‘Economic instruments for the circular economy transition: the (neglected) role of virgin materials and landfill taxation in Italy’

The use of economic instruments in environmental and circular economy policies has attracted a wide and increasing interest in the international and European debate in recent decades. Environmental taxes and levies, subsidies and other marked-based instruments have been seen as useful policy tools to enhance environmental protection, getting the price right and creating market-based incentives – price and cost signals – for environmentally-friendly behaviors. In this perspective, taxes and other economic instruments acquire, primarily or at least partially, a regulatory and preventive role: they address the market failure of environmental externalities, aligning private and social costs and, consequently, stimulating more socially desirable outcomes. The paper focuses on the two main price instruments implemented in Italy at the beginning and at the end of the material stream - i.e the aggregates levy and the landfill tax – aiming at enlightening the main characteristics of the two instruments and suggesting some possible future development. The analysis will show how the regulatory role of these subnational environmental levies is largely neglected, jeopardizing the opportunity to use them in a more effective and consistent way.