2004 Conference

Vth International Conference

Property rights, economics and environment: Wastes
June 2004

AIX-EN-PROVENCE, France

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Conference ProceedingsGeneral TopicFactsTowards new solutionsSelected PapersGeneral Report and concluding remarksConference CommitteeAdvisory boardAssociated Institutions

Available in french only. See Selected Papers tab for the english papers.

Actes-2004

As for the four past international conferences (1996, 1998, 2000 and 2002) we shall present and evaluate theories and actual experiments in the field of property rights and economic instrument which, beyond command and control, are likely to help solve the pressing issues of sustainable management of wastes and identify new tools for environmental governance. Wastes management appears as one of the trickiest environmental issues which, contrary to some other problems does not appear to be likely to be solved in the near future. It appears that in resorting to technical solutions in order to address the consequences of waste generation is not adequate if waste continues to be considered as “res nullius”. Numerous public regulations and subsidies often worsen the situation. The experiences in France, Brittany or Netherlands are illustrative. It appears that in order to control the rising tide of wastes, regulations are necessary but not sufficient. If free access to any resource means depletion and “tragedy of the commons” we must devise new alternative tools and institutions based on economic tools and property rights. Dealing both with concepts and successful experiments the Conference will aim at imagining new institutional arrangements and tools in order to protect the environment and manage wastes the for the new century.
Unlike many colloquia and research projects which for the last decades have dealt technically with waste management, our objectives will be limited, pragmatic, and prospective as basic stakeholders and decision makers meet in order to find implementation instruments. Tools and means are as important as long-agreed objectives.

Objectives

As for the four past international conferences, we shall present and evaluate theories and actual experiments in the field of property rights and economic instrument which, beyond command and control, are likely to help solve the pressing issues of sustainable management of wastes and identify new tools for environmental governance.
Senior specialists from around the world (mainly lawyers and economists), local government officials, conservation leaders, and NGO’s will participate, alongside landowners, industry and other associations, as well as wastes processing, recycling and packaging firms, and other interested stakeholders.

Wastes management appears as one of the trickiest environmental issues which, contrary to some other problems does not appear to be likely to be solved in the near future. For instance the production of municipal solid waste (MSW) per personn amounts to 450 kg per year in Europe with a 2% annual growth rate.
The increasing number of solid waste management facilities (landfill, incineration, recovery, etc..) does not entirely solve the problem since it raises other difficulties such as dioxine emissions, smell, transportation hazards, etc.… Sludge from waste water treatment plants are not really welcome by farmers and landowners.
It appears that in resorting to technical solutions in order to address the consequences of waste generation is not adequate if waste continues to be considered as res nullius i.e. belonging to nobody, or more specifically a public good, the responsibility and costs of which are for the public. One can imagine and devise alternative solutions such as “negative property rights” where each successive owner is responsible for dealing with his wastes and incurring the full economic, social and environmental costs. Some concepts such as OECD’s “Extended Producer Responsibility” and tradeable permits are prone to decrease the amount of wastes.
“Pay as you throw” schemes, a reflection of the “polluter pay principle”, would be an alternative and is now the corner stone of environmental policies in other areas in many countries. A number of experiments have been conducted in cities throughout the world implementing variable-rate waste disposal pricing helping to reduce costs and environmental impacts and encourage recycling.
In contrast, numerous public regulations and subsidies often worsen the situation. The case of hog-breeding in Brittany and the Netherlands is illustrative. Political underpricing of waste processing is an incentive for waste production.
In addition, property owners are very often not compensated for nuisances linked with waste processing and this kind of regulatory “taking” is the source of opposition (NIMBY) and inappropriate location of expensive facilities.

It appears that in order to control the rising tide of wastes, regulations are necessary but not sufficient. If free access to any resource means depletion and “tragedy of the commons” we must devise new alternative tools and institutions based on economic tools and property rights.
We must explore to what extent property rights (public, common and private) and economic tools such as, compensation and betterment devices, easements, covenants, concessions, negotiable permits, land and inheritance taxes…could combine and meet the objectives of sustainable development by public/private joint collaboration.
Dealing both with concepts and successful experiments the Conference will aim at imagining
new institutional arrangements and tools in order to protect the environment and manage wastes the for the new century.
Unlike many colloquia and research projects which for the last decades have dealt technically with waste management, our objectives will be limited, pragmatic, and prospective as basic stakeholders and decision makers meet in order to find implementation instruments. Tools and means are as important as long-agreed objectives.

