Economic analysis of the tourism impacts on municipal solid waste generation: Methodological contributions to the design of pay-as-you-throw tariffs

  1. Eugenio Díaz Fariña
Supervised by:
  1. Noemí Padrón Fumero Director
  2. Juan José Díaz Hernández Director
  3. Gustavo A. Marrero Tutor

Defence university: Universidad de La Laguna

Year of defence: 2020

Committee:
  1. Carmelo Javier León González Chair
  2. Raúl Hernández Martín Secretary
  3. Ana Fabiola Espinola Arredondo Committee member

Type: Thesis

Teseo: 641685 DIALNET

Abstract

This thesis contributes to highlighting the transversal nature of the tourism sector and, therefore, the difficulties to estimate its environmental impacts. It is divided into four chapters. These are linked to a single common axis, an analysis of the contribution of tourism to the generation of municipal solid waste (MSW) in island regions and the design of adequate environmental policies to promote recycling and prevent mixed waste generation within the tourism sector. All chapters are applied studies on the island of Tenerife at the municipal level, which has certain characteristics that make it an ideal natural laboratory. Tenerife is the leader in the reception of tourists within the Canary Islands and has a well-established waste management network, which obliges all municipalities to operate under the same regulatory conditions and waste collection information is open data. The thesis has two main objectives. The first is to measure more precisely the contribution of tourism to waste generation with the ultimate aim of separating the contribution of this sector from that made by the resident population. This would be a fundamental aspect for the subsequent definition of a scheme of optimal prices based on the polluter pays principle. Only by analyzing the contribution of each agent will it be possible to test whether there is empirical evidence to support a differentiated treatment for each agent. In this context, supply-side and demand-side approaches are reviewed in Chapter 1 and Chapter 2, respectively. Both approaches have been previously used in the literature, however, this thesis makes several contributions to them. The contribution of Chapter 1 is the estimation of the impact on the mixed waste generation of different services offered by the accommodation industry and the internal waste management technology available. More precisely, the impact of accommodation services and different meal plans are analyzed considering the level of demand. The training of employees about internal waste management and having an environmental certification also impact on the waste generated. The contribution of Chapter 2 is an analysis of the impact of the level and patterns of tourism consumption on waste generation based on the use of overnight stays, as has been done in the literature from a demand-side approach. Tourism expenditure considers expenses for other services apart from accommodation establishments and tourists’ profiles provide an analysis of their differences in the impact on waste generation between hotel and apartment tourists. One of the novel features of the first objective of the thesis is in Chapter 3. A new methodological approach is proposed, called mixed demand-supply, to estimate the impact of tourism on MSW generation by tourism industries as a result of tourism consumption, thus distinguishing from residents’ consumption. An additional contribution of Chapter 3 is the impact on MSW generation associated with the mobility of both residents and visitors to consume services throughout the island. The second main objective of the thesis is to design a two-part Pay-As-You-Throw (PAYT) tariff that achieves an effective reduction in waste generation in one of the main tourist activities, the accommodation sector. This objective is developed in Chapter 4 and its contribution is multiple. It is the first study to design a PAYT tariff in the accommodation sector. Secondly, strong incentives are given to reduce waste generation and increase sorting of recyclable waste while ensuring the polluter pays principles. Lastly, we prove the effectiveness of this two-part PAYT developed for the accommodation sector with a panel data regression analysis. All chapters follow the standard organization of an academic paper. In addition, Chapter 3 was published in Waste Management Journal (impact factor of 5.431 in 2018) in 2020, included in the Journal of Citation Reports (JCR). Chapter 1 and 2 will be sent to be published in Tourism Management Journal (impact factor of 6.012 in 2018), also included in the JCR. Chapter 4 will be sent to Journal of Cleaner Production (impact factor of 6.395 in 2018), also included in the JCR. All journals are ranked in the first quartile (Q1). Below is a brief summary of the content of each of the four chapters that make up this doctoral thesis. Chapter 1: Analyzing the impact of hospitality services and management on mixed waste generation The large and increasing waste generation by the accommodation sector endangers the sustainability of tourist destinations. Additionally, tourism waste is hidden within residential municipal waste indicators, thus blurring its true impact. It is therefore essential to analyze the contribution of the tourism industry and the determinants of waste management practices in order to achieve sustainable development. We analyze the hospitality industry determinants of mixed waste (MW) generation and quantify its causal impact. The contribution of this