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Evaluating Economic and Environmental Impacts of Municipal Solid Waste

December 31, 2016

Background and Problem

Per the Environmental Protection Agency (EPA), as of 2009, there were more than 1,900 open municipal solid waste landfills (MSWLF) in the United States.  These sites receive nonhazardous refuse from households, industrial, and commercial locations.  In 2013, each American generated 4.40 pounds of municipal solid waste (MSW) per day for a total of about 254 million tons.  Annual totals of MSW continue to rise with population increases while the per capita amount has stabilized since 1990 after rising since 1960. The amount of MSW that is recycled increased from 6.2 percent in 1965 to about 34 percent in 2013.  The percentage breakdown of materials sent to landfills in 2013 consisted of food (21.1); plastics (17.7); paper (15.1); rubber, leather/textiles (11.6); metals (9.1); yard trimmings (8.1); wood (8.0); glass (5.0); and other (4.4).  Since 1980, tipping fees for landfill disposal in constant 2013 dollars have increased from about $20 to $50 per ton.  Construction and demolition debris sent to landfills in 2013 entailed another 530 million tons with 85 percent consisting of Portland or asphalt cement with the remainder in other building materials.[1]


Assuming an average size of about 250 acres, the total open landfill space in the U.S. approaches about 500,000 acres.  The cumulative size of the 10,000 or so closed landfills could be comparable.  Thus, there may be up to 1 million acres or more of land devoted to landfills in the U.S. which is less than 1 percent of total land.  Yet, many of the closed landfills are near urban populations and have unknown contaminants posing threats to human health and the environment over much larger areas.  Old landfills cause air (methane gas) and groundwater/ drinking water (leachate) pollution that has been linked to low birth weights/defects and cancer.  The older practice of not covering landfills contributed to wildlife scavengers spreading the bacterium that causes botulism.[2]  Other concerns include proliferation of vermin, fire hazards, and foul odors.[3]  Evidence of direct association between landfills and human health impacts are compelling, however biases and perplexing elements cannot be discounted.  The reason is that research evidence often lacks direct exposure measurement.[4]  Many of these older landfills contain unknown hazardous wastes any of which could be within categories established by EPA such as spent solvent, metal finishing, petroleum refinery sludges, and multisource leachate.[5]  A 1991 University of Tennessee study estimated undiscounted cleanup costs of all hazardous waste sites in the U.S. at $500 billion to $1 trillion for the period 1990-2020.[6]


The groups directly or indirectly impacted by landfills include residents nearby that experience the adverse effects, wildlife, governments regulating operations, and patrons of MSW service.  Studies of wildlife, particularly avian scavengers, have found that landfills often do not have detrimental effects while the availability of food wastes could be beneficial.[7]  The resources being used for landfills consist primarily of the property directly taken that could have been used for other uses but also includes expanses of surrounding land which is then of limited value for natural or developed uses.  Resources affected also consist of groundwater which can be restricted for both consumption and agricultural uses.  Emissions from methane gas are effectively a use of air resources within and surrounding landfills.

Use of Goods and Services


Landfills affect both public and private use of goods and services as they are developed on and impact property owned by both sectors.  Subtitle D, an amendment to the Resource Conservation and Recovery Act, imposed new requirements for landfills built after 1988.  These include pit liners, monitoring wells, and methane gas/leachate treatment systems.  As a result, newer landfills are safer but now must be built as “megafills” to be economical.  Thus, the market shed has shifted from local areas to crossing regional and state lines for disposal of MSW.  New challenges have emerged such as externalities from increased highway truck traffic transporting MSW, environmental justice concerns with locations often near low-income or minority communities, in addition to the standard ecological concerns of air, water and noise pollution.  Exurban and rural locations are now receiving larger amounts of MSW for landfilling from major cities disproportionate to the wastes generated at these outer locations.


