Basic economic principles can be used to promote efficiency in solid waste management. However, there are several impediments to managing waste at least cost, including the widespread perception that some management alternatives are inherently more or less desirable than others, lack of information concerning the true social costs of waste management, underpricing of waste disposal services, and political opposition to the siting of new management facilities. These obstacles could be overcome, in part, by more data on and analysis of the full costs of waste management activities.
As distinguished from hazardous waste, municipal solid waste (MSW) is the less hazardous, nonindustrial waste that is disposed of by households and commercial establishments. While the vast bulk of MSW generated in the United States (about 160 million tons annually) has traditionally been deposited in landfills, many communities have recently utilized two other management alternatives—incineration and recycling. The motivation for pursuing these alternatives differs among communities, but is usually related to the difficulty of siting landfills due to the "not-in-my-backyard" (NIMBY) syndrome, concerns about environmental contamination resulting from the leakage of waste from landfills, or the desire to conserve resources such as forests and energy by recycling or burning waste.
Economically efficient waste management requires either using the least-cost management alternative or, more generally, achieving a least-cost balance between two or more alternatives. Given limited financial resources to meet ever greater needs for waste disposal services, managing solid waste in the most economical way is crucial. However, such an approach to waste management runs counter to the widespread perception that landfilling is inherently undesirable and that the United States should recycle wastes as much as possible. This view results from several misconceptions about the viability of solid waste landfilling. Thus it seems prudent to consider the merit of objections to landfilling before examining some of the practical and conceptual impediments to achieving an economically efficient waste management system.
Misconceptions about landfilling
One misconception about the viability of continued landfilling of MSW is that the United States is running out of landfill space. This does not appear to be the case. At the current rate of landfilling, all the MSW generated by the country over the next thousand years could easily be contained within a 30-by-30 mile area, using current landfill technology. This area represents three one-hundreths of 1 percent of the area covered by the contiguous states. Since the rate at which MSW is generated will probably increase, at least in the near future, more land than this would be required; however, that land would not be lost to alternative uses. Parks and golf courses stand on even recently closed landfills.
Environmental engineers believe that disposal of municipal solid waste in properly designed and operated landfills is an environmentally sound means of waste management.
To the extent that there is a space problem, it is distinctly regional. Lack of space is an acute problem in a number of metropolitan areas, particularly along the northeastern seaboard, but it is not a difficulty in many other areas of the country. Where landfill siting is a problem, it is more often due to political opposition than to a lack of available space.
Another misconception about landfills is that they pose a grave threat to the environment. In fact, much of the recycling effort in the United States has been motivated by concerns about the possible adverse environmental effects of landfills. One of these concerns is the potential for groundwater and surface water to percolate through landfills, resulting in the release of toxic organic constituents and heavy metals into soils and groundwater. Another concern is the potential of landfills to generate gases, including methane, that could have environmentally destructive effects. A more immediate threat is that the gases could cause spontaneous explosions and fires. Landfill fires are extremely difficult to control; in some cases they have burned continuously for several years.
Although they would seem to build an ironclad case against landfilling, these problems can be overcome or minimized by state-of-the-art landfill technology. Landfills lined with clay interposed between multiple layers of plastic sheeting greatly reduce the risk of ambient groundwater contamination, particularly if they have a system for collecting and treating the substances that filter to the bottom of the landfill. Such a system need not continuously remove all this leachate, as landfills have an inherent capacity to lessen the toxicity of the substances that have been introduced into or generated in them. This reduction in toxicity can be accelerated by maintaining landfills as relatively closed biochemical systems and by dispersing leachate within these systems. As for gases generated by landfills, they can be collected and even marketed.
Landfills lined with multiple layers of clay and plastic sheeting greatly reduce the risk of ambient groundwater contamination
Noxious smells can be contained by maintaining land buffers around landfills and by daily covering waste with earth. When a landfill is full, a cap of clay interposed between plastic liner material and covered with earth, along with continued leachate and gas monitoring and control, will assure that it poses little risk to the environment until such time that all wastes contained in it become inert.
Many landfills with leachate and gas control and monitoring have long been in service. In most cases the design and operation of these landfills has been the result of state or local regulations. In view of current landfill technology, some people—including environmental engineers—believe that the deposition of MSW in properly designed and operated landfills is an environmentally sound means of waste management. If so, decisions about whether or not to use landfills should pivot on cost considerations.
Comparing costs of disposal alternatives
It is important to recognize that all waste management alternatives, even recycling, are costly. Incineration and landfilling entail the explicit (internal) costs of resources used in the disposal process. These include the labor, land, and capital equipment required to transport and landfill or incinerate MSW. Other possible costs include the external costs of environmental degradation—noise, air, and water pollution, for example—that are not borne by either the waste facility operator or the clientele for the waste management service. Many of these costs can be internalized—that is, incorporated in the explicit cost of facility construction and operation. For example, modern incinerators provide air pollution control and monitoring, and as described above, modern landfills provide control and monitoring of leachate and gas.
Estimates of the value of the time that households expend in readying waste for disposal should be included in estimates of the social cost of waste management.
Just as with disposal alternatives, external costs are also associated with recycling. For example, trucks used to transport recyclables contribute to noise and air pollution and traffic congestion just as trucks used to transport waste to landfills and incinerators do. The explicit costs of recycling include the transportation, cleaning, sorting, and storage of recyclables. The fact that these operations may sometimes be performed by volunteer organizations does not alter the fact that they are costly in terms of the use of society's resources. Other socially desirable works might have been performed or leisure enjoyed if the volunteer effort had not been directed to recycling.
