Private Sector Participation in Integrated Sustainable Solid Waste Management
in Low- and Middle Income Countries
DISSERTATION
of the University of St. Gallen,
Graduate School of Business Administration,
Economics, Law and Social Sciences (HSG)
to obtain the title of
Doctor Oeconomiae
submitted by
Louigueur Dorvil
from
Haiti
Approved on the application of
Prof. Dr. Thomas Dyllick-Brenzinger
and
Prof. Dr. Matthias P. Finger
Dissertation Nr. 3381
Schmitt-Druck, Essen
The University of St Gallen, Graduate School of Business Administration, Economics, Law
and Social Sciences (HSG) hereby consents to the printing of the present dissertation,
without hereby expressing any opinion on the views herein expressed.
St. Gallen, October 15, 2007
The President:
Prof. Ernst Mohr, PhD
Foreword
Research into privatisation is not a new thing. But some publications smell of opinions held
before the research started.
Louigueur Dorvil does better. He critically looks at one of the big trends of our days, rapid
urbanisation in low- and middle-income countries and the environmental challenges lying in
this trend. He recognises that these countries typically lack the financial means to deal with
the challenges and are therefore inclined to look for foreign financial aid. As a result of
loans, high debts accumulated. In this situation many see privatisation of public assets as a
means to overcome excessive indebtedness.
Before assessing successes and failures in low- and middle-income countries, Dorvil looked
into the past of European countries that since a long time had considered solid waste
management as a private affair. They learned the hard way that this approach didn’t work
and finally made waste management one of the most important public duties, mostly
assumed by the municipalities. To finance the system, waste charges were imposed. Public
perception prevails in Europe that waste management is and must remain a public
responsibility. This does not preclude public-private partnerships as long as the ultimate
responsibility remains with the state.
Dorvil observes that the solid waste market in low- and middle-income countries is
becoming attractive for private investors. But he argues that caution should be applied when
it comes to achieving an integrated system of sustainable solid waste management. Private
sector participation will not by itself solve all problems. The main issue is not privatisation
but the avoidance of unhealthy monopoly or oligopoly situations with a lack of competition.
Another important aspect of Dorvil’s study is insufficient information. Neither the state nor
private operators have sufficient information about the services contracted, leading to
inefficiencies.
Rightly Dorvil argues that privatisation functions best under conditions of a strong
regulatory framework and that public offices need to maintain clear information and
oversight of the relevant operations.
Dorvil offers a thorough treatise on the goods theory, the theory on market competition and
market failure in the context of solid waste management. He emphasises the need for
sustainable management in the waste sector. Numerous case studies illustrate his main
points. I was pleased to see that the author argues for a healthy balance between public
responsibilities and private functions.
I recommend the book to decision makers in developing countries and their partners in the
private sector and in international agencies. I am confident that Dorvil’s work will stand the
test of time.
Prof. Ernst Ulrich von Weizsäcker
Dean, Bren School of Environmental Science and Management
University of California Santa Barbara
Lead author, Limits to Privatization: How to avoid too much of a good thing A Report to the
Club of Rome (Earthscan, London)
Abstract
The need for investment in the Solid Waste (SW) sector in Low- and Middle Income
Countries (LMIC) far outstrips their financial resources. The real challenge for LMIC is to
set up sound SW management for both economic and ecological reasons. One of the
solutions recommended is the involvement of the private sector. This study aims to
demonstrate both theoretically and empirically the limitations of some Private Sector
Participation (PSP) models to the concept of Integrated Sustainable Solid Waste
Management (ISSWM), and to design an improved conceptual framework.
The following major questions are addressed: What are the principal contradictions of PSP
to the concept of ISSWM? What are the strategies of the international donor organisations?
How should a workable concept for achieving ISSWM be designed?
This investigation discovered that the main contradictions include the nature of solid waste
(limitation of Standard Market Model to cope with public goods), the limitation of so-called
“Pareto Efficiency”, the presence of externalities, free-rider issues, low-income areas, and a
decided lack of accurate information and the prevalence of asymmetric information (or
“symmetric lack of information”). The SWM policies of international donor organisations
are theoretically aligned with the key principles of ISSWM. Based on a solid empirical
foundation, this study demonstrates that the success of PSP does not necessarily depend on
competition (due to long-term contracts), but rather on good inter-organisational
relationships. The necessity for public awareness and cooperation between international and
national private enterprises is considered to be a “conditio sine qua non” for the success of
PSP. Empirically, this study confirms that the key principles of ISSWM are often welladdressed at the national level in LMIC, but that their application at a local level is lacking
due to particular remuneration modes, difficulty in setting up performance thresholds, the
financing systems in place, and a symmetric lack of information. Consequently, the
managerial capacity of municipalities is weakened through thoughtless executed PSP.
This dissertation highlights the crucial importance of good inter-organisational relationships
between the public and private sectors. Government agencies or private agencies should
enhance the monitoring of outsourced SW services, and new systems to strengthen the
managerial capacity of municipal managers should be introduced. Also, clear mechanisms
should be set up to address the unforeseen and ensure that support from public authorities is
adequate for guaranteeing operational and organisational success. This study is highly
relevant to private sector enterprises interested in sound business opportunities and policymakers interested in strengthening managerial capacity in LMIC and in avoiding SW project
failure. Simply put, it is about creating strategic business opportunities that also improve the
living conditions of millions of people.
Zusammenfassung
In Entwicklungs- und Schwellenländern übertrifft der Investitionsbedarf im Bereich der
Abfallwirtschaft bei Weitem deren finanzielle Mittel. Diese Länder stehen nun vor der
Herausforderung, aus ökonomischen wie auch aus ökologischen Gründen eine nachhaltige
Abfallwirtschaft aufzubauen. Einer der Lösungsvorschläge sieht eine Beteiligung des
Privatsektors (PSP) vor. In dieser Dissertation sollen die Grenzen einiger PSP-Modelle für
das Konzept einer integrierten nachhaltigen Abfallwirtschaft (ISSWM) theoretisch
aufgezeigt und empirisch nachgewiesen werden. Des Weiteren wird ein verbesserter
konzeptioneller Rahmen entworfen.
Die folgenden zentralen Fragen werden behandelt: Wo liegen die wesentlichen
Widersprüche der Privatsektorbeteiligung zum ISSWM-Konzept? Wie sehen die Strategien
der internationalen Geber-Organisationen aus? Wie lässt sich ein ISSWM-Konzept durch
PSP ohne Widersprüche entwickeln?
