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Journal of Environmental Management 106 (2012) 40e47

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Journal of Environmental Management

journal homepage: www.elsevier .com/locate/ jenvman

On the economic performance of the waste sector. A literature review

Pedro Simões*, Rui Cunha MarquesCenter for Management Studies (CEG-IST), Avenida Rovisco Pais, 1049-001 Lisbon, Portugal

a r t i c l e i n f o

Article history:Received 17 August 2011Received in revised form4 January 2012Accepted 1 April 2012Available online 2 May 2012

Keywords:BenchmarkingIncentivesMarket structureMeta-analysisOwnershipWaste sector

* Corresponding author. Tel.: þ351 218417729; fax:E-mail addresses: pedrotsimoes@ist.utl.pt (P. Sim

(R.C. Marques).

0301-4797/$ e see front matter � 2012 Elsevier Ltd.doi:10.1016/j.jenvman.2012.04.005

a b s t r a c t

In a context of increasing international concern about public cost savings, research interest in the wastesector has gradually emerged. The literature on waste cost and inefficiency, particularly the use ofparametric and non-parametric methods has increased exponentially in the last years. This paperreviews the developments, themes, objectives, concerns and characteristics of this kind of research, byreviewing a comprehensive database consisting of more than 100 relevant papers on economic perfor-mance of the waste services were published since 1965. Based on the econometric and mathematicalprogramming methods (cost and product ion frontiers) used so far, the paper identifies characteristics ofthe waste research community (such as the authors’ case-studies, aims of research, methods adopted,among others). Finally, it also identifies the main targets in this research field, such as market structure,ownership, incentives (through regulation and legal mechanism) and performance assessment.

� 2012 Elsevier Ltd. All rights reserved.

1. Introduction

Investigating costs and efficiency (economic performance) inthewaste sector has been a growing focus of academic research andindustry over time, although it remains quite distant from theliterature of other infrastructure services, like electricity, telecomsor even water. The early years of waste research were centered onaspects related to the model of waste collection and treatment andto the capacity and financing of the policies adopted (Morse, 1908).However, the importance that the waste sector has achieved inlocal government activity, mainly due to the awareness of societyregarding environmental issues, and the weight of these concernsin the public budgets, soon gave rise to another line of research.

In fact, over time more and more studies acknowledge theimportance of performance and its economic impact on the wasteservices. Not only the costs, but also aspects related to performanceevaluation (efficiency/productivity measurement), such as theassessment of factors (operational environment) that mightconstrain the utilities’ performance, the market structure andincentives among others, gain relevance in the waste sectorresearch. Benchmarking is currently a fashionable word in thissector.

þ351 218417979.ões), rui.marques@ist.utl.pt

All rights reserved.

Until 2010 (December), 107 economic performance studiesinvolving parametric or non-parametric methods (cost andproduction frontiers) were identified addressing somehow theseaspects for the different segments of the waste life-cycle (collec-tion, disposal and recycling). These major activities were used asa bridge to incorporate different kinds of analysis regarding policyimplications, such as market structure (evaluating the presence ofeconomies of scale, scope and/or density), ownership (the ongoingdiscussion between public and private), and the role of incentives(mainly through regulation and legislation) to promote cost effi-ciency. Some authors also see in benchmarking and cost efficiencystudies (and comparison of results) a way to evaluate the perfor-mance of waste services and encourage efficiency and innovation.

As the surrounding environment of the waste services provisionshould not be neglected if sound conclusions are to be drawn, it isimportant to analyze the operational environment (inclusion ofexogenous variables). Several authors have addressed exogenousvariables in their studies, which might influence the waste utilitiesservice provision, such as collection frequency, population density,temperature, rainfall, among others.

This study makes significant contributions to the scholarlyliterature and, in particular, to inform utilities and decision-makers.Besides being an extensive research regarding the economic impactof waste services and the application of econometric and linearprogramming models, it also congregates the most relevantconclusions achieved concerning market structure, operationalenvironment or ownership, which can be particularly useful for

P. Simões, R.C. Marques / Journal of Environmental Management 106 (2012) 40e47 41

decision-makers, utility managers and other stakeholders. Theliterature is scarce in terms of meta-analysis in the waste sector inthis scope, existing only (few) studies that investigate the owner-ship issue (Bel and Warner, 2008; Bel et al., 2010). Here, a morecomplete database of studies is used and a comprehensive analysisis carried out.

