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Economics of Solid Waste in India

For many years, economists engaged in research studies related to municipal solid waste (MSW) were hampered by the general lack of data. Very few municipal governments bothered to keep accurate data on the quantity of waste generated, its composition, information about landfills, and any data on the economics of MSW. Therefore, India has no time series data or panel data in connection with solid waste. Economists found it very difficult to gather solid waste generation data. For example, there was inadequate data regarding cost analysis in most municipal governments. It was difficult to understand the empirical relationship between costs and the benefits of MSW management policies.
Rapid urbanisation and population growth increased solid waste generation in the past decade. Inadequate solid waste management policy and the absence of appropriate guidelines led to serious health and environmental problems all over India. The Municipal Solid Waste Management Handling Rules, 2000 indicated that all the municipal authorities should take the responsibility of waste collection, transportation, disposal, and segregation of solid waste. But most municipality solid waste management practices proved to be highly inefficient.
The ¡°environmental Kuznets curve¡± suggests that environmental pollution would initially increase with per capita gross domestic product (GDP) and after a point the per capita GDP and emissions become delinked. Although to our knowledge, there is no research or survey to validate the environmental Kuznets curve for solid waste generation in India, a large number of studies had been carried out in developed countries¡ªMazzanti and Zoboli (2009) in Italy, Johnstone and Labonne (2004) in Organisation for Economic Co-operation and Development (OECD) countries, and Yamamoto and Ichinoe (2009) in Japan. Most studies on India carried out only preliminary analyses in relation to solid waste management. There are a large number of issues such as the difficulties in decision-making and the problem of cost planning in India. For example, data unavailability and the inaccessibility of areas were the most common problems of solid waste management planners in India.
Solid Waste Disposal and Costs
In India, municipal agencies spend about 5%¨C25% of their budgets on solid waste management. Although, most local governments manage MSW collection and disposal in many parts of Indian states, many states had inefficient construction and operation of MSW landfills and incinerators. A review of recent literature on solid waste management in India point out that institutional and financial issues are the most important ones which had shown improvements in solid waste management.
Very little was known until a few years ago, about external costs. Economies of scale for factors for MSW since Hirsch (1965), DeGeare and Ongerth (1971), Clark et al (1971), Wilson (1981), Moon (1994), Fullerton and Kinnaman (1996), Callan and Thomas (1997), Kinnaman and Fullerton (2000), and Bohm et al (2010), have mainly predicted the collection and recycling costs and the future generation rates of MSW, and provided evidence that the procedure could be used as a simple planning tool. The works cited in MSW economic literature focused on specific regions in the developed world. There seemed to be no efforts made in the cited literature at providing generated cost functions which were applicable to developing countries like India.
In India, the cost function of solid waste management had not been studied properly. In Delhi, the per capita expenditure on solid waste management was found to differ widely. For example, the Federation of Indian Chambers of Commerce and Industry estimates costs at Rs 431 per tonne, The National Institute of Urban Affairs (2005) at Rs 135, and the National Solid Waste Association of India (2010) puts it at Rs 497.
Landfills become increasingly expensive because of rising costs of construction and operations. Yet, the available space for landfills decreased and land prices rose, while the environment had either no price or had non-optimal prices assigned to it, which in turn had led to overuse or over-exploitation of these functions and resulted in misallocation of resource. Therefore, environmental problems such as solid waste management are problems of non-optimal pricing and misallocation, which means overuse of resources, and unforeseen externalities.
In India, urban local bodies spend around Rs 500 to Rs 1,500 per metric tonne of solid waste, out of which 60% to 70% is usually spent on collection alone, and 20% to 30% is on transportation. An improper solid waste management approach resulted in all types of pollution ¡ª air, solid and water ¡ª and as much as 95% was discarded as MSW. Health and safety issues also arise from improper solid waste management which increases environmental and health costs all over India, and waste workers or scavengers, are worst affected due to constant exposure and frequent injuries.
Economic Instruments
Solid waste management had traditionally been addressed with command and control (CAC) regulations, which regulated behaviour directly by prescribing specific legislations and standards which should be achieved and by enforcing their compliance through the levy of penalties. Economic Instruments (EIs), such as environmental taxes and subsidies sought to change the behaviour of persons indirectly by changing relative prices (and hence incentives) that individuals and businesses had to bear. In the context of solid waste management, it was ineffective in India. Examples of EIs that could be used for solid waste management include product and input taxes, deposit-refund schemes, and quantity-based waste collection charges.
The use of EIs increased in developed countries and they could be effective in reducing waste generation, diverting waste from disposal to recycling, and by converting waste to energy. Till date there had been few studies on using economic instruments for waste management. Das, Birol and Bhattacharya (2008) had studied solid waste management to improve local environmental quality and public-health choice in West Bengal. They had found that the Indian population demanded improved solid waste management services in the study area municipalities and that they were even willing to pay for it.
