Valuation of externalities of selectedwaste management alternatives:

A comparative review and analysis

Tzipi Eshet a,∗, Ofira Ayalon b, Mordechai Shechter b

a Faculty of Civil and Environmental Engineering, Technion, Haifa 32000, Israelb Natural Resource and Environmental Research Center, University of Haifa, Haifa 31905, Israel

Received 17 June 2004; accepted 15 August 2005Available online 29 November 2005

Abstract

Accessible and transparent data on the social costs of externalities is crucial to waste managementresearchers, decision-makers, and managers, if waste management strategies are to be successfullyanalyzed and implemented. The primary objective of this study, which is based on a thorough reviewof existing literature and research, was to assist the abovementioned in their decision-making withreliable recent data, by mapping, gathering, analyzing, and comparing different valuation results ofexternal costs associated with various types of pollution and disamenities related to landfilling andincineration of solid waste.

The second objective was to assess the suitability and reliability of various valuation methods andtechniques that were implemented in the reviewed valuation studies, as well as the transferability ofvaluations across sites.

The paper focuses on studies conducted since 1990, because in dynamic fields such as the wastesector, externalities, and valuation, it is essential to stay current with the most recent information andvaluations.

We discuss the issues and the limits of the valuation techniques and analyze the estimates of allthe studies, presenting the results in the form of intervals and averages of damage costs. In spite ofthe inconsistencies evident in the variability in the results we reviewed, the outcome of this first com-prehensive critical analysis is significant and the valuations obtained in this study provide estimates

∗ Corresponding author. Tel.: +972 544 755900; fax: +972 4 8252496.E-mail addresses: eshet@techunix.technion.ac.il (T. Eshet), agofira@tx.technion.ac.il (O. Ayalon),

shechter@econ.haifa.ac.il (M. Shechter).

0921-3449/$ – see front matter © 2005 Elsevier B.V. All rights reserved.doi:10.1016/j.resconrec.2005.08.004

of orders of magnitude of external costs that can be used by decision makers in the waste sector toaddress important policy questions associated with social welfare.© 2005 Elsevier B.V. All rights reserved.

Keywords: Waste management; Externalities; Landfill; Incinerator; Valuation; Disamenities

1. Introduction

The impact of waste management on the environment has been widely recognized,and since the 1990s, has contributed to a better understanding of the role of the wastesector in ecological, economic, and social frameworks and in the context of sustainabledevelopment. The most important progress has been in the increased level of awarenessamong the public and politicians (e.g. ISWA, 2002). As a result, municipal waste generationand its management and associated externalities have been addressed as one of the key targetsin environmental policies (Ayalon et al., 1999).1

Externalities are a form of market failure arising in an unconstrained market (CambridgeEconometrics et al., 2003, website; Rabl et al., 1998), defined as: The external costs andbenefits that arise when the social or economic activities of one group of people have animpact on another, and when the first group fails to account fully for their impact (ExternE,1995; Krewitt et al., 1998).

Externalities arise from various activities during the life cycle of a product: production,transportation, use, and disposal. These externalities create numerous global, regional, andlocal disruptions, such as the emission of greenhouse gases (GHG) and pollution to air,soil, and water; the production of noise, odor, and visual intrusion. Finally, these impactsmay also cause, inter-alia, climate change, health effects, damage to crops and buildings,and disamenities. Obviously, adverse health effects are of special importance. Accordingto ExternE (1998), these effects account for more than 95% of the damage costs associatedwith PM10, NOx, and SO2

2 (Rabl et al., 1998). The extent of the health effects dependson the magnitude and duration of the exposure to specific pollutants, and the nature of theexposed population (Burtraw and Toman, 1997).

All alternative strategies of waste management result in externalities that are generatedat the collection, transport, and disposal stages. These externalities are influenced by thecomposition of the waste, treatment processes (landfilling, incineration, etc.) and charac-teristics of the facility involved (e.g. geographic location, age of site). The professionalliterature covers various technologies of waste management; nevertheless, the present workwill focus only on waste landfilling and incineration for the following reasons: (a) theseare the most acknowledged methods of waste management; (b) the number of estimates ofother methods in the literature is insufficient for a comprehensive summary; (c) most of thevaluations of other methods (such as recycling) are highly material-specific, and thus donot fit the character of this study.

1 This growing attention can be illustrated by spending estimates, such as, the annual total operating and capitalcosts for pollution abatement across all sectors in the U.S. exceeding the US$ 150 billion (Beloff et al., 2000).

2 Explanation to the chemical symbols can be found in Appendix 2.

Landfilling is associated mostly with externalities like landfill gas (CO2 and CH4) thatcontributes to global warming, and leachate that contaminate groundwater and/or surfacewater. Occasionally, external benefit is obtained through energy generation from CH4.

Incineration is generally associated with external cost caused by air pollutants like parti-cles, NOx, dioxins, and SO2 as well as by-products (e.g. ash), and on the other hand with theexternal benefits of avoided burdens (external cost from conventional electricity production)through energy recovery. Co-generation facilities are usually placed near large populationcenters, close to the potential consumers of recovered energy. As a result, more people arelikely to be exposed to their adverse effects.

Both landfills and incinerators are also associated with disamenities that arise because ofthe mere existence of the facilities. Disamenity, usually associated with prices of local prop-erties, refers to the welfare impacts of local nuisance experienced by households living closeto noxious facilities. Despite some differences, there are obvious similarities in disamenitiesassociated with the proximity to incinerators and landfills. Both facilities cause, in variousdegrees, odor, dust, wind-blown litter, visual intrusion, noise, and traffic. Landfill is alsoassociated with burdens such as seagulls, vermin, and flies, and an incinerator is typicallylinked to visual intrusion via the smokestack. The magnitude of the effects will depend ondistance from the site, type of waste (municipal or hazardous), type of site (existing, new,or proposed site), topography and prevailing wind directions (EC, 2000b).

Transportation of waste to and from landfill and incineration sites, including the totaldistance traveled, vehicle type and weight, the travel-speed, and waste density and weight,result in externalities in the form of airborne emissions, congestion, accidents, and nuisancessuch as noise. These external costs are among the main factors, together with populationdensity, that distinguish between the social costs of waste facilities in urban and rural areas(CSERGE et al., 1993; Powell and Brisson, 1994).

To meet the various technical, ecological, and economic requirements of integratedwaste management, an appropriate combination of technologies is needed because there isno single solution to waste treatment, and thus there is a need to account accurately for thecontribution in monetary terms of each technology to the overall economy in its full contextat all levels—global, national, regional, and local and finally on the household level. Bycombining costs of environmental impacts with the direct costs of collecting, processingand disposing of waste, a full cost comparison of options is possible.

Once policy-makers have the information about the benefits and costs of alternativeoptions for addressing a particular environmental or social problem, they can use thecost–benefit analysis (CBA) to conduct an overall assessment (RDC and PIRA, 2001).For example, the benefits of improving environmental quality in the vicinity of a landfill(e.g. eliminating odors) should be compared to the costs of improving the landfill function-ing (e.g. enhanced waste-cover in order to avoid dispersion of odors). In practice, however,it is problematic to obtain the full range of impacts, fully quantified in monetary values,as there is frequently a lack of information about the environmental effects as well as gen-eral uncertainty about prices and valuation estimates. Eyre (1998) argues that extensionof the tools of CBA to impacts that have major social and macroeconomic implications isparticularly challenging, and our paper aims to promote such procedures.

In approaching the evaluation of externalities related to landfilling and incineration,this study addresses solid waste management (SWM) researchers, decision-makers, and

managers at all levels. They ought to be interest in economic-values of externalities for theinternalization of external costs related to landfilling and incineration, through instrumentsas standards, taxes, subsidies, compensations, and tradable emission permits, in order toavoid direct damage to society and achieve efficient allocation of resources and sustainabledevelopment. An additional interest would be to practitioners, in the context of reducingcosts and taxes by achieving environmental standards.

The primary objective of this study was to assist the abovementioned by building thefirst inclusive set of existing economic-estimates of externalities. This was accomplishedthrough a comprehensive review of the relevant literature, by mapping, gathering, analyz-ing, comparing, and synthesizing different valuation results for externalities associated withvarious types of pollution and disamenities related to landfilling and incineration of solidwaste. The study refers not only to existing estimates and implications from studies world-wide and common rule of thumb figures, when they are available, but also reveals essentialinformation about data that is still missing.

The second objective was to assess the suitability and reliability of all valuation methodsand techniques that were implemented in the reviewed studies, as well as the transferabilityof valuations across sites.

