Investigating preferences and price sensitivity of incentive-based recycling of household waste in emerging megacities

Abstract

While the pay-as-you-throw approach is widely adopted, some emerging megacities have successfully implemented incentive-based schemes to encourage residents to participate in waste recycling. A common incentive is rewarding residents based on the value of recyclables (e.g., monetary incentives or accumulated points used for gift exchange). However, monetary incentives are subject to fluctuations in recycling market prices, which may further influence residents' recycling behavior. To evaluate whether such price fluctuations will affect residents' willingness to participate in household waste recycling in emerging megacities, it is crucial to examine residents' sensitivity to the price of recyclables. In this study, we investigated residents' preferences for different incentives and residents’ price sensitivity of incentive-based recycling of household waste by building models on preference heterogeneity analysis and price sensitivity measurement (PSM). Analysis results based on first-hand data from two emerging megacities yield several findings. First, residents exhibit a stronger preference for monetary incentives and practical items (e.g., daily necessities and groceries). Second, preferences for reward types vary across emerging megacities (e.g., different preferences shown for entertainment products and subsidies incentives), implying that a one-size-fits-all incentive scheme is not effective among cities. Third, fluctuations in the pricing of recyclables do influence the willingness to participate in recycling. However, it is essential to ensure the price adjustments do not devalue the perceived worth of recyclables. The quantitative analysis suggests that megacities like Shanghai and Chengdu should not reduce the price by over 21.15 % and 13.74 %, respectively. These new findings could provide policy-relevant insights to stakeholders in the household waste recycling industry of emerging megacities.