Understanding the effects of a construction waste cap-and-trade scheme: An agent-based modeling study in Hong Kong

Abstract

Solid waste arising from construction is a worldwide concern. Prevailing policy tools for minimizing construction waste generation are mainly taxation-based, while few studies have investigated a carbon trading-inspired construction waste cap-and-trade scheme. To examine the effects of such a scheme, we deploy agent-based modeling to simulate a waste cap-and-trade market by focusing on Hong Kong. Firstly, we develop a conceptual model with three agent groups: the government, firms, and markets. Then, learning from carbon trading, we model agents' behaviors in the context of common construction practices. Lastly, we simulate three scenarios of construction growth using Hong Kong as a case study. We find that the cap-and-trade scheme contains construction waste generation within an annual reduction rate of 5.8%, and saves land loss and landfill operation costs of HK$37.4 × 106 on average yearly. While the scheme increases the waste containment financial burden on firms more than twofold, from HK$83.9/ton to HK$233.0/ton on average, we propose that the government's annual revenue of HK$172.9 × 103 from auctioning permits can be used to reward low-waste construction. This is among the first studies to examine the policy effectiveness of a construction waste cap-and-trade scheme using modeling methods. Although the study is contextualized in Hong Kong, it, with proper adjustments, can be applied to other regions.