60 MULTIPLE PURPOSE RIVER DEVELOPMENT 



distributed to other factors, and they escape appropriation, through 

 user charges, as a return to reclamation investment.^*' 



INLAND WATER NAVIGATION 



Indivisibility and interdependence have been long recognized in 

 connection with transportation facilities." A particular dam which 

 provides a slack-water channel making navigable a certain reach of 

 the river will be of limited usefulness unless related reaches are 

 developed in a continuum between principal trade centers. Indivisi- 

 bility of this kind, as in the case of railroads, effectively precludes 

 marginal doses of investment in opening up a new channel of com- 

 mercial intercourse. Under the circumstances, financial returns to 

 investment in developing portions of a navigation system would 

 compare unfavorably with returns to alternative investment possi- 

 bilities. If such investment is motivated by national long-run 

 developmental objectives, uncompensated gains to third parties may 

 justify subsidies of various forms, such as the land grants to achieve 

 transcontinental railroad expansion. However, in the absence of 

 incentives obtained outside the market, the market mechanism will 

 fail to allocate resources for providing facilities where a large part 

 of the value which accrues to individuals cannot be appropriated 

 from recipients by means of pricing. 



Provision of a minimum channel depth — or stream regulation to 

 achieve this result — will also provide minimum stream flow, which 

 mitigates pollution concentrations that frequently reach critical 

 proportions.^^ Incidental pollution abatement achieved through 

 regulating stream flows to meet the navigation objective, by reduc- 

 ing water treatment costs, represents an uncompensated service to 

 those employing the stream as a source of water supply. Similarly, 

 there is no compensation from those who, in the absence of the 

 pollution abatement, would be required by legal measures to incur 



" See Federal Reclamation by Irrigation, Senate Document No. 92, 68th Con- 

 gress, 1st Session (Washington: Superintendent of Documents, 1924), pp. 118 ff.; 

 also, H. E. Selby, "A Method of Determining Feasibly Irrigation Payments," 

 Journal of Farm Economics, August 1942. 



" See, for example, K. William Kapp, The Social Cost of Private Enterprise 

 (Cambridge: Harvard University Press, 1950), Chapter 14. 



^ The flow of an extremely variable river such as the Tennessee would fluctu- 

 ate between 5,000 and 500,000 feet per second under unregulated conditions. 



