Long Term Storage: Requires periodic maintenance, is expensive, leaves hazardous materials aboard ships where they are exposed to spillage, and at the end of 100 years, you still have just as many ships to get rid of as you started with; more if additional ships are decommissioned during the 100-year period.
Domestic Scrapping: There are only two shipyards which will engage in recycling (Brownsville, TX and Chesapeake Bay, VA).
Overseas Scrapping: Towing to such places as India or China for recycling is expensive. What makes overseas recycling cheap is the fact that labor costs are low, safety costs are non-existent and there are no pollution controls. Toxic wastes are allowed to run off into the sea from the beaches where the ships are broken. Federal law now prohibits the export of such toxins as PCBs or asbestos, so the ships would have to be cleaned here in any case.
Reefing: Reefing surplus ships is cost effective. Typically the government has in the past provided a grant for cleaning vessels when donated. Private groups such as California Ships to Reefs, or local/state governments, such as along the Atlantic and Gulf coasts, then "diverize" them by cutting diver access openings into them and removing such things as overhead cables, for safety. They are then reefed in selected locations to provide dive tourism attractions. An incidental benefit is that they provide structure and hiding places where marine plants and animals can attach, or hide, to feed and breed. RAND determined that the cost of reefing a ship can be recovered within 12 years of its reefing through taxes on dive tourism alone. The city of Pensacola, Florida provided a loan of $1MM to assist in reefing USS Oriskany, which was recouped in the first three days after reefing