With the increasing severity of weather anomalies, both production and post-production activities in the food supply chain are at stake. This paper examines the economic impact of the Mississippi River drought, an exemplar of extreme weather undermining agricultural production and logistics, employing a structural gravity model. Relying on the interstate commodity flow data, the domestic trade flows from 17 U.S. states adjacent to the Mississippi River system to the 16 U.S. states and 4 country groups during eight non-consecutive years (2007, 2012, 2017-2022) are analyzed. By factoring in the hydrological structure and flow of the river system, the economic costs of river drought reflect the decreasing crop production and increasing transportation costs. The findings show that low water levels in the Mississippi River drive up barge rates, with their effects being more pronounced at downstream. Counterfactual analysis reveals that, without river disruptions, domestic trade flow in the U.S. would have increased by $312.5 billion during the study period.
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