ABSTRACT
Waste has always been a by-product of human civilizations. What is new is the amount of waste produced by affluent societies and the potentially severe impacts resulting from hazardous substances. Globalization extends the pathways of production and consumption into every corner of the world. The distances that components of single products often cover by air are worthy of platinum frequent-flyer status. At the same time, space for disposal has become scarce, and waste treatment facilities have grown increasingly complex and expensive. Waste management tends to be a laborious process because the chain from the ‘cradle’ of resource extraction down to the needs of end consumers inevitably involves a multitude of actors and rule-making bodies. It is no wonder that waste ranks high on the agendas of both policy-makers and businesses. Problems relating to the issue are various:
Negative externalities, relating to the use of services rendered by ecosystems, such as land, groundwater and air, can result when ecosystem capacities are overexploited. They can also arise in terms of pollution problems that, in turn, adversely affect human health.
Problems exist in relation to the scale of activities, which may result from overexploitation of scarce resources or from the sheer amount of products available in affluent societies.
Problems of coordination emerge where suppliers and commercial as well as private consumers have to direct efforts toward recycling, waste reduction, resource conservation, etc. Contrary to widespread opinion, downstream waste disposal policies do not sufficiently encourage upstream activities in recycling and waste reduction (Calcott and Walls, 2000; SRU, 2002).
Proponents of privatization tend to claim that public waste management is inefficient and leads to higher prices and lower standards of customer service (Shleifer, 1998; Lovei and Gentry, 2002). They believe privatizing waste management encourages efficient solutions, driving innovation and meeting customer demands. The way such a claim is reached, however, needs to be closely scrutinized. Incorporation of the principle of ‘full-cost accounting’ is essential. Fully accepted and implemented, it would force firms to think of services provided by the ecosystem as production factors to be included in overall cost calculation. But policies should do more than just ‘get the prices right’. Our knowledge of the causes and effects of externalities is limited. Moreover, uneven emphasis on information about different factors (often called ‘asymmetric information’; Faure and Skogh, 2003) can prevent appropriate action from being taken. Transaction costs (i.e. the cost of seeking, negotiating and implementing solutions) may well eat up any efficiency gains in production costs. For these reasons, waste management needs to be capable of reducing negative externalities, production costs and transaction costs. It also needs to generate new knowledge that helps to avoid waste production (Faure and Skogh, 2003).