Multimedia Waste Disposal Optimization under Uncertainty with an Ocean Option

Many communities face a waste management crisis. An increase in waste generation and decline in available landfill capacity have led to rapid increases in waste management costs. Using sewage sludge management in coastal New York and New Jersey as an example, this paper examines optimal multimedia waste disposal under cost uncertainty. Using expected value-variance analysis, the study looks at the effects on the optimal disposal strategy of uncertainty associated with waste-management cost and the community's risk preferences. The results indicate that, based on available cost data, the optimal strategy of a moderately risk-averse decision maker is to manage sludge through land-based facilities. These results hold over a wide range of risk-aversion parameters and even at low levels of cost uncertainty. Thus, the Ocean Dumping Ban Act of 1988 is consistent with such results.