Waste, recycling, and “Design for Environment”: Roles for markets and policy instruments

Abstract

Several studies that have solved for optimal solid waste policy instruments have suggested that transaction costs may often prevent the working of recycling markets. In this paper, we explicitly incorporate such costs into a general equilibrium model of production, consumption, recycling, and disposal. Specifically, we assume that consumers have access to both recycling without payment and recycling with payment but that the latter option comes with transaction costs. Producers choose material and nonmaterial inputs to produce a consumer product, and they also choose design attributes of that product-its weight and degree of recyclability. We find that the policy instruments that yield a social optimum in this setting need to vary with the degree of recyclability of products. Moreover, they need to be set to ensure that recycling markets do not operate-that is, that all recycling takes place without an exchange of money between recyclers and consumers. We argue that implementing such a policy would be difficult in practice. We then solve for a simpler set of instruments that implement a constrained (second-best) optimum. We find the results in this setting more encouraging: a modest disposal fee-less than the Pigouvian fee-combined with a common deposit-refund applied to all products will yield the constrained optimum. Moreover, this set of constrained optimal instruments is robust to the possibility that consumers imperfectly sort used products into trash and recyclables.

Policy Instruments towards a Sustainable Waste Management

“…Many waste management policy studies in the environmental economics literature (e.g., [73,74]) assume implicitly the presence of efficient private markets for recycled materials. Only a few analyzes the case of second-best optimums assuming that recycling markets are not operating (e.g., [94]), while Calcott and Walls [95] represent one of few studies addressing the presence of existing-but imperfect -recycling markets.…”

Waste Generation and Landfill Diversion Dynamics: Decentralised Management and Spatial Effects

“…Analyses of policy effectiveness are similarly scarce. Existing work is largely oriented towards the optimisation of waste management or evaluation of externalities, regarding landfill and other waste disposal strategies, with a very few purely theoretical analyses of waste management and landfill management (Calcott and Walls, 2005;Daskalopoulos et al, 1998;Andre and Cerda, 2004;Ozawa, 2005). The stronger focus on cost benefit analyses of specific waste streams and policy packages (Pearce, 2004), and landfill siting decisions aimed at resolving the NIMBY (not in my backyard) problem (Quah and Yong, 2007), in part is due to lack of reliable panel data, which is extremely scarce at sub-country level.…”

We want to sort! Assessing households’ preferences for sorting waste

“…Much work has been undertaken within economics to understand the determinants of household recycling behavior (Hong et al 1993;Jenkins et al 2003;Calcott & Walls 2005). A positive Willingness to Pay for recycling reflects the value people place on reducing the externalities due to alternative methods of waste disposal (e.g.…”