Taxing household waste: Intended and unintended consequences

Biodegradable waste constitutes the largest single fraction of municipal solid waste and is subject to specific targets in European Union member states. The present study examines the potential of waste taxes to reduce household disposal of biodegradable waste and encourage substitution into composting. With a view to examining the wider potential effects of the tax, the study also tests labelling effects and possible unintended consequences, namely the potential to stimulate illegal waste disposal. Data is drawn from a nationally representative whole country survey (n = 1037), in which respondents were randomly assigned to different tax treatments. The study finds that in the absence of a tax, composting uptake is mainly predicted by access to a garden or rural land and perceptions of nuisance. The introduction of a nominal fee for waste disposal significantly reduces waste disposal intent and encourages substitution into home-composting. Substitution responds to both higher fees as well as to a “Pay as You Throw Tax” tax label, particularly among garden owners. However, the introduction of a waste disposal fee also induces illegal waste disposal intent, particularly among households that hold government in low trust. These findings, which are robust to several model specifications, are relevant both to science and to policy makers.