REDUCING COSTS IN TIMES OF CRISIS: DELIVERY FORMS IN SMALL AND MEDIUM SIZED LOCAL GOVERNMENTS' WASTE MANAGEMENT SERVICES
| Author | ANTONIO M. LÓPEZ‐HERNÁNDEZ,JOSE LUIS ZAFRA‐GÓMEZ,ANA MARIA PLATA DÍAZ,DIEGO PRIOR |
| Date | 01 March 2013 |
| DOI | http://doi.org/10.1111/j.1467-9299.2011.02012.x |
| Published date | 01 March 2013 |
doi: 10.1111/j.1467-9299.2011.02012.x
REDUCING COSTS IN TIMES OF CRISIS: DELIVERY
FORMS IN SMALL AND MEDIUM SIZED LOCAL
GOVERNMENTS’ WASTE MANAGEMENT
SERVICES
JOSE LUIS ZAFRA-G ´
OMEZ, DIEGO PRIOR, ANA MARIA PLATA D´
IAZ
AND ANTONIO M. L ´
OPEZ-HERN ´
ANDEZ
The current economic crisis is increasingly affecting the public sector, requiring stricter control of
deficits, and local administrations are not exempt from these requirements. Therefore, it is essential
to consider management forms that may produce cost savings in the provision of public services.
In this article we propose an evaluation of municipal waste collection and disposal services to
determine whether single/joint or public/private municipal service provision, together with other
factors including quality, political aspects, and the socio-economic environment, most contribute
to reducing costs. The results obtained for the period 2002–08 show that joint management (inter-
municipal cooperation) and public management (in relation to single and private management
systems, respectively) have a greater effect on reducing the costs of this service. Thus, small and
medium-sized local authorities can identify formulas for reducing costs and thus be in a better
position to overcome the economic crisis.
INTRODUCTION
In recent decades, numerous studies have focused on how to achieve greater efficiency in
the provision of public services (Boyne 1996; Hodge 2000; Bel et al. 2010; among others).
Interest in this question has increased further with the current economic and financial
crisis, the effects of which on public administration have been mainly reflected via a
stricter control of budgets and deficits (L´
opez-Hern´
andez et al. 2012). In view of this
situation, it is necessary to reopen the debate regarding the search for greater efficiency,
with particular emphasis on forms of public management that enable the costs of service
provision to be reduced (Peters 2011).
One of the principal ways by which greater efficiency can be achieved is by obtaining
economies of scale. For smaller authorities, this can be done through inter-municipal
cooperation, i.e., the joint management of services. The provision of local public services
is becoming ever more complex and less financially sustainable (Fluvi`
aet al. 2008), while
at the same time it is subject to cost decentralization processes imposed by central
government, and thus increased responsibilities (Rodr´
ıguez-Pose and Sandall 2008).
These factors, together with the current economic and financial crisis and the limited
management capabilities that characterize this type of entity (Deller and Rudnicki 1992),
highlight the need to determine the optimum size for the provision of certain local public
services, one based on maximizing economic rationality and enabling higher levels of
efficiency to be obtained.
It is in this respect that we must address an initial question, one that has been
widely debated in studies of public administration: what is the optimum organizational
Jose Luis Zafra Gomez, Ana Maria Plata D´
ıaz and Antonio M. L´
opez Hern´
andez are in the Accounting and Finance
Department at the University of Granada, Andaluc´
ıa, Spain. Diego Prior is in the Business Economics Department at
the Universitat Autonoma de Barcelona, Barcelona, Spain.
Public Administration Vol. 91, No. 1, 2013 (51–68)
©2012 Blackwell Publishing Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden,
MA 02148, USA.
52 JOSE LUIS ZAFRA-G ´
OMEZ ET AL.
size for providing public services? (Andrews and Boyne 2009). The first major objec-
tive of the present study is to contribute to our understanding of this question. Could
small and medium-sized local governments benefit more from providing waste col-
lection services individually, or from working jointly in the form of inter-municipal
cooperation?
Our second main goal is to determine whether the provision of local public services
incurs higher levels of costs when they are provided through a public or a private
agency. Supporters of the traditional Weberian model of public administration held
that services should be provided through public agencies, in the belief that this type
of bureaucracy would achieve higher levels of efficiency and rationality in pursuing
its goals, resulting from unified management and the predictability and uniformity of
the routines and processes carried out (Weber 1992; Du Gay 2000; Jørgensen 2011).
However, problems with this model of administration began to appear with growing
acceptance of the Public Choice approach, under which centralized bureaucracies were
viewed as monopolistic and inefficient by nature, suffering problems of coordination and
control arising from their excessive size, as well as a lack of flexibility (Ostrom 1973;
Dahl and Tufte 1974). These ideas subsequently gave rise to the development of New
Public Management (NPM) and the ambition to create a more business-like and market-
oriented administration, one promoting competition, a decentralized public sector, cost
savings, and greater efficiency, thus superseding the Weberian notions of the classic
public bureaucracy (Osborne and Gaebler 1992). The results obtained from our study
contribute to the debate on this issue and on the validity of NPM postulates, which
have been questioned in recent years, and more so with the present worldwide economic
crisis. In this respect, post-NPM (Christensen and Lægreid 2008, 2011; Lodge and Gill
2011) and neo-Weberian administration (Pollitt 2009; Kuhlmann 2010) ideas have been
championed, with arguments in favour of re-centralizing the public sector. These theorists
claim that the formulas employed under NPM have given rise to problems of reduced
efficiency, coordination, and control, as well as unnecessary overlapping in the provision of
services.
Accordingly, we aim to determine which forms of management – single or joint, and
public or private – provide optimal levels of cost and quality in the provision of waste
collection and disposal services. The main reason for examining this fundamental service
is its high cost for local administrations; for this same reason, it has been the object of
many previous studies. This article differs from previous studies in its use of a new
methodology, proposed by Plumper and Troeger (2007), for the analysis of panel data
and in its examination of a broad time horizon, concluding with the onset of the present
world economic crisis. We address six different means of service provision, among public
and private formulas, and joint or single management options, and therefore the results
achieved solidly justify the use of particular management options for reducing costs and
for overcoming the economic crisis.
The rest of this article is structured as follows. In the following section, we review
the principal theories that in one way or another have contributed to the debate on the
best organizational structure or type for efficiently managing public services, and we
formulate the fundamental hypotheses to be proposed. The third section begins with a
brief review of the main studies made to evaluate waste management costs, and presents
the data obtained, the methodology applied, and the results achieved. The fourth section
presents the main conclusions drawn.
Public Administration Vol. 91, No. 1, 2013 (51–68)
©2012 Blackwell Publishing Ltd.
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