In addition, the polluter pays principle (PPP) could also be invoked. In the context of solid waste management, PPP implied that all waste generators, including households and companies were responsible for bearing costs associated with wastes they had generated. The PPP means that both producers and consumers should pay in India. Yedla and Parikh (2001) had found that waste disposal expenses for a tonne of waste by the landfill system with gas recovery in Mumbai, were found to be much less than those of the existing practices of waste disposal in other areas, and a huge saving of about Rs 6.4 billion per annum was calculated. It was found that a properly managed landfill system could even yield some good profits. Paul P Appasamy (2004), in his study had calculated that biomethanation had high benefits and high costs compared to the sanitary landfills approach. The cost of the sanitary landfill was completely dependent on the price of the land that was available. The large negative benefit was due to the fact that the land costs were estimated to be about Rs 25 crore. Both biomethanation and sanitary landfill systems emit greenhouse gases, the main difference being that sanitary landfills emit some methane (even after the provision for gas collection), which is much more detrimental to the environment than carbon dioxide. The benefit to society of Rs 45 crore consisted of not only the net social benefits of biomethanisaiton, but also the costs averted due to the landfill system.
Waste and Poverty Reduction
At present, new forms of disposal had arisen in most societies due to the process of globalisation and other modern developments. Cities have an increasingly important role to play in societies as the pace of urbanisation and globalisation becomes more rapid. Cities have to managed more responsibly for their dwellers (Lazarev 2008). The New York Times (in a letter it published) re-emphasised India¡¯s enormous waste problems, with special reference to scavengers and ragpickers. The inefficient mechanism of waste collection and recycling by municipalities has led to a growing informal economy, based on the collection of reusable wastes by ragpickers, which amounts to more than $280 million annually in economic value (Kapur 2011). With slow, scattered, and inefficient government initiatives to solve India¡¯s solid waste problems, the country might find a solution, or a part of the solution, in the informal networks that currently exist in the country.
India generates more than 100 million tonnes of municipal waste every year. On a per capita basis, this was far lower than most developed countries, but the amount of garbage generated has been growing fast. The OECD estimated that only about 60% of the municipal waste in the country is collected and a far smaller proportion recycled. Martin Medina, an expert in the management of the informal waste sector, had estimated that scavengers or ragpickers collected more than 10,000 tonnes of reusable waste across India every day. The informal waste recycling involves the urban poor and marginalised social groups that engage themselves in waste picking as a source of income, and often, as their only survival strategy. In an unequal society, however, informal waste recycling would continue in the foreseeable future also.
Many thousands of people in developing cities depended on the recycling of materials collected from waste for their livelihood. With the focus of the Millennium Development Goals on poverty reduction and of waste management strategies for improving recycling rates, one of the major challenges in developing countries is about how best to work in this informal sector to improve livelihoods, working conditions, and efficiency of recycling (Wilson, Velis and Cheeseman 2006).
Worldwide, more than 15 million people make a living in the informal collection, recycling, and handling of solid waste. Informal refuse collection could be a profitable activity. The informal refuse collectors of Cairo, popularly known as Zabbaleen, earn about three times the city¡¯s minimum wage. A research study had found that informal refuse collectors operating in the Mexican city of the Nuevo Laredo, on the tax border, had earned five times that of the minimum wage putting them in the top 3% of income earners in that city (Medina 2008). In Brazil, for example, waste picking had been recognised as an organised sector, and workers enter into informal agreements or even formal contracts with business, industry, and with neighbourhood associations to gain access to recyclable materials or to sell materials or manufacturing items. In a survey conducted in six Latin American countries, more than 90% of waste pickers had reported that they liked the job that they did and considered it a decent job (Medina 2008). Recycling by waste pickers saved municipalities much money while reducing the volume of waste that had to be collected, transported, and disposed.
In Mumbai, more than 30,000 waste pickers had recovered reusable items that could be recycled from the stream of waste. Waste pickers had created more than 400 micro enterprises that processed waste materials and made consumer products out of them. The economic impact of these activities had been estimated at $600 million to 1 billion a year (Medina 2007). For example, Madurai has more than 500 waste pickers engaged in waste collection. I spent a month with waste pickers in the village of Vellakkal (solid waste dumping area in the Madurai District). One respondent, Periya Mariyappan, who was about 62 years old has been in collecting garbage in the area for more than three and half decades with his wife Palaniyammal who was about 51 years old. Both of them said they now earned more than Rs 500 a day. Another waste picker name Veerammal, who was about 48 years old, had been working more than two decades in waste collection. She said this work was of huge help to her family and she had been for earning Rs 250 per day, and had saved more than Rs 45,000 for her daughter¡¯s wedding to be celebrated next year. Waste pickers were important in the waste recycling process, but they are not recognised formally and they face several problems every day in the course of their work.
The external costs of waste should be estimated in every municipality in India. As noted earlier, very few economic analyses have been conducted and hence further research around solid waste management has to be carried out. The government aims to consider environmental protection with the market activating both preventive tools to asses and reduce damage to the environment and mechanisms to enhance good market functioning. New solid waste plans acquire management features rather than following the previous logic based on final elimination of goods discarded. The polluter pay principles extends to all actors: producers, consumers and institutions. There is a need to evaluate, in advance, the impact of the targets set by the laws for recycling by taking into consideration region-specific needs, so that proper polices are developed for all actors. Recycling chains could benefit thousands of low-income and vulnerable sections of people at the national level and it will contribute to the fight against climate change.

