The market mechanism and solid waste management

Solid waste management arose and persists as a social problem for two fundamental reasons. First, the absorptive media for waste solids — the air, water and land — are communal resources over which private property rights cannot, and properly ought not, be defined and enforced. Secondly, the spillover effects of private waste disposal in populated areas have the inevitable result that private decisions are socially not acceptable. Both the publicness of basic resources and the spillover effects of private behavior result in the failure of the market to achieve social efficiency and optimality. A society that relies on markets to allocate resources and reconcile individual choices must have assurance that markets function to achieve social efficiency. The aim of public policy with regard to solid waste management is to correct the market mechanism so that private behavior is changed and market prices modified to reflect social costs and private preferences. This paper explores some alternative public policies available for manipulating market prices and moving the economy toward a social optimum. I contend that market interference is essential in solving the solid waste problem, but that the aim of such interference is not so much to circumvent markets as it is to utilize them for changing private behavior.