DOI: 10.
1007/s00267-004-0044-7
PROFILE
Household Demand for Waste Recycling Services
RUSLANA PALATNIK
OFIRA AYALON*
MORDECHAI SHECHTER
Natural Resource & Environmental Research Center
University of Haifa
Haifa, 31905, Israel
ABSTRACT / Municipalities everywhere are coping with
increasing amounts of solid waste and need urgently to
formulate efficient and sustainable solutions to the problem.
This study examines the use of economic incentives in
municipal waste management. Specifically, we address the
issue of recycling, if and when this waste management
option is—on social welfare grounds—a preferred solution.
A number of studies have recently assessed the monetary
value of the externalities of alternative solid waste manage-
ment options. In the present context, these subsidies could
be interpreted as the implicit value of the benefits from
reducing environmental externalities associated with land-
filling as perceived by local government authorities. We
surmise that the difference between mean householdsÕ
willingness to pay (WTP) for recycling services, via the
Municipal solid waste (MSW) is a combined private
and public bad, which generates negative externalities
when disposed of in certain manners. In Israel, as
elsewhere, the collection, transportation, and disposal
is provided by local authorities and financed through
municipal taxes that is by-and-large unrelated to the
volume or weight of waste (and externalities) gener-
ated by a household or a firm. Thus, for example, a
study commissioned by Israel Ministries of the Envi-
ronment and the Interior (Biotech 1995) showed that
each person produces on average 1.14 kg of waste, or
1.73 kg including yard and construction waste, daily,
and the trend has been upward due to population and
income growth as well as changes in lifestyle; conse-
quently, greater than optimal amounts of waste are
produced. Understandably, authorities seek alterna-
KEY WORDS: Municipal solid waste (MSW); Willingness to pay
(WTP); Recycling, Composting; Economic incentives
Published online February 16, 2005.
*Author to whom correspondence should be addressed; email:
agofira@techunix.technion.ac.il
Environmental Management Vol. 35, No. 2, pp. 121–129
purchase of a subsidized waste disposal facility, and the
above (proxy) value of externalities reflects the difference
between private and public perception regarding the neg-
ative externality associated with landfilling. We believe that
this information is useful in determining the level of subsidi-
zation needed (if at all) to sustain any recycling program.
The study is unique in the sense that its conclusions are
based on revealed household behavior when faced with in-
creased disposal costs, as well as information on WTP re-
sponses in hypothetical but related (and, therefore, familiar)
scenarios. The article also explores the influence of the
subsidization schemes on recycling rates. It was found that
with low levels of effort needed to participate in a curbside
recycling program, householdsÕ participation rates are
mainly influenced by economic variables and age, and
households are willing to pay a higher price for the recycling
scheme. When the required effort level is relatively high,
however, households would pay a lower price, and the rate is
influenced mainly by their environmental commitment and by
economic considerations. We found that in both cases a
subsidy would be required in order to achieve an efficient
level of recycling. The median price that households are
willing to pay for recycling devices is found to be about NIS
370 (New Israeli Shekel, approximately $90).
tive, cost-saving solutions to deal with the problem of
the mounting volume and weight of MSW, recycling
being a politically favored option. Clearly, the higher
the level of the householdsÕ participation in recycling
efforts, the more cost-efficient this alternative becomes.
Households, however, are not always willing to partic-
ipate, especially if it involves large investments of time,
space to store recyclables, and out-of-pocket expenses.
The Israeli situation is compounded because of the
composition of MSW. Forty-eight percent of the waste
(by weight) is comprised of organic matter, yard waste,
and disposable diapers (Table 1), a much higher per-
centage than typical to most Western countries. Con-
sequently, the separation of these organic materials
from the general MSW flow will reduce the costs of
transportation and the need for scarce landfill space. It
will also reduce negative externalities at the landfill,
such as contamination of groundwater, release of
greenhouse gases [according to Ayalon (1999), 12% of
total greenhouse gases in Israel are related to methane
emitted from landfills] and other noxious gases into
the environment, and the spread of diseases by animals
and birds feeding at the landfill site. Furthermore, the
ª 2005 Springer Science+Business Media, Inc.
