Financing of solid waste management projects can be pretty overwhelming for the city government, especially if the government see it as a critical part of the service they should render to the citizen and if the citizen also hold it as a basis for measuring the performance of the government and using it as one of the conditions for re-election.
Solid waste management entails different aspects. Generally speaking, waste management consists of pre-collection, collection, transportation, storage, treatment, and disposal. The modern hierarchy of waste management includes prevention, minimization, reuse, recycling, energy recovery, and disposal.
All these aspects require proper funding in rendering a good waste management service to the society. As citizens, we hardly give any thought to the different aspects and what it takes to ensure it is carried out efficiently and effectively.
Financing Options for Solid Waste Management
There are four different options for financing of solid waste management projects. The option chosen will be dependent on various factors. The chief factor will be “what is the end goal of providing waste management service to citizen” and this is to be determined by the city government. Therefore, we say finance option is directly related to waste management goal of a city or State.
Public Financing
This primarily involves funding of waste management service entirely by the government through budgetary allocation. The government determines how it will generate the cash for service and this can be through taxation or redistribution of funds generated from other sources like sales of city natural resources or combination of various sources of funds.
In developing countries, this is generally inefficient due to the corruption within the government and lack of proper waste management capabilities in most instances. The government might decide to charge a service fee or not.
Private Financing
This involves infusing funds from the private sector into waste management service and also overseeing day-to-day running of the service. However, the hired company will charge a service fee which will be determined by calculating the amount of invested funds, operating cost, and profit envisaged. This will be spread over a period of time.
This financing option can deliver optimal result in providing waste management service but the private sector needs to be checked in order not to set a high fee that will end up scaring citizens which might lead to citizen abhorring the service.
Public-Private Partnership (PPP)
This is a special type of arrangement which brings together the government and private sector in providing funds and management capabilities for the delivery of waste management service.
All things being equal, this arrangement is best because the government will be able to regulate and have a say in how the service should be delivered especially as it relates to the setting of service fees which might be difficult in the solely private financing option. The PPP can equally be extended to be a Joint Venture (usually termed as Institutional PPP).
Donors and Grants
This funding mechanism is dependent on the interest of the donor organization. While it is a good way to develop a city’s waste management infrastructure, attracting and utilizing grants is solely reliant on what the donor considers as important. Hence, it might be difficult for a city government to dictate how the funds should be distributed among the various aspect of waste management.
Waste management projects based on public-private partnership (PPP) model has more chances of success in developing countries
However, this type of financing can be combined with a PPP arrangement to cater for a specific waste management aspect that is in tandem with the interest of the donor and can be part of the city government contribution to the PPP.
Conclusion
In conclusion, waste management financing is quite dynamic just like many other services and infrastructure provided by a city government and the best option for financing the provision of waste management service can only be made after appropriate due diligence and consultation with relevant stakeholders has been made and observed.
Note: The original version of the article was published on Waste Watch Africa website at this link.
