multi criteria analysis for 310

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Multi-Criteria Analysis for ERST-310: Public Policy and the

Canadian Environment

A Policy Analysis of Torontos

Municipal Solid Waste System

by

Timothy M. Shah

November 2008

Prepared for

Professor Karen Morrison

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Introduction

Disposing of municipal solid waste has historically been a challenging responsibility for citiesacross Canada. Municipal solid waste (MSW) has become an environmental issue pushingpolitical agendas and having multiple implications for public policy decisions. Canadian cities

with rapidly growing populations such as Vancouver, Montreal and Toronto, will often have thegreatest challenges with waste disposal. In spite of a recent political impetus to expand recyclingand composting programs, growing cities will often encounter challenges with disposing wastein an environmentally sound manner. Consumers, producers, the municipality and taxpayers areall affected by this issue because they have to bear the environmental, social and economic costs.The purpose of this analysis is to consider policy reforms that could significantly address thisenvironmental issue.

Municipal solid waste management is becoming more expensive. Higher costs in the MSWprocess are encouraging cities to reconsider and explore new policy options that areenvironmentally, socially and economically sound. Toronto has encountered obstacles withwaste disposal due to a booming population, the reluctance of other cities to accept its waste, andnumerous issues with consumer behaviour i.e. improper recycling and composting, illegaldumping, burning and littering (Maclaren, 2004). Costs are not always rationally allocated forwaste management, forcing cities to resort to low cost waste disposal solutions such as landfills.But clearly this policy option is not the most equitable, environmental or socially sustainablealternative to the disposal of municipal waste. Typically, waste is shipped from one jurisdictionto another because of cheaper disposal costs or less rigid regulatory requirements (Tammemagi,1999).

Torontos dependence on landfills requires numerous garbage trucks to transport the citys wasteto a landfill site, which is often located in other jurisdictions outside the city limits. The notion oftransporting a citys waste to another jurisdiction has proven to be problematic. Therefore, otherpolicy options are warranted, particularly for large cities like Toronto. Cities are among theheaviest polluters and producers of greenhouse gas emissions through their waste generationpractices. These garbage crises have created an increased awareness and concern regarding thelong-term effects of landfills, and provided a renewed interest in considering other alternatives.This multi-criteria analysis will compare and examine four environmental policy options fordealing with municipal solid waste in Toronto. They include full user pay systems, extendedproducer responsibility, landfill tipping fees and maintaining the status quo. An equal decisioncriteria will be used to ascertain which policy option is worthy of implementation.

Description of Policy Options

Policy Option A: Full User Pay Policy

A full user pay system or program requires city taxpayers (residents, companies, businesses) topay for the pick-up of general waste based on volume or weight rather than through general taxlevies that are unrelated to quantities of household waste (Dewees, 2002). Full user pay systemscan be flexible and allow the household to set out one or two bags for free before being chargedfor collection (Maclaren, 2004). By attaching a cost to each bag of garbage a householdproduces, the economic incentive will encourage householders to recycle more and to reduce theamount of waste they produce (Maclaren, 2004). Due to the cost involved, the household would

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theoretically re-think how much waste it produces. Hundreds of municipalities across Canadaincluding Toronto rely on property taxes for financing residential waste management costs(Kelleher et al., 2005). This municipal service can be advantageous because it has lowadministrative requirements and provides a secure predictable revenue stream (Kelleher et al.,2005). However, property tax systems may lack a cost incentive to reduce the total amount of

waste a household generates because residents can continue to produce waste and pay their taxesat a fixed rate. The rationale for a full user pay system would be to replace the property taxmechanism, thereby sensitizing residents about their waste generation practices and providingthem with an incentive to reduce and divert waste. When there is a direct cost involved for eachgarbage bag a household creates, the household will have a better understanding of the actualcosts of waste (Ready & Ready, 1995).

A jurisdiction that has had success with a full user pay system is the Peel Region in SouthernOntario. With a population of 1 million people, Peel is the largest municipality to adopt a user-pay three bag system, where the first three bags are free, and the city charges $1.00 a bag afterthat (Kelleher et al., 2005). In 2005 alone, Peel generated 442,015 tonnes of garbage under a

two-bag limit, diverted 60 percent of its waste from landfills through recycling, reusing andcutting down on household waste production (Kelleher et al., 2005). Oxford County, with apopulation of 100,000 is another jurisdiction that has adopted a full user pay system. Its systemcharges a fee of $1.00 a bag on all bags (Kelleher et al., 2005). Both user pay systems haveresulted in a substantial increase in recycling tonnage and a reduction in garbage tonnage(Kelleher et al. 2005). Such a policy can relieve pressure on municipal property taxes andultimately reduce the quantities of waste requiring disposal.

