3
Technical Issues

The Corps of Engineers’ UMR-IWW navigation feasibility study considers a large number of issues as they affect UMR-IWW system management. The Corps’ study is broadly divided into two main topical areas: ecosystem restoration and proposed navigation improvements. This chapter reflects that organization, as it first reviews technical issues related to the ecosystem portion of the study, then reviews technical issues within the navigation component of the feasibility study.

ECOSYSTEM RESTORATION

Ecological Issues and Proposed Actions in the Feasibility Study

Over the past several years, the feasibility study’s initial focus on Upper Mississippi River-Illinois Waterway commercial navigation issues has been broadened considerably. The Corps’ 2004 draft study identified possible ecosystem restoration measures that included water level management, reconnections of river channel and floodplain, and prospects for enhancing fish passage past individual dams and through the river basin. The Corps deserves no small credit for proactively and appropriately broadening the scope of the study to better reflect the multiple values, purposes, and relationships within the UMR-IWW. The ecological portion of the feasibility study, however, contains flaws that inhibit the study’s usefulness as a decision-making guide. Examples include a limited degree of integrating the implications of restoration alternatives with other, related system uses; limited emphasis on the importance of ecological processes in restoration; and a lack of clarity regarding project implementation, monitoring, and adaptive management.



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Review of the U.S. Army Corps of Engineers Restructured Upper Mississippi River–Illinois Waterway Feasibility Study: Second Report 3 Technical Issues The Corps of Engineers’ UMR-IWW navigation feasibility study considers a large number of issues as they affect UMR-IWW system management. The Corps’ study is broadly divided into two main topical areas: ecosystem restoration and proposed navigation improvements. This chapter reflects that organization, as it first reviews technical issues related to the ecosystem portion of the study, then reviews technical issues within the navigation component of the feasibility study. ECOSYSTEM RESTORATION Ecological Issues and Proposed Actions in the Feasibility Study Over the past several years, the feasibility study’s initial focus on Upper Mississippi River-Illinois Waterway commercial navigation issues has been broadened considerably. The Corps’ 2004 draft study identified possible ecosystem restoration measures that included water level management, reconnections of river channel and floodplain, and prospects for enhancing fish passage past individual dams and through the river basin. The Corps deserves no small credit for proactively and appropriately broadening the scope of the study to better reflect the multiple values, purposes, and relationships within the UMR-IWW. The ecological portion of the feasibility study, however, contains flaws that inhibit the study’s usefulness as a decision-making guide. Examples include a limited degree of integrating the implications of restoration alternatives with other, related system uses; limited emphasis on the importance of ecological processes in restoration; and a lack of clarity regarding project implementation, monitoring, and adaptive management.

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Review of the U.S. Army Corps of Engineers Restructured Upper Mississippi River–Illinois Waterway Feasibility Study: Second Report The following section explains and comments on the broad features of the feasibility study’s plans for river restoration. Before that discussion, it is appropriate to first consider the literature on large floodplain river science and restoration. Large Floodplain River Science and Restoration There is near-unanimous opinion that UMR-IWW system management should proceed according to the best scientific knowledge available. This is especially important in the realm of ecosystem restoration because this field is relatively young and restoration actions are conducted in highly complex and dynamic systems. The Corps and other actors in the UMR-IWW will thus necessarily have to learn and adjust ecosystem restoration measures through time, and it is crucial that learning and adjustments proceed in accord with science-based principles. As the Corps proceeds with ecosystem restoration efforts, it should stay abreast of the literature in the field of “river science,” which includes a strong focus on the roles of ecosystem dynamics in sustaining and promoting ecosystem processes and productivity (e.g., Bayley, 1995; Church et al., 1995; Junk et al., 1989; Koel and Sparks; NRC, 2002; Sparks, 1995; Sparks et al., 1998). It is worth noting that the federal-state Environmental Management Program (EMP) for the Upper Mississippi River, sponsored by the Corps, has produced a large body of scientific reports that have made notable contributions to the river science field. At a 1994 conference held on the Upper Mississippi River in La Crosse, Wisconsin, several internationally recognized scientists synthesized the guiding principles of floodplain river ecology. These principles have held up well in the years following their formulation, and they should be used to help guide river restoration programs. They are especially applicable to the Corps’ restoration program because they were developed from knowledge and experiences in large floodplain river systems such as the UMR-IWW: Ecological research and experience from a wide variety of large floodplain rivers indicates that the following principles for river management should have broad applicability: River form and condition is a function of the totality of many actions and processes that occur in the basins, stream network, and floodplain. The degree of connectivity between the main channel and its floodplain is a primary structural attribute of river ecological integrity.

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Review of the U.S. Army Corps of Engineers Restructured Upper Mississippi River–Illinois Waterway Feasibility Study: Second Report The annual flood pulse, channel-forming floods, and infrequent droughts are major driving factors in floodplain river ecosystems. Rivers and their fauna are very resilient and measures to improve or rehabilitate them, if taken before critical levels are reached, can produce rapid positive responses in the system. Ecosystem reaction to stress is often expressed catastrophically through critical breakpoints that only can be determined retroactively. That a breakdown in a system is likely can be anticipated, but foretelling the actual time when it will occur is far more difficult. (Church et al., 1995) The Corps has recognized the primacy of fluvial and ecological processes in ecosystem well-being and in restoration strategies. The Corps convened an Environmental Science Panel in 2003 to provide input into the feasibility study process. That panel noted: With neither an ecosystem perspective nor an understanding of natural river function, there is a danger that such management actions will become a disjointed series of expensive engineering fixes in discrete managed areas. Inattention to how the original ecosystem functioned as a whole makes selective rehabilitation speculative, unlikely to achieve widespread success, and unlikely to be sustainable. It is therefore critical that restoration actions be planned and implemented with a fairly complete knowledge of key riverine and ecological processes, so that restoration and management actions can be selected to capitalize on that knowledge. (Lubinski and Barko, 2003) River ecologists view rivers and floodplains as single systems because there are important exchanges of water, sediments, nutrients, and organisms between them that are fundamental to ecological well-being and productivity. On the UMR-IWW, the river-floodplain system has become increasingly “disconnected” through the construction of levees and other flood control structures. This disconnection is system-wide, but it increases as one moves downstream on the Upper Mississippi River. In the southern portion of the Upper Mississippi River, it is estimated that roughly 50 percent of the approximately 1,006,000 floodplain acres are behind levees (Delaney and Craig, 1997).

