Economic Models for Inland Navigation in the Context of Climate Change

The inland navigation market of North-Western Europe faces potential problems due to climate change. Different measures may be taken by governments, carriers, and customers to cope with the negative effects of climate change. The effects of climate change on the inland navigation market may also be different for regions with different demand for transport by inland navigation. The research carried out in this dissertation can be seen as an investigation into adaptation strategies and the interaction-effects of imbalance and climate change on the inland navigation market. This gives rise to the following two main research questions for this dissertation: (1) What is the optimal barge-size adjustment for barge operators to cope with climate change, and what are the implications of climate change for investments in inland waterway infrastructure by the public sector?; (2) What is the impact of climate change on freight prices in the inland navigation market in the presence of direction dependent freight imbalances? There is still a gap in the scientific literature on the transport economic aspects of inland navigation in general. This dissertation contributes to this literature by approaching the field in a climate change context. In addition, the incorporation of imperfect information to the backhaul literature can be seen as a contribution to the economic theory. We show that imbalance leads to different impacts of climate change in different regions (even though the climate change may be the same for these regions). As a contribution to decision making, the adaptation strategies that are evaluated from a welfare economic perspective can be mentioned. Both private decision making (choice of barge size) and public decision making (choice of amount to invest in infrastructure) are supported, by providing the optimal values to be chosen for the instruments available. By taking the imbalance issue into account, this study gives insights into how to achieve a fair division of the costs of potential infrastructural investments on an international level. In Chapter 2, Research Question (1) is addressed by formulating a micro-economic model and deriving optimality conditions for instruments to cope with climate change. In addition, numerical results are given for the case of the Rhine market. Research Question (2) is addressed in Chapter 3 by a mainly theoretical investigation into imbalance and its implications for climate change impacts, and then by an empirical analysis of the Rhine market in Chapter 4. In Chapter 3 a matching model is used to derive, theoretically, the effect of directional flow imbalances on freight prices in an imperfect information setting. After establishing this effect, climate change is taken into account, and the interaction between climate change and imbalance is presented. In Chapter 4, imbalance is studied empirically for the case of the Rhine market in Western Europe. Chapter 5 concludes.