Policy Option B: Extended Producer Responsibility

If Toronto plans on achieving a high waste diversion rate and to encourage sustainable businesspractices, it must consider the merits of an extended producer responsibility (EPR) program. Thispolicy option is premised on the prevention of waste disposal involving the manufacturingindustry and giving them the responsibility to collect their products after use by consumers.Moreover, there is a shift in responsibility for waste from government to private industry withaims to oblige producers, importers and/or sellers to internalize waste management costs in theirproduct prices (Maclaren, 2004). There must be transparency and collaboration between theproducer and the sellers for the waste management process. As a growing environmentalconcern, municipal solid waste requires all stakeholders to be accountable for their actions. TheEPR policy is largely premised on recycling and reuse of materials and has the potential toimpact materials management systems for manufacturers and drive pollution prevention efforts(McKerlie et al., 2006).Without direct preventative action through EPR policy, waste levels cancontinue to rise, threatening to compromise the quality of life and health for Canadians over thelong term.

British Columbia has been a Canadian leader in its commitment to EPR. EPR policies asillustrated in British Columbia can stimulate innovation in manufacturing companies throughreducing materials, resources and energy usage (McKerlie et al., 2006). Manufacturers can alsoincrease the recyclable and recycled content of their products ultimately extending the useful lifeof the product and saving them capital over the long term (McKerlie et al., 2006). ThroughBritish Columbias full product stewardship legislation, all parties with a role in designing,

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producing, selling or using a product are responsible for minimizing the environmental impactsof the product over its life (McKerlie et al., 2006). This progressive EPR policy aims to preventrising levels of waste and pollution. British Columbias EPR policy is a full managementresponsibility which means that producers have to finance and operate all aspects of solid wastemanagement for their products including consumer education, collection, recycling, responsible

disposal, and providing recycling services. All of which create a more equitable process.Producers may initially be concerned about this policy approach because they are responsible forthe internalization of the production costs. However, over the long-term, they can profit bytaking materials back and reusing them.

When manufacturers internalize the costs of production, the price of a product may rise whichcan subsequently change consumer behaviour. The internalization of the process results in priceincreases thereby forcing the consumer to pay more and account for the environmental costs.This is critical because by transferring the costs from taxpayer funded municipal wastemanagement systems to manufacturers and consumers, it can enforce the polluters pay principlewhere level of effort to conserve or pollute is reflected in the cost. These costs can prompt

producers and consumers to examine their waste reduction strategies to consider how tooptimally benefit environmentally and economically. EPR teaches both producers and consumersabout their waste habits and educates them about the steps needed for creating a sustainablesociety prone to high waste diversion (Maclaren, 2004).

Policy Option C: Landfill Tipping Fees

The city of Toronto recently purchased the Green Lane Landfill in St. Thomas, Ontario for $220million (Toronto, 2006). Municipal governments may charge tipping fees for non-residentialwaste or for waste from other communities that are higher than the full costs incurred by theseoperations (Dewees, 2002). Toronto currently has no tipping fee policy but by introducing one, itcan potentially induce more waste reduction efforts, resulting in a total decrease in the flow ofwaste sent to the landfill. The main impetus for this policy tool would be to control and priceexternal waste which could offset the citys own waste management costs. For instance, throughestablishing a tipping fee to external users, it could cover the operating costs such as land taxesand property fees, environmental monitoring costs like repairing liners to prevent groundwatercontamination, and service costs to offset payments for employees who work at the landfill.With a tipping fee, Toronto could provide a stronger incentive for external municipalities toreduce waste and reduce costs. Through maximizing economic efficiency, Toronto benefits bycharging these external users a designated tipping fee which can help offset some of the annualcosts. If municipalities continue to send their waste to the landfill because it is simply moreconvenient and efficient to do so, then Toronto can consider raising its tipping fee which canprovide additional revenue to fund increased waste diversion activities. For instance, increasedrevenues can be directed towards Torontos Greenbin composting program, blue box recyclingprogram or even for consumer education, teaching consumers about the merits of conservationand waste reduction effort.

Policy Option D: Maintain Status Quo: Do nothing

There is always the option of doing nothing and not bringing about a new policy for municipalsolid waste. In effect, this would allow Toronto to continue shipping its waste to the Green lanelandfill. Waste diversion rates would eventually be ameliorated through expanding the Greenbin

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and blue box programs, both of which could see higher rates of composting and recycling. Thecity has a goal of 70 percent solid waste diversion from landfill by 2010 (City of Toronto, 2008).Achieving such a rate would extend the life of the Green lane landfill until 2034 (City ofToronto, 2008). However, waste diversion programs would require more funding in the range of$50 million annually to achieve this goal (City of Toronto, 2008).

