Policy Study

Variable Rates for Municipal Solid Waste

Implementation, Experience, Economics, and Legislation

Executive Summary

Most U.S. waste agencies have traditionally provided unlimited refuse removal to all citizens, funding that service either from their general funds or through flat-rate, “all-youcare- to-dump” billing. This type of service provision represents a simple solid waste policy: clean up the garbage.

Yet by the late 1980s, increased landfilling and incineration costs, tight local budgets, and growing environmental concerns began to fundamentally change the mission of many solid waste agencies. Many agencies began to design programs to divert waste from the “disposal stream.”

Since waste-management decisions are fundamentally made by the solid waste customer, waste policy, in fact, becomes a matter of influencing customer behavior. Price signals are an effective way of influencing customer behavior. Charging refuse rates that vary with the level of waste disposed can bring market-style decision-making to solid-waste management.

Communities that implement these “pay-as-you-throw” variable rates in conjunction with recycling programs have routinely reported between 25 percent and 45 percent reduction in tonnage going to disposal facilities. Moreover, consumer surveys in these communities show that variable rates influence consumer purchasing behavior, giving them an incentive to reduce household garbage by buying less wasteful packaging, composting yardwaste, eliminating “junk mail” deliveries, and so on.

Over 1,000 communities nationwide now having variable rate systems, up from a handful just a few years ago. This increase in use of variable-rate systems has been driven in part by state legislative requirements requiring or encouraging use of such waste collection fees.

Since the popularization of these fees as recently as the late 1980s, fully 20 percent of legislatures in the United States have implemented laws that encourage or mandate variable rates. Features of successful legislation include: 1) allowing community flexibility, while emphasizing the importance of appropriate and real incentives to customers; 2) making incentives available for implementation of variable rates; and 3) encouraging feasibility studies of variable rates at the community or regional level.

Initial evidence indicates that variable rates can result in reduced waste generation and disposal. However, simply stating program participation figures or providing a gross comparison of tonnage diverted are inadequate measures of the long-term cost-effectiveness of these pricing systems. Program evaluation must take into account local prices, conditions, and facilities, customer behavior, recycling markets, and collection and disposal systems to determine the appropriate emphasis on waste reduction, recycling, and other waste management programs. This is the next key step in improving waste-management decisionmaking.


Dr. Lisa A. Skumatz is an economist and Principal of the research and consulting firm Skumatz Economic Research Associates, Inc. (SERA), 1511 Third Avenue, Suite 1000, Seattle, Washington, 98101, Phone: 206/624-8508. Dr. Skumatz has conducted extensive research on market-based and other incentives in solid waste, and specializes in program evaluation and cost-effectiveness analysis for recycling/solid/hazardous waste, energy conservation, and water conservation programs. Among other assignments, she was an invited participant in the Yale Center for Environmental Law and Policy's "Environmental Reform: The Next Generation Project," which focused on market-based incentives in environmental policy. She has written several policy papers for Reason Public Policy Institute on solid waste and rate issues.