2. Valuing the externalities

Economic valuation of externalities can provide an indication of whether environmentalpolicy fits the needs of public preferences. Currently, the ground rule for valuation of exter-nalities is to account for all costs, both market and non-market. For example, the valuationof an asthma attack, caused by particles, should include not only the medical-treatmentcosts but also the willingness to pay (WTP) to avoid the suffering (Rabl et al., 1998).

Economists have developed several concepts for monetary valuation. With the exceptionof some methods that assign approximate values to externalities (based on expert judg-ment and assessment), most of the direct and indirect techniques rely on economic welfaretheory3 that is based on the values that individuals ascribe to their preferences regardingan environmental good with no observable price in the market. In direct (stated preference)methods, people are asked directly to state their WTP for a benefit or to avoid a cost, or torate/rank/choose alternatives regarding a specific hypothetical situation/policy. In indirect(revealed preference) methods, preferences and thus implicit values for externalities arerevealed indirectly when individuals purchase marketed goods and services that are relatedto the environmental good as complements or substitutes (EC, 2000b; Shechter, 1995).

Studies to evaluate externalities are complicated and expensive to carry out. Therefore,in the absence of empirical monetary values for a study site, it is an accepted practice amongresearchers and policy makers to use secondary valuations for new policies by adjusting andapplying estimates from primary studies using econometric techniques, known as benefittransfer (BT). Though this practice adds uncertainty to the ‘new’ estimates (Bateman et al.,2002; Shechter, 1995).

3 Welfare theory aims to maximize individual and social welfare through optimal resource allocation (EC,2000b).

Fig. 1. Monetary valuation methods and techniques.

To assist the reader with the classification of the acknowledged valuation methods, theyare organized in a structured way in Fig. 1.

As illustrated in Fig. 1, the valuation methods are divided into four categories: directmethods versus indirect methods, the dose–response functions that define the physicalrelationship between pollutants and their impacts on relevant receptors and serve as datasuppliers to many of the valuation techniques, and then the expert assessments methods,including approximate techniques. Lastly, the benefit transfer (econometric) method thatserves for transferring ready valuations from a study site to a policy site, usually from pri-mary to secondary studies, potentially through all valuation methods. A short descriptionof all methods is provided in Appendix 1.1.

3. Results

3.1. A review of valuation studies and values, for SWM externalities

Environmental economists have carried out valuation studies of externalities for a numberof decades. In recent years a series of national research projects, as well as limited primarystudies, has been carried out, mostly in Europe and USA, to quantify social costs deriving

from alternative treatments of waste, and mostly with the purpose of setting mandatoryregulations. The European Commission, for instance, has launched a number of majorstudies, such as one on landfills and incinerators, using the consulting group COWI and theExternE project on the energy sector to incorporate energy recovery from the waste sector.These studies serve as databases for many other studies in Europe and other countries,although a great portion of the estimates were adopted from US studies (e.g. Kiel andMcClain, 1995; Tellus, 1992).

This paper focuses on studies conducted since 1990 (including the above), assuming thatin dynamic and continuously changing areas such as externalities and waste management,decision makers at all levels should be as aware as possible of the most recent research.

The reviewed studies included: 12 studies that investigate externalities from landfills,17 studies that analyze externalities from incinerators (some deal with both), and 5 studiesthat deal with air pollution from other sources and could be applied to waste management.A number of different scenarios were examined across all studies (e.g. urban or rural areas,with or without energy recovery, etc.).

Tables 1–4 provide a profile of the reviewed studies in a grouped mode.Tables 1 and 2 present the profile of valuation studies that address emissions to air, water,

and soil from landfill and incinerator, respectively. In Table 3, we have listed studies of airpollution impacts that could be applied to waste management. Table 4 presents both theprofile of valuation studies of disamenities associated with landfills and incinerators, andthe estimates.

Tables 5–7 summarize the main estimates grouped according to the units of measure.Table 5 presents economic unit-values of emissions per kg of pollutant for both landfill

and incinerator. Tables 6 and 7 present valuations for specific impacts, per ton of wasteas well as total estimates for landfilling and incineration, respectively (All figures fromdifferent currencies were converted to US$, 2003 rate, using the actual exchange rates,without special adjustments).

4. Discussion

4.1. Methodological issues

Those who benefit from the useful results of this study should, however, be aware of thedifficulties in summarizing and comparing the valuation results of the reviewed studies andchoosing “best estimates” and thus should consider the limitations and apply the estimatescarefully. The difficulties are connected with key reasons and constraints as follows:

1. Different units of measure, beginning with the physical relations on which valuations arebased. There are calculations that use either dose–response (DRF) or exposure-responsefunctions that yield quite different results. Apsimon et al. (1997) note that it is importantto recognize that any DRF is actually often an approximation of an exposure-responsefunction. In the case of pollutants, different studies express the costs with respect tomoney-unit either per kg of emission or per ton of disposed waste. Some studies presentboth. In the case of energy renewal, there are estimates such as costs per kW of power as

Table 1Profile of valuation studies of landfill disposal/external costs of emissions to air, water and soilAuthors Year Study area Emission Impacts coverage Assumptions/conditions Discount

rate (%)Valuation methods Source of valuation data

Schall 1992 NY city region NOx , CO, CO2, CH4,benzene, TCE,chloroform

Landfills both with andwithout methanerecovery

Tellus-Institute; industrydata

CSERGE et al. 1993 UK CO2, CH4 Global warming; transportationpollution; pollution displacement

Urban/ rural landfills(transportation);with/without energyrecovery; separateestimates for UK onlyand for ECU

0, 3 BT of temperature impacts(impact pathway) clean-upcost; insurance risks andmonitoring costs

Frankhauser (1992,1993) and IPCC

Powell andBrisson

1994 UK CH4, CO2, SO2, NOx ,TSP, leachate

Global warming, health impacts,transportation impacts leachate

Urban vs. rural, and oldversus new; with andwithout energy recovery;values for UK only andfor ECU

BT from existing studies thatused dose–response and SPmethods. Clean-up cost forleachate + risk of accidentsand monitoring costs

Mainly: CSERGE et al.(1993) and Pearce et al.(1993)

ECON Energi 1995 Norway CO2, CH4, VOC, NOx ,VCl, leachate

Standard Norwegianlandfill, with/withoutcollection of landfill gas

Tax on CO2; GWP for CH4;control cost for VOC; controlcost with linkedenvironmental values forleachate; dose–response forNOx; BT from Tellus forVCl; VSL for health impacts

IPCC (1995), Tellus(1992) and Heijungs,Hjellnes and DNVIndustry in Swedish

EC 1996 Europe CO2, N2O, CH4 Global warming With/without energyrecovery; 40%collectionefficiency and 30%conversion efficiency

BT of temperature impactsassessment

Mainly Fankhauser(1992, 1993)

EMC 1996 Israel CO2, CO, CH4 Global warming; morbidity;mortality; crops; buildings; roadaccidents; leachate

With and withoutmethane recovery; twoscenarios fortransportation distances(170 and 85 km); VSLUS$1 million

BT from European studiesmainly used dose–responseand abatement cost methods(for CO)

Fankhauser (1992) forglobal warming; UKdata for pollutioncoefficients

Enosh 1996 Israel CO2, CO, CH4 Global warming; morbidity;mortality; crops; buildings; roadaccidents; leachate

‘Old’ and ‘new’landfills; VSL US$1million; unit values(US$/kg pollutant): CO2(as C) 0.023 and CH40.124

BT from studies mainly useddose–response and abatementcost methods

CSERGE (1993),Fankhauser (1992) forglobal warming, Schall(1992) for toxicpollutants

Table 1 (Continued )Authors Year Study area Emission Impacts coverage Assumptions/conditions Discount

rate (%)Valuation methods Source of valuation data

Miranda and Hale 1997 Germany, Sweden,UK, USA

CO2, CO, CH4, benzene,chloroform, TCE,leachate

Mortality and morbidity effects With and withoutmethane recovery;flaring of landfill gas isconsidered; lined andunlined landfills

Damage cost functions (BTfrom several studies)

Damage cost fromJosselyn (1993), Pearceand Brisson (1995),emissions data fromJosselyn (1993); SRIInternational (1992) andFranklin (1994)

EC (COWI) 2000 Europe CO2, NOx , CH4, SO2,leachate

Global warming; air pollution;pollution displacement;

With/without energyrecovery

BT from EU and US studies

RDC and PIRA 2001 EU member states CH4, CO2, CO, CFC,VOCs, NOx , PM10

Global warming, health impacts,traffic-noise, congestion andaccidents, damage to buildings

Full energy recovery;global warming isclassified in CO2equivalents, for timehorizon being 100 years

5 Life cycle assessment withdamage cost (derived fromhedonic pricing methods orWTP studies) and preventioncost methods

IPPC (1995), Tol andDowning (2000), UKEnvironmental Agency

Eunomia 2002 Europe CH4, CO2, NOx , N2O,VOCs, dioxins, TSP,cadmium, chromium,lead

Global warming, air pollutionleachate

‘Old’ and ‘new’ landfillsdefault’ landfill: 60%gas collection efficiency;50% of collected gasused for energy

1, 3, 5 Mainly based on existingstudies; clean-up cost forleachate.

