Market-based incentives for sustainable waste management in London

This study identified and explored economic instruments that could potentially accelerate the implementation of sustainable waste management in London. Seven instruments were looked at including reductions in landfill tax for pre-treated waste, cap & trade systems and incorporating recycling within carbon accounting.

Objectives
The study was commissioned following a stakeholder dialogue commissioned by London Waste Action in 2006 to look at the deficiencies in the management of wastes in London and the changes that were needed to take London into the next stage of recycling and waste management. The stakeholders suggested a range of financial measures including variable charging, tax breaks, rate rebates, fines and higher landfill taxes for waste producers (among others) and came to a consensus that for maximum impact, a combination of financial measures were needed. Brook Lyndhurst and Eunomia were jointly commissioned to explore these financial measures and develop recommendations for how they might be quickly and effectively brought to bear.

Methodology
The study was a ‘think piece’ which did not incorporate primary research per se, but instead involved reviewing existing evidence about the effectiveness of financial measures, both in the waste sector and elsewhere; conducting workshops with the waste action steering group; and effecting extensive brainstorming sessions.

Findings
Only a handful of policies could lend themselves to being implemented in London without being implemented elsewhere in the UK: incentives or mandates for households, variable charging for premises, a residual waste levy and tradable landfill permits for collectors.

We concluded that the likely impact of incentives and mandates for households would be highest for charging schemes, although making certain forms of recycling compulsory runs the risk of reducing participation levels in forms that are not compulsory. Variable charging for premises would have significant impact on the management of commercial wastes in London, while the impact of residual waste levies would be affected by how authorities perceived the possibilities for variable charging but could be high if the law were to allow the implementation of changing schemes for households. Finally, tradable landfill permits for collectors would have considerable impact.

We also concluded, however, that instruments requiring more co-ordinated action (i.e. implementation on a greater scale than London alone) could have significant impacts. Most pertinently, a system of carbon credits would affect all waste materials and would have significant impacts over the longer term.