Government landfill targets under the Landfill Allowance Trading Scheme (LATS) could drain millions of pounds from council budgets, the Local Government Association (LGA) has warned.
Local government leaders believed that all services could suffer cuts if councils fall behind in implementing the new system.
The LATS due to begin in 2005/6 implements part of the Waste and Emissions Trading Bill. It limits the amount of biodegradable municipal waste sent to landfill. Each local authority will be granted allowances that they can trade.
But the LGA warned that forcing underperforming local authorities to buy permits from councils that have exceeded their goals effectively transferred cash from councils that needed the money most.
Councillor Ken Manton, chair of the LGAs waste and environmental management executive, said: Forcing councils to pay unavoidable extra costs through compulsory paid-for permits will only make the situation worse.
One unitary and county authority team that has put plans in place to meet the LATS targets predicts it could face costs of £13m over two years alone if implementation is delayed by 18 months.
The LGAs concerns come in the wake of the publication of the LATS consultation outcome.