Property tax revenues would still be the predominant practice for funding residential wastemanagement services. Municipal tax bills for waste can range from $150 to $300 depending onyour household income status (Kelleher et al., 2005). The property taxes generated from wastemanagement services are directly allocated to the citys budget, which in turn provide the basisfor municipal property tax assessment (Kelleher et al., 2005). Administrative fees would still beinexpensive and waste management would continue to be a principal and essential municipalservice. Inevitably, the cost of doing business will rise making it more expensive to truck wasteto landfills, thereby providing the impetus to expand current waste diversion programs. Bymaintaining the status quo, the city could avoid any opposition or resistance to any new policiesthat would have otherwise been implemented. The convenience of having household garbage

picked up at the curb for residents would continue, but as society becomes more educated aboutwaste management issues, the citys position about landfill use may be challenged .

Justification of Evaluation Criteria

The ultimate objective for resolving this pervasive environmental issue would be to implement apolicy that is equitable and involves the public in decision-making. The policy goals for thisanalysis will maximize economic efficiency, account for social justice, and incorporate a highdegree of environmental sustainability. The first criteria that will be used for the policy optionsare the environmental impacts under the goal of environmental sustainability. Both a full userpay system and the extended producer responsibility policy have the ability to significantlyreduce the amount of waste being trucked to landfills. Limiting the number of trucks will reduceemissions like volatile organic compounds, nitrogen oxides and carbon dioxide, which in turncan have benefits for societys health. The objective for the policy is to ensure that all wasteproduced from the municipality is properly accounted for and not disposed in a manner thatundermines or jeopardizes the state of the environment. Moreover, environmental impacts forwaste management should be measured to ascertain the effectiveness of waste policy.

Another criterion under the goal of environmental sustainability is collective responsibility. Thiscriterion is centred on diverse involvement and is indispensable for measuring waste policybecause in order for municipal solid waste to be effective and efficient, it must ensure that allstakeholders are responsible for their waste production. Collective responsibility is a multi-faceted approach to waste management and can be essential for waste prevention andminimization. For environmental sustainability, everyone that produces waste is responsible forit either through taxation, recycling, reusing or through other costs. If each party has a legalresponsibility over its own waste, then they must learn how to dispose of it in a manner that isenvironmentally and economically sustainable. This has implications for waste conservation andcan dissuade parties not to resort to environmentally deleterious options like landfills andincineration.

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The goal of providing social justice should include a criterion that is based on collectiveparticipation. Cities will always have problems with facilities like landfills due to the resentmentand opposition from residents who live within close proximity. Alas, most environmentalburdens end up being imposed on communities with the least amount of resources. In terms ofthe status quo, the Green lane landfill is situated near residents of St. Thomas, and the mass

influx of garbage trucks from Toronto would cause traffic problems in nearby townships,consequently creating opposition. This criterion is useful because it can help facilitate thedeliberations of stake-holders by involving them and provides opportunities to develop aconsensus based approach to decision-making (Solomon & Hughey, 2007). Trust, equity andpublic participation are elements of adequate social justice, but using landfills without publicconsultation is not a characteristic of social justice by any degree. Collective participation underthe goal of social justice can give concerned citizens a chance to voice their concerns, andtherefore include them as stakeholders in the municipal solid waste process. Incorporatingdiverse views and involvement creates a sense of ownership and accountability which canenhance the effectiveness of the policy (Solomon & Hughey, 2007).

Another criterion under social justice should include ability to pay. Low-income households orlarger families in general, typically produce more garbage bags in a given week, and when theyare obligated to pay by the bag, it can be economically burdensome. If the household has a highwaste reduction effort, they will save money. But some may perceive this is unjust because theysimply do not have the finances to pay for the amount of garbage they produce. A producerunder an EPR policy will have the ability to pay for taking back their products because of thecost savings from such a process. A landfill tipping fee policy can either advantage ordisadvantage a municipality if it chooses to dump waste in a landfill. The more the municipalityconserves, the higher their ability to pay because of a smaller amount of waste sent to thelandfill. Ability to pay is a useful criterion for measuring the costs of municipal solid waste andto ascertain whether they are socio-economically inclusive. For the status quo, property taxes aredetermined by a households income and can be regressive because there is no correlationbetween the tax rate and the amount of waste generated. In addition, there is no direct incentivefor the household to reduce waste disposal because it is financed by property taxes and is aregular municipal service.

