Essays on solid waste management: The impact of user fees

Over the years, in view of the growing demand for waste collection services and the declining capacity of the environment to absorb waste, governments have increasingly been considering the possibility of financing garbage collection services' through unit charges rather than property taxes as a means of bringing about a reduction in societal waste production coupled with an increase in recycling activities. In the absence of unit charges for garbage, individuals do in fact perceive the marginal cost of the collection services they receive to be zero and therefore have no incentive to change their consumption or production and disposal patterns in less externally harmful ways. If on one hand a unit pricing system has the potential of inducing individuals to decrease their refuse production, on the other hand it provides them with incentives for illegal forms of disposal. The possibility of illegal disposal (or simply dumping) is indeed one of the most alleged shortcomings of a user fee system.;Although a unit pricing system has often been assumed in theoretical treatments of the solid waste problem, dumping has either been ignored altogether or mentioned without being explicitly modelled, with only one notable exception. Nonetheless, the presence of dumping incentives has implications for the optimal taxation and subsidization schemes governments could implement in order to induce individuals to take into account the contribution of their waste generation to the societal accumulation of waste. In fact, despite individuals can be charged for the collection services they.;are provided with under a user fee system, the per unit charge rarely incorporates the social costs of waste production, that is, the instantaneous and intertemporal effects on environmental quality through the waste stock, and policies must then be formulated to ensure that these costs be internalized into the private decision-making processes. Because of the dynamic nature of the social costs of waste generation, and in order to effectively capture it in regulatory measures, the decision-making processes of both households and firms are modelled in the context of dynamic models. Pareto-efficiency is then shown to be always achievable even when dumping is not directly taxable and/or recycling is not directly subsidizable.;In order to also analyze the implications of the presence of dumping incentives for the public provision of garbage collection services, a static model is introduced which allows for the supply of collection services by a governmental agency to be continuous in pick-up frequency. Hence, in the absence of a per unit punishment system, dumping is found to negatively affect the public provision of garbage pick-up frequency but a scheme of efficient taxes on consumption goods and subsidies on legal (or curbside) disposal and recycling exists that ensures social optimality in the decentralized economy. This waste management policy is however no longer feasible once the model is extended to incorporate the waste stock externality and allow households to differ in their valuations of this externality, as it would involve taxing different households at different rates for the same consumption goods. Consequently, a differential system of pick-up frequencies of both curbside garbage and recycled materials becomes an essential component of any optimal policy designed to induce households to recognize and account for both the frequency and waste stock externalities.