Haul Trash or Haul Ash: Energy Recovery as a Component of Local Solid Waste Management

A model of municipal choice of solid waste disposal technologies is developed to examine three competing local options: incineration in energy recovery facilities (ERFs), landfilling, and recycling. We show that the desirability of incineration and the optimal size of an ERF depend on the underlying costs of the various disposal options and the characteristics of the waste stream, and that under most conditions allocating resources to incineration reduces the incentives to recycle. We examine the implications of several extra-local policies on optimal disposal strategies. Most notably, we find that successful source reduction policies and minimum-recycling targets render incineration less attractive.