The effects of a green nudge on municipal solid waste: Evidence from a clear bag policy

Abstract

We explore the power of behavioral economic insights to influence the level of households’ recycling and Municipal Solid Waste (MSW) by examining the effectiveness of a green nudge, the adoption of a Clear Bag Policy that was implemented in 2015 in a mid-size urban municipality in Canada. Using a Regression Discontinuity (RD) Design on universe administrative data, our analysis shows that this green nudge promoted recycling, and reduced both refuse and total MSW. While recycling increased by 15 percent, total MSW decreased by 27 percent overall between August 2015 and July 2017. Our results also demonstrate heterogeneity in response to a Clear Bag Policy across neighborhoods with varying socioeconomic indicators. Our findings suggest that green nudges can serve as effective policy instruments in devising future environment policies.

Introduction

The astounding growth in Municipal Solid Waste (MSW) generation over the last three decades continues to inflict substantial management costs and a heavy environmental burden on citizens and local governments alike. Higher income and wealth, with their resulting increase in the consumption of goods and services, higher urbanization rates, and changes in production methods leading to a greater use of packaging materials, are deemed to be the chief factors (D'Amato et al., 2016). Excessive amounts of waste or garbage are notoriously found in oceans and in the food chain and are increasingly being traced back into our food. The over consumption of resources and the creation of plastics has become one of today's most pressing environmental challenges (Hoomweg and Bhada-Tata, 2012; Barr et al., 2001; Zacho and Mosgaard, 2016). Until recently, China was the dominant market for recycled plastic, and its announcement in 2018 that it would no longer accept recyclables (i.e., plastic, paper, and textile) has intensified many countries' already pressing MSW problem. Alternatives to shipping plastics overseas are limited: incineration is typically frowned upon because of the air pollution it produces, and many places are already facing space constraints in landfills.

The bulk of waste management policies in many countries have relied on “end of pipe” approaches. The objective was to achieve greater levels of recycling or to improve waste disposal management (Cecere et al., 2014; Kinnaman et al., 2014; Zacho and Mosgaard, 2016). Mandatory and voluntary recycling programs as well as price incentive and non-price incentive programs were among the different types of policies implemented (Dahlen and Lagerkvist, 2010). In addition to environmental policies merely motivated by changing economic incentives, policy makers are increasingly incorporating psycho-social content of preferences including extrinsic motivations such as social norms and intrinsic motivations such as altruistic preferences in the design of the environment policies, particularly to encourage waste prevention.¹ As importantly, these new policies aim at utilizing the power of social influence and moral tax in their design.² Because people typically care about their self-image and often follow the crowd, perceptions of what other people do - obtained either directly or indirectly, through information given by a third party - have a powerful influence on agents’ behaviors (Nolan et al., 2008; in Schubert, 2017, p.332).

Informed by insights in behavioral economics, “green nudges”, a concept developed by Thaler and Sunstein (2008), are also being used increasingly in environmental policy to “gently push individuals in the right direction” (Alpizar and Gsottbauer, 2015; Schubert, 2017; Carlsson et al., 2019). One type of effective green nudge is making the green option the default option.³ For example, in 2010, the local government of Fort Collins, Ohio, implemented a policy which switched the size of the garbage bins: the recycling went into a large 90-gallon container, while the refuse went into a smaller 35-gallon container.⁴ As a result, households increased their recycling efforts, showing that people tend to recycle as much as they are given space to do so.

To date, however, green nudges applied to MSW remain rare (Carlsson et al., 2019). In this paper, we attempt to fill the void in the literature by examining the causal effects of a green nudge, the mandatory use of clear plastic bags, on recycling, waste generation and prevention behaviors of households. To the best of our knowledge, this is one of the first papers that quantifies the effectiveness of a moral green nudge policy in MSW. The “Clear Bag Policy” has been instituted by the Regional Municipality Solid Waste Resources Department in the summer of 2015 in a medium size city in Canada with hopes of nudging households towards more responsible sorting and potentially reducing waste generation (Pemberton, 2018). The policy was universally implemented in all garbage collection areas and the municipality is the sole garbage collector in our setting; both of which further speak to it being a top down policy. Under the new garbage collection policy, households were mandated to replace the black garbage bags used for the disposal of the refuse with the clear, transparent bags while one dark bag was permitted for privacy. This new garbage collection policy can be classified as a moral green nudge since its design incorporated the various aspects of nudges we described earlier. Policies such as the Clear Bag policy we study in our paper cost relatively little to administer and implement by local governments, and have the potential to alleviate some of the MSW challenges. Therefore, it is of policy interest to credibly quantify the effectiveness of green nudge policies increasingly being implemented in environmental policy on promoting recycling, better sorting, and ultimately reducing total waste.

