Waste recycling policies and Covid-19 pandemic in an E-DSGE model

Among the environmental problems of the 21st century, waste production and management are particularly pressing. Despite policy efforts, waste volumes are still increasing worldwide and landfilling remains the main disposal option in several parts of the world. Together with the huge environmental impacts of the large amounts of waste landfilled, it would be possible to save enormous amounts of resources improving reuse and recycle options. The impact of the COVID-19 outbreak has been significant also in the waste cycle, leading to an increase in the amount of non-recyclable consumption in response to sanitary needs, as well as to new consumption practices. On the basis of these considerations this paper aims at analysing: (i) the short run impact on output, consumption and health of appropriate waste policies aimed at reducing non-recyclable waste production, and (ii) to highlight the mechanics triggered by an exogenous pandemic event in terms of waste management, environmental and health impacts. To these ends, we adopt an E-DSGE approach. Our results confirm the relevance of policies and consumers' preferences in driving waste management towards a circular economy transition. More importantly, our (to our knowledge) novel analysis suggests the existence of a trade-off between environmental quality and health in the presence of a pandemic event, suggesting the need to increase preparedness to such events, in order to avoid relying on "emergency approaches", based on resorting to increases in non-recyclable consumption types (e.g. single use plastics).