Tag Archives: Private Sector

Financing of Solid Waste Management Projects

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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.

The increasing cost of waste disposal is a cause of major concern in developing nations

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.

Waste Minimisation – Role of Public, Private and Community Sector

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When it comes to waste minimisation and moving material up the waste hierarchy you will find partisan advocates for the roles of the public, private and community sectors. Each will tell you the reasons why their sector’s approach is the best. The private sector will extol their virtues as the only ones capable of efficiently and effectively doing the job.  They rightly note that they are the providers on the front lines who actually recover the vast majority of material, that the private sector approach drives innovation and efficiency, and that if waste minimisation is to be sustainable this must include economic sustainability.

 

The community sector on the other hand will make a strong case to say that their model, because it commonly encompasses social, environmental, and economic outcomes, is able to leverage value from recovered materials to dig deeper into the waste stream, to optimise recovered material quality, and to maximise employment and local economic benefit.

Before recycling and composting were economically viable prospects, community sector organisations led the way, developing many of the techniques now widely used. They remain the leaders in marginal areas such as furniture reuse, running projects that deliver environmental outcomes while providing wider community benefits such as rehabilitation and training for marginalised groups.

Finally, in the public sector corner, advocates will point out that the profit-driven private sector will only ever recover those materials that are able to generate positive revenues, and so cannot maximise waste minimisation, while social outcomes are strictly a secondary consideration. The community sector, on the other hand, while encompassing non-monetary values and capable of effective action on a local scale, is not set up to deliver these benefits on a larger scale and can sometimes struggle to deliver consistent, professional levels of service.

The public sector can point to government’s role in legislating to promote consistent environmental and social outcomes, while councils are major providers and commissioners of recycling services and instrumental in shaping public perceptions around waste issues. The public sector often leads in directing activity towards non-monetary but otherwise valuable outcomes, and provides the framework and funding for equity of service levels.

So who is right? Each sector has good arguments in its favour, and each has its weaknesses. Does one approach carry the day?  Should we just mix and match according to our personal taste or based on what is convenient?

Perhaps we are asking the wrong question. Maybe the issue is not “which approach is better?” but instead “how might the different models help us get to where we ultimately want to go?”

Smells Like Waste Minimisation

So where do we want to go?  What is the waste minimisation end game?

If we think about things from a zero waste perspective, the ideal is that we should move from linear processes of extraction, processing, consumption and disposal, to cyclical processes that mimic nature and that re-integrate materials into economic and natural systems.  This is the nirvana – where nothing is ‘thrown away’ because everything has a further beneficial use.  In other words what we have is not waste but resources.  Or to put it another way – everything has value.

Assuming that we continue to operate in an essentially capitalist system, value has to be translated into economic terms.  Imagine if every single thing that we now discard was worth enough money to motivate its recovery.  We would throw nothing away: why would we if there was money to be made from it?

So in a zero waste nirvana the private sector and the community sector would take care of recovery almost automatically.  There might evolve a community and private sector mix, with each occupying different niches depending on desired local outcomes. There would be no need for the public sector to intervene to promote waste minimisation.  All it would need to do would be to set some ground rules and monitor the industry to ensure a level playing field and appropriate health and safety.

Sectoral Healing

Returning to reality, we are a long way from that zero waste nirvana.  As things stand, a bunch of materials do have economic value, and are widely recycled. Another layer of materials have marginal value, and the remainder have no value in practical terms (or even a negative value in the case of hazardous wastes).

The suggested shift in perspective is most obvious in terms of how we think about the role of the public sector. To bring us closer to our goal, the public sector needs to intervene in the market to support those materials of marginal value so that they join the group that has genuine value.

Kerbside (or curbside) collection of certain materials, such as glass and lower value plastics, is an example of an activity that is in effect subsidised by public money. These subsidies enable the private sector to achieve environmental outcomes that we deem sufficiently worthwhile to fund.

However, the public sector should not just be plugging a gap in the market (as it largely does now), but be working towards largely doing itself out of a job. If we are to progress towards a cyclical economy, the role of the public sector should not be to subsidise marginal materials in perpetuity, but to progressively move them from marginal to genuinely economic, so that they no longer require support.

At the same time new materials would be progressively targeted and brought through so that the range and quantity requiring disposal constantly shrinks.  This suggests a vital role for the public sector that encompasses research, funding for development of new technologies and processes, and setting appropriate policy and price structures (such as through taxes, levies, or product stewardship programmes).

Similarly, the community sector, because it is able to ‘dig deeper’ into the waste stream, has a unique and ongoing role to play in terms of being able to more effectively address those materials of marginal value as they begin to move up the hierarchy.  The community sector’s unique value is its ability to work at the frontiers.

Meanwhile, the private sector’s resources and creativity will be needed to enable efficient systems to be developed to manage collection, processing and recycling of materials that reach the threshold of economic viability – and to create new, more sustainable products that fit more readily into a waste minimising world.

In the end, then, perhaps the answer is to stop seeing the three models as being in competition. Instead, we should consciously be utilising the unique characteristics of each so that we can evolve our practices towards a future that is more functional and capable of delivering the circular economy that must eventuate if we are to sustain ourselves on this planet.

Note: The article is being republished with the kind permission of our collaborative partner Isonomia. The original article can be viewed at this link