The economic assessment of potential external costs due to port development is considered. The importance of environmental cost estimates in making decisions about port development is outlined. A case study in Rhode Island is used to illustrate quantification of one important environmental issue--the economic cost to commercial and recreational fisheries resulting from marine disposal of dredged material. The bioeconomic framework, data, and assumptions used are described. Key results are summarized for seven potential disposal sites for 5.1 million cubic yards of clean dredge sediment, three in Narragansett Bay and four in Rhode Island Sound. To reflect the many sources of uncertainty in the analysis, an overstated cost approach is used and several sensitivity analyses are presented. Results suggest that costs of sediment disposal for bay sites are higher than for Rhode Island Sound sites and support including long-term and ecological effects, and recreational as well as commercial losses, in assessments of potential sites for disposal of dredge material.