By Henri Lamotte

The fifth international conference on « Property rights, economics and environment » is in the lead of the four former conferences and contributes to the analysis of property rights and market-based tools as effective conservation instruments. Waste management, the theme of this conference, provides a perfect illustration for such an analysis. Concluding inevitably leads to simplifying. Diversity of themes tackled during the conference as well as the multiplicity and richness of debates cannot be fully reflected in a few pages. Nevertheless, I think that two lessons can be learnt from this conference. First, public waste management policies have faced serious limits. Second, market-based solutions become undoubtedly necessary to define the perfect combination of instruments to fit local conditions.


I. Public waste management policies have faced serious limits: the solution given to the growing environmental concern has been to increase regulatory constraints with quantitative objectives but lacking socio-economic grounds.

A. The growing concern for environment

1. All developed countries experience increases in the amount of waste per capita along with income

In France, for instance, waste per capita grew by a 1.1% during the nineties (to 552 kg per capita in 2000 from 512kg per capita – a level well below that of the United States, with 760 kg per capita).

2. Waste production generates several spill-over effects that are poorly assessed

In addition to the adverse effects on the environment (contribution to the greenhouse effect, water, soil and air pollution), waste production generates significant damage (i.e., smells, noises, and degraded scenery) for nearby inhabitants . Such damages are called environmental disamenities. They produce a reduction in the value of real estate.

However, these external effects are poorly evaluated. The evaluation of external effects generated by waste management lingers. A study by Coopers and the CSERGE[1] is frequently considered as a reference but does not integrate environmental disamenities and has been severely criticized during the conference by L. Kraemer, a member of the EC Commission for which the study was conducted.

B. The response provided to these environmental problems has mainly consisted in the elaboration of regulatory constraints determining quantitative objectives but lacking socio-economic grounds.

National and European regulations, with 7 or 8 EC directives, on waste management have been accumulated during the last twenty years. These regulations have set quantitative objectives with no socio-economic ground and failing to integrate the diversity of situations that Member states face. The 1994 EC directive on household packaging perfectly illustrates this. Pursuant to the French 1992 Act, landfilling non-final wastes will be banned as of 2012. According to the 1992 Act, final wastes are wastes that cannot be retreated given the “current prevailing technical and economic conditions”. This Act has been viewed as an “anti-dumping” Act and municipalities considered that final wastes meant incineration residues. This legal interpretation led to the development of waste incineration plants as a solution to waste management. A 1998 administrative directive reminds that final wastes are not just incineration residues and regional peculiarities have to be taken into account. However, this directive contributes to the determination of quantitative objectives – 50% of municipal wastes is set as a national target.

During the three days of the conference, some speakers have underlined the myths of planned recycling, the excess cost of which has few environmental legitimacy. Public policies have inescapably contributed to the significant increase of waste treatment costs. In France, for instance, such costs have increased by an annual 5% rate during the 1990s.

II. In this context, the definition of the perfect combination of instruments to fit local situations requires the integration of market-based solutions.

Modern public policies might be assigned the following two objectives: First, reverting the trend of waste generation; secondly, changing the distribution of waste treatment between alternative methods in order to take into account the external costs of pollution. What role should market-based instruments play in that context? Two conceptions may be developed. Taxation is the basis of the first conception (taxes could influence behaviours since quantitative targets would be replaced with changes in relative prices). On the other hand, the second conception is still based on quantitative targets and market-based solutions are regarded as the less costly techniques to achieve these goals. However, the speakers have suggested that a number of problems had still to be solved.