The sheer size of these operations can be detrimental to nearby economic development.  As of 1999, there were no reported failures of MSW landfills established since the new 1988 rule.  Nevertheless, the potential of punctures to underlying barriers is possible in concentrated areas and likely may not be detected by monitoring wells, whereas releases from unlined landfills would be discovered due to the more widespread infiltration of contaminants into groundwater.  Localities such as King and Queen County Virginia have found that the economic benefits of their mega-landfills outweigh the costs.  Tipping fees from the 400-acre landfill comprise a substantial portion of the County’s budget, allowing them to move forward with major capital projects.  The adverse effects to residents are the associated odors, large numbers of scavengers carrying and dropping trash, and the increased truck traffic effect of emissions and road congestion/safety.  Trucks at times are uncovered and leak.  State’s seeking to limit mega-landfills and the related traffic face interference with interstate commerce laws.[8]  One study found that restrictions such as quotas and surcharges can have the effect of increasing interstate shipments and could reduce overall social welfare.  However, this did not include monetized values for externalities such as noise and truck traffic.[9]


Incentives can be used for recycling and composting to reduce the demand for landfill space.  Variable rate pricing or “pay-as-you-throw” programs serve to alter consumer behavior by charging for the quantity of disposed MSW.  For example, Lakeshore Recycling Systems charges the following rates per week based on container size:  35-gallon, $1.43; 65-gallon, $2.86; and 95-gallon, $4.29.  Stickers must be purchased for additional refuse at commensurate rates.  There is no charge for the 65-gallon recycling container as costs are integrated into the overall MSW fee.  Thus, citizens have the incentive to recycle and keep other MSW waste to a minimum.[10]  Such programs can be mandated by the public sector and imposed by the private sector.  Both are motivated by reduced marginal costs and increased marginal revenues.  These “pay-as-you-throw” programs, based on volume or weight, were in place at more than 10 percent of U.S. communities as of 2001.  This is a substantive improvement over the inefficiency of conventional practices where a set fee is imposed via billing or property taxes.  The conventional method effectively makes the marginal cost of disposal faced by the household zero while the MSW collection firm has a positive marginal collection and disposal cost.


The pay-as-you-throw programs have had significant success in volume reductions of landfilling and increases in recycling.  Several studies have quantified landfilling reductions ranging from 6-74 percent depending primarily on the charge rate.  Weight-based systems have the advantage of higher reductions as volume can be impacted by customer compaction. Although, there is an added expense of measuring the weight which can also extend collection time by about 10 percent.[11] A downside is that recycling costs are often subsidized by municipalities via general revenues so that the public does not realize the true costs.  The incentive to reduce MSW and increase recycling can be imposed by the public sector on residents and companies competing to handle these services.  If allowed by local ordinance, private haulers have more of an incentive to initiate or participate in pay-as-you-throw if permitted to match weight-based pick-up fees with weight-based tipping fees as opposed to mismatching weight and volume.[12] This assumes that recycling costs are integrated into the price. Ultimately, both the public and private sectors have the motivation to impose incentive-based MSW disposal and recycling systems if they are required to account for all social costs while maximizing societal net economic benefits.


Some countries and U.S. states require private manufacturers to implement producer take-back programs, also known as extended producer responsibility (EPR), which diminishes consumer obligations for final disposal of goods that have reached their useful lives.  Without such requirements, the only incentive that companies have to do this is through voluntary product stewardship which improves firm image to the public and could increase overall sales. EPR programs are justified because they counter some recycling markets that do not signal producers to account for waste and disposal in their costs.[13]



Economic and environmental impacts of MSW handling should consider sustainability or the ability to ensure the availability of natural resources for future use.  Land or soil in of itself is a finite or non-renewable resource that can be degregated from compaction, erosion, acidification, salinization and hazardous materials.  The ability of soil to recover can require multi-generations and may be incessant without intervention.[14]  In the interim, options for reuse are limited.  Landfills impact ground/surface water and wetlands when hazardous materials and leachate migrate to other areas.  Fresh water is considered a renewable resource as rain soaks into the ground to replenish groundwater and surface water evaporates to be released as rain.  Yet, only 3 percent of the earth’s water is fresh with about 1/3rd of that safe for drinking, while it is scarce in various locations.[15]  Natural attenuation of leachate contamination, including volatile organic compounds (VOCs) occurs over time.[16][17]  Landfills release pollution into the air such as VOC’s, carbon dioxide and methane.  Yet, air is considered renewable.[18]


