi by barges on the Upper Mississippi
providing a critical link for the relatively unused until the early and Illinois Rivers. Other important
movement of bulk commodities. 20th century. commodities served by this water-
The Mississippi is comprised of two By the 1930s, the Mississippi way system include fertilizer, coal,
separate components—an upper re-emerged as an important route steel, cement, and petroleum prod-
portion, upstream from St. Louis, for freight traffic. During the Great ucts (Bertels, 1998b).
and a lower section downstream. Depression, the Federal Govern- Having expanded its original
Locks and dams are almost exclu- ment undertook a massive con- infrastructure facilities, the Upper
sively on the Upper Mississippi, struction project consisting of Mississippi currently has 29 dams
28 locks and dams on the Upper with 35 lock chambers (Casavant).
Dennis M. Brown is a regional economist in the
Mississippi. This, along with dredg- The Illinois River, which flows into
Rural Business and Development Policy Branch ing, greatly enhanced navigability the Upper Mississippi just above St. 11
of the Food and Rural Economics Division, ERS. of the waterway. Locks and dams Louis, has an additional 8 locks.

Winter 2002/Volume 16, Issue 4
Figure 1
Major river systems in the U.S.
The Mississippi is the Nation's most important waterway


North Platte

Platte Ohio



Red Canadian

Source: Prepared by the Economic Research Service.

The average age of this infrastruc- foot chambers, so each tow must be Agricultural products, mostly
ture is approaching 60 years on the separated and "double-locked," wheat, generally move downstream
Upper Mississippi and is several which is costly, time-consuming, on this river system, and account
years older on the Illinois (Bertels, and increases congestion on the for 40 percent of all shipments (by
1998b). Consequently, design waterway. weight) in an average year
capacities for some locks and dams Columbia - Snake River—This (Casavant). Forest products, which
have already been reached. For waterway, which flows through also usually move downstream,
example, current capabilities in the large portions of Idaho and account for 15-22 percent of all
barge "towing" industry allow a sin- Washington and forms the northern tonnage shipped. Fuels and fertiliz-
gle towboat to push a tow of 15 border of Oregon, has 8 locks and 8 ers usually move upstream and
barges, which is approximately dams originally developed for account for over 80 percent of
1,200 feet in length. However, only hydroelectric production in the upriver traffic (Lee and Casavant).
three locks are currently long early 1900s. The waterway's com- Great Lakes - St. Lawrence
enough to handle such tows. The pletion in 1975 opened up interior Seaway—Shared with Canada, this
12 remainder of the locks have 600- points in Washington, Oregon, and system comprises the five Great
Idaho to commercial barge traffic. Lakes (Superior, Michigan, Huron,

RuralAmerica Volume 16, Issue 4/Winter 2002
Erie, and Ontario) and the St. ville, Texas, with the Gulf section infrastructure funding typically
Lawrence River, and stretches over heavily used by the petroleum comes from Treasury funds, appro-
2,000 miles from Minnesota to the industry. priated to the U.S. Army Corps of
Atlantic Ocean. Agricultural prod- Engineers, which oversees such
ucts account for about 40 percent The Federal Role in the Inland projects. Operation and mainte-
of all its trade, with most grain Waterway System nance costs for locks, dams, and
products destined for export. The role of the Federal dredging are also usually paid for
Agricultural commodities shipped Government has historically been by the Federal Government (Bertels,
include wheat, corn, soybeans, bar- to build and maintain the system 1998b).
ley, oats, and flaxseed. of locks, dams, and channels The barge industry has benefit-
The St. Lawrence Seaway was (Bronzini). Low-cost water trans- ed greatly from this Federal invest-
completed in 1959 at a cost of portation, it was argued, served the ment in waterways. Barges, which
about $1 billion and provided interests of society as a whole and operate in a highly competitive
Midwestern locations direct access hence should be exclusively funded industry characterized by very low
to overseas markets (Fruin and by the Federal Government. barriers to entry, transport over half
Baumel). Comprised of a series of The funding situation changed of domestically produced grains
locks on the St. Lawrence River and when the Inland Waterways Trust and oilseeds destined for export,
Welland Canal (which connects Fund was set up in 1980 to receive about 67.6 million tons in 1995 (fig.
Lake Erie to Lake Ontario), the sys- and disburse funds collected by a 2) (Eriksen et al.). Barge transporta-
tem allows oceangoing vessels and newly imposed fuel tax on barge tion is less important in the domes-
"lakers" (ships primarily confined companies. The tax is currently tic grain and oilseed market,
to the Great Lakes) a direct route set at 20 cents per gallon and is accounting for about 6 million tons
from Duluth, Minnesota, at the designed to pay a portion (usually or 3 percent of domestic ship-
western end of Lake Superior, to 50 percent) of the cost of modern- ments. Altogether, barge transporta-
the Atlantic Ocean. izing locks, although current infra- tion accounted for about 19 per-
Other Major Components—The structure needs are probably cent of all grain and oilseed ship-
Tennessee - Tombigbee River sys- greater than the available trust ments in 1995, a ratio largely
tem flows through Tennessee, fund money. The remainder of unchanged since the late 1970s.
Alabama, and Mississippi. In the
1970s and 1980s, a series of locks
and dams was constructed on the
Figure 2
Tennessee and Tombigbee Rivers, Modal shares of grain and soybean shipments, 1995
which opened up a 230-mile, 9-foot Barge transportation is most important in the export grain and soybean market
deep channel, and provided barges
from Appalachia with access to the 11.1% 2.5%
Gulf of Mexico (Fruin and Baumel).
In addition, the New York State
Barge Canal System connects Lake
Ontario to the Hudson River. And,
although not technically part of 50.9%
the inland waterway system, the
Atlantic Intracoastal Waterway and 38.1%
the Gulf Intracoastal Waterway
make up the Intracoastal Waterway
System, which connects ports along
Export Domestic
the eastern and southern coasts of
the Nation. It provides a protected
route for a variety of ships, includ- Barge Rail Truck
ing pleasure craft and small com-
mercial vessels, and stretches from Note: Totals may not add up to 100 percent due to rounding. 13
Boston, Massachusetts, to Browns- Source: Eriksen et al.

