Waste Management Incentive Programs and Municipal Finance Michal Struk Faculty of Economics and Administration Masaryk University
WM incentives programs in CZE ̶̶ Standard of flat fee per person, includes scheduled pickups, drop-off sites, CA sites, etc. ̶̶ Little motivation for waste separation, even with no extra costs ̶̶ Occasional efforts to employ incentives with aim to increase waste separation in municipalities ̶̶ Typical forms include some PAYT variants, rewards for separation, or some other alternatives 7 th International Conference on Sustainable Solid Waste Management, Heraklion, 26-28. 6. 2019
Economic aspects of incentives ̶̶ Evidence shows that WM incentives significantly increase waste separation rates ̶̶ Clear environmental benefits, less residual waste, more just, etc. ̶̶ But what is the effect on municipal finance? ̶̶ Less residual waste = less expenses on residual waste, right? But incentive programs are not free • Separated waste collection is not free either, more separation = more expenses • Also people tend to pay less with incentive programs, thus less revenues • 7 th International Conference on Sustainable Solid Waste Management, Heraklion, 26-28. 6. 2019
Goal of the study ̶̶ Examine effects of waste management incentive programs on municipal WM finance ̶̶ What are the differences between municipalities with and without WM incentive programs in terms of WM revenues and expenditures? 7 th International Conference on Sustainable Solid Waste Management, Heraklion, 26-28. 6. 2019
Data ̶̶ Municipal finance data related to WM, 2010- 2018 ̶̶ Per capita values for more appropriate comparison ̶̶ Revenues and current expenditures examined ̶̶ South Moravia Region in CZE, all municipalities (672) ̶̶ Reversed PAYT incentive program ̶̶ Unlike regular PAYT, people get discounts based on W separation ̶̶ 14 municipalities identified 1 (2011), 7 (2012), 10 (2013), 12 (2014), 13 (2015), 14 since 2016 • ̶̶ Several other municipalities with WM incentives, but inconsistent 7 th International Conference on Sustainable Solid Waste Management, Heraklion, 26-28. 6. 2019
Sample statistics 2010 2012 2014 2016 2018 1 st quartile 269 269 271 275 279 Popul Median 556 570 581 584 593 ation 3 rd quartile 1 072 1 093 1 103 1 116 1 134 1 st quartile 507 545 559 589 632 MWE x p.c. Median 610 632 654 710 763 (CZK/ year) 3 rd quartile 720 750 794 844 940 1 st quartile 444 470 505 526 539 MWR e p.c. Median 493 523 564 586 613 (CZK/ year) 3 rd quartile 550 576 631 657 685 ̶̶ Initially 672 municipalities from South Moravia Region in CZE ̶̶ 8 removed due to the extreme values reported (no Exp/Rev, landfill revenues) – 664 in analysis ̶̶ 14 municipalities with reversed PAYT incentive program 7 th International Conference on Sustainable Solid Waste Management, Heraklion, 26-28. 6. 2019
Current MW expenditures No incentives Reversed PA YT 1000 900 800 700 CZK per capita 600 500 400 300 200 100 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 ̶̶ Comparable levels ̶̶ Until 2013 higher, then decrease until 2016, higher in last 2 years ̶̶ Overall, MW in municipalities is not necessarily cheaper, actual levels differ notably between municipalities due to individual characteristics 7 th International Conference on Sustainable Solid Waste Management, Heraklion, 26-28. 6. 2019
Municipal waste revenues No incentives Reversed PA YT 700 600 500 CZK per capita 400 300 200 100 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 ̶̶ Comparable levels in 2010-2016 ̶̶ Decrease in last years (reasons to be further examined…) ̶̶ Overall, revenues in municipalities with MW incentives tend to be somewhat lower, but in most years not by much 7 th International Conference on Sustainable Solid Waste Management, Heraklion, 26-28. 6. 2019
