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Wasted in waste? The benefits of switching from taxes to Pay-as-you-throw fees: the Italian case

Author

Listed:
  • Giovanna Messina

    (Bank of Italy)

  • Antonella Tomasi

    (Bank of Italy)

Abstract

Solid waste management is one of the most important functions performed by Italian municipalities and is mostly financed through local property taxes. Alternative financing schemes, known as ‘pay-as-you throw’ (PAYT), are designed to price each additional unit of waste and are becoming increasingly frequent at international level. Their advantages in terms of efficiency and equity, as well as of care for the environment, have been investigated both theoretically and empirically. This paper estimates the impact of PAYT schemes on the amount of waste produced and on the costs of its disposal for Italian municipalities. Results show that PAYT schemes deeply affect user behavior: total waste decreases (unsorted waste almost halves). Overall, the costs incurred by municipalities adopting PAYT fall by roughly 10 to 20 per cent in per capita terms, reflecting a reduction of one third in the cost of managing undifferentiated waste.

Suggested Citation

  • Giovanna Messina & Antonella Tomasi, 2020. "Wasted in waste? The benefits of switching from taxes to Pay-as-you-throw fees: the Italian case," Questioni di Economia e Finanza (Occasional Papers) 584, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_584_20
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    Cited by:

    1. Agovino, Massimiliano & Cerciello, Massimiliano & Javed, Aamir & Rapposelli, Agnese, 2023. "Environmental legislation and waste management efficiency in Italian regions in view of circular economy goals," Utilities Policy, Elsevier, vol. 85(C).
    2. Bonan, J. & Cattaneo, C. & d’Adda, G. & Galliera, A. & Tavoni, M., 2025. "Social norms and tariff salience: An experimental study on household waste management," Journal of Environmental Economics and Management, Elsevier, vol. 130(C).

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    Keywords

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    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • 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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