Economic efficiency in waste management and recycling

Abstract: This thesis consists of four self-contained papers that all deal with economic efficiency issues with respect to recycling behavior and waste management policies. Paper [1] provides an econometric analysis of the most important determinants of inter-country differences in waste paper recovery and utilization rates. The paper concludes that relative waste paper recovery and use depend largely on long-standing economic factors such as population intensity and competitiveness in the world market for paper and board products. We also find evidence that supports the conjecture that rich countries tend to recover relatively more waste paper than low-income countries, which reflects the higher demand for waste management and environmental policies in more developed economies. As recovery and utilization rates are determined by economic and demographic characteristics the degree of policy flexibility in affecting these rates may be limited. In particular, an ambitious utilization rate target may be very costly toenforce as it can conflict with existing trade patterns of paper and board products as well as with other environmental goals. Paper [2] builds and extends upon paper [1] and provides a critical analysis of Van Beukering and Bouman’s article in World Development on global paper recycling and trade. We first question their notion that developing countries specialize in waste paper utilization and developed countries in recovery activities primarily because of different patterns of waste paper trade. An increased focus on relative waste paper availability, we argue, provides us with a better understanding of global paper recycling. We also criticize some of the implicit assumptions made in their regression analysis of waste paper utilization rates. In contrast to the approach used by Van Beukering and Bouman our analysis: (a) is consistent with basic microeconomic theory; (b) distinguishes clearly between short- and long-run impacts; and (c) produces results that support our initial conjecture that waste paper availability is the most important determinant of waste paper use. Paper [3] analyzes the spatial cost efficiency of the Swedish legislation regarding waste disposal handling. We focus on the case of corrugated board and recognize that the different counties in Sweden possess different economic prerequisites in terms of waste paper recovery and utilization potential. We employ data for six corrugated board mills and 20 counties and a non-linear programming model to identify the least cost strategy for reaching the politically specified recycling target of a 65 percent recovery rate for corrugated board. That is, the total costs of recovering a minimum of 65 percent in each county are calculated and compared with the case when the country as a whole recovers 65 percent cost effectively. The conclusion is that from an efficiency point of view the recovery efforts should be concentrated to the highly populated and urbanized counties, and not be uniformly divided throughout the country. In the base case the results suggest that the cost efficient county-specific recovery rates should range from 51 percent to 72 percent. Paper [4] analyzes households' perceptions of recycling activities in a municipality in northern Sweden, Piteå. The purposes of the paper are to analyze whether moral motives matter for: (a) the assessment of households' waste sorting costs; and (b) for the efficiency of introducing economic incentives for stimulating households' recycling efforts. We employ an economic model of moral motivation with possible motivation crowding-out and econometric techniques. The empirical results support the notion that moral motives significantly lower the costs associated with household recycling efforts. Specifically, the average hourly willingness to pay to let others sort household waste at source was found to be significantly lower than the corresponding income after tax (i.e., the opportunity cost of time). Furthermore, moral motives can in some cases be the cause of inefficient policy outcomes when introducing economic incentives to promote recycling efforts.