Does funding of waste services follow the polluter pays principle? The case of Spain

Highlights

• Three environmental principles are ruling within the European Union and OECD: Polluters pay, Hierarchy and Decoupling.

• We found that the existing charging systems in Europe are present in Spain.

• We reveal that provincial capitals in Spain in 2009–2014 are not mostly using variable waste charges.

• For the period 2009–2012 Madrid waste charge based on the value of properties may not be considered as a variable system.

• The number of registered dwellings was the most influencing variable in the waste generated in Madrid in 2009–2012.

Abstract

The generation of municipal solid waste is a problem for societies aspiring to sustainability within their municipalities. Policymakers responsible for this issue apply formulas to fund solid waste management by charging taxes or fees. The formulas differ in that some link charges to the event or to the producer of the waste rather than to the environmental‘polluter pays principle’. Among the range of options for funding this service, the literature identifies “pay as you throw” (PAYT), as the method that most directly relates user charges to contributions to environmental sustainability.

This study begins by exploring the types of charges in effect in 52 Spanish provincial capitals and, where applicable, the variables to which they are related. Next, it conducts a case study of the city of Madrid, whose solid waste charge, in force from 2009 to 2014, was based on property values. The case study aims to confirm the relationship—over time—between waste generated (total and per property), number of properties (place where the waste was generated) and properties' rateable value. The results reveal, first, that the most widely-used solution at local government level is the easiest to apply—namely, a flat rate per household or a step-variable flat rate covering on average 59.03% of the cost (in 2012); and, second, that Madrid's waste step-flat rate cannot be considered a PAYT system, despite it covers up to 70% of the cost (in 2012).

Introduction

Managing municipal solid waste (MSW) is a concern for societies aspiring to economic, social and environmental sustainability within municipalities, as waste disposal represents a considerable portion of the municipal budget. This cost may sometimes be paid through charges (revenues) imposed on economic agents. Da Cruz et al. (2014) summarize five different approaches to coping with MSW that are related to recovery and recycling targets imposed by European Union (EU) directives. This paper analyses the charges/fees (MSWCh)¹ that home owners pay for MSW. Other types of waste —such as sewage, farming or industrial waste— are beyond the scope of this paper.

City councils are entitled to apply different types of MSWCh, with fixed or variable tariffs, to finance MSW and encourage citizens to adopt a responsible attitude toward the environment. As Marques and Simões (2008) and Ferreira et al. (2017) indicate, EU directives stipulate that local regulations must include specific rules to finance MSW under the sunshine regulation approach (transparency and comparability) and affordability rules (economic and social sustainability).

MSWCh rarely reflect the idea that the polluter should contribute to paying for the damage caused. Still, it is important from a legal point of view that the formula chosen should calculate MSWCh according to methods that are transparent and comprehensible to citizens so that local authorities can ensure that their activities are consistent with norms of conduct acceptable to society (Dowling and Pfeffer, 1975, Archel Domench and Lizarraga Dallo, 2011, Marques and Simões, 2008). Da Cruz et al. (2014); address the issue of waste packaging (part of MSW). One formula used is the ‘pay-as-you-throw’ (PAYT) system, based on the ‘polluter pays principle’ (PPP) (European Union, 2008). This formula has been used by municipalities in different countries both to reward the public effort required and to reduce the volume of waste generated (Reichenbach and Bilitewski, 2003). Table 1 shows the main characteristics of a PAYT system. In line with Puig-Ventosa (2008), applying this principle means linking fees to the waste generated at a property. Two main factors drive MSWCh: quantity (weight or volume) of waste collected and the property at which the waste is generated. Some papers link waste generation to a range of variables such as type of property (family home, detached house), number of occupants or tenancy regime (ownership, lease) (Hall et al., 2009).

Moreover, opinions vary as to whether the amount charged to users should depend on the individual responsible for causing the waste or the event producing the waste. Taxpayers' contributions may thus be linked to people, property and/or waste type. Based on these premises, some authors have found unilateral links between waste generation and property type, number of occupants and/or tenancy regime (Hall et al., 2009). Others, such as Chamizo et al. (2013), have found a property's rateable value to be associated with waste generated per year and per district. Similarly, some authors associate the impact of waste generated with proximity and convenience of municipal installations (Rousta et al., 2015). Despite the many studies involving waste management concepts—including funding and other operations related to financial assistance— to our knowledge, no scholarly study provides a long-term analysis of the relationship between rateable value of a property, quantity of waste collected and number of properties registered. By providing such an analysis, this article reduces the lack of information on this issue in the literature, contributing empirical evidence for Spain. Through an exploratory study of the types of fees used in Spanish provincial capitals, we analyse the behaviour of the variables commonly associated with waste generation. This paper adds new, long-term empirical evidence to the findings of Chamizo-Gonzalez et al. (2016) for the case of the city of Madrid for the period 2009–2012.

The results 1) establish a precedent for the rateable value of properties that may be applied to other Spanish cities, and 2) confirm for the case of Madrid a relationship generally taken for granted in the literature: the relationship between waste generated and number of properties.

