Does recyclable separation reduce the cost of municipal waste management in Japan?

Municipal solid waste (MSW) management is a system involving multiple sub-systems that typically require demanding inputs, materials and resources to properly process generated waste throughput. For this reason, MSW management is generally one of the most expensive services provided by municipalities. In this paper, we analyze the Japanese MSW management system and estimate the cost elasticity with respect to the waste volumes at three treatment stages: collection, processing, and disposal. Although we observe economies of scale at all three stages, the collection cost is less elastic than the disposal cost. We also examine whether source separation at home affects the cost of MSW management. The empirical results show that the separate collection of the recyclable fraction leads to reduced processing costs at intermediate treatment facilities, but does not change the overall waste management cost. Our analysis also reveals that the cost of waste management systems decreases when the service is provided by private companies through a public tender. The cost decreases even more when the service is performed under the coordination of adjacent municipalities.