Economic risks and opportunities of new waste legislation
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Economic risks and opportunities of new waste legislation

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Waste is valuable.

Waste is valuable.
Waste is not for free.
Sustainable management of waste brings risks and opportunities for private business.
A reflection on the case of Cape Town.

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Economic risks and opportunities of new waste legislation Economic risks and opportunities of new waste legislation Presentation Transcript

  • Economic risks and opportunities of new waste legislationEvidence from Cape Town
    Presentation at Waste In Business Seminar, 14 April 2011
    by
    Martin de Wit
    (As based on inputs to a study for City of Cape Town by the Akhile Consortium)
  • Legislative drivers
    The National Environmental Management Waste Act, into effect on 1 July 2009
    requires that waste minimisation be considered by municipalities in addition to municipal services such as cleaning, collection and disposal to landfill.
    City’s Integrated Waste Management Bylaw
    Waste minimisation as specific function
    Section 78 (3) Assessment of Alternative Service Delivery (ASD) mechanisms (Local Government Municipal Systems Act (MSA))
    One of the requirements of the MSA is to assess costs and benefits of alternative service delivery mechanisms.
  • International evidence
    no one preferred waste management option is identified, highlighting the importance of an assessment based on local conditions.
    with the exception of a few countries,landfillingremains the default option, even in several highly developed economies.
    waste collection and sorting options are vital in a sustainable waste management system, as this choice determines which downstream waste management treatment option(s) will be most effective
    composting options struggle to be financially viable and only have a chance of being successful at high volumes with a marketable quality
    thermal treatment yields net environmental benefits when compared tolandfillingand mechanical-biological treatment options, but is financially expensive
    recycling proves difficult to implement in relatively large volumes
    landfillingremains the most widely used waste management option, but once the full costs are taken into account the sustainability of this option may be questioned
    View slide
  • Systems approach
    Emphasisesthe needfor a systemsapproach.
    A system has a purpose and consists of an interrelated set of elements or components
    An integrated waste system is one that recognises:
    the different elements of the waste system as a whole from generation to disposal
    a range of options on various scales (e.g. household, neighbourhood, city)
    interactions between the waste system and other systems (socio-economic systems for example)
    inputs from various stakeholders and interest groups in the design of a system that is acceptable and feasible
    View slide
  • Economic Systems Model
    Net Additional Cost = Total Additional Costs – Total Additional Benefit
    TAC mainly include:
    Additional Cost of Collections (incl. Transport)
    Additional Cost of Processing
    Decrease in Revenue from Disposal
    TAB mainly include:
    Avoided Disposal Cost
    Savings on Planned Expansions (airspace saved)
  • Data on generation and diversion
    Formal waste management system in Cape Town (MSW and private) handled over an est. 3 million tons of waste in the 2008/2009 financial year
    Round ¼ of the waste in the formal waste management system diverted from landfill
    Mostly commercial and industrial re-use and recycling, but also by Municipality
    Source: Wise, C. Jeffares & Green
  • Financial baseline data
    R1.5bn
    R317m
    +/- R480pp
    Source: Akhile Consortium (2011) as based on City of Cape Town data, 2009/10
  • Baseline costs per ton MSW
    The estimated average cost per ton of waste that was handled by municipality for the year 2009/10, including operational and capital expenses is estimated at approximately:
    R1 700/t for cleaning
    R1 200/t for collections
    R400/t for disposal
    R120/t for support and administration services
    Estimates are very sensitive to costs and MSW generated
  • Additional Waste Costs
    Economic assessment of alternative service delivery (ASD) options:
    The additional direct and indirect costs per ton diverted lowest for the Builders’ Rubble ASD, followed by;
    The Organic Waste Management ASD at an additional cost of between R750–R960/t;
    The Co-mingled Waste ASD at additional cost between R1 350–R1 660 per ton; and
    The Household Hazardous Waste ASD at additional cost between R2 900–R3 500/t.
    Note: These are estimates based on high-level systems analysis.Project level figures likely to vary
  • Model limitations
    Reduced cost to collect solid waste
    Not included as normal service delivery proceeds
    Real potential for cost savings only be seen once implemented
    Possible savings to waste generators not included
    Monetary estimates of environmental costs excluded
    increase costs oflandfillingin mostly poor control landfills
    International studies suggest increase of 20-45% above baseline landfill costs, but much lower for land-fills with best practice controls*
    Important fraction, but not likely to change results on ranking of alternative service mechanisms, even if assume poor controls
    More research likely to shed more light on quantum
    *BDA Group, 2009. The full costs of waste disposal in Australia
  • Discussion of results
    Waste is not for free
    Interventions are costly, in general more costly than defaultlandfillingoption
    Estimated costs of landfilling at R220–R250/t*
    Estimated large volume diversions
    Organic Waste & Composting and Builders’ Rubble options
    Organics & Composting option by far largest air space savings
    >5 times that of second option, builders rubble
    Smaller volumes and air space savings from separation of comingled waste
    From diversion perspective focus on alternative Organics & Composting and Rubble mechanisms
    *subject to changes in medium term budgets on disposal
  • Implications for business
    Rationale for business
    possible private benefits from waste (Income > Cost)
    consider dynamics of supply and demand
    Supply of waste:
    Relative large additional costs (over and above costs of waste service delivery) to ‘unlock’ suitable streams of solid waste from municipality
    Realistic to assume that municipality will not be in a position to carry all these costs
    Model to share risks and costs between municipality and private operators needs further attention
    Assurance of waste volumes and quality of waste stream
    Municipality’s imperative to divert relatively large waste from landfill
    Demand for waste products:
    Possible focus for business on waste capture earlier in cycle
    Market development for recycled products is an important business function
    Not a municipal mandate and function
    Both aspects vital for a sustainable waste recycling and re-use economy
  • Risks and opportunities for waste economy
    Relative high additional cost of diversion
    but lowest for Rubble, Organics & Composting
    higher than default landfill option
    Ability to divert large volumes to be tested
    Organics, composting and rubble
    Mixed results earlier smaller scale attempts
    Ability to deliver quality products to market to be demonstrated
    High quality compost and rubble prerequisite
    Need for market development of waste products
    Some options for higher market value, smaller diversion waste streams (comingled)
    Negotiate sharing of risks, costs and benefits between municipality and private operators