Assessing Alternative Policies for Reducing Household Waste in Taiwan

In the last few years, the three major cities in Taiwan have been experimenting with two different demand-side management approaches to reduce the waste generated by households and to promote the recycling of recyclables. Thus, there are three different kinds of approaches of waste management that are concurrently used in Taiwan: fee-per-bag, mandatory recycling with free waste collection services, and the zero price of trash collection. We performed a comparative analysis of these policy instruments to take advantage of this important social experiment. We first developed an economic model for the three different waste charging programs concurrently in use and then performed an empirical study based on the implications from the theoretical analysis. It is clearly seen that the traditional approach of zero pricing of trash collection is very ineffective in terms of waste reduction and recycling. Households have all changed their behavior significantly in those cities with two new approaches. However, of the two, the fee-per-bag program is clearly the most effective approach. The results have important policy implications.