NET SOCIAL COSTS OF INCINERATION AND LANDFILLING : A CBA study on the economic effects on Sweden under two contrasting trade policy scenarios

Abstract: Every year English waste is exported to Sweden for treatment, the waste type is called Refuse Derived Fuel (RDF). Instead of being landfilled in England, the exported RDF is used as an input fuel in Swedish incineration plants to generate heat and electricity. In Sweden the RDF trade has been criticized for being immoral and causing unnecessary CO2-emissions due to shipping, hence calls has been raised for a ban on RDF imports. The purpose of this paper is to evaluate whether a continued free market policy or a banning policy is the preferable from an economic efficiency perspective. Under the free market policy scenario I evaluate costs and benefits accruing due to incineration of RDF in Sweden. Similarly, under the banning policy scenario I evaluate costs and benefits impacting Sweden when the English RDF instead is landfilled in England. Costs and benefits under each policy scenario are summarized in a net social cost estimate. Main analysis results suggest the net social cost of the free market policy scenario to -577 SEK2018/tonneRDF and the banning policy (English landfilling) to 381 SEK2018/tonneRDF. Thus, the cost of adopting a banning policy is 9582018/tonneRDF potentially no longer exported to Sweden due to a ban. Results are sensitive to a range of assumptions, however the free market policy scenario stay preferable under all conducted sensitivity tests.