CSERGE et al. (1993),Brown et al. (2000) andExternE

Dijkgraaf andVollebergh

2003 The Netherlands CH4, CO2, N2O GWP and other impacts notexplicitly indicated; lleachate

‘Old’ and ‘new’landfills; new landfillsboth with and withoutmethane recovery

Abatement cost (assumed toreflect minimum WTP)

Physical values from EC(1996), Shadow pricesfrom Dutch governmentand EC (2000a,b)

Table 2Profile of valuation studies of Incineration/external costs of emissions to air, water and soilAuthors Year Study area Emission Impacts coverage Assumptions/conditions Discount

rate (%)Valuation methods Source of valuation data

Tellus Institute 1992 USA CO2, NOx , SO2, VOC,PM10

Morbidity and mortality Range of packagingmaterials in newcontrolled facilities

Control cost (cost ofregulation) with linkedenvironmental values (healthranking)

Public sources ofinformation includinggovernment databases

CSERGE 1993 UK CO2, SO2, NOx , TSP Global warming; mortality andmorbidity; damages to buildings,forests, crops

Urban and regionalincinerators both withenergy recovery;estimates for UK onlyand ECU region

0, 3 BT of assessment oftemperature impacts; controlcost

Mainly fromFankhoauser (1992 and1993) and IPCC

Powell and Brisson 1994 UK CO2, SO2, NOx , TSP Global warming; health impacts New urban and ruralsites are referred;estimates for UK onlyand ECU region

BT of dose–response and SPmethods from primary studies

Mainly from CSERGEet al. (1993) and Pearceet al. (1993)

ExternE 1995,1998

EU (Italy, Spain,France)

PM10, SO2, CO2, NO2,VOC, heavy metals,dioxins

Health effects, damage to roadsand accidents

Assessments aresite-specific; thereference location isMilan in Italy; withoutenergy-renewal

1, 3, 5 Impact pathway method(bottom-up); YOLL approachfor mortality and morbidity

Dose–response functionmostly from U.S.studies; Transport’semissions from Corinairsource, ExternE coreproject

ECON Energi 1995 Norway CO2, NOx , SO2, VOCparticles, heavy metals,toxins

Morbidity and mortality, climateeffect, damages to buildings,forests, crops

Range of packagingmaterials in newcontrolled facilities

Impact pathway; control costwith linked environmentalvalues or indices; VSL forhealth impacts (work-hour,illness: hospitalization)

Mainly from Tellus(1992) and Heijungs,Hjellnes and DNVIndustry in Swedish

EC 1996 UK, France,Germany

PM10, SO2, NOx , VOC,heavy metals, dioxins

Morbidity and mortality; damageto crops (TOC) and buildings(SO2, NOx)

German siterepresentative for EU;different regulationsacross countries

Impact pathway method(dose–response)

ExternE and someadditional sources(mainly relying on USEPA damage functions)

EC (b) 1996 EU12 SO2, NOx , particles, CO,CO2, N2O

Morbidity and mortality; climateeffect, damage to water, building,forest, crops

Different incinerationtechnologies; differentwaste composition

BT of dose–response;clean-up costs; CVM;averting behavior

Mainly from ExternEproject

EC (e) 1996 UK Emissions to soil andwater

All aggregated impacts Leachate is not specifiedfor incineration

Clean-up costs; abatementcosts

CSERGE et al. (1993)

Enosh 1996 Israel CO2, CO, HCl, Particles,NOx , SO2

Morbidity and mortality; globalwarming, damage to crops,buildings, roads

Hypothetic incinerator BT from studies mainly useddose–response and abatementcost methods

CSERGE et al. (1993),Fankhauser (1993),Schall (1992) and IsraeliMinistry of theEnvironment

Table 2 (Continued )Authors Year Study area Emission Impacts coverage Assumptions/conditions Discount

rate (%)Valuation methods Source of valuation data

EMC 1996 Israel CO2, particles, NOx ,SO2

Morbidity and mortality; globalwarming, damage to crops,buildings, roads; accidents

Hypotheticalincinerator; damage oftoxic pollutants isconsidered negligible

BT from U.S. and Europeanstudies

Fankhauser (1993) andPearce et al. (1993)

Miranda and Hale 1997 Sweden, Germany,UK, USA

PM, SO2, NOx , CO,CO2, HCl, HFl

Morbidity and mortality; climateeffects; visibility; materials; crops

The report does notdiscuss the effect ofdispersion anddeposition, for instanceto sea

BT of marginal damage costfunction

Mainly based onJosselyn (1993)

Rabl et al. (a) 1998 Europe PM10, SO2, NO2, VOC,CO, dioxins, heavymetals

Morbidity and mortality Urban and rural areas(number of peopleexposed); height ofdefault stack is 100m;hypothetical incinerator(1994’ emission limits)

Impact pathway method(DRF). VSL obtained by CV;COI (hospital stays,emergency visits, bronchitisattacks, restricted activitydays, asthma attacks)

Extern; other sources forhealth impacts

Rabl et al. (b) 1998 France (for EUincinerators)

PM10, SO2, NO2 Health effects, mostly asthmaattacks; damage to forests, cropsand buildings

Local and regionaldispersion models;YOLL: US$ 0.083million for chronicmortality and 0.155 m$for acute

Impact pathway method(DRF) for each pollutant;COI (respiratory hospitaladmission)

ExternE (1995, 1998),Rabl (1996), ETSU(1996), Spadaro andRabl (1998) and Krewittet al. (1995)

Eyre 1998 UK, EU12 SO2, NOx , particles Morbidity and mortality; climateeffect, damages to water, building,forest, crops

Different incinerationtechnologies; differentregulations

Expert assessment;“bottom-up” impact pathway

ExternE Project (1998);UK Governmentdepartments; IPCC

EC (COWI) 2000 Europe CO2, N2O Global warming Different technologicalstandards and level ofenergy recovery

BT from primary studies Studies from EU, USand other westerncountries

Eunomia 2002 Europe SOx, NOx , CO2, N2O,CO, VOCs, dioxins, lead,PM10, leachate

Global warming; health impacts Efficiency of energyconversion is 75%;nature of the materialincinerated is notconsidered

1, 3, 5 BT of unit damage costs fromprimary studies

Mainly from Broome(2000) and EC (2000a,b) that rely also on otherstudies

Dijkgraaf andVollebergh

2003 The Netherlands CO2, N2O GWP and other impacts notexplicitly indicated; leachate

Modern incinerator withenergy recovery

Table 3Profile of valuation studies of air pollution impacts in general that can be implemented to SWMAuthors Year Study area Emission Impacts coverage Assumptions/conditions Discount

rate (%)Valuation methods Source of valuation data Monetary valuation

Rosendahl 1998 Norway, Oslo PM10, PM2.5,mostlytransportation

Health impacts: economicactivity: sickness, absence,disability and publicexpenditures (publichospitals)

Economic impacts ofhealth damages arehandled separately fromother non-economicwelfare effects

7 BT of DRF from theinternational literaturecombined with functions forthe concentration ofparticulates in Oslo at variousemission levels

Norwegian Institute forAir Research; WHO(1995), EPA (1995), EC(1995), Ostro (1993,1994) and StatisticsNorway

US$ 260/kg emission;social costs: US$ 468per capita

Krewitt et al. 1999 EU15,Germany

PM10, SO2, NOx Morbidity and mortality,damages to crops andmaterials

Valued for electricitygeneration

Dose–response (bottom-up);damage costs; abatementcosts

Existing Europeanstudies

US$ 6–8.3/kg SO2, US$3.4–5.4/kg NOx , US$12.8–17.4/kg PM10

Navrud 2001 Norway PM10 PM2.5 SO2NOx Ozone

Asthma and lightersymptoms (coughing,sinus, throat congestion,eye itching, headache,breath shortness, acutebronchitis)