chapter to the literature is twofold. On the one hand, we measure the impact on the mixed waste generation of different hospitality services, such as accommodation and food services, the latter being disaggregated according to different meal plans. On the other hand, it is the first analysis of the causal impact of the environmental practices of the accommodation sector on waste generation and management. Our sample for the analysis in this paper consists of 42 hotels and apartments in the municipality of Puerto de la Cruz, Spain, representing 83.4% of the accommodation rooms in that destination. This municipality is highly relevant to our case study, since the municipal council has implemented an ambitious tourism renewal policy focused on sustainability during the last decade. We run a panel data model to analyze the determinants of hotel waste generation and quantify their causal impact. Results evidence that the food service is the greatest contributor to mixed waste generation within the hospitality industry, with the all-inclusive service being the one with the largest impact. We have also showed that the higher the demand for accommodation services, the higher the amount of mixed waste generated by establishments, with a larger contribution from apartments compared to hotels. This result indicates the absence of economies of scale in the accommodation industry. Moreover, we have found that apartments generate more structural mixed waste than hotels, controlling by size. Regarding waste management practices within accommodation firms, the most important source of mixed waste reduction within the establishments is employee training on waste management (average reduction by 35%), followed by the environmental certifications (10.25%). However, having a waste manager within the firm’s organization seems to have a minor impact. The chapter opens the debate on the need to regulate all-inclusive commercial practices within the destination, the need for adopting Pay-As-You-Throw tariffs in order to account for firms’ internal waste management costs associated with best environmental practices, and the promotion of training programs on waste management besides encouraging environmental certifications. Chapter 2: Quantity vs. quality approaches to tackle the environmental impacts of tourism: the case of mixed waste generation Tourism destinations around the world are facing a growing environmental problem related to the increasing amounts of waste generated. In contrast to other environmental problems such as the intensive use of energy or water in the tourism industry, waste generation and dumping is a visible problem, which directly impacts the image of a tourist destination. In addition, tourism firms’ contribution to municipal budgets in massive tourist destinations is becoming increasingly important in order to guarantee the sustainability of environmental and network services such as waste management and others related to the circular economy. Therefore, to ensure tourism sustainability, it is essential to identify the contribution of all tourism services to municipal waste generation and to provide decision-makers with useful insights and information. The main objective of this chapter is to try to improve the methodologies that estimate the contribution of tourism to waste generation. For this purpose, we overcome the limitations of using quantitative variables, such as tourist numbers, introducing tourism expenditure to capture consumption patterns and the influence of tourism quality variables. In doing so, this chapter provides two contributions to the literature. First, we use tourist expenditure at a disaggregated level: i) where it occurs (in the accommodation or other services at the destination) and, ii) who makes it (tourists staying at hotels or apartments). And second, unlike other studies, our analysis is implemented at the municipal level, which provides additional insights into the weakness of current waste fees in the context of economic incentives designed to internalize municipal externalities. We use a municipal panel data of the four main tourist destinations on the island of Tenerife (Spain), studied between 2009 and 2015, on a monthly basis. Two different panel data models are implemented from a demand-side approach to analyze the impact of tourism on waste generation. The first model uses the number of overnight stays, as previous authors, while the second model uses tourist expenditure to capture tourism impact on waste. Results show that the impact of the accommodation sector using tourist expenditure is lower than the one obtained using tourist number variables. Moreover, tourist expenditure on services outside accommodation establishments has a greater impact on the generation of mixed waste than the expenditure covering both accommodation and food services. Interestingly, when measured by number of tourists, the amount of waste generated by apartment (hotel) tourists is overestimated (underestimated), with respect to tourist expenditure measures. In fact, the expenditure of apartment tourists on accommodation services and pre-paid meals does not have a significant impact on waste generation. There are several policy implications of these results, such as reviewing current waste flat-fees and the introduction of PAYT fees. All in all, proposals range from charging hotels higher fees than apartments to distributing mixed waste generation costs among different tourist activities. Chapter 3: The contribution of tourism to