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[GreenYes] Landiflll economics


Paul,

Great points!  I suggest that Pigovian fees and taxes also consider helping to decrease the uncertainty and help in capitalizing the Extended Producer Responsibility (EPR) systems that we advocate. They could do that by setting up a grant program with revenues from tipping fee surcharges that funds startup costs of industry sponsored EPR systems, IF the industry commits to levying whatever fees are necessary to keep those programs going over time.  That would dramatically decrease the uncertainty to industry, which in turn should help progressive businesses launch these programs, and decrease the opposition from foot-draggers.

The level of Pigovian fees and taxes being levied in Europe is on the order of $20-40/ton, in order to fund initiatives to phase organics out of landfills.

Gary

At 03:45 PM 10/31/2007, paul.ledesma@no.address wrote:

I'd like to make a couple of points re: Landfill Costs and
Economics...

First, here in California, a significant portion of the costs related
to Subtitle D compliance can be directly attributed to controlling
leachate and landfill gas.  Both of these issues are the result of
organic material being buried in landfill cells.  Generally speaking,
those in the Zero Waste community (such as myself) advocate for
diversion of organic matter from landfills to composting.  Diversion
of organics from landfill would obviate the need for greater leachate
and gas control.  The existence of leachate is in and of itself an
externality.

Second, a criticism of Pigovian tax policy centers around two
assumptions that must not be treated lightly.  (1) It is assumed that
the appropriate Pigou tax increment is knowable.  In my experience
this is a fat assumption. Belief in a government agency's ability to
select the perfect tax increment is as arrogant as a blind belief in
the free market as the perfect arbitor.  (2) It is often assumed that
the transaction costs for administering a Pigou tax is low (or near
zero).  This is in many cases not true.  Administrative costs related
to environmental taxes is often costly.

There are other problems with Pigou taxes that could be discussed:
-Inherent regressiveness of Pigou tax policy
-Problem of surplus revenue
-Diminishing tax revenue in the long-run

In conclusion, I would urge caution to any government agency choosing
to implement a Pigou tax.  Oversimplication of the effects of Pigovian
tax policy can lead to significant errors in policy implementation. If
you get it wrong, those that champion rolling-back environmental
policies will attack our mistakes.  As a policy alternative, I would
suggest government agencies more take direct action (i.e., bans,
product steward ship, extended producer responsibility) whenever
appropriate.

Paul Ledesma
Zero Waste Coordinator
City Government
City and County of San Francisco

