Unit Pricing: Sorting out the alternatives

Much has been written on the subject of unit pricing as it relates to solid waste disposal. HCPC has a file more than three inches thick on this subject alone (some of these resources are explained in an article on page 4.) The purpose of this article is not to add to the mountain of information, but to provide an overview.

Unit pricing plans are also called "pay as you throw," "volume-based," "fee-incentive," "pay-by-the-bag," "variable rate" or "user fee," etc. Whatever the name, unit pricing is simply charging fees for products or services as they are used. This contrasts with the method that towns have used traditionally to pay for solid waste disposal . That method, of course, is paying for the entire cost through property tax dollars.

Although unit pricing for solid waste disposal is not new, (Richmond, California launched its program in 1916) it wasn't until budgets really started to soar that alternative schemes began to be considered in our region.

Potential benefits of unit pricing for communities in our area have been documented by studies conducted by the University of Maine and others. Possible advantages have been seen in the following categories

Education is the least mentioned, but perhaps the most valuable part of unit pricing. There are many economic and environmental advantages derived from this increased education.

Within the traditional system of payment for waste disposal, people can be told that they, as taxpayers, are paying the tab. They already know this of course, but many don't seem to really grasp the reality of the situation until they are handed their part of the bill.

This "enlightenment" often leads to further educational gains. People who want to reduce their bill have a new interest in reducing, reusing and recycling some of their formerly wasted resources. This healthy concern leads people to increased knowledge and to improved habits.

Americans have lived and prospered by this simple principle of free enterprise since even before Ben Franklin penned "Necessity is the mother of invention."

Equity, or fairness issues have become grounds for debate on both sides of the waste disposal funding question. One side argues that municipal governments handle much of their business such as education, roads and fire and police protection through collective taxing and spending. "Why should solid waste disposal be any different?" The other side responds, fees are charged for pet and vehicle licenses, water and sewer services etc. "Why not trash disposal?"

If we can agree that these arguments are a "wash", we can quickly get to the heart of the fairness issue with this question. "Why should you pay for my rubbish?" An equitable system keeps individuals financially responsible for their own waste as much as possible and not for their neighbor's

Economics are often a main driving force behind efforts to implement unit pricing systems. Significantly lower costs to a town's general fund for solid waste disposal have been realized through unit pricing because of two factors:

  1. Revenues are brought in to cover costs directly through fees.
  2. Built in economic incentives cause a reduction in the overall volume of trash

Environmental benefits are also a direct result of waste reductions. Fewer materials being incinerated and landfilled means less potential for pollution.

Potential Consequences of unit pricing have also been documented. When implementing any system, undesirable effects need to be anticipated and, if possible, avoided. Here are some of the problems and possible solutions associated with unit pricing

Waste shifting is the deliberate avoidance of the system because of direct costs to the individual. Both legal and illegal methods of shifting waste can be undesirable to communities. An example of legal shifting is when a resident switches to a private trash hauler in response to a new unit pricing system. This may happen when the consumer receives lower cost or better service through the private contractor. There might be a temptation to say "good riddance to bad rubbish-- now we don't have to worry about that stuff anymore," but there are drawbacks. In towns where curbside pickup is already offered, more haulers means more trucks on the road covering the same territories. Private haulers also may not be offering recycling services. Communities which cover tipping fees for private haulers must pay for tonnage which could have been recycled. Also, says Tim Guyette of Coastal Recycling in Hancock, "Local recycling centers may miss the volume of recyclables which are needed to fill out loads in a timely manner."

Another, more serious form of waste shifting is unauthorized disposal in private dumpsters or illegal disposal in public facilities by non-residents. An even more severe kind is illegal dumping along roadsides, public places or on private property. Instances of all these have been reported in Maine, but none have emerged as the widespread problem that some have feared.

The most prevalent form of waste shifting in rural Maine has been household trash burning. Many permits for backyard burn barrels have been issued to residents of communities that have adopted pay-by-the-bag systems in our state. Others burn without permits.

Solutions to waste shifting can be found in most instances (Some will always try to cheat). Systems should be designed carefully so that the economic incentive achieves the desired effects. Adoption of companion ordinances or policies may be needed at the time of implementation to stave off anticipated problems. Successful approaches that some have used are:

Hidden costs are another objection raised by opponents of unit pricing. For example, pollution caused by backyard burning and illegal dumping is worse than that caused by the same materials if incinerated or landfilled according to accepted municipal practices. This emphasizes the need for companion policies in these areas.

Other "hidden costs" are financial. Some say that user fees are simply more taxes. Before such criticisms arise, municipalities should inform their citizens about a program's financing, explaining how revenues would be used.

Another concern is that the poor and the elderly may not be able to afford to pay the fees and that large families could be hit particularly hard. In response to such challenges some communities have provided choices for residents, such as requiring less payment for trash disposed if the household is practicing recycling or not charging for bulky items if they are disassembled before being brought to the transfer station. Financial aid to those who can't pay may also be offered.

Management difficulties can arise in any new system. Unit pricing is not as neat a system as simply taxing and allocating revenues. This will continue anyway whether or not unit pricing is adopted. (Ben Franklin had something to say about that too.)

Unit pricing involves the handling of money and other valuables such as stickers or punch cards in ways that were not needed before. This of course means more effort must be spent in managing. It also means there are new opportunities for abuse. Other circumstances that present difficulties for management such as multi-family housing units must be considered. Some have concluded that it just isn't worth it.

The best judges of a system's worth are the ones who have tried it. All 8 communities in Hancock County that have used fee-per-bag programs plan to continue with them. Most are enthusiastic about their success in achieving their goals. One town is currently debating changing its fee structure, but is not contemplating dropping the system entirely

Solutions to management difficulties can often be found, but the fact remains that work is necessary. Unit pricing systems are flexible and can be tailored to a town's needs and circumstances. Careful choices must be made to minimize the effort required to run the system and to deal with problems. Should you design a unit pricing plan, donít forget to take advantage of the resources available here at the planning commission for that purpose. Contact the HCPC if you have any questions.

"Pay as you throw", Designing a unit pricing system:

"Pay as you throw" is the name of a tool kit produced by the EPA which assists communities in designing a unit pricing system for their needs and circumstances. It includes guidebooks, workbooks, computer software and a 35-minute video-taped introduction to the subject. HCPC has a copy of this kit and would be happy to share it and other resources with any interested community.

What follows is a sampling of "Pay as You Throw"

Deciding and planning...

What kind of options are there?

Hancock County "Fee-Per-Bag" Systems

Municipality  MSW Services  Fee  Comments re: MSW (Municipal Solid Waste) 

Bucksport/ Orland

transfer sta. drop off

.50/bag

If you do not recyle

Castine

pick up and drop off

$1.50

"Working well, saves money, encourages recycling and fair."

Ellsworth

pick up and drop off

$2.00/bag

Commercial, Institutional charged by weight, not by the bag.

Franklin

transfer sta. drop off

$1.50/bag

Sticker/punch card system="excellent", 1 day per year=free,

Hancock

curbside pick up

$1.00/bag

52 free bag stickers given to each household every year.

Otis   $1.00/bag  

Sorrento

curbside pick up

$1.00/bag

"Helps finance curbside pickup so transfer sta. not needed."

Sullivan

transfer sta. drop off

$1.50/bag

"Keeps costs down well, but many use private haulers."

Winter Harbor

curbside pick up

$1.50/bag
$2.00/bag

Using town-provided Bags
Using your own bag