Aerial view of a former eel fishing boat covered in dry mud at low tide on the banks of the Rhine River near Neuss in western Germany, July 30, 2026. Water levels in the Rhine River have fallen to record lows due to the unusually hot weather.
Ina Fassbender | AFP | Getty Images
The drought in Europe is so severe that it threatens economic growth in many countries, forcing countries to take extreme measures such as blowing up riverbeds.
Romania, hit by extreme summer weather, recently shut down its only operating nuclear reactor cooled by the Danube River for the first time, and Bucharest also sent its navy to carry out underwater explosions to improve water flow.
Images released on Monday showed the Romanian navy blasting rocks in a controlled explosion in the village of Izvoarere as part of efforts to divert large amounts of water to the cooling system of the Cernavoda nuclear power plant.
Hungary’s Pakus nuclear power plant, which supplies about 40% of the country’s electricity, is at risk of shutting down due to falling water levels on the Danube River, forcing Serbia to cut back on its hydropower generation.
Why falling Rhine water levels threaten Germany’s economy
In Germany, water levels in the Rhine River, a key waterway for Europe’s economic hub, have fallen to their lowest levels in nearly 150 years, posing risks to the German economy and causing further disruption to supply chains.
Water levels in the Kaub, a key choke point for ships passing through southern Germany and Switzerland, fell to 24 centimeters on Monday and Tuesday, reflecting the lowest levels since records began in 1880, and are expected to fall further this weekend, according to official data compiled by Zurich University of Technology.
This is well below the Kaub water level of 78 centimeters, which is the critical level required for navigation on the Rhine. Although transportation is possible below this threshold, the cargo barge capacity must be reduced, and freight transportation costs and low water surcharges will rise sharply.
“Major rivers like the Rhine and the Danube are important trade corridors and sources of water for industry and energy generation, so when water levels drop, the impact extends far beyond the waterways themselves,” Liz Saccoccia, director of water security at the World Resources Institute, told CNBC in an email.
Photo of a controlled underwater explosion on the Danube riverbed in the village of Izvoarele on August 3, 2026. The purpose of the explosion was to deepen the channel and direct more water into the cooling system of the Cernavoda nuclear power plant.
Daniel Mihailescu | AFP | Getty Images
“We are already seeing it happening. Nuclear power plants in Hungary, Romania and France, along with hydropower facilities in Serbia, have already had to reduce their output because they are running out of water for cooling and driving turbines, increasing the risk of power outages and expensive electricity imports,” Saccoccia said.
“Along the Danube, falling water levels are preventing farmers from shipping their produce and cruise ships from reaching ports such as Budapest. These are early examples of how increasingly unstable water supplies can spill over into the economy, impacting trade, energy security, supply chains and local businesses,” she added.
What falling water levels mean for freight and supply chains
This issue highlights a very important environmental issue: water scarcity.
This problem is particularly acute across Southern Europe, where approximately 30% of the population is known to live in areas with persistent water stress, meaning that water demand exceeds available supply.
Economically, the impact of the Rhine’s lower water levels could be enough to reduce Germany’s gross domestic product (GDP) by up to 0.2% in the third quarter, according to Stefan Koos, economics professor at the Kiel Institute for the World Economy (IfW).
“Transportation capacity is likely to continue to be affected by low water levels for some time next month, as water levels are unlikely to rise rapidly above critical thresholds in early August,” Koos told CNBC in an email.
“We can roughly estimate the value-added loss in the third quarter to be between 1 billion and 2 billion euros ($1.15 billion and $2.3 billion),” he added.
How climate change is increasing Europe’s drought risk
Felix Schmidt, senior economist at German private bank Berenberg, said businesses, Europe’s traditional growth engines, were likely not surprised by the drop in the Rhine. This is because, due to climate change, the Rhine’s water level is falling, which is a recurring problem.
While businesses are preparing by stocking up on inventory and moving some goods by rail or road, Schmidt acknowledged that freight rates are now rising “through the roof,” exacerbating inflation concerns.
“Given the very low growth rate in Germany, obviously if you grow 0.1 instead of 0.2, if you want to frame it that way, you’re losing half the growth,” Schmidt told CNBC in a phone interview.
Germany’s economy expanded by 0.2% in the second quarter compared to the previous three months. This follows an upward revision of 0.4% YoY growth in the first quarter.
View of the Pax power plant from the Danube embankment in the town across the river in Dunaszent Benedek, Hungary, July 31, 2026.
Janos Kumar | Getty Images News | Getty Images
Schmidt said the drying of the river was just one expression of Germany’s economic struggles as the climate crisis intensifies.
“Water levels are clearly an issue, but a few weeks ago there was a heatwave in Germany that affected much of northern Europe and reduced productivity. There is infrastructure being destroyed by the heat and energy supplies are also being affected, with nuclear power plants in Hungary, France and Switzerland shutting down,” Schmidt said.
“We also have catastrophic events, such as the fires currently raging in southern Europe, which are impacting the economy in so many ways,” he added.
