EPA's proposal  recommends an "integrated waste management" system built on what it calls a "hierarchy" of steps aimed at solving waste generation and management problems at the local, regional, and national levels.  This hierarchy consists of the following elements:
Source Reduction. (OTA prefers to use the term "prevention" rather than source reduction.) The assumption is that the volume and toxicity of waste going into landfills and incinerators can be reduced before it even starts by measures aimed at decreasing the volume and toxicity of products. This involves changing marketing and manufacturing practices of American firms along with the buying habits of American consumers. The end result claimed for this component of EPA's proposed waste management hierarchy would be a reduction in the amount of waste – especially packaging waste – that is created.
Reuse and recycling, including composting. Although listed second on the scale, EPA considers reuse and recycling to be the most desirable method of handling solid waste. To reuse is to do what the word itself implies: rather than throwing something away, it should be either kept, sold, or given to someone – say, the Salvation Army or Goodwill Industries – who may find some way to use what others no longer want. One obvious candidate for reuse would be those types of consumer goods which can be immediately passed along to others or those which, with some repair, may be used again. Recycling means separating marketable materials from the solid waste stream so these source-separated materials can be sent into national and international materials markets where they can be used to produce something else. Composting involves turning organic waste (including waste-water-treatment sludge) into a substance which can be used to enrich the soil.
Incineration. EPA acknowledges that even under the best of conditions, not all elements in the waste stream can be recycled. Those which cannot may be candidate for burning in high-technology mass-burn incinerators. Incineration has the advantage of reducing bulk while at the same time producing energy as well as the advantage of destroying pathogens which might be in waste. (Estimates on the amount of bulk reduction vary depending on who's doing the estimating, but the usual figure for mass-burn incineration is 90 percent.) When used to produce energy, incineration is no longer called incineration but, rather, "Resource Recovery." Residual ash from incinerators would have to be landfilled. With proper landfill design, EPA's research suggests that landfilled ash would not represent a health problem.
Landfilling. Landfills will continue to be needed for materials – construction waste, for example – which cannot be recycled or burned. Recognizing that landfills have a role to play in waste management, EPA's only warning is to make sure that landfills are designed and managed in such a way as to assure health and safety. Done properly – which means with proper engineering and oversight – landfills, like incinerators, should present no health risk.
There is absolutely no question that if source reduction (i.e., "prevention") and increased recycling were to occur, the amount of solid waste going to incinerators and landfills would drop. Therefore, given the so-called NIMBY (Not In My Backyard) problem of siting landfills and incinerators, it is not surprising that the EPA report has led to legislation in some states aimed at mandatory recycling and source reduction – including an outright ban on some types of products such as expanded polystyrene drinking cups and food containers.
If some states and communities are choosing to interpret the EPA and OTA reports as requiring specific regulatory mandates for particular types of waste and waste management programs, there may be good reason: both reports contain numerous statements which imply that efficient and environmentally sound solid waste management cannot be achieved without direct government intervention into the economic phenomenon known as the Municipal Solid Waste Stream.
While the EPA report, for example, claims to present only a number of "recommendations", it also calls for "planning at all levels of government" aimed at "fostering source reduction at the manufacturing, governmental, and local levels." To this end, EPA "will study options for reducing lead and cadmium in products in order to reduce the risk of incinerator ash, landfill leachate, and recycling operations ..... will foster workshops for manufacturers and educators to promote design of products and packaging for effective waste management and.....will identify economic, regulatory and possible legislative incentives for decreasing the volume and toxicity of waste." 
To say that something is merely a "recommendation" carries with it the notion that nothing more than a set of ideas has been offered – ideas which may or may not fit the needs of any particular community or region and which may or may not be taken seriously.
But to go beyond merely "recommending" to asserting the need for government planning to change manufacturing and consumption patterns is something quite different. Government planning requires the development and implementation of specific programs which must – if planning and implementation mean anything at all – involve the power to reward those who meet the requirements of the plan and to punish those who do not. Therefore, to suggest, as the EPA report does, "economic, regulatory and, possibly, legislative incentives for decreasing the volume and toxicity of waste"  is nothing if not direct government intervention into the economics of the solid waste stream.
In its proposals for managing the solid waste stream, the Office of Technology Assessment goes even further in the direction of what is known in the economic literature as "Indicative Planning,"( i.e., while government leaves productive resources in private hands, it directs the uses to which these resources may be put through "a system of partial planning from the center, entailing measures of government intervention for purposes of modifying specific aspects of the pattern of production, consumption, or distribution" through explicit taxes and/or subsidies. ) Wherever it has been tried, and France in the 1960s provides the best example, indicative planning has failed to produce anything other than political corruption.
