Refuse Collection
Among traditional government services, only water lends itself more easily to quantification than refuse collection. As such the refuse collection (or solid waste management) sector has provided fertile ground for researchers analysing the financial impact of competition.
The earliest studies were conducted in North America, where private provision has been commonplace for over fifty years. In the UK, the use of competition in refuse collection services began on a significant scale following the implementation of compulsory competitive tendering (CCT) throughout the 1980s and the first empirical studies followed shortly thereafter. A more prosaic approach has prevailed elsewhere in Europe.
Do Public Sector Reforms Get Rusty? Local Privatisation in Spain Germà Bel and Antón Costas, 2006 The Journal of Policy Reform, 9(1), pp. 1-24 This paper studies the relation between the cost of local public services and the mode of their production, either public or private. The study is conducted on refuse collection. Its analysis shows that the more recent the reform, the better its effects on costs. Costs tend to be higher for privatisation that began long ago than they are for more recent contracting. Spain
Ownership and Production Costs: Choosing Between Public Production and Contracting-Out in the Case of Swedish Refuse Collection Ohlsson, Henry, 2003 Fiscal Studies, vol. 24, no.4, pp. 451-476 A study comparing public and private provider costs from 115 Swedish municipalities. It is estimated that public provision is on average 6% cheaper but that municipalities do not always choose the least cost provider. The report identifies bias in methods that do not adjust for the use of different technologies by public and private firms. Sweden
Cost-Savings of Contracting Out Refuse Collection Dijkgraaf, E. and Gradus, R.H.J.M., 2003 Empirica, 30(2), pp. 149-161 This article compares costs of public and private provision in the Netherlands, and confirms findings elsewhere that contracting out yields cost-savings of 15-20%. It also notes that competition is more important than ownership: municipal services faced with competition can also provide a low-cost service. Netherlands
A Law of Large Numbers: Bidding and Compulsory Competitive Tendering for Refuse Collection Contracts Andrés Gómez-Lobo and Stefan Szymanski, 2001 Review of Industrial Organisation, Vol. 18, 2001, p. 105-113. This article observes the "natural experiment" created by the ongoing implementation of Compulsory Competitive Tendering between 1989 and 1993, examining the net expenditure on refuse collection in the first year after the contract has been tendered for a sample of 174 English local authorities. A higher number of bids is associated with a lower cost of service. In addition to confirming a standard proposition in auction theory, the authors claim important policy implications. UK
Solid-waste Contracting-out, Competition and Bidding Practices among Canadian Local Governments McDavid, James C., 2001 Canadian Public Administration, Volume 44, No. 1, 2001, p. 1-25. This is a comparison of public and contracted-out private production for 327 local governments across Canada in 1996. Contracting out is found to have reduced unit costs but historically large differences between public and private production are found to be shrinking. Differences in unit costs only become significant for populations under 10,000. Intra-municipality competition between public and private providers further reduces unit costs. Re-bidding a service rather than renewing a contract with the same private provider yields significant savings. Canada
The Impact of Contracting Out on the Costs of Refuse Collection Services: The Case of Ireland (PDF) Reeves, Eoin and Barrow, Michael, 2000 The Economic and Social Review, 31(2), pp. 129-150 This paper examines the impact on costs of public, private and contracted service regimes in Ireland. Using data from 51 local authorities the authors develop a model incorporating cost, quantity and quality considerations with welcome inclusion of two new developments in the sector, recycling and wheelie bin use. They analyse their results using three progressively complex and rigorous approaches - basic before and after costing, private versus public costing and multivariate analysis, and provide robust evidence of significant cost savings under contracting. Republic of Ireland
Alternative Service Delivery in Canadian Local Governments: The Costs of Producing Solid Waste Management Services
McDavid, James C., 2000
Canadian Journal of Regional Science, Spring 2000, pp. 157-174.
