This study uses the stochastic cost frontier models to investigate recycling cost efficiencies for 1,809 municipalities in Japan from 2011 to 2018. Our major findings are as follows. A U-shaped relationship exists between the waste management cost per ton and recycling rate. The current recycling rate in Japan is much higher than the per ton cost-minimizing recycling rate. The cost-minimizing recycling rate is 7.6%, in detail it is 6.9% for organized and 6.8% for non-organized municipalities. However, the actual mean recycling rate is 21.7%, and the policy target is 27.0%. By decreasing the cost inefficiency, the predicted waste management cost per ton can be reduced from 34,521 yen (approximately USD 336) to 32,849 yen (USD 385) for organized municipalities and from 39,612 yen (USD 320) to 37,422 yen (USD 364) for non-organized municipalities, even though the actual mean recycling rate is 21.7%. Furthermore, as recycling rates change from 21.7% to 6.9% and 6.8%, the costs would reduce to 28,198 yen and 31,624 yen for organized and non-organized municipalities, respectively. Cooperation among adjacent municipalities and the outsourcing of the waste collection function to private companies would reduce waste management costs per ton. The collection frequency of glass is a cost-inefficient factor, whereas that of paper is a cost-efficient one. For the robustness check, we divide the sample into small, medium, and large municipalities. The U-shaped relationship between the waste management cost per ton and recycling rate still holds for small and medium municipalities.
- Stochastic cost frontier