In developing countries, informal waste-pickers (known as scavengers) play an important role in solid waste management systems, acting in a parallel way to formal waste collection and disposal agents. Scavengers collect, from the streets, dumpsites, or landfills, re-usable and recyclable material that can be reincorporated into the economy's production process. Despite the benefits that they generate to society, waste-pickers are ignored when waste management policies are formulated. The purpose of this paper is to integrate the role of scavengers in a dynamic model of production, consumption, and recovery, and to show that, in an economy producing solid waste, efficiency can be reached using a set of specific and complementary policies: a tax on virgin materials use, a tax on consumption and disposal, and a subsidy to the recovery of material. A numerical simulation is performed to evaluate the impact of these policies on landfill lifetime and natural resource stocks. A discussion on the implementation of these instruments is also included.
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