The Cost of Reducing Municipal Unsorted Solid Waste: Evidence from Municipalities in Chile

The optimal size of territorial units in the outsourcing of waste service: An empirical approach

This study provides new insights into the relation between the size of the territorial units for which the provision of waste services is entrusted to external operators and their efficiency. The need for a deeper investigation of this relation arises from the fact that on the one hand, the European Union is pushing its Member States towards the adoption of laws aimed at ensuring competition for the market whenever competition in the market is possible; on the other, both the theoretical and the empirical literature cautions policymakers against the risks associated with contracting out. This problem is addressed here through an efficiency analysis of Italian municipalities in the organization of waste services. The stochastic frontier analysis (SFA) is applied to estimate efficiency scores for the municipalities. Then, a regression analysis is carried out to investigate the relation between the efficiency scores and the size of the municipality. This analysis has been carried out using data on a sample of 6,916 Italian municipalities (87.39% of the entire population) for the year 2019. The method adopted here can also support regulatory authorities in defining the size of the territorial units in which other types of local public service should be outsourced.

Monetary valuation of unsorted waste: A shadow price approach

Improving the management of municipal solid waste (MSW) is fundamental to promote circular economy and sustainability. Unsorted waste involves negative environmental impacts which often are ignored in economic feasibility studies due to its difficult valuation. In this study the shadow price of unsorted waste using the directional distance function was estimated. This methodological approach also allowed us to compute eco-efficiency scores of a set of municipalities in the provision of MSW services. The empirical application focused on a sample of 119 Chilean municipalities. The results showed that the average shadow price of unsorted waste was 297.66 €/ton which means that the environmental cost of left waste as unsorted was 297.66 € per ton. A regression tree model illustrated that population density, tourism intensity and the generation of waste per capita significantly influenced the shadow price of unsorted waste. Moreover, it was illustrated that Chilean municipalities were very inefficient in the management of MSW since the average eco-efficiency score was 0.272. The findings from this study reveal that additional and alternative policies should be adopted to improve the management of MSW and increase its recycling rate.

How much does it cost to collect recyclable and residual waste in medium-income countries? A case study in the Chilean waste sector

Improper municipal solid waste (MSW) management leads to contamination of water, soil and air with negative impacts on human health. Moreover, not dealing with residual waste has huge implications for meeting circular economy targets. Understanding how much it costs could lead to a better quality of service and boost environmental sustainability. This study estimates an input distance function using econometric techniques to measure the technical efficiency of the MSW sector in Chile. This approach further allows us to estimate the shadow price of residual waste in terms of total costs. The results indicated that the average technical efficiency of the waste sector was 0.592. This means that the potential savings in costs and residual waste among municipalities could be at the level of 40.8%. Large divergences among municipalities were found since efficiency scores ranged between 0.029 and 0.863. It is found that for 53% of the municipalities evaluated, efficiency scores varied between 0.61 and 0.80. On average, the cost of reducing residual waste was 81.10 US $ per kilogram. This means that on average the cost of preventing one more kilogram of residual waste not being collected and recycled was 81.10 US $. It was also found that on average as population density increased, the shadow price of residual waste increased as well.Implications: The study provides a methodology that allows the policy makers to estimate the efficiency of the solid waste sector where limited available statistical data usually exists in developing and medium-income countries. They have the opportunity to understand what drives costs and identify the best and worst performers. This information is essential to develop local initiatives to enhance waste recycling and therefore, achieving the targets established at national level. Managers can also see if there are other operating factors that could influence performance such as population density. The proposed methodology allows integrating other exogenous variables that might be interesting to policy makers. For instance, a tourism index could be included in the assessment to evaluate whether tourism impacts on the efficiency of municipalities in the provision of municipal solid waste services and therefore, to analyze the implementation of an eco-tax for tourists.