Effects of the unit-based pricing of waste in Slovakia: Spatial panel data models and matching approach

Abstract

In Slovakia, 55% of the generated municipal solid waste (MSW) was landfilled in 2018. Poor waste management performance is due to a lack of effective policies. We examine the effect of unit-based pricing of waste on the amount of mixed municipal waste and waste sorting. Compared to previous studies, this work applies spatial econometric model using panel data of Slovak municipalities from 2010 to 2018 in order to take into account spatial dependence of waste generation between municipalities. Possible endogeneity of unit-based pricing is assessed using the instrumental variable approach. Moreover, the propensity score matching method was applied to support the results. The results are as follows. (1) Unit prices reduce the amount of mixed municipal waste by an average of 22% per capita and the size of the effect depends on the pricing type. (2) Unit-based pricing increases the sorting of plastics by 15% and glass by 9%. On the contrary, no effect on the garden biodegradable or paper waste sorting is found. (3) The results show significant negative effect of unit-based pricing on waste generation in neighbouring municipalities. Moreover, we find no evidence of waste tourism caused by unit-based pricing implementation.