Climate Change and Inland Waterway Transport

This paper develops a method to estimate the welfare loss or gain due to lower summer water levels on the Rhine as a result of higher temperatures, which lead to less stored snow for melting in spring and more evaporation in summer. The study focused on a particular location in Germany, Kaub. It used a standard navigability measure, the Pegel, to determine water depth. The estimate of welfare loss is based on the effect of water levels on freight prices per ton from the beginning of 2003 to July 2005. In addition, the effect is estimated for the load factor and price per trip. Two assumptions are made for this estimation: perfectly elastic supply and perfect competition in the long run because of the large numbers of shippers and their ability to enter or leave the market. Similarly, entry is not limited for supply and firms are fairly equal, with input prices such as fuel remaining constant. The effect of water level on freight price per ton was found to be negative; the effect on load factor was positive; and price per trip was not affected.