International Review of Waste Management Policy - Department of ...

3.2 Issues with Current Situation
In the waste industry competition in the market can provide a benefit to customers
through revealing an efficient price and, where the process is well managed, through
bringing forth a choice of services, some of which might include innovative aspects.
The OECD proposes that for large producers of waste, competition in the market
approach is possible and appropriate. 63 This is particularly true of major commercial
waste producers and producers of industrial waste.
For other producers of (smaller quantities of) waste, however, the issues that can
arise from an ‘in’ the market approach to competition in waste management service
provision are as follows:
45
� The absence of service provision in some areas where the marginal costs of
provision are high relative to the likelihood of gaining full cost recovery. This is
sometimes referred to as ‘cherry picking’ by private companies of customers,
but the reality is more that anything other than ‘cherries’ is avoided
completely; 64
� Lowered level of service quality due to the desire to reduce the costs of service
provision;
� Reduced likelihood of the scope of the service being broadened to include
separate collection of new materials due to the risks inherent in
understanding the likely level of service uptake (and hence, the costs of
provision);
� An increase in illegal activity related to the level of coverage. The counterpart
of the ‘cherry-picking’ issue is that service coverage is less than 100%.
Currently the EPA estimates that service coverage stood at 80% in 2007. 65
One European survey noted: 66
‘when looking at the quantity of MSW that is collected regularly in
different countries, nearly half of the 24 countries that responded on
this issue - Austria, Andorra, Belgium, Germany, Liechtenstein,
Cambridge: MIT Press; Bernard Salanie (1997) The Economics of Contracts: A Primer, Cambridge: MIT
Press.
63 OECD (2000) Competition in Local Services: Solid Waste Management, DAFFE/CLP(2000)13
64 ‘Cherry picking’ refers to the selection of the best, or most lucrative, customers or householders. The
consultation on waste carried out by the DoEHLG notes that this is an issue with any utility that
becomes privatised (which is effectively what has occurred in the Irish market). DoEHLG, 2006,
‘Regulation of the Waste Management Sector’, available at:
http://www.environ.ie/en/Publications/Environment/Waste/WasteManagement/FileDownLoad,1446,
en.pdf
65 EPA (2009) National Waste Report 2007, Wexford: EPA.
66 C. Preda (2007) MSW Management in Europe, Waste Management World, July 20007,
http://www.waste-management-world.com/display_article/304406/123/CRTIS/none/none/MSWmanagement-in-Europe/
International Review of Waste Policy: Annexes