1 Economic Analysis Water Resources Planning ( EA-WRP ) Deep-Draft Waterborne Navigation Analysis An...

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US Army Corpsof Engineers R

Economic Analysis Water Resources Planning

( EA-WRP )

Deep-Draft Waterborne Navigation Analysis

An Overview

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Deep-Draft Waterborne Navigation - An Overview

• Outline or Topic Agenda

– I. Introduction; Purpose & Objectives• General References for Guidance & Procedures

– II. Basis for Benefit Measurement Benefit Categories

– III. Planning Settings

– IV. National Economic Development (NED) Evaluation Process

– V. Other\Notable Economic Considerations

(continued)

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• Outline or Topic Agenda (continued)

– VI. National Economic Development (NED Cost(s)

– VII. Navigation Data & Related Sources

– VIII. Abbreviated Exercise(s)– IX. Supplemental Information\Slides

– X. End;

Open Time for Questions/Discussion

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• Institute for Water Resources (IWR)

– Navigation & Water Resources Applications Division (CEIWR-NA)

– Ian A. Mathis (Economist); (703) 428-7257

7701 Telegraph Road

Casey Building (Building #2594)

Alexandria, Virginia 22315-3868

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• Purpose

– To provide an overview of the requirements and procedures for conducting deep-draft navigation economic analyses in accordance with standards and guidance as applied by the U.S. Army Corps of Engineers (USACE).

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• Objective(s)

– Identify the General Concepts and Procedural Steps for Economic Analysis Applied to

the Study of Deep-Draft Waterway Improvements Under National Economic Development (NED) Criteria.

– Identify primary sources of guidance and data , and exposure to some of the general

terminology applied for studies.

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• Primary References for Planning and Analytical Guidance

– Water Resource(s) Council’s (WRC) Economic and Environmental Principals and

Guidelines for Water and Related Land Resources Implementation Studies [alternatively identified as the Principals and Guidelines or “P&G”)

– Engineering Regulation (ER) 1105-2-100 [ alternatively identified as the Planning Guidance Notebook or “PGN” ] (continued)

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• Primary References for Planning and Analytical Guidance (continued)

– Planning Manual [IWR Report No. 96-R-21; November 1996]

– National Economic Development (NED) Procedures Manual - Deep-Draft Navigation

[ IWR Report No. 91-R-13; November 1991 ]

– Engineering Manual (EM) 1110-2-1613, Hydraulic Design Guidance for Deep-Draft Navigation

Projects [April 1983 or as currently revised]

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• Conceptual Basis for Benefits

– The Reduction In The Value of (Economic) Resources Required to Transport Cargo or Commodities

and

– The Increase In The Value of Output for Associated Goods and Services

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• Principal Direct Economic Benefits

– Elimination or Reductions in Transportation Cost(s)

– Benefits for Shift-of-Origin or Shift-of-Destination

– Induced Movements

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• Elimination or Reductions In Transportation Costs(s)

– Employment of Larger Vessels

– More Efficient Use of Vessels

– Lower Tug Assistance or Handlings Cost(s)

– Reductions In Transit Time (Waterborne or Landside, etc.)

– Use of Alternative Mode (Land vs. Water, etc.)

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• Shift-of-Origin/Destination & Induced Movements Benefits

– Shift-of-Origin/Destination - Realignment to/from Other Ports or Transport Facilities

(typically to reduce costs)

– Induced - Change in Mode or Scale of Cargo Throughput Activity and Related Cost(s) Via New

or Unique Movements That Would Not Have Occurred or Existed Without Waterway

Improvements

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• Planning Settings

– Historical Conditions

– Existing Conditions

– Future Conditions• “With-Project”

• “Without-Project”

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• “Without-Project” Condition(s)

– In the General Context of Planning: The Most Likely Condition(s) Expected to Prevail Over the

Planning Horizon in the Absence of a Specified Course of Action or Plan.

– Specific to USACE Navigation Studies: The Most Likely Conditions Expected to Prevail

Without the Implementation of Proposed Waterway Improvements.

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• “With-Project” Condition(s)

– In the General Context of Planning: The Most Likely Condition(s) Expected to Prevail Over the

Planning Horizon if a Given Course of Action or Plan is Implemented.

