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

The use of economic instruments in policies supporting a circular economy has attracted an extensive and growing 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 for enhancing environmental protection, getting the price right and creating market-based incentives – price and cost signals – to spur environmentally-friendly behaviors. From this standpoint, 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 mainly focuses on the sector of buildings and construction, i.e. the sector responsible for the largest share of extraction of raw material and of the generation of non-municipal wastes, presenting an analisys the two main price instruments implemented in Italy at the beginning and at the end of the flow of materials. It aims to bring to the fore the main characteristics of the two instruments in the Italian multilevel government, and to propound new paradigms for future developments. The analysis will reveal the extent to which the regulatory role of these subnational environmental levies is largely forsaken, thereby jeopardizing the possibility to use them in a more effective and consistent way.