Wasted in Waste? The Benefits of Switching from Taxes to Pay-as-you-throw fees: The Italian Case

Abstract

Solid waste management is one of the most important functions performed by Italian municipalities and is mostly financed through local property taxes. Alternative financing schemes, known as ‘pay-as-you throw’ (PAYT), are designed to price each additional unit of waste and are becoming increasingly frequent at international level. Their advantages in terms of efficiency and equity, as well as of care for the environment, have been investigated both theoretically and empirically. This paper estimates the impact of PAYT schemes on the amount of waste produced and on the costs of its disposal for Italian municipalities. Results show that PAYT schemes deeply affect user behavior: total waste decreases (unsorted waste almost halves). Overall, the costs incurred by municipalities adopting PAYT fall by roughly 10 to 20 per cent in per capita terms, reflecting a reduction of one third in the cost of managing undifferentiated waste.

Keywords: pay-as-you-throw, municipal solid waste management, policy evaluation

JEL Classification: D78, H23, H71, Q53