Environmentalists, the Congress and other decisionmakers, waste managers, and the public articulate a host of objectives in managing solid waste. These objectives include: decreasing undesirable environmental and health effects associated with solid waste landfills and incinerators; conserving energy and virgin material resources; offsetting existing government policies that promote virgin material use; reducing greenhouse gas emissions; increasing the demand for secondary materials to help local communities sell the recyclables they collect; meeting state and local recycling goals; and decreasing undesirable environmental and health effects associated not only with waste disposal but with the entire "life-cycle" of all products.
This list represents an amalgam of underlying concerns about safeguarding the environment, natural resources, and human health; it also includes some objectives which are not necessarily ends in themselves (such as offsetting virgin materials use or meeting recycling goalspresumably, these goals are means by which to protect the environment and health). In this paper, we evaluate these various goals from an economic efficiency standpoint and assess the ability of different solid waste and recycling policies to achieve these goals.
We conclude that the most important problem that solid waste and recycling policies can address is the problem of zero pricing for residential solid waste collection and disposal that exists in most communities in the United States. Zero prices lead to more disposal than is socially optimal. The most efficient policy for addressing the problem, absent illegal disposal opportunities, is pricing trash disposal at, or close to, its marginal social cost. A policy that achieves the same outcome but without the potential for increasing illegal disposal is a deposit/refund approach. These policies will be incapable of correcting this market failure and at the same time addressing all of the other concerns above. Moreover, "first-best" solutions will address these problems directly&151for example, greenhouse gas emissions are reduced most cost-effectively with a carbon tax; and any distorting government policies in virgin material markets are best addressed by eliminating those policies.