122 R. Palatnik and others
Table 1. Composition of solid waste in Israel, 1995
Percent
Component (by weight)
Organic fraction 38
Paper and cardboard 22
Plastic 14
Yard waste 6 ferred as a representative of 54 similar communities in
Metals 4 Israel (by size of the population and its socioeconomic
Glass 3 parameters), which are about 7% of the whole popu-
Disposable diapers 4
Textile 3
Other (rubber, leather) 6 Misgav is a township with a population of 2600, liv-
Source: Biotech (1995).
biodegradable materials can be turned into compost, a
valuable material for agriculture in semiarid areas; it
enriches soil quality and increases yields (Avnimelech
1997). For these reasons, recycling (at least the or-
ganic—or ‘‘wet’’—components of MSW), in countries
like Israel, could serve as a highly viable, economically
efficient policy option for MSW management (Artzi
and Aharon 2001).
The aim of this study was to examine the efficacy of
economic instruments in promoting waste recycling
schemes in Israel. To date, effectively very little use, if
at all, has been made in Israel of this option in either
MSW management or other environmental policy
spheres. As Ayalon and others (1999) have shown, the
use of such an incentive program in Israel (as else-
where) can help reduce costs of source separation and
recycling programs. In order to examine the potential
benefits of recycling programs, we have decided to fo-
cus on two ongoing programs of source separation of
waste and recycling, targeting separation of clean or-
ganic waste (including yard waste and diapers), in two
Israeli municipalities.
TivÕon is a town of 12,700 residents generating about
14,000 tons of MSW annually. Most of the dwellings are
single-family homes. A voluntary policy of source sepa-
ration of waste was introduced early in 2000, offering
homeowners 500-L concrete bins, priced at NIS 420
(New Israeli Shekel equivalent to about 0.25 US$ at the
time of the study) each, and ideally suited for separat-
ing organic ‘‘wet’’ material (food waste, disposable
diapers, and light garden trimming) from ‘‘dry’’
material—the rest of the waste stream. The price
embodied a 50% subsidy. Under an earlier, mandatory
system, 90-L bins were posted outside each home. They
were designed to accommodate ‘‘nonrecyclable’’ waste.
In addition, residents were required to store certain
recyclables (paper, cardboard, plastic containers, etc.)
in their homes and put them out once a week at the
curbside for collection. The new system made easier
demands on the residents in terms of separation efforts,
because they were no longer required to store the dry
waste in their homes for more than a week, but directly
place the separated waste in the new containers. By
March 2000, 564 out of 1864 eligible families purchased
the new separation container (SC). TivÕon can be re-
lation (Israeli Central Bureau of Statistics, 2003).
ing in 30 separate, nonagricultural communities. It
generated 5900 tons of solid waste annually. Here,
subsidized (again, at a rate of 50% of cost) home
composters (HCs) were offered for sale to residents. In
order to produce high-quality compost for use in their
own gardens, residents must carefully separate organic
material from metals, plastic, glass, and so forth. The
compost must be mixed from time to time and watered
in order to speed up the biodegradation process. In
addition to the individual household subsidy, the re-
gional authority has promised that each community in
which at least 80% of the homes purchased HCs, would
enjoy a NIS 40 rebate per household on the taxes it
charges each community in Misgav for environmental
services. As of May 2000, 502 HCs were purchased at
prices ranging from NIS 120 to 240 (after a 50% sub-
sidy of the full cost of HCs, which ranged between NIS
240 and 480). The price reflected the differences in
size and capacity of HCs offered by the Misgav regional
authority. Misgav can be considered representative of
39 similar townships in Israel (by size of the population
and its socioeconomic parameters), which are about
8% of the whole population (Israeli Central Bureau of
Statistics, 2003).
Related Studies
Rich literature is found on the issue of environ-
mental policy toward reducing disposal and increasing
recycling of household solid waste using economic
incentives. Kinnaman and Fullerton (2000/2001) pro-
vided a good summary of most of the related re-
searches on the subject. However, only few works were
found in which householdsÕ willing to pay (WTP) for
recycling was estimated using observations of actual
behavior, as did the present study.
