Economic Efficiency Effects of Alternative Policies for Reducing Waste Disposal

Reducing the amount of municipal solid waste that is disposed of has become an important policy goal. Previous research argued that a virgin material tax offered an efficient method of meeting this goal and it continues to be considered as a policy option today. This paper demonstrates, however, that a virgin material tax is not an efficient method of reducing waste, but that an alternative policy-a combined disposal tax and reuse subsidy-is. The combined disposal tax and reuse subsidy is theoretically consistent with unit-based household charges for waste disposal, but may have advantages in some situations.