Abstract
The study is based on the survey conducted in 1981 by the National Institute for Environmental Studies (NIES) with the purpose of clarifying a role of user charges in municipal solid waste management. The survey attempts to cover the total number of 60 cities and intergovernmental agencies in Japan which charge, according to the 1977 national survey conducted by Japan Ministry of Health and Welfare, the user for the municipal (residential) collection and disposal (treatment) service. The NIES survey was carried out by mail as well as telephone calls to local goverment officials.
Responses are made by 51 local governments, 14 of which employs a flat fee type, the remaining 37 a variable fee type. The variable fee type consists of various types, in which the change varies with either the quantity of refuse collected or the frequency or spot where service is offered. Particularly, 16 local governments employ a variable fee type of trash bag in which the user purchases trash bags from a government. The price of bag is fixed to cover production cost, billing costs and charge.
Two important findings derived from our analysis of the survey are: the hypothesis that when service consumers must pay a higher fee, they will demand less service than other consumers with a lower price, is verified based on a statistical hypothesis testing of two mean values between a flat fee category (14 samples) and a trash bag category (16 samples). Second, cities with higher population densities are more likely to have lower ratios of charge revenues to total municipal solid waste treatment costs.
Finally, the demand function and the cost function for municipal solid waste treatment service are estimated by the least squares method. These functions together with the marginal-cost-pricing rule and externality as well as public good concept, are utilized to provide an economic rationale for the second finding.
