analysis of economic incentive schemes to promote
ANALYSIS OF ECONOMIC INCENTIVE SCHEMES TO PROMOTE EFFICIENT SOURCE SEPARATION A. HAPPENHOFER*, P. BEIGL*, S. SALHOFER* *Institute of Waste Management, University of Natural Resources and Life Sciences, Muthgasse 107/III, 1190 Vienna, Austria
SUMMARY: Efficiency of source separation schemes is characterised by high participation rates and high recycling quotas as key performance indicators. One possible approach to promote efficient source separation is the implementation of economic incentive schemes. In this study, existing international incentive schemes were analysed based on an extensive literature review in combination with semi-structured expert interviews, in order to determine their limitations and potentials. Several influencing factors were derived and adopted for considerations concerning the potential implementation in civic amenity sites in Austria. Recommendations for a successful planning and implementation of incentive schemes are given. For highly developed, comprehensive collection schemes, accompanying economic incentive schemes can help to boost popularity and participation rates.
1. INTRODUCTION Source separation is a key element of efficiently operating waste management systems. Numerous measures for the promotion of source separation are available. Their application is essential to motivate households to participate in available collection schemes. Economic incentive schemes are basic policy instruments, which either provide positive or negative incentives for waste generators. Compared to strictly regulatory measures, they provide a more dynamic policy option. In the municipal waste management sector, “pay-as-you-throw” – schemes have become well-established in an international perspective. Less prominent approaches are reward schemes which aim to motivate households to recycle by providing them positive incentives. Bearing the goals of the European “Circular Economy Package” in mind, it is becoming more and more important to intensify new and innovative methods to promote high-quality and –quantity source separation and in further consequence recycling. Economic incentive schemes in this context are defined as any kind of positive or negative incentive for a household to participate in source separation. Positive incentives are usually offered in form of rewards (e.g. vouchers), negatives in form of penalties (e.g. fines). Both patterns are used, to achieve a certain behavioural target (Amini et al., 2014). In a waste management context that goal is to motivate more households to participate in existing collection schemes on the one hand and to motivate households already attending, to provide even more recycling material in even better quality. The specific targets of an incentive scheme are guided by framework conditions regarding the collection infrastructure (especially if a kerbside or bring site collection scheme is installed) and political objectives (higher recovery Proceedings Sardinia 2017 / Sixteenth International Waste Management and Landfill Symposium/ 2 - 6 October 2017 S. Margherita di Pula, Cagliari, Italy / © 2017 by CISA Publisher, Italy
Sardinia 2017 / Sixteenth International Waste Management and Landfill Symposium / 2 - 6 October 2017
rates, less contamination of the material, higher participation rates, etc.), which shall be addressed. Goal of the present study was to investigate existing incentive schemes and especially examine overall key success factors and limitations of their implementation. In further consequence a potential implementation in civic amenity sites in Austria is discussed and recommendations for action are given.
2. METHOD To answer the stated research questions, firstly an extensive literature review was carried out primarly using relevant scientific internet databases and journals. To give a clear overview, incentive schemes were generally categorised, depending on their economic impact on the households (fines and rewards). Also the different scopes of design of incentive schemes were summarised. Further research was focused on remuneration and reward schemes and their evaluation concerning induced changes in households’ collection behaviour. Focus of the research is set on European projects implemented in the last ten years that used methodological approaches to assess the impacts of their studies systematically. Furtheron case studies were compared and analysed to harmonise general factors of success and limitation during the implementation of incentive schemes. No general conclusions can be drawn from the review, mainly due to the following reasons: firstly the significant variation of design of the implemented schemes, secondly lack of consistency of the documentation of the systems and their evaluation, and thirdly profound differences of applied assessment methods. The evaluation of existing schemes would benefit from consistent documentation and assessment methods. Finally considerations have been made concerning a potential large-scale implementation of incentive schemes in bring site amenities in Austria taking into account legal and structural conditions. To address this research question with more topicality and practical relevance, expert interviews were conducted between May and June 2016. A semi-structured interview guideline was developed based on experiences resulting from the conducted literature review. Interview partners were chosen based on their professional status in the municipal solid waste management sector in Austria, ranging from the national coordinator of “ARGE Österreichische Abfallwirtschaftsverbände”, federal state representatives of “ARGE Österreichische Abfallwirtschaftsverbände” and the managing director of “Oberösterreichische Landesabfallverwertungsunternehmen AG”. Additional information was obtained through telephone and written correspondences with employees of federal waste management associations.