Air pollution was notmentioned in the surveyto avoid the inclusion ofother impacts from airpollution; estimates aredetailed in the study

CVM survey containingranking technique and WTPquestions; cost of illnessmethod

Survey: sample of 1009Norwegians

US$ 50 is the medianWTP per person to avoid1 additional day per yearof seven “light” healthsymptoms (US$ 162 for14 days a year)

AEA technology 2002 EU (UK) PM10, SO2, NOx ,VOC

Global and local impacts Updating ExternEprogram’ data

Extern project Serden–Belgium US$1.7–22/kg PM10;Finland–France US$1.4–8.2/kg NOx

Kim et al. 2003 Korea (Seoularea)

SO2, NOx Air pollution reflecting inhousing prices

Housing prices are basedon respondent estimatesassuming the market iswell known

A spatial-econometrichedonic housing price modelto measure the marginal valueof improvement in SO2 andNOx concentrations

Housing Survey data;1121 in-personinterviews of owner andrenters; monthly housingprice indices conductedby Korea Housing Bank

Results are reported for(609) owner occupantsonly; marginal WTP fora 4% improvement inmean SO2concentration: US$ 2333or 1.4% of housingprice; NOx has noimpact on housing prices

Table 4Profile of studies of disamenities valuations (landfill and incinerator) and valuation resultsAuthors Year Study area Impacts

coverageMethod Data sources Assumptions and remarks Valuations ($/ton waste)

Roberts et al.a 1991 USA,Tennessee

Landfill;disamenity ingeneral

CV Survey of 150 respondentsliving by a landfilled askingabout NIMBY effect

Hypothetical situation of removingthe near landfill was presented

Average WTP = US$260/year/household up to 6.4 kmfrom site

Hirshfeld et al.a 1992 USA Landfill;disamenity ingeneral

HP Survey of eight real-estateappraisers and agents

Landfill within a hypothetical town 30% reduction in house price0.8 km from site, 13% for 2 kmfrom site

Nelson et al.a 1992 USA, Ramsey,MN

Landfill;disamenity ingeneral

HP Price survey of 708 housesales (1979–1989), within3.2 km from landfill

Price effect is relatively larger in anarea of high value properties

3.8%/km reduction in house pricewithin 1 km from landfill

Powell and Bris-son

1994 UK Landfill;disamenity ingeneral

HP CV(BT)

BT from US studies: Nelson etal. (1992), Havlicek (1985),Gamble et al. (1982),Mendelshn et al. (1992) andCSERGE et al. (1993)

Costs depend on the status of thesite (existing/proposed new site);Topography and wind directions notaccounted

3.1–6.25%/km reduction in houseprices up to 6.4 km

Brisson andPearce

1995 UK (USA) Landfill (andincinerator);disamenitiesin general

HP CV(BT)

BT from U.S.: 10 HP studiesand 3 CV studies

�HP = 12.79–3.76D (�HP = %price change; D = distance)

2.4%/km reduction in house pricesup to 5.25 km from site;WTP = US$ 162/year/km

ExternE 1995 Italy, Milano Landfill;noise, odor,dust, litter

HP Sales from a single real estateagency; Dispersionmodel + exposure for odors

Uniform population and housingdensity in the area

2.8%/km reduction in house price 13.2

Keil and McClain 1995 USA,Massachusetts

Incinerator;disamenitiesin general

HP Analysis of 2593 house salesfrom 1974 to 1992

Costs depend on time-phase(planning, construction, ongoingoperation)

1.06–2%/km reduction in houseprice up to 5.6 km

EMC 1996 Israel Landfill andincinerator;NIMBY effect

HP CV Survey included 757 citizens;503 telephone respondents:data from real-estate agencies

Hypothetic incinerator; urban andrural areas

WTP = US$ 7700/km-landfill;US$ 14,120/km from incinerator;HP: reduction of 5%/km up to4 km (=about US$ 10,960/km)

Garrod and Willis 1998 North UK Landfill;noise, odor,dust, litter

SP Sales from a single real estateagency; dispersionmodel + exposure for odors

73 responded from 400 potentiallyaffected households

WTP = US$ 21/year/household toreduce impacts (50 days a year);litter and dust: WTP = US$0.17–0.27/day; smell: WTP = US$0.14–0.22/day

Table 4 (Continued )Authors Year Study area Impacts

coverageMethod Data sources Assumptions and remarks Valuations ($/ton waste)

Bellof et al. 2000 USA Industryincludingwaste sector;harmless odors

HPCourtdecision

Government records;courts records

Real estate depreciation valueis a part of total societal cost(health, lost opportunities, etc.)

Reduction in houseprices every 0.8 kmwithin 4 km. Cost = US$425/year/household(including health,impacts)

RDC and PIRA 2001 EU (12) Landfill andincinerator;odor andvisualdisamenities

HP CV(BT)

BT from mostly Brissonand Pearce (1995)

Landfill’s capacity200,000 ton/year over 20 year;incinerator: 730,000 ton/yearover 14 year; house price isabout US$ 100,000; density is250 houses/km2

3–4%/km reduction inhouse price, from alandfill/incinerator

37 landfill, 10incinerator (totaldisamenity cost:US$7.4 million/year)

Hite et al. 2001 USA (OH,FranklinCounty)

Landfill;disamenitiesin general (notspecifiedseparately)

HP 2913 Real estatetransaction data (1990) ofowner-occupied housingunit; 1990 census fordemographic variables;maps

Urban landfills with bothpositive and negative lifeexpectancies

3.3–3.6%/km reductionin house price up to5.2 km (related to landfilllife expectancy)

Eunomia 2002 EU (12) Landfill;disamenitiesin general

HP(BT)

BT of COWI study thatused meta-analysis of HPstudies by Brisson andPearce (1995)

‘Old’ and ‘new’ landfills;various household density; 1,3, 5% discount rate

5 (typical-Italy), EUmin–max (0.35–16.96),Finland–TheNetherlands

Kim et al. 2003 Korea, Seoul General airpollution;propertyprices relatingto SO2, NOx

concentration

HP 1121 in-person interviewsof owner and renters;monthly housing priceindices (Korea HousingBank)

House-market is well known torespondents; results reportedfor (609) owner occupants only

WTP = US$ 2333 for 4%improve in SO2concentration, or 1.4% ofhousing price (a marginalchange of 1 ppb frommean air quality of 25ppb results at 4%).NOx-negligible

CambridgeEconometricwith EFTECand WRc

2003 UK Landfill;noise, odor,dust, litter,aestheticattributes

HP CV Environment Agency;Scottish EnvironmentalProtection Ag.; Houseprice and socioeconomicdata from CambridgeEconometrics’ database

11,300 landfill sites (6100licensed); 592,000 housingtransactions 1991–2000; 6%discount rate

Average UK: reductionof about US$ 8668 (7%)in house value inproximity of 0.4km fromlandfill and US$ 2521(2%) for 0.8km;0.8–1.6 km: 1.04%1.6–3.2 km: 0.7%3.2 km: 0%

2.4–3.44 (100 milliontons/year for 28 years)

a We did not review the study. It is quoted from Brisson and Pearce (1995).

Table 5Economic unit-values (US$/kg emission, $,2003) calculated/used in estimates of landfill and incineration externalities (average in parenthesis)Study Year CO2 CH4 NOx PM10 SO2 CO N2O VOC VCl Heavy

metalsLeachatePb+Cd+Hg

Dioxins

PollutantCSERGE 1993 0.0017-0.0136

(0.00765)0.0496–0.2216(0.1356)

0.132–0.523 (0.3275) 22.75 0.392–0.68 (0.536)

Powell andBrisson

1994 0.0065–0.0496(0.02805)

0.051–0.2216(0.1363)

0.132–0.523 (0.3275) 22.75 0.392–0.68 (0.536)

ECON 1995 0.04 2.69 7.33 20.5 2.1 1.65 314.24 1445 3378EC (b) (average

EU12)1996 0.004 2.4–4.7 (3.55) 9.5–12.8 (11.15) 3.1–7.3 (5.2) 0.007 1.469

EC (a) (Germancase)

1996 0.004 0.086 18.34 28.7 7.3 2.53 1916 2000000

Enosh 1996 0.023 0.124 0.19 13.6 0.42EMC 1996 0.023 0.13 22.2 0.38 0.124Rosendah 1997 260

EyreEU 1998 0.9–18 (9.45) 1.3–57 (29.5) 1–15 (7.5)UK 8 15 7

ExternE(Spain–France)

1997 0.0038–0.1339(0.072)