Diese Forschungsarbeit hat festgestellt, dass zu den zentralen Problemen u. a. die
Limitierung des Standardmarktmodells beim angemessenen Umgang mit öffentlichen
Gütern, die Grenzen des “Pareto Prinzips”, externe Effekte, Trittbrettfahrer-Aspekte und
Gebiete mit niedrigem Einkommensniveau zählen. Weitere Schwierigkeiten sind i. a. auch
ein deutlicher Mangel an akkuraten Informationen sowie die Verbreitung von
asymmetrischen Informationen (bzw. „symmetrischem Informationsdefizit“). Die Politik
der internationalen Geber-Organisationen für den Bereich der Abfallwirtschaft ist an den
wichtigsten Prinzipien der integrierten nachhaltigen Abfallwirtschaft ausgerichtet. Auf der
Basis solider empirischer Daten zeigt diese Forschungsarbeit, dass der Erfolg der Modelle
mit Privatsektorbeteiligung (aufgrund langfristiger Verträge) nicht zwangsläufig vom
Wettbewerb, sondern insbesondere von guten Beziehungen zwischen den staatlichen
Institutionen und den privaten Auftragnehmern abhängig ist. Das öffentliche Bewusstsein
und die Kooperation zwischen internationalen und nationalen privaten Unternehmen gelten
als „conditio sine qua non“ für den Erfolg von PSP. Diese Dissertation bestätigt empirisch,
dass die wichtigsten Prinzipien einer ISSWM auf nationaler Ebene weitgehend
berücksichtigt werden. Schwierigkeiten bei der Definition der zu erbringenden Leistung
sowie den besonderen Zahlungsmodalitäten, die bestehenden Finanzierungssysteme und das
symmetrische Informationsdefizit verhindern jedoch eine wirksame Umsetzung auf lokaler
Ebene.
Klare Mechanismen sollten geschaffen werden, damit die öffentlichen Behörden bei
unvorhergesehener Änderung der Ausgangslage angemessen reagieren können und so den
Erfolg der Privatisierung sicherstellen. Diese Forschung ist für die politischen und
unternehmerischen Entscheidungsträger von größter Relevanz bei der Umsetzung von PSP
in der Abfallwirtschaft, um Grenzen frühzeitig zu erkennen und Fehler zu vermeiden.
Acknowledgements
Acknowledgement
First and foremost, I would like to extend my deepest gratitude to Prof. Dr. Thomas Dyllick
for his invaluable guidance and support throughout this dissertation. I also wish to express
my sincere gratitude to Prof. Dr. Dr. Matthias Finger of the EPFL for taking time out of his
busy schedule to become the co-referee, and for offering his valuable insights and
perspectives on the methodological and empirical aspects of my dissertation. His continuous
support was vital and our discussions were always challenging and enlightening. I would
also like to express my utmost gratitude to Prof. Dr. Dr. h.c. Ernst Ulrich von Weizsäcker. I
am touched by the faith he expressed in my work in his foreword. I am also grateful to Dr.Ing Bernd Kordes and Dr.-Ing Abdelaziz Belherazem of the GKW for providing important
case studies from the World Bank Group’s Project. This dissertation has benefited greatly
from the advice and critical evaluation of Dr. Adrian Coad. His comments on my research
design were fruitful. I also extend my thanks to Dr. Urs Egger, General Manager of SKAT
in St. Gallen. Further, I wish to express my appreciation and indebtedness to Christian
Zürbrügg and Silke Drescher at EAWAG/ SANDEC in Dübendorf for granting me access to
their library facilities.
I owe many thanks to Prof. Dr. Driss Zakarya, whose comments throughout are greatly
appreciated, and to Dr. Peter Pluschke of the GTZ in Morocco for providing invaluable
guidance, particularly with the Moroccan contacts to national institutions and local
resources, and for helping me to clarify the whole concept.
I would also like to acknowledge the valuable comments and contributions I received from
Andrés Valverde Farré, the chief executive officer of CESPA in Tangier, for providing me
with the most important information for the CESPA case study. I also wish to highlight the
wonderful help granted to me by GTZ in Tangier, especially by Mr. Clemens Schrage.
I highly appreciate the cooperation and assistance of Dr. Marc-Arthur Georges, Brigitte
Otter and Mechtild Sifkowits who made the final document cohesive and readable.
My exceptional thanks go to my wife, Andrea Dorvil, who has been always a source of
inspiration and keen insight. Last but not least, I would like to thank Julienne Méus, Marc
Méus and especially my parents Léonie and Arnoux Dorvil for incredibly unrestrained
support. To everyone who provided time, effort and inspiration to this project I can simply
say thanks.
Essen, December 2007
Louigueur Dorvil
Table of Contents
Table of Contents
List of Figures ...................................................................................................................... VI
List of Tables.......................................................................................................................VII
Abbreviations......................................................................................................................IIX
I.
INTRODUCTION ......................................................................................................1
1.
Background to the Research ................................................................................1
1.1
Integrated Sustainable Solid Waste Management in Low- and MiddleIncome Countries ....................................................................................................1
1.2
Private Sector Participation in Low- and Middle-Income Countries .....................4
2.
Research Issues and Hypotheses..........................................................................6
2.1
Research Aims ......................................................................................................11
2.2
Research Questions...............................................................................................12
2.3
Justification for the Research................................................................................14
2.4
Research Procedure...............................................................................................15
2.5
Ethical Considerations ..........................................................................................17
2.6
Delimitations of Scope of this Dissertation ..........................................................19
II.
LITERATURE REVIEW ........................................................................................21
3.
Solid Waste Management...................................................................................22
3.1
Historical Background ..........................................................................................22
3.2
Solid Waste: Definitions .......................................................................................32
3.3
Concluding Remarks.............................................................................................35
4.
Solid Waste Management in LMIC: Key Features .........................................38
4.1
Urbanisation in LMIC: Economic and Ecological Issues.....................................38
4.2
Waste Generation and Characteristics ..................................................................42
4.3
Institutional and Managerial Framework..............................................................45
4.4
Financing and Costs Recovery..............................................................................46
4.5
Informal Sector and Recycling .............................................................................49
I
Table of Contents
4.6
Concluding Remarks.............................................................................................52
5.
Theoretical Principles of ISSWM......................................................................53
5.1
Hierarchy Principle ...............................................................................................56
5.2
Polluter Pays Principle..........................................................................................58
5.3
Effectiveness .........................................................................................................60
5.4
Efficiency ..............................................................................................................61
5.5
Concluding Remarks.............................................................................................62
6.
Privatisation and Private Sector Participation ................................................64
6.1
Globalisation and Liberalisation ...........................................................................64
6.2
Deregulation and Regulation ................................................................................67
6.3
Privatisation: Academic and Empirical Discussion..............................................68
6.4
Privatisation: Advantages and Limitations ...........................................................70
6.5
Prerequisites for PSP.............................................................................................75
6.6
Analysis and Discussion of PSP Models ..............................................................77
6.6.1
Public-Private Partnerships......................................................................79
6.6.2
Contracting-out ........................................................................................81
6.6.3
Franchise..................................................................................................87
6.6.4
Concession ...............................................................................................89
6.6.5
Open Competition....................................................................................92
6.7
Concluding Remarks and Discussion ...................................................................94
7.
