Income Inequality and Efficient Resources Allocation Policy for the Adoption of a Recycling Program by Municipalities in Developing Countries: The Case of Chile

The question about how to choose the best recycling policy is particularly relevant in developing countries. On the one hand, many of these countries have no national waste management strategies, with recycling programs emerging as an independent initiative financed by municipalities, mostly in urban areas. On the other hand, the municipal budget tends to be linked to the wealth of their inhabitants. Consequently, an efficient municipal resources allocation policy to support recycling programs is especially crucial for the most vulnerable population, often located in rural areas. In this paper, we address the problem of optimal allocation of resources for the adoption of a recycling program by municipalities located in both urban and rural areas of a developing country, determining the best combination between two options: increasing and redistributing existing resources. Our research methods involve comprehensive data collection and mathematical modelling, adopting a logistic regression model proposed in the literature, formulating a non-linear optimisation model, and implementing a resolution method. In addition, recycling policies with equivalent results are described and analysed, discussing their political feasibility and economic efficiency. To illustrate our proposal, the case of Chilean municipalities is considered. Chile is a country from the Global South that belongs to the OECD and can be therefore compared to other documented cases. Although no official national data is available, we were able to collect figures by requesting information from every municipality in the country. The obtained results show an important lack of resources at the national level in MSWM, especially affecting rural areas. In this context, equivalent recycling policies with combined options could better favour rural municipalities. However, the average probability for the adoption of a recycling program by municipalities, although shows slight increases, is not enough for a substantial change towards a more sustainable waste management model. Our results illustrate the gap between urban and rural municipalities, the need to inject important funds into the system as a whole, and open the question of whether a more direct ‘command and control’ policy is required instead of just trusting the individual initiative of each municipality, even if more resources are provided. © 2021