India: New policy to solve solid waste issue


June 22, Centre has kicked-off second generation reforms in fertilizer sector by framing a policy to produce compost from urban waste, which it believes would reduce chemical use and enrich soil.

A cabinet note circulated by Ministry of Chemicals and Fertilizers offers incentives to manufacturers for producing compost and use municipal waste as manure in agro sector.
India's total municipal waste based compost production potential is around 40 lakh tonne, given the roughly 600 to 650 lakh waste generated annually by the cities and towns. The country¡¯s current installed capacity for compost production is around 10 lakh tonne while the consumption is around 1 lakh tonne.
Cities may have small-scale plants to produce compost, but incentives to manufacturers are vital to encourage firms to set up large-scale compost production units, a ministry official told Deccan Herald.
Sources said the government is hoping to halve manure prices in three to five years as it boosts up production, while demand for manure isalso soaring due to increase in organic farms.

The way many chemical fertilizer companies include manure in their product list is a sign that compost production is fast becoming a serious business, the official said.
Also, compost production would solve the issue of solid waste management, one of the greatest problems Indian cities are grappling with in recent times.
Their struggles in managing waste are exacerbated by the financial crunch. The new policy would solve the urban waste crises and the predicament of chemical usage in agro sector at one stroke, noted another official.

China: Shanghai can become circular economy pioneer

By: EconoMonitor

Efforts to push a circular economy will significantly increase in advanced economies in the near future. With China¡¯s early-mover advantages in circularity, Shanghai could become an international CE trendsetter.
CE means more than the production and consumption of goods and services.
It includes a shift from fossil fuels to the use of renewable energy and a debate on the role of money and finance.
In the next three years, Shanghai plans to invest 100 billion yuan (US$16.3 billion) on 220 anti-pollution projects.
Among other things, the plan seeks to reduce hazardous PM2.5 particle concentrations drastically to 48 ug/m3, a level closer to international standards (25-35 ug/m3).
While the anti-pollution budget seeks to address some eight core areas, one involves the circular economy. The latter is a way to think about pollution and efforts to minimize it across the entire eco-system.
While the CE concept has been pioneered in advanced economies, China is seen as a leader in implementing the core ideas.
CE pioneer
According to a 2012 McKinsey report, a shift toward circularity could add US$1 trillion to the global economy by 2025 and create 100,000 new jobs within the next five years.
However, while advanced economies are struggling to establish appropriate CE legislation, China did so over a decade ago.
At first, Chinese efforts at CE emulated pioneer initiatives in Germany, Japan, the EU, and the US. As double-digit economic expansion began to raise Chinese living standards, both the high level of growth and pollution were unprecedented in world history. When British industrial revolution escalated in 1800, England¡¯s population was only 10 million; less than half of that in modern Shanghai and less than 1 percent of that in China.
But great threats come with great opportunities.
In China, authorities began to develop CE policy that would be broader and better integrated with national-level development planning and government agencies, which seek to link CE to the mainland¡¯s low-carbon strategy.
As CE studies arrived in higher education institutions and activities took off in clean tech production and eco-industrial parks, the National Development Reform Commission envisioned circularity as central to an alternative development model.
With the establishment of the 2009 Chinese CE law, circularity began to support national plans for safe urban municipal solid waste treatment, energy saving, and emissions reduction.
Shanghai as a frontrunner
As circularity is now seen as a possible platform to create a more sustainable future, substantial investment has been geared to CE-oriented pilot projects, including those in municipal and regional eco-industrial development.
In the early 2010s, many cities ¡ª particularly Beijing ¡ª met or exceeded the targets set. Other cities such as Dalian, Shanghai, and Tianjin attained more modest improvements. And that¡¯s why Shanghai¡¯s plan for anti-pollution projects matters.
However, as efforts toward circularity are about to accelerate in Europe and other advanced economies, more is needed in Shanghai as well. The city¡¯s budgeted anti-pollution plan is a great start. But it is not a systematic CE strategy.
If Shanghai is to become an international CE pioneer, it is time for the city to intensify thinking not just in terms of how to reduce the effects of pollution but how to drastically nullify the causes of pollution in the urban eco-system.
These lessons are vital for all metropolises in China and other emerging economies, as well as to cities in the advanced economies worldwide.
Such forward thinking would offer a handsome payoff to cutting-edge Shanghainese enterprises and extraordinary cost-efficiencies to the municipality itself. Most importantly, circularity would raise the quality of life in Shanghai with safer air, purer water, and fewer vehicular emissions.