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Review of the U.S. Army Corps of Engineers Restructured Upper Mississippi River–Illinois Waterway Feasibility Study: Second Report The construction and operations of the dam and navigation pool system have also had stabilizing effects on UMR-IWW ecology (USGS, 1999). The system of dams and navigation pools, while important for providing a reliable commercial navigation channel, has reduced the natural hydrologic cycle of (spring) flooding and (summer and fall) drawdown in the UMR-IWW. This cycle is important for, among other things, maintaining habitat and water quality in riparian wetlands and backwaters of the UMR-IWW. In other places, unnaturally rapid fluctuations in summer water levels adversely affect moist soil vegetation and aquatic plants (Ahn et al., 2004). U.S. Geological Survey scientists working within the federal EMP explained these changes as follows: A growing body of evidence indicates that physical (geomorphic) processes and features control the biological structure and diversity of large floodplain rivers, particularly at large spatial scales. Scientists generally agree that the ecological diversity and integrity of large floodplain rivers are maintained by fluvial dynamics (annual flood pulses and channel-forming floods) and river-floodplain connectivity. Anything that tends to suppress the natural flood regime or constrain channel migration will disrupt these interactive pathways and lead to reduced ecological diversity and integrity. (Delaney and Craig, 1997) The field of river science and restoration, and findings generated within the federal Environmental Management Program, point to the importance of fluvial processes in maintaining and restoring ecological productivity and diversity in large river floodplain systems such as the UMR-IWW. These findings prompted this committee to recommend in its first report that “priority should be given to restoration projects that aim to restore natural processes” (NRC, 2004a). Scientifically sound restoration within the feasibility study will thus focus on (1) reconnections of the river channel with its floodplain and (2) restoring some degree of the pre-settlement hydrologic regime. Box 3-1 provides specific examples of types of changes that could be used to promote these processes.

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Review of the U.S. Army Corps of Engineers Restructured Upper Mississippi River–Illinois Waterway Feasibility Study: Second Report Box 3-1 Restoring UMR-IWW Aquatic Ecosystems The term “restoration” is frequently used to describe efforts designed to improve the overall social value of ecological habitat. A universally accepted definition of this term does not exist, and there are often differences of opinion regarding the state that constitutes a “restored” ecosystem. Nevertheless, many measures could be implemented in the UMR-IWW to help improve ecosystem productivity and the overall social value of ecosystem habitat. These options include the following: Exposing mud flats to low, stable water levels during the summer growing season to promote growth of vegetation, with water levels drawn down late enough in the season to exclude colonization by willows and cottonwoods that would eventually shade out more diverse stands of vegetation. Exposing sand islands during the summer nesting season where federally-endangered least terns and piping plovers (and other species) can nest free from land predators. Unnatural summer water-level fluctuations that drown the nests or connect the islands to land should be avoided. Allowing a spring flood every one to three years to provide aquatic organisms access to spawning and nursery areas in expanded floodplain lakes and on the floodplains themselves. The floods should last at least six weeks, with a gradual recession (i.e., few reversals or “spikes”) to avoid stranding fish eggs and larvae. Providing accessible wintering areas for fish where water levels will not drop suddenly, water will not freeze to the river bed, current velocities are low, water temperatures remain at least 2-4° C, and dissolved oxygen concentrations remain above 3 mg/L. Feasibility Study Goals, Alternatives, and Evaluation Metrics Establishing Goals and Ranking Alternatives Proposed ecosystem improvements within the feasibility study are framed by a “vision statement” (USACE, 2004, p. 159), which describes an effort “to seek the long-term sustainability of the economic uses and ecological integrity of the Upper Mississippi River System.” The feasibility study recognizes this primary goal and lists a host of subsidiary “systemic ecosystem goals.”

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Review of the U.S. Army Corps of Engineers Restructured Upper Mississippi River–Illinois Waterway Feasibility Study: Second Report These second-tier goals reflect the content of material presented in a 1994 paper on ecosystem management (goals 1-4 below; Grumbine, 1994) and a 2000 report from the Upper Mississippi River Conservation Commission (goals 5-13 below; UMRCC, 2000). The second-tier goals are listed in the Corps feasibility report as follows: Maintain viable populations. Represent all native ecosystem types across their natural range of variation. Restore and maintain evolutionary and ecological processes. Integrate human use and occupancy within these constraints. Improve water quality for all uses. Reduce erosion and sediment impacts. Restore natural floodplain. Restore natural hydrology. Increase backwater connectivity with main channel. Increase side channel, island, shoal, and sandbar habitat. Minimize or eliminate dredging impacts. Sever pathways for exotic species’ introduction or dispersal. Improve native fish passage at dams. After defining the vision statement and this second tier of 13 goals, the feasibility study provides a long list of ecological considerations and possible “projects,” including island building, fish passage, floodplain restoration, water-level management, backwater and side channel restoration, wing dam or dike alteration, island protection, shoreline protection, topographic diversity, and dam point control. These various measures are then grouped into five different alternatives, listed as A through E. A “virtual reference” condition is presented and described as “the characteristics of a system least impaired by human activities and … used to define attainable biological or habitat conditions.” Alternative A represents a “no-action” scenario (essentially maintenance of status quo activities and expenditures), and alternatives B, C, D, and E represent increasing levels of expenditures with corresponding increases in ecological “diversity” (the virtual reference state lies beyond alternative E). Alternative E is explained as “restoration to include most environmental objectives that could be accomplished in the context of the navigation project” (USACE, 2004, p. 171). Levels of expenditures (over a 50-year period in 2003 dollars) range from roughly $1.7 billion for alternative B to roughly $8.4 billion for alternative E (USACE, 2004, p. 185). Accordingly, alternatives B through E generally entail increasing numbers of proposed projects (e.g., alternative B would entail approximately 40 “floodplain restoration” projects, and alternative E would entail about 75 such projects).

