The Effects of Pricing Waste Generation: A Synthetic Control Approach

Abstract

To internalize pollution externalities into household waste generation, Unit Pricing Systems (UPS) have been adopted worldwide. This paper evaluates the causal effects of a UPS on the disposal of municipal solid waste in Trento, Italy. To account for policy endogeneity due to unobservables, we employ the synthetic control method on a unique panel of monthly waste generation. Our results show that the policy was effective, with a significant decrease of the priced waste stream,unsorted waste, by 37.5%. This effect seems to be largely driven by behavioral changes towards waste avoidance (-8,6%) and a minor increase in recycling (+6,1%).