San José State University
Department of Economics
& Tornado Alley
The Tennessee Tombigbee Waterway Project is infamous in the field of cost benefit analysis. The idea behind the project seems reasonable. As can be seem from the map below the Tennessee River in its westward journey to the Mississippi turns south and comes within about 500 miles of the Gulf of Mexico before turning north to travel several hundred miles to the Ohio. It seemed a shame that any Tennessee River transports that are destined for the Gulf have to travel hundreds of miles further to the north and back when they were so close to the Gulf. The Tennessee Tombigbee Waterway is a 232 mile channel cut from the Tennessee River to connect to the Tombigbee River which empties into Mobile Bay on the Gulf of Mexico. Any traffic from the Gulf to the Tennessee Valley could also use this route. It was also possible in the imaginations of the proponents of the project when it was being proposed that some shippers on the Ohio River might use the Tennessee Tombigbee Waterway for traffic destined for the Gulf.
The location of the Tennessee Tombigbee Waterway with respect to the Tennessee Valley Authority Project and rest of the Mississippi-Missouri-Ohio River system is shown below.
The project seems simple on a map but the costs are unexpectedly high. In order for the waterway to link the Tennessee and Tombigbee Rivers there is a 27 mile long canyon that has to be cut and the earth moving involved is on the order of that involved in the Panama Canal. But this is not the only costs. There is also 205 miles of canals involving five dams and ten locks. There is also considerable effort involved in widening and straighening the natural channels.
The original estimate of the U.S. Army Corps of Engineers which would be responsible for the construction of the waterway was that it would cost $323 million. This was in 1970. In 1975 the Corps reported to Congress that the cost would be $815 million. In 1976 the cost estimate was $1360 million, $1.36 billion. There does not appear to be much objective basis for any of these figures. The early estimates seemed to have been chosen purely on the basis of their impact on Congress and the public. Estimates of construction costs from outside of the Corps were in the range of two to three billion dollars. The actual cost upon completion in 1985 were just under $2 billion.
While the early cost estimates for the waterway were based upon nothing of any substance the estimates of the benefits seemed to have been based upon less than nothing. While the waterway might involve a time saving for some shippers there are factors which might preclude its use. For example, the locks preclude the use of barge tows (trains) of more than eight barges whereas on the Mississippi as many as 45 barges can be linked together. Thus some of the benefits attributed to the waterway were for shippers the Corps or outside consultants thought might use the waterway but, in fact, these shippers had no intention of using it. Millions of dollars of benefits that the Corps or their outside consultants attributed to the waterway evaporated upon scrutiny. Those that could not be scrutinized such as Miscellaneous seemed to thrown on the basis that there must be some benefits somewhere.
In the early days of the project as the cost estimates rose to more realistic levels the Corps apparently withheld the new cost figures from Congress while the benefit figures were being inflated to comparable levels.
In 1945 the Corps gave an estimate of the ratio of benefits to cost for the waterway of 1.08 to 1.24. There was most likely little or no factual basis for these figures at all but by giving a range of values it suggests to the public that the figures were arrived at by objective methods but that there was some uncertainties that could not be resolved. Since the range of values is similar to what had been found for other public works it seemed that the waterway was a legitimate candidate for funding. A professional review by the noted economist Robert Haveman concluded that the benefit cost ratio could be no greater than 0.3. This means the building of the project would waste 70 percent or more of the funds invested in it.
Despite all of the evidence that the waterway should not be funded, it was funded. The explanation is that it was supported by powerful members of Congress from the area of the project such as Senator John Stennis and Congressman Jamie Whitten of Mississippi. John Stennis was a powerful figure in the Senate but for the Corps of Engineers the more important fact was that Stennis chaired the subcommittee which sets the recommended budget for the Corps of Engineers. Representative Jamie Whitten was chairman of the House Committee on Appropriations. Thus if the Corps wanted budget approval for its projects it had to give its support to the Tennessee Tombigbee Waterway. Why would Stennis, Whitten and others want the waterway when the evidence indicated that it would be a colossal waste of the public's money? There would not be that much benefit in Mississippi except for the construction companies and workers involved in the actual construction of the waterway. It was a matter not of the amount of benfit and cost but a matter of the incidence of benefit and cost. The cost of the waterway fell on the general public of America whereas the benefits were concentrated in the workers and businesses of the politicians' constituencies.
The Tennessee Tombigbee Waterway was approved shortly after World War II. At the time it was considered a project much like the Tennessee Valley Authority program. But construction of a project involves at least two stages; legislative approval or authorization of the project and then, separately, the appropriation of funds to actual carry out the project. The initial appropriation of funds for the Tennessee Tombigbee Waterway did not come until 1970. Opponents of the project in Congress and outside fought the project for a decade or more. It was deauthorized at one point. President Jimmy Carter included it on his hit list of projects he wanted to cancel. The proponents were able to overcome the weak or nonexistent economic justification of the project, and organized opposition focusing on its environmental impact.
After the waterway was completed in 1985 recreational boating was more common on it than commercial shipping. This led to some ludicrous scenes. The locks were built to dimensions of 110 feet wide and 300 feet long to accomodate eight barges and their towboats. The largest lock raised or lowered the vessel passing through by 84 feet. A passage through that lock involved 45 million gallons of water filling or being emptied from the lock. It is not uncommon for a small recreational boat measuring perhaps two feet by fifteen feet to pass through a lock measuring 110 feet by 300 feet and require as much as 45 million gallons of water to change its level for the next section of the waterway.
In 1988 the Tennessee Tombigbee Waterway did get increased usage by commercial shippers. A drought in the Mississippi-Missouri watershed lowered the level of the Mississippi and made some shipments hazardous on the Mississippi. Some shippers opted to use the Tennessee Tombigbee Waterway. The recreational boaters complained of this intrusion into their domain.
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