The effects of extreme weather on rural transportation infrastructure and crop prices along the Lower Mississippi River

Abstract

Extreme weather events are worsening the fragile rural infrastructure in the United States, impacting trade flows of agricultural products. The Mississippi River, vital for transporting agricultural commodities, reached historic lows during the 2022 and 2023 fall harvests, increasing transportation costs and lowering crop prices. This paper estimates the cost of these drought events by analyzing Arkansas soybean basis data and Mississippi River stream gauge data. Low river levels significantly weaken soybean prices, with the impact being a function of a grain market's distance to a river port. Findings have implications for public policy investment in rural infrastructure and risk management strategies.