– Specific to USACE Navigation Studies: The Most Likely Conditions Expected to Prevail and Uniquely Attributable to Implementation

Proposed Improvements.

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• Basic Economic Criteria for Plan Formulation\Selection\Optimization

– Plan, Alternative or Increment Where Net Economic Benefits (Above Project Costs) are Maximized……

…Subject to Reasonable Assessment of Marginal or Incremental Economic Costs vs. Benefit(s) or Economic Return(s).

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• Basic Steps of the Evaluation Process

– As Presented by the Principals and Guidelines (P&G)

– As Presented by the NED Procedures Deep-Draft Manual

(IWR Report 91-R-13; November 1991)

• Process is Not Characteristically Comprised of Rigid or “Discreet” Requirements in Terms of a Detailed Model, Structure, or Order of Process for Analysis………

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Determine the Economic Study Area

Identify CommodityTypes, Volumes, & Flows

Project Waterborne Commerce

Determine Harbor Use With andWithout Project Implementation

Compute NED Benefits

Determine Vessel Fleet Composition and Costs

Determine Current Commodity Movement Cost(s)

Determine Alternative Movement Cost(s)

Determine Future Commodity Movement Cost(s)

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2 4

653

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WRC’s P&G 9-Step NED Evaluation Process Schematic

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Determine the Economic Study Area

Identify CommodityTypes, Volumes, & Flows

Project Waterborne Commerce

Determine Harbor Use With andWithout Project Implementation

Compute NED Benefits

Determine Vessel Fleet Composition and Costs

Determine Current Commodity Movement Cost(s)

Determine Alternative Movement Cost(s)

Determine Future Commodity Movement Cost(s)

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2

4

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3 7

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NED Procedures Deep-Draft Navigation Manual 9 Step Evaluation Process

NED Multi-Port Analysis

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• Detail of the Basic 9-Step Process

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• Determine Economic Study Area– Origin to Destination

– Will Vary by Commodity

– Competing ports and modes are factors

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• Identify Commodity Types, Volumes & Flows– Which commodities are likely to be

impacted by the proposed improvement.

– What are the expected tonnages

– What are the expected routes

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• Project Waterborne Commerce– Projections supplemented with interviews

and historical data.

– By commodity

– 20 years is usually sufficient

– Sensitivity Analysis

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• Vessel Fleet Service Composition Cost(s)

– Vessel Characteristics • Route, Commodity, Distance

• Draft, DWT, Immersion Factors

– Current and Future Fleets

– Vessel Operating Costs

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• Determine Current Costs of Commodity or Cargo Transport

(With Regard to Origin/Destination as Appropriate)

– Ocean Transit Costs

– Handling/Transfer Costs

– Hinterland/Tributary (Landside or Inland Waterway) Transit Cost(s)

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• Determine Alternative Movements Cost(s) (Next Best Alternative(s); Applicable?)

– Lightering, Topping-Off, or Offshore Facilities

– Transhipment Facilities

– Pipelines

– Traffic/Port Facility Management

– Other Transport Modes

– Competitive Harbors

– Other?

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• Determine Future Commodity Movement Cost(s)

Relative to Foreseeable & Probable Changes In:

– Fleet Service and/or Composition

– Port Logistics (Delays, Throughput Process, etc.)

– Port Throughput Capacity (Undertaken Relative to Time & Resources)

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• Determine Harbor or Waterway System Use Under “With” &\vs. “Without-Project” Conditions

– Compare costs for alternatives to determine use– Integrate Multi-Port Analysis (as Appropriate)

– Identify and Quantify Uncertainties

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• Calculate or Quantify National Economic Development (NED) Benefits

(Cost Reduction Benefits - Examples)

– Same Cargo Flow, Origin/Destination, Harbor

– Same Cargo Flow, Origin/Destination, New or Alternative Harbor

– Same Cargo Flow, Origin/Destination, Alternative Mode.

