The Cost of Reducing Municipal Unsorted Solid Waste: Evidence from Municipalities in Chile

Abstract

The management of municipal solid waste sector is crucial for a sustainable circular economy. Waste utilities are expected to provide high quality solid waste services at an affordable price. The efficient management of solid waste requires its assessment from an economic and environmental perspective, i.e., eco-efficiency assessment. Although the reduction of unsorted waste incurs an economic cost, its positive externalities are huge for the well-being of society, the environment, and people. Our study quantifies the marginal cost of reducing any unsorted waste using stochastic frontier analysis techniques which allow us to estimate the eco-efficiency of the waste sector. Our empirical approach focuses on the municipal solid waste collection and recycling services provided by several waste utilities in Chile. The results indicate that substantial eco-inefficiency in the sector exists, since the average eco-efficiency score is roughly 0.5 which means that the municipalities could approximately halve their operational costs and unsorted waste to produce the same level of output. The average marginal cost of reducing unsorted waste is 32.28 Chilean pesos per ton, although notable differences are revealed among the waste utilities evaluated. The results provided by this study are of great interest to stakeholders to promote sustainable management solutions and resource efficient solid waste services.