On Oct 31, 9:26 am, "Reindl, John" <Rei...@no.address> wrote:
> Helen ~
>
> I think that the distinction between 'cost' and "price" is not that important and gets off the issue.
>
> The Pigouvian fees -- when properly set -- produce the true cost and price -- the cost of the environmental/social impacts and the proper price for someone who wants to buy the product or service. While I of course cannot assure you that they will be set at the proper level on any solid waste alternative -- reuse, recycling, composting, landfilling or incineration -- currently, this impact is being ignored and so this cost is not included. The work of Jeffrey Morris, the Governor's Task Force from Wisconsin, economists from the UK, Denmark and Norway, have all provided reasonable estimates that will continue to be sifted, winnowed and constantly improved.
>
> John
>
> PS ~ I specifically used Pigouvian 'fees' rather than Pigouvian 'taxes'. I view taxes as an amount paid regardless of the impact or level of service received -- such as income, property and sales taxes. Fees, however, reflect the impact imposed or the service delivered,.such as a recycling or advance disposa fee when purchasing a computer (this often takes the cost off local taxes), or a fee to build roads based on the amount of gasoline used, or the fee that we should be paying for the carbon we put in the air.
>
> PPS ~ Part of the first recommendation of the Governor's Task Force is that all University of Wisconsin students in environmental and conservation fields be required to take at least one semester in environmental economics.
>
>  From: GreenYes@no.address [ mailto:GreenYes@no.address]On Behalf Of Helen Spiegelman
> Sent: Wednesday, October 31, 2007 10:59 AM
> To: GreenYes@no.address
> Subject: [GreenYes] Re: Landiflll economics
>
> One point of clarification, John, to clarify the distinction between between "costs" and "prices." In the market it seems to me that the "price" is set to include the "cost" and the "profit margin" and in a similar way government policy can use Pigovian taxes to arrive at a "price" that includes "cost" and "externalities/incentive/disincentives."
>
> In the landfill example you give, the "cost" of landfilling is reduced by extending the leachate lines. But can you assure us that the "price" of landfilling set at a rate high enough through Pigovian surcharges to both cover externalities and incentivize waste reduction?
>
> In the interests of transparency, it would also be good public policy to clearly post the difference between "cost" and "price." This would help the public understand the economics -- as well as the government's moral and civic purpose -- in adjusting the price.
>
> It also reinforces the public's expectation that the funds raised through the Pigovian tax will indeed be allocated to public purposes like the ones you mention and allow the public to hold the government accountable for doing so.
>
> Absent any of these conditions, it seems to me that reducing the cost of landfilling undermines the very objective you seek: changes in producer and consumer behaviour.
>
> H.
>
> At 08:28 AM 10/31/2007, Reindl, John wrote:
>
> Sorry for not responding earlier, but sickness kept me away
>
> Yes, the lengthening of the leachate lines will probably reduce costs of landfills . The goal of all economic enterprises, it seems to me, is to either reduce costs or improve features, or both. If company A sells a widget for X dollars, then company B must either produce that widget for less than X dollars or have additional features in their widget in order to offer a competitive service. That's the great part of competition and the invisible hand of the market.
>
> There are some in the environmental field who look at reducing costs for landfills as an evil. I do not share that viewpoint. I feel that it frees up monies to be used for other purposes, like education, parks, discretionary income, on and on.
>
> I think that we need to work towards a sustainable system and to do so means that we must also have a full accounting of the environmental impact and their costs. What I see "Zero Wasters" doing is narrowly focusing on the "evils" of two options -- landfilling and incineration -- and neglecting to analyze the total environmental impacts -- and the relative importance of individual impacts. That's the problem with the current
> invisibile hand of the market -- not all costs are counted, a problem recognized since at least the 1920s, through the work of the British economist A. C. Pigou (see below).  Having been in the environmental movement since 1969 -- and having called for "internalizing the externalities" since then -- I find it discouraging that environmentalists are ill-informed about the techniques now available for internalizing externalities and, it seems to me, resistant to even learning about this field.
>
> John
>
> ..........
> from Wikipedia,http://en.wikipedia.org/wiki/Arthur_Cecil_Pigou
>
