Agent-based model property rights for decentralized organic waste processing: Case of local biodigestion

K.P.H. Lange (Developer)

Research output: Non-textual form & short web contentSoftwareEducational

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Abstract

The increase in consumption of resources has led to more waste being generated, which then needs to be managed at the end of their life-cycle as waste. Current practices of waste management are not efficient as they lead to a release of emissions and a loss of value that is present in the resource, which is discarded as waste. New legislation for efficient waste management practices has been established, however, adopting them is hampered by factors, one of which is the high cost of these solutions. However, incentive-based approaches can be used to address this problem. This research explores the role of institutional incentives in the form of property rights bundles for such cases. Property rights are a set of formal and informal rules that define how resource allocation is done, while property rights bundles are the set of one or more property rights tied together. As per academic literature, a clear allocation of property rights leads to an economically efficient distribution of costs, benefits, risks and responsibilities associated with a resource. Based on these aspects, this research explores the influence of property rights bundles in the case of collective ownership of waste processing infrastructure by companies. Through collective ownership of the infrastructure, the investment cost would be distributed among those using the resource, thereby reducing the share of investment per company and addressing the challenge of high investment costs. Furthermore, in this situation of collective ownership, property rights need to be defined clearly so that there are no conflicts among the participants at later stages. The research is based on a case study of a few companies in Amsterdam, who are attempting to set up an initiative to improve the waste management practice in the region. For this purpose, they plan to invest collectively in a waste-processing infrastructure. This research thus explores the role of property rights in this regard. The literature on property rights forms the theoretical foundation of the research, along with the Theory of Planned Behaviour, which is the behavioural theory chosen to analyse the decision-making of the companies. The case study was analysed using the Institutional Analysis and Development framework. An agent-based model was built based on the insights obtained from these concepts to capture the interaction between the property rights and the characteristics of the companies, such as the amount of waste generated by them, the amount of budget they hold, etc. The influence of property rights bundles was analysed using the attributes of property rights: robustness, strength, duration and excludability. The results obtained were analysed using the defined Key Performance Indicators: Joining Ratio, Number of Participants and Number of times the initiative is started. It was found that for the case of the Amsterdam Zuidoost initiative, providing property rights bundles of claimants and proprietors as incentives leads to an increase in the number of participants that join the initiative. However, due to lack of statistical significance between the distributions, we cannot determine which of the two has a higher influence. Furthermore, the influence of the other property rights bundle could not be verified due to lack of statistical significance in the distribution.
Original languageEnglish
Publication statusPublished - 30 Sep 2020

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