Germany: City may seek waste-to-energy facility proposals; two firms express interest

By: Paterson Times

The city may seek proposals from firms interested in building a waste-to-energy facility in the municipality. Two firms have already expressed interest in building such facilities within city boundaries.
Pennsylvania-based Delta Thermo Energy (DTE) and Parsippany-based WSI Management have said they will both submit proposals once the city council approves a resolution opening up the request for proposals (RFP) process.
The city plans to weigh the proposals of various firms before considering a waste-to-energy facility within municipal borders.
¡°We¡¯re going to go ahead and explore the idea to see if there¡¯s any value in this type of a facility,¡± said mayor Jose ¡°Joey¡± Torres. ¡°We¡¯re vetting it for the sake of transparency. And let¡¯s just see what comes in.¡±
What¡¯s bound to come in is a proposal by WSI Management which has a technology called Waste Elutriation Technology (WET) that turns refuse into composite bio-planking, electrical energy, and renewable fuel cubes for co-generation plants, according to Matthew Linda, vice-president of the Parsippany-based company.
¡°What we have is low-temperature steam that cuts the material up, turns it into feedstock, the feedstock is then turned into fuel pellets, and those fuel pellets are used in co-generation plants,¡± explained Linda.

Linda¡¯s plant will cost $100 million to construct and operate. The plant¡¯s construction will generate 80 to 100 new jobs, he said. He said city residents will be provided training and hired to run the plant. 80 to 100 employees are needed to operate the plant, he said. Similarly, Delta Thermo Energy¡¯s $45-50 million facility, will create 75 jobs during construction, and require 29 full-time employees to run the plant which will utilize technology developed in South Korea, Japan, and Germany to convert refuse into clean fuel through a process called hydrothermal decomposition, according to Robert Van Naarden, president of DTE.
Naarden explained the technology to council members few weeks ago stating waste is run through a pressure cooker like system that ultimately produces what is called engineered pulverized fuel (EPF), a black substance that resembles crumbed soil. This substance is then burned to produce electricity, he said.
Naarden¡¯s company has yet to select a location to situate its plant, but it has been looking at a contaminated site in the corner of Madison and 3rd Avenues. He said his company would submit a proposal depending on what is being sought in the RFP. ¡°If we can work something out together that would be fabulous,¡± said Naarden.
Linda said his firm is looking at a site near the border of Clifton.
Both firms have been lobbying council members. Both have also met with the mayor. Neither received a good reception from Torres.
Linda said he scheduled a meeting with the mayor to discuss his proposal some time ago, but the mayor cut short the meeting and dismissed his proposal for a waste-to-energy facility in the city. He isn¡¯t alone Naarden¡¯s proposal also received the cold shoulder.
The mayor has said Naarden¡¯s proposal is little more than a cloaked incinerator. Naarden though denies it. In fact, he has told council members his facility produces no odor and does not release any smoke as is the case with incinerators.
Andre Sayegh, 6th Ward councilman, whose economic development committee, has brought forth the resolution, has said waste-to-energy facilities are the wave of the future. Not every council member though is convinced it¡¯s the wave of the future.
¡°I¡¯m not convinced of the idea,¡± said Kenneth Morris, councilman at-large, last Tuesday. ¡°I have a fundamental concern when you¡¯re talking about any type of waste facility being located in an already environmentally challenged urban center such as Paterson.¡±

German municipalities urged to keep hands off recyclables

By: Recycling International

Germany: The growing number of German municipalities claiming first rights on recyclables from households is continuing to have a dramatic impact on commercial recyclers, according to the German federal association for secondary raw materials and waste management (BVSE). Over the past two years, German scrap collectors and recyclers have seen their volumes decrease rapidly as a result, lamented BVSE's managing director Eric Rehbock at last week's Recycling Aktiv exhibition in Baden-Baden, Germany.

