Loris Manni – 377711 Master Thesis – 45 ECTS [email protected] Sustainable Development (EG) Utrecht University THE SOCIAL EFFICIENCY OF ALTERNATIVE FINANCIAL INCENTIVE SCHEMES FOR MUNICIPAL SOLID WASTE REDUCTION Abstract: Efficient management of waste, especially at the urban level, is becoming more and more important in order to reduce negative externalities and achieve a sustainable society. Due to an increasing amount of waste, this goal is becoming more and more difficult; many solutions have been implemented, at different levels of the value chain. This research deals with different solutions for incentivising the reduction of municipal solid waste (MSW) through separation and recycling, applied by different municipalities in Switzerland. A cost-benefit analysis (CBA) is used to assess the social efficiency of different financial incentive schemes. Social efficiency is analysed as the difference between social costs and social benefits. Therefore not only economic but also environmental and social costs are taken into account. The results show how a pay-as-you-throw (PAYT) scheme can lead to a reduction of not only economic, but also environmental and social costs. It can therefore provide an important advantage to the social efficiency of a municipality. Supervisor: dr. Hens Runhaar Second Reader: dr. Frank van Laerhoven TABLE OF CONTENT Chapter 1 – Introduction ........................................................................................................................................ 1 1.1 Increased production of waste and related externalities ............................................................................. 1 1.2 Financial incentives as a solution .................................................................................................................. 1 1.3 Criticism about costs and benefits of different financial incentives ............................................................. 2 1.4 Research objective and research question ................................................................................................... 3 1.5 Empirical focus: Switzerland ......................................................................................................................... 3 1.6 Reading Guide ............................................................................................................................................... 5 Chapter 2 – Methodology ....................................................................................................................................... 6 2.1 General research strategy ............................................................................................................................ 6 2.2 Data sources and data collection .................................................................................................................. 6 2.3 Research methods ........................................................................................................................................ 8 2.3.1 A cost-benefit analysis ........................................................................................................................... 8 2.3.2 Program Theory ..................................................................................................................................... 9 2.3.3 Impact Assessment ................................................................................................................................ 9 Chapter 3 - Identification of costs and benefits ................................................................................................... 13 3.1 Accounting perspective .............................................................................................................................. 13 3.2 Geographical delineation ............................................................................................................................ 13 3.3 Time horizon and risk discounting .............................................................................................................. 14 3.4 Four Cases ................................................................................................................................................... 15 3.5 Program Theory .......................................................................................................................................... 16 3.5.1 Program Impact Theory ....................................................................................................................... 16 3.5.2 Program Boundaries ............................................................................................................................ 17 3.5.3 Explicating Program Theory ................................................................................................................. 17 3.5.4 Objective assessment .......................................................................................................................... 18 3.6 Impact model .............................................................................................................................................. 19 3.6.1 Direct effects........................................................................................................................................ 20 3.6.2 Indirect effects ..................................................................................................................................... 22 3.6.3 Exogenous Variables ............................................................................................................................ 25 Chapter 4 - Assessment and monetisation of costs and benefits......................................................................... 28 4.1 Impact Assessment ..................................................................................................................................... 28 4.1.1 Establishing causality ........................................................................................................................... 29 4.1.2 Intervention and control groups .......................................................................................................... 32 4.1.3 Time series ........................................................................................................................................... 33 4.1.4 Measuring program effects ................................................................................................................. 38 4.2 Monetisation of costs and benefits ............................................................................................................ 40 Chapter 5 - Business-as-usual: Lugano ................................................................................................................. 42 5.1 Introduction ................................................................................................................................................ 42 5.2 Infrastructure and collection system .......................................................................................................... 43 5.3 Total costs and benefits .............................................................................................................................. 44 Chapter 6 - Base Case: Locarno ............................................................................................................................ 49 6.1 Introduction ................................................................................................................................................ 49 6.2 Infrastructure and collection system .......................................................................................................... 50 6.3 Total costs and benefits .............................................................................................................................. 51 Chapter 7 - Alternative 1: Bellinzona (Pay-by-volume) ........................................................................................ 56 7.1 Introduction ................................................................................................................................................ 56 7.2 Infrastructure and collection system .......................................................................................................... 56 7.3 Total costs and benefits .............................................................................................................................. 58 Chapter 8 - Alternative 2: Caslano (Pay-by-weight) ............................................................................................. 64 8.1 Introduction ................................................................................................................................................ 64 8.2 Infrastructure and collection system .......................................................................................................... 65 8.3 Total costs and benefits .............................................................................................................................. 66 Chapter 9 - Comparison of Financial Incentive Schemes ...................................................................................... 73 Chapter 10 - Conclusions and Reflections ............................................................................................................ 76 10.1 General