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Flexible Waste Management under Uncertainty

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  • Di Corato, Luca
  • Montinari, Natalia

Abstract

In this paper, we use stochastic dynamic programming to model the choice of a municipality which has to design an optimal waste management program under uncertainty about the price of recyclables in the secondary market. The municipality can, by undertaking an irreversible investment, adopt a flexible program which integrates the existing landfill strategy with recycling, keeping the option to switch back to landfilling, if profitable. We determine the optimal share of waste to be recycled and the optimal timing for the investment in such a flexible program. We find that adopting a flexible program rather than a non-flexible one, the municipality: i) invests in recycling capacity under circumstances where it would not do so otherwise; ii) invests earlier, and iii) benefits from a higher expected net present value.

Suggested Citation

  • Di Corato, Luca & Montinari, Natalia, 2013. "Flexible Waste Management under Uncertainty," Climate Change and Sustainable Development 146348, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemcl:146348
    DOI: 10.22004/ag.econ.146348
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    1. is not listed on IDEAS
    2. Cui, Hailong & Sošić, Greys, 2019. "Recycling common materials: Effectiveness, optimal decisions, and coordination mechanisms," European Journal of Operational Research, Elsevier, vol. 274(3), pages 1055-1068.
    3. Gambella, Claudio & Maggioni, Francesca & Vigo, Daniele, 2019. "A stochastic programming model for a tactical solid waste management problem," European Journal of Operational Research, Elsevier, vol. 273(2), pages 684-694.
    4. Lambertini, Luca, 2021. "Regulating the tragedy of commons: Nonlinear feedback solutions of a differential game with a dual interpretation," Energy Economics, Elsevier, vol. 100(C).
    5. Reggiani, Carlo & Silvestri, Francesco, "undated". "Municipal Waste Collection: Market Competition and the EU Policy," Climate Change and Sustainable Development 230598, Fondazione Eni Enrico Mattei (FEEM).
    6. Trigeorgis, Lenos & Tsekrekos, Andrianos E., 2018. "Real Options in Operations Research: A Review," European Journal of Operational Research, Elsevier, vol. 270(1), pages 1-24.
    7. Dimitrios Zormpas & Giorgia Oggioni, 2024. "Correction to: Evaluating the optimal timing and capacity of investments in flexible combined heat and power generation for energy-intensive industries," Annals of Operations Research, Springer, vol. 332(1), pages 1161-1161, January.
    8. Tsekrekos, Andrianos E. & Yannacopoulos, Athanasios N., 2016. "Optimal switching decisions under stochastic volatility with fast mean reversion," European Journal of Operational Research, Elsevier, vol. 251(1), pages 148-157.
    9. Carlo Reggiani & Francesco Silvestri, 2018. "Municipal Solid Waste, Market Competition and the EU Policy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 71(2), pages 457-474, October.

    More about this item

    Keywords

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    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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