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Economics Research Institute Study Paper




Utah State University Department of Economics

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Quantity-based pricing for garbage collection services and recycling programs are becoming increasingly popular methods of meeting municipal solid waste diversion objectives. This article investigates household willingness to pay (WTP) for a pilot curbside recycling program (CRP) in the presence of a quantity-based pricing scheme for garbage collection services. The pilot CRP provides a unique treatment effect that more precisely determines a household's level of real experience with curbside recycling than may be accomplished by respondents simply stating their experience levels. Moreover, unlike previous studies that have modeled the simultaneity of these household decisions as a two-step process, we jointly estimate the household's intentions using a full-information maximum-likelihood (FIML) approach. We find that participants in the pilot CRP are more likely than non-participants to reduce their container size and that for those that intend to reduce their container size, WTP for participants is larger than for non-participants. Taken together, these results suggest that the benefits of curbside recycling may be closely linked with the availability of a quantity-based pricing scheme for garbage collection. In particular, there appears to be a virtuous cycle for the household between choosing to recycle and reducing the size of its garbage container.