Finance & economics | Free Exchange The high cost of phantom tollbooths Freedom of navigation is worth preserving Aug 20th 2026 Pfalzgrafenstein castle, near the village of Kaub in Germany, had a lucrative site. Situated on an island in the Rhine, the waterway that connects the most prosperous bits of western Europe, the redoubt lies on one of the river’s shallowest stretches. The tightness of the route past it meant that chains could be lowered from the battlement to prevent passage and demand payment. Pfalzgrafenstein was a toll castle, one of many along the course of the river. Rhine tolls were a classic example of an economic rent, a payment that some entity is able to extract by making a cheap resource artificially scarce. The river cost the Electors Palatine who usually controlled the castle absolutely nothing, so the toll they earned from stopping others from making their way
upriver was pure rent. In the aftermath of the latest Gulf war, there is a risk that tolls of this sort will come back. The Iranian government is considering levying a toll on ships traversing the Strait of Hormuz, through which around 20% of the world’s oil supply passed before the war began in February. Oman, on the other side of the Strait, may join in. America, too, may want to get in on the act: President Donald Trump has said that his country should consider levying fees as “THE GUARDIAN OF THE HORMUZ STRAIT”. You might call this the political economy of the rent-seeking sea, to paraphrase the title of a paper by Anne Krueger, an American economist, published in 1974. Restrictions on trade create rents and that creates a new type of competition, in which different groups compete to capture those rents rather than doing anything productive. The trade restrictions that Ms Krueger observed in the “rent-seeking society” typically meant lobbying, bribery or legal chicanery. For charging tolls on passing maritime traffic the rent-seeking activity could be far more deadly: piracy, drones and so on. During the age of sail territorial waters ended three nautical miles (5.6km) from the coast, roughly the range of a cannon shot. It was a recognition that sovereignty could stretch only so far. For the past couple of centuries, however, freedom of navigation has been the norm. That has typically been a public good provided by naval powers capable of asserting their sovereignty, or extending its reach beyond their shores. Tolls were abolished at Pfalzgrafenstein castle in 1867: the Prussian government controlled both sides of the river and was at last able to make good on a diplomatic promise made years earlier. The rent extraction ended. In 1868 an international treaty abolished all tolls on the Rhine. Elsewhere change was also under way. For years the Danish crown had earned much of its revenue by levying tolls on access to the Baltic Sea, until in 1857 the great powers forced the end of that money-making scheme. On the high seas freedom of navigation was assured by hegemonic powers, able to project their authority everywhere. For much of the 19th and 20th centuries the hegemon was Britain, notably in the Persian Gulf. The British Empire used a crackdown on piracy to strong-arm emirs into signing treaties, starting in 1820; their fiefs became the Trucial States. The empire secured access to the shipping lanes without formally incorporating them.
The torch passed to America after 1971, as Britain withdrew from east of Suez. The Gulf states got their independence but also fell under America’s shield. America occupied the former British naval base in Bahrain. Keeping waterways toll-free, then, is an example of the hegemonic stability theory formulated by Charles Kindleberger, another American economist: to remain in good order, the global economy requires certain public goods. The hegemon is the only one with both the ability and the desire to provide them; it captures some of the large gains from a functioning world economy. Kindleberger, who was writing about the Depression, was primarily concerned with financial stability, but freedom of navigation also fits the model. In his theory, and later versions, only the hegemon was able to both bear the costs of providing such goods and capture a big chunk of the benefits: “Our economic interest is in maximum freedom of movement for merchant vessels at minimum possible cost,” wrote officials in America’s State Department in 1969. Now America is retreating from that role, partly for lack of will—Mr Trump is reluctant to commit troops to the Gulf—partly for lack of ability. Cheap drones can project power much farther and more cheaply than the three-mile cannon shot of yore. Is there a third option, neither anarchy nor hegemonic domination? Perhaps collections of other states—the “middle powers” referred to by Mark Carney, Canada’s prime minister—could club together to provide public goods. The treaty guaranteeing a toll-free Rhine was signed by a group of German states, France and the Netherlands. But a paper last year by Anwesha Banerjee, Ottmar Edenhofer and Ulrike Kornek, three economists based in Germany, sounds a note of scepticism; a more equal balance of power between countries encourages free-riding and jockeying for position. It may be unlikely, then, that middle powers would do any better at keeping Hormuz toll-free. Then there are the truly global public goods. Whether or not there are tolls on the Rhine is, for the time being, a moot point. Europe’s extended heatwave and drought, now into its third month, has reduced the water level at Kaub to just six centimetres, below the previous record of 25cm in 2018. That is barely enough for children to paddle in, let alone for heavily laden tankers to pass. This will knock 0.2 percentage points off German GDP this
