WASTE DISPOSAL COSTS AND FINANCIAL INCENTIVES TO

IMPROVE WASTE MANAGEMENT

P. C. Coggins
Waste Management & Technology Centre, University of Sheffield, UK
Keywords: waste disposal, waste disposal cost, financial incentives, waste management,
landfill, NFFO, landfill tax, nitrogen tax, incineration, fiscal instruments
Contents
Introduction
1. Landfill: traditionally easily available and cheap
2. Fiscal Instruments and Waste Disposal
3. Recycling Credits
4. Non-Fossil Fuel Obligation (NFFO)
5. Landfill Tax
6. Nitrogen Tax
7. Taxes on Landfill and Incineration
8. Non-Financial Instruments
Related Chapters
Bibliography
Introduction
Waste disposal in the UK has traditionally relied on landfill, and this is the main focus of this
Section. Incineration has a long history, with many technological advances being made in
municipal incinerator design and operation. However, as a result of financial constraints
imposed on local authorities in the 1980s, no new municipal incinerator was opened between
1979 and 1994. In addition, the implementation of tighter emission controls as a result of EC
Directives on municipal incinerators (89/369/EEC for new plants and 89/429/EEC for existing
plants) meant that 26 incinerators closed by December 1996, with only eight deemed suitable
for upgrading.
The following table gives a typical breakdown of the main cost elements for landfill and
incineration. Whilst operational costs are similar, major differences can be seen in terms of
(land) acquisition costs for landfill versus capital costs for incineration, and whilst landfill
restoration is similar to decommissioning for incineration, long term after-care doubles this
cost for landfill.

Table1: Typical Breakdown of Landfill and Incinerator Costs

In both cases the data becomes complicated when increased capital investment is needed to
treat leachate and/or capture methane at landfill sites, or install more sophisticated emission
control equipment and/or capture heat and/or power. Costs for both facilities are likely to
increase as operators have to progress through both waste management licensing and land use
planning regimes, which can be as long as 8-10 years with planning enquiries and appeals.
Companies are now faced with the need to conduct (expensive) environmental impact
assessments and Not In My Back Yard (NIMBY) attitudes require greater expenditure on
public relations, publicity material and other expenditure to convince local communities of
their environmental and economic benefits.
Comparative data for waste disposal in EU Member States was collected on behalf of DG X1
for 1993, and is shown in the following table. Overall contrasts between landfill and
incineration are apparent, together with national and urban/rural variations. Recovery of
energy from landfill operations has less overall impact on costs than heat and/or power
generation from incineration.

Table 2: Net
Financial Costs (ECU per tonne) for Waste Disposal
1. Landfill: traditionally easily available and cheap
The UK has a long history of mining and quarrying as a result of suitable geological
conditions. This has resulted in holes in the ground being available in, or near, most urban
areas throughout the UK. Once mineral extraction has ceased, these holes have then been used
for landfilling urban waste. Their number and ease of accessibility is very important in
understanding why 83% of controlled waste in the UK is disposed of in landfill sites.
One of the first studies highlighting the low cost of landfill, and much higher costs of
incineration and recycling waste was that undertaken by Coopers and Lybrand for the
Department of the Environment in For incineration, future costs took into account tighter
emission controls and continued access to better prices through the Non Fossil Fuel
Obligation (NFFO). In contrast, blue box kerbside collection schemes for separate collection
of household recyclables were estimated to cost 85-175, and drop-off or bring systems to
cost 16-36 per tonne respectively.

Table 3:
Costs ( per tonne) of Waste Disposal in the UK
In terms of regional variation, the following table illustrates typical landfill gate fees on a
regional basis in the late 1990s, and the figures exclude landfill tax.

