41703 noTE no. 28 ­ oCT. 2007GRIDLINES Sharing knowledge, experiences, and innovations in public-private partnerships in infrastructure Managing municipal solid waste in Latin America and the Caribbean Integrating the private sector, harnessing incentives Daniel Hoornweg and Natalie Giannelli A s Latin America's urban population has Review of the issues grown, its solid waste has increased at an even faster pace. Today the region's The region generates about 369,000 tons a day urban areas generate about 369,000 tons a of municipal solid waste--56 percent of it in large day of solid waste. Ensuring that the waste is urban centers, 21 percent in medium-size ones, collected and disposed of properly will require and 23 percent in small ones (PAHO 2005).2 The strengthening the strategic role of municipali- total per capita rate of waste generation is about ties. The private sector already plays a big part 0.8 of a kilogram a day, though it can exceed 2.4 in waste collection. But private providers could kilograms a day during peak tourism seasons in do more in waste disposal and management, some municipalities. The region's large cities have helping to improve service in close coordina- the highest per capita rates of waste generation, and tion with local authorities. Given the methane the smaller and poorer settlements the lowest. gas currently released from landfills, carbon finance is another potential driver of manage- Residential waste is typically 50­70 percent of the ment improvements. waste stream. Construction and demolition waste can also account for a large share--as high as 31 Latin America and the Caribbean is the most percent in Belo Horizonte, for example--though urbanized region in the world, with its urban this varies markedly among cities. population expanding from 61 percent in 1975 to more than 78 percent in 2001. With increas- Coverage by waste collection services in the ing urbanization--along with economic growth region's cities ranges from 11 percent of the popu- and rising consumption--comes greater waste lation to 100 percent, with a regional average of generation. And the waste will continue to grow: 81 percent (PAHO 2005). Compared with other several recent World Bank studies project that the regions and similar economies, Latin America has region's municipal solid waste will increase from relatively low rates of waste diversion (recycling 131 million tons in 2005 to roughly 179 million and composting; see www.worldmap.com, map in 2030.1 308). And it has generally poor, though highly variable, practices for final disposal (box 1). Protecting public health and the environment in the face of this growing volume of waste will The predominant means of disposal is through require improved waste management services. open dumps, with associated health and envi- Municipal budget allocations for solid waste ronmental problems. Management of infectious management, now 2­8 percent of municipal medical waste and hazardous industrial waste is budgets, will probably need to at least double. The private sector, already playing a part, will need to further expand its services to meet the Daniel Hoornweg is a senior municipal engineer, and Natalie increased demands. And the public sector will PUBLIC-PRIVATE INFRASTRUCTURE ADVISORY FACILITY Giannelli a junior professional associate, in the Sustainable need to improve its often inadequate oversight Development Network of the World Bank's Latin America and coordination of these services. and the Caribbean Region. Helping to eliminate poverty and achieve sustainable development through public-private partnerships in infrastructure PUBLIC-PRIVATE INFRASTRUCTURE ADVISORY FACILITY a relatively high level of private participation in Box 1 waste collection (table 1). Opportunities are also Surveying cities in Latin America and plentiful in recycling and in managing nonhaz- the Caribbean ardous industrial waste and construction and demolition waste. Private participation in waste InstItutIonal Issues disposal is growing, with related benefits in landfill · Lack of legislative framework for integrated management and environmental compliance. management of municipal solid waste Benefiting from small-scale providers · Lack of integrated management of municipal Small community-based organizations (such as solid waste systems cooperatives) and private microenterprises play · Underfunding of municipal solid waste an important part in providing waste management services services in the region. These small-scale service · Lack of effective education programs to providers offer several advantages, including encourage source separation of organics and low-cost, labor-intensive approaches and greater dry recyclables community participation, which encourages · Wide variation in service efficiency better collection and source separation. But while · Lack of coordination between national and they often provide low-cost services, they may also municipal agencies and objectives require more municipal management. PublIc-PrIvate PartnershIP Integrating waste pickers Issues Informal waste pickers perform most of the recy- · Relatively low levels of recycling cling in the region, often at dump sites and in the · Predominance of informal waste pickers as streets. Waste picking in dump sites poses serious recycling agents health and safety risks and provides little income. · Little or no diversion of organics Waste picking in the streets may compete with · Uncertainty in estimating current and future formal collection of recyclables and can disperse waste generation waste placed outside for pickup. · Low participation by private companies in Competition between "formal" and "informal" recycling and waste diversion activities The private programs is usually counterproductive. Efforts to · Significant environmental impacts from unac- improve recycling now commonly try to reduce sector already ceptable disposal sites informal waste picking and upgrade pickers into plays a role-- Source: Golders Associates 2006 and NIPSA 2006. community-based organizations operating with sanctioned routes and separate collection of but could do recyclables. Successful community-based orga- more generally poor; most is simply mixed with munici- nizations might eventually become independent pal waste. Environmentally safe waste disposal collection contractors or recycling enterprises fully (such as in sanitary landfills) is provided for only integrated into the waste management system. 