After this brief introduction, section 2 provides an overview ofthe research made by the waste sector community. Section 3focuses on the different econometric and mathematical program-ming approaches identified and used in the literature and section 4presents the main conclusions drawn regarding the market struc-ture, ownership, incentives and performance evaluation, includinga meta-regression analysis. Finally, section 5 provides the mainconcluding remarks.

2. Quantitative studies on costs and inefficiency

2.1. Overview

The literature on the waste sector performance (cost and effi-ciency studies) comprises studies (and other contributions) pub-lished in journals, working papers, books and chapters of books,reports, dissertations and proceedings. Fundamentally, the paperspublished in journals are normally the unique type of publicationsubject to (impartial) review and the ones that are more easilyidentified and accessible for research. For these reasons, we mostlyfocused our research on this type of publication.

Moreover, the pattern of publication is quite particular for eachfield of publication, although a relevant increase of publicationsconcerning the waste sector performance in different types ofjournals has been observed. A growing awareness about environ-mental issues, which has also been motivated by the increasingexpenses in this scope, and the growing data availability, are someof the reasons that have instigated the increasing number ofpublications.

The number of publications is also related to the availability ofjournals to publish these studies. This is the reason why the earlyyears of the literature on waste sector performance is included inthe scope of the Economic, Policy and Public Administration jour-nals. Only later did the journals dedicate themselves to Environ-mental Issues (after 2003) or focus on the waste sector, after 2008by publishing quantitative performance studies (Sanchez, 2008).

2.2. Types of publications

In this research, we encompass all the reliable sources ofpublication, up to January 2011, which comprise journals, workingpapers, books and book chapters, reports and PhD theses. To ourbest knowledge, this is the first comprehensive research paperreviewing the literature that, somehow, performs a cost and effi-ciency analysis of the waste sector. In order to keep the reliability ofthis study, we opted to exclude the papers of conference proceed-ings andmaster theses from this investigation. The usual absence of(external) revision do not assures the adequate quality of thesetypes of publications.

The identification of 107 studies allows us to classify 72.9% asacademic journals, 6.5% as working papers, 10.3% as reports, 6.5% asbooks and book chapters and, finally, 3.8% as doctoral theses. Inorder to identify the studies referred to, we began by searchingparticular keywords, such as “waste efficiency” or “waste bench-marking” to identify the majority of the studies focusing on thesetopics. After that, we analyzed in detail the references of eachpaper/book identified. Regarding the working papers, diversedatabases were used, for example, the Social Science ResearchNetwork (SSRN), IDEAS and EconPapers, and university websites.

The publication of studies as working papers preceding Journalpublication has been a growing practice by researchers. In thisregard, to avoid duplication of the same work, in the WorkingPapers category we only took into account the studies that were notpublished afterwards.

2.3. Chronological analysis

The beginning of the academic activity, regarding the economicimpact of waste services, dates back to 1965. In the first studyfound, Hirsch (1965) intended to identify “an ideal residentialrefuse collection cost model”, based on an empirical analysis of thecosts of waste collection from 24municipalities in the St. Louis areain the US. Among his major findings, collection frequency, pickuplocation, and type of financing were the most important factorsexplaining the service costs. No significant evidence was found oneconomies of scale or between public and private service provision.

The 1970s were very productive years concerning publicationson the economic performance of the waste sector. Mainly throughthe contributions of 20 authors, several papers were producedregarding the cost analysis of the waste collection service. It wasalso the early stage of ownership analysis (Pier et al., 1974;Pommerehne and Frey, 1977) and market structure, where someconsiderations were made about the optimal scale of the wastecollection services (Savas, 1977, found a population of 50,000inhabitants as the optimal scale, while Stevens, 1978, identifiedeconomies of scale in the collection service in a population of up to20,000 inhabitants).