Goods, Market and Organisational Theory .....................................................98
7.1
Characteristics of Public Goods............................................................................98
7.2
Provision of Public Goods and Services.............................................................104
7.3
Economic Classification of Solid Waste Services..............................................108
7.4
Theory of Market Competition ...........................................................................109
7.5
Theory of Market Failures ..................................................................................111
7.5.1
Asymmetric Information .......................................................................112
7.5.2
Transaction Costs...................................................................................115
II
Table of Contents
7.6
Concluding Remarks and Discussion .................................................................117
8.
International Organisations and Privatisation Policy...................................120
8.1
Sovereign Debts ..................................................................................................120
8.2
Scope of the Debt and Financial Crises ..............................................................122
8.3
World Bank Group and Privatisation Policy ......................................................123
8.4
Solid Waste Management Policy ........................................................................126
8.5
Concluding Remarks...........................................................................................135
III.
EMPIRICAL EVIDENCE.....................................................................................137
9.
Illustrative Case Studies ...................................................................................138
9.1
Overview and Background of the Case Studies..................................................138
9.2
Key Features of the Solid Waste Sector in the METAP-RSWMP Region ........139
9.3
Illustrative Case Study: Egypt ............................................................................143
9.4
Illustrative Case Study: Lebanon ........................................................................150
9.5
Illustrative Case Study: Tunisia ..........................................................................154
9.6
Discussion of the Main Results...........................................................................159
9.6.1
Hierarchy Principle ................................................................................160
9.6.2
Polluter Pays Principle...........................................................................160
9.6.3
Inter-organisational Relationships .........................................................161
9.6.4
Effectiveness..........................................................................................162
9.6.5
Efficiency...............................................................................................163
10.
Single Case Study: CESPA ..............................................................................165
10.1
Methodological Approach ..................................................................................165
10.1.1 Design of the Case Study Protocol ........................................................166
10.1.2 Conducting the Case Study....................................................................168
10.1.3 Analysing the Case Study ......................................................................173
10.2
National Level.....................................................................................................176
10.2.1 Macroeconomic Framework ..................................................................176
10.2.2 Privatisation Policy ................................................................................178
III
Table of Contents
10.2.3 Legislative Framework ..........................................................................181
10.2.4 Solid Waste Management Issues ...........................................................184
10.2.5 Concluding Remarks and Discussion ....................................................186
10.3
Municipal Level ..................................................................................................189
10.3.1 Tangier: Socio-economic Background ..................................................189
10.3.2 Typological Classification of the Municipality of Tangier ...................191
10.3.3 Solid Waste Management in the Municipal Context.............................192
10.3.4 Key Features of the Contract Specifications with CESPA....................194
10.3.5 Economic Value of the Recycling Market.............................................196
10.4
Analysis and Discussion of the Key Principles ..................................................198
10.4.1 Hierarchy Principle ................................................................................199
10.4.2 Polluter Pays Principle...........................................................................203
10.4.3 Continuity Principle...............................................................................204
10.4.4 Monitoring .............................................................................................206
10.4.5 Principal-Agent Dilemma and Asymmetric Information ......................208
10.4.6 Inter-organisational Relationships .........................................................212
10.4.7 Effectiveness..........................................................................................215
10.4.8 Efficiency...............................................................................................217
10.4.9 Concluding Remarks..............................................................................218
IV.
CONCLUSIONS AND IMPLICATIONS ............................................................221
11.
Conclusion about the Research Questions and Hypotheses .........................222
11.1
Objective 1: Contradictions between existing Theories and ISSWM ................222
11.2
Objective 2: Strategy of international Donor Organisations ..............................227
11.3
Objective 3: Empirical Evidence of PSP ............................................................230
11.3.1 Illustrative Case Studies.........................................................................231
11.3.2 Single Case Study: CESPA ...................................................................235
11.4
Objective 4: Achieving ISSWM through comprehensive PSP...........................244
11.5
Implications and Directions for further Research...............................................250
IV
Table of Contents
11.6
Implications and Directions for Policy and Practice ..........................................251
List of References ................................................................................................................ XI
List of Annexes ................................................................................................................. XXI
V
List of Figures
List of Figures
Figure 1:
Causes and effects of indiscriminate solid waste management in LMIC...........3
Figure 2:
Causes and effects of PSP in LMIC ...................................................................4
Figure 3:
Conflict of interest between the hierarchy principle and private sector
incentives ............................................................................................................7
Figure 4:
Structure of the dissertation..............................................................................16
Figure 5:
Delimitation of scope of the dissertation..........................................................19
Figure 6:
World population projections, 1950–2050 (Billions).......................................39
Figure 7:
Basic Idea of Agency theory: P (Principal) A (Agent)...................................113
Figure 8:
Methodological approach: “National level” and “Municipal level” ..............169
Figure 9:
Waste composition in Tangier........................................................................200
Figure 10:
Direct investment of a sanitary landfill ..........................................................201
Figure 11:
Waste quantities – estimated and contractual.................................................210
Figure 12:
Effectiveness of CESPA over time.................................................................216
VI
List of Tables
List of Tables
Table 1:
Hypotheses on privatisation/PSP and resultant problems ................................10
Table 2:
Milestones in the history of SWM ...................................................................30
Table 3:
Definition of waste relating to their types ........................................................34
Table 4:
Percentage of population living in urban areas (with projections for 2015) ....41
Table 5:
Global perspective on solid waste quantities....................................................43
Table 6:
Key data of solid waste management in LMIC................................................48
Table 7:
Limitations of Public-Private Partnerships model to SW elements .................80
Table 8:
Limitations of contracting-out/delegation to SW elements..............................86
Table 9:
Limitations of franchise model to SW elements ..............................................88
Table 10:
Limitations of concession model to some SW elements ..................................90
Table 11:
Limitations of open competition model to SW elements.................................93
Table 12:
International organisations and their programmes regarding SWM ..............135
Table 13:
Overview of PSP in SWM in Egypt ...............................................................145
Table 14:
Fees charged per month to different beneficiaries .........................................146
Table 15:
Strengths and weaknesses of contracting-out in Egypt ..................................149
Table 16:
Strengths and weaknesses of contracting-out in Lebanon..............................153
Table 17:
Key data of the transfer stations .....................................................................155
Table 18:
Landfill Jebel Chekir ......................................................................................156
Table 19:
Strengths and weaknesses of contracting-out in Tunisia................................158
Table 20:
Case study tactics for four design tests...........................................................167
Table 21:
Case study analysis.........................................................................................174
Table 22:
Selected macroeconomic indicators ...............................................................177
Table 23:
Moroccan legislation relating to waste management .....................................181
Table 24:
Date of promulgation and subject...................................................................182
Table 25:
Analysis of principles in Moroccan law no. 11-03.........................................187
Table 26:
Analysis of some theoretical principles of law no. 13-03 ..............................187
VII
List of Tables
Table 27:
Theoretical principles and the legislation of law no. 28-00 ...........................188
Table 28:
Population of Tangier according to the 2004 census......................................190
Table 29:
Typological classification in terms of areas of the housing structure in Tangier.
