Waste management alternatives: (Dis)economies of scale in recovery and decoupling

• We formulate a theoretical model which allows different waste management strategies in equilibrium.
• Waste management strategies depend on the technology of waste recovery.
• If recovery activities present constant or economies of scale then it is optimal to have zero not-recovered waste.
• If recovery activities present diseconomies of scale then two outcomes are possible: either equilibrium with zero or with positive not-recovered waste, but recovery of waste is necessarily positive.
• An EKC is only compatible in our model when we assume decreasing marginal utility of consumption, and diseconomies of scale are limited.

This paper formulates a theoretical model which allows different waste management strategies in equilibrium, depending on the technology of waste recovery and the utility functional specification. In the model there are two waste treatment alternatives: ‘not-recovered waste’, composed of landfill and incineration without recovery and ‘recovered waste’, which is the aggregate of recycling, composting and incineration with recovery. We show that if recovery activities present constant or economies of scale then it is optimal to have zero not-recovered waste. The presence of diseconomies of scale in recovery of waste can either result in an equilibrium with zero or positive not-recovered waste, but recovery of waste is necessarily positive. We test for the presence of an EKC, and find that it is only compatible in our model when we assume decreasing marginal utility of consumption, and diseconomies of scale are limited. However, in the presence of (constant) economies of scale in recovery, we observe complete decoupling.