How a Fee Per-Unit Garbage Affects Aggregate Recycling in a Model With Heterogeneous Households

Nearly 2000 communities have implemented user fees to finance garbage collection over the last five years. These user fees require households to pay for each bag of garbage presented at the curb for collection (Skumatz 1993). The revenue raised from these user fees has supplanted the use of general tax revenue to finance garbage collection and disposal costs. Benefits to the community include the social value of less garbage and more recycling. The costs include the social cost of additional litter and the value of resources used to administer the program. The magnitudes of both the benefits and costs depend on the waste removal choices of individual households within the community.