Specifically, a couple of recent studies have em-
ployed a somewhat similar approach to the one em-
ployed in this study to analyze the issue of recycling in
MSW management. Sterner and Bartelings (1999)
analyzed the cost of waste disposal, recycling, and
composting in municipalities in southern Sweden,
 Household Demand for Waste Recycling Services 123

Table 2. Comparison of relevant studies

Present study Swedish study US study
1. Subsidy on waste collection device; 1. Tax on waste removal; source separation 1. Unit pricing on waste removed;
curbside recycling and composting and composting curbside recycling
2. Based on actual WTP and survey data 2. Based on actual composition and quantity 2. Based on actual percentage
of waste and survey data waste recycled and survey data
3. Jenkins ‘‘Household Production Model’’ 3. Jenkins ‘‘Household Production Model’’ 3. Jenkins ‘‘Household Production
(1993) framework (1993) framework Model’’ (1993) framework
4. Analysis of waste removal, recycling, and 4. Analysis of waste removal, recycling and 4. Comparison between unit
composting composting pricing and curbside collection
as incentive to waste recycling
5. Estimation of WTP also through CVM 5. Estimation of WTP

where a unit tax system based on the weight of waste
generated by each household was introduced in 1994.
At the same time, the municipalities initiated an
advertising campaign on the environmental merits of
the program. This policy caused a significant decrease
in the amount of waste collected and an increase in
recycling. The researchers had access to data measur-
ing the actual amount of waste disposed of, in addition
to household characteristics from a Contingent Valu-
ation Method (CVM) survey. They found that the
important determinants of the householdsÕ behavior
and waste composition are the relative difficulty of
composting different materials, living space, and age.
WTP was measured and compared for three different
municipalities. It was found that composting had a
statistically significant negative correlation with waste
generation: Composting reduced the flow of waste for
general disposal. Age also was a significant factor in
explaining the volume of waste generated; elderly
people were willing to invest more time in recycling
and composting. Economic incentives were also found
to be important in promoting recycling.
A study by Jenkins and others (1999, 2003) falls
between our study of curbside recycling, as detailed
below, and the Swedish study on composting and unit
pricing of waste. It analyzed two options for reducing
MSW: (1) unit pricing and (2) curbside recycling of
five types of waste: glass bottles, plastic bottles, alumi-
num, newspaper, and yard waste. The data analyzed
were unique in terms of the information level on US
households and included information on (1) the per-
centage of the five types of waste recycled, (2) charac-
teristics of the recycling program (curbside recycling
versus removal on a voluntary or mandatory basis), (3)
socioeconomic characteristics of households, and (4)
fees collected for removal in municipalities with a unit
pricing. It was found that the access to curbside recy-
cling and the time that passed from the introduction of
the program were the two main positive and statistically
significant influences on the percentage of recycling in
all five categories of waste, although the scale of the
influence varied from material to material. The unit
pricing option influenced only the effort to separate
and recycle newspapers. Household income had a po-
sitive, statistically significant influence on the recycling
effort for newspaper and plastic bottles. Generally, the
higher the householdsÕ income, the larger the amount
of these materials recycled.
From the above comparison, it is clear that the
Swedish and American studies complement each other
with regard to the type of incentives analyzed by them.
Both of them, as well as the study presented below,
were based on a combination of observed data and
observed behavior. However, only the present work
specifically employs data on WTP obtained from a
householdÕs stated preferences (CVM) survey and ac-
tual behavior (purchasing SC/HC at the authority
proposed price). Table 2 presents and compares the
three studies.
Data Description
The present study is unique in the sense that the
analysis is based on combining responses from a CVM
survey with observed household behavior when faced
with actual choice of payment for recycling services.
The database included information obtained from the
municipalities on the purchases of separation or
composting container (depending on the municipal-
ity) and on levels of waste removal and composting in
the two municipalities. A CVM telephone survey of
samples of residents in the two municipalities gath-
ered data on several aspects of the extent of the
householdsÕ awareness regarding recycling, familiarity
with a variety of characteristics of the relevant waste
separation system, and socioeconomic background.
Respondents who stated that they owned or definitely
intended to buy the relevant container were queried
whether they would be willing to pay a higher price,
which was randomly chosen out of five (TivÕon) and
124 R. Palatnik and others
three levels (Misgav) bid levels. In each case, the
maximum bid was equal to the actual cost of the
container (i.e., without any subsidy). Subjects who
indicated that they would not buy the container at the
actual price were asked for the reason. If it was in-
come related, they were queried whether they would
be willing to pay a lower price (randomly selected
from among the options). However, in both munici-
palities, relatively few respondents indicated that the
reason for nonacquisition was economic (e.g., in Ti-
vÕon 18 out of 131 respondents).