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Review of the U.S. Army Corps of Engineers Restructured Upper Mississippi River–Illinois Waterway Feasibility Study: Second Report The study (in Chapter 12) compares the different alternatives using a three-step evaluation process: (1) compare and rank alternatives using key evaluation criteria (e.g., environmental benefits, efficiency); (2) refine the alternative ranking with the remaining criteria (e.g., regional economic development, other social effects); and (3) identify other criteria, implementation considerations, or technical information not included in the evaluation scoresheet and process (including information provided by stakeholders). Under step 1, “three evaluation criteria were identified as being best suited to select the most appropriate ecosystem plan.” These were “contribution to planning objectives,” “environmental quality” (based upon criteria of “completeness” and “diversity”), and “efficiency of the alternative in addressing ecosystem needs.” The third criterion was proposed as part of the analysis of National Ecosystem Restoration (NER) benefits and was further described as a cost-effectiveness measure, defined as the ratio of project cost to acres of project “influence.” Chapter 14 of the study compares the final alternatives and selects the preferred alternative. In commenting on the alternatives, the study rejects alternatives B and C because “they do not contain all the tools and measures necessary to address restoration of key ecological processes and ecological diversity” (USACE, 2004, p. 508). Regarding alternatives D and E, the study concluded that “based on cost effectiveness, likelihood of successful implementation and reasonable estimate of potential cost shared floodplain restoration opportunities; Alternative D* is identified as the preferred ecosystem restoration measure” (p. 508).1 Evaluation Metrics and Terminology The ecosystem portions of the study contain and explain many scientific concepts, but they are often presented without a clear explanation of why they are important, how they are to be measured and implemented, and how they relate to other concepts within the study. Terms such as “robustness,” “risk,” “ecological risk assessment,” “environmental benefits,” “adaptive mitigation,” “adaptive management,” and “virtual reference” are referred to throughout the study. Although such concepts are important and may be relevant, the study usually does not fully and consistently explain the relevance of such concepts, how they are to be measured, and how they fit into overall program implementation and operations. 1   Alternative D was modified, as a result of stakeholder input and discussion, to produce a similar alternative D*. Key aspects of alternative D* are its estimated total cost of $5,182,800,000, its estimated ability to achieve eight of nine environmental objectives listed in the 2000 UMRCC report, and its estimated ability to “restore” ecology in “relation to existing condition” (USACE, 2004, p. 447).

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Review of the U.S. Army Corps of Engineers Restructured Upper Mississippi River–Illinois Waterway Feasibility Study: Second Report The components of the ecosystem part of the study, or individual restoration projects, are not clearly framed or bound together by ecosystem science principles. There are efforts to tie them back to the first- and second-tier criteria (USACE, 2004, pp. 449-450), but these efforts are weakened by the lack of clearly defined and measurable criteria. For example, goals 7 and 8 are described as “restore natural floodplain” and “restore natural hydrology.” The meanings of these terms are not clearly defined, and no measurable indices are offered that could be used to determine whether progress is being made toward a goal or to explain exactly what goal (in quantifiable and measurable terms) is being pursued and expected. For both goals it is important to clarify what is meant by “natural”; if it means “pre-settlement conditions,” there is no consideration within the study of returning the river and floodplain ecosystem to a state that existed centuries ago. In another example, in comparing alternatives A-E, the study suggests that most of the alternatives satisfy the second-tier goals adopted from the UMRCC (2000) report, but the feasibility study does not clearly explain how it was determined that a given alternative did or did not meet one or more of these criteria. Alternative D* was identified as the preferred ecosystem restoration plan because, in part, it is estimated that it will achieve eight of the nine second-tier goals (as identified in UMRCC, 2000). However, since these goals are all expressed in qualitative terms (e.g., restore natural floodplain, restore natural hydrology), it is not clear what unit(s) of measurement will be used or what threshold value(s) must be attained for a given measure to achieve its objective. River science theories and principles could be better incorporated within the process of evaluating, ex ante, the potential effects of restoration actions. The key metric for ranking and comparing restoration projects throughout the study relates to the (potential) area affected in an individual restoration effort, expressed as the “project footprint,” in most instances with units of either acres or structures. The areal extent of restoration efforts may be important in cases such as island construction projects, but this single metric is not well correlated with ecosystem function across the wide diversity of restoration projects being considered and is, thus, an inadequate metric for ranking and comparing all restoration measures. A more comprehensive, science-based system for prioritizing restoration actions would explicitly consider a broader variety of metrics, emphasize those that focus on ecosystem processes and functions, and consider restoration actions within the broader context of the entire UMR-IWW system. Clearly, the science and practice of system-level ecological restoration are in their infancy, and in many cases it is not possible to formulate and evaluate alternatives to the same degree of precision possible when economic development is the single objective. However, the feasibility study attempts to utilize traditional Corps planning princi-

