INTER-COUNTY DIFFERENCES IN COST OF COMPLAINCE WITH MICHIGAN'S SOLID WASTE MANAGEMENT ACT

Waste generation is a natural and expected outcome of productive activity. Waste is produced, much like any other commodity, although rather than considering waster as a "good" where more is preferred to less, we would tend to consider waste as a 'bad' - less is preferred to more. However, it is also true that waste supply is an increasing function of production and that is we prefer more consumption to less, we must accept the production of more waste. The point here is that waste disposal is a cost which in aggregate increases with the demand for productive activity; it is a cost which is assigned to both producers and consumers in the form of a trash removal fee. However, as a cost of production, one would expect that disposal fees are passed on to consumers in the prices they pay for goods. Hence, disposal fees in general are borne by consumers, either directly as residential disposal fees or indirectly through prices of goods and services. When waste disposal is performed unsatisfactorily, an additional cost is imposed: the cost of pollution. The burden of this cost often escapes those who are responsible, since disposers interested in maintaining a competitive position will transfer the pollution cost to the public in general or to future generations. The issue here is not merely a problem of cost allocation, but rather a conflict in interests over the use of a natural resource - namely, groundwater. Waste disposal requires land as an input. To simplify the discussion, consider land as a container to hold waste. This same land may also be a container for groundwater, although these two uses of land are mutually exclusive where proper disposal techniques are not utilized. In other words, we have a situation where the disposer has the right to utilize the land for disposal activities, and the public has the right to safe drinking water and uncontaminated soil. But where rights conflict, it is necessary to protect one of the interests. Under Act 641, the right is assigned to the public, thereby prohibiting the waste disposer form interfering with the groundwater. Hence, the waste disposer is legally constrained from creating an externality; that is, from imposing pollution costs on others. One can argue, then, that a mechanism to protect a natural resource is property rights assignment, or as Demsetz points out, "a primary function of property rights is that of guiding incentives to achieve a greater internalization of externalities". Although the Act regulates all facets of solid waste management, this study is confined to an examination of sanitary landfill regulation and the costs incurred by the county in conforming to these regulations. It is the hypothesis of this study that costs will not be distributed evenly between Michigan counties, but rather, will be a function of the degree to which a county can meet Act 641 standards, subject to certain constraints. Since a major objective of Act 641 is to regulate landfills, the author considered the analysis of this facet of the Act indicative of the economic ramifications of the entire Act. However, where regulatory changes in other waste management activities are particularly significant to this study, implications will be noted.