Waste Generation in Denmark 1994-2005 : An Environmental and Economic Analysis

In recent years the amount of waste generated by Danish firms has increased significantly. In the present analysis we use the decomposition analysis, which has been widely used in the energy economics literature to explain the mechanisms influencing energy consumption and CO2 emissions. In this paper the methodology is transferred to the topic of waste generation and is used to analyse why the amount of business waste is increasing. The empirical application is related to data for the volumes of waste generated in the Danish economy for the main sectors as well as the manufacturing sector covering the time span 1994-2005 has been included. By means of the Log-Mean Divisia Index Method (LMDI) an algebraic decomposition of the data for the waste amounts generated is performed. This methodology separates the increases in waste amounts into effects related to economic activity, industrial structure and waste intensity, respectively. The waste intensities are defined as the ratio between the waste amounts and the production in value added terms in the respective sectors and industries of the economy. The results indicate that the intensity effect is the main contributor to the increasing amounts of waste generated in Denmark followed by the activity effect. The results also indicate that the structural effect has a relatively small influence.