3. RESULTS AND DISCUSSION 3.1 Scopes for design of incentive schemes Pay-as-you-throw (PAYT) schemes have become well established internationally. They are based on the “polluter pays principle” and provide an economic incentive by making a households waste fee dependent on the amount of waste it actually produces (Bilitewski et al., 2004). They are mainly implemented relating to the collection of residual waste and their impacts have been examined in various studies (e.g. Reichenbach, 2008; Dahlén and Lagerkvist, 2010; Brown and Johnstone, 2014). Due to the fact that these systems are based on punishing unwanted behaviour they can cause unwanted side-effects like for example illegal dumping. Another incentive form are deposit-refund-systems (DRS) which are basically a
Sardinia 2017 / Sixteenth International Waste Management and Landfill Symposium / 2 - 6 October 2017
formation of “extended producer responsibility” and are mainly used for the collection of packaging waste (like e.g. aluminium cans) and WEEE. In some countries (e.g. Germany) these systems are well-established and very important for the capture of particular waste streams, but their implementation is very costly and also requires high political will and support (Walls, 2011). A third incentive form are reward schemes. First implementation cases in Europe date back to the 1980ies in the German Democratic Republic (DDR). Citizens could bring their recycling materials to central collection points, where they recieved cash rewards in exchange (Hartard and Huhn, 1992). Figure 1 gives an overview of possible scopes of design of economic incentive schemes. Economic theory states that individuals want to maximise their personal benefit. Therefore the idea of economic regulation is to make environmentally friendly behaviour – such as recycling – more attractive economically in order to motivate individuals to behave in accordance with society´s interests (ThØgerson, 2003). With this hypothesis in mind the question arises, if the implementation of a reward scheme could be an adequate way to adress more people to participate in source separation. Yau (2010) states that recycling is prone to the collective - action problem and ways to address it need to be examined. Figure 1. Different scopes of design of incentive schemes
3.2 Design alternatives of reward schemes In the course of the case study review several options to design reward schemes were found. Figure 2 summarises the different design alternatives, distinguishing different adressees and relevant parameters.
Sardinia 2017 / Sixteenth International Waste Management and Landfill Symposium / 2 - 6 October 2017
Figure 2. Design alternatives of reward and remuneration schemes (references: AEAT, 2003; AEAT, 2006; Harder and Woodard, 2007; Holmes et al., 2014; De Feo and Polito, 2014; Owusu et al., 2013; Defra, 2016)
3.3 Key influencing factors The meta-analysis of the examined literature showed that some relevant performance indicators influencing a successful implementation of reward schemes can be derived. Giving general recommendations would not be purposeful, in view of the fact that structural and legal frameworks vary strongly from country to country and in some cases also from region to region. A short overview over the main influencing factors is given below. 3.3.1 Preferred incentive form Research indicates that in general rewards are preferred over fines (e.g. Amini et al., 2014; AEAT, 2003; Shaw and Maynard, 2008). In the context of rewards due to an unsatisfactory amount of scientifically evaluated pilot schemes it is hard to name one preferred incentive form. Survey-based results tend to indicate that housholds prefer community-based rewards (e.g. Shaw and Maynard, 2008). On the other hand results based on actual pilot scheme projects showed that rewards given out based on the performance of a group of households did not lead to significant changes in the collection behaviour of the households (Harder and Woodard, 2007). 3.3.2 Infrastructure Having access to convenient collection infrastructure seems to be one of the most, if not the most important factor influencing household´s motivation to participate in recycling (e.g. Strategy Unit, 2002). A well-developed collection scheme is not only a basic requirement for
Sardinia 2017 / Sixteenth International Waste Management and Landfill Symposium / 2 - 6 October 2017
source separation, but also for the implementation of a reward scheme in particular (AEAT, 2006). Shaw and Maynard (2008) could show that an increase in participation in a kerbside scheme could best be achieved through changes in the design of the collection scheme, such as organisation of the pick-up of household waste. Woodard et al. (2006) also found that participation rates correlate positively with the number of separately collected materials. The literature indicates that in general such factors are influencing households recycling behaviour stronger than the sole provision of an incentive. The combination of the mentioned aspects and consideration of local conditions could be a solid basis to develop high performing source separation schemes. 3.3.3 Information campaigns and feedback Further the adequate use of supporting activities can have significant impact on the performance of an incentive scheme. Such measures are basically information and feedback campaigns. Information sheets about the systems in place and also general promotion of the schemes in the media or in local stores were found to be successful (Harder and Woodard, 2007). To support the provision of these measures it can be helpful to identify and integrate relevant stakeholders (such as government, households and private companies) in the implementation phase from the beginning (Xu et al., 2015). Another crucial factor in the preparation phase is to identify the target audience and adopt supporting activities in accordance with their wants and needs. Information about the general environmental benefits resulting from recycling was also found to be important in order to influence households´ collection behaviour in the long run (AEAT, 2003; AEAT, 2006). 3.4 Implementation within a highly developed waste management system – case study Austria Austria is characterised by strong municipally regulated supply and disposal structures. Since the 1970ies an efficient source separation scheme in different formations of kerbside and/or bring site amenity schemes was developed (MA48, 2015). Especially Upper Austria is an example for a high performing waste management system with respect to bring site amenities. Local recycling centers are installed comprehensively collecting more than 80 different waste streams (LAVU AG OÖ., 2015). The fact that private households are responsible for a considerable amount of the profits that can be generated with recycling materials and growing pressure through private disposal companies, leads to discussions concerning a potential implementation of reward schemes in Austria (Ehrengruber, 2016; Mayr, 2016). Currently there is a comprehensive PAYT-scheme in place in Austria, based on a combination of volume- and frequency-based elements (EC, 2012). 3.4.1 Cost and revenue structure of civic amenity sites To design new economic schemes it is firstly relevant to understand the one that is currently operating. Table 1 shows a general overview of the cost and revenue structure of civic amenity sites in Austria (adopted from Himmel et al., 2008). Table 1. Costs and revenues from the operation of a local bring site amenity (adopted from Himmel et al., 2008) Cost Revenue Collection and treatment costs for non hazardous Recycling revenues for recycling materials (such as waste streams (such as recyclables) and cardboard, wood, metals) hazardous waste streams (such as problematic