Technologies available besides landfilling and recycling/composting include incineration, gasification, and pyrolysis.[19]  Incineration occurs over 850o C, oxidizing waste and converting it to water and carbon dioxide with remaining non-combustible residuals such as metals, glass and carbon.  Gasification uses some oxygen, combustion occurs at lower temperatures (above 650 o C), and the primary product is synthesis gas (syngas), containing hydrogen, carbon monoxide, and methane. Pyrolysis is thermal degradation of MSW at lower temperatures (300-850 o C) without oxygen and also produces syngas.[20]  Syngas has 50 percent the energy density of natural gas and is used as raw material in fuel for producing steam, electricity, and chemicals.[21]  Mechanical-biological processing (MBP) varies but generally is an intermediate treatment process which includes physical shredding, metals separation, and heat/steam treatment.  The biological component consists of aerobic decomposition and anaerobic digestion.  Outputs are recovered metals and glass, liquid digestate, fraction for composting, and refuse derived fuel (RDF) pellets.[22]


Khan et al. developed a decision-making model to aid local officials in selecting the appropriate mechanism for handling MSW based upon economic and technical parameters.  This includes identification of a site/optimal size for a MSW facility, the appropriate disposal method(s), transportation costs, and comparison of nine waste conversion technologies or scenarios and landfilling methodologies.  For the last element, the researchers developed the FUNdamental ENgineering PrinciplEs-based ModeL for Estimation of Cost of Energy and Fuels from MSW (FUNNEL-Cost-MSW).  The model is used to compute gate fees charged by ton of MSW received and internal rate of return (IRR) or the interest received on the unrecovered balance such that the first payment net present value (NPV) is zero.  Initially, site selection is evaluated through 12 separate criteria/specifications such as environmentally sensitive areas, roads, land surface gradient, and urbanized areas. For each of the nine scenarios, other potential revenues are quantified based on sales of biofuel, electricity, and compost in addition to carbon credits (default value for CO2 saved) and incentives.  The model uses equations for capital and operating costs developed from empirical data.  Higher capital costs mandate increased tipping fees.  The model is applied to Parkland County Alberta and, in terms of calculated gate fees, finds for MSW of 25,000-50,000 tons/year that composting is cheapest due mainly to higher capital costs for the other technologies.  At MSW of 50,000-150,000 tons/year, an electricity-producing gasification facility along with composting is the cheapest option.    This technology is also optimal when considering calculated IRR at MSW of 50,000-100,000 tons/year which results in the highest IRR (8.87-13.17 percent).  Gasification-producing electricity performs second best with an IRR of 6.79-11.49 percent at 50,000-150,000 tons per year.  Landfilling has the worst IRR at 70,000 tons/year and above.  Gasification-producing biofuel has the lowest IRR at 50,000-70,000 tons per year.[23]


Chang et al. uses life cycle assessment (LCA) to quantify environmental impacts of MSW in terms of global warming potential (GWP). The study addresses the inability of cost-effectiveness to consider these impacts by improving upon a benefit-cost analysis (BCA) approach to determine optimal levels of landfilling and recycling.  The study focuses on such operations in Lewisburg, Pennsylvania by analyzing five scenarios with the goal of minimizing total costs: 1) cost minimization; 2) benefit maximization; 3) GWP minimization; 4) combination of 2 and 3; 5) BCA under a carbon-regulated environment.   Findings indicate that scenario 4 is optimal in the sense that benefits and GWP are balanced and maximized with increased recycling.  The net benefit is -$75,400 which is negative but higher than the other alternatives.[24]