1. Reduction of waste generation – should we intervene at the consumer or at the producer level?

Mathieu Glachant has presented a convincing approach based on a mixed taxation scheme suggesting that a consumer tax and a producer tax complement each other. At the producer level, fees paid to certified companied (Ecoemballage, Adelphe in France) for producer’s extended responsibility reasons might be increased in order to induce producers to use less packaging. At the consumer level, the waste collection financial mechanism might be changed in order to induce consumers to generate less household waste. In France, for instance, the implementation of an incentive-based taxation requires that local authorities implement fees on waste collection increasing with the amount of waste and give up a system based on a waste collection lump-sum tax, based on the real estate value of properties and creating no incentives. Additionally, a lump-sum tax system causes an extra opacity on public utilities financial mechanisms. Debates have been very lively on this question and revealed that the technical difficulties frequently evoked against a pay-as-you-throw taxation scheme, an incentive-based taxation system, could be overcome. Technical solutions for implementing an incentive-based taxation exist so that taxation can always be adapted to local conditions. Taxes may be based on containers (e.g., on-track-weighing-based taxes, taxes calculated according to the volume or the number of containers) or set on trash bags (e.g. pre-paid trash bags, tags…). A pay-as-you-throw system, an upstream taxation mechanism, certainly produces adverse effects (e.g. illegal dumping or incineration). However, this is rather unusual and the costs of an incentive-based system must be compared with its benefits. A number of countries have applied an incentive-based taxation system. It has been applied in Flanders and Wallony, Belgium, in 2004 where a pre-paid trash bag system and an electronic chip container system have been implemented. Finally, an upstream taxation together with a downstream incentive-based taxation system complement each other and should be coordinated in order to prevent over-taxation.

2. Effectiveness of market-based solutions at influencing agents’ choices between competing waste treatment techniques – the external effects of each technique must be precisely evaluated.

A landfill tax may be an appropriate instrument insofar as the tax is set at its appropriate level. Taxes on negative externalities should not exceed the marginal damage produced. As a result, a landfill tax should be determined according to local conditions in order to take into account the size of these externalities (see below). Additionally, prices for recoverable waste should be set at their market price levels. A mark-up margin might be added to this price in order to take into account the external effect of the valuation technique. This margin might be financed with the revenues of an incentive-based fee. The objectives assigned to the taxation of different waste treatment methods may either be expressed in quantitative terms or designed as the less-costly solutions to reach such quantitative goals. The priority given to quantitative targets by public policies (national and European valuation target) might open a debate on the effectiveness of tradable permits. With such instruments, quantitative targets might be achieved at low cost, as several speakers suggested during the conference.

B. In any case, waste management policies should be defined locally

Two reasons why local waste management policies should be implemented have surfaced during the conference:

Most external effects (i.e., environmental damage and disamenities) are locally concentrated, except for the greenhouse effect;
Existence of a significant variability of geological, hydrological and economic conditions. Therefore, waste collection and treatment costs differ between regions.
Under these circumstances, decentralization is appropriate to deal with waste management. National and European policies should therefore leave stakeholders free to implement actions fitting the local conditions.

C. Barriers to the development of market-based solutions – the French case

There are both political and bureaucratic barriers.

First of all, political decision makers have an evident preference for quantitative results that citizens and local stakeholders can clearly identify. Such results will be easily transformed into mottos, as evidence suggests (e.g., “zero dumping”, “100% recycling”). Supporting taxation will always be difficult, especially in France where people have a poor economic culture.
In addition to political barriers, bureaucratic barriers remain. In France, for instance, the disinterest for incentive-based fees and the priority given to lump-sum taxes are not due to practical reasons or to the risks of adverse effects but to the differences in fiscal revenue collection of both systems. Fees are collected by local jurisdictions which must face fee uncollectibility costs and, therefore, assume financial risks. On the other hand, taxes are collected by central governments which guarantee local governments they will get the revenues they voted for, given an extra 8% charged on taxpayers. In that case, local governments assume no financial risks. Such an asymmetry in the revenue collection system leads governments to prefer lump-sum taxation rather than an incentive-based fee system. Should an incentive-based fee system be developed, such a bias should be removed. In addition to this, the barrier establishing the mutual exclusion of the legal and the financial dimensions of municipal waste management and collection systems should also be removed. When the system is operated by a service public administratif, only taxes can be levied. When the system is operated by a service public industriel et commercial, only fees can be levied. Such a separation should be abolished in order to combine both systems (i.e. taxes and fees charged on upstream producers).
Finally, informational and economic barriers should be removed by providing local stakeholders with externalities evaluation analysis when they have to conduct impact studies. In France, for instance, the evaluation of the external effects produced by infrastructures and the transportation sector are available in the Boiteux report (2001). But there is nothing alike for waste management and collection. The debates during this conference have shown how complex is the evaluation of external effects (i.e. environmental damage or disamenities) when local conditions are to be taken into account. Governments should therefore encourage studies on the evaluation of external effects in order to establish an evaluation procedure that local stakeholders might use. In this respect, three kinds of actions should be undertaken: i) increasing the number of local studies in order to improve data reliability; ii) sharing knowledge to avoid an increase in the number of elementary studies; iii) elaborating indicators for decision makers.


