The cramped city-state is only years away from running out of landfill space.

Hong Kong has a trash problem. With more than 7 million people and limited available land, the city-state is one of the world’s most densely populated urban areas. But the same geographical constraints that have made Hong Kong so compact make it difficult to dispose of the mountains of trash it creates every day. The city’s three landfills are expected to reach capacity by the mid to late 2010s.

The government saw this coming. Hong Kong was a veritable pioneer in pursuing aggressive recycling policies, going as far back to the 1980s. And to a large extent, it’s worked. Between 2005 and 2010, Hong Kong’s domestic recycling rate leaped from 16 percent to 40 percent. That puts it way ahead of New York and London.

But it turns out that recycling isn’t enough. Hong Kong still sends a staggering 13,800 metric tons of trash to its landfills each day. The city’s Environmental Protection Department has said Hong Kong needs “a major mindset and behavioral change.”

Many large cities deal with excess trash by, well, throwing it away. New York City ships trash to Virginia. Toronto ships trash to Michigan. But this sort of solution, such as it is, is hardly sustainable. There may not be an immediate shortage of landfill space in the U.S., but shipping trash is expensive, both in cash and in carbon.

Hong Kong is trying a different tack. Secretary of the Environment Edward Yau is proposing that the city charge people different rates for trash collection based on how much trash they throw out. If you’re in the habit of buying lots of stuff and tossing it without recycling or composting, you’ll pay more. If you want to save money, you’ll think about ways to send less to the landfill.

This policy is known as “pay as you throw” (or PAYT). The hope is that by charging people more depending on their behavior, their behaviors might actually dramatically change. All of a sudden, everything you throw away comes with a small, but real, cost, and you have a reason to think about reducing waste. It’s exactly the kind of market mechanism that both environmentalists and economists love.

PAYT isn’t a new concept. The first large-scale PAYT program in the United States was set up in Seattle in the 1980s. Now, about a quarter of the nation’s population lives in areas with some variation on the theme. PAYT programs are also in place in Germany, Denmark, South Korea, and other countries.

How do you implement PAYT? Some cities only pick up trash that’s put out in designated, pre-paid trash bags that are priced to include the cost of the collection and disposal of the trash inside. Others offer different sizes of trash bins at different rates. Others actually weigh a household’s trash as it’s collected to calculate the charge.

Lisa Skumatz, an economist who helped set up Seattle’s trailblazing program, says, “pay as you throw is the most elegant of the solutions because it encourages more recycling or more diversion rather than less—you save more the more that you recycle—and it encourages more than just recycling.” In other words, with a pay-as-you-throw policy, citizens have an economic incentive to do all the right things: avoid extraneous packaging, compost, separate their recyclables, and buy fewer things that must be thrown out.

There’s some evidence PAYT could prompt the kind of mindset change Hong Kong needs. Skumatz collected data from 1,000 communities with some form of PAYT and found that on average, it reduces the amount of household trash that goes to the landfill by 17 percent.

That result seems to be remarkably consistent. When Skumatz moved to Boulder, Colorado, which had just put in a PAYT program, people in the waste removal business were shocked when she guessed they were seeing a 17 percent reduction. “There was silence around the table and they said, ‘We got exactly that number.’”

Some opponents have worried that a putting a variable price on throwing things away legally would create a rash of illegal dumping. But, according to Skumatz, “It’s a much bigger fear than reality.” Her research found that 15-20 percent of communities with PAYT have experienced a notable illegal dumping problem, which lasts three months and then goes away.

Indeed, it’s hard to find critics of pay as you throw in academia or public policy circles.

The challenge to getting a PAYT system in place is convincing the public,or convincing the politicians to try to convince the public. Traditionally, trash collection is paid for by city taxes that are more or less invisible. Switching to a system that requires residents to buy pre-paid trash bags instead makes them feel like they’re being charged for something they used to get for free. It’s not always an easy sell, no matter how much sense it makes.

Hong Kong will also face another long-standing obstacle to PAYT. In big cities with multi-hundred person residential towers, most trash is tossed down garbage chutes. It’s very easy for someone in a huge apartment complex to drop trash through a chute in an illegal, store-bought bag, and hard to trace that trash to its source. In fact, New York City was considering PAYT in the early 2000s, but decided that it was all but impossible to administer in a city where everyone dumps garbage down shared chutes.

In Hong Kong, 88 percent of households live in buildings over 10 stories tall. To implement PAYT, the city will have to solve this residential tower problem. If it does so successfully, it could provide a new model for smart, market-based urban waste policy. If it doesn’t, the government may be forced to start shipping all of its trash elsewhere.

Top image: A Hong Kong man walks near piles of waste paper stored at a collection site before being shipped to mainland China for recycling. (Reuters/Tyrone Siu)

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