Ta
ble 4: Regional Landfill Gate Fees ( per tonne) in the UK

The scale of increases in landfill gate fees noted in Table are the result of various pressures
imposed on landfilling companies during the 1990s, and it is likely that costs will continue to
increase:- the Environment Agency was established in April 1996, and took over the regulatory
function previously undertaken by Waste Disposal Authorities, and Waste Regulation
Authorities after 1990
- much tighter controls over waste management licences, and increases in licence fees
- much tighter controls over environmental protection, both during operations and afterwards
- funding mechanisms to ensure long term stabilisation
- the landfill tax is a further cost items not shown in these tables
In the past, landfill sites were operated in order to fill the void space as quickly as possible.
Owners often then sold the land, and in many cases the operators of old landfill sites cannot
now be traced. No records were kept concerning waste inputs, and in many cases only limited
(if any) attempts were made to control leachate or methane. The principle of dilute and
disperse was practised, both in terms of co-disposal of liquid and solid wastes and in terms of
the underlying geology absorbing any leachate.
Friends of the Earth have commented on the large number of ticking time bombs waiting to
cause problems. So far, the most well known example is that of Loscoe in Derbyshire. An old
quarry was filled with waste until full, the site was covered and completed. In 1986 methane
seeped from the quarry and caused and explosion in a bungalow, several hundred metres
away. No-one was killed, but a substantial amount of damage occurred, and property prices in
the area were severely affected. There are well over 6,000 closed landfills in the UK.
Policy towards landfill is now to concentrate and contain, with suitable liners (natural clay
or synthetics) for the base and sides and an impermeable cap together with measures to recirculate leachate and capture, or flare any methane generation. The aim is to stabilise a
landfill site, although there has been considerable debate concerning how long this could take,
with estimates ranging from 30-50 years or longer. Current regulations dictate that a waste
management licence cannot be surrendered until the Environment Agency is satisfied that the
landfill site is stabilised and the company must make necessary financial arrangements to
ensure that this is achieved
The Landfill Directive (99/31/EC) will probably have major impacts on waste management
strategies and costs in all Member States. The Directive states that each landfill shall be
classified in one of three categories : hazardous wastes, non-hazardous wastes and inert
wastes. For the UK this will mean the end of co-disposal sites, where industrial liquid wastes
are mixed with solid household wastes.
This Directive also stated that Member States shall take measures to ensure that all of the
costs involved in the setting up and operation of a landfill site, including as far as possible the
cost of the financial security or its equivalent and the estimated costs of the closure and
after-cart-e of the site for a period of at least 30 years shall be covered by the price to be
charged by the operator for the disposal of any type of waste in the site (Article 10). Subject
to various requirements,
Member States shall ensure transparency in the collection and use of any necessary cost
information (ibid).

Other implications of the Landfill Directive are discussed in the Section on Non-Financial
Instruments.
2. Fiscal Instruments and Waste Disposal
These are variously described as carrot and stick, either providing a financial stimulus to
actively promote diversion from landfill or a levy to increase the cost of landfill. In the UK
recycling credits and NFFO are examples of carrots, with landfill tax and nitrogen tax as
examples of sticks. Put another way, sticks can also be seen as a way of taxing environmental
bads, and accord with the principle of the polluter pays.
The Eighth Report of the Select Committee on Environmental Audit reported that
environmental taxes accounted for 9.1% of total taxes and social security contributions in
1997, and this had been stable over the previous four years. Data from Europe, with definition
problems, showed the UK had a lower proportion of such taxes than Denmark, Spain, Ireland,
Netherlands and Portugal. It was the first full year with landfill tax, and presumably the
percentage of environmental taxes will have increased since then, and especially after the
increase to 10 per tonne in April 1999.
3. Recycling Credits
These were introduced in Waste Disposal Authorities were given a statutory duty to provide
recycling credits to Waste Collection Authorities who diverted household waste from landfill
for recycling.
Waste Disposal Authorities were given discretionary powers to pay third parties, such as
community groups and charities, but many declined to do so.
At first recycling credits were based on the marginal cost of waste disposal, but were then
changed to cover the full cost of waste disposal The following table shows the changes for
1997/98, and reflects the regional variations shown in Table and obvious urban/rural
variations.

Table 5: Recycling Credits ( per tonne) Received by WCAs

4. Non-Fossil Fuel Obligation (NFFO)

This was originally introduced in order to subsidise expensive nuclear power, in competing
with cheap UK coal. NFFO was also made available to a range of other non-fossil fuel
sources : wind power, water power, user of biomass and energy from waste. The following
table shows the scale of proposed projects for England and Wales, in terms of Designated Net
Capacity in Megawatts not all the projects were taken up, and in announcing the fourth
round in 1997 it was evident that the government would miss its overall target of 1,500 MW
from renewable energy sources.

Table 6: Non-Fossil Fuel Obligation and Waste-Related Projects (MWDNC)

What is more important has been the scaling back of the preferential price given to such
schemes.

