Economic Foundations of Ohio River Navigation Investment Model

Abstract

The Ohio River Navigation Investment Model (ORNIM) estimates the benefits of navigation improvements and balances those estimated benefits against the estimated costs of improvements. The economic assumptions within ORNIM are identified; the rationale for these assumptions is provided; and how these assumptions alter the estimates of inlandwater navigation benefits, as compared with those of the theoretical model, are addressed. ORNIM is a spatially detailed partial equilibrium model that incorporates the following assumptions: ( a) demand for individual movements, provided exogenously, is perfectly inelastic; ( b) willingness to pay (WTP) for individual river movements is equal to the exogenously given least-cost alternative rail rate; and ( c) the supply of rail for individual movements is perfectly elastic at the exogenously given rail rate. The first assumption biases upward estimates of with-project benefits. However, empirical evidence on demand elasticity and WTP suggests that these assumptions are reasonable in the short run. In the long run, decisions to move cargo by water depend only in part on river rates, with environmental and energy policies also being critical. The demand for waterway movements is determined exogenously to ORNIM, and the Corps' recent scenario-based approach to demand projection is laudable. The third assumption unequivocally biases downward ORNIM's estimate of with-project benefits. Future ORNIM enhancements include improvements in analyzing congestion fees, environmental externalities, traffic management, and system reliability as well as improvements in data quantity and quality. ORNIM, like other navigation models, is data constrained. Without significant data improvements, attempts to relax economic assumptions within ORNIM are of questionable value.

Impacts of combining partial and general equilibrium modelling in freight transport analyses – a forest sector case study from Norway

“…The demand for freight transport is a derived demand resulting from the need to move commodities over geographical space, and supply requires infrastructure services to be available to the operators. Thus, it is given from the outset that the freight market is influenced by multiple actors with different demands both spatially and over time (Friedlaender and Spady 1980, Inaba and Wallace 1989, Curlee et al 2004. Transport considerations influence industrial location and selected freight patterns.…”

Simulation-Based Network Maintenance Planning and Scheduling

“…The methods for allocating maintenance funds in previous studies are not sufficient for optimizing maintenance planning and scheduling. Recently, the U.S. Army Corps of Engineers introduced a new Ohio River Navigation Investment Model (ORNIM) to measure incremental system navigation transportation costs for proposed infrastructure investments, which include construction, rehabilitation, and maintenance (14,15). It optimizes the investment plans in ORNIM's…”

Incorporating Complexity and Uncertainty in Planning Models for Engineering: Economic Analysis within the U.S. Army Corps of Engineers

“…problems in characterizing shipper response to anticipated transit times and reliability, in terms of timing of shipments and modal choice. The Corps had developed and applied a number of previous Monte Carlo simulation models that address inland navigation issues, including the Waterway Analysis Model (WAM), NavSym (Institute for Water Resources 1999), the Life Cycle Lock Model (LCLM) (Institute for Water Resources 1999), as well as the Ohio River Navigation Improvements Model (ORNIM) (Curlee 2004). These models dealt with some, but not all, of the issues noted above.…”