4.6–18 (11.3) 4.41–57 (30.7) 4.21–15.3 (9.755) 0.045–1.583(0.814)

Rabl et al. (a)(averageFrance)

1998 18.05 13.6 12.2 0.002 0.7 293

Rabl et al. (b) 1998 18.6 6.6–62.7 (34.6) 13.4 0.7 16300000Krewitt et al. 1999 3.4–5.4 (5 EU) 12.8–17.4 (13 EU) 6–8.3 (6 EU)EU 2000 0.004–0.042

(0.023)0.053–2.223(1.138)

4.3–18.34 (11.32) 2.1–12.2 (7.15)

RDC and PIRA 2001 0.0035 24 1 0.73Eunomia 2002 0.0245–0.0257

(0.0251)0.4506–0.4892(0.4694)

0.002–0.009(0.0055)

8.239–14.161(11.2)

AEA Technology 2002 1.4–8.2 (4.2) 1.7–22 (14) 5.2 2.1Dijkgraaf and

Vollebergh2003 0.034 0.379 3.291 4.701 0

Total averagevalue

0.0238 0.6242 6.8104 36.156 5.383 0.1905 1.262

Table 6Valuation results (costs and benefits) on emissions from landfill disposal (US$/ton waste, $,2003)

Study CO2 CH4 Other (conventional) Transportation(rural–urban)

Leachate Energyrecovery

Totala estimate

Pollutant

Schall (1992)b 2.42–14.14CSERGE et al. (1993)b 0.128–2.03 0.72–8.64 0.08–1.904 0–1.44 0.72–3.07 0.91–14.64Powell and Brisson (1994)b 0.512–0.736 2.176–3.776 0.144–0.608 0–1.43 1.29–1.79 1.6–6.4Enosh (1996) 0.01–0.7 6.5EMC (1996) 0 3 (with energy

recovery)Miranda and Hale (1997) 0–0.98 2.42–13.16EU (2000a,b)b 1–23 0–0.2 0–2 0–10 6–44Eunomia (2002) 3.05–3.21 4.49–4.87 0.03–0.08 0–2.03 7.51–10.19Dijkgraaf and Vollebergh (2003)c 5.85 0 4.76 21

a Each of the estimate is a sum of different components and not necessarily the sum of the values in the line.b The range refers to: with (high) and without (low) energy recovery.c Modern landfill with energy recovery including calculation of land use being US$ 17.88/ton waste.

Table 7Valuation results (costs and benefits) on emissions from incineration (US$/ton waste, $,2003)

Pollutant study CO2 NO2 Other conven-tional

Transportation Energy recovery Leachate(most ash)

Totala estimate

Tellus (1992) 1–5CSERGE et al. (1993)b 1.1–10.72 1.64–3.3 0.17–1.64 6.88–23.6 5.77–19.8Powell and Brisson (1994)b 1.1–10.72 1.85–4.08 0.368–0.567 10.99–15.04 (−)3.15–6.3ECON (1995)c 28–171EC (1996) 1.3Enosh (1996) 8.55 10.09EMC (1996) 3.9 2.51 8.55 1.65Miranda and Hale (1997)d 5.17–31.5Rabl et al. (1998a) 12.3ExternE (1998) 15–92d

EC (2000a,b) 0.5–1 5–108 0–115 (−)9–124Eunomia (2002) 19.65–20.69 0.97–1.68 8.72–23.43 0.05 29.39–45.85Dijkgraaf and Vollebergh (2003)e 17.26 22.62 0 17.57

a Each of the estimate is a sum of different components and not necessarily the sum of the values in the line.b The ranges refer to rural and urban sites for UK and UK+ECE.c The rang presents different types of materials (left for glass and right for plastic).d The ranges refers to differences between countries.e Modern incinerator with energy recovery including calculation of chemicals and materials.

well. Estimates of disamenities are figured as cost per ton of waste, per household, persite or per km distance. Generally, ‘marginal’ values rather than aggregated values arerequired, as the latter do not fit into formal cost–benefit appraisal systems and methods(Turner et al., 2003); however, such values often are not available.

2. Monetary values are presented either by a single approximate value or, preferably asintervals reflecting uncertainties involved, different locations, processes, and technolo-gies.

3. Some studies address each of the individual pollutants, and others provide a total estimateonly. Moreover, even when comparing total damage estimates, the totals are not alwaysthe sum of the same impacts. For instance, transportation impacts are taken into accountin only a few studies, and the results differ from those of studies that exclude them.

4. Double counting of impacts (such as of impacts of particles on health and visibility)occurs occasionally, resulting in overestimated values.

5. The reviewed studies were carried out in various countries with different geographical,ecological, and demographic characteristics, influencing levels of impacts and valua-tions. Besides global warming, many estimates are site-specific, making it difficult topoint to a best representative and transferable value (although an appropriate BT canobtain reasonable transferable-estimates for policy questions).

6. Many of the studies basically adopted estimates from existing studies through differentapplications of the BT method, resulting in similar estimates just because of the method.

7. Discount rate topics are addressed in a few studies only. Discounting is a method thatenables comparison of damages incurred in different time periods. Decision makers areoften faced with tradeoffs between current and future impacts. One typical exampleis waste incineration; where immediate emissions to the air from the process must beweighed against future emissions of slag landfills. The choice of discount rate can affectthe valuation by a very large factor. There is broad agreement that a high discount rateis not justified, but there is no concurrence on a correct value (Hellweg et al., 2003).Among the few reviewed studies that address this matter, the Eunomia study, for instance,uses three discount rates for calculations: 1%, 3%, and 5% and shows the variations invaluations it generates. Ideally, comparisons should be done on the same basis, whichlargely is not the case here.

8. The studies use different valuations of a statistical life (VSL)4 with reference to the riskto life imposed by pollution; these vary between US$ 1 and 3 million. The question ofthe validity of the BT values with different VSLs arises, especially because it is widelyused in the Europe.

9. Various valuation methodologies were implemented in the reviewed studies. In somecases, application of different techniques for the same impacts resulted in differentestimates.

4.2. Analysis of the valuations of externalities from waste landfilling and incineration

With awareness of the limitations and under existing constraints, we present and analyzethe valuation results from the reviewed studies, resulting in a useful set of estimates for the

4 Explanation on VSL is provided in Appendix 2.

benefit of decision makers. Some areas of monetary evaluation of externalities arising fromSWM are more fully covered in the literature than others. For impacts of pollution to airand for disamenities, there are a relatively large number of studies and estimates, whereasfor pollution to soil and water, studies are sparser.

4.2.1. Externalities related to emissionsMany of the studies (especially the European studies) based their valuations on DRF

and unit values obtained by studies that have been produced for the ExternE Project(1995, 1998) and CSERGE et al. (1993). This fact can explain the similarity of someestimates across the studies. Other studies have based their valuations on major U.S. stud-ies and few have generated original valuations. External costs have been calculated fora range of different assumptions using various methods. Many of the estimates, espe-cially for heavy metals, VOC, and leachate, are based on approximate valuation tech-niques such as control cost and linked environmental values5 or on special approachessuch as the use of tax on CO2 by ECON (1995); fewer are based on damage costmethods.

There are more estimates of costs related to total kg of pollutants emitted (Table 5)than of emissions related per ton of waste (Tables 6 and 7). This is likely because it ismore complicated to obtain the latter. Generally, because environmental subjects containenormous uncertainties, costs are presented in terms of intervals. Nevertheless, in order tosimplify the analyses, we often attach average values.

The tables include essential valuations of many pollutants. However, the analysis belowis limited to some key pollutants only (CO2, CH4, NOx, PM10, SO2).

From the twelve estimates of CO2 in Table 5, eight are within the same order of mag-nitude (US$ 0.023–0.072/kg CO2) and four are in the preceding order of magnitude (US$0.0035–0.0076/kg CO2). Because of the large uncertainty involved, we recommend ‘bestestimate’ for CO2 damages as the full range of the estimates: US$ 0.0035–0.072/kg CO2.This is a fairly broad range, with the highest level more than ten times the lowest. Theaverage value is US$ 0.023/kg CO2 (which approximates the recent common market-valueof CO2).

The costs of CH4 are based on global warming potential (GWP) across all studies. ECON(1995) uses a higher value of GWP than the others and thus obtains the highest estimate(US$ 2.69/kg CH4) for CH4 whereas the lowest is US$ 0.049/kg CH4 (the low end of therange calculated for various scenarios by CSERGE et al., 1993). The average damage costover all studies is US$ 0.6242/kg CH4. Among the nine available estimates, six are in thesame order of magnitude: US$ 0.124–0.4894/kg CH4 (including the Extern value, at 1%discount rate) being the recommended range.

