Non-municipal waste generation and firm performance

The problem of waste management has become a major issue in Europe, especially in countries with high population density, such as Italy. Although waste management was set as one of the priorities of the European Commission (Environmental Action Programmes), total waste production in EU-27 is still increasing. Under this perspective, the role of firms in source reduction (prevention, packaging reduction, recycling) has become crucial. An externality problem arises because the firm does not bear the full cost of waste production and management and there isn’t a definite incentive to invest in a waste minimizing technology. The aim of this paper is to shed some light on waste produced by firms in Italy, with a detailed analysis of firms located in Tuscany. As regards Tuscany, the analysis is conducted at the micro level with a highly innovative panel dataset built by merging waste and balance sheet data. This dataset provides detailed information on firms sectoral and dimensional characteristics for a first assessment of the relationship between productivity, profitability and waste production at the firm level. Our estimation results show a waste saving behaviour for most profitable firms, with significant differences across firm dimension, sector of activity and localisation within the Region.