Economies of size and density in municipal solid waste recycling in Portugal

The recycling of municipal solid waste has a remarkable importance in the preservation of the environment and the welfare of the society. However, it is also important that this service can be provided with efficient costs. This paper aims to search for economies of output density and economies of size in the selective collection and recycling activities in Portugal and to identify the size the utilities should have to become more cost efficient. The sample comprises all Portuguese recycling utilities operating in the wholesale segment in the period 2006-2010. The results show that the Portuguese recycling utilities should increase the quantities of municipal solid waste for recycling (especially glass and paper) and also become larger to dimensions corresponding to a supply of 400-550 thousand inhabitants. With the increasing amount of glass collected, utilities are simultaneously struggling to fulfill the targets established by the European legislation and explore the existing economies of output density. The results also show that the management of these services carried out by private companies and the use of incineration (by utilities) seem to reduce the costs of utilities while the regulation of these services and the composting of waste held by utilities tend to increase costs.