Green taxes, waste management and political economy

Interest among policymakers has recently focused on the role, efficiency and effectiveness of so-called 'green taxes'. This paper surveys recent developments in the context of waste management policy and the emergence of policy instruments such as recycling credits and the landfill tax. It is concluded that there is an important role that economic instruments can play in this policy area. The inherent efficiency gains that economic instruments may provide deserve to be highlighted. The application of such instruments in the current political economy settings will however serve to reduce such efficiency gains, as multiple and conflicting policy objectives are introduced by the political process. While there are instances where appropriately designed environmental taxes can provide an important element of environmental policy, there is a danger nevertheless that an ill-conceived comprehensive 'environmental tax reform' could be detrimental. Such reform could result in a deterioration of environmental quality; and/or an increase in economic costs; and/or undesirable social consequences.