degradation. Several ecological indicators on the Upper Mississippi River—such as the viability of native populations and their habitats, the ability of the ecosystem to recover from disturbances, and ecosystem sustainability—are in decline (USGS, 1999). The causes of these effects are multiple and difficult to precisely ascribe. Commercial navigation is but one of several factors that have affected the river ecosystem. The Corps projects additional congestion in the future, based on projections of increased grain exports from this region.

The Upper Mississippi River–Illinois Waterway system serves a diverse clientele who seek different services. Furthermore, some uses and users impinge negatively on others in “oneway” types of externalities. For example, barges on the river have significant and damaging effects on fish; but fish do not negatively affect the barge industry. Striking the proper balance between the multiple uses and users and thereby protecting the public interest requires denying some potential users access when they want it. Rationing access could be done by regulation: for example, commercial traffic could be given priority over recreational boating, or tows could be forced to sign up for a schedule long in advance. Rationing could also be done by pricing, since some of these users would be willing to pay a great deal to use these services, while others would be willing to pay almost nothing. The methods of allocating access differ with respect to their efficiency and equity. The point is that allocating access is better than overusing a public resource.

If access is allocated by charging for it, there is a natural relationship between a congestion toll and the decision to expand capacity. A congestion toll provides a monetary value of the user's willingness to pay for use of the lock and is a clear indication of the public benefits of expanding capacity. In contrast, when there is no toll for use, users' willingness to pay for use of the waterway is not as clearly expressed.

Investment decisions for the UMR–IWW system are complicated by (1) multiple values, uses, and users of these waterways, (2) contradictions between public ownership and private use, and (3) the lack of a system for managing congestion, which leads to market failure. The first two problems are inherent in the system. The third problem requires a solution before intelligent decisions can be made about investments in increasing lock capacity.

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