Between the 80s and the final 90s, various papers continuedanalyzing the ownership and the market structure of the wasteservice. Regarding the ownership, one of the main causes was theenactment of a new law in the UK (1988 Local Government Act),introducing compulsory competitive tendering in the waste sector,among awide variety of services provided by local authorities. Afterthat, diverse studies (e.g. Szymansky and Wilkins, 1993; Bello andSzymanski, 1996) focused their research on the impact on theefficiency that the change of the legal framework was having. Theperformance of waste utilities using linear programming (dataenvelopment analysis e DEA) was firstly evaluated by Vilardell andRiera (1989), analyzing the Spanish waste collection utilities. Theauthor concluded that the private sector had better results in largemunicipalities (greater than 20,000), while the public sector per-formed better in small municipalities.

As expected, the period between 2000 and 2010 was the mostproductive one, with more than 60 studies published. In thisdecade, the first questions regarding the “general” benefits ofprivate sector participation in the waste sector (Bel and Warner,2008; Bel et al., 2010) were raised. Other studies defending thatcooperation (in particular among small municipalities) is moreimportant for waste services than ownership itself (Dijkgraaf andGradus, 2003, 2007a; Bel and Fageda, 2010) were published.

Besides the ownership discussion, there is another debateregarding the relevance of competition. The impact of competitivetendering in the UK triggered this kind of analysis (Dombergeret al., 1986; Cubbin et al., 1987). After that, several studies evalu-ated the effect of the legislation reform that imposed compulsorycompetitive tendering in thewaste sector (Chaudy and Utley,1993).Later, also Dijkgraaf and Gradus (2007b) and Bel andWarner (2008)concluded that competition is more important than ownership forthe waste sector efficiency improvement.

Regarding the market structure, the main conclusions remain inline with previous studies, although some authors reacheddifferent conclusions about the disposal service (300,000 inhabi-tants e Simões et al., 2010) and the recycling services (80,000inhabitants e Bohm et al., 2010). As far as economies of scope are

Fig. 2. Area of publication and number of authors.

P. Simões, R.C. Marques / Journal of Environmental Management 106 (2012) 40e4742

concerned, only Callan and Thomas (2001) contributed to theanalysis of this matter; however, they only took into account thegains of providing together disposal and recycling services.

Until 2009, the (economic) regulation effect on the waste sectorhas never been studied. This is a consequence of the lack of sector-specific regulators for the waste sector at an international level,excluding particular countries like Brazil (only in some states),Romania or Kosovo, in opposition to other infrastructure services.The exception is the atypical situation of Portugal, where twostudies (Marques and Simões, 2009; Simões et al., 2010), based onThe Water and Waste Services Regulation Authority (ERSAR)regulatory activity, evaluate the trade-off between economicregulation and quality of service regulation on waste utilities.

Fig. 1 presents the evolution of the number of quantitativestudies per year since 1965 until the beginning of 2011.

2.4. Area of publication

Regarding the area of publication of the papers identified in theliterature, we categorized them in four main groups, which are (a)Management and Organization; (b) Political Science and PublicAdministration; (c) Business and Economics; and (d) Environ-mental Journals. Besides the distribution of the 78 papers identi-fied, Fig. 2 also includes the number of authors publishing in thoseareas.

The category of Political Science and Public Administration is themost representative one. There are two main reasons behind this,which are related to the great number of journals dealing with thissubject and to the fact that the performance publications on theenvironment (since 2003) and, particularly, waste (since 2008)journals are much more recent.

Regarding the working papers, the real number of studies thatanalyze the economic impact of waste services is a little higher thanthe seven that were identified. However, as abovementioned, inorder to avoid double counting, we left out of the analysis theworking papers that were also published in journals or bookchapters.

Of the 78 journal articles in our census, 13 were earlier availableas working papers.

The remaining categories under analysis are considerably lessaccessible. Reports represent about 10 % of our sample, a great partof them are only referred to due to the difficulty of being consulted.

The existence of four dissertations on the topic probablyunderestimates the volume of graduate student research sincemany economics dissertations include essays that may incorporatestudies on the cost and efficiency of the waste sector.

The literature on quantitative studies regarding book publica-tion is considerably scarce. This clearly reflects the lack of authorsanalyzing this issue. As referred to, among the seven studiesidentified as book or book chapters, only two refer to bookpublication.

Fig. 1. Percentage of studies per decade.

2.5. Authorship

The performance analysis of an infrastructure service, includingthe waste sector, is a multi-disciplinary activity. Expertise andexperience should support this kind of studies, mainly regardingthe model specification, the variables definition, knowledge of theinstitutions, the awareness of the strengths and limitations ofavailable data and the policy implications taken from the results.

