Waste Disposal and Recycling

Many environmental challenges facing the world today such as climate change, water and air pollution, and species endangerment are the consequences of the productive economy, of agriculture, land development, and industrial production. Solid waste is different. The consumer, not the firm, generates the bulk of solid waste. The waste consumers produce while at home or at work is unsightly, generates odor, threatens fresh groundwater supplies, and contributes to airborne dioxins. When looking for policies to improve things, consumers must examine their own choices and habits. Economists promote incentive-based policy approaches to improve environmental quality at the lowest cost to the economy. Although cap-and-trade programs and environmental taxes appear sporadically across the environmental policy landscape, nowhere are incentive-based policies more common than in the market for solid waste. Thousands of municipalities across the globe require consumers to pay for each bag of waste contributed to collection agencies or subsidize consumer recycling efforts – both examples of environmental taxes. With the emphasis on consumers and on market-based policies, microeconomic theory and welfare economics are perfectly suited to study the market for solid waste and evaluate policy. This article summarizes the economist's view of solid waste disposal and recycling.