– Induced Movement

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• Notable Economic Evaluation Considerations– Fleet changes

– Service changes– Vessel Load Parameter(s) and Logistics– Commodity changes– Sensitivity– R&U

(continued)

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• General Guideline for Level of Effort for Process or Analysis

– Undertaken Until It Is or Can be Determined Additional Significant Effort or Analysis Would Not Yield or Result In a Significant Variance in Finding Concerning Disposition for Both Justification and Plan Formulation…..

…………Subject to Time and Budgetary Constraints for Studies…….

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• Historical Findings of the Army Audit Agency (AAA)– Economic benefits often or typically overstated (relative

to intent of applied guidance)

– General lack or absence of multi-port analysis

– Commodity\cargo projections not current or updated as might otherwise be appropriate

– Frequent inconsistencies in fleet service projections

– Vessel\Carrier size often overstated or overestimated

– Inconsistency(ies) in comparison of with vs. without-project conditions.

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• Notes or Questions:

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• Short Break

• 10 Minutes

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• Abbreviated Exercise(s)

– Plan Formulation\Selection\Optimization

– Sample Calculation of Vessel Loading(s) & Immersion, & Derivation of Associated cargo

Unit Costs

– Bulk Carrier

– Containerized Cargo Carrier

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• Open Period for Questions/Discussion

• END

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• Supplemental Slides\Information

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• Navigation Data & Related Sources - General– Required Sources are Multiple or Numerous……Currently There Does

Not Exist One Singular Source Applicable to the Needs of USACE Deep-Draft Navigation Studies

– Not Always Readily or Consistently Available in Desired Level of Detail or in Time Series for All Studies

– Sources Often Require Notable Lead and Labor Time to Acquire & Compile, Reconcile, and Refine

– Applicable Sources Include Governmental & Private-Sector Entities

– Some Critical Sources are Commercially-Based and Require Purchase for Acquisition

– Nature of Data Requires Update or Currency for Reasonable Analysis (reference supplemental slides for a listing of typical sources)

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• Supplemental Slides\Information for Reference\Individual Review

– General Schematics for Considerations of Risk & Uncertainty (R&U) Analysis

– General Schematics for Waterway Terminology\Nomenclature

– Information Concerning Research Efforts for Improvements to Waterborne Navigation Analysis &

Planning

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• General Schematics for Waterborne Navigation Risk & Uncertainty

– “Flow” Diagram– “Hierarchal-Order” Diagram

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Waterway System (or Feature) Dimension/Specification Uncertainty >Depth, Width, and Alignment >Length or Duration >Lead/Lag Time

EnvironmentalRisk(s)

Waterway System (or Feature) Maintenance Uncertainty > Dredging\Excavation - Volume, Scheduling, & Cost(s)

> Material Disposal

Shoaling/Sedimentation Uncertainty > Sediment Flow/Transport - Degree, Nature, and Location of Material Deposition

> Other

Fleet Forecast UncertaintyCommodity Forecast Uncertainty

Vessel Operations Uncertainty

National Economic Development (NED) Cost(s) Uncertainty

National Economic Development(NED) Benefit(s) Uncertainty

Vessel Safety> Vessel Clearance(s) - Underkeel/Passing

Clearance(s)

> Maneuverability

Vessel Traffic Uncertainty >Cargo/Commodities >Service Schedule(s) >Vessel Specifications

Deep-Draft Navigation Risk(s) & Uncertainty (R&U) (“Flow” Diagram)

Total Navigation Study/Project Uncertainty

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Navigation Project Uncertainty

NED Cost(s) Uncertainty

NED Benefit(s) Uncertainty

Voyage Cost Estimates

Construction Cost(s)

Vessel Operating Practice(s)

Traffic Projections

Maintenance Cost(s)

Disposal Cost(s)

Construction Quantities

Maintenance Quantities

Design Vessel Design Conditions

Design Dimensions

Advance Maintenance Quantities

Design Quantities

Dredging Allowance

Dredging Allowance

Existing Dimensions

Operating Cost Estimates

Commodity Projections

Fleet Projections

Dredging Cost(s)

Disposal Cost(s) Dredging Cost(s)

Advance Maintenance Quantities

Existing Dimensions

Deep-Draft Navigation Risk(s) & Uncertainty (R&U) (“Hierarchal-Order” Diagram)

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• General Schematics for Waterway Terminology or Nomenclature

– Conceptual Coastal Waterway\Entrance Layout• (Overhead\Horizontal Plane Perspective)

– Waterway\Channel Cross Section(s)• (Vertical Plane Perspective; Typical Interior\Protected vs.

