Oct 20, 2016
This week the U.S. Department of Agriculture (USDA) released a report on the economic impact of the hypothetical closure of locks on the Upper Mississippi River and the Illinois River. The report titled, Economic Impacts Analysis of Inland Waterways Disruptions on the Transport of Corn and Soybeans, was commissioned by USDA and conducted by the University of Tennessee.
This study examines the economic impacts to corn and soybean stakeholders and the transportation industry if long disruptions were to occur due to lock closures for major repairs.
The study considered hypothetical disruptions if lock closures were to occur at Mississippi River Lock 25 and Illinois River La Grange Lock in the 2024-25 timeframe. These locks were selected because they are representative of the entire system and of significant importance to the agricultural sector. The two locks are analyzed independently and various potential changes in rail rates are incorporated in the disruptions scenarios: (1) no change, (2) an increase of 5 percent, and (3) an increase of 15 percent. The report looked at how traffic is diverted by a lock closure and the revenue shifts between the modes as a result of reduced navigation. Overall economic impacts are measured by combining the transportation sector impacts with the impacts on the corn and soybean sectors.
Changes in economic surplus of the corn and soybean sector consider a loss in profit by the producer and increased purchase costs incurred by the consumer resulting from increased transportation costs.
Some of the conclusions of the study include:
The full report can be viewed here.