Beyond the Throwaway Society: An Incentive Approach to Regulating Municipal Solid Waste

Abstract

This Article develops a multi-tier pricing model for internalizing the social costs of municipal solid waste and balancing transaction costs. The Article concludes that, while comprehensive monitoring systems would be prohibitively expensive, there are feasible economic incentive systems that would be extremely effective in reducing the quantity and improving the composition of the municipal solid waste stream. Moreover, the transaction costs of implementing these systems could be kept within reasonable bounds. Simple curbside charges, based on the volume or weight of mixed refuse, provide strong incentives for source reduction, separation of valuable materials, and purchasing of materials that are reusable, recyclable, or less expensive to landfill or incinerate. Another possible option is a highly flexible system of retail charges implemented by entering data on disposal costs into optical scanning cash register systems. This system would facilitate carefully tailored adjustments to individual product prices to reflect disposal costs. If this pricing system were combined with a curbside charge, even greater social benefits could be reaped. Beyond the analysis of particular policy tools, the Article also considers means whereby incentive-based regulatory policies could be implemented within our complex federal system encompassing diverse local communities.

Keywords: environmental regulation, municipal solid waste, externalities, recycling

JEL Classification: K32