2.6.12 Evaluation procedure: Step 8— 

 Determine future cost of waterway use. 



Two separate analyses make up this step. First, 

 analyze the possibility of changes In the costs of 

 the wateway mode for future years for individual 

 origin-destination commodity combinations. Second, 

 analyze the relationship between watenway traffic 

 volume and system delay. Do this second analysis 

 in the context of the total volume of traffic on the 

 watenA^ay segments being studied for with- and 

 without-project conditions. This analysis will gener- 

 ate data on the relationship between total traffic 

 volume and delay patterns as functions of the mix 

 of traffic on the waterway; it may be undertaken 

 iteratively with step 9 to produce a "best estimate." 



2.6.13 Evaluation procedure: Step 9 — 



Determine waterway use, with and without 

 project. 



At this point the analyst will have a list of com- 

 modities that potentially might use the waterway 

 segment under study, the tonnages associated with 

 each commodity, and the costs of using alternate 

 modes and the waterway, including system delay 

 functions with and without the project over time. 

 Use this information to determine watenway use 

 over time .with and without the project based upon: 



(a) A comparison of costs for movements by the 

 watenway and by the alternative mode, as modified 

 by paragraph (b) of this section. 



(b) Any changes in the cost functions and 

 demand schedules comparing (1) the current and 

 future without-project conditions and (2) the current 

 and future with-project condition. Conceptually, this 

 step should include all factors that might influence 

 a demand schedule; e.g., impact of uncertainty in 

 the use of the waterway; ownership of barges and 

 special equipment; level of service; inventory and 

 production processes; and the like. As a practical 

 matter, the actual use of a waterway without a cost 

 savings or nonuse of a watenway with a cost sav- 

 ings depends on the knowledgeable judgment of 

 navigation economists and industry experts. 



(c) Account for the "phasing in" or "phasing out" 

 of shifts from one mode to another in the analysis. 

 Base diversion of traffic from other modes to the 

 waterway, and from the waterway to other modes 

 as the waterway becomes congested, on expected 

 rate savings as adjusted by any other factors af- 

 fecting the willingness of users to pay or the speed 

 of the response mechanism to changes in the rela- 

 tive attractiveness of alternative modes. Specifical- 

 ly, determine diversions from congested waterways 

 in the order of the willingness of users to pay for 



waterway transportation. Divert users with the 

 lowest willingness to pay first. 



2.6.14 Evaluation procedure: Step 10— 

 Compute NED benefits. 



Once the tonnage moving with and without a 

 plan is known and the alternative costs and water- 

 way costs are known, total NED navigation benefits 

 can be computed at the applicable discount rate: 



(a) For cost reduction benefits, the benefit is the 

 reduction in cost of using or operating the water- 

 way; the cost of the alternative mode is a factor in 

 determining whether the tonnage would move both 

 with and without the project but is not a factor in 

 computing benefits. Cost reduction benefits are 

 generally limited to evaluation of existing water- 

 ways. The benefits for current and future cost re- 

 ductions are reflected by the difference in watenway 

 costs (steps 4 and 8) with and without the project. 

 Compare waterway cost data (steps 4 and 8) with 

 the alternative mode costs (steps 5 and 7) in order 

 to determine the traffic flow by mode over time 

 (steps 3 and 6). 



(b) For shift of mode benefits, the benefit is the 

 reduction in costs when the alternative movement 

 is compared with the waterway. These benefits 

 apply to new or existing waterways. Cost differ- 

 ences between the alternative mode and the water- 

 way mode (step 5— step 4 x step 3 and step 7 — 

 step 8 x step 6) will identify the shift of mode bene- 

 fits over time. 



(c) For shift of origin-destination benefits and 

 new movement benefits, the benefit is the value of 

 the delivered product less the transportation and 

 production costs with the project. The transporta- 

 tion cost without the project (assuming the with-pro- 

 ject movement would have occurred) is a factor in 

 categorizing these benefits but is not a factor in 

 computing them. The upper limit of these benefits 

 can normally be determined by computing reduction 

 in transportation charges achieved by the project. 

 These can be a reduction in watenA^ay costs (steps 

 4 and 8) with and without the project or changes in 

 mode (step 5— step 4 and step 7— step 8). 



2.6.15 Evaluation procedure: Problems in 

 application. 



(a) Changes in system delays. Differences in 

 system delays resulting from project alternatives 

 are difficult to compute. An assessment of system 

 delays within the state of the analytic art is neces- 

 sary for a comprehensive benefit analysis. Delays 

 at all points in the system should be analyzed only 

 to the extent that project formulation and evaluation 



55 



