The rail network has not been fully operational in the past, among other things because of the civil war in Mozambique (1977–1992), destruction by floods, and poor maintenance. Lall et al. (2009) characterize the role of railroads in Malawi as follows: “...rail has historically been the main mode for international freight transport, connecting Malawi with its southern neighbors of Mozambique, Zimbabwe and South Africa. However, the civil war in Mozambique from the mid-seventies cut off the two main rail arteries—the Nacala and Beira-Sena lines. With the Nacala line being mined and the destruction of the main bridge across the Zambezi River on the Beira-Sena lines, the importance of rail in Malawi’s international freight movements has declined.” However, the (potential) importance of the railway for domestic trade in the Malawi economy is acknowledged in policy documents: “Rail transportation is also an important mode of transport for rural farmers who usually use the train to move their farm produce to main markets in the cities or trading centers. Such commodities include tomatoes, pigeon peas and other vegetables. In 2006, CEAR (Central East African Railways) recorded approximately 480,000 passengers moved largely smallholder farmers. Since 2000, CEAR moved over 250,000 tons of local products to main markets locally but has been experiencing reduced usage by the locals to transport their commodities using rail transportation.” (Millennium Challenge Corporation 2011).

What about unit transport costs by rail relative to unit transport costs by road? World Bank (2006) compares local road transport costs in 2003 with average per ton-kilometer tariffs for a number of subSahara African corridors and rail operators. Unit road transport costs are calculated to be a factor 1.4 to 3.1 higher.<sup>5</sup> Donaldson (2010) claims that road transport in India is 4.5 times more costly relative to rail transport. Various studies further stress the role of rail transport in keeping road tariffs in check, and this is particularly relevant to Malawi which has notoriously high road transport costs (see Lall et al. 2009). In summary, rail transport is clearly cheap relative to road transport and potentially leads to reductions in unit road transport costs. Moreover, in many sub-Sahara African countries, road infrastructure is supplied at less than full recovery cost, creating a road-rail competition imbalance (World Bank 2006, Teravaninthorn and Raballand 2008) _Transport by Rail and the January 2003 Collapse of Domestic Freight by Rail_ What can we learn from data on Malawi transport by rail? Figure 2 shows Malawi transport by rail (freight in ton/km) in the period 1997–2007. Despite fluctuations, the figure reveals a clear structural break in trade volume starting in January 2003 when a large decrease of freight occurred. The large decrease coincides with a nearly total collapse of domestic trade, and, somewhat less pronounced, by a drop in passenger transport (see appendix, figures A2 and A3).

The collapse in rail transport expressed in the figures is for a large part<sup>6</sup> on account of the disruption of a bridge at Rivirivi in Balaka district, located in the center of the rail network (see figure 1), in its turn caused by a tropical storm named Delfina. Delfina started on December 30, 2002, at the northwest coast of Madagascar, intensified while moving westward before hitting northeast Mozambique on December 31, and weakened while moving inland by January 1, 2003 into Mozambique and Malawi. By January 9, Delfina had died out. The major damage of the storm was done in Mozambique. In Malawi, the storm's remnants caused flooding in several districts, although not widespread. Delfina damaged roads, and, most importantly for our study, destroyed the railway bridge at Rivirivi, in Balaka district. The storm further destroyed about 3,600 houses, and around 30,000 people were forced to leave their homes; floods affected 57,000 properties, damaging 23,500 ha of agricultural land.<sup>7</sup> Delfina

> 5. Average tariffs for, respectively, road and rail transport services in US$ per ton-kilometer are: 7.9, 5.3 (SenegalMali, Transrail), 7.9, 5.5 (Cote d’Ivoire-Burkina/Mali, Sitarail),  11.2, 6.3 (Cameroon-Chad, Camrail), 10.0, 5.5 (Mozambique, CCFB/CFM), and 13.5, 4.3 (Tanzania-Great Lakes, TRC), with in parentheses respectively corridor and rail operator (World Bank 2006).

> 6. The drop also coincides with the closure of a quarry at Changalume (86 km north of Blantyre) in 2002, which used to supply clinker to a Blantyre cement plant. Unfortunately, we are unable to construct local freight data excluding freight of clinker. The closure is unlikely to affect market prices of agricultural commodities.

> 7. Despite the casualties and damage, we were unable, using annual aggregate data sourced from the Ministry of Agriculture and Food Security, to find an adverse impact on agricultural production of the affected districts.

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