According to German recycling legislation introduced two years ago, municipalities have first rights on collecting and recycling household recyclables. Law-makers use the argument that revenues are required for funding the whole disposal system, but commercial collectors sometimes fail to prove legal reclamation.
The situation is endangering the survival of hundreds of private small and medium-sized businesses, according to Rehbock. 'It irritates the scrap sector that local governments increasingly lay their hands on everything they can make money on, and take over well-functioning collecting and recycling structures,' he said.
Rehbock admitted the situation was not new 'but the impact has become more and more dramatic now that recyclers suffer from overcapacity', he argued. 'And instead of reaching out a helping hand, they overload us with new legislation and extra bureaucracy.'
Heiner Groger, president of the confederation of German steel recyclers BDSV, called on the German government to increase controls on illegal exports of scrap from the country. According to Groger, an estimated 1 million end-of-life vehicles (ELVs) leave Germany every year and some 8 million from the whole of the EU, entailing a total loss of some 12 million tonnes of scrap. 'This illegal export of ELVs has to be stopped,' he insisted in Baden-Baden. 'Legislation is not the problem; defending this legislation, that's the problem.'

Germany makes progress toward modern recycling law

By: Recycling Today

The Federal Association of Germany for Secondary Raw Materials and Waste Management (BVSE) is applauding progress made by Germany¡¯s grand coalition on key elements of a new national recycling law.
The nation's major political parties have agreed to elements in the proposal. In a joint statement, Marie-Luise Dott, environmental policy spokeswoman for the CDU/CSU (Christian Democratic Union of Germany and the Christian Social Union in Bavaria) Parliamentary Group and Thomas Gebhart, rapporteur of the CDU on closed cycle waste management and resource efficiency, report, ¡°We have cleared with today¡¯s agreement on common key points the way for a modern recyclables law. This will be a milestone for greater environmental protection and resource conservation."
Following intensive negotiations, the groups say they expect the Federal Environment Ministry to promptly submit a bill on the basis of these principles.
The proposal calls for the combined collection of postconsumer packaging and metal and plastic streams from households, simplifying sorting for households. In addition, municipalities will have flexibility in how the recyclables are collected, whether via yellow bag, recycling bin or at a recycling center.
Additionally, the bill calls for further development of market-based product stewardship calling for manufacturers of metal and plastic products and packaging to include recycling and disposal costs as part of the sales price.
The bill also calls for competitively organized recycling and collections contracts, to facilitate low costs.
Eric Rehbock director general of the BVSE, calls the agreement ¡°real progress.¡± In a statement posted on the association's website, Rehbock calls for speedy passage and implementation of the law to strengthen recycling in the country, particularly in the area of plastics.
The proposal also calls for the following:
¡öExpansion of the existing product responsibility of manufacturers and distributors regarding nonpackaging plastic, metal and composites
¡öEcologically demanding recovery requirements
¡öRecycling rates and license fees to be adjusted based on recyclability
¡öCombined collection of packaging and nonpackaging materials
¡öEstablishment of a central location with supervisory powers for oversight of the system
¡öStrengthening of local authorities as direct local contacts
¡öFlexibility to define collection structures

China starts work on multi-million tyre recycling park

By : Recycling International

Asia: The Central China Rubber Resources Recycling Industrial Park has broken ground in Xiangyang, Hubei province. Entailing an estimated investment of US$ 340 million and covering an area of 7.5 million square feet, the enterprise will become the country's largest rubber recycling park.

The aim will be to process the equivalent of 400 000 tonnes of end-of-life tyres on an annual basis, including a capacity of 300 000 tonnes per year for rubber modified asphalt as well as 100 000 tonnes per annum for recycled rubber.
The park will feature sections for manufacturing, processing, trading, storage and research. Also, it is intended that the facility will function as a link between upstream and downstream sectors, as well as providing rubber recycling solutions.

The 6th China Solid Waste Management Summit & Exhibition 2015. Copyright 2009-2015 IGVision, All Rights Reserved. IGVision reserves the right to change the venue and content of the event should circumstances require