Municipal solid waste collection service in Italy: Efficiency analysis and a proposal for regulation

In Italy, costs related to the waste collection and disposal service are financed by the tax on waste (tari). Nevertheless, the lack of an organic and centralised regulatory framework has determined heterogeneous economic performances of operators within different optimal territorial contexts (ato). This analysis aims to estimate both the efficiency level reached by atos through a comparative assessment based on the well-known frontier analysis approach and to evaluate the economic benefits that could arise from the implementation of a proposed regulatory framework. The analysis bases on data collected in the three-year period 2013-2015. The paper proposes a method for regulating the sector to update the regulated revenues of operators. This method foresees a combined use of a parametric method and the price-cap mechanism. Since the national yield of the tax on waste estimated in the last available year (2015) amounts to about 10.05 billion Euros and considering the specific cost characteristics of the different contexts, if all atos converged to the most efficient one, a potential saving between 12% and 19% emerges.