Thus, due to themulti-specialization required by this quantity ofstudies, it would be expected to find multi-authored studies in thisfield. Fig. 3 shows the results of authorship of the studies found.

Among the 129 authors identified in studies analyzing theeconomic impact of the waste sector, 72 developed a single study.This might be a consequence of the difficulty of getting (reliable)data (REC, 2001; Baptiste, 2007) to carry out this kind of studies, forinstance when we compare the number of authors in other infra-structure services such as electricity, telecoms, or even water. Inaddition, only six authors have published more than three studiesin this field.

2.6. Countries analyzed

The development of this kind of studies is highly related to theeasiness of collecting data (either from utilities or governmentalagencies) and the interest and concern of the society about publicservices efficiency. The papers are mainly focused on five countries.The early stage of the studies on this topic was located in the US(costs and market structure were the main goals of the studies,Savas, 1977; Stevens, 1978), followed by the UK (the first study wasfrom 1986 by Domberger et al., 1986), with particular emphasis onthe impact of the enactment of a compulsory competitive tenderinglaw on the waste services (Szymansky and Wilkins, 1993;Szymanski, 1996). This pattern might reflect country size, the

Fig. 3. Publications per level of authorship.

P. Simões, R.C. Marques / Journal of Environmental Management 106 (2012) 40e47 43

major features and the number of academics and professionals inresearch institutions and universities.

In fact, the high number of studies is always associated withparticular characteristics of each country/region waste sector. Forexample, Spain is associated with the high level of private sectorparticipation and Portugal is known for the atypical presence ofa sector-specific regulator dedicated to the waste sector, the ERSAR.This regulatory authority pioneered the application of bench-marking through the calculation of a set of performance indicatorsfocused on the regulation of quality of service of the waste sector(Marques and Simões, 2008).

Leaving behind cross-country studies, we found papers in 16individual countries from all five continents. In some cases, likePortugal, Spain or the Netherlands, a specific researcher or group ofresearchers drove the country-specific numbers. Fig. 4 illustratesthe countries investigated.

Regarding the cross-country studies, only two studies wereidentified. In particular, only Bel and Warner (2008) and Bel et al.(2010) evaluate the global effect of the private sector participa-tion on waste services through a literature review.

Africa has no representation in this kind of studies. This mightbe related to the primary concerns of the African decision makers,since they are more concerned with increasing the coverage of thewaste services rather than with the data availability.

The papers are, fundamentally, written in English, which is notonly explained by the importance of the language itself, but also bythe role of countries like the US and the UK and to the acceptabilityof the (most searched) journals, in general, focused on readershipand citations. However, some exceptions were identified in Dutch,French, Italian, Portuguese (Simões and Marques, 2009), Spanish(Bel, 2006) and Japanese (Kiyomi et al., 2005).

Fig. 4. Publications per country.

2.7. Scope of the studies

Historically, the waste collection services have been by far morestudied than other segments of thewaste sector, such as disposal orrecycling services. In fact, the first study (quantitative/performance/etc.) dedicated to recycling services reports to 1991 (Duggal et al.,1991), while the disposal services were only taken into account in2001 by Callan and Thomas (2001). Fig. 5 shows the level of publi-cation per segment of waste life-cycle. Note that commonly authorsand studies encompass more than one segment in their analysis.

3. Quantitative techniques

There is a standard categorization of performance measurementmodels of cost or product functions into parametric and non-parametric approaches. The use of an a priori functional form forthe efficient frontier, as required by the parametric approach,distinguishes these two methodologies. While the latter usesmathematical programming to adjust the technology to the sampleunder consideration, the parametric approach requires a priori thedefinition of an econometric function for the production or cost(profit) technology (see about these methods Fried et al., 2008).

In the literature of waste sector performance, there is a domi-nance of the parametric approach (55.1% of the studies) over thenon-parametric one (26.9%). Just 2.5% use both approaches, while15.4% support their conclusions based on simple cost analysis. Thisalso reflects the beginning of the application of non-parametricmethods (Vilardell and Riera, 1989, first study applying dataenvelopment analysis-DEAe on Spanish waste collection services),when compared with the first parametric study (Hirsch, 1965).

