Working Papers,
National Institute of Economic Research

Abstract:

Parallel to the efforts of the EU to achieve a significant and overall reduction of waste quantities within the EU, the Swedish parliament enacted an environmental quality objective stating that ‘the total quantity of waste must not increase …’ i.e. an eventual absolute decoupling of waste generation from GDP. The decoupling issue is ad-dressed, in the present paper, by assessing future waste quantities, for a number of economic scenarios of the Swedish economy to 2030 with alternative assumptions about key factors affecting waste generation and waste management costs. We use an integrated top-down/bottom-up approach by linking a CGE-model of the Swedish economy with a systems engineering model of the Swedish waste management system. In this way, we can in more detail consider the interaction between waste generation and waste management costs (waste disposal prices) when assessing future waste quantities.

A relative decoupling of waste generation takes place in all scenarios, i.e. total waste quantities increase at a lower rate than GDP. Absolute decoupling, which re-quire total waste quantities to stabilize or to reduce, does not take place in any of the scenarios. This means that the present Swedish Environmental quality objective of stabilizing waste quantities is not met in any of the scenarios with total waste genera-tion levels of 110 per cent up to nearly 200 per cent of that in 2006.

The overall impression from our analysis is that costs are high for reducing waste generation irrespective of the type of waste reduced. In other words, the waste treat-ment costs are low compared to the costs for reducing waste. This situation also means that the use of policy instruments, which induce substitution by increasing the price of waste disposal services, will have very small reducing effects on the generation of all types of waste unless the price increase brings about an introduction of waste preventing techniques and affect households in the direction of a less waste intensive behaviour. For example, the policy instruments used must affect the pattern of household consumption pattern more directly, as a differentiation of the value added tax, rather than to be directed towards the waste management sector. Economic policy instruments introduced in the waste management sector are more likely to affect the choice of waste management solutions than prevent waste generation.

Linking a macroeconomic and a systems engineering model for waste manage-ment, gives us a tool useful also for capturing the macroeconomic effects, such as GDP growth and structural changes, when designing policy instruments intended to prevent waste generation or take waste management in a more sustainable direction.

Keywords: general equilibrium model; systems engineering; solid waste; waste management; waste generation; decoupling; EMEC; NatWaste; top-down/bottom-up; waste policy instruments

JEL-codes: C68; D20; H23; R48

54 pages, May 2010

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