Externalities resulting from NOx dominate, as they constitute 70% of the total health costs(EC, 2000b). Damage costs associated with NOx have significant variations in the studies.They range from US$ 0.13 to 18.6/kg NOx. The variation reflects inter-alia, differences inregulations across countries, differences in population density and the inclusion or exclusionof damages besides health impacts (e.g. damages to buildings, forests, and agricultural

5 The valuations produced by Tellus (1992) are used widely by other studies. See Appendix 1.2 for details.

yields, etc.). The average of the estimates is US$ 6.81/kg NOx and this value approximatesthe valuation given by ECON (1995), obtained mostly through COI method.

Particles (generally PM10) are emitted from transportation activities and from the incin-eration process. Most of the studies use DRF through BT methods from Extern project andfrom US studies, and generally apply them to local air dispersion models. Health impactsare mainly valued by the COI method and other impacts by expert-assessment methods.When looking at the costs, besides the extreme estimate (US$ 260/kg PM10) of Rosendahl(1998)6, the variation of the estimates is: US$ 1.3–62.7/kg PM10. The variation reflects dif-ferences in population density, inclusion of one or both of incineration and transportation,and occasionally energy recovery. In addition, they may or may not include damages otherthan health impact, such as damage to buildings. The average cost of PM10 is US$ 36.15/kgPM10, and excluding Rosendahl (1998), it is US$ 21.26/kg PM10. The latest value is inwidespread use in European studies.

Finally, the valuation of SO2 produces an average damage cost over all studies of US$5.38/kg SO2, as a general indicator. The variation in the cost estimates is large and involvesdifferent orders of magnitude: US$ 0.38–15.3/kg SO2. One possible explanation could be thefact that SO2 has some major potential impacts (health, buildings and acidification affectingagriculture and ecosystems) and each of the studies refers to one or more of these effectswith non-comparable values. Furthermore, the costs depend greatly on the site location,specifically, urban or rural,7 and this varies across the studies. For instance, at the high endof that interval is the French average, with an even higher value for the densely populatedcity of Paris (ExternE, 1995).

Most of the studies use different valuation methods depending on the nature of the impact.Whereas COI is normally used for health effects, control cost and clean-up cost methodsare used for the others. Krewitt et al. (1999) address this issue by comparing estimatesof damage costs (including mortality, morbidity, crops, buildings, and materials) againstabatement costs (private costs of emission reduction measures) of SO2, NOx, and PM10.All the comparisons show that damage cost measures are significantly higher than abatementcost measures, confirming the allegation that control cost valuations (i.e. abatement cost) atbest can serve as a minimum value of the damage cost. However, they suggest that on theEuropean average, the implementation of current best available emission reduction-cost isa reasonable measure.

Decision makers and waste managers will probably be more interested practically indamage costs per ton of disposed-waste; however, specific estimates for individual emissionsare rather sparse as can be seen in Tables 6 and 7. Thus, we consider the total estimate per tonof waste, although there are some flaws with this procedure in terms of the different factors inthe total cost that almost every study considers. In most cases the estimates were calculatedon the basis of the previous valuations of emission weight, adjusted for the quantity of wastein the investigated sites, thus, the same valuation methods are considered. Usually when

6 This study deals with impacts of transportation in Oslo, in general (not specific to waste disposal). The highvalue can be explained by the high density of population and by inclusion of more social damages than otherstudies do.

7 Rabl et al. (1998) argue that the variation in valuation results is up to a factor of 10 between urban and ruralsites.

intervals are indicated, the lower and the upper values of the range reflect differences intypes of landfills or incinerators used in various countries, differences in the composition ofwaste and the facility age. They also reflect whether there is energy recovery, and whetherthe site is in an urban or rural location. Moreover, in some studies (e.g. Dijkgraaf andVollebergh, 2003) disamenities are integrated in the calculation of total costs and it is notfeasible to isolate the emissions only, with the result that values for emissions’ damages areoverestimated.

External costs per-ton-waste of landfills are summarized in Table 6. The range of thetotal costs of emissions is US$ 0.91–44/ton waste landfilled. Most of the estimates are lessthan US$ 15/ton waste, which is the recommended range here. Generally, the external costsinclude global air pollutants and leachate. Reliable DRF for leachate (both for each compo-nent and for the overall damage) are not available so far because the scientific knowledge8

in this area is fairly limited. Consequently, all of the reviewed studies provide estimateseither by using clean-up and remediation approaches or by relying on hand-calculated val-ues. Leachate in modern lined landfills is usually considered negligible (although accidentsmight occur) whereas the cost of leachate in old landfills is estimated to be US$ 1–2/tonwaste. The results are dubious because methods such as the clean-up cost method are apartial substitute for the actual externality or damage cost.

External costs per-ton-waste of incineration are summarized in Table 7. Some studiesconsider hypothetical incinerators (e.g. the Israeli case: EMC, 1996; Enosh, 1996). In thesecases the results reflect a state of the art regulated-incinerator. Some of the studies considerbenefits from energy recovery and others do not. There are substantial variations in thevaluations of energy recovery as well as in the total costs of incineration, even within thesame study. This reflects differences in conditions, regulations, and the factors included.In addition, the impacts can be very uncertain. For instance, in the study of Miranda andHale (1997), the external costs in the UK are much higher than in Germany, Sweden,and USA, probably due to the less stringent British air emission regulations. The intervalof the total estimates is US$ 1.3–171/ton waste. Whereas the lowest value represents anaverage estimate for EU12 (EC, 1996) for global warming only, the highest refers to specificincineration of plastic in a modern incinerator in Norway (ECON, 1995).

To conclude this part, we argue that it is neither appropriate nor feasible yet to identify asingle numerical “best estimate” of the external cost of each pollutant or of entire emissions,regardless of the unit of measure. We cannot recommend the best valuation method fromamong those used in the studies (although as a rule of thumb, as was discussed before,the economic damage-cost methods are preferable), because they best reveal and reflectthe social viewpoint of the damages. Thus, again, the values of pollutant externalities wegathered and recommended are important as indicators for policy use but the results shouldbe applied and adjusted with specific consideration to each individual policy case.

4.2.2. Externalities related to disamenitiesMost of the studies refer to disamenities, either from a landfill or from both a land-

fill and an incinerator. Only a few studies that had produced estimates of nuisance effects

8 As an exception, in the Eunomia study (2002) physical data on leachate’s components is detailed based onCOWI report in EC (2000a) that had made observations at 17 sites in Europe.

associated with incineration per se were found. However, although there are differencesbetween disamenities associated with proximity to incinerators and landfills, there arealso obvious similarities and it is still acceptable to use valuations of disamenities fromlandfill studies for incinerator disamenities, particularly as studies of the later are ratherrare.

The majority of the original studies were carried out in USA and their results wereadopted with some adjustments in Europe. Recently, an original comprehensive researchregarding disamenity costs of landfills in UK was carried out by Cambridge Econometricset al. (2003), and it provides a new database for European studies.

When looking at Table 4, the problematic character of potential comparisons is notice-able. Although valuations were commonly undertaken by the acknowledged methods,HPM and CVM, the variation in the yardsticks was considerable. Specifically, valu-ations are presented in different ways, as follows: percentage or dollar reduction inhousing prices according to the per km distance from landfill/incinerator site; yearlyWTP per household, per km to reduce total disamenities or for a specific disamenity,and occasionally cost per ton of waste. When intervals are presented, the lower andthe upper limits refer to differences regarding inter-alia the type of site (new/old), thestatus of the site (planning/construction/ongoing), location (urban/rural), and populationdensity.

The hedonic studies are more comparable than others because they result in relativelyuniform scales, mostly as percentage reduction in housing price per km distance. Exceptfor Hirshfeld et al. (1992) that suggests a decreasing marginal change in house price withincreasing distance from a landfill, linear relationship is commonly formulated betweenthe distance from a site and the change in housing price. The overall range of disamenitycosts via HPM (overlooking different assumptions and conditions, and excluding Hirshfeldet al., 1992)9 is reflected in 1.06–6.25% reduction in housing price per km, resulting inan average of 3.6%/km. This approximates the estimates that most studies obtained. Themaximal effect range varies between 4 and 6.4 km from a landfill or incinerator, with anaverage of 5.2 km. These values can be used as general representative estimates of dis-amenity impacts of landfills and incinerators for policies regarding inter-alia, the sitingof facilities. However, note that most of the studies do not take into account significantfactors that might change the estimates, such as topography and prevailing wind direc-tions, that determine, for example, odor effects. Note also that the perceived disamenity(e.g. poor visibility) might be overestimated when taking into account the actual increasedhealth risk from air pollution, which is already accounted for in the cost of air pollutionexternalities.

