Thomas C. Kinnaman

Why do Municipalities Recycle

Abstract The disposal of municipal solid waste is believed to emit foul odor, threaten groundwater, and increase road congestion. As remote regional landfills have replaced local town dumps, these costs are no longer internalized by garbage-producing households or their municipalities. Instead, rural property owners located adjacent to large regional landfills and along the roadways accessing those landfills bear the external costs of garbage disposal. This paper uses a comprehensive nine-year panel data set of aggregated state data to empirically examine why 8,937 municipalities continue to operate costly recycling programs designed to reduce the external costs of garbage disposal. Results suggest that local tastes for recycling drive municipal decisions. If household preferences for recycling are short lived, then we can expect a future decrease in the number of municipal recycling programs. Recent data indicate the number of recycling programs in operation in the U.S. has indeed fallen.

How a Fee Per-Unit Garbage Affects Aggregate Recycling in a Model with Heterogeneous Households

This paper develops a utility maximizing model of household choice among garbage disposal, recycling, and littering. The impact of a user fee for garbage collection is modelled for heterogeneous households with different preferences for recycling. The model explains (1) why some households participate in curbside recycling programs even in the absence of a user fee, (2) why other households do not participate, even in the presence of a user fee, and (3) why some households choose to litter when others do not. Household choices are aggregated to determine the effect of a user fee on the community-wide quantities of garbage, recycling, and litter. We show how an increase in the user fee can decrease aggregate recycling.

Understanding the Economics of Waste: Drivers, Policies, and External Costs

This survey reviews the economics literature on solid waste published since 2000. This survey also summarizes the results of the lifecycle literature estimating the magnitudes of the external marginal cost of waste disposal and the external marginal benefit associated with recycling. The external marginal cost of landfill disposal is found to be rather small. The external marginal benefit of recycling certain materials is found to be comparatively large. If these estimates are true, then conditions at solid waste landfills and incinerators may no longer be the driving source of market failure in the industry. Instead the sizable external benefits associated with recycling some materials may explain the need for policy.

Waste Disposal and Recycling

Many environmental challenges facing the world today such as climate change, water and air pollution, and species endangerment are the consequences of the productive economy, of agriculture, land development, and industrial production. Solid waste is different. The consumer, not the firm, generates the bulk of solid waste. The waste consumers produce while at home or at work is unsightly, generates odor, threatens fresh groundwater supplies, and contributes to airborne dioxins. When looking for policies to improve things, consumers must examine their own choices and habits. Economists promote incentive-based policy approaches to improve environmental quality at the lowest cost to the economy. Although cap-and-trade programs and environmental taxes appear sporadically across the environmental policy landscape, nowhere are incentive-based policies more common than in the market for solid waste. Thousands of municipalities across the globe require consumers to pay for each bag of waste contributed to collection agencies or subsidize consumer recycling efforts – both examples of environmental taxes. With the emphasis on consumers and on market-based policies, microeconomic theory and welfare economics are perfectly suited to study the market for solid waste and evaluate policy. This article summarizes the economists view of solid waste disposal and recycling.

A Landfill Closure and Housing Values

The United States disposes roughly 60% of the municipal solid waste it generates each year in solid waste disposal facilities, commonly known as landfills. Hedonic pricing studies have estimated the external costs of landfills on neighboring housing markets, but the literature is silent on what happens to property values after the landfill closes. Original housing price data collected both before and after a landfill closure are used to estimate how a landfill closure affects neighboring property values. Results of both a hedonic pricing model and a repeat-sales estimator are used in the analysis. (JEL H42, H72, Q51, Q53, R21)