To conclude, debates during these three days have revealed that a lot of things remain to be done in developed countries to manage waste with market-based instruments in order to promote sustainable development. Three kinds of actions should be kept in mind: i) implementing an incentive-based fee system and/or transferable permits by replicating international experiences; ii) thinking globally but acting locally; iii) removing legal and administrative barriers to optimal public decisions: role of the Treasury, financial aspects to support companies operating municipal waste collection and management activities…

[1] This study considers that average environmental costs of waste disposal and incineration account for 10 to 15% of direct costs. As a result, such costs would not significantly impact on the comparative costs of competing waste management methods.

Patronage Committee

Under the patronage of

  • SERGE LEPELTIER
    Ministre de l’Ecologie et du Développement Durable
  • HERVE GAYMARD
    Ministre de l’Agriculture
  • WALTER SCHWIMMER
    Secrétaire Général du Conseil de l’Europe

Members

  • Serge Antoine, Président, Comité 21
  • Elizabeth Brubaker, Président Probe Canada
  • Dominique Bureau, Directeur, Ministère de l’Ecologie et Développement Durable
  • Jean-Paul Chirouze, Directeur, Agence de l’Eau RMC
  • Jean-François Colomer, Président, Société de Agriculteurs de France
  • Fritz Flanderka, Président, Duales System Deutschland
  • Karl Grotenfelt, Président, European Landowners Organisation
  • Jean Noël Guérini, Président Conseil Général des Bouches du Rhône
  • Eric Guillon, Président, Eco-Emballages
  • Maryse Joissains, Député-maire, Président de la Communauté du Pays d’Aix en Provence
  • Ludwig Kraemer, Commission Européenne
  • Brice Lalonde, Ancien ministre de l’Environnement
  • Jean Laporte, Président Pollutec
  • Yves Lebars, Président ANDRA
  • Corinne Lepage, Ancien ministre de l’Environnement
  • Michèle Pappalardo, Président l’ADEME
  • Bernard Peignot, Avocat au Conseil d’Etat
  • Jacques Pelissard, Président Association des Maires de France
  • Bernard Rousseau, Président France Nature Environnement
  • Kenneth Ruffing, Directeur OCDE
  • Jean François Saglio, Président d’honneur de l’IFEN
  • Fred Smith, Competitive Enterprise Institute
  • Pierre Ténière-Buchot, Banque Mondiale
  • Gérard Trouvé, Directeur Ministère de l’Ecologie et Développement Durable
  • Bruce Yandle, Clemson University