........................................................................................................................192
Table 30:
Population of the municipality of Tangier including waste generated per year...
........................................................................................................................194
Table 31:
Quantity of recycled materials in [kg/week] from the landfill in Tangier .....197
Table 32:
Description of the services provided, including prices per ton ......................199
Table 33:
Quantitative data of the hierarchy principle in Tangier..................................202
Table 34:
Analysis of qualitative data of the hierarchy principle...................................202
Table 35:
Analysis of polluter pays principle ................................................................203
Table 36:
Control system in the contractual agreement in Tangier................................207
Table 37:
Population of Tangier according to the census 2004 .....................................210
Table 38:
Interpretation of the penalties.........................................................................212
Table 39:
Organisational theory and contract management ...........................................213
Table 40:
Ratios to achieve hierarchy principle .............................................................245
Table 41:
Towards a comprehensive framework of PSP models to achieve ISSWM ...249
VIII
Abbreviations
Abbreviations
ADB
ANPE
A.D.
AGBAR
BBO
B.C.
BOO
BOT
BOOT
BTO
CBO
CDR
CEDARE
CESPA
CP
CWG
CSCs
DBO
e.g.
ESM
Etc.
EU
FDI
GDP
GEF
GNP
GTZ
IDRA
ICSID
IDB
IEA
IETC
IPCC
IFC
Asian Development Bank
National Agency for Environmental Protection (Agence Nationale pour la
Protection de l’Environnement)
Anno Domini
Aguas de Barcelona
Buy Build Operate
Before Christ
Build Operate and Own
Build Operate and Transfer
Build-own-operate-transfer
Build Operate and Transfer
Community Based Organisations
Council for Development and Reconstruction
Centre for Environment & Development for Arab Region and Europe
Compania Espanola de Servicios Publicos Auxiliares
Community Participation
Collaborative Working Group
Common Service Councils
Design Build and Operate
Exempli gratia. (for example)
Environmentally sound management
Et ectera (and so forth)
European Union
Foreign Direct Investment
Gross Domestic Product
Global Environment Facility
Gross National Product
German Technical Co-operation (Deutsche Gesellschaft für Technische
Zusammenarbeit)
International Debt Restructuring Agency
International Centre for Settlement of Investment Disputes
Inter-American Development Bank
International Energy Agency
International Environmental Technology Centre
Intergovernmental Panel on Climate Change
International Finance Corporation
IX
Abbreviations
IFI
IMF
IFI
ISSWM
LBO
LMIC
MCD
MDG
METAP
MSWM
NAFTA
NDMC
NGO
NIMBY
OECD
PAHO
PMO
PPP
PRS
PSP
RSWMP
RTO
SKAT
SW
SWM
TZS
UMP
UN
UNDP
UNEP
UNDP
UNICEF
US
UWEP
WASH
WHO
WRI
WSSD
WSSP
International financial institutions
International Monetary Fund
International Financial Institutions
Integrated Sustainable Solid Waste Management
Lease Build Operate
Low- and Middle Income Countries
Municipal Corporation of Delhi
Millennium Development Goals
Mediterranean Environmental Technical Assistance Project
Municipal Solid Waste Management
North American Free Trade Agreement
New Delhi Municipal Corporation
Non-governmental organisations
Not In My Back Yard
Organisation for Economic Co-operation and Development
Pan American Health Organization
Prime Minister's Office
Public Private Partnerships
Poverty Reduction Strategy
Private Sector Participation
Regional Solid Waste Management Project
Rehabilitate Transfer Operate
Swiss Centre for Development and Cooperation
Solid Waste
Solid Waste Management
Tanzanian shilling
Urban Management Programme
United Nations
United Nations Development Programme
United Nations Environmental Programme
United Nations Development Programme
United Nations Children’s Fund
United States
Urban Waste Expertise Programme
Water Sanitation Hygiene
World Health Organisation
World Resources Institute
World Summit on Sustainable Development
Water and Sanitation Programme, UNDP/World Bank
X
1. Background to the Research
I.
INTRODUCTION
1.
Background to the Research
1.1
Integrated Sustainable Solid Waste Management in Low- and
Middle- Income Countries
The generation of Solid Waste (SW) is inevitable. It was not important in former times but
became an issue as soon as people started to settle in communities. Ever since, Solid Waste
Management (SWM) has been of great concern to municipal authorities worldwide. In the
Middle Ages, badly managed waste was responsible for millions of deaths in Europe (see
Table 2). In the 18th century, inappropriate waste management was the cause of the
outbreak of diseases like the plague and cholera, which claimed more than 380,000 lives in
Hamburg (Bilitewski, B. / Härdtle, G. / Marek, K, 1994). Approximately 590 to 880 million
tons of methane (CH4) are released into the atmosphere every year. 90 % of the gases
generated are due to the decomposition of biomass as a result of indiscriminate waste
management, among other causes. Consequently, the ozone layer and the ecosystem are
continually being destroyed. In short, today indiscriminate waste management is one of the
biggest threats to ecosystems in the world. Cities, often overwhelmed by the continuous
influx of new arrivals, have frequently been unable to keep up with the provision of basic
services. Between one third and two-thirds of the solid waste generated goes uncollected,
piling up on streets and in drains, contributing to flooding and the spread of disease (see
Chapter 4.2). In addition, urban and metropolitan domestic and industrial effluents are often
released into waterways with little or no treatment (World Bank 2000).1
In order to achieve sustainable development, policy makers in Low- and Middle-income
Countries (LMIC) have to cope with the above-mentioned issues. Indiscriminate SWM
leads not only to the destruction of the ecosystem, but also to lower economic productivity,
and thus to poverty (see Figure 1). Consequently, Integrated Solid Waste Management
(ISSWM) is crucial to the urban infrastructure in both “industrialised” countries and LMIC2
as it ensures environmental protection and safeguards human health.
Cities are the drivers of economic growth. As countries develop, more national income is
produced in urban areas, accounting for 55% of Gross National Product (GNP) in lowincome countries, 73% in middle-income countries and 85% in those of high income (World
1
Freire M., The Challenges, in Freire, M./Stren R. (eds.), Urban Government, Washington: WBI, 2001, p. xviii.