Economic efficiency is always a high consideration in municipal solid waste. The criterion to beused under this goal is universal cost savings, where cost savings accrue to multiple parties.Municipalities will attempt to find options that are economical and have the ability to maximizeeconomic efficiency. All four policies include some degree of economic efficiency because theyare all cost effective and have the ability to save capital. The objective of such a criterion wouldbe to induce good consumer/producer behaviour through transparency in costs. A user paysystem for instance, can cut the costs of waste disposal as the household consumes less garbage.A landfill tipping fee can provide additional funds for Torontos waste management services, andmore funding for current and future waste diversion programs. The city gains through itsownership of the landfill and maximizes economic efficiency by charging municipalities fordumping. An EPR policy can save a producer/manufacturer economically through reusingproducts and minimizing the need to extract further resources which may be more costly. Finally,the status quo keeps the property tax scheme in place and allows Toronto to send its waste to

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landfills which is the cheapest option in the short term. Waste diversion programs are stilloperating and the city runs a budget surplus for its waste management services.

Equal Decision Criteria Alternatives

Goals Criteria Status-Quo EPR User Pay Landfill Tipping

FeeMaximizeEconomicEfficiency

UniversalCost Savings

Reasonable-manufacturershave limited costsavings

Verygood

Good- if allhouseholdsparticipate

Depends if tippingfee is re-directedinto waste diversion

Aim forSocial Justice

Ability to pay Depends onhouseholdincome

Excellent Depends onwastereductioneffort

Reasonable- candiscriminate againstpoorermunicipalities

CollectiveParticipation

Good- wastediversionprograms involve

all households

Verygood

Very good Unclear-hard todetermine

IncorporateEnvironmentalSustainability

EnvironmentalImpacts

Poor- continueddependence onlandfills

Excellent Good-depends oncomplianceandparticipation

Poor-waste stillbeing dumped inlandfills

CollectiveResponsibility

Good- taxpayerscontributefunding for wastediversionprograms

Excellent Good-conservingless is betterfor theenvironment

Unclear- hard toevaluate becausemunicipalities canavoid tipping feeand dispose of waste

cheaper; lessenvironmentallyfriendly.

Discussion of Results

Based on the matrix above, policies will have their advantages and disadvantages. The EPRpolicy appears to be consistent for the criteria evaluation. In terms of economic efficiency andcost savings, all parties have the opportunity to benefit because of incentives. Producers canreuse and recycle their products which are less expensive than extracting more material to createnew products. Consumers also have an economic incentive through a deposit return system tobring back their goods to the manufacture after its use. Such a process induces collective

participation, collective responsibility and accountability, all of which lead to waste preventionand minimization, and have fewer impacts on the environment. A user pay under universal costsavings received a very good because households can save significantly. Moreover, ifhouseholds reduce waste, the municipality is not required to send as much waste to landfillswhich also cuts down the cost for the city, taxpayer and consumer.

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In examining the cost savings and ability to pay for the status quo versus the user pay, a formula

can be used: where tc represents total cost of municipal solid waste,ptis

the fixed property tax rate, h is the number of household residents, b(c) is the total number ofbags multiplied by the cost of the bag, and w represents the number of weeks. If Toronto had afixed property tax rate of $300 per year, and a household of four produces three bags of garbage

a week at cost of $1.00 per bag, then the following would occur: .

Therefore, if a family of four is using 1.3 bags per capita every week, their total wastemanagement costs will be:1.3 * 52 = $67.6 per year. Thus, by subtracting the property tax of $300 from the user payamount of $67.6, the difference is $232.4. To calculate the percentage decrease: amount ofdecrease 232.4/initial value of 300 * 100 = 77 percent. This shows that a user pay system canhave higher cost savings if households choose to consume less and recycle more. A householdsability to pay is determined by their waste reduction effort; generating less waste results in lowercosts. Therefore, for the goal of economic efficiency, it is clear that a user pay policy optionmay be more economical for households than the status quo which relies on property taxes from

households to finance municipal solid waste. With a user pay system, the city would not bring inas much revenue (to finance public services) however, they would not need to send as muchwaste to landfills because of the decrease in waste consumption. This would ultimately save thecity capital.

