Variable-Rate or Pay-as-you-throw Waste Management

Executive Summary

As landfills fill up and recycling opportunities increase, more communities across the nation are interested in reducing waste disposal and its costs. City managers are considering a variety of strategies to improve incentives to recycling and composting, as well as increasing the variety of materials that can be recycled or composted.

Currently, in most parts of the country, garbage is removed once or twice a week with revenues coming from one of two places:

• A portion of property taxes; or
• A fixed bill amount that does not vary with respect to the amount of garbage taken away.

Neither method provides an incentive to reduce waste. In fact, with the property tax method of payment, customers never even see a bill and generally have no idea how much it costs to remove their garbage regularly. Areas using this method of payment have sometimes implemented mandatory recycling programs to reduce their amount of garbage.

Variable-rate pricing, or “pay as you throw,” is a new strategy with a growing number of advocates. Under a variable-rate system, customers are provided an economic signal to reduce the waste they throw away because garbage bills increase with the volume or weight of waste they dispose. Variable-rate pricing is being adopted in thousands of communities to create incentives for additional recycling in the residential sector. Variable-rate programs are very flexible and have been implemented by communities in many forms. The most common types of variable-rate programs are can programs, bag programs, tag and sticker programs, and hybrid programs. Other less common programs include weight-based rates. Each program type is briefly summarized below.

• Can Programs. Customers select the appropriate number or size of containers (one can, two cans, etc., or 30-35 gallons, 60-65 gallons, etc.) for their standard weekly disposal amount. Residents who use larger cans or numbers of cans are charged more.
• Bag Programs. Customers purchase bags imprinted with special logos ahead of time, and waste must be put in the appropriate bag (i.e. yard waste, recyclables, regular “wet” waste, etc.). The price of the bag incorporates the cost of the collection, transport, and disposal of the waste.
• Tag and Sticker Programs. These programs are almost identical to bag programs, except instead of using a special bag, customers affix an appropriate sticker or tag that identifies the type of waste they are disposing.
• Hybrid Programs. These programs form a hybrid of the current collection system and a new incentivebased system. Instead of receiving unlimited collection for payment of the monthly fee or tax bill, the customer gets a smaller, limited volume of service for the fee. If the customer needs to dispose of additional waste, there is an additional charge such as a fee per bag or additional container.
• Weight-based Programs. This system uses a modified scale on trucks to weigh garbage containers and charge customers based on the actual pounds of garbage set out for disposal. On-board computers record weights by household and customers are billed on this basis.
• Other Variations. Some communities or haulers offer variable rates as an option along with their standard unlimited system. Waste drop-off programs, that use punch cards or other customer tracking systems, are also in place in some communities.

Some systems are more appropriate than others, depending on local conditions. Larger communities and urban and suburban communities tend to use can programs. Smaller communities and more rural communities are more likely to use bag, tag, or sticker programs. Bag and drop-off programs are most prevalent in the East, can and bag programs are most common in the Midwest and the South, and can programs are the most popular in the western U.S.

Each type of variable-rate system has strengths and weaknesses. Key advantages and concerns are discussed in the following sections of this study. The factors driving the growth in each program are presented. The study also provides information on appropriate program selection, implementation issues and tips, and rate setting.

This study demonstrates that rate incentives in solid waste have strong and measurable effects on waste disposal behavior and waste disposal. Towns implementing variable-rate programs can expect to see reductions of more than 15 percent in tons disposed, with increases in recycling, yard-waste diversion, and measurable impacts on the highest rung on the waste-management hierarchy: source reduction.

Ultimately, variable rates can help reduce the burden on the disposal system and lead to more efficient resource use, reduced environmental burden, and lower long-run solid waste system management costs. The programs enhance community recycling and waste reduction programs. While these programs may not be appropriate in all communities, many communities can benefit from variable rates. This report offers guidance to communities wishing to examine the feasibility of variable rates for their solid waste systems.