2
Whereas nowadays solid waste is more or less under control in industrialised countries, in LMIC the problem is still
crucial.
1
1. Background to the Research
Bank 1999).3 In LMIC, two-thirds (2/3) of the population live in cities and generate 60% to
70% of the Gross Domestic Product (GDP). Moreover, 80 % of GDP growth in LMIC is
expected to come from cities in this decade. There will be 100 “mega cities,” each with a
population of more than 5 million inhabitants (see Chapter 4.1).4 Thus, more solid waste
will be generated. At present, 30% to 50% of the population of LMIC live in municipalities,
generating 75% of the total amount of solid waste (see Chapter 4.2). Rapid urbanisation in
LMIC is threatening the environment and urban productivity (see Chapter 4.1).5 For that
reason, adequate SWM is urgently required; otherwise economic development will become
counterproductive. ISSWM represents one of the outstanding challenges facing municipal
authorities in LMIC (World Bank, 1996). Policy makers in LMIC face great difficulties in
addressing waste issues due to the lack of sound managerial instruments, planning tools, and
last but not least, financial means. These difficulties in turn create major solid waste
problems for LMIC, including lack of equipment and/or obsolete equipment, inadequate
public funds, the open burning of waste, and so forth. In addition, LMIC also face serious
managerial problems, such as superfluous staff, cumbersome procurement, inflexibility, low
cost-recovery, inadequate monitoring systems, tight public budgets and non-enforcement of
legislation. It is difficult for municipalities to implement changes towards efficiency. The
need for investment far outstrips the financial resources available from public budgets.
Moreover, most of these countries are highly indebted (see chapter 8.2); as a result, foreign
financial aid is always required. Municipalities are not able to cope with the ever-growing
waste generated. Accordingly, the challenge for LMIC in this decade is to ensure the sound
management of the environmental implications of this growth.
The issue of sustainable development6 was discussed for the first time on a very broad level
during the Earth Summit in Rio in 1992. In Rio, decision-makers agreed that sustainable
SWM is the key to sustainable cities and inevitably to sustainable development. Whereas
industrialised countries adopt principles like the hierarchy principle and the polluter pays
principle, most LMIC are far behind. In brief, rapid urbanisation, inadequate financial
means and indiscriminate waste management in LMIC result in a vicious circle which must
be interrupted (see Figure 1).
3
Freire M., The Challenges, in Freire, M./Stren R. (eds.), Urban Government, Washington: WBI, 2001, p. xvii.
4 E. Bergmann & H.P.Gatzweiler, 1996; S. Schmitz et al.
5 Cointreau et al. 2000; Bartone et al., 1994, J. Leitmann 1995.
6 Since the Earth Conference in Rio, a certain fundamental change has occurred in the field of SWM. The “throwaway” mentality has been replaced with a focus on the protection of resources. Solid waste management has to be
looked at holistically. Because of its characteristics, it is much more costly if the waste collected is entirely disposed
of in a landfill than if it is partly recycled and treated.
2
1. Background to the Research
Rapid urbanisation, inadequate
financial means
More waste managed
indiscriminately, more
pollution
Poverty, increase of external
debts
Destruction of ecosystem,
diseases, less economic growth
Figure 1: Causes and effects of indiscriminate solid waste management in LMIC
Recently, the world’s governments committed themselves to achieving the Millennium
Development Goals (MDG) (see Chapter 3.1). 7 Solid waste services are widely
acknowledged as the principal means through which these goals can be achieved.8 The
MDG emphasise poverty alleviation and access to sanitation and health services for all. The
MDG have been adopted to ensure environmental sustainability. Within that goal, targets 9
and 11 of the MDG are “to integrate the principles of sustainable development into a
country’s policies and programmes and reverse the loss of environmental resources.”
Although there are no direct references to solid waste in the specific targets, the MDG call
for appropriate environmental considerations as well as social awareness of the problems of
waste pickers and other poor people in cities. Moreover, the issue of urban poverty is
inextricably linked to waste management in LMIC (see Figure 1). In India, for instance,
nearly 1 million9 people find livelihood opportunities by engaging in waste collection and
recycling through well-organised but informal systems. If the MDG of poverty alleviation
and access to adequate solid waste services are to be achieved, waste management must
become one of the chief focus areas, particularly in haphazardly growing urban and
metropolitan areas where it remains a low priority for municipalities but high on the agenda
of the citizens. Private Sector Participation (PSP) is one paradigm which has clearly shown
potential in achieving the above-mentioned goals. Therefore, the question of how SWM
could be provided by the private sector by adopting the principles of sustainability is
crucial.
7
The Millennium Development Goals identify specific gains that can be made to improve the lives of the world’s poor
people. The aim is to reduce poverty while improving health, education, and the environment. These goals were
endorsed by 189 countries at the September 2000 U.N. Millennium General Assembly in New York.
8
Kessler, T./Alexander, N., Essential Services, in Weizsäcker, E./Yong, O./Finger, M. (eds.), Limits to Privatization,
London: Earthscan, 2005, p. 229.
9
Gupta, Sanjay K., SME in India, CWG on SWM in LMIC and WASH Workshop 2006, Kolkata/India, 2006, p. 1.
3
1. Background to the Research
1.2
Private Sector Participation in Low- and Middle-Income Countries
Agenda 21 of the United Nations includes objectives that have to be undertaken to create
sustainable cities and sustainable development. A long-term financial strategy to implement
these goals in LMIC still fails to exist. Starting from the 1990s, one of the proposed
solutions is privatisation in general, and PSP in particular. PSP is considered to be means of
improving overall economic efficiency, and of reducing the fiscal burden and the external
national debt in LMIC (see figure below).
Privatisation, economic growth
Less pressure on the municipal
budget, more flexibility
Decrease of external debts
Foreign investment,
competition, better service
Figure 2: Causes and effects of PSP in LMIC
At the beginning of the 1980s, a shift towards privatisation occurred in OECD countries, in
particular in the United States10 and in Great Britain11. The argument for more privatisation
is normally based on the belief that profit-seeking and competition are necessary to provide
the proper incentives for efficiency and quality. Economists use the standard market theory,
also known as Pareto 12 Optimum, to argue in favour of privatisation policies (see
Chapter 7.1). In LMIC, however, the arguments for involving privatisation and PSP are
different from those in industrialised countries. The involvement of the private sector in
LMIC is viewed as a way of reducing government loans, subsidies, and explicit or implicit
government guarantees for borrowings (see Figure 2).13
Performance tended to be worse in LMIC where preconditions for successful PSP were not
10
With the election of Ronald Reagan in 1980 as President of the United States.
