It help keep waste down that could attract rodents or bugs, which could lead to disease. Another reason would be that it keeps down the possibility of people burning their garbage/recycling, therefore reducing pollutants in the air. something else to think about is how much more pleasant the environment is when trash isn't all over the place. Odors are reduced. Imagine all the foul odors certain kinds of waste put off as they start to decompose. Many types of garbage take a number of years to decompose. It's better to have it all in one place...the local dump.
