Garbage by t4Ri061



Peter Berck 2000
• Garbage isn’t free to dispose of properly,
  but the opportunity to illegally dispose of it,
  and the public health problems with non-
  proper disposal, make it difficult to charge
  for this service.
  – Garbage charges
  – Deposit refund systems
  – Laws
• r good disposed clean   • d is refundable
  and for refund            deposit
• c good disposed         • hr hc hx the time costs
  clean                     of disposing of the
• x good disposed dirty     good in the various
• w wage                    modes
• T time                  • P is price of good
• L leisure
            Budget constraint
• Tw = Lw + (P+d+w hc) c + (P+w hr) r +
  (P+d + whx) x
• U(L,c+r+x, c+r)
    – reflects total consumption of good
    – taste for clear disposal.
    More garbage comments
• Tw = Lw + (P+d+w hc) c + (P + whx) x
• If we charge for garbage properly
  disposed of at price d (recall that the
  underlying good costs P), then dirty is
  favored over clean.
• Two effects: less garbage produced and
  more illegal disposal
          General Comment
• Tw = Lw + Px or (T-L)w = Px
• an advalorem tax of d on x: (T-L)w = dPx
• gives the same result as (T-L)w/d = Px
  – income tax is a tax on all goods, here there is
    only one good, so it is a tax on it.
  – income taxation already discourages
    consumption of environmental bads, so
    pigouvian taxes have less work to do.
 Garbage Reduction Thoughts
• Value of Garbage reduction
  – WTP as in Hutla
  – Shadow price of dumping
    • Much higher than price because public entities set
    • Don’t include cost of making next dump.
    • However, many small dumps closed and many
      towns moved to commercial dumps
    • California 140/ton is way above numbers in
      Fullerton—may be because of transport costs—
      new dumps further away
• Many deposit return situations
  – Beverage containers (talk about later)
     • Recycle for bottles (Denmark)
     • Recycle for cullet (Ca.)
  – Car batteries
• Laws
  – No dumping of motor oil
  – Charge fee to dispose of properly
  – More stringent for Toxics (CERCLA) with manifests
    and permitting
  – NYC really does fine for non-seperation
• Separate garbage from salvage
  – Clean and dirty MURFs
  – Scavengers
End Product is bales
          Economics of Reuse
•   Price for cullet at furnace
•   Less cost of transport
•   Less MURF cost
•   Has to be greater than dump fee
•   For glass to be remelted into new bottles
     Glass doesn’t pay its way
• Four ways to make it go back
  – Make manufacturer pay (Germany and in theory in
    Ca.) Would be first best, polluter pays principle.
  – Use unredeemed part of deposit fund
     • Doesn’t discourage use by recyclers sufficiently
     • Done in CA.
  – Use tax revenue
  – Have recycled content laws
     •   Done in many states
     •   Could bring in waste paper from other places
     •   Could drive production out of state
     •   Will shift demand for cullet/crushed cans out.
           Other incentives
• Garbage reduction mandate
  – Cities pay fine if they don’t reduce their
  – Cities choose to fund curbside rather than pay
    • Big target is yard waste to compost
    • Glass, because mandate is by ton.
    • Aluminum is valuable and doesn’t end up in this
    • Plastic is problematic
• Many resins
• PET has the biggest share
• PET bottles weigh very different amounts
• Light weight bottles best made with pure resin,
• Plastic lumber, fleece are uses
• More and more things are packaged in plastic
  rather than glass
• Infant industry. Wait and see.
            Plastic v. Glass
• Not at all obvious whether a ½ lb glass
  container causes more environmental
  damage than a 1/17 lb PET container.
  Even after recycling.
• Definitely a hot Berkeley issue—Ecology
  center calls the reuse of plastic as lumber,
• Deposit-Refund
  – Equivalence of refund to other taxes
  – Tax on virgin material encourages recycling
    • Offshore processing and manufacturing evade tax
      and move jobs out
     From Fullerton’s Review
• (much of this is verbatim)
• Drop off programs
  – (Jakus) $1.29/lb (for cost of time)
  – (Powell) costs from transport
     • 5 pounds stirling per ton curbside
     • 23 pounds stirling per ton drop off.
• Prob of starting new curbside
  – Increases in income
  – Increases in env. Group membership
• Tawil (1995)
  – 80 towns in Massachusetts
  – every $1000 that can be saved by curbside
    recycling increases the probability of adoption
    by 11%.
• a 1% increase in the percentage of
  households belonging to an environmental
  interest group increases the probability of
  adoption by 4%.
• In a survey of 100 households, Kinnaman
  (1998) finds that households are on
  average willing to pay about $86 per year
  to keep curbside recycling of newspaper,
  glass, and aluminum.
• Jakus et al. (1996) estimate that
  households are willing to pay $69.36 per
  year for curbside collection of newspaper
  and glass.
• Huhtala (1997)develops a dynamic model of
  waste accumulation with recycling as a backstop
  technology. The model is simulated using 1993
  data from theHelsinki region. Results show that
  the social benefits of recycling paper, cardboard,
  andmetal exceed the social costs. Glass and
  plastic do not pass the benefit/cost criterion.
• Brisson (1997) finds that the recycling of
  aluminum produces the greatest social
  benefits,followed by glass, ferrous metals, paper
  board, and rigid plastic.
               Garbage Charges
• Reschovsky and Stone (1994) and Fullerton and Kinnaman (1996)
• individual households whether they observed any change. In the
  former study, 51% of
• respondents reported an increase in dumping. The most popular
  method was household
• use of commercial dumpsters. For the 20% who admitted to burning
  trash, the authors
• were unable to confirm whether these burners did so in response to
  the program. Roughly
• 40% of the respondents to the Fullerton and Kinnaman (1996)
  survey indicated that illegal
• dumping had increased in response to the unit-pricing program.
• Germany implemented a unique policy in 1991 called the
  ―Law on Waste
• Management‖ that is designed to internalize the external
  costs of packaging choices by
• industry. This law requires the original product
  manufacturers to pay to recycle the
• packaging it produces even after the product is sold to
  retail firms or directly to consumers.
• The law also set an original recycling target of 80%. That
  is, firms would be required to
• recycle 80% of all packaging they produce. Amendments
  to the original legislation are
• expected to ease these targets to 60-70%.
•   Over 400 retail and packaging firms have combined with the large waste-
•   firms to create the Duales System of Deutschland (DSD). The purpose of
    this syndicate is
•   to reduce the administrative costs associated with satisfying the minimum
•   standards. Rather than requiring that each bottle be delivered back to its
•   manufacturer, local waste management firms agree to collect for recycling
    all bottles of
•   member organizations in exchange for payment from the DSD. Participating
•   identify their membership in the DSD by affixing a green dot on their
    packaging. In
•   essence, the program becomes a national recycling effort operated by the
    DSD rather than
•   by independent municipal governments, as is common in the United
• Only Fullerton and Kinnaman (1996) use household data that are
  not based on
• self-reported surveys. The weight and volume of the garbage and
  recycling of 75
• households were measured by hand over four weeks prior to, and
  following, the
• implementation of a price-per-bag program in Charlottesville, VA. A
  curbside recycling
• program had already been in operation for over one year. Results
  indicate that the weight
• of garbage decreased slightly, but the volume of garbage (number of
  bags or cans)
• decreased by more. Indeed, the density of garbage increased from
  15 pounds per bag to
• just over 20 pounds per bag.

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