11
With the election of Margaret Thatcher in 1979 as Prime Minister of Britain.
12
Vilfredo Federico Damaso Pareto (1848 – 1923) made several important contributions to economics, sociology and
moral philosophy. He introduced the concept of Pareto efficiency. In 1893, he was appointed Lecturer in Economics
at the University of Lausanne in Switzerland.
13
Since the crisis in 1982, the financing of development in LMIC has become one of the most controversial
discussions with regard to the world economy. Another milestone of sovereign debts is the creation of the Bretton
Woods Institutions after the Second World War. In actual fact, debts reach a peak as the budgets of many LMIC
governments depend on them. (Gélinas, J. B., le Tiers Monde s’autofinancait, Montréal: Ecosociété, 1994, p. 61).
4
1. Background to the Research
met. These preconditions were stable macro-economic conditions, broad ownership among
stakeholders (not just the government), policies conducive to competition, an existing robust
private sector, and administrative capacities to implement the programme (see
Chapter 6.5).14
Privatisation/PSP in LMIC has often been part of an adjustment agreement with the World
Bank Group (see Chapter 8.3). The motives of privatisation have primarily been that the
private sector works more efficiently than the public sector (see also discussion about PSP
in Chapter 7); it is hence concluded that economic benefits will arise from privatising public
sectors where there is no natural monopoly (Nellis and Kikeri, 1989; Kragh et al, 2000). 15
Another important aspect of the involvement of the private sector in LMIC is the debt issue
(see Chapter 8.1 and Chapter 8.2). Most LMIC public budgets depend on external financial
aid. Many international credit organisations impose the concept of privatisation to obtain
less demand for loans. The World Bank Group is the leading institution in the preparation
and support of privatisation programmes, providing advice and loans to cover costs
associated with privatisation, and also providing investment loans to cover costs associated
with privatisation as well as ones to help restructure private enterprises.16 Privatisation is
consequently assimilated into the “corpus conditionality” of the donor community (Adam
and Cavendish, 1990). Taking into consideration that 90% of municipal investments in
LMIC today come from external aid (World Bank, 1998), the issue of privatisation is
becoming inevitable for LMIC. In reality, the donor community imposes the principles of
privatisation. It is a ‘conditio sine qua non’ for the continuation of external aid flows.17
Simply put, efficient SWM and privatisation are linked to LMIC.
14
Obser, A. Privatization and Development, in Weizsäcker, E./Yong, O./Finger, M. (eds.), Limits to Privatization,
London: Earthscan, 2005, p. 257.
15
Obser, A. Privatization and Development, in Weizsäcker, E./Yong, O./Finger, M. (eds.), Limits to Privatization,
London: Earthscan, 2005, p. 253.
16
Obser, A. Privatization and Development, in Weizsäcker, E./Yong, O./Finger, M. (eds.), Limits to Privatization,
London: Earthscan, 2005, p. 254.
17
However, the decision to privatise a public service should not be based on ideological considerations but rather on
economic merits.
5
2. Research Issues and Hypotheses
2.
Research Issues and Hypotheses
SWM, despite being crucial to any sustainable city, is still neglected by local authorities and
by the private sector.18 The importance of SWM to sustainable development and cities is
being ignored. 19 Very limited experiments in the field of PSP in solid waste in LMIC have
been successfully implemented in this regard (World Bank, 1998). The World Bank Group
is one of the few international institutions carrying out research in the field of privatisation
in general, and in the field of PSP in SWM (see Chapter 8.4). It has published many
surveys, various well-designed guidelines and contract forms for implementing private
sector participation in solid waste (Cointreau-Levine et al, 2000 a,b,c). However, a thorough
analysis of the natural complexities of solid waste services (collect, transfer station,
transport, and landfill management) has yet to be carried out. Thus, the privatisation policy
debate is subject to bias.
More than 60% of the waste generated in LMIC is generally biodegradable, which makes it
more appropriate for aerobic and anaerobic treatment 20 than disposal. What is much more
concrete is the contradiction of the hierarchy principle (see Chapter 5.1), where in the case
of a landfill concession, for instance, the private sector has no incentive to minimise the
waste to be disposed of, since the private enterprise is normally paid according to the
amount of waste disposed (see Figure 3). Table 1 summarises some hypotheses regarding
privatisation models concerning solid waste elements in LMIC. Do national and local
authorities create incentives to enterprises in PSP agreements to follow the waste hierarchy
principle and, if so, how? How can the polluter pays principle and the user pays principle be
applied in PSP agreements when people living in slum areas in LMIC face enormous
difficulties to afford the services rendered? Finally, should a private enterprise go out of
business, is the monitoring committee of the municipality capable of proposing alternatives
within a short period to guarantee the continuity of the solid waste service?
18
Between 1990 and 2001, the private sector invested US$ 23 billion in LMIC: 68% in telecommunications, 13% in
electricity, 8% in roads, and less than 0.1% in SWM.
19
Governments are reluctant to support utilities such as solid waste services.
20
Treatment involves the physical, chemical or biological processing of waste in order to reduce its volume or
harmfulness, facilitate its handling, or enhance recovery.
6
2. Research Issues and Hypotheses
ch
y
r
cto
Se
Collection
e
vat
Pri
Hi e
rar
P
r
i
nc
ipl
e
Minimisation
Transport
Treatment
Landfill
Figure 3: Conflict of interest between the hierarchy principle and private sector incentives
Privatisation and PSP are useful wherever private firms operate in a competitive
environment. However, depending on the service, it is not obvious to create competition in
any market. Contracts between public authorities and private sectors can sometimes span 15
years or more. Moreover, private firms are not engaged in competition after the bidding
procedure and during the contractual period negotiated. Therefore, other criteria than
competition are crucial. In effect, SWM services encompass various system elements, such
as street sweeping, waste collection, waste treatment, and waste disposal. Is it economically
and ecologically sustainable for services such as landfill management, waste collection, or
the management of a composting plant to be provided by many different suppliers in the
same area? One might argue that it is possible that the privatisation of a monopolistic
service like municipal landfill management can be effectively regulated. However, is the
regulator likely to obtain accurate information on the real costs and the technical
performances of any given private firm? Other issues are displayed in Table 1.
Another privatisation issue includes the duration of the contract. Due to the investment
required for SWM services (landfill management, composting plant, biogas plant, etc.), PSP
contracts are typically written for multiyear periods. As a result, the nature of the contractoragency relationship will principally determine service quality and cost savings, and not the
competitive marketplace, as stated in the Standard Market Model. The stronger the
contractual terms and conditions, the more complex the service provided, the smaller the
role played by market competition becomes in the costs and benefits of privatisation.21 The
Standard Market Model, which is the basis for this individualised theory of organisational
21
Sclar, E. D., Economics of privatization, 2000, p. 14.