Hellweg et al. found that when only considering net private costs of waste treatment (total capital and operating costs less energy sales revenues), the order of performance for 4 MSW options is landfills, MBP, grate incineration (GI), and staged thermal process (pyrolysis and gasification) (PECK).  The analysis takes into consideration co-products that are developed such as heat, electricity and metals.  The researchers then identify the metric environmental cost efficiency (ECE), or net environmental benefits divided by costs to, compare MSW options while accounting for emissions to determine net social benefits.  They find that the life-cycle assessment (LCA) rankings from most to least ECE in the long-run is PECK, MBP, GI, sanitary landfills.  The ECE rating for incineration is better than landfills and MBP due to superior energy recovery and lower air emissions of methane, nonmethane VOCs, and nitrogen oxide.  MBP outperforms landfills in all categories.  PECK is less toxic than incineration as it prevents metal emissions but overall the two are about equal in ECE.[25] 


In recent years, it has been difficult for private firms to make a profit in the recycling industry as prices for these materials have dropped significantly due to the slowdown in the Chinese economy, strong U.S. dollar, and low oil prices.  The result is that there have been closures of recycling facilities and increases in MSW deposited in landfills.  Part of the problem has been aggressive recycling promotion, larger recycling bins, lighter packaging materials, and policies that do not require customer sorting.  Consequently, more inappropriate materials are added to recycling bins which increases contamination and costs for sorting.  To compensate, local governments will need to take on more of the financial responsibility for companies to continue in the recycling business.[26]  This means that increases in customer user fees and pre-sorting may be necessary.  Changing from single-stream (no sorting), which is predominant, to dual stream methodology decreases contamination and streamlines facility processing.  With dual stream, customers are only required to separate fiber materials such as paper and cardboard from containers such as glass, metal and plastic.  The pickup truck maintains the dual separation.  A study by Lakhan in Ontario, Canada found that areas with single-stream recycling generally recover more materials (~4 percent) than multi-stream systems but at higher overall costs.  The reason is that savings in collection costs are outweighed by increases in processing costs and reductions in sales revenues due to lower quality recovered materials.  Nevertheless, the author concludes that single-stream recycling may be desirable in larger high-density regions as it is more cost-efficient when processing higher volumes.  Multi-stream recycling may be preferable for smaller communities hesitant to invest in more expensive/complex separation technology.[27]


Economic Valuation Methods

Economic valuation (EV) is monetization of benefits/costs from the impacts of policies on ecosystems based upon revealed preferences such as purchasing habits. Contingent valuation (CV) is a stated preference approach via surveys to identify willingness to pay (WTP) for changes in such impacts.[28]  The downside of CV is time and the difficulty people have in accurately expressing WTP.  CV/EV do not include non-use value of the ecosystem.  Hite et al. studied housing values near landfills in Columbus, Ohio. They found that increases are expected in the range of 18-20 percent at a distance of 3.25 miles from a landfill vs. 0.5 miles.[29]  Nelson et al. studied home values near a landfill in Ramsey, Minnesota and similar to other studies, found reductions of 12 percent near the border, 6 percent at 1 mile, and no effects beyond 2-2.5 miles.[30]


Decisions by localities to implement recycling are often based upon cost effectiveness as opposed to net social benefits.  Due to budget shortfalls, they often reduce or terminate curbside recycling programs (CRP).  Aadland et al. compared EV/CV to identify preferences of mandatory, voluntary and no CRP using surveys of more than 4,000 homes in 40 western U.S. cities. They found bias and that the public’s WTP or the social net benefit of CRP is almost zero.  The results vary by area and some CRPs appear to be inefficient.  The authors surmise the differences may be due in part to the public’s beliefs regarding landfill limitations based on messaging from officials.[31]  Kinnaman analyzed CRP in Lewisburg, Pennsylvania and found direct costs exceeded net benefits by $10.00 per home per year.  This did not include dis-benefits of those residing near landfills and results of a CV survey indicating residents WTP more than $90 yearly for a CRP.  The author is concerned that WTP is skewed by altruistic preferences due to inaccurate information regarding landfill space.[32]  A study of paper recycling in the United Kingdom finds that it is unprofitable for the private sector but is preferable when considering social costs and benefits such as reductions in landfill scarcity and greenhouse gases.[33]


