... whilst total costs, will be POMR. The net benefit from production and consumption of a this good will therefore be DPR. The demand curve denotes WTP and consumers would be prepared to pay more than the going price P for all units of output up to the last, or marginal, unit when consumption is OM. The area DPR shows the extent to which they would be prepared to pay above market price. Thus all the net benefits of the commodity accrue to consumers and DPR is the consumers' surplus. Once the inputs and outputs of a project have been determined it is necessary to place an economic value on each one over the life cycle of the investment. Where no price can be set by the market, for example, the cost of public goods and externalities such as environmental factors, estimated shadow prices can be used to replace inappropriate or missing ...

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