Drought and alarming declines in river flows threaten global economy

Drought in major rivers is an international logistical and economic problem.

The world is currently going through a general economic crisis due to issues such as soaring inflation in many countries or the energy crisis resulting from the Russian invasion of Ukraine and the sanctions subsequently imposed on the country led by Vladimir Putin, which has affected gas and oil prices across the board. This scenario further aggravates a difficult situation that had already been dragging on in part since the outbreak of the COVID-19 pandemic.

Now, the worst drought in decades is wreaking havoc on many rivers, creating a number of problems that deepen the delicate global economic situation. In this context, the sharp decline in the flow of several of the world's most important rivers is creating a major economic challenge, posed by the climate change we are currently experiencing. 

The heat wave and drought that several countries are experiencing and which are affecting their most important waterways are having a negative impact. Rivers of great importance in the world, such as the Yangtze in China or the Rhine in Central Europe, have seen their flows drop alarmingly and this affects the transport of supplies by boat, for example. The case of the Rhine is representative because the level of the river has fallen by a third and transport by boat has been reduced by 30%, which has forced people to look for other, more costly or less effective means of supply for large loads, such as road transport. This situation causes major problems in the supply chain and means that certain products do not arrive on time in other countries, or do not reach their destination at all, as may be the case with microchips or basic semiconductors for the technology or even the automotive industry. This is a problem of shortages that affects industry in many recipient countries. And it is well known that, if production costs increase in industry or there is a shortage of certain products due to a lack of supply of raw materials or similar, then the final price increases exponentially. This makes the current high inflationary situation even worse.

Low river water levels are also particularly affecting the shipment of fuel supplies in central Europe. The difficulties for cargo ships on the Rhine are affecting the arrival of coal and oil to Germany and other neighbouring nations at a difficult time marked by Russia's natural gas cuts following sanctions received from the European Union in response to its invasion of Ukraine. The large ships that use the Central European routes are vital for the transport of various goods and raw materials needed for global destinations. 

There are more problems than just transport. The heat wave and lower river flows are also leading to a reduction in electricity production that uses rivers for its supply, as is the case with hydroelectric power stations, where water is involved in the operation of the turbines, which generates mechanical energy; the water flows out of the turbines into a drainage channel, through which it is returned to the river. Directly connected to the turbine is the rotating electrical generator (alternator), which converts the mechanical energy received by the turbine into electrical energy. With this system in mind, water is vital in many cases in order to produce electricity. 

For their part, nuclear power plants, which are also basic to the energy system in many countries, also depend on the flow of rivers for proper cooling. 

In the current situation, some countries are severely affected by declining water flows. Norway, one of Europe's main exporters of electricity, has already considered limiting its electricity distribution sales to Western Europe, and hydroelectric production in Spain has also fallen by a high percentage. 

In this line, as reported by Reuters last week, electricity futures contracts reached record highs in France and Germany, due to the coincidence of the sudden disruption in supply with the high energy consumption resulting from the latest heat wave. 

One of the countries most affected by the drought, with great geopolitical relevance, is the People's Republic of China, one of the world's major economic powers with increasing weight in trade and the global economy. The drought has affected 66 rivers in 34 areas of the Chongqing region (southwest), which is worrying for the supply of goods between provinces, according to state television. 

The high temperatures in the Asian giant have caused the drought of rivers such as the Yangtze, the longest in the Asian country and the third longest in the world, only surpassed by the Amazon River in America and the Nile River in Africa. The delicate situation of the Yangtze River could lead to a global economic collapse, aggravating, for example, the crisis of supply shortages. 

The Yangtze River generates resources for one third of China's population and is very important for the global economy and supply chain. Given this, China's climate change-induced heatwave and drought (and the fact that China is one of the most polluting countries in the world) could create an even greater crisis of international shortages.

Poyang Lake has been reduced by a quarter in size today, something to consider because it is one of the most important flood basins of the Yangtze River, the Xinhua news agency reported as quoted by Al-Arab media.

This great river flows through China into the East China Sea, and its depletion means that the world's largest country in terms of population is threatened by famine, which will create a demand for food that is unprecedented in the world considering that China's population exceeds 1.4 billion. 

