Does weight-based pricing for municipal waste collection contribute to waste reduction? A dynamic panel analysis in...

This paper analyzes the effects of weight-based pricing on municipal waste generation in Flanders (Belgium) by applying the bias-corrected least squares dummy variables estimation model to account for the dynamic relationship. The study also considers yearly weight-based pricing dummy variables to clarify the annual effects after its introducing and price elasticities of weight-based pricing systems from the both viewpoints of short and long terms. The results by the dynamic panel estimations showed that the continuous participation of weight-based pricing decreases the amount of residual waste significantly by approximately 10.4%. However, the remarkable decrease (approximately 21.4%) was observed only in the first year after the introduction and the reduction effect gradually decreases following its introduction and it disappears in five years. The study also showed that price elasticities of weight-based pricing were smaller than that of volume-based pricing for five years after its introduction and consequently the difference between them disappeared in five years. In addition, the study indicated that the estimation results by the non-dynamic fixed effects model overestimated the long-term effects in weight-based pricing and price effects while underestimating the short-term effect by its introduction. The study suggested that we should consider dynamic effects and remove the bias from the least squares dummy variables estimators when we examine the effects of weight-based pricing.