Entrance\Ocean Approach Channel Segments)

– Vessel Underkeel Clearances and Waterway Specifications

• (Cross Section;Vertical Plane Perspective)

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Ocean Approach Contour

Turning\Maneuvering Basin

Transit Channel Segment

Quay or Berthing Area(s)

Ocean Approach Reference Depth: 48.0 Feet MLLW

Interior\Protected Reach Reference Depth: 45.0 Feet MLLW

Transit Channel Wideners

Turn\Transition

Protective Jetty(ies)

Conceptual Waterway\Entrance Layout

Interior\Protected Reach

Ocean Approach\Entrance

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General Channel Cross Section SchematicProtected Water Reaches\Interior Channels *

(Basic Increments for Depth Excavation)

Margin for Dredging Tolerance ( Allowable )

Margin for Advance(d) Maintenance ( Required )

Waterway Reference Depth ( as Authorized & Maintained; Includes Allowances for Squat and Freshwater\Load Zone Sinkage; Required )

Mean Tide Variation Above Reference Datum( MLW to MHW or MLLW to MHHW )

Reference (Bottom) Width

0.0 ft.

-45.0 ft.

+5.0 ft.

-45.0 ft. – (1+)

-45.0 ft. – (1+?)

* Vertical Plane Perspective of Waterway Cross Section

-45.0 ft. – (1+)

-45.0 ft. – (1+?)

+5.0 ft.

-45.0 ft.

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General Channel Cross Section SchematicOcean Approaches\Entrance Channels *(Basic Increments for Depth Excavation)



Waterway Reference Depth ( as Authorized & Maintained; Required )


Reference (Bottom) Width-45.0 ft.

-45.0 ft. – (1+?)


Margin for Coastal\Open Water Climatic Conditions ( Required )

0.0 ft.

-45.0 ft. – (2+)

+5.0 ft.

-45.0 ft. – (1+)-45.0 ft. – (1+)

-45.0 ft. – (1+?)

-45.0 ft. – (2+)

+5.0 ft.

-45.0 ft.

Marginal Width for Coastal\Open Water Climatic Conditions

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Vessel Underkeel Clearance(s) and General Waterway Depth Specifications

Mean Bed Level

Vessel Vertical Motion Due to ClimaticConditions (Significant Wind & Waves, etc.)

Vessel Squat (Dynamic\Underway)

Net Safety Clearance

Dredging Tolerance ( Dredge Allowable )

Reference Datum (i.e., MLW or MLLW)

Advance(d) Maintenance ( Dredge Required )

Effect of Freshwater (Sinkage)

Mean Tide Variation (MTV)

Gross Underkeel Clearance(Static condition)

Mean High Reference Level Above Reference Datum (I.e., MHW or MHHW)

Vessel Loaded\Laden Draft (i.e., Transit Draft; Static Condition)

Vessel Hull

Waterway Reference Depth( as Authorized & Maintained;

Dredging Depth Margin Required )

Waterway Design Depth(s) (or Increments)

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• Supplemental Slides\Information for Reference\Individual Review

– Information Concerning Research Efforts for Improvements to Waterborne Navigation Analysis & Planning

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• Activities for Integration of Engineering and Economic Analysis

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[Undertaken with the Support of the U.S. Naval Academy USNA)]

• Design Procedure Literature Review

• Comparison of Study Procedures (& field surveys)

• Channel Design & Maintenance Assessment

• Safety Performance Review

• Shipping Trends Analysis

• Summary Report of Findings & Recommendations

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• Ongoing Investigations\Evolving Methods or Guidance

– Efforts to Enhance the Integration of Engineering & Economic Analysis for Planning of

Waterway Design.

– Efforts to Develop Practical/Applied MethodsAnalysis of Risk & Uncertainty (R&U) in

Planning of Deep-Draft Navigation Projects.