China's heatwave has been raging for more than two months, with record high temperatures in key regions such as Shanghai and Sichuan, and is the longest on record for more than six decades, according to the National Climate Centre, quoted by La Razón.

The water crisis is hitting China and several provinces have suffered power outages while a large number of companies have seen their production affected. The power outages show the energy problems facing the nation due to drought and extreme heat, which have led to increased demand for power, also affecting water levels in the Yangtze River, on which several regions of the country depend for energy.

The respective waterway covers nineteen provinces of the Asian giant and provides water to some 600 million people. The Yangtze basin accounts for 45% of the country's economic output and its water shortage means the collapse of the surrounding regions. 

For example, in Sichuan, where more than 80% of energy is obtained through hydroelectric dams, large companies are suffering from blackouts, as is the case of Volkswagen, the German car manufacturer, which closed its company in Chengdu due to "slight delays that they hope to recover in the near future", as reported in La Razón. 

In the same vein, activity in China's manufacturing industry fell again in August due to power cuts that led to the temporary closure of factories in some parts of the country, according to the Purchasing Manager's Index (PMI) published by the private daily Caixin.

This indicator, compiled by the British economic information company IHS Markit and taken as a benchmark by many international investors, fell from 50.4 in July to 49.5 in August.

Wang Zhe, an economist at Caixin, linked the energy problems to a "prolonged heat wave", as reported by the EFE news agency.

Climate change is affecting the entire world and may continue to have an impact on the food market in the face of rising global commodity prices. Both food-exporting and food-importing countries may find themselves in a very difficult situation. 

Drought in rivers and climate change directly threaten agricultural crops, some of which are destined for export to various countries, including several Arab and African nations, which are more dependent on the foreign market for food because of their production deficits in this regard due to climatic conditions that have always made cultivation difficult in these areas. 

Climate change may lead to higher commodity prices, which may cause the cost of food imports to rise exponentially, and some countries may not be able to import sufficient quantities and may not be able to find anything on the market to buy, even if they have sufficient liquidity.

The war in Ukraine has a serious impact on global food supplies and in particular on grain prices, complicating the food situation for Arab countries that import most of their grain from Russia, Ukraine, France and the United States.

One of the waterways affected is the Rhine River, as mentioned above. The Rhine runs through five European countries from the Alps in Switzerland through Germany, Liechtenstein and France to the Netherlands. Its current situation has the potential to hit Europe economically. 

Also, the Loire River in France, the longest river in the country, has seen its level drop drastically after all its tributaries dried up, affecting agriculture, tourism and fishing, as well as electricity production through four nuclear power plants that use its waters for cooling.

The Po river, which flows through northern Italy for more than 650 kilometres, in areas that produce most of the country's crops, is also facing a sharp drop in water levels, which has affected crop irrigation and drinking water. The country's largest river has fallen to its lowest level in 70 years, affecting much of the country's agricultural production. 

The Danube joins this list, which is very important considering that it is the second largest river in Europe after the Volga and crosses or borders 10 European countries. The Danube, the longest waterway in Western Europe, is being dredged day and night by the Bulgarian, Romanian and Serbian authorities in an attempt to improve the navigation situation for the transit of cargo ships. 

But the river drought crisis is not limited to Europe. The Colorado River in the United States, which supplies water to the American West and flows into Mexico, is also suffering from a severe drop in water flow. 

Europe and North America export food to the world and are threatened by the fall in agricultural yields, which is exacerbated by the current drought, something that has a very negative impact on the situation of countries that need to import the food produced there, such as Arab countries, which import wheat and cereals from these areas to a greater or lesser extent.

This especially affects the most fragile nations, which suffer from economic crises and wars, or which do not have large resources such as oil and gas to afford the high prices of food. Somalia and Yemen are the Arab countries most affected by the food crisis, according to a World Food Organisation report. These nations are in dire straits, along with others such as Sudan and Syria, which are also embroiled in internal conflicts, resulting in a need for international assistance for the hardship of their populations. 

The arrival of the rainy season in autumn and winter is already being awaited in order to bring about a significant increase in river water levels, which would favour a return to normal river navigation, the recovery of the hydroelectric sector, which is very important for the generation of energy, and an improvement in the situation of crops and agricultural production, vital for many countries, especially those most threatened by the food crises.