The impact of the Circular Economy Act on waste volumes in Germany: An analysis using Regression Discontinuity Design

Abstract

This study analyzes the impact of the Circular Economy Act (German: Kreislaufwirtschaftsgesetz - KrWG), implemented in 2012, on the volume of biogenic waste collected nationwide. Using annual data from 1990 to 2022 from the Federal Statistical Office, Sharp and Fuzzy Regression Discontinuity Designs (RDDs) were applied to estimate causal effects. The Sharp RDD assumes precise policy implementation by the 2012 cutoff date, while the Fuzzy RDD accounts for delays or incomplete adoption in the real-world implementation by municipalities and the waste sector. These quasi-experimental methods leverage the exogenous timing of the legal reform to assess its impact on waste volumes. The findings suggest a statistically significant short-term increase of 8.44% (Sharp RDD) to 12.07% (Fuzzy RDD). This increase is likely attributable to enhanced enforcement, expansion of separate collection, improved reporting, and citizen compliance. The RDD method confirmed the nationwide effect by isolating the law’s impact via its fixed implementation date. In subsequent years, this positive trend weakened, with annual growth decreasing by about 0.86% compared to pre-legislation, suggesting an initial adjustment followed by long-term dampening. This study contributes to evaluating environmental legislation by showing that legal instruments can have measurable, though time-limited, effects on material flows. Although it lacks direct analysis of complementary measures (e.g., incentives, infrastructure), it underscores their importance for sustained long-term impact. To the best of our knowledge, this is the first causal RDD-based evaluation of the KrWG, providing rare quantitative evidence of the impact of circular economy policy.