This paper deals with the environmentally important issue regarding how best to motivate citizens to reduce their individual waste production. The paper discusses the pros and cons of the various financial incentives incorporated into the waste charging mechanism, pay‐as‐you‐throw (PAYT). Pay‐as‐you‐throw breaks with the tradition of paying for waste services through general blanket taxes or levies in the form of flat rates in that households are required to pay individually adjusted fees in the same way as water and electricity bills are calculated on an individual consumption basis. This difference is achieved through the interplay of three principal components which mark the technical implementation of PAYT: identification as a vehicle to attain accountability, measurement of the generated waste and/or corresponding services, and unit pricing as the basis for individual charges proportional to the extent of the obtained services. However, any motivating factor for inducing citizens to dispose of their recyclable discards and residual waste must be supported by a well developed collection infrastructure, good media information and an appropriate, transparent charging policy. Of particular importance is the use of a multi‐tiered charge model, i.e., the charging of a fixed minimum fee plus certain variable components payable in respect of the service structure. The introduction of a basic charge, albeit reducing the intensity of the incentives created by the PAYT system, ensures that certain fixed costs for the provision of waste services will be covered independently from the actual waste developments and, at the same time, minimises the temptation to attempt to bypass the system. Such an arrangement for the waste charges neither contradicts the principle of pay‐as‐you‐throw nor does it impair the waste diversion for which it is implemented. Waste statistics and figures representing the waste charging situation in Germany indicate that there is a relatively good correlation between the level of recycling and the amount of perceived financial motivation provided by PAYT. Waste stream developments in areas using such charging schemes generally suggest that the reduction goals are being achieved. Single figures on decreasing quantities of collected residual waste, however, say little about the actual efficiency of differentiated waste charging models and deliver little in the way of reasoned explanation as to why the diffusion of variable rate pricing is progressing painstakingly slowly. To evaluate the success, feasibility and problems of PAYT schemes, one needs to consider the various ways for technically implementing this approach in practice, and must take a broader look into the wide spectrum of available waste services and into more factors that influence their efficiency and acceptance. Urban structure settings assume a particular importance here as do the specific goals of social policy which, among others, are reflected in the charging mechanisms applied. Practical experience, however, shows that solutions can be found which allow most of the concerns and area specifics to be accommodated and waste streams to be influenced in the desired way. Aside from this, positive effects as to waste collection efficiency can also be achieved, which contribute towards long‐term environmental improvements and countervail the incremental costs of implementing PAYT.
