There is insufficient market data for councils to trade on the Landfill Allowance Trading Scheme (LATS) effectively, according to the Local Government Association (LGA).
Waste disposal authorities were given their final allocation of landfill allowances last week, ahead of the scheme that starts on April 1.
LATS allows local authorities in England the flexibility to decide how they meet their individual landfill allowances through the ability to trade tonnages with each other.
However, LGA senior project policy officer for environment Alice Roberts said: "Local authorities need to know who's got what in terms of tonnages. That information just isn't there at the moment, and if they don't have sufficient knowledge of what the 120 other councils will trade, then the flexibilities of LATS are lost."
Roberts added that the LGA were in support of LATS and were pursuing a number of lines of funding for research to gather the required market intelligence.
This included asking the Government for funds.