New waterway: boon for economy or boondoggle for taxpayers?

It's a $2 billion shortcut. Paid for by the nation's taxpayers, the Tennessee-Tombigbee Waterway is a giant water-filled trench connecting those two rivers. For barge operators in some Eastern states, it provides a shorter route to the Gulf than does the Mississippi.

The largest project ever undertaken by the Army Corps of Engineers, it is also one of the most controversial. Dedication ceremonies for the waterway June 1 in Columbus, Miss., and Mobile, Ala., did not mark the end of the controversy. The project will be closely watched for years to see if enough people use it to justify its expense and environmental damage.

The waterway has been condemned by critics as a classic example of government waste, and has been praised by its supporters as a boon to one of the nation's poorest areas, along the Alabama-Mississippi border.

The corps has scaled back earlier estimates that 27 million tons of cargo would be moved on the waterway during its first year of operation. The corps's current estimate is 10 million to 14 million tons.

In addition, some economists say previous estimates of the number of new jobs brought to the area along the canal are unrealistic today.

Congress authorized the project in 1946, and construction on the 234-mile canal began in 1972. But opposition in Congress nearly axed funding several times.

The corps has been accused of intentionally overstating benefits and understating costs. Various lawsuits temporarily held up part of the project. Environmentalists claimed the canal would cause great damage.

Now that it is built, what lessons have been learned? And what can the economically poor states of Alabama and Mississippi do to maximize benefits from the project?

Proponents. ``The political process worked,'' says Army Corps of Engineers Col. Robert Hatch, assistant director of civil works for the East Coast. He calls the project one of this century's ``outstanding example[s] of an environmentally sensitive project.'' And he predicts development will occur ``all along that waterway.''

Coal, the No. 1 item likely to be shipped on the waterway, is not being shipped much now because of low oil prices, says Brig. Gen. Forrest Gay, South Atlantic engineer for the corps. But 10 new ports have been started and 19 more are planned on the waterway, boosting local development, he says.

Critics. ``The project reflects everything that is wrong about American pork-barrel politics,'' says James T. B. Tripp, general counsel of the Environmental Defense Fund in New York. And it was ``an environmental travesty,'' he says. He contends 35,000 acres of forest wetlands were destroyed along with some rare species of fish, snails, and mussels.

Critics suggest a lesson learned: Make those who are intended to benefit from a public-works project -- such as states and barge companies -- help pay for the project. One example would be to charge user fees for barge companies.

``Do away with the free ride,'' says Joseph Carroll, economist at Pennsylvania State Univeristy. He says the the waterway is ``primarily a political project'' promoted by Southern politicians in Congress.

Projected shipments of coal on the waterway are not likely to be realized -- and were overstated to begin with, he contends. In addition, few companies are likely to be attracted to the canal region because it is not close to most sources of raw materials or markets.

But officials in Alabama and Missisippi hope to glean major benefits from the waterway.

``The waterway could indeed play a major role in the revitalization of the Alabama industrial base,'' says Carl Ferguson, director of the Center for Business and Economic Research at the University of Alabama. But Alabama ``does not have a comprehensive economic-development plan'' to take full advantage of the canal, he adds.

David Cheng, an economist at the same center, says only ``30 to 40 percent'' of the estimated new jobs the waterway is supposed to attract to a 10-county region in Alabama will be realized. The estimates are from a study for the Appalachian Regional Commission, according to a corps spokesman.

In neighboring Mississippi, the official in charge of mapping out plans to promote development along the waterway only took on the assignment in February. But plans made earlier might be outdated by now, says another analyst, Jim W. Meredith, director of the Mississippi Research and Development Center.

The big question remains, how much will the canal be used?

In the first four months after it opened in January, fewer than a half-million tons were transported on the canal, a rate that is a fraction of even the corps's scaled-down predictions.

``There's no doubt a lot of uncertainty about the traffic,'' says corps economist Edward Dickey. ``This is essentially a speculative investment.''

And a related major investment has already been examined by the corps: straightening out curves in the lower part of the Tombigbee River to allow longer barge tows.

According to federal estimates, the cost would be more than $1 billion. -- 30 --