Garbage generators should be required to pay a fee for every pound (or other unit of weight) of garbage they generate. More specifically, each category of garbage should have a fee that generators are required to pay to have it collected. Some possible categories could be paper, plastics, metals (including aluminum), hazardous wastes (batteries, medicines, etc.), stones-bricks-concrete, food wastes, yard wastes, etc. Paying a fee for yard wastes would not only encourage people to recycle their yard waste again into their gardens but would also encourage them to dry out their yard wastes to make it lighter before they are picked up. There should also be a category called non-sorted wastes so that people are not forced to separate their wastes if they do not want to. However, this would be the category with among the highest fees to the generator (except for hazardous wastes, etc.) because of the need for the collector to sort and prepare this waste. Obviously, governments would need to establish a standardized set of categories so everyone knows what they are before such a system could be implemented. Collectors should inspect the waste stream at the point of collection so as to ensure an acceptable degree of purity of the categorized waste stream.
These fees could be paid every month, just like a utility bill. Furthermore, garbage generators could call and schedule their own garbage pickup either from the city or from whoever collects that kind of garbage. In fact, competition among several garbage collectors could result in the prices charged to the garbage generators to fluctuate according to market supply and demand. Possible payments to waste generators could even be made by waste collectors for waste materials that are really in demand, like aluminum, etc. The market prices (either the prices charged or the prices paid) for all categories of wastes should be determined by the free market.
If waste generators take their waste themselves to collection or processing centers, it would be natural that they would pay a discounted cost for disposing of that waste, or if the waste is relatively valuable, such as aluminum, they would be paid a premium because the waste collector did not need to bear the cost of collecting this waste. However, the natural markets should determine all elements of the price structure associated with this system of waste disposal.