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• Efforts to Develop Practical/Applied Framework for Analysis of Risk & Uncertainty (R&U) of Deep-Draft Navigation Projects

– Literature Review and Survey of Methods

– Delineation of Parameters Considered Most Significant

– Development of Risk-Based Computerized Models for Standardized Practice

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• Navigation Data & Related Sources:

Cargo/Commodity Data

– Waterborne Commerce Statistics Center (WCSC)

– Port(s) Authorities

– Port Maritime Exchanges

– Industry• Journal of Commerce (Port Import/Export Reporting

System or PIERS) (continued)

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• Navigation Data & Related Sources

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• Navigation Data & Related Sources

– Traffic\Commerce Data

• Cargo/Commodity Movements– Type and Volume of Movement(s)

– Origin(s) and Destination(s)

– Handling Requirements

– Other

(continued)

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• Navigation Data & Related Sources– Traffic\Commerce Data (continued)

• Vessel/Fleet– Service Frequency by Type and Class of Carrier– Type and Tonnage of Cargo Handled– Physical Characteristics and Operating Cost(s)– Other

» Port/Landside Facility Operations» Independent and Industry Forecasts» Other

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• Navigation Data & Related Sources: (continued)

– Vessel/Fleet Data– Waterborne Commerce Statistics Center

(WCSC)– Lloyd’s Register of Ships (LR)– Lloyd’s Voyage Records– Clarkson Ship Register/Research Studies– Janes Maritime References (continued)

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• Navigation Data & Related Sources: (continued)

– Fairplay Ship Register– Journal of Commerce (JOC) - Port

Import/Export Reporting Service (PIERS)– Pilot’s Log(s)– Shipping/Steamship Agents– Vessel Operators/Owners– Other

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Ocean Approach Contour

Turning\Maneuvering Basin

Transit Channel Segment

Quay or Berthing Area(s)

Ocean Approach Reference Depth: 48.0 Feet MLLW

Interior\Protected Reach Reference Depth: 45.0 Feet MLLW

Transit Channel Wideners

Turn\Transition

Protective Jetty(ies)

Conceptual Waterway Layout

Interior\Protected Reach

Ocean Approach\Entrance

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General Channel Cross Section SchematicProtected Water Reaches\Interior Channels *

(Basic Increments for Depth Excavation)



Waterway Reference Depth ( as Authorized & Maintained; Includes Allowances for Squat and Freshwater\Load Zone Sinkage; Required )



0.0 ft.

-45.0 ft.

+5.0 ft.

-45.0 ft. – (1+)

-45.0 ft. – (1+?)


-45.0 ft. - (1+)

-45.0 ft. - (1+?)

+5.0 ft.

-45.0 ft.

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-45.0 ft.

-45.0 ft. – (1+?)



0.0 ft.

-45.0 ft. – (2+)

+5.0 ft.

-45.0 ft. – (1+)-45.0 ft. – (1+)

-45.0 ft. – (1+?)

-45.0 ft. – (2+)

+5.0 ft.

-45.0 ft.

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0.0 ft.

-45.0 ft.

+5.0 ft.

-45.0 ft. – (2+)

-45.0 ft. – (1+?)

* Vertical Plane Perspective


-45.0 ft. – (1+)

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Vessel Underkeel Clearance(s) and General Waterway Depth Specifications

Mean Bed Level

Vessel Vertical Motion Due to ClimaticConditions (Significant Wind & Waves, etc.)

Vessel Squat (Dynamic\Underway)

Net Safety Clearance

Dredging Tolerance ( Dredge Allowable )

Reference Datum (i.e., MLW or MLLW)

Advance(d) Maintenance ( Dredge Required )

Effect of Freshwater (Sinkage)

Mean Tide Variation (MTV)

Gross Underkeel Clearance (Static)

Mean High Reference Level Above Reference Datum (I.e., MHW or MHHW)

Vessel Loaded\Laden Draft (i.e., Transit Draft; Static Condition)

Vessel Hull

Waterway Reference Depth( as Authorized & Maintained;

Dredging Depth Margin Required )

Waterway Design Depth(s) (or Increments)

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