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Review of the U.S. Army Corps of Engineers Restructured Upper Mississippi River–Illinois Waterway Feasibility Study: Second Report ples of alternatives evaluation that are not necessarily well suited to ecological restoration measures and objectives. This does not mean that no restoration measures should be attempted, but rather argues for the importance of a phased, adaptive implementation process. The ecological component of the feasibility study could also be enhanced by presenting proposed ecosystem improvements within a more systematic framework. Ecosystem restoration projects are presented in the feasibility study as a large menu of possible selections, but without clear, science-based and system-wide themes to help prioritize possible projects. Although all of the projects could conceivably have merit and contribute to restoration goals, the prioritization, constraints, and prospects for success of these individual projects could be better explained because there is no clear sense of which projects would be the most useful and in what sequence they might be implemented (given the large number and variety of proposed measures, along with limited resources for their implementation, some type of sequencing is inevitable). The ecological portion of the study is thus framed primarily in terms of individual, site-specific projects, where the degree of restoration depends on the size and number of projects and overall dollar expenditures. The first- and second-tier goals require clarification, further explanation, and tighter linkages with the details of project alternatives if they are to serve as useful guiding themes. The ecosystem component of the study is of mixed value because, even though it contains a large number of possible restoration measures and a great deal of information, it lacks clear explanations of the relative importance and priorities of these measures and their relationships. The limited degree of coherence within the ecosystem portion of the study renders communication and evaluation of the study’s details very difficult, and individuals unfamiliar with the study are challenged to clearly understand its structure, key assumptions, methods, metrics, and conclusions. The ecosystem component of the study also discusses critical historic properties along the river, as well as recreational boating, hunting, and social and economic issues. These factors are relevant to river ecology, and the effort to consider such variables in an attempt to increase the study’s multidisciplinary character is commendable. It is not clear, however, how these considerations enter into decisions related to ecosystem improvements within the feasibility study. Integration and Trade-Offs As explained earlier in Chapter 2, there are several prominent impacts and trade-offs between commercial navigation and river ecology within the

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Review of the U.S. Army Corps of Engineers Restructured Upper Mississippi River–Illinois Waterway Feasibility Study: Second Report UMR-IWW system. Many of these impacts on river ecology stem from the construction and subsequent operations of the navigation project, such as the ecological effects of the navigation pools and the direct impacts of barge traffic on fish mortality rates. Some impacts, however, occur in the other direction, such as when low or high water levels affect shipping (e.g., low flows in the summer of 1988, Mississippi-Missouri River floods of 1993). There are many other users of the system and they affect each other in a mixture of complementary and conflicting ways. As explained in the report from the Phase I committee, not all of these uses are fully compatible and not all users may be able to always fully enjoy the system’s benefits as they wish: “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” (NRC, 2001). Given the prominence and importance of the interconnections and trade-offs between the 9-foot channel project and river ecology, these linkages should be clearly defined and presented within the feasibility study. Biologists have documented trends indicating there is little uncertainty regarding a long-term decline of fish and wildlife resources in the UMR-IWW (USGS, 1999; Wiener et al., 1998). There have been many ecological changes across the UMR-IWW region during the past several decades that have affected river ecology in numerous and only partly understood ways. Construction of the dam and navigation pool system in the 1930s and its subsequent operations have clearly played a large role in the river system’s declining ecological trends. Accordingly, declining trends may continue as long as ecosystem restoration actions are constrained by the operations of the 9-foot channel project. It is reasonable to assume that the 9-foot channel project will continue to be operated and maintained, but it is also reasonable to assume that changes in the configuration and operations of the commercial navigation channel may be necessary to achieve different levels of ecosystem recovery. Trade-offs such as these will be integral to major UMR-IWW decisions in the future. Such trade-offs will be controversial, and decision makers should be provided good economic and environmental information in order to anticipate such trade-offs and forge polices that reflect society’s best interest. The ecosystem restoration plans presented in the feasibility study, however, pay scant attention to how restoration measures might affect other users of the system, such as commercial navigation. Although the study identifies and explains some of the impacts of the navigation pool system on river ecology, the possible effects of prospective restoration measures on commercial navigation are not broadly considered. Within the study it is stated, for example, that “pool-scale drawdowns can be accomplished while maintaining navigation” (USACE, 2004, p. 167). This is certainly a true

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Review of the U.S. Army Corps of Engineers Restructured Upper Mississippi River–Illinois Waterway Feasibility Study: Second Report statement as it applies to this specific issue. But in a broader sense it illustrates the study's general assumption that meaningful restoration can be accomplished without disturbing commercial navigation and that linkages and trade-offs between these two sectors thus need not be carefully evaluated. Small drawdowns that do not affect navigation are likely to yield small degrees of river ecosystem recovery. More challenging situations will arise if greater degrees of ecological restoration are desired in the future, and if proposed restoration actions, such as pool-scale drawdowns, would affect navigation. These types of trade off decisions pose the greatest challenges to decision makers and stakeholders. The feasibility study will be strengthened by identifying these types of prospective trade-offs and explaining the economic and environmental implications they may entail. Implementation Implementation of the ecosystem component is discussed near the end of the feasibility study. Several “adaptive implementation” options are described, with variations in initial years authorized and oversight and approvals requested. The study proposes a 15-year implementation plan, listing three criteria that will be considered in the adaptive framework: (1) best return on investment, (2) best gains in diversity, and (3) additional knowledge required to guide future investments. Although references to adaptive management concepts within the study are encouraging, these discussions suffer from lack of clarity, detail, and consistency. For example, it is not clear in what units “best return on investment” will be measured, how it is to be measured, and who will do the measuring. The same concerns hold for the “best gains in diversity” criteria. Furthermore, it is not clear how these criteria relate to the many other criteria being used in the study (e.g., first- and second-tier goals). There is also inconsistency in the presentation and use of key terms and concepts. For example, p. 516 describes adaptive management as “a process that seeks to aggressively use management intervention as a tool to strategically probe the functioning of the ecosystem…. It uses management actions as tools to not only change the system, but as tools to learn about the system.” This may be a reasonable definition, but the ecological section of the feasibility study does not explain how adaptive management concepts, such as ecosystem monitoring, policy adjustments, and stakeholder collaboration, are to be used during implementation of various ecosystem improvement measures. Such examples of inconsistency and lack of clarity make it difficult to understand how ecosystem improvements are to be implemented (time scale, resources, priorities), how their results are to be monitored, which

