Centralized collection and disposal is an integral component of waste management
strategies for many solid and liquid wastes, and carbon capture and storage is currently
being considered for gaseous waste. In this paper we show how collective waste disposal
systems introduce essential changes in the design of optimal environmental policy. Absent
collective disposal, an optimal environmental policy imposes relatively stringent regulations
on polluters in regions where local environmental damage functions are “high”;
however, under collective waste disposal, the optimal environmental policy level
increases monotonically over distance from the disposal site, and this is true irrespective
of the degree of spatial heterogeneity in local environmental damage functions. We
characterize the optimal spatial pattern of environmental policy levels under collective
waste disposal and identify optimal membership size for waste disposal networks
comprised of homogeneous producers