Garbage

1
Garbage

• Peter Berck 2000

2
Problem

• Garbage isnt 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

3
Theory--consumer

• r good disposed clean and for refund
• c good disposed clean
• x good disposed dirty
• w wage
• T time
• L leisure

• d is refundable deposit
• hr hc hx the time costs of disposing of the good
  in the various modes
  
• P is price of good

4
Budget constraint

• Tw Lw (Pdw hc) c (Pw hr) r (Pd
  whx) x
  
• U(L,crx, cr)
• reflects total consumption of good
• taste for clear disposal.

5
More garbage comments

• Tw Lw (Pdw 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

6
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.
  

7
Garbage Reduction Thoughts

• Value of Garbage reduction
• WTP as in Hutla
• Shadow price of dumping
• Much higher than price because public entities
  set pac
  
• Dont 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
  Fullertonmay be because of transport costsnew
  dumps further away
  

8
Consumer

• 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

9
Upstream

• Separate garbage from salvage
• Clean and dirty MURFs
• Scavengers

10
End Product is bales
11
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

12
Glass doesnt 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
• Doesnt 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.

13
Other incentives

• Garbage reduction mandate
• Cities pay fine if they dont reduce their
  landfilling
  
• Cities choose to fund curbside rather than pay
  fine.
  
• Big target is yard waste to compost
• Glass, because mandate is by ton.
• Aluminum is valuable and doesnt end up in this
  stream
  
• Plastic is problematic

14
Plastic

• Many resins
• PET has the biggest share
• PET bottles weigh very different amounts
• Light weight bottles best made with pure resin,
  so
  
• Plastic lumber, fleece are uses
• More and more things are packaged in plastic
  rather than glass
  
• Infant industry. Wait and see.

15
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 issueEcology center
  calls the reuse of plastic as lumber, downcycling.

16

• Deposit-Refund
• Equivalence of refund to other taxes
• Tax on virgin material encourages recycling but
• Offshore processing and manufacturing evade tax
  and move jobs out
  

17
From Fullertons Review

• (much of this is verbatim)

18

• 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

19
Curbside

• 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.
  

20

• 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.
  

21

• 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.

22
Garbage Charges

• Reschovsky and Stone (1994) and Fullerton and
  Kinnaman (1996) asked
  
• 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.
  

23

• 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.

24

• Over 400 retail and packaging firms have combined
  with the large waste-hauling
  
• 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 recycling
  
• standards. Rather than requiring that each bottle
  be delivered back to its original
  
• manufacturer, local waste management firms agree
  to collect for recycling all bottles of
  
• member organizations in exchange for payment from
  the DSD. Participating manufacturers
  
• 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 States.11
  

25

• 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.