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Review of the U.S. Army Corps of Engineers Restructured Upper Mississippi River–Illinois Waterway Feasibility Study: Second Report tunity cost4 of the “excess” time. This process should consider, at a minimum, the costs borne by the tow being locked, other tows in the queue, and the Corps. An estimate could then be made of the number of barges that would be fitted with winches in response to that fee (based on a study of barge operator characteristics and economics, certainly something less than 100 percent). This estimate would lead to a calculation of reduced maneuver time at locks, which would lead to an estimate of reduced delay times and then to a partial measure of benefits (there may be other components). In this formulation, costs are similar to those defined in the Volpe report, except that fewer winches would be installed. A crucial part of the analysis is the assumed time savings associated with processing a winch-equipped, double-cut tow. The report from the Volpe group examined the experience of the single company that has equipped all of its barges with deck winches. Examination of the probability distributions of that company, compared to other operators, revealed that the company with the deck winches had many fewer lockages in the fourth quartile of maneuver time5. The time savings for each lock were then calculated by assuming that all fourth-quartile lockages would be processed at third-quartile maneuver times. This approach is clearly arbitrary and represents another flaw in this analysis. There is no reason to believe that fourth-quartile lockage times will be reduced to third-quartile levels (the reduction may be more or less). Similarly, there is no reason to believe that third-, second-, and first-quartile lockage times will not be reduced at all.6 Much of the data on the effectiveness of this measure used in the Volpe study was available because one large towing company had previously installed deck winches on its barges. This action was said to have been justified by the incidence of injuries to deck hands resulting from the former line-handling procedures. If true, this implies that companies can expect substantial benefits in the form of reduced insurance costs, lost time, and so on. These benefits were not included in the analysis. They are described as "not part of the scope," but in a voluntary program they would be very much part of the considerations of a company contemplating implementation (Dyer et al., 2003, p. 48). The benefit measures employed in the Volpe report are not well documented, but they appear to be confined to avoided short-run costs (payroll, 4   In this instance, “social opportunity cost” is the additional cost borne by society as a consequence of excess lockage time. It includes costs borne by the Corps, tow operators, shippers, and commodity producers. Costs are generated by a tow that is being locked, as well as by tows that must thereby wait longer in a queue. 5   The “fourth quartile” refers to the set of lockages that constitute the slowest 25 percent of all lockages. 6   The latter point is acknowledged in the report from the Volpe group (Dyer et al., 2003, p. 48).

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Review of the U.S. Army Corps of Engineers Restructured Upper Mississippi River–Illinois Waterway Feasibility Study: Second Report fuel, etc.). One issue not investigated in the Volpe report, or elsewhere, is the long-run cost of delay. If a towing company experiences chronic delay, that effectively reduces its capacity to move commodities with its existing fleet. If the company is able to increase its tariff sufficiently to compensate for this loss (as well as any increased short-run costs), it may be indifferent to the delays, but the cost will have been passed on to shippers and, further, to their clients. If competitive conditions preclude a fully compensatory increase in the tariff, then the towing company has two choices: (1) purchase and operate additional barges and towboats to regain lost capacity, and (2) incur the costs associated with lost business. In any of these cases, it appears that avoided short-run costs may underestimate the true benefits of congestion reduction. It should be noted that it was suggested in the Volpe study that partial implementation of deck winches would lead to an even lower benefit-cost ratio (Dyer et al., 2003, p. 48). The opposite, however, is the case. Given that implementation on the part of operators is voluntary, only those who foresee private benefits exceeding the costs will take this step. If the excess lockage fee is at least equal to the social opportunity cost of the time saved and if any operator voluntarily installs winches as a result of this fee, a benefit-cost ratio in excess of 1.0 is guaranteed. This does not imply any particular degree of implementation or congestion reduction (that must be estimated through analysis), but it promises that whatever happens will be beneficial. Tradable Permits. The analysis of tradable permits within the Volpe report addresses three configurations, all of which are judged infeasible and not subjected to any quantitative evaluation. Two of the three options involve a fixed, long-term scheduling system (permits issued at the beginning of the navigation year on the basis of an assumed schedule), which is argued to be impractical for U.S. inland waterway navigation. With respect to the assumed schedule, the argument is persuasive. Whether that admittedly impractical schedule could serve as an acceptable basis for the initial distribution of tradable permits is another question that is not fully explored in the report. The third option allows tows to trade places in a queue, based on trading of place-in-queue permits issued on arrival. No quantitative analysis of this option was conducted, however, so there is no information regarding the efficiency of any of these trading options. Since towing companies base decisions on their private costs, they would be expected to trade queue positions whenever the differential in private costs between the trading tows justifies such a move. This kind of transaction is inherently

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Review of the U.S. Army Corps of Engineers Restructured Upper Mississippi River–Illinois Waterway Feasibility Study: Second Report efficient, provided it leaves other tows unaffected.7 However, no analysis is offered. The Corps also reported an investigation of a “congestion fee.” This measure was evaluated separately as “alternative 2.” As described, however, it does not correspond to the technical definition of a congestion fee. The proposal is for a fixed fee levied on all commercial users of the locks, whether congestion is present or not. As such, it is better described as a “lockage fee.” Based on the Corps’ estimates of the price elasticity of water transportation, this measure appears to produce significant benefits at very modest cost. In fact, based on analysis conducted within the feasibility study, it was found that the lockage fee resulted in the largest net benefits of any alternative considered for 14 of the 15 combinations of traffic-benefit assumptions (USACE, 2004, p. 201). Nevertheless, the lockage fee was rejected as a possible strategy because (1) implementation would require a change in federal law that bans user fees, (2) no such fee has been attempted on any other U.S. waterway, and (3) the fee had questionable policy implications. The third point refers to the origin of the benefits: the fee would drive marginal users off the waterway, possibly transferring shipments to less environmentally- or socially-desirable modes of transport (this latter concern does not appear to have been investigated). Measures Not Considered: Nonstructural Waterway Traffic Management Despite a decade of review of “small-scale” measures, the consideration of nonstructural approaches to congestion management within the feasibility study is substantially incomplete. One major omission has been the failure to seriously consider a real-time traffic management system. Such a system could be designed as an expansion of the existing OMNI data collection system or as a variant of the Vessel Traffic Services (VTS) system operated by the U.S. Coast Guard in major ports. The basic requirements are that the system operator be continuously aware of the location, direction, speed, and short-term intentions of all commercial traffic on the river. Towboats could then be advised of their position in a queue before arriving at a lock and, if desirable, tows could be re-sequenced en route. One benefit of such a system is that it expands on the information available to towboat captains from the existing OMNI system, improving their ability to conserve fuel and to schedule maintenance and servicing. Although this result contributes to lower water transportation costs (the 7   In practice, tows may have to be reordered prior to joining the queue so that tows changing places do not increase approach times and thus delay other tows. The solution to this problem lies in a real-time scheduling system, as discussed below.

