Transcript Managing Municipal Solid Waste (MSW)

Chapter 19
Managing Municipal
Solid Waste (MSW)
© 2007 Thomson Learning/South-Western
Thomas and Callan, Environmental Economics
Problem of MSW
 MSW is nonhazardous waste posing no direct
threat to humans or ecology
 Still there are risks


Excess generation
Improper management, which can lead to…
 bacterial
contamination: unsanitary conditions
 toxic contamination: hazardous wastes mixed in
 air pollution: incineration or decomposition gases
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MSW Trends
 MSW generation is growing, both total and per capita
 Dependence on landfills continues
 In 2001, almost 56% of MSW was landfilled in the U.S.
 Composition of MSW
 largest proportion by product: containers & packaging
 largest proportion by materials: paper & paperboard
 Major industrialized nations are largest generators
 Recycling rates vary across nations
 Japan has one of the highest recycling rates, e.g., 60% of
its paper/cardboard; 78% of its glass
 U.S. overall recycling rate is 29.7%
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Trend Data
US Annual MSW Generation
MSW
(millions tons)
Population
(thousands)
Per capita
MSW
(pounds/day)
1970
1980
1990
2000
121.1
151.6
205.2
232.0
203,984 227,255 249,907
3.25
3.66
4.50
281,422
4.52
Source: U.S. EPA, Office of Solid Waste and Emergency Response (October 2003), pp. 2, 4,
table ES-1 and ES-3
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International Ranking
by Per Capita Generation
Country
US
Australia
Switzerland
Germany
France
Italy
Greece
Japan
Turkey
Canada
Czech Republic
Mexico
Poland
kilograms per capita
760
690
650
540
510
500
430
410
390
350
330
320
290
Sources: OECD (2002), as cited in U.S. Census Bureau (2003), Table No. 1329, p. 849;
World Bank, as cited in U.S. Census Bureau (2003), Table No. 1333, p. 851.
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Policy under RCRA (Subtitle D)
 Federal responsibilities
 To give financial and technical assistance to states,
encourage resource conservation, set minimum
criteria for land disposal, incineration facilities, etc.
 States’ responsibilities
 To develop waste management plans


Many follow EPA’s integrated waste management system,
which promotes using a combination of programs aimed at
source reduction, recycling, combustion, and land disposal –
in that order
To use regulatory powers to comply with RCRA

e.g., recycling laws, grant programs
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EPA’s Integrated Waste Management System
Source Reduction
Recycling
Combustion
Land Disposal
MSW Services
Markets
Using Economics
Modeling the MSW Market
 Supply (S), or MPC, represents the
production decisions of firms providing MSW
services
 Demand (D), or MPB, represents the
purchasing decisions of MSW generators
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Two Sources of Resource
Misallocation

Flat fee pricing of MSW services does not
reflect rising MPC associated with
increases in production levels.
 Production of MSW services is associated
with negative externalities, which means
that private market equilibria, where MPB =
MPC do not yield an efficient solution
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Flat Fee Pricing System
 Communities typically charge the same fixed fee
regardless of amount of MSW generated
 Fee typically hidden in property taxes
 Demanders pay a zero Marginal Price as if
MPC were 0

Ignores positive and rising MPC of MSW services
 Result:


No incentive to reduce wastes
Too many resources allocated to MSW services
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Flat Fee Pricing System
Result is overallocation of resources,
since Q0 > Qc where Qc would be
based on a positively sloped MPC
$
S = MPC (actual rising MPC)
S = MPC (implied by flat fee)
0
QC
Q0
Q of MSW Services
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Negative Externality
 Production externality causes resource
misallocation even if the fee reflects rising MPC
 External costs (MEC) are due to air pollution from
incineration, groundwater contamination, etc.
 Result:
 Overallocation of resources to MSW services
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Price
Negative Externality
overallocation, since Qc > QE
MSC = MPC + MEC
S =MPC
PE
PC
D = MPB = MSB
0
QE
QC
Q of MSW Services
Market-Based
Solutions
Waste-end Charges
Retail Disposal Charges
Deposit-Refund Systems
Back-end or Waste-end Charge
 Imposed on waste at time of disposal
 Efficiency is achieved if the fee, PE, equals to MSC at QE
 Known as unit pricing, or pay-as-you-throw (PAYT),
programs

Can be implemented as flat rate or variable rate pricing
 Real-world usage

Used in over 4,000 communities in 43 states



Some use bag-and-tag systems
Empirical evidence
$0.50 per container led to reduction of 3,650 tons/year
for a community of 100,000 people (Jenkins 1993)
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Unit Pricing
Price
Implemented as a Waste-end Charge
MSC = MPC + MEC
S = MPC
Fee = PE
D = MPB = MSB
0
QE
Q of MSW Services
Front-end or Retail Disposal Charge
 Imposed on the product at point of sale
 Intended to encourage prevention through
source reduction
 Aimed at a consumption externality
 Efficiency is achieved if the front-end charge
equals the MEB at QE
 Effective price of product (PR) includes fee
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Retail Disposal Charge
A Front-End Charge
Price
Effective price,
including the charge
MSC + charge
Charge
MSC = MPC
PR
D = MPB
MSB
0
QE
QC
Q of batteries
Deposit/Refund System
(review in Chapter 5)
 Up-front fee imposed on a product at point of
sale (like retail disposal charge)

Fee equals MEC of improper disposal, or the
negative MEB of consumption
 Fee is returned if consumer takes proper action
to avoid environmental damages
 Real world examples
 Australia,
Canada, Denmark, Mexico, South Korea,
Sweden, and U.S. for beverages
 Greece, Norway, and Sweden on car hulks
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Deposit-Refund Programs in U.S.
STATE
Arizona
Arkansas
California
PRODUCT
Batteries
Batteries
Beverage
Connecticut
Batteries
Beverage
Beverage
Beverage
Beverage
Batteries
Beverage
Beverage
Beverage
Beverage
Beverage
Beverage
Batteries
Delaware
Hawaii
Iowa
Maine
Massachusetts
Michigan
New York
Oregon
Vermont
Washington
AMOUNT OF DEPOSIT
$5.00
$10.00
$0.025 for < 24 oz.
$0.05 for > 24 oz.
$5.00
$0.05 minimum
$0.05
$0.05
$0.05
$10.00
$0.05 – $0.15
$0.05
$0.05 – $0.10
$0.05
$0.03 – $0.05
$0.05 - $0.15
$5.00 minimum
Sources: U.S. EPA, Office of Policy, Economics, and Innovation (January 2001), pp. 57-66; Battery
Council International (May 23, 2002); State of Hawaii (2002).
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Deposit-Refund Model
Deposit converts % of overall waste
disposal, measured by (QIW - Qe),
from improper to proper methods
MSCIW
MPCIW + Deposit
MPCIW
a
Deposit=MEC
at QE
b
MPBIW = MSBIW
QE
0
100
QIW
Improper Waste Disposal (%)
Proper Waste Disposal (%)
100
0