Peter Franklin links to Gordon Hector's call, in a study (PDF) for the ASI, for Pay As You Throw. I wasn't so impressed. I've gone through the entire article but it is well summarised in the Executive Summary so I'll fisk that. I'll make a few points:
- Increased rates of recycling should not be a treated as a policy imperative.
- Pay As You Throw will increase rates of fly-tipping and attempting to combat this will require large measures of illiberalism.
- The political economy of Britain's current settlement between local and central government means that this new measure will almost certainly mean an increased burden on families.
- Conflating Pay As You Throw and a private market in waste disposal is a mistake.
First, on the imperative to increase the amount of our waste that we recycle. This will be my main subject as it is, really, the most interesting, and gives me an opportunity to talk about mass-manufacturing and buffalo scrotums.
"There is a consensus that we need to recycle more of our waste. The UK government and the EU are committed to achieving this, but progress is patchy. The UK, in particular, is lagging behind, often referred to as the, 'dustbin of Europe'."
Always be wary of anyone who supports their argument with an appeal to a consensus. Far too often in politics consensus is another term for 'lazy, untested assumption'.
"This consensus is well founded. Waste, surprisingly enough, is uneconomic. Recycling allows us to get value from things we would otherwise bury in the ground. The environmental benefits are persuasive too: increased recycling reduces the need for unpopular landfill sites and incinerators, and can prompt emissions savings of many millions of tonnes per year."
This starts off from the highly questionable premise, one that Peter Franklin loves, that Government can systematically identify opportunities for people to save money. That politicians and their civil servants have the wit and the policy tools to direct entrepreneurs, corporations and ordinary people on how to run their own companies and their own lives in order to make them more efficient.
Business should be wary of this particular mentor. Producing physical waste isn't universally economic or uneconomic. This can be seen by looking at one of the most important economic histories of the twentieth century; the history of mass-manufacturing. Why did mass-manufacturing take off in the United States of America and not Britain, industrial leader at the time?
The answer lies in the fact that mass-manufacturing allowed the Americans to trade resource efficiency for labour productivity. America had a large resource endowment and a low endowment of skilled labour relative to Britain so that made sense. British cotton mills didn't lose a scrap of cotton but required far more skilled labour. American mass-manufacturing used more raw material and energy but increased labour productivity massively. Over time the American, mass-manufacturing model outcompeted older methods in use elsewhere and rose to international dominance. Do we really want to try and reverse that?
Hector cites an IPPR study calling for A Zero Waste UK. The closest humanity has come to a Zero Waste society is probably the Native Americans with their predilection for putting every part of a buffalo to use. Where are they now?
Spending your time turning a buffalo's scrotum into a rattle (presumably for the kiddies, this isn't an area I'm expert in) is a waste of human time that could be spent doing something more useful. The whole process wastes energy, in the form of the human muscle power that was all the Native Americans really had. Dead civilisations attest to the fact that resource efficiency isn't necessarily a good idea if it comes at the expense of other efficiencies.
There is no simplistic economic case for more or less physical waste. In order to make the case that policy to encourage recycling is a good idea, never mind necessary, you either need to be an enthusiast for economic planning or identify a serious externality to dumping household waste. Hector doesn't identify serious externalities.
There is nothing unsafe about ordinary landfill (the relevant item here). Old scare stories are based on industrial landfill of chemical wastes. Toxic material is disposed of by separate means and wouldn't be covered by any new Pay As You Throw scheme. If something is safe to have in your house it is probably safe to landfill once it is surplus to requirements. It will either biodegrade or (ideally, biodegradation produces methane) not and just sit there under our feet (rocks don't biodegrade either). Archaeologists have huge fun sifting through the landfills of earlier generations.