Table 7: Prices for Landfill Gas and Energy from Incineration (pence/kWh)
5. Landfill Tax
It is an unusual tax in that it is relatively popular
Discussions concerning a landfill levy on waste inputs to landfill sites took place in the mid1990s, with the main driver being the need to increase landfill prices in order to stimulate
recycling. The White Paper This Common Inheritance, published in 1990 proposed the

challenging target to recycle 25% of household waste by the year 2000. Only limited progress
was made on national basis and in Making Waste Work in 1995, the government
downgraded this to a secondary target, and proposed a new primary target to recover
(recycling and energy from waste) 40% of municipal waste by 2005. For some in the waste
industry, the idea of a landfill levy, which would be ring-fenced in order to allow tax revenue
to be used to support recycling, and also help in remediation of closed landfill sites and fund
other externalities from landfill operations especially environmental pollution
A landfill tax was introduced with effect from October 1996:7 per tonne for active wastes (wastes which will biodegrade, leach or burn)
2 per tonne for inactive/inert wastes (wastes such as rock and concrete)
Exemptions included materials used for engineering purposes and contaminated soils.
In March 1998 HM Customs and Excise reviewed the operation and level of the landfill tax.
They concluded that 7 was based on an estimation of the environmental cost of landfill, and
that it would need to be much higher in order to encourage diversion towards reuse, recycling
and recovery. As a result, the rate for active waste was increased to 10 per tonne with effect
from April 1999, and in the 1999 Budget it was announced that this tax would become an
escalator tax increasing by 1 per tonne until at least April 2004, taking it to 15 per tonne.
Many in the waste industry feel that a landfill tax of at least 30 per tonne is necessary to
change the economics of waste management and stimulate changes in behaviour towards
recycling, composting and energy from waste plants. This view was endorsed by the House of
Commons Select Committees Report on the landfill tax in 1999
The rate for inactive waste has remained at 2 per tonne, and the range of exemptions was
extended in October 1999 to cover inert/inactive used in the restoration of landfill sites and
filling quarries : rocks and soils, ceramic or concrete materials, minerals, furnace slags, ash,
low activity inorganic compounds, calcium sulphate, calcium hydroxide and brine, and water.
Whilst the landfill tax has obviously raised the cost of landfill, there is debate as to whether it
has achieved its objective in diverting waste for recycling. Information from landfill tax
returns to HM Customs and Excise suggest there has been a fall in landfill waste inputs.
Overall waste inputs to landfill fell by 20% between 1996 and 1998, with active wastes falling
by 10% and the volume of exempt contaminated soils and building rubble falling by 30%.
Similarly, there is circumstantial evidence to show that fly-tipping has increased, but little real
evidence as there was limited base line data. In some areas there has been an increase in
commercial waste taken to civic amenity sites. Such sites are provided (as a statutory duty) by
Waste Disposal Authorities or Unitary Authorities for householders to deposit bulky waste
free of charge. Since 1996 some Authorities have installed height barriers (to deter vans and
pick-up trucks), whilst others have banned all commercial vehicles
The landfill tax was the first hypothecated tax in the UK, with a proportion being potentially
available for environmental uses. This is the so-called landfill tax credits scheme (LTCS),
where an operator can claim back 90% of landfill tax they donate to an environmental body,
subject to a maximum 20% of annual landfill tax liability.
This money can then be used for a range of Approved Objects, under the overall control of
ENTRUST and managed by nearly 2000 registered Environmental Bodies.

Table 8: Approved Objects and Expenditure in 1999 ( 000)

The main criticism has been the over-emphasis on small projects close to landfill sites
involving public parks, amenity landscaping and restoration of old buildings, although data
suggests that one job has been created or safeguarded per 25,000 spent on community
projects. The breakdown within sustainable waste management (in 000) was: waste
minimisation 1, green waste 1.1, recycling 5.8, R&D 2.1 education and information 6.1.
Access to LTCS for recycling and market developments were made more specific during
1999.
In 1999 91% of the theoretical maximum was being allocated to Approved Objects, compared
to 67% in 1997. Cumulatively this now adds up to 145 million. ENTRUST estimates that
LTCS facilitates a 3-6-fold multiplier in obtaining other funding from UK and/or European
sources.
A further benefit of landfill tax was the parallel cut (0.2%) in National Insurance contributions
by employers, with effect from April 1997.
Comparisons with Europe indicate the contrast in terms of both availability and cost, and
differences in landfill tax. The range of costs also reflects country size and scale of
industrialisation and urbanisation.