Winter 2002/Volume 16, Issue 4
Figure 3
Modal shares of export grain and soybean shipments by type of grain, 1995 example, export corn shipments
Barges are most important for corn and soybean shipments coming from the Midwest typically
arrive at a riverside grain elevator
Percent on the Mississippi by either truck
or rail. If each mode is to be used to
best advantage, the entire trans-
portation network must be opti-
mized. If any link in the system is
60 underfunded, then the entire net-
work suffers.

Inland Waterways Reduce Costs,
Encourage Development
40 Inland waterways offer a num-
ber of economic benefits.
According to one study, economic
activity on the waterway system
20 creates an estimated $4 billion in
Federal tax revenue (U.S. Army
Corps of Engineers, 1995). An esti-
mated 800,000 jobs in the agricul-
ture, manufacturing, and mining
0 industries are linked to the origina-
Corn Soybeans Barley and Rye Wheat Sorghum tion or receipt of barge-oriented
shipments (Mercer Management
Barge Rail Truck Consulting). The inland barge
industry annually moves some 1
Source: Eriksen et al. billion barrels of petroleum prod-
ucts and 450 million barrels of
chemicals to domestic users or ter-
Barge transportation is most benefited from the granting of pub- minals, with 169 million tons of
important in the export corn and lic lands by the Government in the coal and 94 million tons of farm
export soybean markets, where it 19th century, and that rail labor and food products transported on
accounted for 58 percent and 66 benefits from public subsidies of inland waterways in 1995 (U.S.
percent of shipments in 1995 (fig. the Railroad Retirement System. Army Corps of Engineers, 1996).
3). Most corn and soybeans are Sussman summarizes the argument These all are important industries
grown near the Mississippi River for continued public support this in rural America.
system. Barge transportation is also way: "Given the close ties between Since the early 1960s, domestic
important in the barley, rye, wheat, the waterways and the Nation's shipments on inland rivers have
and sorghum export markets. resource base and the lack of a pri- generally increased, while those on
With the Federal Government's vate sector entity that could effec- the Great Lakes have declined (fig.
investment in waterways, the barge tively provide and manage the 4). By 1997, domestic waterborne
industry, some argue, has unfairly physical facilities that support navi- commerce on all components of
benefited from a public subsidy gation, it seems reasonable to con- the inland waterway system
(Bronzini). The railroad industry, in clude that the Federal Government accounted for over 738 million
particular, has cited its competitive will be heavily involved in this sys- short tons (a short ton is equivalent
disadvantage as a result of the con- tem for many decades to come." to 2,000 pounds) of freight ship-
tinued public support of the Nearly all commodities that use ments, representing about 70 per-
Nation's inland waterway infra- the waterway system use multiple cent of all domestic waterborne
14 structure. The waterway industry modes of transportation, including freight shipments in the Nation.
counters that railroads massively trucking, rail, or pipelines. For The remainder is made up of