Sardinia 2017 / Sixteenth International Waste Management and Landfill Symposium / 2 - 6 October 2017
materials) Personnel costs (during opening hours, preparation Revenues for take over of certain recycling and follow-up times, education and training) materials (such as tires), bulky waste, animal carcasses or problematic materials (such as car batteries) Operation and maintenance costs (such as Subsidies for the installation of a local bring site electricity, water, cleaning, heating) Depreciation (for property, buildings, maschinery) Infrastructure reimbursement for the collection of EEE, batteries and packaging materials
Table 1 shows that costs for the operation of a bring site amenity mainly result from the collection and treatment of certain non hazardous and hazardous waste streams, personnel costs, operation and maintenance costs and also depreciations. Revenues can be generated from the sale of recycling materials and the take over of certain materials, eventually subsidies for the installation of the bring site and also infrastructure reimbursement. 3.4.2 Adoption of theoretical considerations for the Austrian waste management system When considering the planning and implementation of a reward scheme at a local bring site amenity, there are some considerations to take into account. One relevant advantage compared to an implementation in a kerbside scheme would be that the majority of waste logistics (in particular pre-sorting and transportation of waste materials) is carried out by the waste generator. Naturally the installation at a bring site would cause additional costs, resulting from acquisition and administration of a reward scheme, but monitoring can be implemented centrally and personnel for the administration is in general available. One option to capture the delivered materials with an adequate attribution to the waste generator would be the combination of a weighing system with an individualised chip card, to allocate a reward per piece (e.g. one radio) or per kilogram material (Ehrengruber, 2016). De Feo and Polito (2015) found that rewarding citizens at a local recycling centre with olive oil for the delivery of waste cooking oil leads to high increases in the amount of waste cooking oil delivered. The installation of reward schemes would be especially suitable for bring sites that are already equipped with any kind of acquisition or weighing system. Clearly rewards could not be given out to the waste generator for the delivery of every material. There are a range of waste streams that cause disposal costs for the site operators. These include in particular bulky waste, construction waste or hazardous waste from households (Studer, 2016). From a cost accounting point of view, remuneration would be legitimate for every waste stream that causes revenues from its sale (Ehrengruber, 2016). Waste paper for example has a sales value ranging from about 90 to 120 Euro per ton, depending on material quality (Beigl, 2016). In the status-quo scenario in Upper Austria the revenues after deduction of overhead costs are rewarded a hundred percent to the districts waste management association. When considering handing out rewards to the citizens directly it would require collecting more recycling material in order to keep the revenues for the waste management association constant. This increase could be argued by the introduction of an incentive for good recycling behaviour. If the amount of recycling materials could not be increased another possibility would be to divide to achievable recycling revenues between the waste management association and the citizens directly. The first option would be the preferred development, because more material could be generated whilst the waste management association and citizens would then benefit from recycling revenues. But financing the reward itself would only be one necessary cost factor that needs to be covered. Potential additional cost drivers along with the introduction of a reward scheme could
Sardinia 2017 / Sixteenth International Waste Management and Landfill Symposium / 2 - 6 October 2017
be: • Costs for promotion of the scheme • Monitoring costs (weighing system and software) • Administration costs (in particular personnel cost; acquisition system) Based on the results derived from the expert interviews it was found that currently practical limitations in the development of reward schemes concern in particular three aspects. Firstly in some rural regions opening hours, qualification of the personnel and delivered waste material quantities varies too strongly. The introduction of this progressive scheme would need highly developed collection and administrative structures. This argument also leads to the second aspect. Fair and transparent acquisition and documentation would be required. Not only the required equipment but also trained personnel would be required to ensure professional, consequential procedures. The third aspect concerns the general volatility of the secondary materials markets and in further consequence its market values. This would cause the effect that it is not possible to give out a constant reward sum to the citizens. It is expected that more concrete discussions concerning the implementation of reward schemes will only evolve, if and when the economic pressure (expressed as higher prices for raw materials than secondary materials) rises in the long run. 3.4.3 Effects on present waste fee structures One might assume that the implementation of a reward scheme can create economic benefits for all involved parties. For local authorities improved source separation leads to lower disposal costs, at the same time generating higher recycling revenues. But considering that waste related total costs are attributed to households indirectly through a waste fee collection it becomes apparent that total cost and revenues from the operation of local recycling centers are already considered in the present fee structure. Recycling revenues are causing economic benefits for households expressed as lower waste fees per household (Mayr, 2016). But one could object that the current system is not individualised and does not give an actual incentive for an individual household to change its collection behavior because it benefits despite the actual amount of recycling material it contributes to the collection scheme. In further consequence that means that if a community wants to finance rewards through additionally generated material revenues, it would become necessary to exclude these from the present waste fee calculation. Also the rewards could not exceed the variable part of the waste fee in order to secure waste related fixed cost. In practice the consequence would be an increase of the general waste fee level to provide an economic reward for households actually participating in source separation. 3.4.4 Recommendations for action Based on the conducted research a guideline including some general recommendations for actions could be deduced and are shown in Figure 3. To give local authorities assistance in planning and implementing an incentive scheme, the guideline can be divided in three phases: preparation phase, implementation phase and follow-up phase.
