by alternative modes, (2) current levels of produc- 

 tion, and (3) the distribution of economic activity. 



(a) New waterways. In the case of rail move- 

 ments, use the prevailing rate actually charged for 

 moving the traffic to be diverted to watenways. For 

 traffic induced by the waterway construct the rail 

 rate as in step 5b. 



(b) Existing waterways.iise rate and other price 

 data when available to estimate the cost of move- 

 ment by alternative modes. In the case of rail 

 movements, if the rate for that movement is not 

 now used, use prevailing rates that are (1) competi- 

 tive, and (2) for movements similar to the individual 

 move that would occur without the project. Avoid 

 the use of paper rates, i.e., rates at which no sig- 

 nificant amount of traffic is actually moved. A rate 

 is "competitive" to the extent that it is for traffic for 

 which there is intramodal or intermodal competition 

 within the relevant markets. In identifying a "simi- 

 lar" movement, the factors considered may include 

 geographic location, degree of use, characteristics 

 of terrain, backhaul, contract division, seasonality, 

 ownership of rolling stock, and physical rail connec- 

 tion to the shipper. It is the responsibility of the an- 

 alyst to select rates that, in his or her view, best 

 represent the long-run marginal costs of the move- 

 ment. Cost estimates for particular movements may 

 be useful in selecting the rate or rates that best 

 meet the criteria of competitiveness and similarity. 

 If more than one competitive and similar rate is 

 identified, an average may be used. Assume that all 

 water-compelled or water-competitive rates are 

 competitive and similar. 



2.6.10 Evaluation procedure: Step 6— Forecast 

 potential waterway traffic by commodity. 



Develop projections of the potential use of the 

 watenway under study for selected years from the 

 time of the study until the end of the project life, 

 over time intervals not to exceed 10 years. Docu- 

 ment commodity projections for the commodity 

 groups identified in step 3. 



(a) The usual procedure for constructing com- 

 modity projections is to relate the traffic base to 

 some type of index over time. Indices can be con- 

 structed by many different methods, depending on 

 the scope and complexity of the issue under con- 

 sideration and the availability of data and previous 

 studies. 



(b) Generally, OBERS projections are the demo- 

 graphic framework within which commodity projec- 

 tions are made. There are many instances, howev- 

 er, in which a direct application of OBERS-derived 

 indices is clearly inappropriate. Frequently, there 

 are circumstances that distort the relationship be- 

 tween waterway flows and the economy described 



by OBERS. Even when total commodity flows can 

 be adequately described through the use of indices 

 derived from OBERS projections, factors such as 

 increasing environmental concerns, changes in in- 

 ternational relations and trade, resource depletion, 

 and other factors, may seriously alter the relation- 

 ship between waterway commodity flows and the 

 economy described by OBERS. 



(c) If problfems of the type described in paragraph 

 (b) of this section are identified, undertake inde- 

 pendent studies to ascertain the most appropriate 

 method of projecting commodity flows. The assess- 

 ment of available secondary data forms the basis 

 of these independent studies. These data will assist 

 in delineating the bounds on the rate of increase 

 for waterway traffic, as well as facilitate a better un- 

 derstanding of the problem. Supplement these data 

 with (1) interviews of relevant shippers, carriers, 

 and port officials; (2) opinions of commodity 

 consultants and experts; and (3) historical flow pat- 

 terns. Commodity projections can then be con- 

 structed on the basis of the results of the inde- 

 pendent studies. 



(d) Generally, specific commodity studies are of 

 limited value for projections beyond approximately 

 20 years. Given this limitation, it is preferable to 

 extend the traffic projections to the end of project 

 life through the use of general indices on a regional 

 and industry basis. Such indices can be construct- 

 ed from the OBERS projections or other generally 

 accepted multi-industry and regional models. 



2.6.11 Evaluation procedure: Step 7— 



Determine future cost of alternative modes. 



(a) Future cost per unit of each commodity will 

 normally be the same as current cost. As stated in 

 2.6.3(a)(5), the without-project condition normally 

 assumes that the alternative modes have sufficient 

 capacity to move traffic at current rates unless 

 there is specific evidence to the contrary. This step 

 combined with step 6 provides a time series of 

 demand schedules specific to a particular commod- 

 ity origin-destination pattern. Address the projection 

 of any change in future prices as indicated below. 



(b) A future rate is a prevailing rate as defined in 

 step 5. It reflects exclusively a shift in rates be- 

 cause of projected changes in the volume of ship- 

 ments on a given mode or a shift from one mode to 

 another (e.g., from rail to pipeline). To support such 

 a shift, show that the increase in volume is likely to 

 lead to a change in rate; do not assume, for exam- 

 ple, that an increase in volume of traffic of a com- 

 modity from one area to another will automatically 

 ensure a more favorable high-volume rate. 



54 