ARNOLD Olivier, Ministère de l’Ecologie et Développement Durable
AVON Michel, High Tech Environnement
BAHRI Meriem, Ecole Mohamedia des Ingénieurs (Maroc)
BATE Roger, American Enterprise Institute (Washington)
BARBIER Rémi, CEMAGREF-ENGEES
BAUDRY Rachel, ADEME
BELTRAME Pierre, Université Aix-Marseille
BERTOLINI Gérard, CNRS Lyon
BOISSERY Pierre, Agence de l’Eau
BOULAN Michel, Communauté du Pays d’Aix
BUCLET Nicolas, Université de Troyes
BUREAU Dominique, Ministère de l’Ecologie et Développement Durable
BENJAMIN Carl, PERC (USA)
CASAS PARDO José, Université de Valence (Esp.)
CECCALDI Jean-Hubert, Université Aix-Marseille
CENTI Jean-Pierre, Doyen de la Faculté d’Economie Appliquée, Aix en Provence
CHAMOUX Jean-Pierre, consultant international
CHARLEZ Annie, Office National de la Chasse et de la Faune Sauvage
CHASSY (de) Christian, Expert International
COLOMER Jean-François, Société Française des Agriculteurs.
COMBY Joseph, Etudes Foncières
CONSANI Gérard, Communauté du pays d’Aix
CONTANT Olivier, Eco-Emballages
DAVIGO Jacques Ingénieur Général du GREF
DE ALESSI Michael, Reason Foundation, San Francisco
DESROCHERS Pierre, University of Toronto
DUPARAY Guillaume, Association des Maires de France
ELSEN Liliane, France Nature Environnement
ESCAILLE (de l’) Thierry, European Landowners Association
FALQUE Max, Délégué Général
FEDRIGO Doreen, Waste Watch, Grande Bretagne
FIORE Karine, Doctorante CAE,
FLANDERKA Fritz, Duales System Deutschland
GARRIGUES Dominique, Président de l’Institut Européen pour la Gestion Raisonnée de l’Environnement
GAUDIN Thomas, ADEME
GIRARD Ronan, European Landowners Association
GLACHANT Mathieu, Ecoles de Mines de Paris
GUILHOU Marie-Josephe, Ministère de l’Agriculture
HANNEQUART Jean-Pierre, Institut Bruxellois Gestion Environnement
KINNAMAN Thomas, Bucknell University (USA)
KRAEMER Ludwig, Commission Européenne
KROMAREK Pascale, Total
LALONDE Brice, Ancien Ministre
LAMOTTE Henri, Ministère des Finances
LAMULLE-BRUN Valérie, Université d’Aix Marseille
LAVOILLOTTE Marie-Pierre, Université de Bourgogne
LAVOUX Thierry, IFEN
LE BOZEC André, CEMAGREF-Rennes
LEBARS Yves, ANDRA
LEGER Marc, Commissariat à l’Energie Atomique
LELOURD Philippe, Commissariat au Plan
LEPAGE Corinne, Ancien Ministre
LEPAGE Henri, Parlement Européen
MAIRESSE-FIORUCCI Sophie, Université Aix Marseille
MIRAN Patrice, Plan Bleu
MITRA Barun, Liberty Institute, New Delhi
MORRIS Julian, International Policy Network (UK)
NOURY Dominique, Agence de l’Eau RMC
PEIGNOT Bernard, Avocat au Conseil d’Etat
PELISSARD Jacques, Association des Maires de France
PELLEGRINI Roger, Environnement et Technique
PEZENNEC Didier, Commissariat à l’ Energie Atomique
RENARD Vincent, Laboratoire d’Econométrie, Ecole Polytechnique
REVEL Alain, Ingénieur Général du GREF, INRA
RISSER Rémy, Ministère de l’Ecologie et Développement Durable.
RUFFING Kenneth, OCDE
SAGLIO Jean-François, Ingénieur Général des Mines
SANDBERG Audun, International Association for the Study of Common Property
SLOAN Joe, Sloan Company, USA
TENIERE-BUCHOT Pierre-Frédéric, Banque Mondiale
VANDERSTRICHT Christoph, Price Waterhouse Coopers, Belgique
VALLON Marie-Caroline, Conseil régional PACA

Agence Nationale pour les Déchets Radioactifs (ANDRA)
Agences de l’Eau
ADEME
Association des Maires de France
Commission Européenne
Commissariat à l’Energie Atomique (CEA)
Communauté du Pays d’Aix (CPA)
CEMAGREF
Competitive Enterprise Institute (Washington)
Conseil de l’Europe
Conseil Général des Bouches du Rhône
Country Landowners Association (GB)
Duales System Deutschland
Eco-Emballages
Environment Probe (Canada)
Environnement et Techniques
European Landowners Organisation (Bruxelles)
Faculté d’Economie Appliquée Aix Marseille
France Nature Environnement
Fundacion para el Analisis y los Estudios Sociales (FAES, Madrid)
Institut Bruxellois de Gestion de l’Environnement
Institut Economique de Montréal
Institute of Economic Affairs (Londres)
International Association for the Study of Common Property
International Policy Network
HighTech Environnement
Liberty Institute India
Ministère de l’Agriculture et de la Pêche
Ministère de l’Ecologie et du Développement Durable
OCDE/ OECD
Plan Bleu
PME France
Political Economy Research Center (USA)
Probe Environment Canada
Reason Public Policy Institute, San Francisco
Région Provence Alpes Côte d’Azur
Rotary-Club International district 1760
Total
Université d’Aix-Marseille
Ville d’Aix en Provence
Waste Watch (UK)