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Review of the U.S. Army Corps of Engineers Restructured Upper Mississippi River–Illinois Waterway Feasibility Study: Second Report study’s ultimate objective), it does not directly reduce congestion. The major benefit of a real-time traffic management system is the platform that it provides for various strategies to improve the efficiency of lock operations. For example, the third trading alternative considered, but not evaluated in the Volpe report, involves the trading of place-in-queue permits in which permits are issued as tows join the queue. To be fully effective, this alternative requires that approach times not be compromised in the course of resequencing queues. A real-time traffic management system would allow the place-in-queue permits to be assigned as tows depart the previous lock, providing time for operators to negotiate trades while under way, and further allow for re-sequencing to occur before tows reach the queue. A potentially more effective strategy may lie in a large body of Corps-funded research performed on the Ohio and Upper Mississippi Rivers over the past decade that has explored a range of decision rules for lock operations and for minimizing transport costs (see, for example, Kim and Schonfeld, 1995; Ting and Schonfeld, 1996, 1998a, 1998b, 1999, 2001a, 2001b; Wei et al., 1992; Zhu et al., 1999). These papers describe various ways of scheduling and sequencing tows to minimize overall delay time and/or transportation cost. The findings are too extensive and detailed to summarize here, but one example may suffice, taken from Ting and Schonfeld (2001b). The authors simulated operations at Ohio River lock 22 and UMR lock 25, using data from the Corps 1987 Lock Performance Monitoring System to generate service time regressions. They considered, among other things, a lockage priority rule that places tows with minimum expected service time per barge first in the queue (the “shortest processing time” (SPF) rule). This measure alone substantially reduced simulated congestion at the Ohio River lock. When compared to the existing first-come-first-served rule, the SPF rule reduced per-barge delay by 8.5 percent for arrival rates of 24 tows per day, and by 77.8 percent for arrival rates of 44 tows per day. A similar simulation was carried out for UMR lock 25, except that the SPF rule was combined with tow speed control designed to achieve just-in-time (JIT) arrival at the lock. The combination of SPF and JIT resulted in simulated short-run cost savings averaging $255 per barge per lockage (for arrival rates of 18 barges per day). It should be noted that actual implementation of either measure requires real-time traffic management for coordination of speeds and sequencing of tows. A 2003 report issued by the Center for Transportation Studies at the University of Missouri-St. Louis called for development of a Mississippi River waterway traffic appointment system, and for reexamination of the measures included in the 1999 Corps study (Ronen and Nauss, 2003; USACE, 1999). An appointment system offers another means of prioritizing tows so as to minimize the social cost of congestion. Ships approach-

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Review of the U.S. Army Corps of Engineers Restructured Upper Mississippi River–Illinois Waterway Feasibility Study: Second Report ing the Panama Canal, for example, must e-mail or fax ahead for an appointment. They are also offered the option of requesting priority treatment in return for payment of an additional fee. In this way, cargo that would involve the highest delay costs can be moved to the head of the queue. Several feasible, potentially beneficial nonstructural measures have been omitted from the Corps’ screening and evaluation of small-scale measures. In the case of the Corps-sponsored studies on scheduling referred to above, it appears that decision rules for lockage priority could lead to major reductions in delays and costs, at least in the case of high arrival rates (as predicted for the future by the Corps’ scenarios). These studies need further development and careful evaluation, but it is surprising that such a long-term program of directly applicable Corps-sponsored research, producing no fewer than nine peer-reviewed papers, was not considered in the feasibility study. Potential for Nonstructural Measures to Reduce Congestion In the report from the Phase I NRC committee, the Corps was advised to conduct a “comprehensive review and assessment of nonstructural options for improving traffic management” (NRC, 2001). That report emphasized that benefits to proposed lock construction cannot be evaluated fully until the existing system is operated more efficiently. These concerns were repeated in this Phase II committee’s initial report (NRC, 2004a). Since that 2004 report was issued, this committee has reviewed the Volpe report and many other documents and has discussed this issue with the Corps. The conclusion remains the same: review of nonstructural measures has been inadequate. This issue is crucially important for three reasons: (1) major construction projects should not be undertaken when acceptable, less costly, and equally effective nonstructural means can achieve the same end, (2) substantial uncertainty with respect to the volume of future river traffic calls for flexible, incremental approaches, which are typically best achieved through nonstructural measures, and (3) even if major construction is undertaken, effective nonstructural measures will be needed to deal with increased congestion during the construction period. Many shipping and agribusiness industry representatives argue that significant efficiency improvements in the existing system will be few and hard to find. They credit the practice of industry self-help, and a greater use of the “N-up/N-down rule,” as removing most existing inefficiencies. The Corps and the industry appear to agree that the addition of switchboats and additional mooring points will largely exhaust the feasible opportunities for reductions in congestion. This position does not consider the existence of entire categories of nonstructural measures that have been only partially