Sardinia 2017 / Sixteenth International Waste Management and Landfill Symposium / 2 - 6 October 2017
Figure 3. Recommendations for action for the planning and implementation of a reward scheme (adopted from Happenhofer, 2016)
4. CONCLUSIONS No general formula for all development stages of municipal waste collection schemes can be deduced for the successful implementation of economic incentive schemes. The research indicates that incentives should be applied as complementary measures to promote the use of existing collection schemes, as they can boost their publicity and popularity. The provision of an incentive scheme without accompanying information and collection options will only lead to moderate success. Within municipal waste management schemes, primarily funded by waste management fees the introduction of systems rewarding the provision of recycling material would lead to profound changes. In particular due to the fact that currently every household equally benefits from the total collected tonnage of recycling material in a community, despite the amount it actually contributes. Overthinking existing financing mechanisms could be a possibility to develop more reasonable fee structures and sending out the signal that certain waste streams are valuable secondary resources and not only a costly (by-)product of our society. Bearing in mind the economic and administrative cost, the implementation of new and innovative incentive schemes is conceivable. For logical reasons initially at a pilot project level to measure actual effects on recycling behaviour and collection quantities.
ACKNOWLEDGEMENTS The authors would like to acknowledge all interview partners and especially thank “ARGE Österreichische Abfallwirtschaftsverbände” and “OÖ. LAVU AG” for their cooperation and contribution to the findings.
Sardinia 2017 / Sixteenth International Waste Management and Landfill Symposium / 2 - 6 October 2017
REFERENCES AEA Technology Environment (2003). Incentives for Householders to Change their Waste Practices – Final Report. Report Nr. AEAT/ENV/R/1380. Available in http://www.gov.scot/Publications/2003/11/18568/29504 (access 01.09.2015). AEA Technology Environment (2006). Evaluation of the Household Waste Incentives Pilot Scheme. Final Report to Defra (Waste Strategy Division), Report Nr. AEAT/ED51352/Issue 1., available in: http://sciencesearch.defra.gov.uk/Default.aspx?Menu=Menu&Module=More&Location=None&C ompleted=0&ProjectID=15402. Amini F., Ahmada J. and Ambalia A.R. (2014). The Influence of Reward and Penalty on Households’ Recycling Intention. In APCBEE Procedia, 10, 187–192. Beck C. (2016): Personal communication from interview. 13.06.2016, Vienna. Beigl P. (2016): Personal communication. 08.07.2016, Vienna Bilitweski B., Werner P. and Reichenbach J. (2004). Handbook on the implementation of Pay As-You-Throw as a tool for urban waste management. In Beiträge zu Abfallwirtschaft/ Altlasten, 39, first edition. Technical University of Dresden Brown Z.S. and Johnstone N. (2014). Better the devil you throw: Experience and support for pay-as-you-throw waste charges. In Environmental Science & Policy, 38, 132-142 Dahlén and Lagerkvist (2010). Pay as you throw – Strenghts and weaknesses of weight-based billing in household waste collection systems in Sweden. In Waste Management, 30, 23-31 De Feo G. and Polito A.R. (2014). A separate collection centre seen as a „reverse supermarket“ in an urban mining perspective. In SUM 2014 Second Symposium on Urban Mining. Bergamo, Italy. Defra – Department for Environment, Food and Rural Affairs (2016). WR1509 Evaluation of the Waste Reward and Recognition Scheme. Final Report by Brook Lyndhurst. Available in http://randd.defra.gov.uk/Default.aspx?Menu=Menu&Module=More&Location=None&ProjectID= 18513 (access 21.06.2016). EC - European Commission (2012). Use of economic instruments and waste management performances. Final Report. Availabl in http://ec.europa.eu/environment/waste/pdf/final_report_10042012.pdf. Ehrengruber C. (2016). Personal communication from interview. 