Further, in our paper we provide suggestive evidence on the potential heterogeneous effects of the Clear Bag Policy across garbage collection areas with various socio-economic indicators. Previous studies have shown that economic instruments such as income, education, and social influence are key factors explaining the patterns in selective sorting behavior (Meyer, 2015; Kirakozian, 2016), while the prevention of waste does not seem to be motivated by social pressure or norms, or by economic incentives (Barr et al., 2001). Our analysis indeed demonstrates a significant heterogeneity in response to the policy change by education and income.

Essential to the purpose of this paper, the sharp and unexpected policy change in the garbage collection rules instituted in the summer of 2015 provides us with a unique quasi-experimental setting to causally estimate the effects of green nudge waste management policies on households’ recycling and waste generation behaviors. More specifically, we exploit the discrete and abrupt change in the waste management rules engendered by the Clear Bag Policy to implement a highly credible RD design. This design exploits the differences in total waste, recycling, and refuse amounts and rates in the weeks preceding and following August 1st, 2015, the date the policy was launched.

We conduct our analysis using administrative municipal data on daily solid waste, where every weekday corresponds to a garbage collection area. Our data covers the entire population we study and provides detailed daily information on the amount of refuse, recycling, organics and total solid waste spanning several years before and after the implementation of the Clear Bag Policy. In this study, we focus on the downtown core and its five collection areas, each corresponding to a given day in the week. These areas were determined to allow for about the same number of trucks, staff and completion times on any given day (Pemberton, 2018).

Our novel administrative data offers several advantages over the previous research on the waste management, which utilize survey data. First, in contrast to previous studies,⁵ these data cover all the available information on household solid waste, thereby, we have information on the entire population. Since the municipality is the sole collector of garbage and because the policy was applied to all dwellings in the community (except large apartment complexes), our analysis effectively addresses any potential selection bias in participation to the policy or sorting around the announcement of the policy. Second, as our data represent daily records on solid waste, it allows us to estimate the effects of the green nudge policy more precisely, compared to previous research, which mainly utilize monthly or annual survey waste data. Third, having access to daily data allows us to identify the effects of the policy change within narrow bandwidths spanning several months at the maximum; thereby significantly mitigating the possibility of the potential confounders and other policy changes which could have risen in the analysis using the monthly or annual data. Further, we are able to observe both the immediate and medium-run effects of the Clear Bag Policy since our data spans several years before and after the policy change. This could potentially inform and aid policy makers in their design of the new environmental policies.

Using RD design on this universe administrative data, our analysis shows that the Clear Bag Policy has been effective in increasing recycling and reducing both refuse and overall MSW. More specifically, we find in our RD robust specification controlling for bias and variance and garbage collection area dummies that the Clear Bag Policy led to a 27 percent reduction in overall MSW, while increasing recycling by 15 percent compared to the pre-policy period. Our results also point to a substitution between refuse and recycling, suggesting households improved effort in more responsible recycling after the policy. We further find suggestive evidence that areas with lower average income and educational attainment exhibit more significant improvements in their waste management and generation, thereby demonstrating that green nudges could also be effective in alleviating differences in waste management across socioeconomic status. An increasing diversion of the redeemable items, clothing and small appliances from landfill and the growing use of the commercial garbage for fee are potential mediators explaining our findings. Our results are robust to a variety of alternative RD specifications with different data-driven bandwidth selection procedures, equal and different bandwidths in each side of the cut-off, a different degree of polynomials in running variable, non-parametric kernel estimations and a battery of different placebo cut-offs.

The remainder of the paper is organized as follows: Section 2 provides a brief overview of Halifax Regional Municipality, some background on waste management policies and a description of the Clear Bag Policy instituted in August 2015; Section 3 describes our data; Section 4 discusses the identification strategy; Section 5 presents the main results, extensions and robustness checks; Section 6 includes the discussion of the results and Section 7 concludes.