TivÕon
The sample consisted of 445 households, out of
which 271 households owned SCs and 43 indicated that
they intend to acquire one. Thus, the data from the
445 households were used to estimate the WTP of the
total relevant population in TivÕon (denoted WTPt)
and data from 314 (271 + 43) households were used to
estimate the WTP of those who actually bought the
container (WTPb).
Misgav
The sample consisted of 575 homeowners, of whom
296 purchased HCs and 19 declared their intention to
buy one. Data from the 575 homeowners served to
estimate the appropriate WTPt and from 315 (296 +
19) to estimate WTPb.
Methods for Estimating WTP for Recycling
Services
The Random Utility Model (RUM) (Hanemann
1984) underlies the estimation of the WTP for recy-
cling services function. The model posits the point at
which a household is indifferent between paying to
participate in the new recycling program, and not
paying. This point is indicated by E in Figure 1 on
the function, GE(A), depicting the cumulative dis-
tribution function (CDF) of the buying decision for
any given price A (of a HC or SC). The indifference
point is derived from data on individuals who did
purchase the SC/HC, supplemented by information
from the CVM survey of households that declined to
buy at the stipulated price A. Essentially, the CDF of
the purchase decision represents the household de-
mand function for SC or HC, and, by association, the
demand for recycling services. Given the high pro-
portion of nonbuyers, we supplemented the analysis
by employing Reiser and ShechterÕs (1999) spike
model method for incorporating zero CVM re-
sponses.
Figure 1. Cumulative distribution function of probability to
buy at price A.
The estimated regressions for the WTP for recy-
cling services in TivÕon and Misgav served two
objectives. The first was to identify key parameters in
the characterization of communities that affect the
demand for waste separation services under the two
recycling programs. The second objective was to
calculate the median WTP in each case [i.e., the
price at which households are indifferent between
purchasing a SC/HC (and thereby ensure their par-
ticipation in the recycling program), and not pur-
chasing].
To carry out the first objective, a regression for
theentire population of homeowners (WTPt) was esti-
mated; therefore, it was necessary to weigh differently
purchasers and nonpurchasers in the sample accord-
ing to their actual representation in the entire popu-
lation. For example, 564 households in TivÕon owned
SCc out of 1864 private homeowners at the time of the
survey. Out of 445 private homeowners participating in
the survey, 314 owned SCs. In order to obtain results
that reflected the actual situation, in each run of the
regression we used a weighted regression that matched
the responses of owners of SC/HC with their real
weight in the population. The dependent variable in
the estimated regression equation is BUY, the proba-
bility that WTP is greater than zero for a household
with given characteristics (i.e., the probability that the
household would purchase a SC/HC at a stipulated
price). In the case of TivÕon, BUY stands for the
probability that a SC would be purchased at a price of
NIS 420. In the case of Misgav, BUY stands for the
probability that a HC would be purchased at a price
ranging from NIS 120 to NIS 240.
To deal with the second objective, an additional
regression was estimated using responses of only those
households that actually bought or intended to buy the
SC/HC (regression of WTPb). In this case, the
 Household Demand for Waste Recycling Services
dependent variable BUY is the probability of purcha-
sing the SC/HC at a higher price than the actual stated
in the explanatory variable ln(bid). For TivÕon, ln(bid)
was randomly selected from five bids: NIS 500, 600,
700, 800, and 920 (equal to the full cost of the con-
tainer). For Misgav, ln(bid) applied to respondents
who had paid NIS 120 for the HC, selected randomly
from the following four bids: NIS 150, 170, 200, and
240 (the full cost of the smallest HCs). As we noted
earlier, the price of HCs in Misgav jumped from NIS
120 to 240, so for those who paid the higher price, the
following three bids were used: NIS 300, 400, and 480
(the full price of the largest HC). The regression
equations were estimated using the forward estimation
procedure. According to Reiser and ShechterÕs (1999)
spike model method, estimations of the dependent
variable BUY from WTPt regression and estimated
parameters of independent variables from WTPb
regression were employed to derive the household
demand function for SCs or HCs.