20.06.2016, Vienna. Harder M. K. and Woodard R. (2007). Systematic studies of shop and leisure voucher incentives for household recycling. In Resources, Conservation and Recycling, 51, 732-753. Hartard S. and Huhn M. (1992). Strukturanalyse des SERO-Systems der DDR im Hinblick auf Effizienz und Eignung unter marktwirtschaftlichen Bedingungen. Ergebnisse des F + E – Vorhabens 1480687 der Gesamthochschule Kassel. BMFT: Bonn. Happenhofer A. (2016). Ökonomische Anreizsysteme für die getrennte Abfallsammlung. Master thesis. Institute of Waste Management, University of Natural Resources and Life Sciences. Vienna. Himmel W., Dimitroff-Regatschnig and List D. (2008). Tipps und Informationen rund um das Thema ”Abfallgebühren”. Amt der Steiermärkischen Landesregierung – Fachabteilung 19D. Available in http://www.abfallwirtschaft.steiermark.at/. Hogg D., Sherrington C. and Vergunst T. (2011). A Comparative Study on Economic Instruments Promoting Waste Prevention. Final Report to Bruxelles Environnement. Available in http://www.eunomia.co.uk/reports-tools/a-comparative-study-on-economic-instruments-
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promoting-waste-prevention-2/. Holmes A., Fulford J. and Pitts-Tucker C. (2014). Investigating the Impact of Recycling Incentive Schemes – Full Report. Available in http://www.eunomia.co.uk/reports-tools/investigating-theimpact-of-recycling-incentive-schemes/. Janisch J. (2016). Personal communication from interview. 19.05.2016, Vienna. LAVU AG - O.Ö. Landes - Abfallverwertungsunternehmen AG (2015). Altstoffsammelzentren. Available in http://www.lavu.at/asz/was.php (access 07.09.2015). MA 48 – Magistratsabteilung 48 der Stadt Wien (2015). Abfallwirtschaft, Straßenreinigung, Fuhrpark. Available in https://www.wien.gv.at/umwelt/ma48/ (access 13.07.2015). Mayr J. (2016). Personal communication from interview. 18.05.2016, Vienna. Owusu V., Adjei – Addo E. and Sundberg C. (2013). Do economic incentives affect attitudes to solid waste source seperation? Evidence from Ghana. In Resources, Conservation and Recycling, 78, 115–123. Reichenbach J. (2008). Status and prospect of pay as you throw in Europe – A review of pilot research and implementation studies. In Waste Management, 28, 2809 -2814. Shaw P. J. and Maynard S. J. (2008). The potential of financial incentives to enhance householders´ kerbside recycling behaviour. In Waste Management, 28, 1732–1741. Studer F. (2016). Personal communication from interview. 13.05.2016, Vienna. Strategy Unit (2002). Waste Not, Want Not – A strategy for tackling the waste problem in England. Available in http://mie.esab.upc.es/ms/informacio/sostenibilitat/Wastes%20England.pdf (access 21.04.2016). ThØgerson J. (2003). Monetary Incentives and Recycling: Behavioural and Psychological Reactions to a Performance-Dependent Garbage Fee. In Journal of Consumer Policy, 26, 197228. Walls M. (2011). Deposit-Refund Systems in Practice and Theory. Discussion paper. Available in http://www.rff.org/files/sharepoint/WorkImages/Download/RFF-DP-11-47.pdf (access 10.06.2016). Woodard R., Harder M.K. and Bench M. (2006). Participation in curbside recycling schemes and it´s variation with material types. In Waste Management, 26, 914-919. Xu W., Zhou C., Lan Y., Jin J. and Cao A. (2015). An incentive-based source separation model for sustainable municipal solid waste management in China. In Waste Management & Research, 33(5), 469-476. Yau Y. (2010). Domestic waste recycling, collective action and economic incentives: The case in Hong Kong. In Waste Management, 30, 2440–2447.
SUMMARY: Efficiency of source separation schemes is characterised by high participation rates and high recycling quotas as key performance indicators. One possible approach to promote efficient source separation is the implementation of economic incentive schemes. In this study, existing international incentive schemes were analysed based on an extensive literature review in combination with semi-structured expert interviews, in order to determine their limitations and potentials. Several influencing factors were derived and adopted for considerations concerning the potential implementation in civic amenity sites in Austria. Recommendations for a successful planning and implementation of incentive schemes are given. For highly developed, comprehensive collection schemes, accompanying economic incentive schemes can help to boost popularity and participation rates.
