Tolls: Efficiency and Equity Issues for Inland Waterways

Transportation requires large amounts of capital in fixed facilities such as roads, tracks, or canals. Inland waterway transport is unique among modes, since it neither owns its right-of-way nor pays taxes to support its construction and maintenance. Although user charges are widely employed to recover the costs of publicly provided investments, proper theoretical foundation has not been made for their application to inland waterway transport. In this paper we shall provide this foundation focusing on efficiency of allocation of resources, on equity of taxation, and on administration simplicity of each toll scheme. §1 of this paper presents the criteria to be used in evaluating waterway user charges. §2 appraises possible alternative tolls and estimates the rates that would be needed to recover current expenditures. A combination of toll schemes (segment tolls, locking fees, and congestion tolls) are argued to be economically and politically feasible and to dominate fuel taxes and license fees. The Appendix presents an example of the benefits and costs of waterway expansion and a test of the predictive power of the queueing model.