7
2. Research Issues and Hypotheses
change, actually has no inherent theory on organisational behaviour. It is a powerful theory
about the operation of a decentralised system of resource allocation, but has nothing to say
about the operation of organisations22 like municipalities and the private sector.
Moreover, decisions to contract out usually involve complex transaction costs related to the
specification of services, the negotiation of prices, the close monitoring of quality, and the
need to anticipate unforeseen contingencies. In such cases, the managerial decision process
involves analysing not only the comparative costs of the services rendered but also the
transaction costs associated with contract design and monitoring (Williamson, 1996). In
such situations, obtaining all the relevant information can be difficult, or may require a
considerable amount of time and money. 23 Hence, the question is: are transactions costs
taken into account when those advocating privatisation argue that the private sector is more
efficient?
Another issue is the output of some waste services as this output is very often uncertain. 24
The more uncertain the service environment, the more difficult it is to create a contract with
low transaction costs. Where risk is a major factor, it becomes almost impossible for local
authorities to avoid paying a risk premium to obtain competent work. The Standard Market
Model is essentially a comprehensive and highly formal theory of exchange. However,
whether it can be considered to be a theory of continuing relational behaviour between
public sector and private enterprises is questionable.
PSP advocates believe that the private sector has more people with superior managerial
expertise. Nevertheless, it is important to remember that private sector 25 intends private
firms, for instance, to provide SWM services, that is, in an area in which they have little
experience by definition. The three most important forms of information scarcity in
incomplete contracting situations are Principal-Agent 26 problems, adverse selection, 27 and
moral hazards.28 In the case of ISSWM, PSP are based on the operation of specific services
22
Demsetz (1993) cited in Sclar, E. D., Economics of privatization, 2000, p. 15.
23
Sclar, E. D., Economics of privatization, 2000, p. 19.
24
No one can foresee, for instance, the environmental situation of a landfill which has been operated by a private firm
after a long-term contract of 20 years.
25
Experiences can include the field of solid waste management and/or the areas and/or the countries to be covered.
26
Principal-agent problems typically arise when one party (the principal) hires another (the agent) to carry out an
assignment, but the agent is able to serve its own interest at the apparent expense of the principal because of
information asymmetry.
27
Adverse selection is a situation in which the party with inferior information about the market situation acts first in
seeking to establish a contractual relationship (Salanié, 1998).
28
Moral hazards refer to potential problems of reduced incentives on the part of the agent to fulfil the goals of the
principal.
8
2. Research Issues and Hypotheses
for which the public sector remains responsible; consequently, the degree of scrutiny29 has
to be very high.
Waste elements such as waste collection in the same areas by different private companies
will lead to a collision effect (see Table 1 and Annex 8); there will hence be a contradiction
of the continuity principle if one private firm goes out business. Some privatisation models
do not match some waste elements, such as waste collection franchises.30 In this particular
case, however, the fees for waste disposal and waste treatment are not considered.
Furthermore, there will be a contradiction with the non-exclusivity principle and public
goods theory due to the nature of solid waste (public goods) and the characteristics of the
services rendered (non-exclusivity), in the case of non-payment by some beneficiaries.
Hence, it is difficult to compare the performance of private firms and municipal
management in the field of SWM, since these organisations pursue different goals and since
there is little concrete experience in this sector. Private firms are indeed interested in
maximising profit, whereas the objectives of municipal management are much more
complex. Furthermore, public enterprises have a better chance of remaining inside their
production frontiers than private ones (Bhaskar, 1992).
Another relevant issue is cost recovery. For instance, in a PSP arrangement like a waste
collection franchise where the private firm is collecting the fees from the beneficiaries, what
would be the consequences if some beneficiaries cannot pay for the SW service? (see
Table 1) Furthermore, in other PSP arrangements, such as landfill concessions31, BOOT32, or
BOO 33 , which are normally agreed for many years, what would happen if the private
contractor went bankrupt? Would the continuity of the SW service be guaranteed? As
mentioned above, LMIC municipal managers lack know-how; thus, could they be expected
to replace a private firm to ensure the continuity of the service?
29
Nevertheless, scrutiny process is costly in terms of time required and money needed.
30
Collection of fees directly from polluters.
31 Finance and Owner of facilities, long-term contract.
32 BOOT means Build, Own, Operate and Transfer.
33 BOO means Build, Own and Operate.
9
2. Research Issues and Hypotheses
Hypotheses
Privatisation: more foreign investment,
more economic growth
International private sector: high interest
of more generation of waste
Efficient PSP: competition
PSP model: franchise34
Waste element: collection
PSP model: contract management
Waste element: collection
PSP model: concession
Waste element: landfill management
PSP model: BOOT
Waste element: landfill management
PSP model: open competition
Waste element: collection
PSP model: open competition
Waste element: landfill management
PSP model: BOO
Problems
• Bankruptcy: problems with “On again” / “Off
again”
• Bearer of hazards remediation costs
• Conflict of interest with hierarchy principle
• Long-term contract: no competition, risky
• Competition in same areas: collision effect
• Non-payment: contradiction of public goods
theory
• Low rate of cost recovery
• Contradiction of polluter pays principle
• No incentive for waste minimisation
• In case of bankruptcy: contradiction of
principle of continuity,
• More waste to dispose of: contradiction of
hierarchy principle
• Bankruptcy: contradiction of principle of
continuity
• More waste to dispose of: contradiction of
hierarchy principle
• Non-payment: contradiction of public goods
theory
• Lack of adequate tariff: Asymmetric
Information
• Higher cost, contradiction of public goods
theory, collision effect
• Adequate tariff: Asymmetric Information
• Higher cost, contradiction of continuity and of
non-exclusivity principle
• Lack of adequate tariff: Asymmetric
Information
• No transfer of facilities to LMIC: contradiction
of public goods theory
Table 1: Hypotheses on privatisation/PSP and resultant problems
Finally, on the one hand, there are the concerns of ISSWM: lack of financial means,
managerial competence, asymmetry of information, limits of the Standard Market Model by
34 Under a franchise agreement, the government gives a special monopoly privilege to a private firm to supply a
particular service.
10
2. Research Issues and Hypotheses
delivering SW services, and so forth. On the other hand, there are PSP models that fit
neither into the hierarchy principle, nor the polluter pays principle, or the continuity
principle, etc. Few economists (Savas, Adler, Moshe, etc.) who carry out research on PSP in
SWM take the ISSWM concept or the socio-economic and environmental realities in LMIC
into consideration. Existing theories are inadequate to make PSP compatible with ISSWM
principles. As the target is to achieve ISSWM, it is important to combine the well- devised
use of PSP with respect to waste hierarchy and to the polluter pays principle.