Results and Discussion
Table 3 summarizes the results of the four regres-
sions (WTPt and WTPb for TivÕon and Misgav,
respectively). All information gathered in the surveys
was used in the form of explanatory variables. Maxi-
mum likelihood estimation (MLE) using the forward
logistic procedure estimated the vector of coefficients.
The value of each of the statistically significant vari-
ables, as they appeared in each regression, is shown in
Table 3. The level of confidence of all significant
variables was 95% or greater. The variables that were
highly insignificant (probability lower than 0.9) were
omitted from the analysis. The variable ln(bid) was
used only in the regression for the WTPb; it is not
relevant for the WTPt regression.
WTP Regressions
WTPt
The econometric results reported in Table 3 indi-
cate that two categories of variables influenced the
decision of TivÕon households to purchase SCs at a
price of NIS 420. One involves household socioeco-
nomic and demographic characteristics and the other
is associated with attitude, such as environmental
awareness and a positive impression regarding the de-
sign of the SC. Statistically significant socioeconomic
variables in the model were type of employment of the
respondent, type of employment of the respondentÕs
spouse, age, and the number of cars owned by the
125
household. All socioeconomic variables had a positive
effect on the likelihood of purchasing a SC. The like-
lihood increases if the respondent or his/her spouse is
self-employed. The same also holds true for retirees. A
possible explanation is that the shadow value of time of
pensioners is relatively low. Our findings with respect
to the age variable conform to other studies (Jenkins
and others 2003; Sterner and Bartelings 1999; Ayalon
and others 1999; Fullerton and Kinnaman 1995). In
general, our findings regarding the positive effect of
economic status variables correspond to those of other
works dealing with recycling effort (Jenkins and others
2003; Ayalon and others 1999; Callan and Thomas
1999).
In the regression of the WTP for HCs in Misgav,
none of the socioeconomic variables was found statis-
tically significant (Table 3). All of the explanatory
variables found significant in the regression were re-
lated to the awareness of the economic and environ-
mental benefits of recycling. As the level of awareness
about recycling and composting rose, the willingness of
Misgav households to participate in the recycling pro-
gram grew. The difference of found influences on
decision of Misgav households compared to TivÕon
households might be explained by the following fac-
tors:
1. The diverse nature of communities and house-
holds represented in our dataset: Socioeconomic
status of households in Misgav varied much less
than it did in TivÕon (most of the family heads are
about 40 years old, employed, have three children,
whereas TivÕonÕs population were much more di-
verse).
2. Differences in the price of the relevant commodi-
ties: The SC in TivÕon costs almost twice as much as
the most expensive HC available in Misgav (NIS
420 compared to NIS 240 and almost four times the
price of the least expensive—NIS 120).
3. Differences in the amount of time and effort re-
quired under the two systems: In TivÕon, the citi-
zens are just required to separate the waste,
whereas in Misgav, residents need to invest time
and effort in periodically watering and turning the
compost; only after a year could they use the
resulting compost on their gardens. Therefore, the
purchase of an HC might be interpreted as a de-
mand for additional effort.
4. Differences in the ‘‘lifetime’’ of the commodity:
Misgav HCs are made of plastic and, as such, have
an estimated life of 5 years. In contrast, the con-
crete SC proposed for TivÕon has an estimated life
of 15 years or more.
