Using Matching Estimators to Evaluate the Effect of Unit-Based Pricing on Municipal Solid Waste Disposal

Abstract

The delivery of municipal services for the collection, transfer, and disposal of household solid waste is often provided by local governmental units; typically at the town or city level. Unit-based pricing, also known as pay-as-you-throw (PAYT), is a residential solid waste collection program requiring households to pay a fee per bag of trash disposed. Unit-based pricing represents a significant departure from the historical practice of financing solid waste service from property tax revenues in which the marginal cost to a household for disposing solid waste is effectively zero. Local governments are motivated to adopt unit-based pricing for the purpose of creating a financial incentive for households to reduce the quantity of solid waste disposed and concurrently increasing the level of recycled materials. The objective of this study is to evaluate the impact of unit-based pricing of household solid waste disposal. A counter-factual model is used to estimate the program effect. The study area for this paper consists of the 234 incorporated towns and cities in the state of New Hampshire. As of 2008, 40 towns had adopted a form of unit-based pricing of household solid waste. Results from propensity score matching suggest there is an average annual reduction of 466 pounds of household solid waste due to unit-based pricing.Propensity score matching, unit-based pricing, pay-as-you-throw, municipal solid waste, Environmental Economics and Policy,