Assessing the effectiveness of voluntary solid waste reduction policies: Methodology and a Flemish case study

The purpose of this paper is to illustrate the use of statistical techniques to evaluate the effectiveness of voluntary policy instruments for waste management. The voluntary character of these instruments implies that latent characteristics, unobserved by the analyst, might influence the subscription decision and might lead to biased estimates of the effectiveness of the policy instrument if standard techniques are used. We propose an extension of the difference-in-differences (DiD) estimator to evaluate the effectiveness of voluntary policy instruments, which is termed the dynamic difference-in-differences (or DDD) estimator. We illustrate the technique by estimating the effectiveness of voluntary cooperation agreements between the Flemish environmental administration and individual municipalities aimed at curbing residential solid waste. Using a dataset covering all 308 Flemish municipalities for the period 2000-2005, our results indicate that municipalities subscribing to the agreement accomplished less reduction of their waste levels compared to what could be expected on the basis of their own performance prior to subscription and the performance of the non-subscribers. This result might be explained by the rising marginal cost of extra residential solid waste reduction policies. In addition, there are indications that subscribing municipalities refrain from additional reduction efforts once the target waste level of the program is achieved. The more complicated DDD methodology is shown to generate additional insight over the ordinary DiD analysis