International Review of Environmental and Resource Economics > Vol 8 > Issue 3–4

Understanding the Economics of Waste: Drivers, Policies, and External Costs

Thomas C. Kinnaman, Department of Economics, Bucknell University, USA,
Suggested Citation
Thomas C. Kinnaman (2016), "Understanding the Economics of Waste: Drivers, Policies, and External Costs", International Review of Environmental and Resource Economics: Vol. 8: No. 3–4, pp 281-320.

Publication Date: 06 Jun 2016
© 2016 T. C. Kinnaman
Environmental economics,  Public economics
Solid wasteRecyclingExternal costsExternal benefits


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In this article:
1. Introduction 
2. International Developments in Waste Markets 
3. Advances in Economic Understanding — The International Literature 
4. The External Marginal Cost of Waste 
5. The Lifecycle Literature 
6. Monetizing the Results of Lifecycle Analyses 
7. Combining the Lifecycle and Monetizing Literatures to Estimate External Costs 
8. Lifecycle Implications of Recycling Systems 
9. Policy Implications 
10. Implications to Future Modelling 
11. Conclusion 


This survey reviews the economics literature on solid waste published since 2000. This survey also summarizes the results of the lifecycle literature estimating the magnitudes of the external marginal cost of waste disposal and the external marginal benefit associated with recycling. The external marginal cost of landfill disposal is found to be rather small. The external marginal benefit of recycling certain materials is found to be comparatively large. If these estimates are true, then conditions at solid waste landfills and incinerators may no longer be the driving source of market failure in the industry. Instead the sizable external benefits associated with recycling some materials may explain the need for policy.