Optimality Conditions of the Water Use Model

Abstract

The optimality concept is focused on deriving the so-called non-profit conditions. These non-profit conditions are expressed in the form of actual and inter-temporal marginal costs for producing the desired quantity of the consumption good and the associated water and generated wastewater amounts. These marginal costs are based on the shadow prices for the two essential input factors, the human labour inputs and the energy inputs. The concentrations of the extracted raw materials are given exogenously. Therefore, there are declining functions for the production and reproduction activities in the past, which cause actual and inter-temporal marginal costs for using non-renewable natural resources in the future. The decrease of the raw materials concentrations is combined with an increase in un-avoidable residuals, which must be transported by water to the wastewater treatment sector. As a result, the use of non-renewable resources also leads to actual and inter-temporal marginal costs for water production and wastewater treatment.