The implementation of PAYT system under the condition of financial balance in France

Since 2005, France has been facing a reform of the financial regulation of the management of municipal solid waste, by tax or flat fees. Nevertheless, the application of unit pricing is limited to about 15 local authorities, but interest is expanding. The French examples confirm the efficiency of this PAYT system. The prevention and the sorting of packaging waste are increasing and the quantity of residual waste falling. But, we have highlighted the difficulty for the local authorities to balance their budgets during the years of PAYT system implementation.After a short review of the situation in France of the financing of waste services, and in particular of PAYT system, the paper presents, firstly the financial model and then, the results of its application in two communities.The cost model takes into account the expenditure of management on various waste flows and the revenues for the sale of by-products. A financial balance is ensured by the payments from households. Consequently, the unit pricing and the effect of the behaviour of the inhabitants are introduced into the simulation model. The application on two local authorities showed that the increase of sorting waste did not restore the balance. From the analysis, three reasons explain this situation:–the extent of the changes of the behaviour of the households is not easily foreseeable,–the selection and the development of the pricing structures by decision-makers were not based on a preliminary economic analysis,–the choice of the criteria is made without linking with the criteria for remuneration of the private operators.Thus, the development of the tariff must be carried out according to an economic approach. In the end, after the presentation of the financial modelling and its application, we make recommendations to aid the implementation of the PAYT system and the development of the pricing structures by local authorities.