Economic consequences of inland waterway disruptions in the Upper Mississippi River region in a changing climate

Zhenhua Chen () and Junmei Cheng ()
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Zhenhua Chen: The Ohio State University
Junmei Cheng: The Ohio State University

The Annals of Regional Science, 2024, vol. 73, issue 2, No 10, 757-794

Abstract: Abstract Inland waterway locks have become significant bottlenecks in waterway networks worldwide due to the disruptions caused by aging infrastructure and climate change. While these locks have traditionally received attention for traffic issues, the disruptive impact on the regional economy remains unclear. This study addresses this knowledge gap by assessing the economic impacts of inland water transportation system failures, specifically focusing on disruptions in agricultural commodities within the Upper Mississippi River–Illinois River (UMR–IR) region. These disruptions encompass both unscheduled climate-induced extreme weather events and scheduled maintenance and repair work due to internal system failure. To capture the spatial interdependence between the regional economy and shipping rate changes caused by disruptions, we developed an integrated modeling approach. This approach combines spatial econometric modeling and multi-regional computable general equilibrium modeling techniques. Detailed weekly data from 2013 to 2021, including variations in inland barge rates and environmental conditions, were utilized. The assessment reveals that lock closure events in the UMR-IR region have severe economic consequences, impacting both the region itself and beyond. Conversely, transportation resilience achieved through modal substitution from barge to rail services during disruptive events can substantially reduce GDP losses. Specifically, such resilience measures can reduce GDP losses in the UMR-IR region by 6.6–24.2% and in the rest of the USA by 5.2–19.5%. Overall, these research findings carry significant implications for future planning and investment in inland waterway systems.

Keywords: R11; R41; Q25; C31; C68 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s00168-024-01283-0

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