23 percent of the urban population. Several cities in the region have recently started municipal recycling programs involving small This brief overview suggests that the first prior- enterprises or cooperatives and numerous sorting ity in municipal solid waste management in Latin stations for dry recyclables. America should be to improve waste collection and Upgrading landfills controlled landfilling. Greater focus also is needed on source separation of waste. This could begin The number of acceptable landfills in Latin Amer- with the segregation of organics--such as market or ica has increased in recent years, and some of horticultural waste--for high-grade composting. these now meet international standards for sani- tary landfill. But in many cases landfills are closer to "controlled dumps." Around 60 percent of the Potential for private participation waste generated in the region ends up in inad- equately controlled landfills, or "dumps." Solid waste management offers many opportu- nities for private sector participation, and there The United Nations Environment Programme appears to be greater support for private involve- reports that most capital cities and large second- ment in solid waste than in the highly politicized ary cities in South America have sanitary landfills water sector. Indeed, Latin America already has (UNEP 2005). Only 11 landfills in Mexico, mostly Managing municipal solid waste in Latin America and the Carribbean TABLE 1 Solid waste management services provided by the private sector in selected Latin American cities, 2005­2006 (percentage of total) Belo Horizonte La Paz Lima Managua Rio de Janeiro Collection services Residential 78 100 70 1 40 Local policies Commercial 78 100 50 1 0 Sweeping 90 100 70 nA 0 and market Construction and demolition 100 nA 90 nA 100 incentives can Industrial 100 100 100 1 100 Recycling 50 100 100 100 38 be key tools Landfill 0 100 100 0 100 in managing Source: Golders Associates 2006. solid waste in the north, are equipped for sanitary landfill many worker, municipal, and business associa- operations--and only 15 percent of Mexico's solid tions have formed in the region to develop waste waste is disposed of adequately. Central Amer- management programs. Well-managed trade asso- ica (except for Costa Rica) and most Caribbean ciations generally make a positive contribution to countries lack acceptable landfills. So do Bolivia, the waste management dialogue. Market-based Ecuador, and Peru, except in their capital cities. instruments--such as weight- or volume-based And so do many medium-size cities across South disposal fees and collection charges for the indus- America, except those in Chile and Colombia. trial, commercial, and institutional sector--can promote waste reduction and recycling. How landfills are operated can affect recycling rates. In Latin America--in contrast with China, Building municipal capacity India, Japan, Europe, and the United States-- In many countries central governments need small cities, where the dump sites are small, have to provide a legislative and institutional frame- higher recycling rates than larger ones, where work for addressing national priorities in solid waste pickers are banned from dumps and have waste management. But it is municipalities that to rely on informal street collection (Golders Asso- can usually best achieve these priorities, through ciates 2006). Another factor in the region's lower strategies of integrated waste management that recycling rates is that private collection contrac- maximize environmental benefits while minimiz- tors and landfill operators are typically paid by ing overall costs. To do so, however, municipalities the tonnage disposed, so they have no incentive often need greater capacity and independence. to encourage waste diversion. In all cities surveyed, constraints on increasing or Policies and incentives--key tools improving private participation include a lack of municipal capacity to manage contracts and ensure Big improvements in solid waste management are service standards. Often adding to these constraints possible with the right policies and financial incen- is a public skepticism about privatization and its tives (Walls 2006). A sound legal framework and association with corruption and lack of transpar- appropriate tax and subsidy policies can encour- ency--a common concern in Latin America. age waste reduction and recycling and change the nature of products, alter waste streams, and reduce But experience around the world shows that involv- social costs. Economic policies can promote the ing the private sector in solid waste management use of recycled materials, and purchasing policies can lead to efficiency gains where competition, can favor products manufactured with them. transparency, and accountability are present. Municipalities can enhance these efficiency gains While regulations are important, market and by introducing