MW revenues from fees/charges No incentives Reversed PA YT 600 500 CZK per capita 400 300 200 100 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 ̶̶ Municipalities with reversed PAYT tend to collect continuously less from people through fees/charges – but is this good or bad? ̶̶ Over 30% less in recent years – WM incentives make it cheaper for people ̶̶ People are rewarded with fee discounts based on their waste separation behavior 7 th International Conference on Sustainable Solid Waste Management, Heraklion, 26-28. 6. 2019
MW revenues from W separation No incentives Reversed PA YT 250 200 CZK per capita 150 100 50 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 ̶̶ Growing trend for revenues based on W separation, not on fees ̶̶ Municipalities with reversed PAYT show significantly higher levels of revenues, some years even double per capita levels ̶̶ In recent years 30% higher per capita revenues from this source 7 th International Conference on Sustainable Solid Waste Management, Heraklion, 26-28. 6. 2019
Revenues distribution No incentives Reversed PAYT Revenues from waste charges/fees Revenues from waste charges/fees Revenues from rewards, selling waste, etc. Revenues from rewards, selling waste, etc. 14% 2011; 15% 2012; 14% 2013; 15% 2014; 17% 2015; 19% 2016; 20% 2017; 22% 24% 14% 2011; 8% 2012; 24% 2013; 23% 2014; 34% 2015; 33% 2016; 38% 2017; 34% 34% 100% 100% 86% 2011; 92% 86% 2011; 85% 2012; 86% 2013; 85% 2014; 83% 90% 90% 2015; 81% 2016; 80% 2017; 78% 76% 2012; 76% 2013; 77% 80% 80% 2015; 67% 66% 2014; 66% 2017; 66% 70% 70% 2016; 62% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2010 2011 2012 2013 2014 2015 2016 2017 2018 ̶̶ Revenues from fees/charges still dominant ̶̶ Ratio with reversed PAYT is 1:2, without incentives is 1:3 ̶̶ Revenues from W separation gained significantly in importance ̶̶ Higher diversification of revenues for the municipality ̶̶ More room for maneuvering with fee/charges levels for municipal authorities 7 th International Conference on Sustainable Solid Waste Management, Heraklion, 26-28. 6. 2019
Overall findings ̶̶ MW expenditures are comparable whether incentives are employed or not, so it is generally not cheaper for the municipality ̶̶ MW revenues tend to be slightly lower in municipalities with reversed PAYT, so it is not more profitable for the municipality ̶̶ Municipalities with reversed PAYT collect 1/3 less from fess, but cover most of this gap with higher revenues from waste separation 7 th International Conference on Sustainable Solid Waste Management, Heraklion, 26-28. 6. 2019
Conclusions ̶̶ While MW incentive programs have clear environmental benefits in terms of higher waste separation, financially the evidence in not so straightforward ̶̶ Also additional effort from municipal administration and related costs are necessary, in order to persuade and teach people how the new incentive system works (not to be underestimated) ̶̶ Main difference between municipalities is in the revenue sources distribution ̶̶ Municipalities with incentive program tend to earn significantly more from waste separation ̶̶ Increase room for charging people less for WM – politically very appreciated ̶̶ If considering adopting incentive programs, reasons should not be primarily financial, but rather environmental 7 th International Conference on Sustainable Solid Waste Management, Heraklion, 26-28. 6. 2019
*Development in 2010-2016* Current MW expenditures MW revenues from fees/charges No incentives reversed PAYT No incentives Reversed PAYT 900 600 800 500 700 CZK per capita CZK per capita 600 400 500 300 400 300 200 200 100 100 0 0 2010 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 2016 MW revenues MW revenues from waste separation No incentives Reversed PAYT No incentives Reversed PAYT 700 250 600 200 500 CZK per capita CZK per capita 150 400 300 100 200 50 100 0 0 2010 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 2016 7 th International Conference on Sustainable Solid Waste Management, Heraklion, 26-28. 6. 2019
Thank you for your attention Michal Struk struk@mail.muni.cz
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