1. INTRODUCTION Source separation is a key element of efficiently operating waste management systems. Numerous measures for the promotion of source separation are available. Their application is essential to motivate households to participate in available collection schemes. Economic incentive schemes are basic policy instruments, which either provide positive or negative incentives for waste generators. Compared to strictly regulatory measures, they provide a more dynamic policy option. In the municipal waste management sector, “pay-as-you-throw” – schemes have become well-established in an international perspective. Less prominent approaches are reward schemes which aim to motivate households to recycle by providing them positive incentives. Bearing the goals of the European “Circular Economy Package” in mind, it is becoming more and more important to intensify new and innovative methods to promote high-quality and –quantity source separation and in further consequence recycling. Economic incentive schemes in this context are defined as any kind of positive or negative incentive for a household to participate in source separation. Positive incentives are usually offered in form of rewards (e.g. vouchers), negatives in form of penalties (e.g. fines). Both patterns are used, to achieve a certain behavioural target (Amini et al., 2014). In a waste management context that goal is to motivate more households to participate in existing collection schemes on the one hand and to motivate households already attending, to provide even more recycling material in even better quality. The specific targets of an incentive scheme are guided by framework conditions regarding the collection infrastructure (especially if a kerbside or bring site collection scheme is installed) and political objectives (higher recovery Proceedings Sardinia 2017 / Sixteenth International Waste Management and Landfill Symposium/ 2 - 6 October 2017 S. Margherita di Pula, Cagliari, Italy / © 2017 by CISA Publisher, Italy
Sardinia 2017 / Sixteenth International Waste Management and Landfill Symposium / 2 - 6 October 2017
rates, less contamination of the material, higher participation rates, etc.), which shall be addressed. Goal of the present study was to investigate existing incentive schemes and especially examine overall key success factors and limitations of their implementation. In further consequence a potential implementation in civic amenity sites in Austria is discussed and recommendations for action are given.
2. METHOD To answer the stated research questions, firstly an extensive literature review was carried out primarly using relevant scientific internet databases and journals. To give a clear overview, incentive schemes were generally categorised, depending on their economic impact on the households (fines and rewards). Also the different scopes of design of incentive schemes were summarised. Further research was focused on remuneration and reward schemes and their evaluation concerning induced changes in households’ collection behaviour. Focus of the research is set on European projects implemented in the last ten years that used methodological approaches to assess the impacts of their studies systematically. Furtheron case studies were compared and analysed to harmonise general factors of success and limitation during the implementation of incentive schemes. No general conclusions can be drawn from the review, mainly due to the following reasons: firstly the significant variation of design of the implemented schemes, secondly lack of consistency of the documentation of the systems and their evaluation, and thirdly profound differences of applied assessment methods. The evaluation of existing schemes would benefit from consistent documentation and assessment methods. Finally considerations have been made concerning a potential large-scale implementation of incentive schemes in bring site amenities in Austria taking into account legal and structural conditions. To address this research question with more topicality and practical relevance, expert interviews were conducted between May and June 2016. A semi-structured interview guideline was developed based on experiences resulting from the conducted literature review. Interview partners were chosen based on their professional status in the municipal solid waste management sector in Austria, ranging from the national coordinator of “ARGE Österreichische Abfallwirtschaftsverbände”, federal state representatives of “ARGE Österreichische Abfallwirtschaftsverbände” and the managing director of “Oberösterreichische Landesabfallverwertungsunternehmen AG”. Additional information was obtained through telephone and written correspondences with employees of federal waste management associations.
3. RESULTS AND DISCUSSION 3.1 Scopes for design of incentive schemes Pay-as-you-throw (PAYT) schemes have become well established internationally. They are based on the “polluter pays principle” and provide an economic incentive by making a households waste fee dependent on the amount of waste it actually produces (Bilitewski et al., 2004). They are mainly implemented relating to the collection of residual waste and their impacts have been examined in various studies (e.g. Reichenbach, 2008; Dahlén and Lagerkvist, 2010; Brown and Johnstone, 2014). Due to the fact that these systems are based on punishing unwanted behaviour they can cause unwanted side-effects like for example illegal dumping. Another incentive form are deposit-refund-systems (DRS) which are basically a
Sardinia 2017 / Sixteenth International Waste Management and Landfill Symposium / 2 - 6 October 2017
formation of “extended producer responsibility” and are mainly used for the collection of packaging waste (like e.g. aluminium cans) and WEEE. In some countries (e.g. Germany) these systems are well-established and very important for the capture of particular waste streams, but their implementation is very costly and also requires high political will and support (Walls, 2011). A third incentive form are reward schemes. First implementation cases in Europe date back to the 1980ies in the German Democratic Republic (DDR). Citizens could bring their recycling materials to central collection points, where they recieved cash rewards in exchange (Hartard and Huhn, 1992). Figure 1 gives an overview of possible scopes of design of economic incentive schemes. Economic theory states that individuals want to maximise their personal benefit. Therefore the idea of economic regulation is to make environmentally friendly behaviour – such as recycling – more attractive economically in order to motivate individuals to behave in accordance with society´s interests (ThØgerson, 2003). With this hypothesis in mind the question arises, if the implementation of a reward scheme could be an adequate way to adress more people to participate in source separation. Yau (2010) states that recycling is prone to the collective - action problem and ways to address it need to be examined. Figure 1. Different scopes of design of incentive schemes
3.2 Design alternatives of reward schemes In the course of the case study review several options to design reward schemes were found. Figure 2 summarises the different design alternatives, distinguishing different adressees and relevant parameters.
