Rhine water levels hit July record low, threatening water supply and German GDP growth

Record low gauge readings

The water level at the Kaub bottleneck fell to 27 centimetres on Tuesday afternoon, only 2 centimetres above the all-time low of 25 centimetres recorded on 22 October 2018. On Tuesday morning it stood at 30 centimetres, down from 55 centimetres the previous Friday. The Waterways and Shipping Authority (WSA) forecasts it will reach the 25-centimetre mark this Friday and dip to 24 centimetres on Saturday, setting a new record. At Lobith on the Dutch border, flow dropped to 771 cubic metres per second, the lowest July reading ever, breaking the previous drought-year record from 1976.

Normally low water conditions peak toward the end of summer. We are very early this year.

Shipping bottlenecks and rising costs

Commercial vessels on Europe's busiest inland waterway can now load only 15 to 20 percent of their maximum capacity, according to traders. The freight rate for diesel from Rotterdam to Karlsruhe jumped 56 percent in a single week to 70 euros per tonne. The Kaub gauge has been below the critical 78-centimetre threshold for shipping on 14 days so far in July, and the Federal Waterways Authority expects a 100 percent probability it will remain below that mark until at least 9 August.

Deutsche Bank Research analysts note that the disruption is compounded by a months-long closure of the right-bank railway line for freight, which will last until 12 December, removing a key alternative route.

Economic drag

The Kiel Institute for the World Economy (IfW) estimates the low water could shave 0.1 to 0.2 percent off German gross domestic product in the third quarter. Under normal economic conditions, the drop would reduce industrial output by about 0.8 percent in July alone and cut monthly GDP by roughly 0.2 percent, said Stefan Kooths, head of business cycle and growth research. Since many economists already expect summer growth of no more than 0.2 percent, the disruption might push Europe's largest economy toward stagnation.

As water levels are unlikely to rise suddenly above the critical threshold at the beginning of August, transport capacity is likely to remain impaired for some time next month.

Water supply and environmental risks

Low flow on the Rhine means saltwater pushes further inland from the North Sea, threatening drinking water intakes, agriculture and industrial supply along the river. Reduced water volumes also dilute wastewater less effectively, leaving higher concentrations of pollutants. Consumers along the Rhine are expected to notice the squeeze first through rising prices and restrictions on leisure use rather than a loss of tap water.

Outlook and causes

Dry weather over recent weeks, reduced inflows from tributaries and Lake Constance, and a forecast of further high temperatures are combining to keep the river low. The early timing means the highest evaporation and water demand months still lie ahead. Authorities see no sharp recovery before at least mid-August.