126 R. Palatnik and others

Table 3. Regression estimates, logit model

TivÕon Misgav

WTPt WTPb WTPt WTPb

Sample size (N) of 445 314 575 315
private homeowners
Explanatory variable
Constant )6.498** (0.85)*** 12.756** (3.66) )3.495** (0.282) 12.87** (2.313)
Employee 0.057 (0.405) — — —
Self-employed 0.006 (0.471) — — —
Pensioner 1.2** (0.46) — — —
Age (in years) 0.029** (0.29) — — —
Number of cars 0.417** (0.161) 0.446* (0.207) — —
Participate frequently 3.034* (0.5) — — —
in the scheme
Finds the 1.191* (0.247) — — —
container practical
Reason for recycling — — 4.645 (0.84) —
is environmental
Reason for recycling — 0.493** (0.244) 3.096** (0.7) 0.736** (0.313)
is economic
Reason for recycling — — 9.501** (15.8) —
is local
Babies in the family — — — 0.859** (0.342)
Municipal information — — 2.178** (0.384) —
actions are clear
Separate organic fraction — — — 1.13* (0.445)
to save costs
Separate organic fraction — — — —
to recycle more
Separate organic fraction — — — —
to get compost
Spouse is employed 0.734** (0.376) 0.945** (0.311) — —
Spouse is self-employed 0.277 (0.443) 0.724* (0.441) — —
Partner is a pensioner 0.18 (0.467) 0.708* (0.372) — —
Natural log of the Not used )2.19** (0.562) Not used )2.415** (0.429)
proposed price
Number of rooms — — — —
in house
Income above average — — — —
Received information — — — —
from municipality
Education (in years) — — — —
Number of — — — —
family members
Thinks neighbors — — — —
participate frequently
Knows the separation rule — — — —
Heard about the program — — — —
Score for the municipality — — — —
waste treatment (1–10)
Participates for — — — —
local reasons
Participates to get compost — — — —
Participates for — — — —
ecological reason
Knows that organic — — — —
fraction has to be clean
R2 = 36% R2 = 16% R2 = 72% R2 = 24%
Note. Values in parentheses are standard deviations of the variables.
*a = 0.05
**a = 0.01
 Household Demand for Waste Recycling Services
WTPb
The WTPb analysis refers to 314 TivÕon households
that had already purchased a SC or indicated a definite
intention to do so at the time of the survey. Consistent
with expectations, as the suggested price of a container
rises, the probability to buy one falls (Table 3). The
analysis also indicates that a higher economic status of
the household increases the probability of purchasing
the container at the suggested price. In addition, those
households show more awareness of recycling and,
especially, that source separation might help decrease
costs and, therefore, increase the efficacy of waste
management.
Willingness to pay analysis for Misgav concerned
only 315 households in the sample that had already
purchased a HC or had indicated the definite inten-
tion to do so. As indicated earlier, some of the HCs in
Misgav were purchased for NIS 240 and some for NIS
120. This fact might have influenced the willingness
of households to participate in the recycling program
and the price that they were willing to pay. Therefore,
a dummy variable, LowPrice, was added to the analy-
sis. It had value 1 if the household had purchased a
HC for NIS 120 and 0 otherwise. The effect of this
variable on the WTP was not found to be statistically
significant. As hypothesized, an inverse relationship
was found between the price of the HC and the WTP
for it: The higher the proposed price, the lower the
WTP [negative coefficient on log(Bid)]. Additional
variables influencing the actual buyersÕ WTP, as in the
general population of Misgav, were awareness of
recycling and its economic and environmental
advantages. Positive coefficients on the variables
indicate that higher levels of awareness generally, and
of the economic advantages in particular, led to a
higher WTP. A new variable, appearing for the first
time as significant in the analysis, was the presence of
a baby in the household. The effect on WTP in this
case was negative, indicating that individuals taking
care of a baby were less inclined to acquire a HC and
shoulder its corresponding requirements in invest-
ment of time and effort. This variable can be inter-
preted as a proxy for free time.
The Demand for Recycling Services
After accounting for zero responses using the pro-
cedure suggested by Reiser and Shechter (1999), we
applied the Hanneman RUM to derive the median
price on the demand schedule. It was found that NIS
369 is the price at which the TivÕon householdsÕ utility
from purchasing the container and participation in the
new program was equal to the utility that would be re-
127
Figure 2. Cumulative distribution function of the probabil-
ity of purchasing a container at price A: TivÕon.
ceived from not buying the container. In other words,
the median price is the point at which 50% of home-
owners were willing to pay a positive amount for the SC.
Figure 2 depicts the cumulative distribution function of
purchasing at a given price A for TivÕon residents,
including standard errors. The indicated price of NIS
369 is a relatively high one; yet, it is lower than the NIS
420, which TivÕon residents had to pay, and much lower
than the full cost of the container (NIS 920).
As Figure 2 indicates, 38% of homeowners in Ti-
vÕon would purchase a SC for NIS 420. In fact, by
October 2002, more than half of TivÕonÕs homeowners
had bought a SC. It should be noted that during the
time the survey was carried out, the project was based
on the voluntary will of the residents to buy the SC.
