Designing optimal subsidy schemes and recycling plans for sustainable treatment of construction and demolition waste

More than 10 billion tons of construction and demolition waste (CW) are generated globally each year, exerting a significant impact on the environment. In the CW recycling process, the government and the carrier are the two primary stakeholders. The carrier is responsible for transporting CW from production sites to backfill sites or processing facilities, with a primary focus on transport efficiency and revenue. Meanwhile, the government aims to minimize pollution from the recycling system, which is influenced by transport modes, shipment distances, and the processing methods used for CW. This paper develops a bi-objective, bi-level optimization model to address these challenges. The upper-level model is a linear programming model that optimizes the government's subsidy scheme, while the lower-level model is a minimum-cost flow model that optimizes the carrier's recycling plan. A hybrid heuristic solution method is proposed to tackle the problem's complexity. A case study in Chengdu, China, demonstrates the computational efficiency of the model and its small solution gap. With an optimized subsidy scheme and recycling plan, pollution can be reduced by over 29.29% through a relatively small investment in subsidies.