THE ECONOMICS OF MUNICIPAL SOLID WASTE

Abstract

This article examines the generation and management of municipal solid waste through the lens of economics. The authors estimate that the global burden of municipal solid waste amounted to 1.3 billion metric tons in 1990, or two-thirds of a kilogram of waste per person per day. Industrial countries account for a disproportionately high share of the world's waste relative to their share of world population, while developing countries account for a disproportionately high share of the world's waste relative to their share of world income. Analyses across countries and over time reveal that the generation of municipal solid waste is positively related to variations in per capita income and that the generation of municipal solid waste per capita does not vary with population size among countries with comparable per capita income. Practices for collecting, processing, and disposing of municipal solid waste vary widely across countries, generally in accord with the nature of the waste stream and key environmental and economic features. The least efficient practices tend to be found in developing countries, creating serious threats to local environmental quality and public health. Although considerable evidence indicates that the generation and management of waste is sensitive to income and price variables, natural incentives to overuse common property and the presence of inter- generational externalities both suggest that private economic behavior will not yield socially optimal outcomes in this area. Community intervention may be needed to promote the social good, with evidence accumulating in support of arrangements involving the participation of private firms. The authors' calculations also suggest that improvements made now in the handling of hazardous waste will be far less expensive in discounted terms than undoing in the future the damage being caused by current practices. Addressing these issues from a rational societal perspective will become increasingly urgent in the future, especially in the developing countries, where the authors project that municipal solid waste will increase at an annual rate of 2.7 percent through the year 2010.