Consumptive use value refers to the worth of market and non-market resources/products.  Non-consumptive use value entails ecosystem goods/services.  These include the value of plants in cycling nutrients, limiting soil erosion, and in providing food, clothing and shelter.  Animals are a source for food and contribute to soil fertility, limiting pests, and plant pollination. Bacteria contributes to the cycling of nutrients/gases, agriculture/biotechnology, and drugs/antibiotics.  Together, these non-consumptive use values range into the trillions of dollars.[34]  Recycling is a consumptive use value as reused paper, glass, plastic, etc. contribute to new products.  Landfills can displace productive agricultural uses of property which has a long-term impact on consumptive use value.[35] The products from MPB and PECK can be considered consumptive use value due to the goods they produce.  Non-consumptive use values are more applicable to the negative impacts upon the environment and mankind’s enjoyment of nature imposed by landfills.[36]


Other valuation methods include the averting behavior model regarding WTP to avoid environmental harm.  Another is the Delphi Method whereby experts provide values for benefits and costs and come to consensus based upon professional economic judgement. The replacement cost method determines a value to restore an asset damaged by pollution.[37]  Option value is the worth placed on an environmental amenity based on WTP so it can be used later.  Existence value is based on WTP to preserve environmental features.  Intrinsic value is the worth of an environmental amenity in of itself.[38]  These are all legitimate methods to measure environmental impacts of MSW disposal but may not be appropriate if they cannot be accurately quantified.



It is recommended that local governments seeking to modify existing MSW practices identify the market and social costs of the various alternatives, determine WTP through previous research or a new survey, and meld the results to inform a selection that balances optimization of both methodologies.  This approach will minimize the impacts of landfills and promote efficient use of resources by closely matching marginal benefits with marginal costs.  The typical MSW options are landfilling, recycling (single/dual stream), incineration, gasification, pyrolysis, MBP, and combinations of each.  To maximize expenditures for analysis, MSW alternatives and facility siting exploration at least initially should occur as part of a coordinated comprehensive planning process for land use and transportation.  This establishes a long-range vision for growth and development including potential locations for services such as MSW management.  In addition, a decision-making tool such as the Khan et al. FUNNEL-Cost-MSW, benefit-cost analysis (BCA) or a comparable framework should methodically evaluate the alternatives more in-depth to optimize economic/operating efficiencies while minimizing environmental and human health impacts.  Thus, a potential MSW-handling methodology and site would need to be dictated by economic analysis that quantifies noise, emissions, transportation, capital and operating costs among others to ensure efficient use of resources.  To lessen the detrimental effects of a landfill, siting would likely need to be at least 2-3 miles from areas expected to become urbanized over the long-term.  MSW facilities for recycling and alternative technologies may be able to function with minimal impacts in areas zoned for heavy industrial uses.


From an economic perspective, since recycling and advanced MSW technologies have higher costs, they should be justified or supported accordingly by the WTP research or local survey.  In turn, estimates are needed for revenues from those options that would generate reusable materials and energy in the form of electricity or biofuels.  From a financial perspective, these sales revenues along with tipping fees or charges to customers must be sufficient to cover operating costs to ensure long-term viability, including market downturns for recycling products.  Local government general funds could be used to make up any difference, however, this would effectively be a subsidy that would reduce economic efficiency.  To further efficient use of resources, WTP surveys and implementation of the chosen technology should consider incentives, such as charging by waste (unrecycled) volume, thereby enticing respondents to separate recyclables if they realize there is a cost savings.  WTP for advanced technologies may be higher in larger urbanized areas due to limited land availability and the costs of moving wastes farther for landfills as opposed to rural areas where space is plentiful and costs are lower.  The WTP research or survey should attempt to quantify use and non-use values as appropriate for landfill and alternative MSW sites.  By doing so, local officials can ensure that valuations are as comprehensive as possible to confirm residents are willing to pay not only the private costs of MSW disposal and processing, but also the social costs such as impacts to ecosystem services, open space, agricultural production, and wildlife.


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