Sardinia 2017 / Sixteenth International Waste Management and Landfill Symposium / 2 - 6 October 2017
Figure 2. Design alternatives of reward and remuneration schemes (references: AEAT, 2003; AEAT, 2006; Harder and Woodard, 2007; Holmes et al., 2014; De Feo and Polito, 2014; Owusu et al., 2013; Defra, 2016)
3.3 Key influencing factors The meta-analysis of the examined literature showed that some relevant performance indicators influencing a successful implementation of reward schemes can be derived. Giving general recommendations would not be purposeful, in view of the fact that structural and legal frameworks vary strongly from country to country and in some cases also from region to region. A short overview over the main influencing factors is given below. 3.3.1 Preferred incentive form Research indicates that in general rewards are preferred over fines (e.g. Amini et al., 2014; AEAT, 2003; Shaw and Maynard, 2008). In the context of rewards due to an unsatisfactory amount of scientifically evaluated pilot schemes it is hard to name one preferred incentive form. Survey-based results tend to indicate that housholds prefer community-based rewards (e.g. Shaw and Maynard, 2008). On the other hand results based on actual pilot scheme projects showed that rewards given out based on the performance of a group of households did not lead to significant changes in the collection behaviour of the households (Harder and Woodard, 2007). 3.3.2 Infrastructure Having access to convenient collection infrastructure seems to be one of the most, if not the most important factor influencing household´s motivation to participate in recycling (e.g. Strategy Unit, 2002). A well-developed collection scheme is not only a basic requirement for
Sardinia 2017 / Sixteenth International Waste Management and Landfill Symposium / 2 - 6 October 2017
source separation, but also for the implementation of a reward scheme in particular (AEAT, 2006). Shaw and Maynard (2008) could show that an increase in participation in a kerbside scheme could best be achieved through changes in the design of the collection scheme, such as organisation of the pick-up of household waste. Woodard et al. (2006) also found that participation rates correlate positively with the number of separately collected materials. The literature indicates that in general such factors are influencing households recycling behaviour stronger than the sole provision of an incentive. The combination of the mentioned aspects and consideration of local conditions could be a solid basis to develop high performing source separation schemes. 3.3.3 Information campaigns and feedback Further the adequate use of supporting activities can have significant impact on the performance of an incentive scheme. Such measures are basically information and feedback campaigns. Information sheets about the systems in place and also general promotion of the schemes in the media or in local stores were found to be successful (Harder and Woodard, 2007). To support the provision of these measures it can be helpful to identify and integrate relevant stakeholders (such as government, households and private companies) in the implementation phase from the beginning (Xu et al., 2015). Another crucial factor in the preparation phase is to identify the target audience and adopt supporting activities in accordance with their wants and needs. Information about the general environmental benefits resulting from recycling was also found to be important in order to influence households´ collection behaviour in the long run (AEAT, 2003; AEAT, 2006). 3.4 Implementation within a highly developed waste management system – case study Austria Austria is characterised by strong municipally regulated supply and disposal structures. Since the 1970ies an efficient source separation scheme in different formations of kerbside and/or bring site amenity schemes was developed (MA48, 2015). Especially Upper Austria is an example for a high performing waste management system with respect to bring site amenities. Local recycling centers are installed comprehensively collecting more than 80 different waste streams (LAVU AG OÖ., 2015). The fact that private households are responsible for a considerable amount of the profits that can be generated with recycling materials and growing pressure through private disposal companies, leads to discussions concerning a potential implementation of reward schemes in Austria (Ehrengruber, 2016; Mayr, 2016). Currently there is a comprehensive PAYT-scheme in place in Austria, based on a combination of volume- and frequency-based elements (EC, 2012). 3.4.1 Cost and revenue structure of civic amenity sites To design new economic schemes it is firstly relevant to understand the one that is currently operating. Table 1 shows a general overview of the cost and revenue structure of civic amenity sites in Austria (adopted from Himmel et al., 2008). Table 1. Costs and revenues from the operation of a local bring site amenity (adopted from Himmel et al., 2008) Cost Revenue Collection and treatment costs for non hazardous Recycling revenues for recycling materials (such as waste streams (such as recyclables) and cardboard, wood, metals) hazardous waste streams (such as problematic
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materials) Personnel costs (during opening hours, preparation Revenues for take over of certain recycling and follow-up times, education and training) materials (such as tires), bulky waste, animal carcasses or problematic materials (such as car batteries) Operation and maintenance costs (such as Subsidies for the installation of a local bring site electricity, water, cleaning, heating) Depreciation (for property, buildings, maschinery) Infrastructure reimbursement for the collection of EEE, batteries and packaging materials
Table 1 shows that costs for the operation of a bring site amenity mainly result from the collection and treatment of certain non hazardous and hazardous waste streams, personnel costs, operation and maintenance costs and also depreciations. Revenues can be generated from the sale of recycling materials and the take over of certain materials, eventually subsidies for the installation of the bring site and also infrastructure reimbursement. 