Validation of this research relies on the classification of MSWCh developed by (Chamizo-Gonzalez et al., 2016) in a Spanish context, which demonstrates the link to different variables. This study is, however, limited to a single year and to the case of Madrid, and draws on the study by Puig Ventosa and Sastre Sanz (2017)) of 125 relevant municipalities, representing 34% of the Spanish population. Both studies note the significant absence of a relationship of MSWCh analysed to PPP.

This paper adds new, long-term empirical evidence to the findings of Chamizo-Gonzalez et al. (2016) for the case of the city of Madrid for the period 2009–2012.

The research provides a confirmatory test of the findings of Chamizo-Gonzalez et al., 2016, Puig-Ventosa, 2008 and Puig Ventosa and Sastre Sanz (2017) using fresh empirical evidence on MSW in Madrid for an extended time period (2009–2012). Confirming these results both establishes a precedent for the rateable value of properties (not) to be applied to other Spanish cities and confirms for the case of Madrid a relationship generally taken for granted in the literature: the relationship between waste generated and number of properties (Puig Ventosa and Sastre Sanz, 2017).

To this end, the study addresses the following research questions:

• What variables determine MSWCh in Spanish capital cities?

• Do Spanish capital cities use a PAYT approach?

• Is the PPP behind MSWCh in Spanish capital cities?

• Do MSWCh in Spanish capital cities change over time?

• In the case of Madrid, can we confirm a long-term relationship of waste generated to property value and/or number of properties?

• Can we confirm/reject the presence of a PAYT approach in the case of Madrid in the long term?

To answer RQs 1 to 4, we analysed the local tax literature covering the main local taxes in force in Spanish capital cities (including MSWCh and the variables to which they relate). This analysis generated a descriptive analysis. A statistical study of Madrid (RQs 5–6) was conducted with the data available by district (21 districts) on MSW, such as tons of waste collected, inhabitants, number and value of the properties, etc. Social variables such as age, gender and education level were discarded based on the non-relevance of these factors established in Chamizo-Gonzalez et al. (2016). The statistical part of this study focuses on Madrid for two reasons: it is the largest Spanish city in terms of population and volume of waste generated, and the user charge system applied during the study period was linked to properties' rateable value. This practice may imply that the local authorities deemed that the higher the value of the property, the higher the economic potential and, in an exercise of solidarity, that the owner of a property with a higher value should pay a higher amount.

Identifying property as the generator of waste establishes a link between property value/quantity and waste. The nature of this relationship is unclear, however, and questions arise as to whether the indicators used to calculate MSWCh penalise those generating more waste through a higher charge or reward citizens for displaying better environmental behaviour.

This article is divided into four sections following this introduction. The second section presents the theoretical framework. The third is dedicated to funding methods for waste collection services in Spanish municipalities. The fourth analyses the behaviour of this fee imposed by the City Council of Madrid (rateable value) and the MSWCh's possible relationship to other variables. Following these sections, we discuss the results obtained and present the main conclusions.

The core EU waste legislation (Davies, 2017) (Tojo et al., 2008) is the waste directive (European Union, 2008), which establishes the waste policy and stems from the principle of Waste Hierarchy and PPP, and the attitude of responsibility they imply towards the environment. The effects of the directive apply to home owners as waste producers but also to Extended Producer Responsibility. In addition, the directive includes recycling and recovery targets to be achieved by member states (Arm et al., 2017). For instance, by 2020, member states must achieve a 50% rate of recycling/reuse of the weight of the paper, cardboard, metal, plastic and glass waste collected, among other targets.

MSW management must be faced under the triple perspective of sustainability—social, economic and environmental (Navarro et al., 2010). Spain's National Integrated National Waste Management Plan (Ministerio de Medio Ambiente y Medio Rural Y Marino. Gobierno de España., 2009)[Plan Nacional Integrado de Residuos de España] 2008–2015 applies the environmental PPP and establishes a waste management hierarchy, promoting implementation of a variable tariff system according to the MSW generated. The Plan encourages transparency of environmental information, leading Spanish town and city councils, in their capacity as administrative bodies, to seek formulas that enable them to meet three objectives: a) to fund the collection, treatment and disposal of waste, b) to provide incentives for reduction of waste generated by citizens, and c) to seek economic tools to improve the performance of economic agents and make environmental resources more profitable. With these measures, municipal authorities aim to take another step toward social sustainability, calling for a more customer-oriented management style (Skumatz and Freeman, 2006, Bilitewski, 2008a, Bilitewski, 2008b); (Hall et al., 2009, Couto and Hernandez, 2012) by introducing the concept of “citizens' collaboration” in the municipal decision to apply MSWCh to ensure greater efficiency in management of public services.

Among the many formulas for calculating MSWCh, the premise that the generator of waste must contribute to paying for the damage caused is internationally accepted. Diverse opinions have arisen as to whether MSWCh should be related to the cause of the waste (a specific aspect of the waste in question), or to the entity that causes it (aspects pertaining to the property, organization, person, general population, etc.).²