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Review of the U.S. Army Corps of Engineers Restructured Upper Mississippi River–Illinois Waterway Feasibility Study: Second Report examined, especially economic instruments (tradable permits, congestion fees, etc.) and various kinds of scheduling and appointment systems. Some of these measures may be capable of significant, cost-effective reductions of the costs of congestion. If major structural improvements are justified by expected future growth in traffic, judicious use of nonstructural measures could defer the need for some or all of those major improvements, perhaps for decades. Furthermore, these measures could reduce current delays and costs prior to the time when any major construction would be completed. The costs imposed on farmers and other shippers by the failure to manage this precious national inland waterway resource more efficiently are a matter of concern. As a matter of sound analysis, the benefits of extending locks or other waterway improvements cannot be estimated properly until the beneficial nonstructural measures have been implemented. If construction was started, nonstructural measures would be needed even more, since there would be a reduction in waterway capacity during the decade of construction, requiring still better allocation of the existing resources. It has been argued that many proposed nonstructural measures for managing traffic have limited relevance to actual conditions on the UMR-IWW. Reasons offered include the complexity and unpredictability of commercial river traffic, configuration of the lock system, hydrologic variability of the river system, and volatility of markets for transported commodities. The challenges associated with implementing nonstructural measures should not be taken lightly. It is important that consideration of any nontraditional management approach include a genuine effort to adapt it to existing conditions, rather than simply rejecting it as unsuited to those conditions. Accordingly, until careful evaluation of all potentially useful measures—preferably based on empirical data—is completed, assertions that nonstructural measures cannot be applied successfully to UMR-IWW traffic cannot be accepted. Implementing some nonstructural measures for managing waterway congestion could decrease congestion, reduce shipping costs, and use the existing waterway more efficiently. Because the costs of implementing nonstructural measures are low, and because some have positive net benefits, implementation of these measures should be of the highest priority. A comprehensive evaluation of UMR-IWW traffic management alternatives will identify and thoroughly evaluate all plausible measures. The failure to consider and evaluate the prospects of all potentially beneficial nonstructural measures for better managing waterway traffic undermines the conclusions and recommendations regarding proposed structural improvements.

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Review of the U.S. Army Corps of Engineers Restructured Upper Mississippi River–Illinois Waterway Feasibility Study: Second Report Measuring Benefits of Improvements All measures taken to improve the efficiency of navigation, whether structural or nonstructural, are expected to produce economic benefits in excess of the costs. Any measure that meets this test is said to be feasible, in the economic sense, and to result in an increase in the National Economic Development (NED) account. The prediction of costs for proposed measures is relatively straightforward; most elements of cost are calculated through conventional engineering economic procedures. The prediction of benefits, however, is much more challenging. The Corps’ Planning Guidance Notebook (USACE, 2000; see Section IV, Chapter 6) lists the four categories of benefits expected from reducing waterway congestion: Cost reduction benefits Shift-of-mode benefits Shift of origin-destination benefits New-movement benefits Note that some of these benefits will be positive, but others may be negative (i.e., offsetting positive benefits). The algebraic sum of the four categories is the estimate of total benefits. Economic Models In the case of the navigation improvements described in this report, which are generally designed to reduce congestion at specific locks or to reduce transportation cost in other ways, two general approaches to benefit estimation can be considered: A spatial equilibrium model—which reflects grain demands, supplies, prices, and transportation costs—can be used to determine commodity movements on the river and via other transportation modes with and without congestion reduction. Results of this model are then used to calculate each of the benefit components listed above. The model itself accounts for all modal shifts as well as changes in quantities. As noted in the report from the Phase I committee, and in this committee’s first report in early 2004, this is the preferred strategy. An empirical transportation demand function can be estimated for each pool and for each commodity group. This demand function, technically a “derived demand for transportation services” may reflect the factors

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Review of the U.S. Army Corps of Engineers Restructured Upper Mississippi River–Illinois Waterway Feasibility Study: Second Report described above. However, because the function is estimated from data that may or may not reflect changes of the kind under study, it may not fully capture all responses to congestion reduction. This approach is marginally acceptable, if only because it is an improvement over prior methods of measuring navigation benefits. At one time, the Corps planned to develop a spatial equilibrium model for the UMR-IWW feasibility study. This model was named the Inland Navigation Excel Spreadsheet Spatial Equilibrium Nascent Concept Execution, or the (in) ESSENCE model. The use of the underlying concepts behind this model was applauded within the NRC Phase I committee report. However, at the time of that review, the model was incomplete, and some aspects appeared to have been misspecified and/or to have been based on hypothetical data. After reviewing the ESSENCE model the Phase I committee report listed suggestions for improvement, and also recommended that an unrevised ESSENCE not be used in the feasibility study. In response to the recommendations in the NRC Phase I committee report, the Corps initiated a research program at its Institute for Water Resources (discussed below) for the purpose of developing improved economic models. Meanwhile, however, the Corps continued its use of the ESSENCE model in the same form reviewed by the Phase I committee. This Phase II committee reviewed the ESSENCE model again in its first report, concluding that “there is no useful role for the ESSENCE model in the restructured feasibility study” (NRC, 2004a, p. 23). To reiterate, the ESSENCE model in its present form serves no useful role in the feasibility study. The Corps also reintroduced the Tow Cost Model (TCM) as an alternative method of estimating benefits of reduced waterway congestion. The TCM is part of a suite of models that had previously been used for the same purpose as the subsequent ESSENCE model. The Waterway Analysis Model (WAM) simulates conditions and commodity movements on the entire navigation system. The TCM uses these outputs to generate cost-effective configurations of barges, towboats, origins, and destinations. This leads to predictions of tow arrivals at each lock. Congestion at the lock is represented by a separate queuing model (as in the case of ESSENCE). Economic benefits of congestion reduction are then estimated by the TCM. These models were developed by the Corps in the 1970s and have since been updated and modified several times. The primary limitation of the TCM is its simplistic representation of the demand for waterway transportation. To generalize, the TCM assumes that shipments will be unaffected by rising transport cost (due to increasing congestion) until it reaches the cost of the least cost alternative mode (presumed to be rail shipment). At that point, all traffic is assumed to move

