Effectiveness of unit-based pricing of waste in the Netherlands: Applying a general equilibrium model

Differential and variable rates (DVR) in waste collection charging give a price incentive to households to reduce their waste and increase recycling. International empirical evidence confirms the effectiveness of DVR schemes, with limited unwanted side effects. In the Netherlands, currently some 20% of the population is charged at DVR. This is less than in several other countries. Taking into account differences between types of households and dwellings, this study analyses various scenarios for extended use of DVR in the Netherlands. The analysis shows that further penetration of DVR is a cost-effective instrument for waste reduction and more recycling. Moreover, DVR can itself be seen as a necessary condition for the successful implementation of other economic instruments, such as waste taxes. It is therefore recommended to stimulate municipalities to adopt DVR schemes in the Netherlands, accompanied by the provision of adequate facilities for waste separation by households. Before introducing DVR in ‘very strongly urbanized’ municipalities (i.e. the 12 largest cities in the Netherlands) a pilot experiment in one of them might be useful to test the behavioral response in this category.