Centralized standards and local taxation in municipal waste management

In the EU, standards for municipal waste sorting and recycling are established by the European central institutions, being mostly based on the available estimates of recyclable materials. In a simple model of co-production in municipal waste management with local taxation, we assess that central bodies enjoy more discretion and can set more ambitious targets in jurisdictions with stronger environmental preferences and/or lower expenditure needs. Incentives to engage in waste sorting and recycling are found to be less powerful with citizens who are less sensitive to the environmental preservation, and all the more when the public input has a high cost. This points to the conclusion that standards should be differentiated across jurisdictions, with due consideration of the local preferences and costs of waste management.