3.4.2 Adoption of theoretical considerations for the Austrian waste management system When considering the planning and implementation of a reward scheme at a local bring site amenity, there are some considerations to take into account. One relevant advantage compared to an implementation in a kerbside scheme would be that the majority of waste logistics (in particular pre-sorting and transportation of waste materials) is carried out by the waste generator. Naturally the installation at a bring site would cause additional costs, resulting from acquisition and administration of a reward scheme, but monitoring can be implemented centrally and personnel for the administration is in general available. One option to capture the delivered materials with an adequate attribution to the waste generator would be the combination of a weighing system with an individualised chip card, to allocate a reward per piece (e.g. one radio) or per kilogram material (Ehrengruber, 2016). De Feo and Polito (2015) found that rewarding citizens at a local recycling centre with olive oil for the delivery of waste cooking oil leads to high increases in the amount of waste cooking oil delivered. The installation of reward schemes would be especially suitable for bring sites that are already equipped with any kind of acquisition or weighing system. Clearly rewards could not be given out to the waste generator for the delivery of every material. There are a range of waste streams that cause disposal costs for the site operators. These include in particular bulky waste, construction waste or hazardous waste from households (Studer, 2016). From a cost accounting point of view, remuneration would be legitimate for every waste stream that causes revenues from its sale (Ehrengruber, 2016). Waste paper for example has a sales value ranging from about 90 to 120 Euro per ton, depending on material quality (Beigl, 2016). In the status-quo scenario in Upper Austria the revenues after deduction of overhead costs are rewarded a hundred percent to the districts waste management association. When considering handing out rewards to the citizens directly it would require collecting more recycling material in order to keep the revenues for the waste management association constant. This increase could be argued by the introduction of an incentive for good recycling behaviour. If the amount of recycling materials could not be increased another possibility would be to divide to achievable recycling revenues between the waste management association and the citizens directly. The first option would be the preferred development, because more material could be generated whilst the waste management association and citizens would then benefit from recycling revenues. But financing the reward itself would only be one necessary cost factor that needs to be covered. Potential additional cost drivers along with the introduction of a reward scheme could
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be: • Costs for promotion of the scheme • Monitoring costs (weighing system and software) • Administration costs (in particular personnel cost; acquisition system) Based on the results derived from the expert interviews it was found that currently practical limitations in the development of reward schemes concern in particular three aspects. Firstly in some rural regions opening hours, qualification of the personnel and delivered waste material quantities varies too strongly. The introduction of this progressive scheme would need highly developed collection and administrative structures. This argument also leads to the second aspect. Fair and transparent acquisition and documentation would be required. Not only the required equipment but also trained personnel would be required to ensure professional, consequential procedures. The third aspect concerns the general volatility of the secondary materials markets and in further consequence its market values. This would cause the effect that it is not possible to give out a constant reward sum to the citizens. It is expected that more concrete discussions concerning the implementation of reward schemes will only evolve, if and when the economic pressure (expressed as higher prices for raw materials than secondary materials) rises in the long run. 3.4.3 Effects on present waste fee structures One might assume that the implementation of a reward scheme can create economic benefits for all involved parties. For local authorities improved source separation leads to lower disposal costs, at the same time generating higher recycling revenues. But considering that waste related total costs are attributed to households indirectly through a waste fee collection it becomes apparent that total cost and revenues from the operation of local recycling centers are already considered in the present fee structure. Recycling revenues are causing economic benefits for households expressed as lower waste fees per household (Mayr, 2016). But one could object that the current system is not individualised and does not give an actual incentive for an individual household to change its collection behavior because it benefits despite the actual amount of recycling material it contributes to the collection scheme. In further consequence that means that if a community wants to finance rewards through additionally generated material revenues, it would become necessary to exclude these from the present waste fee calculation. Also the rewards could not exceed the variable part of the waste fee in order to secure waste related fixed cost. In practice the consequence would be an increase of the general waste fee level to provide an economic reward for households actually participating in source separation. 3.4.4 Recommendations for action Based on the conducted research a guideline including some general recommendations for actions could be deduced and are shown in Figure 3. To give local authorities assistance in planning and implementing an incentive scheme, the guideline can be divided in three phases: preparation phase, implementation phase and follow-up phase.
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Figure 3. Recommendations for action for the planning and implementation of a reward scheme (adopted from Happenhofer, 2016)
4. CONCLUSIONS No general formula for all development stages of municipal waste collection schemes can be deduced for the successful implementation of economic incentive schemes. The research indicates that incentives should be applied as complementary measures to promote the use of existing collection schemes, as they can boost their publicity and popularity. The provision of an incentive scheme without accompanying information and collection options will only lead to moderate success. Within municipal waste management schemes, primarily funded by waste management fees the introduction of systems rewarding the provision of recycling material would lead to profound changes. In particular due to the fact that currently every household equally benefits from the total collected tonnage of recycling material in a community, despite the amount it actually contributes. Overthinking existing financing mechanisms could be a possibility to develop more reasonable fee structures and sending out the signal that certain waste streams are valuable secondary resources and not only a costly (by-)product of our society. Bearing in mind the economic and administrative cost, the implementation of new and innovative incentive schemes is conceivable. For logical reasons initially at a pilot project level to measure actual effects on recycling behaviour and collection quantities.
ACKNOWLEDGEMENTS The authors would like to acknowledge all interview partners and especially thank “ARGE Österreichische Abfallwirtschaftsverbände” and “OÖ. LAVU AG” for their cooperation and contribution to the findings.
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