Studies can also be classified into deterministic and stochastic,where the deterministic ones include both non-parametric andparametric studies. Although the parametric studies identifiedrecognize the stochastic nature of quantitative modeling (byconsidering the noise), they do not separate the impact of noise(purely random errors) from that of inefficiency. From this perspec-tive, only 4% of the studies found in the literature are stochastic. Themajority of the parametric studies are based on OLS estimates.

Parametric methodologies might still be categorized into costand production functions. Only 6% of the studies report a produc-tion function. Concerning the cost functions, just 12% considersimply operation costs, the remaining ones encompass all thesources of service costs, that is, operating and capital costs.

Cobb-Douglas is the most adopted methodology by the authors(about 93%). Other techniques, such as quadratic or translog func-tions are still scarcely represented in the literature.

Regarding the application of non-parametric methodologies,among the 21 studies identified, the DEA is the most representativemethodology to evaluate the efficiency of waste utilities, while thefull disposal hull (FDH) is only applied to validate the DEA results.

Fig. 5. Publications per activity.

P. Simões, R.C. Marques / Journal of Environmental Management 106 (2012) 40e4744

Productivity analysis was identified in only one study analyzing thewaste sector, through the application of a Luenberger productivityindex (Chapple and Harris, 2003).

About 60% of the studies encompass the operational environ-ment in their analysis, although only 2 studies have made this kindof analysis by means of a non-parametric approach. This latteranalysis was either done through a Tobit regression (Marques andSimões, 2009) and a (double) bootstrap regression in a secondstage (Simões et al., 2010), based on Simar and Wilson (2007).

We identified more than 26 explanatory factors in these studies,being the ones most adopted the population density, frequency ofcollection, distance between containers, income per capita (orGDP), temperature, rainfall, snowfall, tourism, regulation, recyclinglevel, infrastructure age, distance to landfill, method of collection(curbside or backyard), among others.

Concerning the non-parametric studies, all of them use an inputorientedmodel specification (focuses on theminimization of inputs(or resource consumption) for the same level of outputs (results)produced), which is quite understandable due to the basic princi-ples of a public service, in a strict sense. The most used inputs arelabor, operational expenditures, other operational expenditures,capital expenditures, capital stock and total cost, while the outputsmay vary between the waste collected (and disposed or inciner-ated) and the waste recycled, or both.

As far as the DEA technique and the stochastic frontiers (anddeterministic) are concerned, besides the larger number of worksunder development by academics, there are also some regulatorsand governmental agencies that apply these types of methodolo-gies (Spain, by Sindicatura de Comptes da Catalunha, Australia, byIPART, etc.).

4. Issues addressed by the studies

4.1. Categorization

The literature review was not only clear regarding the outcomeof the publications, but also concerning the aims of study. In thisregard, we may categorize the studies according to their objective,that is, market structure, ownership, incentives and benchmarking,as shown in Fig. 6.

Note that the results correspond to themajor aim of each article,since most of them have more than one objective. These topics andmain results achieved are next briefly summarized.

4.2. Market structure

Since the 70s, the waste market structure has been a target ofresearch. The early studies identify diseconomies of scale (Bodkin

Fig. 6. Categorization of publications.

and Conklin, 1971) and there is no evidence of economies of scale(Kemper and Quigley, 1976) for the collection service. Nevertheless,the first conclusions over the optimal scale of waste services widelydiverge according to the case-study. For instance, Hall and Jones(1973) found that the optimal scale for the state of Texas (US)corresponded to a population served of 9600 inhabitants. Savas(1977) identified a population of 50,000 inhabitants as theoptimal scale for waste services in Dublin (Ireland) and Dubbin andNavarro (1988) concluded that the optimal scale of the wasteservices in the US corresponded to 20,000 inhabitants served.

Not only was the object of study a diverging aspect among thepublications, but the aim of research also led to different conclu-sions. While for the waste collection service the optimal scale(among the studies analyzed) ranges between 10,000 and 50,000inhabitants, for the disposal service it is more consensual a sizearound a population of 300,000 inhabitants (Kitchen, 1976;Marques and Simões, 2009; Dijkgraaf et al., 2003). Regarding therecycling service, Bohm et al. (2010) defines a population of 80,000inhabitants as the optimal scale. Among the 78 studies found, 33focused on this subject. Of course, the optimal size depends alwayson the country studied and on its major features.

