A linear programing model is developed for analyzing the effects of policy, particularly water policy, on the use of water in ammonia production and on the cost of ammonia. Solution of the model for each policy specification gives the least‐cost ammonia production process, the marginal costs of the resource limitations, and the cost of water use and waste water treatment. The effect of systematically decreasing each effluent standard to zero was evaluated, and the effect of increasing the water price on water withdrawals was determined. The following results were obtained: (1) zero discharges of suspended solids, heat, and total dissolved solids increased production costs 3.8% with injection wells; (2) an effluent tax of 3.6¢/lb dissolved solids will reduce dissolved solid discharges 95%, and an effluent tax of 29.5¢/lb dissolved solids will reduce dissolved solid discharges 100%; (3) a water withdrawal price of 3.2¢/103 gal. will reduce water withdrawals 95%; and (4) zero discharge of residuals and high water prices increase production costs less than 4%. The modeling was done for a newly designed plant. Both naphtha and natural gas feedstocks were evaluated.
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