No. 584 - Wasted in waste? The benefits of switching from taxes to pay-as-you throw fees: the Italian case

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by Giovanna Messina and Antonella TomasiNovember 2020

Waste management is mainly financed through a local property tax (TARI). Alternative financing schemes, known as 'pay-as-you throw' (PAYT), are designed to price each additional unit of waste disposed of by the user and create significant advantages in terms of efficiency and equity, as well as of environmental care/for the environment.  The paper estimates the impact of a wide implementation of PAYT schemes by Italian municipalities by applying different estimation strategies on an extensive dataset with more than 6,100 observations.

Our results show that the application of PAYT schemes would have a significant impact on users' behaviour: the total amount of waste in per capita terms would fall and, more specifically, unsorted waste would almost halve. The costs for waste management services would fall from 20 to 10 per cent, reflecting a reduction of one third in the cost of managing undifferentiated waste.

Published in: Economia Pubblica, v. 2021, 2, pp. 7-38