By Organisation for Economic Co-Operation and Development
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Extra resources for Addressing the Economics of Waste
However, this fall is partly or even entirely wiped out (Fullerton and Kinnaman, 1996) by the higher costs of administering the system. x It is also the fairest solution, since the cost of the service is individual and billed according to use. The drawback of this method of taxation, called “pay as you throw” (PAYT) in the United States, is that it often leads to the illegal disposal of waste by unauthorised tipping and incineration (Kinnaman and Fullerton, 1996 and 2000, Horton, 1996). Although the generator of the waste disposes of it at least cost, the disposal has a significant environmental impact and implies social and rehabilitation costs borne by the community as a whole.
With the strict mass balance condition (c = g+r+b), Fullerton and Kinnaman (1995) show that the optimum in the above model is achieved by: (3) tc = -nuB/O tr = nuB/O tg = n(uB – uG)/O . Note that the tax on purchase of consumption c is positive, and it reflects the marginal external damages from dumping. The tax on recycling is negative, a subsidy that exactly returns the tax collected upon the purchase of the item. Recycling has no “external” effect, and ends up with no net tax. The proper disposal of garbage also receives back the initial tax upon purchase (since tg includes nuB/O), but garbage gets an additional tax that reflects its own externality, – nuG/O.
This law imposed technology-based standards on the construction, operation, and closure of solid waste landfills. Each landfill now is required to install thick plastic linings along the base, to collect and treat leachate, to monitor groundwater, and to cover garbage within hours of disposal. Because the fixed costs of constructing and operating a landfill have increased, the cost-minimizing landfill size has increased, and fewer landfills are being built. The trend toward larger landfills is also related to the increased political difficulty in siting them: once decision-makers get past the problem of “Not in My Back Yard” (or NIMBY), they choose to build one large enough to last longer.