year, estimates Oxford Economics, a consultancy. The danger is not only that states manage to extract rents from what was once free, but that the world is less capable of providing public goods at all. ■ This article was downloaded by zlibrary from https://www.economist.com/finance-and-economics/2026/08/20/the-high-cost-of- phantom-tollbooths
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Science & technology | Global warming and aviation Contrail-free flying could help the climate A trial over the Atlantic aims to show how Aug 20th 2026 The 40m scheduled passenger flights which took place in 2019 added up to about 61bn kilometres of travel—exceeding the distance from Earth to the Sun every day of the year. More than 40% of those flights left contrails behind them for at least some of the journey as water vapour in the exhaust from their engines froze into tiny particles of ice. Many of these trails were ephemeral. They streamed out behind their progenitor planes before fading quickly away. But over about 5% of the total distance flown—comfortably enough for ten round-trips a day to the Moon —they persisted and widened as water vapour already in the atmosphere joined in the freezing. Thin white lines became broad translucent stripes of cirrus cloud. Wind those stripes around Earth like yarn around a ball and you
will find that, at any one time, persistent contrails cover maybe a thousandth of the sky. In doing so they warm the planet. Contrails are white because their constituent ice crystals reflect sunlight. That can have a cooling effect during daytime. But the crystals also absorb infrared radiation and re-emit it, rather as greenhouse gases do. Some is thus radiated into space, but the rest travels back towards Earth. This produces 24-hour warming that, overall, handily outweighs the cooling (something which is true for non-contrail cirrus, too). The exact amount of net warming is hard to calculate, but current evidence suggests aircrafts’ contrails and the cirrus clouds they induce may do more to raise the planet’s temperature than carbon dioxide emitted by the aircrafts’ engines. This warming is, though, to some extent, optional. For contrails to persist the air they are in must be well below freezing point and yet contain a significant amount of not-yet-frozen water vapour. The thing which stops this water vapour freezing is a lack of particles that might “seed” the process by acting as nuclei around which crystals can form. A contrail provides such seeds by the trillion, and so creates cloud where there was none. Such ice-supersaturated regions (ISSRs) tend to be found at altitudes of 8- 13km. They are a few hundred kilometres across, but only a few hundred metres deep. Keep aircraft out of them and you should get rid of a lot of persistent contrails—which means getting rid of some warming, too. On August 18th a consortium based in Britain announced Operation Blue Skies, the most important trial of this approach to cooling the climate so far undertaken. It will take place in Shanwick, a piece of airspace that covers 1.8m square kilometres of the North Atlantic west of the British Isles (see map).
There have been smaller trials of the idea. One was run by Germany’s aerospace agency in 2021 and another, in 2025, by American Airlines and Contrails.org, a not-for-profit research organisation largely funded by Breakthrough Energy, a network of investors founded by Bill Gates. The results were promising. Blue Skies, which is considerably bigger, should show whether ways to predict and route around ISSRs are both effective and suitable for operational use. Shanwick is a bit of airspace well suited to such a project. It is prone to the right sort of damp chilliness at airliners’ cruising altitudes, and it is used by a lot of planes. In combination, those factors mean that, although it covers just 0.4% of Earth’s surface, models suggest Shanwick is responsible for about 5% of contrail-associated warming. What is more, European and American weather satellites monitor the area day and night in both visible- light frequencies and infrared, making it easy to see what is going on. The plan is that on between 20 and 40 days over the coming winter and again the one after that air-traffic controllers at NATS, the company which looks after British airspace, will alter the flight paths of aircraft passing through Shanwick to keep them out of suspected ISSRs. These changes will route the planes a few hundred metres below their filed flight plans when conditions suggest it and when there is no reason not to (such as turbulence).