Landfill tax and recycling

Abstract

AbstractThis paper provides new empirical evidence on the role of landfill taxes in reducing landfill waste and promoting recycling. We focus on the impacts of the 2017 landfill tax law reform in Catalonia, a Spanish region, which increased the tax rate from 18 to 47 euros per tonne over the period 2017–20. Using municipality‐level data for Catalonia from the 2013–20 period, we contrast municipalities that differed in the use of door‐to‐door waste collection by the beginning of our study period. As door‐to‐door waste collection is advocated as especially efficient at reducing landfill waste, we hypothesise that municipalities that had not yet adopted this system had greater leeway in responding to the tax changes. Based on a two‐way fixed effects design, our findings reveal large differential responses to the tax hike. Compared with municipalities that had implemented door‐to‐door waste collection by 2013, we estimate that those that had not done this responded to the tax hike by reducing landfill waste by an additional 12 per cent, reducing total waste by 4 per cent, and increasing the share of recycled waste and waste that is sorted as organic by 6 and 2.5 percentage points, respectively. We provide suggestive evidence that the adoption of door‐to‐door waste collection is the main mechanism driving these responses.