Contents lists available at ScienceDirect Ecological Indicators journal homepage: www.elsevier.com/locate/ecolind Considering spatial effects in the evaluation of joint environmental and cost performance of municipal waste management systems Alessandro Sarra ⁎ , Marialisa Mazzocchitti, Eugenia Nissi, Davide Quaglione Department of Economics, G. d’Annunzio University of Chieti and Pescara, Viale Pindaro 42, Pescara, 65127, Italy ARTICLE INFO Keywords: Municipal waste management system (MWMS) Environmental-economic indicator Data envelopment analysis (DEA) Spatial analysis Regulatory issues Case study ABSTRACT In an article recently published in this journal, Sarra et al. (2017) presented an approach to measure the effi- ciency of municipal waste management systems (MWMSs) that allows a joint consideration of their performance in both environmental and economic terms. Such an approach does not consider the existence of the effects of spatial proximity among municipalities. This could result in biased efficiency scores that may lead to in- appropriate policy decisions. To overcome this weakness and to provide policy makers with a more reliable tool for the joint evaluation of the environmental and cost performance of MWMSs, this paper proposes to integrate a multistep procedure that would control for spatial effects with the approach of Sarra et al. (2017). This paper also presents an application of the proposed approach to the same data used by Sarra et al. (2017) to allow a comparison between the results obtained. The findings of this study suggest that jointly assessing the environ- mental and economic efficiency of MWMSs through data envelopment analysis-based methods can lead to distorted judgments if spatial effects are not properly taken into consideration. 1. Introduction In an article recently published in this journal, Sarra et al. (2017) presented an approach to measure the efficiency of municipal waste management systems (MWMSs) that allows a joint consideration of their performance in both environmental and economic terms. The rationale of that approach relied on the fact that the structure of the extant sector regulation (the targets set by the European legislation and transposed to the national level) led each municipality to decide how much to spend to improve separate collection according to its specific political priorities and the availability of financial resources. Higher costs could thus be justified by a better environmental performance, while a mere assessment of the economic (cost) efficiency that did not take into account the results obtained in terms of separate collection could have very little significance for benchmarking purposes. Following Seiford and Zhu (2002, 2005), the authors used a mod- ified data envelopment analysis (DEA) model with input orientation, where waste cost (i.e., the amount of annual expenditure for the urban sanitation service) is the single input of a production process that generates one desired output (separated waste) and one undesired output to be minimized (unsorted waste). The final scores thus obtained account for both the environmental and cost performances of the MWMSs. The analysis was then carried out assuming both constant returns to scale—adopting the so-called Charnes–Cooper–Rhodes (CCR) model—and under variable returns to scale—the Bank- er–Cooper–Charnes (BCC) model—in an application to the munici- palities of the Italian region of Abruzzo. The scores obtained and their evolution through time were used to shed light on the effects of scale and on the possibility of designing multi-municipal aggregates—called optimal territorial areas (OTAs)—to improve efficiency. Like the other available benchmarking analyses using DEA in the field of waste services, such an approach has not considered the ex- istence of spatial proximity effects among municipalities. It is well known in the literature, however, that local governments are not iso- lated actors, and therefore the decisions made by a local jurisdiction are likely to affect (and be affected by) those of its neighbors (Werck et al., 2008). Several studies have confirmed the existence of spatial inter- dependence across local governments where spending decisions are concerned (Costa et al., 2015; Ermini and Santolini, 2010; Ferraresi et al., 2016, 2018; Geys, 2006; Revelli and Tovmo, 2007) and have shown that local governments tend to mimic the strategies adopted by their neighbors (Berliner, 2013; Huang and Du, 2016) including, for example, the organization or externalization of local public services (Plunket et al., 2008). In the field of MWMSs, relying on the idea that municipalities influence each other through spatial spillovers or neighbor imitation, Agovino et al. (2019) attempted to identify those https://doi.org/10.1016/j.ecolind.2019.105483 Received 27 December 2018; Received in revised form 22 May 2019; Accepted 12 June 2019 ⁎ Corresponding author. E-mail addresses: alessandro.sarra@unich.it (A. Sarra), marialisa.mazzocchitti@unich.it (M. Mazzocchitti), eugenia.nissi@unich.it (E. Nissi), davide.quaglione@unich.it (D. Quaglione). Ecological Indicators 106 (2019) 105483 1470-160X/ © 2019 Elsevier Ltd. All rights reserved. T