Waste recycling and yardstick competition among Italian provinces after the EU Waste Framework Directive

ABSTRACT

Recycling and the recovery of waste are crucial waste management strategies. In light of the new European Union (EU) circular economy approach, these strategies remain core pillars of a competitive and sustainable waste value chain. Local governments have an important role in controlling and checking the implementation of waste management policies. We study the spatial determinants of waste recovery using a dataset of 102 Italian provinces from 2001 to 2014. To induce a possible source of exogenous variation, we exploit the political cycle of the provinces to isolate the impact of waste recovery in neighbouring provinces on its own province’s waste recovery. We find that after the transposition of the 2008 EU Waste Framework Directive, provinces mimic their own neighbours in the separate collection of waste aimed at recycling and recovery. This effect is more pronounced during pre-electoral years than non-pre-electoral ones, and fully guided by provinces where the president can run for re-election.

KEYWORDS:

• spatial interactions
• political budget cycle
• waste management
• recycling
• yardstick competition
• election
• Waste Framework Directive

JEL:

• H20
• H71
• H77

ACKNOWLEDGEMENTS

We are grateful for helpful comments made by the participants at the 20th Louis-André Gérard-Varet international conference and at the 77th annual congress of the International Institute of Public Finance (IIPF). We also thank the editor and three referees for insightful comments. An earlier version of this paper circulated under the title ‘Political cycles and yardstick competition in the recycling of waste. Evidence from Italian provinces’ in the Institut d’Economia de Barcelona (IEB) Working Paper series (No. 12/2020). The scientific output expressed does not imply a policy position of the European Investment Bank. Neither the European Investment Bank nor any person acting on behalf of the EIB is responsible for the use which might be made of this publication.

DISCLOSURE STATEMENT

No potential conflict of interest was reported by the authors.

Notes

1. Over the period of analysis, 15 provinces (around 15% of the total) experienced an (unexpected) early termination of the term of office.

2. Italian regions follow staggered electoral times, thereby making it possible to control for their electoral cycle in the analysis. Conversely, the inclusion of other type of elections, such as a national one, would not be feasible since they occur at the same time for all provinces, and, therefore, they would be absorbed by yearly fixed effects.

3. The approach used here is that of only considering neighbours that are contiguous municipalities as this is a neutral and simple definition which captures the idea that interactions are more likely to take place between adjoining jurisdictions.

4. Since the standard spatial econometric approach – that is, instrumenting the neighbours’ outcome variables by using all neighbours’ (exogenous) variables – has been criticized by Gibbons and Overman (2012), most of the literature has exploited quasi-natural experiments to analyse spatial interactions (for a discussion, see Ferraresi, 2020, passim).

5. Since the instrument set is based on the timing of elections of neighbouring provinces, which can be reasonably considered exogenous (Coviello & Gagliarducci, 2017), we argue that the assumption that the neighbours’ political cycle is uncorrelated with the error term is likely to hold.