RuralAmerica Volume 16, Issue 4/Winter 2002
coastal, intraport, and intraterritori- of Argentine corn delivered to the way users sufficient time to avoid
al shipments. mouth of the Plata River increases accidents.
One of the main advantages of to $3.21 per bushel, compared with The waterway system also
waterway transportation is its very $3.01 per bushel for U.S. corn offers various environmental
low rate structure, averaging 0.73 delivered to the Gulf of Mexico advantages. Barge transportation
cent per ton-mile in 1995, versus (Haulk). not only emits fewer hydrocarbons,
2.49 cents for railroads, the next Waterways offer a number of carbon monoxide, and nitrous
cheapest transportation mode other benefits. The inland naviga- oxide per ton-mile than rail or
(Haulk). This low rate structure fos- tion system is, by far, the safest trucking, but pollutants tend to
ters competition and exerts down- mode of transportation. For exam- be emitted in more remote loca-
ward pressure on the rates of alter- ple, the death rate for barge tows in tions, which further reduces the
native modes of transportation, 1993 was 0.01 death per billion impact of pollution on population
most notably rail. The waterways' ton-miles, compared with 0.84 for centers (U.S. Department of
cost effectiveness enables export trucks and 1.15 for railroads Transportation).
price advantages for some U.S. (Haulk). And barges are more than Waterways can promote rural
exports. For example, corn pro- 200 times safer than railroads in economic development in a num-
duced in Iowa cost $2.33 per terms of injuries. Barges tend to ber of ways. The system of locks
bushel to grow and harvest in operate in less congested environ- and dams provides reliable, year-
1996, compared with $1.33 per ments than other freight trans- round sources of water supply for
bushel in Argentina. However, after portation modes and their slow local communities, and can miti-
domestic transportation, the cost speeds typically allow other water- gate floods. Waterways enable pri-
vate boating and commercial use
by the gambling and pleasure
cruise industry. Waterfront property
Figure 4
can accelerate residential and
Domestic waterborne commerce on inland rivers and Great Lakes, 1960-99
Freight shipments increased on inland rivers, decreased on the Great Lakes
commercial development in many
areas. Finally, about 50 lock-
Shipments (million tons) associated dams nationwide have
700 hydroelectric power capabilities.
Potential benefits of the water-
way system must be balanced with
associated costs. For example, com-
mercial and recreational use of the
500 waterway system has raised envi-
ronmental concerns over fish and
wildlife populations, water quality,
streambeds, and shorelines.
Although this increasingly con-
300 tentious issue often focuses on the
Upper Mississippi, it affects many
navigable waterways throughout
the Nation. Moreover, undertaking
improvements to the waterway sys-
100 tem can impair the recreational
value and scenic beauty of some
natural areas, degrade wildlife habi-
1960 1965 1970 1975 1980 1985 1990 1995 1999 tat, increase turbidity of water,
interrupt fishing, and increase
Inland rivers Great Lakes flooding in some low-lying areas.
Source: U.S. Army Corps of Engineers, Waterborne Commerce of the United States, 1999.

Winter 2002/Volume 16, Issue 4
a low-cost transportation waterway
that brings grain to northwestern
export elevators, a source of hydro-
electric power, or a natural resource
harboring endangered species of
salmon? Waterways throughout the
Nation, most notably Maine's
Kennebec River, have had dams
removed in recent years when the
environmental benefits of breach-
ing were thought to outweigh com-
mercial benefits.
Helicopter carrying grain inspectors from the Illinois Department of Agriculture prepares to land on a
Railroad capacity issues also
grain-laden barge tow on the Mississippi River near East St. Louis, Illinois. Photo courtesy USDA/ERS. affect use of the Nation's inland
waterway system. Stemming from
deregulation of the railroad indus-
Also, the commercial use of the Mississippi and Illinois Rivers, try in 1980 under the Staggers Rail
waterways requires a number of mostly constructed between 1930 Act, rail carriers have recently initi-
special considerations. Because and 1950, is aging. Also, many ated aggressive restructuring to
barge transportation is very slow, Upper Mississippi locks cannot improve their profitability, which
averaging only 6 miles per hour, fully meet the needs of current has engendered a high degree of
products that require either rapid barge traffic. concentration among major (Class
or precise scheduling requirements, The Army Corps of Engineers I) railroads. These consolidations
such as high-value or differentiated is responsible for routine mainte- have resulted in several notable dis-
commodities, may opt to use faster nance of navigation channels, ruptions of rail service in recent
modes of transportation. And including dredging and channel years. For example, traffic flows
because rivers rarely travel in widening. However, upgrading and along the rail network were severe-
straight lines, point-to-point dis- repairing the system can cost $100 ly disrupted in mid-1997 and 1998
tances for barge transportation are million or more per lock. Missis- when the largest rail freight compa-
usually greater than for other sippi River Lock 26, near Alton, ny, Union Pacific, experienced diffi-
modes, although this disadvantage Illinois, was replaced in 1994 at a culties in absorbing operations of
is usually overcome by low rates. cost of $950 million. Whether the the Southern Pacific railroad, fol-
Barge transportation can be affect- benefits of the projects justify the lowing its merger in 1996. As bulk
ed by lock and dam delays. And costs—and determining who shippers shifted to other trans-
waterways tend to be more directly should fund the projects—has been portation modes, waterways experi-
affected by adverse weather condi- the subject of much public debate. enced heavier traffic volumes. This
tions than railroads, particularly in Since 1993, the U.S. Army Corps of has been of particular concern
the north where the inland water- Engineers has been reviewing the for agriculture and other rail-
way system is unusable for 3-4 long-term structural needs of the dependent industries.
months during the winter. Mississippi River system. As of this Globalization is another issue
writing, the outcome of this debate increasingly affecting the Nation's
Challenges Facing the Inland is still unresolved. inland waterways. By one estimate,
Waterway System Also uncertain is the future sta- total agricultural trade with Mexico
Inland waterways face a num- tus of four dams on the Lower has increased by over 50 percent
ber of pressing challenges, infra- Snake River. Some have argued for since the institution of the North
structure foremost among them. "breaching" (or removing) the American Free Trade Agreement
With over 170 lock sites and 210 dams, or constructing bypasses to (NAFTA) in 1994 (Casavant). In
lock chambers nationwide, many allow salmon to reach spring breed- recent years, this increased com-
facilities are in various stages of ing sites further downstream. At merce has created transportation
16 disrepair (Casavant). In particular, this debate's core is the question of bottlenecks along the U.S.-Mexico
the system of locks and dams on the river's primary use. Is it mainly border, at times disrupting rail and

