Effects of low water levels on the river Rhine on the inland waterway transport sector

Abstract

This paper examines the welfare effect of water level variation on the river Rhine through its impact on freight prices in the inland waterway transport market. We study this effect using a unique dataset including information about more than 3000 journeys of inland navigation vessels in 2003, of which 700 are useful for our analysis. We demonstrate that the freight price increases by up to 100% at the lowest water levels compared to the situation of normal water levels. The welfare loss for the economy in 2003 as a result of the increase in freight prices due to low water levels amounts to about € 189 million.