Cost-benefit analysis of the "blue-bag" recycling program in Muncie, Indiana

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Kutna, Oksana
Pichtel, John, 1957-
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Thesis (M.S.)
Department of Natural Resources and Environmental Management
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Cost-Benefit Analysis (CBA) was applied to evaluate the "Blue Bag" recycling program in Muncie, IN. Data was collected from the Muncie Sanitary District, a waste recovery facility and from a sample of Muncie residents. Results were analyzed descriptively and statistically and compared in terms of environmental performance to a landfilling option. Recycling resulted in greater greenhouse gas (GHG) emissions reduction and also in larger savings in energy consumption compared to landfilling (an equivalent of savings of $25,800.52 per year). A willingness to pay (WTP) parameter ranged from $0-175 in WTP in taxes/rent per year and a $0-52 range for WTP per trash container collected. The mean value of the welfare improvement corresponded with values obtained by other researchers (Hanley and Spash, 1993), totaling $960,797.65 for the WTP in taxes/rent scenario and $412,819.95 for the WTP per trash container collected scenario. The project's Net Present Values (NPV) were negative under the 3, 5 and 7`%, discount rates (-5209,961.75, -8242,477.73 and -S269,187.38 in the case of an optimistic scenario and -S675,244.83, -657.262.23 and -640,288.54 for the pessimistic scenario, respectfully) if environmental impacts were not taken into consideration. Environmental benefits associated with the Blue Bag program impacted results of the analysis - the project's NPVs were positive under the range of 3, 5 and 7% interest rates (510,569.501.26, 9,704,811.17 and 8,951,068.00 for the optimistic scenario and S 10, l 04,218.17, 9,290,026.68 and 8.579,966.84 in the case of pessimistic scenario, respectfully). It is concluded, that if the Blue Bag program is justified on CBA grounds, it can be considered as a profitable initiative from the social point of view; otherwise, the recycling program's costs outweigh its incomes and the existence and continuation of the Blue Bag program may he questioned. Further studies should be conducted in order to comprehensively test the overall social impacts of the program that could affect results presented in this study.