Economic risks and opportunities of new waste legislation

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

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

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

Economic risks and opportunities of new waste legislation

by martin de wit on Apr 14, 2011

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Economic risks and opportunities of new waste legislation — Presentation Transcript