ABSTRACTIn this paper, we discuss how user fees and congestion tolls can be used to improve the efficiency and equity with which the inland waterway system is managed. The advantages and disadvantages of various types of user fees (fuel taxes, segment tolls, and license fees) are presented. The rationale for the employment of congestion tolls on congested waterways is discussed. A segment toll that is equated to average variable cost is recommended for uncongested existing waterwyas. When existing waterways are congested, congestion tolls, in addition to the segment tolls, are recommended, A two‐part tariff, consisting of segment tolls and an annual license fee, is recommended for “new” uncongested waterways. A three‐part tariff, consisting of the first two parts plus congestion tolls, is recommended for “new” congeste