well-focused performance objec- financial incentives can be even more effective tives, financial and managerial autonomy, hard in modifying public behavior and increasing budget constraints, and clear accountability to waste diversion. Responding to market demands, customers and providers of capital. Tapping carbon finance at times, ensuring proper disposal. Their role The release of methane gas from landfills provides needs to go beyond this, to the integrated manage- opportunities for the sale of emission reductions ment of waste material throughout its life cycle. under the Kyoto Protocol's Clean Development Municipalities also need to be involved in broader Mechanism. The resulting carbon finance could discussions, such as on greater product steward- provide potentially significant economic incentives ship by manufacturers and retailers. for improving waste management operations. The private sector is active in some areas, nota- The first priority for carbon finance support in bly in collection. But there are opportunities for solid waste should be landfills--and the second, greater involvement as long as local authorities composting. New areas worth pursuing include ensure sound integrated management and enforce- recycling and improved collection through such ment. The availability of carbon finance could also changes as adding transfer stations. Many proj- help drive improvements in waste management ects in the region have already been approved services. for carbon finance, including landfill projects that will involve the capture and combustion of meth- References ane and a few composting projects that will avoid Golders Associates. 2006. "Improving Management and Quality methane emissions. of Municipal Solid Waste Services." Report prepared for Finance, Private Sector, and Infrastructure Unit, Latin America and the Caribbean Region, World Bank, Washington, DC. Bymakingrelativelymodestimprovements,munic- NIPSA (Ingeniería Estudios y Proyectos NIP, S.A.), IBERINSA ipalitiescouldbecomeeligibleforsignificantcarbon (Ibérica de Estudios e Ingeniería), and Universidad de Cantabria. finance revenues that could partially offset waste 2006. "Improving Municipal Management and the Delivery of Local management costs. A recent review by the World Services in Latin America." Report prepared for Finance, Private Sector, and Infrastructure Unit, Latin America and the Caribbean Bank estimates potential annual carbon finance Region, World Bank, Washington, DC. Pilot cities reviewed: Bogota, revenues per million residents at US$2,580,000 BA, Panama City, Quito, Santo Domingo. for landfill gas recovery, US$1,327,000 for PAHO (Pan American Health Organization). 2005. "Report on composting, up to US$3,500,000 for recycling, the Regional Evaluation of Municipal Solid Waste Management Services in Latin America and the Caribbean." Area of Sustainable and US$115,000 (plus the fuel savings) for trans- Development and Environmental Health, PAHO, Washington, DC. fer stations.3 UNEP (United Nations Environment Programme). 2005. Solid Waste Management. Vol. 1. New York: United Nations. Still, carbon finance revenues will never exceed Walls, Margaret. 2006. "The Economics of Waste Management: around 10 percent of overall waste manage- Market Structure and Government Policy." Urban Development ment costs and should be viewed as performance Unit, Latin America and the Caribbean Region, World Bank; and Resources for the Future, Washington, DC. incentives rather than dedicated revenues. Much uncertainty remains about the long-term availabil- World Bank. 2006. Carbon Copy: Carbon Finance in Latin America and the Caribbean 2 (July). ity and acceptability of carbon finance in waste Notes management. This note summarizes several recent World Bank reports, including a PPIAF-supported review of the private sector's role in the region's Conclusion waste management sector (Golders Associates 2006; NIPSA, IBERINSA, and Universidad de Cantabria 2006; Walls 2006). 1. Municipal solid waste includes residential, industrial, commercial, Better solid waste management services in institutional, and construction and demolition waste as well as Latin America will depend on municipalities municipal services waste (street sweepings, drain cleanings, yard waste). All tonnes given in the note are metric tons. GRIDLINES strengthening their role. While munici- palities are generally responsible for 2. Large urban centers are those with more than 500,000 inhabitants; medium size, between 100,000 and 500,000; small, Gridlines share emerging knowledge all matters relating to urban solid less than 100,000. on public-private partnership and give an waste, those in Latin America 3. These estimates assume an emissions reduction sale price of US$5 overview of a wide selection of projects from tend to focus almost exclusively per ton of avoided carbon dioxide equivalent. A more thorough various regions of the world. Past notes can be on collecting waste, cleaning analysis would be needed if two or more, potentially competing, found at www.ppiaf.org/gridlines. Gridlines are a streets and public spaces, and, options are selected. publication of PPIAF (Public-Private Infrastructure PUBLIC-PRIVATE INFRASTRUCTURE ADVISORY FACILITY Advisory Facility), a multidonor technical assistance facility. Through technical assistance and knowledge dissemination PPIAF supports the efforts of policy makers, nongovernmental organizations, research institutions, and others in designing and implementing strategies to tap the full potential of private involvement in c/o The World Bank, 1818 H St., N.W., Washington, DC 20433, USA infrastructure. 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