OTA argues that the EPA "should complete regulations for all municipal solid waste (MSW) management" and, once this has been done, these regulations should "be accompanied by strengthened federal enforcement provisions." Moreover, "A clear national policy on MSW that addresses the use of materials is essential for providing a broader context in which specific MSW programs can be developed and implemented." 
OTA believes that a "vigorous federal role will be needed" to manage MSW materials on a "material by material basis in which discarded materials (including discarded products, yard waste, etc.) are diverted to the most appropriate management method based on their physical and chemical characteristics. In addition, the manufacturing of products should be coordinated (emphasis added) with the needs of different management methods." 
However, despite the fact that OTA admits that individual communities may choose to use only those parts of its recommended plan which may be applicable to their local needs  – an admission which discounts the nationwide import and urgency of its own plan – it argues that even though states are currently not required to submit solid waste plans to Federal authorities, "Congress should require them to submit plans to EPA and specify particular issues that state plans must address."  Once these plans have been submitted, "Congress should require that (state plans) be reviewed and further plans for implementing them be made for the states by EPA and other federal agencies, unless there is demonstrable reasons for not doing so." 
Recognizing that legal precedent exists to allow states to reach agreements among themselves to permit waste to be transported from areas where landfills are closed to areas where space is available, OTA suggests that Congress could, as a device to promote recycling, "adopt measures to discourage interstate shipments." 
Yet even while proposing measures to force waste to remain in the state where generated, OTA also recommends that Congress mandate "capacity assurance" by encouraging States to require those who hold landfill permits to act quickly to develop landfills.  (State lawmakers may be excused for thinking that there is a slight contradiction, if not outright confusion, in these two mutually exclusive recommendations.)
While the OTA list of "sticks" is much longer than what I have noted here, its proposal is not without some "carrots." Citing its own preference for prevention (i.e., "source reduction") and recycling over incineration and landfilling in managing MSW, OTA acknowledges that fluctuation in the market price of secondary materials makes recycling problematic. Therefore, "procedures must be developed for sustaining recycling when market prices drop below a certain (emphasis added) level"  and, "The ability to sustain marketing of collected materials at a high level cannot be assured due to the dynamic nature of markets." 
Having acknowledged the dynamic nature of markets, OTA makes no attempt to say what "certain" price level would induce more recycling. Indeed, to do so would be virtually impossible. Why? Because what matters is not the level of prices, but the structure of relative prices and costs.
If the secondary materials market's price of, say, tin cans were to make it worthwhile for one community to collect, process, and ship tin cans; it might not induce another community to do so. What makes it sensible for one community and not another to collect, prepare, and ship tin cans to secondary materials markets depends on each community's particular collection and preparation costs (minus whatever price they can get for the cans) relative to the cost of using a landfill. What those net costs are will depend on population densities – i.e., ease of collection; the level of labor costs associated with managing a recycling center in each community; and the distance to, and tipping fees at, the nearest landfill open to the community. Therefore to speak of some "level" of secondary material prices is to chase a ghost. Behavior is not affected by the "level" of prices but, rather, by relative prices and relative costs.
When the subject is recycling, OTA believes the "carrot" has to come into play. To increase demand and, consequently, the relative price of secondary materials, OTA recommends expanded government procurement of goods made from recycled materials even when doing so would require the government to pay higher costs.
When the costs of secondary materials extracted from MSW are too high, OTA recommends that the Federal government offer direct subsidies to firms which use materials extracted from MSW.
Finally, to encourage private firms to use materials extracted from the MSW stream, OTA recommends the provision of low-interest government loans to firms attempting to develop products from such materials. "Congress could provide direct subsidies to manufacturers to increase the use of secondary materials."  Local communities could be encouraged to attract firms which process and use secondary materials through "low interest loans, loan guarantees, government equity partnerships, and direct grants." 
At the same time OTA offers its list of "carrots", particularly government procurement of goods made from secondary materials, it warns "It is unclear whether procurement has a substantial effect on stimulating increased recycling" and, efforts to provide direct subsidies or low interest loans to some firms will cause competitor firms to react negatively on the grounds that such favoritism is inequitable. 
In a word, having argued for government financing of recycling, OTA acknowledges that "politicizing" the management of MSW to favor secondary materials over virgin materials may create its own set of problems.
Given the increase in legislation aimed at incorporating both EPA's and OTA's recommendations into local and state legislation – including legislation currently under consideration in Michigan – at least four statements in the EPA report have tended to be overlooked: 
EPA admits that its hierarchy "is not meant to be rigidly applied when local unique waste and demographic characteristics make source reduction and recycling unfeasible." In fact, EPA now places little emphasis on the waste reduction component of its hierarchy, and because of lack of data, is unable to determine whether manufacturing practices are generating more or less waste. 