The emissions savings are dubious. Most estimates include the emissions produced when making new items but those emissions are already priced in through the EU Emissions Trading Scheme, the Climate Change Levy and the Renewables Obligation. Introducing another charge to discourage the same emissions stretches the logic of Pigovian taxation beyond breaking point. The only emissions that landfills really deserve to be held responsible for are from the methane give off but this is already controlled by regulation and the landfill tax. Even if you buy none of this and accept the high end of the WRAP estimate that Hector cites of 15 million tons of "carbon emissions" (I haven't got time to look into this now but I hope he knows whether he is talking about tonnes of carbon or carbon dioxide) saved you are talking about a small portion of the UK's emissions (XLS) which are, themselves, are tiny share of the global total.
"Studies do not show any link between PAYT and fly–tipping. Indeed, by giving the consumer more power, a liberalized system of waste management could actually reduce fly–tipping."
What Hector is relying on here are elaborate enforcement measures. I don't share his enthusiasm for local authorities being given the power to "stop and search vehicles suspected of fly–tipping". Those measures also appear to be ineffective. Another measure that increases the costs of binning your waste, fortnightly collections, is already place in the UK and hasn't turned out well:
"The jump in fly-tipping in areas which have introduced fortnightly rubbish collections was nearly three times bigger than in places where rubbish is still collected once a week.
According to figures calculated by the Taxpayers' Alliance pressure group, in areas with fortnightly rubbish collections, the increase was 11.89 per cent. In places with weekly collections, the rise was 4.24 per cent."
This isn't based on subjective "reports" as the studies Hector cites appear to be.
"However, PAYT must not be used as a 'dustbin stealth tax'. It must be accompanied by a corresponding fall in local tax rates."
Oh, it "must not be" used as a stealth tax. Great. Hector's faith in politicians is touching but mistaken. Accountability in local government finance is limited by the reliance of local government on central government for resources. That means that when council tax goes up councils blame the Government and the Government blames councils. Even if a new scheme is nominally, initially, revenue neutral it makes it easier for councils to increase the burden on families and businesses over time. Look what happened with parking charges (PDF, pg. 25).
Furthermore, there is no reason why PAYT should be more expensive than a tax–funded system. Where PAYT is used in Holland and Ireland, it has not increased household bills. In Germany it has led to savings.
Richard Hobbs, Chief Waste Officer at Wandsworth Council, suggests (PDF, Appendix) that Pay As You Throw will increase costs. He uses the Irish example that Hector praises but says:
"The Council will need to wait to see if the Government wishes to allow or require the introduction of DVC. However, it is difficult to see how DVC can be considered to give any value for the extra expenditure."
It is hard to know who has this one right. Hobbs extrapolates from an Irish non-PAYT system so that he can compare to charges in the UK. That should be effective if that non-PAYT system exists in a competitive, single-price, market - Hector himself suggests that the Irish waste management market fits this description. However, if the market isn't sufficiently competitive it could be unfair to damn PAYT just because a non-PAYT system in the same market is expensive.
I would guess that PAYT can probably lead to lower bills only if you, through taxes and other measures, make landfill artificially expensive and, therefore, make discriminating between customers who produce more or less landfill waste more economically worthwhile. As I've argued earlier, you shouldn't be artificially increasing the cost of landfill in the first place.
"To get the best results, the introduction of PAYT must be accompanied by the full liberalization oef the refuse collection sector. Private companies should compete for customers. This would keep prices down and lead to greater customer satisfaction. The Irish experience indicates that it would also spark much greater innovation and specialization and prompt refuse collectors to compete on how much waste they recycled."
Hector could have made a strong argument for liberalising waste management. It could sensibly be argued that in a privatised waste management market, freed from political interference, removing the restriction on PAYT would then make sense as the regulation would be unnecessary in a free-market. I'm not as convinced as Hector is that this would mean PAYT would rise to prominence. In a perfect market price is set to match marginal cost, that is the most-competitive price that a company can economically deliver, and I expect the marginal costs of waste collection are more aligned to the number of houses visited than the amount of waste they put out (that the collection is the expensive bit). However, that is really a matter the market could settle in a free society.
Instead, Hector has decided that PAYT, rather than privatised waste management, is his primary objective. That is unfortunate and the result can be seen in the suspect arguments I've discussed above. He might also have decontaminated a version of PAYT that isn't run in an economically liberal manner and costs households a fortune.
