Alternative Service Delivery in Canadian Local Governments: The Costs of Producing Solid Waste Management Services

In this paper, key findings are presented from three complementary national surveys of producers in the Canadian solid waste management industry. The surveys, conducted by the Local Government Institute between 1995 and 1999 focused on factors that predict the: unit costs (costs per unit of output) of residential solid waste collection, residential recycling and landfills, respectively. Among the variables that were examined was the production arrangement for each service. A key question, based on the existing literature is whether private producers tend to be more efficient than their public counterparts. The hypothesis that private producers will tend to be more efficient is well entrenched in the literature, which has developed from Ostrom et al's initial formulation (1961) of a polycentric theory of the governance of metropolitan areas. Although most research suggests that private producers are more efficient, existing Canadian research has tended to focus on relatively few services. The only national study of public and private producers of local services was conducted in the early 1980s and focused on residential solid waste collection (McDavid 1985). The current study offers the first cross-Canada comparisons of the efficiency of three services that are a principal part of the solid waste management industry. For the first time, both smaller local governments and Quebec local governments are included in sufficient numbers to permit regional comparisons on key variables. Because the three services are complementary, it is also possible to combine findings from all three to address the question of whether recycling residential solid waste is more efficient than conventional collection and landfilling practices. Existing Research In 1961, Ostrom et al (1961) introduced their theoretical interpretation of the organisation of urban governments for the delivery of services. Their theory, based on the emerging field of public goods economic theory (Tiebout 1956), characterised the existing complex patterns of local governments in metropolitan areas as polycentric systems. Key to their theory was the distinction between the provision and the production of local services. Local governments, organised on behalf of their residents, can make decisions to provide services to their residents or choose to let residents provide those services for themselves. Providing a service creates options for its production. A local government can undertake production with its own personnel and equipment, contract out production to another local government or to a private company, franchise production by one or more private companies, use volunteers to produce the service, offer vouchers to residents or use combinations of these options (ACIR 1987). Ostrom et al (1961) contrasted their polycentric theory of local public economies with the then dominant model of metropolitan governance, which they called gargantua. Gargantua was characterised as a metropolitan-wide local government structure, which was intended to capture putative scale economies in the production of all local services. Advocates lot consolidation of existing jurisdictions asserted that multiple and overlapping local governments were incapable of cooperation to resolve problems that transcended existing boundaries, and competition among local governments was seen to be a wasteful duplication of services. Since 1961, the polycentric theory of metropolitan governance has been further developed (Ostrom 1973) and subjected to a variety of empirical tests (Ostrom et al 1978; ACIR 1987; Ostrom et al 1988). Although there continues to be some support for consolidating and simplifying local government structures in the urban areas of the United States, the polycentric theory and its derivatives have become orthodoxy. An important feature of the polycentric research program has been the emphasis on the efficiency-related consequences of alternative service production methods (Bish 1971). …

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