municipal solid waste generation: a mixed demand-supply approach in the municipalities of Tenerife island Tourism contributes intensively to municipal solid waste, yet the waste from tourism systematically remains hidden behind residential waste flows. As a result, municipal fees are set without precise information about waste producers' contributions, causing financial imbalances and cross-subsidies between residential and economic activities. To estimate tourism's contribution to mixed waste generation in an island destination, socio-demographic, economic, and disposal-related factors are modeled using municipal panel data from 2006 to 2015 for the island of Tenerife (Spain). In contrast to previous studies, a mixed demand-supply approach is adopted to estimate the main tourism activities' contribution to mixed waste, thus, isolating residents’ contribution. An auxiliary model is used to isolate the employment levels in tourism activities attributable to residents’ consumption and to capture tourists’ and residents’ mobility on the island. Estimates show that main tourism activities generate 0.40 kg of mixed waste per tourist daily, while residential and economic sectors account for 1.19 kg per resident daily. This tourism contribution is significantly lower compared to other studies, either from a demand-side or supply-side approach, as it captures tourism’s contribution to mixed waste attributable only to tourists, following a mixed demand-supply approach. These results shift impacts from tourists to main tourism activities, which highlights the choices made by producers rather than the final customers and reinforces the extended producer responsibility principle. The implementation of a Pay-As-You-Throw tariff for mixed waste is discussed as a way of promoting waste prevention and recycling, as well as avoiding cross-subsidies among waste producers and municipal financial imbalances. Chapter 4: Encouraging the hospitality sector to reduce waste generation: designing an effective two-part Pay-As-You-Throw tariff Waste generated from the accommodation sector adds additional pressure on municipal waste management services and, as it is commonly dumped, increases tourism environmental and social impacts at the destination. Furthermore, if flat waste tariffs charged to accommodation establishments are set below the average cost of waste collection and treatment services, deficits in the municipal budgets may arise. In addition, cross-subsidies between tourism activities and residents or other sectors may arise if revenues from other sectors are used to cover such deficits. Thus, the PAYT tariff seems to be the ideal economic incentive to internalize the full cost of municipal waste management. The main objective of this chapter is the design and impact evaluation of a PAYT tariff for the accommodation sector in a mature tourist destination. Two databases are available to address the design of an optimal PAYT tariff and to evaluate the impact of this optimal tariff, a variant of which was approved by the City Council in December 2018. The first database contains data for 60 accommodation establishments, observed during eight weeks in 2018, therefore before the new tariff approval. The second database contains data for 18 establishments observed during four weeks before the PAYT became effective in April 1st, 2019, and eight weeks after. The same twelve weeks in 2018 are used to control for yearly and weekly trends and the Easter effect. An econometric model is developed to estimate the impact of the PAYT tariff on the reduction of the mixed waste generation relative to the number of overnight stays. As a result of our previous research in this matter, an optimal two-part PAYT tariff is designed based on a pay-per-bin mechanism, which introduces strong incentives for accommodation establishments. The first incentive is aimed at promoting adequate waste management by the firms, off streets and with, at least, three recycling bins. Therefore, in order to avoid an increase of 300% above the initial flat waste tariff, accommodation firms would need to adapt their infrastructure to allow a door-to-door collection system (a refrigerated and isolated room to stock recyclable and mixed waste bins and their collection by municipal services) if it was not previously built. The second incentive aims to minimize firms’ waste generation. To do this, a penalty (reward) on the excess (deficit) of mixed waste bins generated by the firms over time, with respect to the municipal sector average, was designed. The impact of the PAYT tariff implemented by the municipality are: first, an increase in municipal revenues, ensuring compliance with the polluter pays principle, with the novelty that those establishments generating a greater quantity of mixed waste relative to their size pay more than proportionally; and second, a significant reduction in mixed waste generated, of around 35%, both related to waste prevention and increased recycling of paper and cardboard, glass and light packaging. As the explained variable is the number of bins, and not waste weight, results regarding mixed waste reduction must be interpreted with care. Indeed, fewer bins might be related to better recycling practices that free up bin space and, thus, denser mixed waste can be produced. On the other hand, the opposite can be also true, since municipal services stated that better waste management practices were required of establishments, prohibiting additional bags or non-standard, leaking and heavy bins.