Taiwan, like many other countries, often incentivizes private investors to participate in the construction of infrastructures for environmental protection. The build-operate-transfer (BOT) or build-operate-own (BOO) model of financing public infrastructure was introduced to Taiwan in the 1990s. Among them, the construction of incinerators to treat the municipal solid waste using the BOT/BOO model was quite a success in the beginning. With the socio-technical change of lifestyle and waste generation, the amount of amount of trash dropped dramatically. The policy failed eventually, however, because the government over-estimated the trash quantity and refrained from inter-municipality cooperation to treat trash efficiently. This failure triggered a rash of intense debates and legal disputes. In the case of the Taitung incinerator, the 26th incinerator located in southeastern Taiwan, the arbitration resulted in the government making significant compensation payments to the private sector. The finished construction was consequently converted into a “mothballed and pensioned off” facility. This study applies in-depth interviews and literature review to discuss aspects contributing to the policy failure and proposes some possible remedial measures. Five aspects are summarized, namely, the administrative organization’s rigid attitude, the irrationality of the BOT/BOO contracts, the loss of the spirit of BOO partnerships, the heavy financial burden on local government, and the abandonment of inter-municipality cooperation. The remedial measures for the policy failure are presented in the form of thorough policy evaluation, room for contract adjustments under the BOT/BOO model, encouragement of cross-boundary cooperation, and revision of the legal framework for implementing decentralization.
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