The different stated preference (SP) studies are not directly comparable because ofdifferent valuation scales, although, as one can expect, across all studies WTP decreases asthe respondents are located farther away from the waste site. Furthermore, it seems that theHPM results appear consistent with the CVM results when both methods were undertakenfor the same investigation. SP studies can provide WTP values and are considered thebest economic measure of externalities; however, in practice, there are challenges in the

9 Hirshfeld et al. (1992) obtained a very high value that is 30% reduction in house price at 0.8 km from siteinvolving landfill in an hypothetical town. No explanation to this extraordinary value.

performance of the surveys involved. Based on the review and the theoretical literature, HPMseems to be practically the favored approach to value disamenities. HPM has the significantadvantage of being a revealed preference method based on observable market prices thatare relatively easy to obtain. Nevertheless, the limits of HPM should not be ignored. Forinstance, the influence of non-homogeneity of the housing market in the vicinity of aninvestigated site can make it difficult to identify and isolate the related factors that changehouses prices. Combining results of both methods with proper econometric tools, as someof the studies did, is strongly recommended (Adamowicz et al., 1994).

The few estimates of cost per ton of waste were mostly calculated through integration ofHPM and CVM studies with additional extrapolations of local and regional features such asthe amount of waste, duration of operation, and population density. The range of estimatesis US$ 2.4–37/ton waste depending on the factors as mentioned. The range of the intervalis too large to be represented by an average; however, the typical estimate is less than US$10/ton waste. A final note regarding the review of disamenities valuations is that this fieldis relatively neglected and there is a substantial need for more extensive original work,especially in Europe.

5. Concluding remarks

In spite of the considerable progress that has been made over the last years, the quan-tification and valuation of externalities related to SWM are still associated with largeuncertainties, and have theoretical and practical limitations. In addition to uncertainty as todata and methods, the variation in estimates also results from different basic assumptionsthat are based on ethical and political value choices. It is well known that externalities-valuation is a controversial economic discipline, still undergoing a process of design andexperimentation. However, various valuation methods have been developed based on differ-ent concepts and principles. A contentious topic emerges regarding the implementation ofmethods: in contrast with researchers and practitioners who argue that sometimes it is best touse an approximate value rather than no value (Tellus, 1992), most economists argue againstthe use of valuation techniques that are not based on the theory of welfare economics andthus do not consider people’s preferences. In spite of some drawbacks, valuation methodsbased on individual’s preferences are the most attractive from an economic point of viewfor deriving credible estimates of people’s WTP and hence providing the true external costfrom a social point of view. However, it seems in practice that indirect methods, includingexperts’ judgments, have a higher acceptance rate than data obtained through surveys inthe political discussion. Note, however, that control costs and damage costs are the twocomponents necessary for conducting cost–benefit analyses—they should be weighed oneagainst the other. In cases where one of them is missing, the one that is at hand can at mostserve as the other’s minimum value for justifying whether an action should be taken or not.

In theory, at least, different methods should produce the same external cost valuationfor a specific impact. Practically, in many cases, application of different techniques for thesame impacts results in different valuations. It is of interest to compare the various figuresobtained via damage cost methods with the costs obtained by expert-assessment methodssuch as abatement cost. However, it is difficult to formulate such a comparison with the

simple per-unit values because the abatement costs depend largely on critical assumptionsand on the level of abatement undertaken.

Based on the analysis of the reviewed studies of SWM externalities, only a few ofthe acknowledged valuation methods described in Fig. 1 were actually implemented in thereviewed studies, including damage cost and approximate techniques. Yet expert-assessmentmethods were more widely used in practice, basically because they are easier to perform.The most commonly employed methods for the valuation of externalities from landfilldisposal and incineration processes were impact pathways (DRF) for physical relationship,cost of illness, averting behavior, hedonic pricing, SP methods (mostly CVM), controlcost, and clean-up cost. Regarding the last two, evidence from the literature shows that inspite of different theoretical valuation principles, there are overlaps in the realization ofthe approximate techniques, usually caused by a conceptual confusion of the terms in use.Furthermore, it is not always possible to determine whether the process of dealing withthe environmental damage, from which the external cost is calculated, is actually aboutrepairing, restoring, replacing, or abating damages, so in fact one can consider the entireapproximate techniques as one approach implemented at different damage-reduction levels.

Theoretically, different valuation methods are appropriate for different kinds of exter-nalities, and recommending a “best method” is not likely, beyond the caveat that soundeconomic methods are always preferable. Sometimes, as is the case in some of the studies,a full valuation of social costs of an individual impact may employ various techniques. Forexample, the damage cost of odor, which has several aspects, can employ COI and avoid-ance cost methods for health effects, averting behavior method, and court decisions (Beloffet al., 2000) for disamenities as well as HPM and CVM for depreciation of housing prices.

As for the valuation estimates, we have discussed the issues and the limits of the val-uations, although we exclusively gathered the available estimates in organized tables andanalyzed the estimates and presented recommended values in the forms of intervals and aver-ages to assist in SWM decision-making processes. Of course, monetary valuation alonecannot evaluate the full complexity of waste-environmental problems, but it can help toaddress some important policy questions.

To conclude, this survey has produced the following observations that should be consid-ered in the SWM decision-making process when social welfare is considered:

1. Because of the ambiguity of the nature of externalities, valuations of the externalitiesprovide at best order of magnitude estimates. Thus, the estimates presented in the studycan be used by practitioners in the waste sector as indicators of the environmental damagerelated to landfilling and incineration, but adopting accurate values for a specific policyrequires particular consideration of the assumptions and the conditions under which eachof the estimates was calculated.

2. Beyond the recommendation that economic methods (damage cost) are preferred fromthe social welfare perspective, there is not a single “best” valuation method. We alsonote the dominance of approximate methods in practice.

3. Based on the analysis, cautiously speaking, it seems that incineration is a more expensiveoption from the social point of view (however, the conclusion is likely to change in favorof incineration if the benefits of ‘avoided burdens’ in the energy sector will be more infocus and will be included in the calculation of externalities more intensively).

4. There is plenty of room for improvement in the valuation of externalities associatedwith waste management, especially with respect to pollution to water and soil as well asdisamenities. Improvement relates, inter-alia, to the necessity of new and updated defi-nitions of impacts of various pollutants (i.e. DRF) as a basis for the economic valuation,second, developing the valuation methods to deal in a superior way with the compli-cated character of external cost valuation in order to reduce the level of uncertainty, andgenerally, more primary studies for the valuation of all kind of externalities are neededworldwide, as well as advanced BT procedures for reliable transfer of values acrosssites.

5. Future impacts is an additional issue, as the unit costs of pollutants and disamenitiescan be expected to rise over time because of predicted growth in population densityand inter-alia congestion. This suggests that there will be greater exposure to a givenlevel of pollution. If, in addition, income levels rise, so will WTP for environmentalimprovements.10 Hence, the demographic consideration suggests that the studies under-estimate damages in future years. Abatement investments resulting from policies tomitigate pollution of all kinds internalize some of the damages and thus may reduceexternalities costs in the future.

Therefore, for both potential hypotheses along with others discussed before, valuationsshould be continually updated and consideration given to various changes and developmentsin the environmental field in general and in waste management in particular. Moreover,decision makers should be encouraged to consider the environmental impacts of wastepolicies and to internalize externalities for driving the market towards the optimum.

Acknowledgements

An earlier version of this paper was presented at the ISWA congress, Rome 2004 (Eshetet al., 2004). Financial support from Sapir Foundation of Mifal Hapayis, Israel, is gratefullyacknowledged. The authors would like to thank the anonymous reviewers of RCR for theiruseful comments.

Appendix 1. 11

1.1. Valuation methods (the terms for the methods in parentheses are also in use in theliterature)

Dose–response functions (DRF) (Production function and Impact pathways methods)can be regarded as the core of evaluations as they provide reasonable first basic data for

10 The basic theory is that the quantity demanded of any normal good is assumed to rise in income levels. SinceWTP for the environmental good is a reflection of demand, it should also rise in income.11 Detailed description of all methods is available in numerous references (i.e., Shechter, 1995; Hellweg et al.,

2003; Pearce and Howarth, 2000; Eyre, 1998; Tellus, 1992; Navrud, 2001).

various valuation techniques associated with the economic damage-cost approach. DRFmeasure the relationship between a unit concentration of a pollutant (dose) and its impacton an affected receptor (population, crops, buildings, water, etc.) based on scientific data(Rabl et al., 1998; Tellus, 1992). Due to the occasional absence of reliable DRF, alter-native methods have been developed for practice (and they have been identified in ourpaper):

Sustainability indicators measure the ability of the environment to absorb anthropogenicwastes, based on expert judgments about the acceptable impact-severity, setting indicatorsand standards regarding different health and environmental issues, as a ground for monetaryvaluation (Eyre, 1998).