There is little research on economies of scope and density in thewaste sector literature. Up to 2010, only Callan and Thomas (2001)have investigated the possible presence of economies of scope inthe provision of disposal and recycling services together. However,it should be noted that in some countries the waste sector (e.g.Portugal) continues being provided together with the water sector.This aspect has been completely away from research. Concerningthe analysis of economies of density, Kemper and Quigley (1976),Callan and Thomas (2001) and Antonioli and Filippini (2002) areconsensual about their presence in the waste collection service.

A related area of interest concerns the economies obtained fromthe vertical integration of the waste sector; for instance, in somecountries, e.g. Spain and Belgium, the waste sector is clearlydesegregated in two markets: the ‘wholesale’ (landfilling, inciner-ation, etc.) and the ‘retail’ (waste collection) markets. However, toour best knowledge, this topic has never been under investigation,which might reflect the great difficulty of prorating the costs incases of joint provision.

4.3. Ownership

Another aim of intensive research relates to the eternal questionbetween public and private management. Although there are someeconomic theories supporting the best performance (and incen-tives) through private provision, the literature provides evidence ofsome mixed results (Bel and Warner, 2008; Bel et al., 2010).

We identified 53 studies in the literature on this topic, 18 ofwhich focused exclusively on the ownership issue and theremaining addressed other aspects as well. Within the census, 31studies concluded that the private sector was more efficient thanthe public, although with some incentive losses over time(Szymansky and Wilkins, 1993; Dijkgraaf and Gradus, 2007b), 4studies found public waste utilities to bemore efficient than privateones, and 18 did not identify significant differences.

As there is an upward trend towards private management, thedichotomy of public versus private management has becomea relevant issue (Bel and Warner, 2008). Many studies have beencarried out, often associatedwith divergent conclusions, dependingon the sample and on the technique applied (for a survey see Haaset al., 2003). In spite of the opposition of some authors, it isa consensual that the incentives provided to the operators are moreimportant than the ownership (e.g. Bel and Costas, 2006).

There are several possible reasons capable of explaining themixed results achieved so far. Despite being acknowledged that the

P. Simões, R.C. Marques / Journal of Environmental Management 106 (2012) 40e47 45

private sector grants flexibility and labor productivity improve-ment (Hoover and Peoples, 2003), in fact it often increases capitalexpenses (Averch-Johnson effect). In addition, public provisiontends to under invest in the service facilities (Marques, 2010).

In order to evaluate the global effect of ownership in the wasteliterature, we applied a meta-regression analysis to the 36 studiesthat present statistical inference (t-values) on this matter.Following Stanley and Jarrell (1989), a meta-regression analysis canbe computed using the following formulation:

bj ¼ bþXK

k¼1

akZjk þ ej ðj ¼ 1;2;.;NÞ (1)

where bj is the t-value of the private sector influence of b of the jthstudy of the literature consisting of N studies, b is the “true” value ofthe parameter under analysis, Zjk are the meta-independent vari-ables that measure relevant characteristics of an empirical study,and ak are the correspondent coefficients, and ej is the meta-regression disturbance term.

In this analysis, we encompassed the number of utilities in thesample (Sample Size), the year studied (Year), the gross domesticproduct (GDP) of each country studied, the country studied (US, UKand Other Countries) and the method studied (parametric e 1 e ornon-parametric e 0 e approach). The results are presented inTable 1.

The results show that only the GDP and the Year are statisticallysignificant. This suggests that the higher the GDP, the lower thepositive influence of the private participation, meaning that in therichest countries public provision might yield better results. Thisoutcome was the expected one and is in line with the literature(Baietti et al., 2006). The variable Year has a negative effect, too,indicating that privatization loses its benefits to the waste sectorover time. Although, initially, the private sector suffers pressures tobecome more efficient and provide better value for money of theservice, this effect tends to vanish over time (Bel and Costas, 2006).No relevant conclusions can be drawn from the other variables,since no statistical significance was found.

4.4. Incentives

The third objective involves determining the impact of incen-tives in the waste industry. We found 17 studies addressing thisissue. There are two main reasons behind this circumstance, whichare related to the evaluation of the impact of the UK Act introducingcompulsory competitive tendering and the atypical existence ofa sector-specific regulator for the Portuguese waste sector, ERSAR,with attributions on economic and quality of service regulation.