Measuring the Efficiency of Spanish Municipal Refuse Collection Services Núria Bosch, Francisco Pedraja and Javier Suárez-Pandiello, 2000 Local Government Studies, Vol. 26 No 3, Autumn 2000, p. 71-90. This is an analysis of the technical efficiency of the refuse collection services in 75 Catalonian municipalities in 1994. No substantial evidence of differing efficiencies between public and private production was demonstrated; the framework for competition in which the service is provided appeared more influential than the public-private dichotomy. Spain
The Cost and Production of a Solid Waste Disposal Service Douglas K. Adie and James C. McDavid, 1999 Ch. 11 in Paul Seidenstat (Ed.), 'Contracting Out Government Services', Westport: Greenwood, 1999. This chapter analyses cost and production conditions for public and private solid waste collection organisations in British Columbia (BC), Canada in 1989. Private production is found to be 25% to 40% more cost-effective than public production using a model limited by the data to just a few independent variables. The authors also estimate the optimal volume or refuse and/or number of households visited. Canada
Compulsory Competitive Tendering for Public Services in the UK: The Case of Refuse Collection Bello, Hakeem and Szymanski, Stefan , 1996 Journal of Business Finance & Accounting, 23(5) & (6), pp.881-903 This is the last in a series of updates on the changes in cost and service characteristics following CCT. Costs fall by an average of 22% between the last full year prior to tender and the first full year after tender. Where tender was awarded in-house, CCT results in a significantly lower cost reduction - DSO contracts prove on average 10% more expensive than private firms. UK
The Impact of Compulsory Competitive Tendering on Refuse Collection Services Szymanski, Stefan , 1996 Fiscal Studies, 17(3), pp.1-19 In a follow-up to Szymanski and Wilkins (1993), which found that contracting yields significant cost savings which diminish during contract lifespan, this report finds further evidence of diminishing cost-savings over time in 365 municipalities between 1983 and 1994. UK
Competitive Tendering and Refuse Collection - the 20% Solution
Stefan Szymanski, 1994
CDC Research
This paper analyses changes in the cost of refuse collection for 280 out of 365 English authorities between 1988 and 1992. Local authority expenditure on refuse collection falls by 18-19% over the four-year period. These savings are specifically identified with CCT. Cost reductions are significantly greater for authorities awarding to a private firm than in-house.
Cheap Rubbish? Competitive Tendering and Contracting Out in Refuse Collection Szymanski, Stefan & Wilkins, Sean , 1993 Fiscal Studies, 14(3), pp.109-130 This report supplements Domberger, Meadowcroft and Thompson (1986), which examined CIPFA data on refuse collection 1984-86, with the same surveys in subsequent years (1986-1988). They find that competitive tendering and contracting out reduce costs by 20%, in line with DMT's findings. UK
The Economics of Compulsory Competitive Tendering: Issues, Evidence and the Case of Municipal Refuse Collection Chaundy, David and Uttley, Matthew , 1993 Public Policy and Administration, 8(2), pp.25-41 This is an article based on exclusive, albeit limited, survey data evaluating the economic performance of CCT within an evolving and politically divided framework. It reports average savings of 22% (29% in real terms) in the switch from municipal provision to CCT for those 14 authorities to return cost comparable data. Tendering costs of 3.6% representing an 18.4% (25.4%) saving overall in nominal terms. Competition rather than ownership was the primary variable affecting performance. UK
How Markets for Impure Public Goods Organize: The Case of Household Refuse Collection Dubin, Jeffrey A. and Navarro, Peter , 1988 Journal of Law, Economics, and Organisation, 4(2), pp.217-241 This paper finds that rather than lowest cost, it is the political ideology of the community that will most often dictate the choice between public and private provision of refuse collection. And given different conceptions of value no form of market organisation can be held to be lexicographically superior: communities will choose the outcome which closest reflects their values. USA
Competition and Efficiency in Refuse Collection: A Critical Comment Ganley, Joe and Grahl, John , 1988 Fiscal Studies, 9(1), pp.80-85 This article is a critical appraisal of Domberger, Meadowcroft and Thompson (1986). Cost reductions identified by Domberger et al are said to be not so large as indicated because a handful of 'superstar' districts with outsized savings skewed the data; where there are reductions these can be traced to 'losers' among the workforce and are devalued by the potential for loss-leading and service quality reductions. For a robust defence of these criticisms, see Domberger, Meadowcroft and Thompson (1988). UK
Competition and Efficiency in Refuse Collection: A Reply Domberger, Simon; Meadowcroft, Shirley and Thompson, David , 1988 Fiscal Studies, 9(1), pp.86-90 In this reply to Ganley and Grahl's critical comment (1988, also listed on the Resource Centre), the authors defend themselves from methodological criticism and re-iterate the validity of their original findings: in municpalities where there is competition, refuse collection is around 20% cheaper than where uncontested public monopoly prevails. UK
Privatization Versus Union-Management Cooperation: The Effects of Competition on Service Efficiency in Municipalities McDavid, James C; Shick, Gregory K., 1987 Canadian Public Administration, Vol. 30, No.3, pp. 472-488 This case study examines residential solid waste collection in two neighbouring municipalities, one operating a government monopoly (North Vancouver) and the other periodic competition via private contract (West Vancouver). It is found that privatisation does not equate to efficiency. The threat of private sector competition from 1981 incentivises North Vancouver's public-sector provider to innovate and eliminate waste such that by 1984 there is no significant difference in efficiency between themselves and West Vancouver's private contractor. Canada
Competitive Tendering and Refuse Collection: Identifying the Sources of Efficiency Gains
Cubbin, John; Domberger, Simon and Meadowcroft, Shirley, 1987
Fiscal Studies, 8(3), pp.49-58
Competitive Tendering and Efficiency: The Case of Refuse Collection Domberger, S.; Meadowcroft, S.A. and Thompson, D.J. , 1986 Fiscal Studies, 7(4), pp.69-87 This landmark paper examines 305 municipalities in England and Wales, and finds that in those areas where competition had been introduced, services were provided around 22% cheaper than in those districts where uncontested municipal provision endured. Additionally, DMT found that there was no significant difference in service costs between public and private provision where competition existed. In other words, while public monopolies were found to be costly in the absence of competition, those public bodies incentivised to reduce costs by the introduction of competition were found to be no less efficient than their private competitors. UK
The Canadian Experience with Privatising Residential Solid Waste Collection Services McDavid, James C., 1985 Public Administration Review, pp.602-608 This article compares the costs of provision under public monopoly and contracting-out across 126 municipalities. There is also a two-region case study of collection comparing service production in Richmond and West Vancouver. Public provision is found to be significantly more expensive, with municipal workers less productive and their equipment less efficient than their private sector counterparts. In both Richmond and West Vancouver, service costs fell while quality either held constant or even improved. Overall, unit cost savings are found to be larger than comparable studies in the United States (Savas, 1981). The role of competition, rather than the public-private dichotomy, is said to be fundamental. Canada
Securing Further Improvements in Refuse Collection
Audit Commission, 1984
The Stationery Office
This is a comprehensive audit of 400 districts in England and Wales to identify service collection costs following the introduction of CCT and to explore potential for further value-for-money improvements. After six years of productivity increases amounting to 25%, there were still significant savings (>5%) to be made in many districts. Private sector involvement is deemed unnecessary "provided that the DLO is well managed and the workforce suitably motivated". The explicitly cost-centric approach fails to address the social and economic costs of exclusively pursuing the lowest cost route, and scant consideration is given to impact on service quality.
