Burn or bury? A social cost comparison of final waste disposal methods

Abstract

This paper evaluates the two well-known final waste disposal methods, incineration and landfilling. In particular we compare the social cost of two best-available technologies using a point estimate based on private and environmental cost data for the Netherlands. Not only does our comparison allow for Waste-to-Energy incineration plants but for landfills as well. The data provide support for the widespread policy preference for incineration over landfilling only if the analysis is restricted to environmental costs alone and includes savings of both energy and material recovery. Gross private costs, however, are so much higher for incineration, that landfilling is the social cost minimizing option at the margin even in a densely populated country such as the Netherlands. Furthermore, we show that our result generalizes to other European countries and probably to the USA. Implications for waste policy are discussed as well. Proper treatment of and energy recovery from landfills seem to be the most important targets for waste policy. Finally, WTE plants are a very expensive way to save on climate change emissions.

Introduction

Most developed countries, in particular European countries and Japan, have adopted a hierarchical approach to solid waste management, including final waste disposal options. First of all, waste should be reduced, otherwise recycled or reused, next incinerated with energy recovery and, only if nothing else works, landfilled. Landfilling is often considered to be the worst option because it consumes a lot of space, runs a high risk of leakages to air, water and soil and makes less use of the energy content of waste compared with incineration. Incineration is generally thought to produce fewer externalities, in particular in so-called waste-to-energy (WTE) facilities (Miranda and Hale, 1997). These facilities not only reduce final disposal of waste, but also produce electricity and/or heat, saving (energy) resources elsewhere.

Incineration plants, however, also contribute to externalities, such as emissions to air and chemical waste residuals. In addition, they are expensive to build even compared with modern landfills with appropriate prevention of leaking. In fact, the relative performance of incineration depends not only on its own emissions profile but also on the different technological options for landfilling, and all of their associated private and environmental costs, including their recovery characteristics. For instance, methane emissions of landfills, the main source of emissions to air, can be reduced by flaring, and can be used to produce energy as well.

Ideally, the choice between final waste disposal methods requires a systematic comparison of all costs and benefits involved, i.e. a proper social cost–benefit analysis. Obtaining information on individual preferences for final waste disposal facilities, however, is surrounded by difficulties, especially if social costs are included (Miranda and Hale, 1997). Moreover, these individual preferences do not necessarily provide useful information due to free-rider effects such as Not In My BackYard (NIMBY) problems. Consequently, the focus of recent analytical and empirical studies has been on (social) cost comparisons, while (social) cost minimization is a necessary condition for welfare maximization anyway.

For instance, Keeler and Renkow's (1994) interesting analytical contribution analyzes the desirability of incineration relative to recycling and landfilling based on their differences in (marginal) cost. However, this study only includes energy production by incineration, and it neglects the role of environmental externalities. Brisson (1997) is one of the first to extend this framework of analysis to the role of (marginal) social cost, building on a simple linear model of social cost minimization by a government.¹ Empirical work on the performance evaluation of final waste disposal methods, however, is not always adequate from the social cost perspective, and is often disfigured by lack of data. Earlier attempts focus only on environmental risks (e.g. Ontario Ministry of the Environment, 1999), lack private cost data, apply an asymmetric (extended) private cost analysis only (Keeler and Renkow, 1994), use very rough or incomplete data on (indirect) environmental impacts, or exclude the recovery functions or include them inadequately (Brisson, 1997).

To our knowledge this study is the first to present an encompassing empirical analysis of the incineration versus landfilling including the effects of their recovery functions from a social cost perspective. We have data describing a reasonable set of available (technical) options for each disposal method, as well as on their associated private costs and cost performance in terms of environmental externalities and energy and materials recovery. We present the results from a comprehensive data-set on the average social cost of two ‘best-practice’ technologies for incineration and landfilling. The data are taken entirely from the Netherlands because they reflect cost estimates of technologies that comply with the strictest waste disposal regulation in the world (see Section 6). Indeed, environmental conditions for final waste disposal are rather poor because the Netherlands is not only densely populated, like Singapore, Japan and some areas in the USA, but also faces pretty bad soil conditions for landfills.² If WTE plants were to signal lower social cost than landfilling anywhere, one would expect them to do so in the Netherlands.

The paper is organized as follows. We first illustrate the existing policy preferences for final waste disposal options in several developed, particularly European, countries (Section 2). Next we discuss the characteristics of our social cost–benefit analysis of the choice between landfilling and incineration (Section 3). Then we present our results for the best available techniques for the Netherlands (Section 4), and we explore the sensitivity of our results in Section 5. Section 6 analyzes the different arguments in the current policy debate on waste disposal options and how they relate to the choice of technological options, in particular in the European Union (EU). The last section presents some conclusions and discusses further research.

Note that we do not consider the issue of illegal dumping or other forms of non-compliance behavior (see Fullerton, in press), nor do we evaluate issues related to the interaction between the choice of final waste disposal methods and recycling (e.g. Huhtala, 1999). By analyzing the choice between landfilling and incineration, we implicitly restrict ourselves to that part of the overall waste stream where both options are available, namely burnable waste. Therefore, we also neglect issues related to specific waste streams, such as hazardous waste (including radioactive waste).