No study about economic regulation in the waste sector wasfound in the literature, in opposition to other infrastructure

Table 1Meta-regression estimates.

Variables Dependent variable: cost differencesbetween public and private production (t-statistic)

Coefficient Standard errors

Sample size(No. of utilities)

0.08 0.92

Year �1.37* 13.1GDP �3.57** 2.62US 18.6 451.1UK 0.20 0.10Other countries 248.5 458.6Method applied �198.7 266.5

N 36

***Significant at the 1%; ** significant at the 5%, * significant at the 10%.

services, such as energy (Fleishman et al., 2009), telecoms (Uri,2002), or water (Saal and Parker, 2001). This can be a conse-quence of the very limited number of regulators dedicated to thewaste sector, something that does not happen in other services.

In particular, yardstick comparisons via benchmarking tech-niques should be seen as a means to encourage waste utilities tobecome more efficient and innovative. Thus, benchmarking mightbe seen as simulating market forces, replacing competition in or forthemarket by competition per comparison (yardstick competition).Few studies were found in the literature for this purpose (e.g. IPART,1998), although it is our belief that they will increase considerablyin the next years.

4.5. Benchmarking

The last objective corresponds to the use of benchmarking toevaluate the performance of the waste services and identify thebest practices. We found 17 studies addressing this issue. Most ofthem attempt to determine the relative efficiency of utilities ina particular country or region. There are also some studies whichpropose, apply, or compare different models, for instance DEA andFDH (Bosch et al., 2000) or DEA and SFA (Boetti et al., 2010).

In some studies, researchers investigated the potential for usingrankings to develop incentives (Segal et al., 2002). In this particularcase, the authors use the DEA results to allow organizations to rankthe municipal services, and the waste service, in particular. Thepublication of rankings is a very sensitive topic in performanceevaluation (see Berg and Lin, 2008). Thus, this is a matter that stillrequires further investigation.

Studies on productivity analysis in this sector are quite few. Until2010, the study of Chapple and Harris (2003) represented theunique work on this matter. However, they focused on how theincrease of waste production (as a ‘bad’ output) affected theregional productivity growth in England. They also evaluated theinfluence of Regulation (Acts and European Directives) anda Landfill Tax on waste production by means of a Malm-quisteLuenberger productivity index. This study reports to theperiod between 1991 and 1998, encompassing 42 English counties/metropolitan areas.

5. Concluding remarks

This literature overview considers the type of publications thatanalyze costs and efficiency of the waste sector. This researchcomprises different aspects, such as quantitative studies in wasteutilities, chronological data and location, countries investigated,scope and methodologies and approaches utilized in these studies.In addition, we have summarized the results of studies examiningdifferent factors affecting cost: (1) market structure (economies ofscale, scope and density); (2) ownership arrangements (public vs.private); (3) introduction of incentives; and (4) benchmarking.

Regarding the market structure, the presence of economies ofscale (up to a certain level and diverging according to the countryand type of service), and economies of density is consensual.Nevertheless, few conclusions can be drawn about economies ofscope (since only the disposal and recycling services were analyzedand in a single study). The same agreement is not shared con-cerning the benefits of the private sector participation in the wasteservices provision. In fact, this a matter that should continue to betested for the impacts of alternative public policies, such as regu-latory incentives, amalgamation, and governance structures, giventhe extreme relevance of these issues.

Concerning the ownership, the meta-regression exerciseallowed us to identify the GDP and the year of analysis as the mostinfluent variables to explain the private sector effect on waste

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services efficiency. Regarding the GDP, we concluded that publicprovision yields better results in the richest countries and thatprivatization has been losing its benefits over time if the year ofanalysis is considered.

Despite the importance of the waste sector for local governance,only 107 studies were identified in 45 years of research, whichclearly does not reflect the relevance of this matter. Nevertheless,the availability of (reliable) data is fundamental for this kind ofresearch. This might be the most important reason behind thegreater number of studies developed about this topic in the lastdecade. In addition, the increasing awareness of society aboutenvironmental issues and the global intention of making the wasteservice more transparent make the collection of data the first stepto be taken.

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