Unit pricing of residential municipal solid waste: Lessons from nine case study communities

Communities across the US have implemented unit pricing of residential solid waste, or pay-as-you-throw programs, as an innovative approach to encourage significant waste reduction and diversion. This paper provides an analysis of case studies from nine municipalities that employ unit pricing for residential waste collection. The paper details the economic theory underlying unit pricing, analyses how the various characteristics of the nine unit pricing programs affect program outcomes, and frames unit pricing issues for further research. We find that communities experience decreases in annual residential waste landfilled and incinerated after implementation of unit pricing. The communities with larger decreases tend to have higher unit pricing fees and smaller minimum container sizes for collection. Complementary programs, such as recycling and yard waste collections, benefit under unit pricing, as households increase their diversion behaviour. We consider this immediate diversionary behaviour the first stage in a household's response to a unit pricing program. After several years of experience with unit pricing, households enter a second stage where source reduction behaviour becomes more apparent. Unit pricing programs do appear to encourage source reduction behaviour, and concerns about undesirable diversion do not appear to be well founded. These results may provide guidance in statistical analyses of larger sets of unit pricing communities.