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The OECD held a workshop in October 2003, bringing together leading experts in the field, to take
stock of "the state of the art" in the economics of waste area, and to identify issues on which further
work in the area of solid waste management and policy should be undertaken. This publication
presents papers that were prepared for that workshop.
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Addressing
the Economics of Waste
Pursuant to Article 1 of the Convention signed in Paris on 14th December 1960, and which came
into force on 30th September 1961, the Organisation for Economic Co-operation and Development
(OECD) shall promote policies designed:
– to achieve the highest sustainable economic growth and employment and a rising standard of
living in member countries, while maintaining financial stability, and thus to contribute to the
development of the world economy;
The original member countries of the OECD are Austria, Belgium, Canada, Denmark, France,
Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain,
Sweden, Switzerland, Turkey, the United Kingdom and the United States. The following countries
became members subsequently through accession at the dates indicated hereafter: Japan
(28th April 1964), Finland (28th January 1969), Australia (7th June 1971), New Zealand (29th May 1973),
Mexico (18th May 1994), the Czech Republic (21st December 1995), Hungary (7th May 1996), Poland
(22nd November 1996), Korea (2th December 1996) and the Slovak Republic (14th December 2000). The
Commission of the European Communities takes part in the work of the OECD (Article 13 of the OECD
Convention).
© OECD 2004
Permission to reproduce a portion of this work for non-commercial purposes or classroom use should be obtained through the Centre français
d’exploitation du droit de copie (CFC), 20, rue des Grands-Augustins, 75006 Paris, France, tel. (33-1) 44 07 47 70, fax (33-1) 46 34 67 19, for every country
except the United States. In the United States permission should be obtained through the Copyright Clearance Center, Customer Service, (508)750-8400,
222 Rosewood Drive, Danvers, MA 01923 USA, or CCC Online: www.copyright.com. All other applications for permission to reproduce or translate all or part
of this book should be made to OECD Publications, 2, rue André-Pascal, 75775 Paris Cedex 16, France.
FOREWORD
Waste generation and waste management receive increasing attention among policy makers. On
the one hand, waste causes environmental problems, both if it is handled properly and - especially - if
it is mishandled, e.g. through illegal dumping. On the other hand, both waste recovery and final
disposal can involve significant financial costs for public authorities, waste handlers and for
households. Unfortunately, under existing policy frameworks, both producers and households often
lack proper incentives to reduce the amounts of waste being generated, and to ensure that the waste
which is generated cause limited adverse environmental impacts. Some countries have adopted
ambitious targets in the waste area, but the costs of achieving them through the instruments chosen is
sometimes high. It is therefore important to carefully assess the costs and benefits of waste-related
policies.
The OECD has for many years been working on waste-related issues, in later years primarily
through its Working Group on Waste Prevention and Recycling (WGWPR). The work has inter alia
focused on transboundary movements of waste, and on defining environmentally sound management
of waste.
In the elaboration of the 2003-2004 work program of WGWPR on waste issues, it was felt that it
could be useful for the OECD to place more emphasis on issues related to the “economics of waste”. In
order to take stock of recent research findings on such issues, and to help the selection of topics on
which the OECD could usefully do additional work, a workshop on the economic of waste was held
14-15 October 2003 in Paris. The workshop brought together leading academics, civil servants working
on waste-related topics and representatives of the business community (selected by the Business and
Industry Advisory Committee to the OECD, BIAC) and environmental NGOs.
This book contains eight papers that were presented at the workshop - revised to take into
account relevant comments made and questions raised in the subsequent discussions. In addition to
these papers, two more papers were presented at the workshop: David Fitzsimons of the consultancy
firm Oakdene Hollins, Aylesbury Bucks, United Kingdom, had written a paper on “Improving
Markets for Used Lubricating Oils”, while Nick Johnstone of OECD, Environment Directorate, had
addressed “Market Failures and Barriers in Secondary Material Markets”. While this book would have
benefited greatly from the inclusion of these two papers, it has instead been decided to issue them
separately, along with two other papers, all presenting findings of a recent OECD project on the
functioning of secondary material markets.
The OECD wishes to thank Denmark and France for financial contributions that allowed the
workshop to take place.
These proceedings are published on the responsibility of the Secretary-General of the OECD.
3
TABLE OF CONTENTS
5
Chapter 5 WASTE TAX IN NORWAY ................................................................................................ 81
1. Background .............................................................................................................................. 81
2. Environmental costs of final waste treatment ..................................................................... 84
3. Measures to stimulate energy production from waste....................................................... 91
Chapter 7 EFFICIENT TARGETING OF WASTE POLICIES IN THE PRODUCT CHAIN ....... 117
1. Introduction............................................................................................................................ 117
2. The Cost of Waste Market Price Failures ........................................................................... 119
3. Waste Pricing With No Recycling And No Littering........................................................ 121
4. Waste Pricing With Recycling But No Littering................................................................ 124
5. Waste Pricing With Recycling and Littering...................................................................... 128
6. Mandatory Deposits.............................................................................................................. 132
7. Setting Recycling Targets ..................................................................................................... 138
8. Demand-Side Policies ........................................................................................................... 140
9. Supply-Side Policies .............................................................................................................. 142
10. Producer Take-Back Responsibility .................................................................................... 143
11. Regulating Packaging ........................................................................................................... 145
12. Restricting Solid Waste Trade.............................................................................................. 146
13. Conclusion .............................................................................................................................. 150
6
Chapter 1
1
By Nils Axel Braathen
1. Introduction
OECD has for many years been working on many waste-related issues, in later years primarily
through its Working Group on Waste Prevention and Recycling (WGWPR). The work has primarily
addressed technical, scientific and health aspects of waste issues and inter alia focused on waste
management, transboundary movements of waste, waste minimisation, extended producer
responsibility and • most recently • on promoting environmentally sound management of waste.
