The impact of prices and pricing units on residual and organic waste: Evidence from Wallonia, Belgium

Waste pricing is important to encourage households to reduce their waste and to increase sorting and recycling. Pricing instruments include differentiated prices for the waste fractions collected and the choice of an appropriate pricing unit (volume, weight, levy). In this paper, we test the effectiveness of those different instruments using an original and complete dataset from Wallonia (the southern region of Belgium), covering 10 years and all the 262 municipalities of the region. Our approach is to estimate the sensitivity of households' production of residual and organic waste to prices i.e., the price elasticities, using sophisticated econometric techniques to control for the endogeneity of prices. For residual waste, we show a significant own-price elasticity, which is higher when organic waste is not collected at the curbside. For organic waste, we found an important and significant cross-price elasticity, but a limited own-price elasticity. Hence, the privileged instrument to encourage waste reduction and sorting should be the price of residual waste. Finally, we show that the weight-based pricing system contributes substantially to the reduction of residual waste.

Automated summary

Waste pricing is essential for promoting waste reduction and sorting. Different pricing instruments, including differentiated prices for waste fractions and the choice of appropriate pricing units, are important factors in achieving these goals. This study uses a comprehensive dataset from Wallonia, Belgium to test the effectiveness of various pricing instruments over a 10-year period. The results show that price elasticities play a significant role in reducing residual waste, with weight-based pricing systems contributing substantially to waste reduction.