A landfill tipping fee has the potential to achieve high economic efficiency but depends onuniversal cost savings. Optimal pricing for tipping fees should include the costs of service andlabour, environmental monitoring, and operating the landfill including property taxes. Thefollowing scenario explains how a landfill tipping fee policy would work. Two municipalitiesdecide to send their waste to the Toronto-owned Green lane landfill. They both send an averageof 150 tonnes of garbage every week to the site equalling 300 tonnes in total. Toronto

implements its landfill tipping fee and sets an arbitrary price of $100 per tonne for external users.This translates into:300 tonnes * $100 per tonne * 52 weeks = $1, 560,000. This amount represents the revenue fromthe tipping fee in just one year. On the cost side, the following equation can be used:t= oc + e + s, where tis the total cost of managing the landfill, oc is the operating costs, e is theenvironmental monitoring cost, ands is service cost.Therefore, if operating costs oc were $700,000 per annum, e was $400,000 ands was $500,000then the total costs of managing the landfill would be $1,600,000 per annum. Therefore, themoney collected from the tipping fee can considerably offset the total costs of operating thelandfill. This can provide Toronto with more economic flexibility when it manages wastediversion and provides waste consumer education. It can also discourage municipalities to send

their waste to the landfill because of the exorbitant tipping fee in place.The goal of social justice produced mixed results. Collective participation and ability to payvaried for each criterion. As shown in the equation, a user pay can work out to be more equitableand reasonable for the household if they choose to produce less waste. The status quo involveshouseholds in municipal solid waste because they ostensibly participate in waste diversionprograms. However, this policy received reasonable because Toronto would continue to sendwaste to the landfill and fuel opposition in nearby townships. As exemplified in Michigan, the

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trucking of waste from one jurisdiction to another is problematic because the people are notadequately consulted or engaged in the process. Striving for a higher waste diversion rate willrequire enhanced participation from the public and ensure that their needs are being addressedfrom the municipality. For collective participation, it is hard to determine where a landfilltipping fee would place because the process only involves the municipality who is willing to use

the landfill, the municipality who owns the landfill. For ability to pay, the landfill tipping feereceived a reasonable because the owner of the landfill can discriminate against poormunicipalities through setting a high tipping fee. This can be good because it can force willingmunicipalities to encourage better waste diversion to cut down on their waste. However, it canalso be bad because these municipalities may take their waste to another landfill that does nothave a tipping fee in place, or to a poorly monitored dumpsite.

Under the goal of environmental sustainability, the landfill tipping fee policy received a poorbecause waste is still being sent to the landfill and thus may continue to have environmentalimpacts. Though revenue collected from the tipping fee can be theoretically directed to wastediversion programs, this would not compensate for the environmental impacts caused by the

overuse of landfill. EPR was given an excellent because it is premised on waste prevention andthis ultimately has no environmental impact and involves responsibility by all parties. Producersand consumers only win environmentally, socially, and economically if they collaborate in themunicipal solid waste process. An EPR policy significantly cuts down on aggregate extractionfrom the natural environment. It can minimize environmental impacts because manufactures cutdown on the exploitation of resources, thereby sustaining resources and encouragingenvironmental sustainability.

As shown in the matrix, each policy alternative is unique to its set of criteria. Based on thediscussion of results, this paper would recommend the EPR policy. This policy is consistentwith all three goals- maximize economic efficiency, provide social justice and strive towardsenvironmental sustainability. In addition, each set of criterion appears to be achievable under anEPR policy. Again, collective responsibility is an indispensable component of municipal solidwaste. The optimization of the EPR policy depends crucially on the presence of householdwaste reduction effort and more importantly by placing the environmental, economic, physicaland informative responsibilities on the producer. EPR teaches both producers and consumersabout their waste habits and educates them about the steps needed for creating a sustainablesociety prone to high waste diversion

Conclusion

Municipal solid waste is an environmental issue insofar as it relies on conventional wastepractices like landfill use and incineration. MSW can be revitalized through the alternativepolicies that this paper has identified. Each policy option is not exclusively environmental innature, but encompasses a broad range of criteria to evaluate the efficacy of including such apolicy. Waste prevention should be the utmost consideration for MSW, and extended producerresponsibility would be capable of fulfilling such a task. Recycling initiatives and wastediversion programs are also important to municipal solid waste, but first and foremost, initiativesfor reducing waste should involve all parties and an EPR policy is capable of doing this.Torontos population is expanding and its purchase of the Green Lane landfill will give the citymore flexibility with municipal solid waste. As discussed, although a landfill tipping fee is not as

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all-encompassing as an EPR, it is something the city could consider for maximizing economicefficiency and for the potential augmentation of waste diversion programs. The twenty-firstcentury is going to encounter several issues around the environment, economy and social justice.Public policy decisions should be inclusive and feature a plethora of criterion so that all factorsare taken into consideration to make the most optimal choice. For this environmental issue which

is projected to worsen if no action is taken, there are numerous policy alternatives available.However, in terms of economics, environmental sustainability, social justice and involvingseveral stakeholders in the process, an EPR policy is worth considering, for it remains the mostlogical and rational decision based on this analysis.

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