Linked environmental values or indices—a wide range of “hazardous substances” isranked, as an index of health risk factors. These are used to estimate annual numbers offatalities and illnesses from exposure to particular pollutants. Monetary estimates are thencalculated by multiplying the unit value or shadow price by the ratios derived from thehealth ranking (Tellus, 1992).

1.1.1. Stated preference methods (SP)SP are direct methods enabling estimations of economic values for a wide range of

intangible commodities based on individuals’ preferences, including contingent valuationmethod (CVM) and choice modeling. SP methods are mainly used in SWM context toassess individuals’ WTP for a specific degree of improvement in their welfare level causedby air/water/land pollution level and disamenity impacts as well, related to different wastemanagement options (i.e. Shechter, 1995):

1. Contingent valuation method (CVM) (market creation method) is a method in whichpeople are asked directly through a survey to state their WTP for a benefit or toavoid a cost, or conversely on their WTA to forego a benefit or tolerate a cost,regarding a specific hypothetical policy. Yet, they are assumed to behave as thoughthey were in a real market. Econometric techniques are then applied to the surveyresults to derive the average bid value, i.e. the average WTP (Pearce and Howarth,2000).

2. Choice modeling methods (Conjoint analysis) represent a broad term of survey methodsasking individuals to rank/rate/choose alternatives rather than explicitly express a WTPor WTA. The techniques (based on marketing research tools) rely on the idea that anygood can be described in terms of its attributes, and the levels that these take. Changingattribute levels will essentially result in a different ‘good’ being produced and the tech-niques focus on the value of such changes in attributes. A baseline status quo alternativeis usually included to help establish the other alternatives in relation to the respondent’sactual experience. It is generally assumed that choice modeling approaches are preferredover CVM in contexts where it is important to value individual attributes (Pearce andHowarth, 2000).

1.1.2. Revealed preference methods (RP)RP are indirect methods inferring preferences and implicit value for externalities from

marketed goods and services that are supposed to solve/reduce the associated environmentalproblem (Shechter, 1995; ODPM, 2003):

1. Hedonic price method (HPM) (/Surrogate markets method) relies on the notion thatpeople derive utility from various physical and environmental attributes of a house.The value individuals place on an environmental attribute (e.g. air quality near a land-fill/incinerator) is obtained from differences in housing prices at various distances awayfrom the sites (Hite et al., 2001; Shechter, 1995; Segeron, 2001; Tellus, 1992). HPMhas also been applied to labor market in valuation of work-related risk in Hedonic wagestudies, giving an indication of the value that people ascribe to their lives (Pearce andHowarth, 2000; Shechter, 1995).

2. Averting behavior method assumes that marketed goods can act as substitutes for envi-ronmental goods because households spend money to offset environmental impacts. Forinstance, expenditures such as water filters in the vicinity of a landfill can be used tovalue clean water and thus can represent the value of the damage to groundwater causedby landfill leachate (ODPM, 2003, Shechter, 1995).

3. Cost of illness method (COI) estimates external costs through changes in private andpublic expenditures on medical commodities and earnings lost due to days not workedresulting from the suffering from various impacts related to noxious facilities (Navrud,2001; Shechter, 1995).

4. Health production function (HPF) is a popular way of calculating the relative effectsthat a pollutant has on health. The measurement widely used is the mortality rate. Thefunction depicts health as a good or output that is a function of various inputs includ-ing the environmental factor. The approach assumes that increases in the purchasesof health-care goods and services decrease the purchases of other goods and services,when controlling for household income constraints (Pearce and Howarth, 2000). In fact,HPF methods comprise elements both from averting behavior methods and from COImethods, and it is a more comprehensive approach.

5. Court-decision assessment is an alternative indirect-method presented in a disamenity-valuation study by Beloff et al. (2000). The method is based on observation of actualexpenditure involved in citizens’ legal suits against noxious facilities. These costsinclude, inter-alia, various government or municipality costs engaged in the investi-gation of a complaint, costs of the activities of Citizens groups, environmental lawyers’fees and advocacy costs of the companies.

6. Travel cost method has been founded especially for monetary valuation of recreationalsites. The approach is based on the fact that usually a trip to a recreational site requiresan individual to incur costs in terms of travel, entry fees, on-site expenditures, andtime. These costs are used as a proxy for the use value of the site and for changesin its quality (Pearce and Howarth, 2000; ODPM, 2003; Shechter, 1995). Appar-ently, and according to existing literature, this method has no place in valuing SWMexternalities.

1.1.3. ‘Experts’ assessment of damage costsBecause of valuation limitations, environmental damages are often valued according

to the knowledge, experience and mainly the intuition and judgment of professionals in

particular fields, like engineers that estimate, ex-ante or ex-post, the costs of repairing,restoring, or replacing a damaged asset, or abating impacts. Various techniques that oftenrefer to the term “expert assessment” are addressed hereby:

1. Control cost method (/abatement cost, avoidance cost, remediation cost) purports toinfer the value that society attributes to pollutions, from the costs of implementingregulations that society imposes on itself in order to abate pollution (avoiding damage).The criticizers argue that the highest required cost for abatement of a specific pollutantshould be taken as the minimum value that society places on removing it (EC, 2000b;Tellus, 1992).

2. Clean-up cost method (/engineering approach) assumes that once the damage resultingfrom pollution is done, the costs of rehabilitation to achieve the pre-damage situation willappear as a (minimum) proxy economic value of damage done. For example, clean-upcost to reduce leachate from a landfill will represent the damage cost of leachate (EC,2000b).

3. Replacement cost method uses the cost of replacing or restoring a damaged asset toits original state as the measure of the benefit of restoration and thus as the cost ofdamage. The technique implies that complete replacement is, in fact, feasible (Pearceand Howarth, 2000).

1.2. Value of statistical life (VSL)

VSL is not actually a valuation method for environmental damages in the usual sense;nevertheless we refer to VSL method because the assessment of external costs associatedwith human health in the framework of some studies is based on VSL, and it serves frequentlyas a basis for estimations in several valuation methods.

The obvious moral objections to valuing human life are avoided by valuing smallrisks to life and normalizing to unit risk—“value of statistical life” (VSL), namely, thevaluation of a loss of life. It can be done either via CVM (summarizing informationabout people’s WTP for small reductions in mortality risks/how much they are ready toforego in income to reduce the probability of a premature death) or by observation ofpayments in real market, such as expenditure on safety devices and wage premium inrisky occupations (Eyre, 1998). This information enables estimations of how much soci-ety is ready to spend to reduce a statistically determined number of premature deaths,and economists use the VSL in CBA to express the social costs of a life lost (EC,2000b).

The value of mD 3.1 (1995 value) for VSL is an accepted figure in European stud-ies, close to similar studies in the USA. A crucial question for the valuation of pollu-tion mortality is whether one should simply multiply the number of premature deathsby VSL, or whether one should take into account the years of life lost (YOLL) perdeath. The difference is important because premature deaths from air pollution tendto involve a smaller number of YOLL per death than accidents (on which VSL isbased) (Rabl et al., 1998). Most recent studies have adopted a VOLL approach becauseit is bettered linked to the health analysis and is intuitively more credible (Eyre,1998).

Appendix 2

List of abbreviationsBT Benefit transferCBA Cost–benefit analysisCOI Cost of illnessCVM Contingent valuation methodDRF Dose–response functionERF Exposure response functionGHG Greenhouse gasesGWP Global warming potentialHPM Hedonic price methodMSW Municipal solid wasteRP Revealed preferenceSP Stated preferenceSWM Solid waste managementTSP Total suspended particulatesVSL Value of a statistical lifeYOLL Years of life lostWTP Willingness to payWTA Willingness to accept

Chemical symbolsCd CadmiumCH4 MethaneCO2 Carbon dioxideCO Carbon monoxideHCl Hydrogen chlorideNOx Nitrogen oxidesNO2 Nitrogen dioxidesPb LeadPM10 Particles with a diameter < 10 �mSO2 Sulphur dioxideVOC Volatile organic compound

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