Cost Functions of an Urban Government Service: Refuse Collection

Abstract

ENVIIRONMENTAL health services, especially refuse collection and sewage disposal, though relatively small in terms of outlays compared to other urban government services, have played a major role in the rapid urbanization of society. They have helped to eliminate the frightful dangers to health that can threaten densely populated communities and decimate their populations. Economists who are concerned with planning the provision and financing of urban government services might find the analysis of refuse collection useful from a methodological point of view. Their interests tend to focus on issues of scale economies, break-even points, the cost of differential service levels, the determination of user charges, etc. In addition, projections of service needs and costs occupy their attention. Inquiries into these matters require information on government service demand and cost functions which are unusually difficult to determine because of the economist's inability to find readily quantifiable output units and quality characteristics. However, as will be shown below, refuse collection cost analysis, in this respect, poses less difficulty than any other local government service, except perhaps water supply. In much of the world, refuse collection services are mainly provided by governments, although this need not be the only method.' Indubitably, these services do not constitute pure public goods; only to a limited extent do they fulfill either social or merit wants.2 Or, to put it differently, while pure public goods have very many major indirect or neighborhood effects, in the case of refuse collection such effects are relatively minor. Residential refuse collection (and disposal) service involves the regularly scheduled pickup, collection and disposition by a sanitary agency of solid waste materials resulting from the operation and maintenance of households; its main components are garbage, ashes and rubbish.3 It is useful to distinguish between residential refuse collection on the one hand and industrial refuse collection on the other. The two usually are carried out separately and the latter takes place virtually on a daily basis. Unlike residences, commercial and industrial establishments vary greatly in the amount of refuse they produce, and many large industrial firms provide their own collection and sometimes even disposal service. In the following pages, an ideal residential refuse collection cost model will be presented. Because of data difficulties and the marginal importance of some variables, this model will next be simplified and implemented in relation to a case study. Finally some conclusions are pre-