2002 World Congress of Environmental and Resource Economists

Economic theory generally advocates internalizing externalities by means of Pigouvian taxes. For the case of domestic waste collection we show that introducing a unit–based fee on waste may lead to undesirable environmental impacts because it provides an incentive to generate a lower quality of organic waste as a form of dumping. An applied general equilibrium model that incorporates organic waste in high and low quality and rest waste and the possibility of substitution between the generation of these three types of waste is built. The model is used to analyze the effects of introducing a unit-based pricing scheme. The results show that ‘waste leakage’ can occur and that this will have a strong impact on the effectiveness of the unit-based pricing scheme. We recommend considering these counter productive effects explicitly before implementing unit-based pricing of waste.



	Paper Title:	Economic Incentives And The Quality Of Domestic Waste: Counterproductive Effects Through ‘Waste Leakage’
	Presenting Author:	Heleen Bartelings (Wageningen University)
	Coauthor 1:	Rob Dellink
	Coauthor 2:	Ekko Van Ierland
	Coauthor 3:
	Abstract:	Economic theory generally advocates internalizing externalities by means of Pigouvian taxes. For the case of domestic waste collection we show that introducing a unit–based fee on waste may lead to undesirable environmental impacts because it provides an incentive to generate a lower quality of organic waste as a form of dumping. An applied general equilibrium model that incorporates organic waste in high and low quality and rest waste and the possibility of substitution between the generation of these three types of waste is built. The model is used to analyze the effects of introducing a unit-based pricing scheme. The results show that ‘waste leakage’ can occur and that this will have a strong impact on the effectiveness of the unit-based pricing scheme. We recommend considering these counter productive effects explicitly before implementing unit-based pricing of waste.
	Link to paper:	http://weber.ucsd.edu/~carsonvs/papers/589.pdf

	Session / Day / Time	6I / Tuesday / 10:15 - 11:45 am

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