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Review of the U.S. Army Corps of Engineers Restructured Upper Mississippi River–Illinois Waterway Feasibility Study: Second Report from the waterway to rail. In economic terms, the TCM assumes that demand for water transportation is perfectly inelastic for prices below the cost of rail shipment and perfectly elastic at that point. In other words, the TCM assumes that shippers will not respond in any way to rising congestion costs until water transportation becomes infeasible; at that point, all shippers will then change modes. Numerous issues are neglected in this oversimplified representation of economic demand. Even the “boundary conditions” are incorrect (there is no single alternative shipping cost—it depends on rail capacity, proximity of shippers to railheads, proximity of shipper to barge loading points, and so on). In principle, the accuracy of the boundary conditions can be improved by disaggregating shipments and applying the mode separately to each commodity and each origin-destination pair within a commodity grouping. In practice, however, the data needed to support such an analysis may be lacking. It is also questionable that any disaggregation based on shipment characteristics would identify all factors that affect the choice of water transport. Yet even if more realistic boundary conditions could be provided, the assumption of perfectly inelastic demand for all shipping costs below the boundary (alternative cost) remains at odds with reality. Through the course of this committee’s study, several academic and other experts and practitioners in the fields of grain production, shipping, and commercial transportation provided comments regarding grain shipments and multiple end uses, markets, and shipping options available to farmers. These comments indicated a strong consensus that small changes in market prices as experienced by grain producers (driven, for example, by changes in shipping costs) are sufficient to transfer significant amounts of grain from one market to another. This committee concurs with this consensus and further notes that similar factors also influence non-grain shipments. This reality is not represented in any way by a model that assumes unchanging barge movements for all shipping costs below the relevant boundary conditions. The TCM thus produces a result that is a significant, perhaps substantial, overestimate of the benefits of reduced congestion. Any calculations based on the TCM contain no information about actual benefits. The TCM contains assumptions and functions that do not adequately reflect responses of shippers to changes in shipping costs. It therefore produces results that are of only marginal use in the feasibility study. ESSENCE and Tow Cost Model Applications A Corps guidance memorandum dated August 11, 2004, stated the rationale for continuing to use the TCM. According to the memorandum, the

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Review of the U.S. Army Corps of Engineers Restructured Upper Mississippi River–Illinois Waterway Feasibility Study: Second Report Corps recommended that the original ESSENCE model could be used in conjunction with the TCM to conduct a sensitivity analysis with respect to demand elasticity. This memorandum accepted that use for that limited purpose. In implementing this approach, the feasibility study provides three measures of project benefits for each of the barge traffic scenarios: TCM—A presumed “upper bound” on benefits EUB (estimated upper bound)—Benefits calculated by the ESSENCE model, using parameter values selected to produce a high number ELB (estimated lower bound)—Benefits calculated by the ESSENCE model, using parameter values selected to produce a low number When combined with the five barge traffic scenarios, this approach produces 15 alternative estimates of project benefits for any given configuration of future navigation system infrastructure improvements. Given the long planning period and the considerable levels of uncertainty associated with future values of most key variables, this is a reasonable way to proceed. If benefits could actually be bracketed (by reliable estimates of upper and lower bounds) for each scenario, and if the scenarios were properly designed, a simplified form of risk analysis would be possible. The strategy, however, is undermined in several ways. As already noted, the scenarios are poorly designed. The TCM result is at least an approximation of the upper bound on the benefits of reduced waterway congestion, but benefit calculations from virtually any set of parameters defined by the ESSENCE model are suspect, and there is no assurance that the values computed by the Corps are above or below the true benefits of reduced waterway congestion. No credible lower bound on the benefits of proposed lock extensions is thus available. Economic Model Development The first report of this Phase II committee (NRC, 2004a) encouraged the Corps to develop a spatial equilibrium model, as had the prior Phase I committee report (NRC, 2001). To further illustrate the advice regarding the development of a spatial grain model, this committee’s first report included an appendix describing some of the desired features of such a model (NRC, 2004a, Appendix A). Subsequent to issuance of the NRC Phase I committee report, a research program—the Navigation Economic Technologies (NETS) program—was instituted at the Corps Institute for Water Resources to develop a suite of economic models for evaluation of

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Review of the U.S. Army Corps of Engineers Restructured Upper Mississippi River–Illinois Waterway Feasibility Study: Second Report inland navigation projects. The initial NETS program plan calls for three tiers of models: International traffic flow model. This model allows for deep draft multiport analysis of exports and imports, facilitating the evaluation of port improvements. It may also be capable of generating port-specific grain export shipments. Regional traffic routing model. This model would, as presently planned, generate a spatial equilibrium picture of commodity movements ultimately exported from U.S. ports (e.g., grain). Microscopic systems model. This suite of methods can generate and route individual shipments through inland waterways, while maintaining consistency with the results of the upper-tier models. These methods could include economic benefit models. The NETS program is in its early stages, and no firm decisions have been made on the specifics of the models described above. It is possible that these models may collectively satisfy the modeling criteria set forth in Appendix A, although this is not currently known. Thus, although the NETS program holds promise, results from this program have not been used to inform the feasibility study, nor is there any guarantee that the program will be continued or that its results will ever provide meaningful inputs to the policymaking process. The IWR has sought advice and assistance from a broad range of experts, inside and outside the Corps. Because of the IWR’s contacts with U.S. universities, there promises to be some degree of participation by researchers from outside the Corps. The intention is to develop credible models that have been subjected to expert review and that are transparent and data driven. A review of this research program was not part of this study or report. The Corps should be credited for initiating this program and for placing it in an organization that is relatively independent of day-to-day project considerations and has ties to the research community beyond the Corps.