Waste management is a crucial part of Swedish environmental policy. In this study, the economists Robert Lundmark and Eva Samakovlis show the advantages of using economic control instruments for waste management policy.
WASTE MANAGEMENT HIERARCHY. The so-called waste management hierarchy is a pillar in the waste management policy of Sweden and the EU. It builds on the fact that one should first try to prevent the emergence of waste, second try to promote recycling and third burn the waste. The last resort is to turn the waste into landfill.
THE WASTE MANAGEMENT HIERARCHY IS TOO INFLEXIBLE. Lundmark and Samakovlis consider the waste management hierarchy to be too inflexible for it to be applied in waste management policy in practice. If we want to obtain the maximum improvement of the environment per Swedish krona, we should have a more flexible attitude. How much of the paper waste from households that should be recycled or burnt might, for example, differ between various parts of the country, depending on the proximity to a paper-mill and population density.
INCLUDING POLLUTION IN THE PRICE. When possible, the goal of the waste management policy should be to create well-working markets for waste management that internalize the external costs, such as pollution, in the price. Economic control instruments will provide those who are closest to the waste management business and who thus have the best knowledge with the driving forces to find efficient solutions to the waste management problem, while also promoting technological innovation.
Provided that they are correctly designed, economic control instruments in waste management policy can:
Give private economic price signals that take all costs in the economy into account and that make companies and households change their behaviour in a desirable way. One example of such a signal could be garbage collection fees based on weight, which are only applied in 10 percent of the Swedish municipalities.
Reduce the costs for achieving the environmental goals by rewarding new and efficient solutions from those concerned.
Promote long-term solutions to the waste management issue by rewarding investments in technological development by the companies concerned.
ROBERT LUNDMARK is Professor of Economics at Luleå University of Technology, robert.lundmark@ltu.se.
EVA SAMAKOVLIS is Head of Environmental Economics Research at the National Institute of Economic Research and Associate Professor of Economics at Umeå University, eva.samakovlis@konj.se.