Solid Waste Disposal

It is not a hyperbole to suggest that if we could somehow incentivize people themselves to collect litter and deposit them at designated places, we would have achieved a great feat of civic and social engineering.

Nobody will dispute the fact that solid waste disposal is one of the major challenges facing cities across the globe. Litterring is a major area of concern in every city, and all attempts at regulatory control through fines and legal deterrents, have not succeeded to the desired extent. So it is time to try out alternative approaches.

One of the main problems associated with the solid waste management chain, relates to difficulty in segregation of bio-degradable and non-degradable materials. Of all the non-degradable waste, the major problems are posed by plastic and other non-degradable packaging materials. The problems include those relating to environmental pollution and public health and sanitation, and are called negative externalities. The sellers and buyers of such packaged goods do not incur their share of the negative externalities imposed by their actions.

As has already been discussed in detail in previous posts, negative externalities impose disproportionately high social costs, while benefitting the agent causing it. In the absence of appropriate incentive structure, such externalities will tend to be over-supplied by the market. It is therefore important that the external costs inflicted on the society and the environment by the actions of the agent, are internalized.

It is important that the environmental and other social costs imposed by the use of plastic and other packaging materials are costed into the selling price. One way to do this is to charge the disposal cost on to the sale price of the product. While this would generate additional revenues to address the issue of disposal, it would still leave the main problem of actual segregation unresolved.

There is another way to address the problem. The external cost can be added to the sale price as a refundable deposit, which can then be given back when the buyer returns the packaging material. It can be arranged for the packaging material to be returned either at the same shop or any pre-designated shop. In fact, left to its own devices, a whole new market in collecting such packaging materials will develop, and we could have exclusive shops for procuring these waste materials. The additional cost collected as the refundable deposit, can be used to pay off the shops buying off these waste. The solid waste so collected can be either disposed off scientifically or recycled for further use. In due course of time, as the market matures, even the cost of disposing off the packaged material will be determined by the market.

This arrangement is a more sustainable attempt at segregation of non-degradable materials, than commonly adopted efforts like organizing rag pickers associations. It is likely to be more effective than even motivating housewives to segregate garbage at source. It is more likely to succeed because the incentive structure is compatible with the objective. The additional, refundable deposit incentivizes the buyers to collect and return the used packaging material.

Such an arrangement could throw up a market solution to the problem of solid waste disposal. To start with, this arrangement can be tried out for tetra packs, plastic and other bottles, and other similar packaging materials. It can later be extended to polythene bags and the more common packaging materials.