Last week The Oregonian published an editorial attacking the City of Portland’s waste collection system.
It was quite a piece of work. It leads:
City Auditor LaVonne Griffin-Valade provided two services this week to the thousands of people ensnared by the heavy-handed experiment in social engineering known as Portland's solid waste collection system.
Dropping the “social engineering” bomb? Just how naïve do you think we are to think licensing 19 private companies to make a profit through a voluntary system to collect our garbage from each of our houses is “ensnaring” people in “social engineering”?
Calling it a “heavy-handed experiment”? Folks have been running curbside collection programs requiring separation since at least 1884. Portland has had economic incentives for lowering trash creation for twenty years. We ran a pilot composting program before we rolled out the new program citywide.
How’s our new program doing? It’s drawing delegations from around the country to study our success and try to emulate it. According to the Wall Street Journal, our 44% reduction in waste under to the program contributes to: “the kind of numbers that excite municipal waste watchers. Delegations from places like San Antonio; Santa Fe, N.M.; and California's Marin County have come by to pick through garbage data to study Portland's success.”
But the editorial focuses on Griffin-Valade’s findings on rates. Here’s what the audit, titled: “Residential Solid Waste: Customer rates accurate, but monitoring should continue” recommended, amidst general approval of the City’s work:
“We recommend that [the Bureau of Planning and Sustainability] either eliminate incentives and disincentives [to produce less trash] or clarify the rationale and expected outcome of the changes to the basic rates.”
So she’s recommending better documentation of the rationale behind a certain practice, a common recommendation in audits I’ve read in the private sector.
But The Oregonian wants to judge first, ask questions later. It reframes: “In other words, abandon your arbitrary scheme or justify it.” Calling the financing system an “arbitrary scheme” ignores over twenty years of studies on Pay As You Throw (PAYT) programs that charge customers who create more trash more for collection.
The Oregonian’s main complaint:
Portland forces people who use larger cans to pay a penalty [beyond direct cost differential], then uses the extra loot to subsidize people who use tiny cans. Under the rate scheme that will kick in next month, the city's penalty accounts for 16 percent of the total rate paid by users of 90-gallon cans. Those who use 60-gallon carts pay a hefty markup, too.
Why might the City do that? Portland is trying to successfully implement its long-adopted policies to reduce waste and fight climate change. Economic incentives seem a reasonable strategy. There remain two interesting questions: the price elasticity of waste consumption, and the cost of externalities in our waste system.
Simply put: how much are people changing their habits based on the economic benefits of reducing trash? And can we make the system fairer by recovering some of the costs of climate change and air pollution from those who impose them with high materials consumption?
We have partial answers.
To the first question, economic incentives are effective -- while providing a host of benefits. The EPA’s 2006 study of programs nationwide found:
The impacts from Pay As You Throw were the single most effective change that could be made to a curbside (or drop-off) program.
Pay As You Throw has significant advantages beyond recycling and equity, including:
High levels of source reduction;
Recycling and yard-waste diversion impacts that provide significant progress toward meeting diversion goals (in a very cost-effective way);
Environmental benefits in terms of greenhouse gas reductions, energy conservation, and consequently, pollution prevention;
Job creation and economic development benefits. Moving from landfill disposal to more labor intensive recycling creates jobs.
Are the rates right? From the EPA’s study:
While significant differentials in rates between different can sizes are an important incentive, twice as much service does not need to cost twice as much in order to provide an incentive – a differential of 80% seems to generate most of the diversion impacts associated with more aggressive rates.
That 80% is much higher than Portland's rate differential. Susan Anderson, Director of the Bureau of Planning and Sustainability, notes:
“In Seattle, for example, the monthly rate for services that includes a 64-gallon garbage rollcart is fully twice the rate for service that includes a 32-gallon can; in Portland, by contrast, the 60-gallon rollcart costs 34% more than the 32-gallon can."
So our price differential could be even higher. A current study of price elasticity could provide valuable data, but studies suggest we're not out of line - and might be too low to maximize our benefits.
As to the second question – just how large are those externalized costs?
Take just the climate benefits. Per the EPA: “The value of the reduced emissions due to [volume-specific trash rates] is on the order of $30-$55 billion dollars annually.” That’s real money - real costs that currently go unaccounted for in Portland’s rate-setting process. Imposing relatively small economic incentives to account for this sort of externality is simply smart and fair, while admittedly imprecise.
Finally, even with our rate system, The Oregonian ignores a basic fact: the average cost per gallon of trash decreases with more trash. Customers with a 90-gallon trash collection cart pay just 49 cents per gallon of trash per two weeks, whereas those of us with 20-gallon carts pay $1.29. And those who get garbage collection just every four weeks pay $1.32.
The auditor is right: we should make our case for economic incentives clear. But there are plenty of solid reasons for them. Economic signals should be an integral part of being America’s smartest city in waste management – reflecting our community’s values at their best.
Disclaimer: I contribute towards the pay of The Oregonian’s editors as a daily subscriber to home delivery. I also contribute towards the City of Portland’s management of this program as a resident and customer of Waste Management.
Footnote: Recycling and composting are generally included as fixed amounts and rolled into other rates. That's a question for another day.
Update: As the comment below notes, the original title of this piece didn't include reference to garbage rates.