Production uncertainty in the inland navigation market: climate change, optimal barge size, and infrastructure investments

In this paper a model is developed to study an inland waterway market’s production uncertainty due to fluctuating water-levels. Aspects that are studied are climate change and adaptation strategies against climate change. As an example of private adaptation the optimal barge-size, and as an example of public adaptation the optimal amount to investment in infrastructure are derived. We find that the trend to increase barge sizes in the Western European market is theoretically justified. We also show that dredging may be a cost-effective strategy for the Netherlands to cope with climate change.