However, in 2002, the municipality required those
who needed to replace the old containers to purchase
the new SC. We note that the estimated median price
is very close to the subsidized price that was actually
charged. Although households that purchased the
container were prepared to pay a higher price than
the median, our findings indicate that the new recy-
cling program in TivÕon could not have succeeded
without the subsidy.
The demand schedule for SC can be derived from
the cumulative distribution function, because the
independent variable is the price and the dependent
variable is the probability of buying the SC. Upon
inversion of the axes of the CDF of the probability of
purchasing a SC at price A, found earlier, the demand
function for SC for private homeowners in TivÕon was
derived (see Figure 3).
We can now estimate the amount of additional recy-
cling at the TivÕon municipality after the introduction of
a subsidized SC program. The demand function for SC
indicates the extent of waste recycling in response to a
128 R. Palatnik and others
Figure 3. Demand curve for private homeowners in TivÕon.
change in the subsidized price. The external costs of
landfilled waste in Israel had been estimated to approx-
imate NIS 23 per ton (Goren 1997; Enosh 1996), imply-
ing that the capitalized external cost of landfilled waste
produced by a typical TivÕon household over a 15-year
period (the life of a SC) amounts to NIS 549. According
to the estimated demand function, 25% of homeowners
in TivÕon (455 out of 1864 homes) would acquire the SC
at that price (NIS 549). Hence, a subsidy of NIS 180 that
would lower the cost to NIS 369 (549-180) would raise
participation so that 50% of homeowners would buy one
(932 homes in the case of TivÕon). Because the average
household in TivÕon produces 4.56 kg of solid waste daily,
acquiring a SC would increase the amount of waste
recycled from 20% to 70% (i.e., from 0.91 to 3.19 kg. per
day per household). A NIS 180 subsidy would therefore
raise the amount of recycled waste in TivÕon by about 1
ton per day or 378 tons annually over a 15-year period.
In a similar vein, one can derive the WTP per kilo-
gram waste recycled. Given the TivÕon projectÕs price of
NIS 369 per SC, the corresponding annualized sum is
NIS 31 (for a device life of 15 years and at 3% interest).
This sum can be interpreted as the annual payment
that a representative household would be willing to pay
for waste collection and recycling in TivÕon. Because
Israeli households, on average, produce 2 tons of solid
waste annually (Biotech 1995), TivÕon households
would, accordingly, be willing to pay NIS 0.015 for
recycling 1 kg of waste, over and above the charge set
by the municipality for waste disposal (i.e., 10% above
the current flat tax). The above analysis refers to Ti-
vÕonsÕ data only; similar analysis for Misgav can be
found in Palatnik (2002).
Concluding Remarks
Waste is a nonmarket commodity. Households pay a
flat fee unrelated to the amount of waste they produce.
This amounts to a marginal cost of zero on waste dis-
posal and creates an incentive to dispose of more waste
than is socially efficient. Municipalities are striving to
make households aware of the cost related to waste,
namely the cost of treatment and related external
costs. This article analyzed the experience of a local
authority in carrying out a program of source separa-
tion and recycling combined with financial participa-
tion and investment of time by residents.
We found the following: (1) As the price that the
household is asked to pay for waste disposal services
rises, the impact of the householdÕs socioeconomic
characteristics on the decision to purchase a separation
container increases. (2) As the amount of effort re-
quired for participation rises, the willingness to par-
ticipate falls, as well as the price that the household is
willing to pay. (3) As the effort required for participa-
tion rises, environmental awareness exerts a much
greater impact upon the decision to participate in the
recycling program.
Although it seems that households tend to state that
economic reasons did not influence their decision not
to take part in the program, there is definitely a sig-
nificant correlation between the price of the SC/HC
and the willingness to purchase the device. Households
are willing to pay for a weight-base waste recycling
program. Thus, TivÕon residents are willing to pay a
10% premium for waste separation. However, we found
that the median WTP was significantly lower than the
full price of the SC/HC. It thus seems fair to conclude
that without the subsidy, the recycling programs (in
both TivÕon and Misgav communities) would not have
succeeded to the extent that they did.
Acknowledgment
We wish to acknowledge the generous support of
Life-3rd Countries project no. LIFETCY 97/IL/ 048.
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