The Economic Benefits of Reducing the Environmental Effects of Landfills: Heterogeneous Distance Decay Effects

Abstract

This paper estimates the economic benefits of different alternative policies considered for reducing the external effects caused by the utilization of landfills in solid waste management. The preferences of the local population in the surrounding areas of a landfill are evaluated utilizing a discrete choice experiment in which subjects are presented with alternative policy decisions that involve reducing the material processed through the landfill. Various models were employed in order to capture heterogeneous preferences, resulting in a mixture of normals modelling approach (MN-MNL) outperforming other alternative models of heterogeneity. The results show that the policy of moving the landfill away from the population does not provide the most benefits when compared to a policy of increasing recycling in the household. The economic benefits of the waste management policies are heterogeneous across the population surrounding the landfill and so the distance decay functions. Thus, the economic benefits for most waste management policies can increase or decrease the further away the subject lives from the landfill, depending on the preferences of his/her segment and the type of policy employed.