Title: Assessing incentive-based environmental policies for reducing municipal solid waste disposal.
Other Titles: Assessing incentive-based environmental policies for reducing municipal solid waste disposal.
Authors: De Jaeger, Simon
Issue Date: 13-May-2011
Abstract: The aim of this PhD dissertation is to evaluate waste management policies to limit municipal solid waste (MSW) production and disposal of garbage. Understanding MSW production and disposal is of prime importance forcommunities to choose appropriate policy instruments to attain their garbage disposal targets. Notwithstanding the extensive interest of scholars during the last decades, new developments in the MSW market reveal important shortcomings in both empiric and theoretic research. In particular we identify three potential sources of bias when evaluating economic and political incentives for reducing MSW disposal. It is our goal to tackle these three shortcomings and demonstrate their impact by means of specific case studies. First, as indicated by Besley and Case (2000), if policy intervention is responsive to economic and political conditions within its jurisdiction, then it may be necessary to control or tocorrect for the forces that cause the policy to change if one wishes toobtain estimates of a policy’s incidence. Techniques to circumvent thisendogeneity problem, such as difference-in-differences, matching, instrumental variables and, Heckman’s two-stage estimator, are commonly used methods for program evaluation. However, when assessing effectiveness ofwaste reduction policies these statistical methods are rarely used. In the first chapter (published in waste Management, see De Jaeger and Eyckmans, 2008) we will give an introduction to one of these techniques – the difference-in-differences (or DD) estimator – and argue that it is a useful tool for assessing waste management policies. We start by showing that existing dynamic DD techniques can be extended to accommodate for more than one treatment group. Next, we apply this technique to a Flemishvoluntary waste policy program to demonstrate its relevance for evaluating MSW management policies. In the second chapter (published in Waste Management and Research, see De Jaeger, 2009) we further extend the DD methodology in order to evaluate the real impact of weight-based pricing schedules in MSW. The main idea is to use historical observations on MSW production to determine which version of the difference-in-differences technique is most suitable to assess the impact of a policy action on MSWquantities. Second, numerous empirical studies in the field of strategic tax policy interaction among local governments have shown the existence of spatial policy interaction. Heyndels and Vuchelen (1998), for instance, show that local income and property tax policies are strongly correlated among neighbouring municipalities in Belgium. A similar principle appears to be true for MSW taxes. In chapter 3 we set up a two-stage theoretical model of consumers’ demand and municipalities’ pricing policy for residual MSW collection and processing. We test the predictions from this model using the proper techniques in spatial econometrics. The results indicate, as predicted by our model, local governments strategically interact with each other when setting the price for MSW. Based on chapter 3 we can conclude local policy makers mimic waste tax rates because they believe voters try to overcome information asymmetries by comparing the local policies with neighbouring municipalities when evaluating the performance of their incumbents. In chapter 5 we go a step further and explicitly test for political costs in terms of popularity scores.We test if voters indeed use neighbouring tax rates as a yardstick, or if other principles drive their attitude towards tax rates. As expected,voters do not engage in yardstick voting, but are rather averse to increases in MSW tax rates in general. Third, in responses to financial incentives to reduce waste, like unit based-pricing, households mightbe tempted to engage in illicit behaviour as an alternative to recycling, composting or adjusting purchasing habits. The possibility of increasing illegal forms of waste disposal has always been an important concernfor local policy makers when deciding on the payment schemes. New (but anecdotic) evidence suggests the existence of a form of illegal waste dumping which has not yet been analysed in the literature. If neighbouringmunicipalities charge significantly different prices at their recyclingsites, residents have an incentive to present their waste at the cheapest location. As the prices often do not reflect the true processing costs for the municipalities, waste import is perceived as problematic by the local policy makers. In chapter 4 we present a simple theoretical model of consumers’ demand for waste collection and processing facilities and test the predictions from the model using a set of spatial econometrictools. Our estimation results indicate that bulky household refuse levels indeed depend on the prices charged in neighbouring municipalities. For other waste fractions like demolition waste, garden waste, scrap metal and wood waste we find no proof for waste export. This is not surprising as we argue some waste fractions are more sensitive to spatial differences in prices than others. Finally chapter 6 (published in WasteManagement, see De Jaeger et al., 2011) studies the impact of some local policies aimed at MSW reduction on the cost efficiency of MSW collection and disposal. We explicitly account for endogeneity of localpolicies by using a bootstrapped version of the Data Envelopment Analysis methodology in combination with a matching technique. Our results indicate that municipalities that are member of a waste collection joint venture, or that subscribe to a voluntary agreement to reduce MSW at the highest ambition level, collect and process MSW more efficiently than other municipalities. Weekly instead of two-weekly waste collection, or using a weight-based pricing system appears to have no impact on efficiency. Our results show that aiming at MSW reduction does not lead to lower efficiency of public service provision, even on the contrary. Key references Besley, T.J. and A.C. Case (2000), Unnatural Experiments? Estimating the Incidence of Endogenous Policies, Economic Journal, 110, pp. F672-F694. De Jaeger, S., Eyckmans, J., Rogge, N. and T. Van Puyenbroeck,(2011), Wasteful waste-reducing policies? The impact of waste reduction policy, Forthcoming in Waste Management. De Jaeger, S. (2010), Residual household waste: from pay-per-bag to pay-per-kg. An evaluation study for Flanders, Waste Management & research, 28, pp. 330 - 339. De Jaeger, S., Eyckmans, J. (2008), Assessing the Effectiveness of Voluntary Solid Waste Reduction Policies: Methodology and a Flemish Case Study, Waste Management, 28, pp 1449-1460. Heyndels, B. and J. Vuchelen (1998), Tax mimicking among Belgian municipalities, National Tax Journal, 51, pp. 89-10.
Publication status: published
KU Leuven publication type: TH
Appears in Collections:Research Center of Energy, Transport and Environment, Leuven
KU Leuven Energy Institute
Research Centre for Economics and Corporate Sustainability, Campus Brussels
Faculty of Economics and Business (FEB) - miscellaneous

Files in This Item:
File Status SizeFormat
PhD_Simon_De_Jaeger_Final.pdf Published 1997KbAdobe PDFView/Open Request a copy

These files are only available to some KU Leuven Association staff members


All items in Lirias are protected by copyright, with all rights reserved.