|
In Israel, the government currently implements various measures intended to reduce the
amount of household waste sent to landfill. So far, however, these measures have resulted
in only limited success. The commonly heard claim that municipalities prefer to continue
sending waste to landfill because it is less costly than recycling is incorrect. A recent
study shows that on average, recycling is 11% less costly than landfill, and that over 50%
of municipalities would enjoy lower waste management costs by recycling, even ignoring
the landfill tax which has since gone into effect. However, despite this basic economic
consideration, the vast majority of municipalities are hesitant to make the transition to
recycling. The main reason for this is the combination of price uncertainty in recycling on
the one hand, and high irreversible investment costs required to make the transition to
recycling on the other. This combination of uncertainty and irreversible investment costs
is recognized in the literature as a significant deterrent to transition between states, even
when the transition is economically profitable. This study present a theoretical model
analyzing the decision-making process of the municipality, and then empirically tests the
results of the model by using data from 79 municipalities in Israel. On the basis of these
results, an alternative government policy is proposed – a policy focused on dealing with
the uncertainty factor in recycling, constructed in such a way as to help make the
transition to alternative treatment solutions for household waste more efficient.
|
