An Interindustry Approach to Financing Small Port Development and Maintenance

Political support in Washington is leaning toward shifting the responsibility of a large portion of the dredging expenditures of US ports to local interests. Advocates believe this would encourage local governments to dredge only where the project is economically sound. Senate bill 1692 proposed that local interests could increase their portion of the costs of maintenance and improvement of the dredging projects by charging user fees based on tonnage of cargo handled by the port. This approach would favor the larger ports since they would be able to offer lower charges to shippers than the regional ports. An alternative approach would be to tax the region's businesses and industries on the basis of the marginal benefits they receive from the port. This would enable the port to lower user fees, thus raising both profits and the overall viability of commercial activity for the port. A regional input-output model of 3 South Carolina counties is developed to show how such a model can identify which sectors are port beneficiaries and what those benefits are.