It has now been felt useful to shift the emphasis somewhat, and to focus more on the “economics
of waste”. There are several reasons for this: Better understanding of the economic issues involved can
facilitate policy measures to limit waste generation, and to promote environmentally benign ways of
handling the waste. Increased ambition levels in waste-related policy targets set over the last decades
have increased costs to public authorities, industry, waste handlers and/or private households. More
focus on “the economics of waste” can help assessing the balance between benefits and costs of
existing targets, and making sure that a given target is approached at lowest possible costs to society
as a whole.
In order to take stock of recent research findings on such issues, and to help selecting topics on
which OECD usefully could do additional work, a workshop on the economic of waste was held
14-15 October 2003 in Paris. The purpose of this chapter is to highlight a few of the issues raised, and
2
the “answers” given, both in the subsequent papers and in the discussions held during the workshop.
Some additional observations are also made.
1. National Policies Division, OECD Environment Directorate. The opinions expressed in this chapter are
those of the author and do not necessarily reflect the views of the OECD.
2. All the papers have been revised after the workshop, to reflect comments made and questions asked
during the workshop.
7
The paper explains that the increase in the amounts of municipal waste is the net impact of
several, sometimes conflicting “drivers”, like economic growth; a growing number of households;
smaller average household size; growing urbanisation (with better waste collection services in urban
3 4
than rural areas ); changing consumption patterns and changing socio-cultural habits.
De Tilly illustrates that although most municipal waste is still put in landfills, this method of
waste management is less and less dominant: Municipal waste landfilling increased by 2% between
1995 and 2000, while municipal waste generation increased by 10%. Incineration of municipal waste
with energy recovery, and composting of moist organic waste, is becoming increasingly common.
However, major differences between different countries and regions are described in the paper.
There is also a broad trend towards increased recycling. Recycling rates differ according to the
type of material, surpassing 80% for metals, 35-40% for glass, 40-55% for paper and cardboard.
Recycling rates differ also considerably from one country to another: in Ireland, for example, 10% of
paper and cardboard is recycled whereas the figure for Germany is 70%.
Municipal waste constitutes only a minor share of total waste amounts. According to EEA
(2001b), manufacturing waste constituted 26% of the total waste amount in EEA countries in the
period 1992-1997, while mining and quarrying waste constituted 29%, construction and demolition
waste 22% and municipal waste 14%. It should, however, be emphasised that these numbers are
uncertain.
De Tilly finds that broadly speaking, environmental impacts of waste management in the OECD
countries have diminished over the last ten years, due to extensive regulation, especially concerning
landfills and standards for incinerator emissions and the development of highly efficient technologies,
such as for controlling dioxin emissions from incinerators.
However, in many cases, current disposal capacities are seen as insufficient. The paper also states
that emission regulations and standards are often not complied with, and that poor waste
management in the past e.g. have led to long-term contamination of soil and groundwater. Local
authorities set waste management charges that do not reflect environmental externalities and fail to
provide a coherent basis for the use of the different potential methods of waste management.
3. This point is also reflected in an observation made at the workshop by Mr. Remy Risser of the French
Ecology and Sustainable Development Ministry. He indicated that the amount of household waste in
France is mainly known through surveys of treatment facilities. Thus, each policy increasing the
supply of treatment facilities tends also to raise the apparent quantity of waste generated. It has been
estimated that the amounts of waste eliminated by household through domestic incineration, domestic
composting and illicit dumping have decreased from 1.56 Mt to 0.89 Mt between 1993 and 2000,
representing now less than 3% of the 32,5 Mt collected and treated yearly. During the same period,
available data show a decreasing growth rate of waste generation. This is partly due to better statistics
linked to the modernisation of treatment facilities, but also - apparently - to a change in the
consumption structure, with a shift from less durable goods to more durable goods.
4. EEA (2001) states that “(t)here is no correlation between quantities generated (of waste from daily
household and commercial activities) and private consumption, suggesting that basic needs that
produce waste are being satisfied in all countries and that higher incomes will not result in the
generation of more waste of this type. Differences between countries are due to other factors, such as
difference in consumption patterns and lifestyle. Single households produce more waste per capita
than families, ready-made food produces more packaging waste than the traditional family-prepared
meals, while traditional preparation results in more organic kitchen waste. Increases in income are
likely to be used for long-lived goods and services, which could result in increasing amounts of other
types of waste such as bulky waste and wastes from construction and demolition.”
8
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