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Employment Effects of Waste Management Policies

Client: European Commission, Directorate-General for Environment
Date: 2001

The move towards creating a sustainable Europe has required an understanding of the linkages between economic growth and socially and environmentally driven activities. There is general recognition of the potential consequences of environmental regulation to the costs faced by businesses and consumers, but there are also other wider economic effects, such as changes to employment patterns.

A number of links between employment and waste management emerged from the European Commission’s Communication on Environment and Employment - Building a Sustainable Europe (COM/87/0592). Within the field of waste management, there has been considerable ongoing debate on the employment effects that may occur from shifts in policy. It has been argued that recycling and other waste management activities create employment for the socially excluded or low skilled in particular. However, as the costs of waste management increase, this may lead to the loss of (potentially higher quality) jobs in other sectors of the economy.

Scope of the Study

RPA was commissioned to provide additional information to DG Environment on the employment effects of different waste management policies. The objectives were to:

  • critically evaluate and complete existing information on employment activities related to waste management;
  • look at the issue of opportunity costs in terms of employment and other effects on other economic sectors; and
  • identify ways in which employment effects can usefully be integrated into evaluating policy instruments in the field of waste management.

Approach to the Study

The study involved the following analytical steps:

  • a review of available data on waste management and employment;
  • the analysis of job types within waste-related employment; and
  • the determination of the opportunity cost impacts of waste management, and the evaluation of the macroeconomic effects on employment across the EU, through the use of case studies.

Three case studies were selected for analysis:

  • an examination of the cost implications of waste management policies for the chemicals industry;
  • an analysis of the implications of producer responsibility in the waste electrical and electronic (WEEE) equipment industry; and
  • an examination of the implications of waste shipment regulations on the non-ferrous metals recycling industry.

The outputs of the desk-based case study work were fed into an econometrics-based macroeconomic model, the E3ME Model, to evaluate the net employment and wider economic impacts of the policies for the EU economy as a whole. The study then focused on how best to incorporate such predictions into policy appraisals. This involved an analysis of the range of current approaches (qualitative to monetary) to valuing employment, in order to determine the relative merits of the different approaches in supplementing the cost-benefit analyses that normally form the basis of such appraisals.

Conclusions

A key finding of this study was that the relationship between waste management policies and employment is more complex than the ongoing debate might indicate. Although waste management policies may increase demand for waste management services, this does not necessarily result in additional jobs. Instead, substitution of technology for labour, increased productivity and consolidation in the waste management sector may severely constrain job creation. There was also some evidence that these factors could reduce employment opportunities for the socially excluded in waste management.

The three case studies indicated that the impact of waste management policies on the competitive position of the sectors they regulate has been limited to date. Waste management accounts for a small proportion of total expenditure and companies subject to regulation naturally act to minimise the costs of compliance. Some companies also seemed to have gained efficiency benefits through focusing on waste minimisation.

Overall, the study demonstrated that waste management measures are likely to have only a small effect, either positive or negative, on employment. The detailed way in which a policy is implemented and complied with is most likely to determine the direction and scale of the effect, and this is often the hardest to predict. The most significant effects may arise outside the directly regulated sector, making the use of approaches that take account of indirect effects particularly important.

Further Developments

The study has been used by the Commission as an example of the need to widen the scope of impact assessment to consider the full range of potential economic, environmental and social impacts of changes in policies.

Links

To access the report, click here.