Efficient Refuse Collection
Gears, Mitch , 1984
Contract Services, pp.13-16, 22
Intracity Competition between Public and Private Service Delivery E.S. Savas, 1981 Public Administration Review, Vol. 41 No. 1, Jan/Feb 1981, pp. 46-52. This paper presents studies of six competitive systems in Kansas City, Misouri; Akron; Minneapolis; New Orleans; Oklahoma City; and Montreal. The cities are examined for public-private balance in the market, service area characteristics, and costs and productivities, and then compared to explore cross-city patterns. Measuring efficiency as a straightforward cost to the consuming household, contracting is the most efficient means, then municipal ownership and then outright privatisation. Costs are found to be significantly lower for populations over 50,000. See also David N. Ammons and Debra J. Hill (1995), which returns to explore whether Savas' findings had long-term durability. USA
Public versus Private Provision of Collective Goods and Services: Garbage Collection Revisited
Bennett, James T. & Johnson, Manuel H., 1979
Public Choice, 34 (1979), pp. 55-63
The Provision of Municipal Sanitation Services by Private Firms: An Empirical Analysis of the Efficiency of Alternative Market Structures and Regulatory Arrangements Edwards, F. and Stevens, B. J. , 1978 The Journal of Industrial Economics, 27(2), pp.133-147 This article provides empirical analysis of the alternative market structures and regulatory regimes (six schemes in total) used around refuse collection services in 77 US cities in 1975. Contract arrangement is reported as the most efficient form of collection: prices in non-contract cities are found to be 41% higher than in contract cities. As with other US studies around this time, preoccupation is with total costs and public/private distinction, rather than understanding sources of savings and future service delivery. USA
The Use of Contracts and Alternative Financing Methods in the Collection of Household Refuse in Urban Areas William M. Petrovic and Bruce L. Jaffee, 1978 Public Productivity Review, Vol. 3, No. 2, Summer-Autumn 1978, pp. 48-60. This is a study of refuse collection in 25 cities (pop. 25,000-180,000) in four states in the United States Midwest: Illinois, Indiana, Michigan and Ohio. The authors distinguish between municipal, contract and competitive regimes to examine the contract model in particular as a means to provide household refuse collection. Private contractor arrangements are earmarked for increased popularity as it was deemed likely that private involvement (and user-charging) would improve productivity and lower costs. However, this finding is contingent on properly incentivised contracts and user charges. USA
Scale, Market Structure, and the Cost of Refuse Collection Steven, Barbara J., 1978 The Review of Economics and Statistics, 60(3), pp. 438-448 This paper analyses how the cost of providing waste removal services varies systematically with the identity of the collector, the degree of competition and the size of the market served. It looks at the difference in providing waste removal services in three alternative market structures. Findings in the paper suggest a private monopolist is more likely to use a smaller staff base, whilst also showing that the cost to households is likely to decrease when the collector is a private monopolist. USA
An Empirical Study of Competition in Municipal Service Delivery
Savas, E.S. , 1977
Public Administration Review, pp.717-724
An Empirical Comparison of Government and Private Production Efficiency William Pier, Robert Vernon and John Wicks, 1974 National Tax Journal, Vol. 27, December 1974, pp. 653-656. This study uses survey data to compare production functions of refuse collection service across municipalities in Montana, measuring the productive and labour efficiencies of public and private service providers. Unusually among North American studies, public production is found to be more efficient than private. For a critical look at their methodology, see Werner Pommerehne and Bruno Frey, 1977, pp. 228-9. USA