NIMBY Notes: Privatization Panic

A debate over the privatization of waste services isn’t a NIMBY issue in the strictest sense of the term. There’s no physical facility in question, there are no angry neighbors, and there usually isn’t much if any demonization of the waste industry as a whole, since everyone likes the part of the business that takes trash away from their homes (just not the part that has to put it somewhere). But privatization battles resemble traditional NIMBY fights, too, starting with the prevalence of misinformation and decisions driven by emotional crowds.

Kyle Moore, the mayor of Quincy, Mass., has had a front-row seat to this phenomenon. In November he proposed changing the city’s waste collection setup from a municipally run enterprise to a privately contracted system. Quincy, a working-class city just south of Boston, is not exceptionally wealthy, and the government-operated service was losing more money each year, averaging an $846,000 annual deficit during the last five years. Moore cited cost savings as the primary motivation for his move, and invited public input at two meetings.

And boy, did he get it. Around 200 residents attended the first meeting alone, an impressive turnout for a hearing on the minutiae of waste collection and local budgeting. And the feedback was clear: residents were opposed to any privatization plan, regardless of the costs of the current program. The meetings were enough to convince Mayor Moore to abolish the privatization idea in December. Quincy is now figuring out another way to stanch the fiscal bleeding from its waste collection program; fee increases seem to be the most likely option according to local press accounts.

What happened in Quincy is not uncommon, but people in the waste industry are often surprised at the rejection of their services when they believe they can do a better job in a cheaper fashion. Our experience has shown us that there are three primary reasons for “privatization panic”:

Fear of Cost Increases: Almost every time, the entire point of switching to private collection service is to save money. And yet, concerns will persist that the move will end up costing households more than the status quo. This is partially a trick of psychology: in many privatization plans, the new contractor will of course have to charge residents a monthly fee for disposal; on top of that, there are sometimes supplementary costs like sign-up charges and purchasing new bins. Under government-run programs, however, the cost of the service is partially or entirely covered by taxes, and thus amounts to a “hidden” cost to households instead of an explicit one. Paying for a more expensive service via taxes is less noticeable than a cheaper service paid out-of-pocket, which is what prompts this concern.

Fear of Jobs Lost or Diminished: We saw a textbook example of this phenomenon in Fresno, Calif., last year, when the city’s mayor pushed for a privatization plan. Opponents, especially public sector unions, argued the plan would kill local jobs, and that the remaining jobs would pay less and provide fewer benefits. They forced the issue to a public referendum, which narrowly defeated the privatization plan and left the mayor with a political black eye.

Fear of Inferior Service: People have a funny relationship with government services. On the one hand, they’ll swear up and down that the DMV is proof positive that the government couldn’t run an agency to save its life. On the other, they’ll sometimes prefer the stability and predictability of a state-run program compared to the risks and volatility of the free market (the overwhelming unpopularity of privatizing Social Security is a good example of this). If a municipal collection service has done its job well, many residents will worry about a decrease in performance when switching to some company they’ve never heard of.

Every privatization debate is unique, but if you look closely you’ll typically find at least one of these concerns undergirding the opposition in every case. For players in the waste industry on the cusp of a big contract, the challenge is to recognize these concerns in advance and to take steps to address them before they become too big for politicians to abide.