The Theory of Water and Utility Pricing - Global Drinking Water Management and Conservation - page 91

Fig. 5.2 Marginal cost versus plant size (MGD)

Table 5.4 Estimated MC,
Shadow Ramsey Prices and
Breakeven Prices in cubic
meters

ʱ 7.985754878

ʲ 0.740621837

ʳ 0.928025419

ʴ 0.143438118

Note only the constant changes

LRMC ¼ ShadowRamsey Price ¼ b e a Q ðb 1 Þ

Taking in the estimated coef cients,

740621837 e 7 : 985754878 Q ð 0 : 259378163 Þ ShadowRamsey Price ¼ 0 :

On the other hand, a seawater-desalinating plant faces the following Shadow
Ramsey Price equation:

LRMC ¼ ShadowRamsey Price ¼ e aþc ðb þ dÞ Q ðbþd 1 Þ

When we include estimated coef cients, we get:

ShadowRamsey Price ¼ e 8 : 913780297 884059955 Q 0 : 115940045 0 :

The computed Shadow Ramsey Prices are displayed in Table 5.5 .