Looking Beyond the Benefit-to-Cost Ratio: Why America’s Inland Waterways Deserve a Broader Measure of Value

Every year, the President’s budget proposes investments in infrastructure projects across the country. For navigation projects on America’s inland waterways, one of the most important factors influencing whether a lock and dam modernization project advances in the annual budget process is its benefit-to-cost ratio (BCR).

On its surface, the concept sounds simple and sensible. A project’s benefits should exceed its costs. The higher the ratio, the stronger the justification for federal investment.

But when it comes to inland waterways infrastructure, the formula used by the U.S. Army Corps of Engineers captures only a fraction of the value these projects provide to the Nation. As a result, some projects that are critically important to the economy, national security, and energy supply may appear less beneficial on paper than they truly are in practice.

What is a Benefit-to-Cost Ratio?

The Corps calculates a BCR by comparing the expected economic benefits of a project to the cost of constructing it. For inland navigation projects, the quantified benefits are limited to cost savings- an estimate of how much money shippers will save by moving freight by barge versus another mode of transportation like truck or rail which automatically assumes there is capacity to accommodate the volumes currently transported by barge.
The inland waterways system moves hundreds of millions of tons of cargo annually, including grain, fertilizer, coal, petroleum products, aggregates, chemicals, and other bulk commodities. Even small improvements in efficiency can generate significant economic benefits. The problem is not what the BCR measures; the problem is what it does not measure.

A System Providing Far More Than Transportation Savings

America’s inland waterways network is much more than a freight transportation system. It is a foundational piece of national infrastructure that supports numerous public benefits extending well beyond shipper cost savings.

Locks and dams help maintain a reliable navigation channel that enables U.S. agricultural exports to reach global markets competitively. A disruption at a major lock can ripple through supply chains, increase transportation costs, and weaken the international competitiveness of American farmers and manufacturers.

The system is also essential to energy security. Inland waterways transport vast quantities of petroleum products, coal, chemicals, and components used throughout the Nation’s energy sector. Maintaining reliable movement of these commodities helps ensure affordable and dependable energy supplies for homes, businesses, and industries.

Moreover, inland waterways provide critical resilience and redundancy during disruptions to other transportation networks. When highways become congested, rail service is constrained, or national disasters affect transportation infrastructure, the option rivers provide is even more crucial.
Yet these broader economic and strategic benefits generally do not appear in traditional navigation BCR calculations.

The National Security Dimension

Perhaps the most significant omission is national security. The Department of Defense [War] and the Nation’s industrial base depends on reliable transportation networks capable of moving large volumes of critical materials. America’s waterways support shipyards, energy facilities, steel production, agricultural output, and manufacturing operations that contribute directly or indirectly to national defense readiness.

The inland waterways system itself can be viewed as strategic infrastructure. Just as the Nation invests in highways, ports, airports, and military facilities because they serve broader national objectives, locks and dams support capabilities that may become especially important during emergencies or conflicts.

A lock modernization project may not generate enough transportation cost savings alone to produce a particularly high BCR. However, if that same project strengthens supply chain resilience, supports defense-related industries, and provides transportation redundancy during crises, its actual value to the Nation is substantially greater than the ratio suggests.

Global Competitiveness Matters

The United States competes in a global market where transportation efficiency directly affects economic success.

Many of America’s major trading competitors continue investing heavily in transportation infrastructure to lower logistics costs and improve export performance. Aging inland waterways infrastructure places the United States at a disadvantage when breakdowns and delays increase transportation costs for domestic producers.

The average age of many locks on the inland waterways system exceeds their original design life and unexpected outages become increasingly likely as infrastructure ages. When key locks fail, the consequences extend far beyond local communities. Exporters lose reliability, manufacturers face higher costs, and international customers may seek alternative suppliers.

These impacts affect national economic competitiveness, but they are not fully reflected in traditional project economics.

Toward a More Comprehensive Evaluation Framework

None of this suggests that benefit-to-cost analysis should be abandoned. Fiscal discipline and economic accountability remain essential for responsible stewardship of taxpayer dollars. However, major infrastructure investments should be evaluated using a framework that recognizes both economic efficiency and strategic national interests.

America’s inland waterways are one of the Nation’s greatest competitive advantages. They move freight safely, efficiently, and with lower emissions than most transportation alternatives. More importantly, they support food security, energy security, economic growth, military readiness, and the resilience of domestic supply chains.

If decision makers continue focusing solely on what can be easily measured, they risk undervaluing infrastructure that is vital to the Nation’s future.