There is a growing concern about inappropriate waste disposal and its negative impact on human health and the environment. The objective of this study is to understand household waste segregation intention considering psychological, institutional, and situational factors simultaneously. Insights into the motivations of household waste segregation drivers may assist in a better knowledge of how to pursue the most efficient and effective initiatives. For this purpose, data from a representative sample comprising 849 households is obtained from the twin cities of Islamabad and Rawalpindi (Pakistan). The empirical analysis employs a Structural Equation Modeling (SEM) approach, showing that policy instruments have significant direct and indirect impacts on households' segregation intentions. The results highlight that government policy instruments strengthen personal and perceived norms for waste segregation intentions, resulting in an external intervention that would encourage intrinsic motivation. Therefore, policy actions become the main entry point for initiating waste segregation behavior. Public policy must continue to emphasize waste segregation since it may help resource recovery. This is imperative because the environment is a shared resource, and its conservation increases social welfare.