A substantial part of the social cost of waste management is the implicit value of the time that households expend in readying waste for disposal. With each waste management alternative, some waste-handling effort is required of households. To determine a socially efficient waste management system, some estimate of the cost of this effort should be undertaken. To illustrate, suppose that the introduction of recycling into a community would require each household to spend an average of five additional minutes per week preparing, sorting, and taking recyclables to the curbside. At $8 per hour—a conservative estimate of the average wage rate—the annual cost of this effort per household would be $35. If the effort were to result in the recycling of as much as half of the average household's waste, the cost to each household per ton of waste recycled would be about $45. (For a more complete estimate of the cost to households of recycling, the cost of hot water for rinsing recyclables and the cost of space for storing recyclables would have to be added to this figure.) By comparison, the cost of managing waste in a state-of-the-art landfill (excluding transportation costs) is at most about $30 per ton of waste, even in areas where land is relatively costly.
To determine the net cost of recycling, receipts from the sale of recovered materials must be deducted from the collection, transportation, sorting, storage, and other costs of processing recyclables. Because of differences in the local prices paid for recyclables, the cost of recycling will vary among communities. Sometimes the price of recyclables is negative. For example, in some areas dealers require payment for taking stocks of old newsprint. Where this occurs, the cost of recycling is increased. Depending on the cost of other waste management alternatives, newspaper recycling may still be an economically viable option even under such circumstances.
Determining the least-cost management system
The U.S. Environmental Protection Agency (EPA) has established a hierarchy of management alternatives that favors recycling over incineration and landfilling. This hierarchy apparently reflects the agency's belief that in many or most cases the full social costs (both internal and external) of incineration and landfilling are excessively high compared with the costs of recycling. Since no studies have attempted to comprehensively quantify and compare the full costs of alternative solid waste management options, this belief remains unsupported.
The least-cost method or combination of methods for managing MSW is likely to differ among different communities. In some cases, some combination of recycling, incineration, and landfilling may be optimal; in others, it may be best to use only one of these alternatives. In principle, when two or more management methods are used, costs will be minimized if each activity is pursued to a point such that the marginal or incremental costs are equal for each activity. Thus if it costs a community $15 to recycle each ton of waste and $20 to dispose of each ton in a landfill, recycling efforts should be increased. With increased recycling, the cost of recycling will rise above $15 per ton, eventually reaching the per-ton cost of landfilling. At this point the optimum mix of the two activities is reached, and no further recycling efforts should be pursued.
Determining the optimum mix of management methods is not as easy as the above example suggests, however. Consider the complexity of comparing just one aspect of waste management—collection and hauling of waste. The costs of this activity comprise a large share of the total costs of all three management alternatives. For example, about three-fourths of the explicit costs of landfilling are associated with waste transport. Thus the transportation arrangements that are instituted as part of an integrated waste managemant system are crucial. If a community's system for collecting and hauling waste to a recycling center or incinerator is operated separately from its system for transporting waste to a landfill, total waste transportation costs can be expected to increase greatly. If the system for transporting waste to the recycling center or incinerator is expanded, the per-ton cost of recycling or incineration could be lowered, while the per-ton cost of landfilling could be driven up by virtue of the lower tonnage of waste going to the landfill. If the accounting data are taken at face value, a possibly wasteful decision to have separate curbside collection systems may look like a wise one. Therefore, careful economic analysis of the true social costs and benefits of introducing alternative transportation systems is needed.
Impediments to efficient management
There are several impediments to managing waste at least cost. One of these is a lack of cost data and analysis that would provide the basis for economically rational decision making. It would be desirable for a community that wishes to introduce an integrated waste management system to have available the data that would enable it to project the likely costs of various management alternatives, given the specific relevant features of the community. The experiences of other communities would be a potential source of such information, and the collection and analysis of this information would be a major step toward better decision making.
When two or more management methods are used, costs will be minimized if each is pursued to a point such that the marginal costs of each are equal.
Even with better data collection and analysis, however, economical waste management would be impeded by the failure of governments to correctly price solid waste collection and disposal services. Households typically pay a flat weekly or monthly fee, irrespective of the amount of solid waste collected. This leads to underpricing of solid waste disposal services, which encourages overuse of these services in two ways. First, by reducing the waste producer's incentive to consider waste management costs when acquiring materials (such as packaging and printed matter) that later will require disposal, underpricing stimulates the use and production of these materials. Second, underpricing reduces incentives to voluntarily recycle, thereby increasing the demand for solid waste disposal services. Pricing that reflected the true social costs of waste management activities would enable households and businesses to make intelligent decisions regarding purchases of disposable materials and waste management options.
With respect to management options, even well-informed decisions may not be acted on if there are political impediments. Whether or not a waste management system is economical may not be a prime consideration for those people who perceive that their welfare would be adversely affected by any waste management facility operating in their neighborhood. As a result, politicians often find that attempts to establish an economically efficient waste management system are antithetical to an astute re-election strategy. Thus it may be necessary to find alternative decision-making mechanisms that would alleviate siting problems.
At present, lack of information about the full costs of management alternatives, underpricing of waste disposal services, and political obstacles to the siting of management facilities represent formidable barriers to economically efficient waste management. Without programs of research and public information that identify and communicate the true social costs of various management scenarios, it is doubtful that basic economic principles will be put to use to promote efficiency in waste management.
A. Clark Wiseman, a recent visiting fellow at Resources for the Future, is an associate professor in the School of Business Administration at Gonzaga University in Spokane, Washington.
A version of this article appeared in print in the October 1991 issue of Resources magazine.
A version of this article appeared in print in the October 1991 issue of Resources magazine.