Volume 16, Issue 4/Winter 2002
truck service. Some have speculat- domestic waterway transportation advantage deriving from the inland
ed that the Mississippi River may industry. For example, foreign com- waterway system may reduce
become a new outlet for Canadian petitors in the grain and oilseed demand for shippers using
grain destined for international trade—primarily Argentina, Brazil, America's inland waterways. And,
markets, such as Mexico (Casavant). and China—are undertaking signifi- as of this writing, it is still unclear
Future use of the inland water- cant improvements in their domes- how the incidents of Sept. 11, 2001
way system will continue to be tic transportation systems (Bertels, will affect the waterway system. RA
affected by factors external to the 1998a). The loss of a U.S. cost

For Further Reading . . .
Paul J. Bertels, Infrastructure Improvements by International Competitors, U.S. Dept. of Agriculture, Agricultural Marketing
Service, July 1998a.

Paul J. Bertels, Long-term Capacity of the Upper Mississippi and Illinois Waterways, U.S. Dept. of Agriculture, Agricultural
Marketing Service, July 1998b.

Michael S. Bronzini, "Inland Waterways: Still or Turbulent Waters Ahead?" Annals of the American Academy of Political and Social
Science, Vol. 553, Sept. 1997, pp. 66-86.

Ken Casavant, Agricultural Transportation Challenges of the 21st Century: Inland Waterborne Transportation - An Industry Under
Siege, U.S. Dept. of Agriculture, Agricultural Marketing Service, Nov. 2000.

Ken A. Eriksen, Jerry D. Norton, and Paul J. Bertels, Transportation of U.S. Grains: A Modal Share Analysis, 1978-95, U.S. Dept.
of Agriculture, Agricultural Marketing Service, Mar. 1998.

Jerry E. Fruin and C. Phillip Baumel, "How Much Transportation Infrastructure does Rural America Need?" Paper presented to the
Hubert H. Humphrey Institute of Public Affairs Transportation and Economic Development in the Upper Midwest Research
Roundtable and North Central Regional Research Committee NC-137 on Agricultural and Rural Transportation, Washington, DC,
April 17, 1992.

C. Jake Haulk, "Inland Waterways as Vital National Infrastructure: Refuting 'Corporate Welfare' Attacks," Report No. 97-04,
Allegheny Institute for Public Policy, Pittsburgh, Pennsylvania, 1998.

Nancy S. Lee and Ken Casavant, Waterborne Commerce on the Columbia-Snake System, Eastern Washington Intermodal
Transportation Study (EWITS) Research Report #12, Dept. of Agricultural Economics, Washington State University, Oct. 1996.

Mercer Management Consulting, The Importance of Inland and Intracoastal Waterways to State Economies, Lexington,
Massachusetts, Aug. 1995.

Joseph M. Sussman, "Transportation's Rich History and Challenging Future - Moving Goods," Transportation Research Circular,
Vol. 461, Aug. 1996, p. 18.

U.S. Army Corps of Engineers, Navigation: The Role of the U.S. Army Corps of Engineers, Navigation Analysis Division, Institute
for Water Resources, Water Resources Support Center, 1995.

U.S. Army Corps of Engineers, The U.S. Waterway System - FACTS, Navigation Analysis Division, Institute for Water Resources,
Water Resources Support Center, Dec. 1996.

U.S. Department of Transportation, Environmental Advantages of Inland Barge Transportation, Office of Ports and Intermodal 17
Transportation, Maritime Administration, Aug. 1994.

Winter 2002/Volume 16, Issue 4