Table 9:
Comparative Average Landfill Costs and Taxes ( per tonne) in Europe
6. Nitrogen Tax
The Institute of Wastes Management Sustainable Landfill Working Group examined the
potential role and operation of a flushing bioreactor landfill system, in order to control
leachate generation and impact, protect groundwater and ensure long term stabilisation and
environmental protection. Research showed that the main problem was ammoniacal nitrogen,
and if this was sufficiently flushed through the landfill site, it may be assumed that other
leachate components will already have reached concentrations compatible with the
surrounding environment. On average, household wastes contain up to 10 kg of Nitrogen per
tonne of waste, but will release only 2 kg. Other wastes will contain and/or release more or
less depending on composition and pre-treatment.
The main problem was that of cost, and discussion centred on balancing a tax on waste inputs
with rebates for nitrogen abstracted via leachate. Estimates suggest that for highly bioreactive
wastes (2 kg Nitrogen per tonne), the cost of treating the nitrogen content would be 8 per
tonne plus 2 for circulating approximately 3m3 of leachate, giving a total of 10 per tonne or
5 per kg of nitrogen
The following table is based on a nitrogen tax of 6 and 12 per tonne for low or high band
waste inputs, and corresponding rebates.

Table 10: Possible Nitrogen Tax

The intention would be that such a nitrogen tax would be additional to landfill tax, thus
driving the overall cost of landfill upwards but having significant advantages for long term
environmental protection and also promote alternative (but more expensive )waste
management options
7. Taxes on Landfill and Incineration
This has long been argued for by groups such as Friends of the Earth, mainly to stimulate
recycling and move away from high-tech waste disposal. Some countries already have such
taxes. The trend in Denmark has been to increase taxes on landfill and incineration over time,
and also to emphasise energy from waste disposal in contrast to mass burn and landfill. There
are no comparable taxes on recycling in Denmark.

Table 11: Waste Disposal Taxes (Dkr) in Denmark

8. Non-Financial Instruments

These include bans, or strict controls, on certain types of waste being landfilled and/or
incinerated.
At a European level, the Landfill Directive (1999/31/EC) will apply to all Member States and
will increase costs for a number of reasons :- diverting biodegradable wastes from landfill : reduced to 75% of 1995 level by 2001,
reduced to 50% by 2009 and reduced to 35% by 2016
- banning shredded tyres from landfill by 2003 and whole tyres by 2006, except where they
are used for engineering purposes
- other wastes to be banned : liquid wastes, waste which in the conditions of landfill is
explosive, corrosive, oxidising, highly flammable or flammable
- only waste that has been subject to treatment can be landfilled
Some countries aim to ban combustible wastes going to landfill, and thus stimulate
incineration: Belgium, Denmark, France, Netherlands, Norway and Switzerland. Germany, for
example, is also planning to ban household waste being disposed of in landfill without pretreatment
Related Chapters
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Bibliography
Beavon R. and Knox K. (2000). The use of a nitrogen tax as a driver towards more sustainable landfills. Wastes
management, January, pp 18-21.
Chartered Institute of Public Finance and Accountancy (CIPFA). Waste Collection and Disposal Statistics 199798 Actuals.
Coopers and Lybrand (1996). Cost-Benefit Analysis of the Different MSW Systems : Objectives and Incentives
for the Year 2000. Final Report for DG XI.
Department of the Environment (1993). Externalities from Landfill and Incineration. A Study by CSERGE,
Warren Spring Laboratory and EFTEL.
ECOTEC Research and Consulting Ltd (1999). Policy Instruments to Correct Market Failure in the Demand for
Secondary Materials

To cite this chapter

P. C. Coggins, (2004), WASTE DISPOSAL COSTS AND FINANCIAL INCENTIVES TO IMPROVE
WASTE MANAGEMENT, in Waste Management and Minimisation, [Eds. Stephen R. Smith, and Nick Blakey],
in Encyclopedia of Life Support Systems (EOLSS), Developed under the Auspices of the UNESCO, Eolss
Publishers, Oxford ,UK, [http://www.eolss.net] [Retrieved April 12, 2007]