> Pigou's major work, Wealth and Welfare (1912, 1920), brought welfare economics into the scope of economic analysis. In particular, Pigou is responsible for the distinction between private and social marginal products and costs. He originated the idea that governments can, via a mixture of taxes and subsidies, correct such perceived market failures - or "internalize the externalities". Pigovian taxes, taxes used to correct negative externalities, are named in his honor.
>
>
>
> > -----Original Message-----
> > From: GreenYes@no.address [ mailto:GreenYes@no.address]On
> > Behalf Of Neil Seldman
> > Sent: Sunday, October 28, 2007 11:04 PM
>
> > Dear JW, Excuse me for not being specific enough. And my impressions 
> > can be subject to dialogue and constructive criticism.
>
> > But here is my reasoning. If the leachate pipe is extended, as was 
> > the rule in WI (from 1200 to 2000 ft) it expands the capacity of the 
> > landfill by four-fold. Thus lowering the cost of landfill.
>
> > This is not the only technique used to increase the use of landfill, 
> > and reduce landfill costs.. In CA  there is the ubiquitous
> > ADC rule---
> > use of alternative daily cover. This tactic increases 'recycling' 
> > rates by 15-20% in some jurisdictions. See Dan Knapp's recent
> > comments.
>
> > My initial point was that incineration is not the sustainable 
> > solution, nor is endless landfilling. Zero waste needs to be applied 
> > to solid waste management and recycling, so that the economy can get 
> > the most use out of each material. An environmental policy as if 
> > molecules and communities matter.
>
> > Neil
>
> > On Oct 27, 2007, at 11:41 AM, JW Spear, Sr. wrote:
>
> > >  I have been trying to follow this thread but, now I am thoroughly 
> > > confused.
> > > How does Wisconsin allowing 'extra leachate lines' lower the cost of
> > > landfill? Wouldn't the additional engineering, construction
> > cost, and
> > > operating cost attributable to additional leachate lines increase 
> > > landfill
> > > cost?
>
> > > JW.
>
> > > -----Original Message-----
> > > From: GreenYes@no.address [ mailto:GreenYes@no.address]
> > > On Behalf
> > > Of Neil Seldman
> > > Sent: Saturday, October 27, 2007 9:10 AM
> > > To: GreenYes group
> > > Cc: GreenYes digest subscribers
> > > Subject: [GreenYes] Re: 6 new messages in 6 topics - digest
>
> > > John, I really do not understand what you mean. Subsidized 
> > > incineration and
> > > low cost landfill are a major part of the problem.
> > > Not the entire set of problems we face but a critical one
> > nonetheless.
>
> > > In my response I posed the example of aluminum cans and recycling.
> > > You choose not to address it. So provide us with some examples of 
> > > what you
> > > are talking about.
>
> > > Here is an example of why focusing on end of stream is as
> > important as
> > > upstream focus:
>
> > > I understand that at a recent WI DNR meeting, a staff 
> > > recommendation was
> > > ignored and the DNR voted to dramatically weaken the existing 
> > > landfill rules
> > > by permitting extra leachate lines. This decreases the cost of 
> > > landfill in
> > > your state by 25%, undercutting market based and regulatory
> > efforts to
> > > increase recycling, reuse and redesign. With landfill disposal so 
> > > cheap how
> > > will the state move forward with sustainable discard management? 
> > > ILSR and
> > > many other groups have been working on upstream issues for years. 
> > > But we
> > > cannot ignore the easy access to material destruction by 
> > > incineration and
> > > landfill. These issues are a necessary complement to
> > upstream work. 
> > > Nor can
> > > we ignore upstream strategies that do not get to zero waste, e.g, 
> > > returning
> > > all computers to OEMs which precludes refurbishing and
> > local economic
> > > development. The environmental, economic and community benefits of 
> > > reuse
> > > over recycling are staggering.
>
> > > ILSR has been a primary, sometimes sole, organization calling for
> > > refillables and reusables and product redesign. At the same
> > time we 
> > > help
> > > communities fight incinerators and landfills. Other groups take on 
> > > other key
> > > aspects like haz waste, medical waste, mining subsidies,
> > etc. Isn't 
> > > it clear
> > > that a multi-pronged strategy is needed?
>
> > > Please provide examples of what point you are trying to emphasize.
>
> > > Neil
>
> > >> GreenYes
> > >> http://groups.google.com/group/GreenYes?hl=en
>
> > >> GreenYes@no.address
>
> > >> Today's topics:
>
> > >> * Letter sent to Mayor of Albuquerque, Ma rtin J. Chávez, 9/07 - 1
> > >> messages, 1 author
> > >> http://groups.google.com/group/GreenYes/browse_thread/thread/
> > >> e9a8f548e264d1d2?hl=en
> > >> * Letter sent to Mayor of Albuquerque, Ma rtin J. Chávez, 9/07 - 1
> > >> messages, 1 author
> > >> http://groups.google.com/group/GreenYes/browse_thread/thread/
> > >> e801d460598d1fde?hl=en
> > >> * Source separation of household waste: A case study in China - 1
> > >> messages, 1 author
> > >> http://groups.google.com/group/GreenYes/browse_thread/thread/
> > >> 142405293210bf21?hl=en
> > >> * baseline impacts of what WE are
>
> ...
>
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>
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Gary Liss       
916-652-7850    
Fax: 916-652-0485
www.garyliss.com



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