"An integrated waste management system may contain all or some of the EPA plan's components."
"Every community can custom-design its integrated waste management system to emphasize certain management practices, consistent with the community's demography and waste stream characteristics."
"Strict adherence to a rigid hierarchy is inappropriate for every community."
In the same manner, OTA fills its report with warnings against legislative "quick fixes" and rigid application of its recommendations in all communities. "At the local level, communities should use our framework to decide how to manage particular materials in light of local conditions."  (emphasis in the original).
In advocating prevention as the preferred method for reducing MSW – with special focus on product packaging – OTA acknowledges that "Containers and packaging, which are mentioned frequently as potential targets for waste prevention efforts, serve many functions (e.g., sanitation, theft prevention, public safety, weight reduction, customer appeal) which must be considered."  (emphasis added) "The likelihood that production and consumption patterns will change hinges on behavioral, cultural, and economic considerations, and thus it is difficult to estimate whether and when prevention, particularly in terms of quantity, might have a significant effect on MSW. Also, since there is no standardized way of defining and measuring prevention, it can be difficult to know when it has occurred." 
Regarding the trade-offs between prevention and recycling, OTA observes that "Prevention and recycling efforts can sometimes work at cross-purposes .... plastic bottles which replace glass bottles reduce the weight of MSW, yet glass can currently be more easily recycled." 
With regard to preventive measures to reduce the quantity of MSW, OTA warns that "Even if quantity reduction (and associated savings in waste management costs) can be measured, it would still be difficult to resolve all potential tradeoffs, and particularly difficult to quantify other potential benefits (e.g., using less materials and energy) against costs (e.g., effects on GNP and convenience) offered by prevention, and to assess the performance and effects of new or alternative products.
Quantity reduction also has to be evaluated in terms of its effects on MSW toxicity; for example, using cadmium-coated bolts reduces corrosion, prolongs product life and reduces waste, but it also can increase potential toxicity when the products are eventually discarded in MSW." 
Concerning efforts to ban certain products – for example, some types of plastic packaging – OTA notes that "It is often not clear whether the replacements for banned products are better in terms of reducing quantity or toxicity or of using fewer natural resources during manufacturing."  (On this, more below.)
With regard to proposals to recycle some specific percentage of the MSW stream, (EPA aims at a national goal of 25 percent while OTA would settle for "progress") OTA argues that "Although such a goal is a useful target, it does not appear to be based on a quantitative evaluation of market potential. The actual amount that recycling can be increased nationally is not easily predicted, nor is such a prediction particularly worthwhile given the dynamic nature of materials markets."  In addition, if Congress were to place a tax on certain products to encourage changes in manufacturing techniques and choice of materials used, "it is not clear that substitute materials will be more compatible with recycling." 
But whatever the condition in secondary materials markets, some argue that mandatory recycling pays off through cost avoidance (i.e., the cost of landfilling or incineration). Against placing too much reliance on this argument, OTA notes that "The main problem with implementing the avoided cost concept widely is the absence of an accepted calculation procedure, which makes it hard to evaluate competing claims about the costs of different waste management scenarios." Moreover, "the avoided cost has to be compared with costs for collecting and processing secondary materials. These relative cost differences will change as recycling expands and landfill space becomes relatively less scarce following the diversion of MSW from landfills." 
In response to its own argument that increasing the cost of virgin materials by removing whatever tax advantages they may have (e.g., the depletion allowance for extractive raw materials such as oil) would make secondary materials more attractive and, thereby, increase the advantages of recycling, OTA admits that "Data from the 1970s indicate that removing the incentives may not significantly affect secondary materials markets," and, given that there has been no substantial change in the structure of the economy since that time, the effect of tax penalties on virgin materials on secondary materials markets could yield roughly the same outcome now. 
Moreover, OTA argues, efforts to mandate secondary materials recovery and reprocessing "would likely entail significant costs to other sectors of the economy. Mandatory recycling approaches should be undertaken only after the full range of social and economic costs are clearly understood."  (Emphasis added.)
Carrots and sticks! Explicit proposals to bring the force of law into the management of MSW combined with warnings against attempting to apply carrots, sticks, and the force of law equally in all communities! What are both EPA and OTA saying? By clear implication, both EPA and OTA are acknowledging that America's municipal waste stream is the product of market forces and, in that context, legislative efforts to restructure that waste stream in ways which ignore market forces could, potentially, generate unintended consequences.
Before the State of Michigan moves too far down the path of legislative intervention in the management of solid waste, it would be worthwhile to examine the basic economics of the solid waste stream. The next chapter attempts to address that issue.