The Cost-Effectiveness of the Supporting Policies for Food Waste-Reducing Equipment: Purchase Subsidy vs. Rental Subsidy

Abstract

However the food waste problem has been well characterized by the local government, finding the best solution is a difficult and daunting task. Although much attentionhasbeenpaid to analyze the effect of food waste treatment facilities, there have been few sophisticated comparisons of the costs and potential effects of food waste reduction equipment subsidized. In this study, an attempt was made to analyze lump-sum purchase and rental subsidies by comparing the costeffectiveness of food waste reduction equipment distribution by the local government, Jeju Special District. A set of scenarios for two kinds of subsidies were constructed and the data on the cost of financing methods was assembled after upscaling the costs over a 10-year period. The estimated costs are 6,091 million KRW for the purchase subsidies and 6,463 million KRW for the rental subsidies, which indicates that the former is more cost-effectivet hanthelatter. However, cost-effectiveness can vary with assumptions, such as technological progress, interest rate, risk premium, etc. The present approach can be adapted to establish proper food waste policy interventions or a mixture of policies by considering the regional economic conditions and environment.