The effect of recycling price uncertainty on municipal waste management choices

Doron Lavee, Uri Regev, Amos Zemel

Research output: Contribution to journalArticlepeer-review

26 Scopus citations

Abstract

This paper analyzes the effect of price uncertainty and irreversible investment on the decision of municipalities to switch from landfill waste disposal to recycling by developing a model to predict recycling adoption behavior and applying it to empirical data. It is shown that uncertainty regarding the price of recycled materials may induce a risk neutral municipality to prefer landfill disposal, even when recycling is less expensive. A model is developed to describe the switching process and estimate its parameters using empirical data from 79 municipalities in Israel. The model is then used to predict municipalities' recycling adoption decisions under various assumptions regarding price uncertainty. The results support the hypothesis that price uncertainty is a major obstacle for recycling. Finally, several options for price stabilization are sketched and it is argued that these policies may be effective in establishing viable recycling markets.

Original languageEnglish
Pages (from-to)3599-3606
Number of pages8
JournalJournal of Environmental Management
Volume90
Issue number11
DOIs
StatePublished - 1 Aug 2009

Keywords

  • Irreversible investment
  • Municipal solid waste
  • Recycling
  • Uncertainty

ASJC Scopus subject areas

  • Environmental Engineering
  • Waste Management and Disposal
  • Management, Monitoring, Policy and Law

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