Moving to Markets in Environmental Regulation: Lessons from Twenty Years of Experience

Peter S. Menell

In the late 1980s and early 1990s, it was not uncommon to read that a municipal solid waste crisis loomed in the United States.¹ These news reports warned that landfill space was soon to be exhausted and that new capacity would not become available in time due to regulatory constraints, [not in my back yard] (NIMBY) opposition, and not in my term of office politics. As a result, tipping fees, the per ton disposal fees at landfills, were rising at an unprecedented rate. Incineration, the other major disposal option, was seen as a threat to air quality,² and new capacity also faced NIMBYism. Recycling, the third waste management option, was unable to gain much traction. The United States trailed far behind Europe and Japan in recycling rates.³ Environmental advocates chastised America as the [throwaway society.] This was a moral issue, and Americans either did not care enough or were too lazy to protect the environment. This crisis was perhaps most poignantly symbolized in 1987 by the Odyssey of the Mobro, a trash-laden barge that was unable to find any place to unload its fetid cargo.⁴ The futility of this voyage, broadcast frequently on national news reports, brought attention to environmental problems surrounding the municipal solid waste (MSW) stream and awakened government officials at all levels to the need for action. But what action was called for?

In 1989, the Office of Technology Assessment (OTA) issued a detailed report calling for government intervention.⁵ The OTA offered numerous recommendations, but relatively little in the form of coherence or clear priorities. Environmental groups and ultimately the public called for aggressive action to address what was often presented as a national problem. Many states adopted recycling goals and mandatory recycling laws, a few passed deposit-refund laws for beverage containers, and one even

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