2.1
Research Aims
This study aims to critically evaluate the theoretical contributions of the literature on
privatisation/PSP in the field of SWM and to provide an analysis of the theoretical
principles of ISSWM and the theory of public goods, together with market and
organisational theory, in order to break new ground with respect to this theory. In pursuing
these goals, major contributions in the field of PSP in ISSWM, especially in LMIC, will be
analysed while emphasising, extending, and illuminating their contents. The overall goal of
this investigation is to appropriate the best PSP model in order to provide SWM in a
sustainable manner by examining the hierarchy principle, the polluter pays principle, and
the continuity principle. Every effort will be made to focus on conceptual insights. Simply
put, the principal objective of this study is to demonstrate theoretically and empirically the
economic limitations and incompatibility of some PSP models with the concept of
Integrated Sustainable Solid Waste Management (ISSWM) in Low- and Middle Income
Countries (LMIC); secondly, this study sets out to design a practicable conceptual
framework for the most appropriate model to achieve ISSWM in LMIC.
The main objectives deriving from these aims are:
1. To identify controversial research issues between some PSP models and the
principles of the ISSWM concept;
2. To assess the various strategies of international donor organisations in the solid waste
sector;
3. To gain in-depth knowledge from illustrative case studies and a single case study in
order to challenge the existing theories and design an appropriate concept;
To design an appropriate conceptual framework for achieving ISSWM based on the
results obtained from objectives 1, 2 and 3.
4.
11
2. Research Issues and Hypotheses
2.2
Research Questions
The research questions arising from the main objectives are:
Objective 1 is addressed by the following question:
What are the main contradictory issues of the existing theories on privatisation and
goods theory towards achieving ISSWM in LMIC?
One of the gaps in all the research carried out so far is that “waste” is not categorised. Are
we concerned with private goods, public goods, pure public goods or collective goods?
There is no clear scientific categorisation of the term “waste.” In addition, the services to be
rendered, such as collection, transport, and disposal, are treated separately to the service in
question. Nevertheless, by looking thoroughly at the product (that is, waste) together with
the services required, conflicts between economic interests and sound environmental
management arise. For instance, according to the hierarchy principle, there would be no
incentive to minimise waste for a private landfill operator as he is paid by the amount of
waste disposed of. In a franchise-based waste collection contract, residents failing to pay
their fees (and hence being excluded from service) will compromise the whole collection
system, even if the majority pays its fees. In reality, waste indiscriminately endangers the
entire neighbourhood and not only the premises of non-paying residents. Moreover, the
ecological and socio-economic situation abiding in LMIC differs from that in industrialised
countries. Very often, unplanned and informal settlements surround cities in LMIC. Most of
these informal settlement areas are very densely occupied, and the narrow and winding
roads and paths are only accessible by modern vehicles. People with very low incomes, who
cannot afford the charges of the services rendered, inhabit these areas. Is every PSP model
affordable for any community?
Objective 2 is addressed by the following question:
What are the strategies of the international donor organisations and what are the
economic limitations of the PSP policy towards ISSWM?
The World Bank Group is the strongest financial donor in LMIC. It belongs to the few
international institutions carrying out research in the field of privatisation in general and in
the field of PSP/privatisation in SWM in particular. In line with recent policies, CointreauLevine et al (2000a,b,c) have published many surveys and especially diverse, well-designed
guidelines and contract forms for strengthening the implementation of private sector
participation in solid waste. Taking into consideration that 90% of municipal investment in
LMIC today comes from external aid (World Bank, 1998), both the issue of
12
2. Research Issues and Hypotheses
privatisation/PSP and the World Bank Group strategy are becoming inevitable for these
countries. Nevertheless, in comparison to other infrastructure services such as water supply
and energy supply, solid waste is not successfully implemented despite its importance to any
sustainable city. It is worth noting that US$ 23 billion was invested in LMIC between 1990
and 2001: 68% in telecommunications, 13% in electricity, 8% in roads, but less than 0.1% in
the solid waste sector. Is there not enough interest for private investors in this sector? Are
policy makers not aware of the importance of ISSWM for sustainable development?
Comparisons with other sectors will be made to support the hypothesis posited in the first
research question, namely that the category of goods is relevant to PSP. There are various
reasons given by international donor organisations for PSP; they include higher efficiency,
reduction of national debt, the benefits of more Foreign Direct Investment (FDI), and so
forth. Academic discussion in this area is often ideological rather than substantiated by
empirical evidence. However, is there any incentive for beneficiaries in LMIC to prevent or
minimise the generation of waste according to the hierarchy principle when international
donors support local waste services? In other words: is there a contradiction between the
polluter pays principle and foreign aid?
Objective 3 is addressed by the following question:
What is the empirical evidence of the PSP models and the ISSWM concept?
In order to challenge existing theories, illustrative case studies and a single case study will
be analysed in-depth. The single case study has been chosen to answer the first research
question, not only theoretically but also with empirical evidence as specified in the principal
aim of this investigation. Proponents of the PSP model advocate theory building based on
the notions of service effectiveness and efficiency. Therefore, the case study will answer
those questions relating in particular to the hierarchy principle and the “Principal-Agent”
dilemma. One waste element, “waste collection,” and one PSP model, “Contracting-out,”
will be chosen to narrow the scope of the investigation and to build up comprehensive
knowledge.
Objective 4 is addressed by the following question:
How can ISSWM be achieved in LMIC through PSP without contradiction?
Having demonstrated the shortcomings of existing theoretical principles in the first section
and having gained solid empirical evidence from both national and international strategy and
the analysis of illustrative case studies and the single case study, a conceptual framework
will be designed. The result of this investigation will be the best appropriate PSP model for
each specific waste element. The parameters for the ISSWM concept, including service
13
2. Research Issues and Hypotheses
efficiency, the hierarchy principle, the polluter pays principle, and the principle of continuity
will be considered holistically rather than separately. The findings of this research will be
useful if implemented by decision-makers, national authorities in LMIC, private investors,
and international donor organisations.
2.3
Justification for the Research
In the coming decades, as much as 80% of population growth and most economic growth in
LMIC will occur in cities (see Chapter 4.1). In this context of rapid urbanisation,
accompanied by pervasive globalisation, the outstanding challenges that public authorities
and municipal managers face have increased in both scope and complexity due to a lack of
resources, continuing urban migration, deteriorating infrastructure, and the need to tap a
solid economic and financial base while maintaining the incentives necessary to attract
investment and generate employmen. 35 This dissertation is also relevant to both
international enterprises with strong financial and technical backgrounds and national smalland medium enterprises. It is also justified by the relative neglect of privatisation in the field
of SWM in LMIC. Finally, it addresses decision-makers, local LMIC authorities, and
international donor organisations. Its findings will prove useful to the potential applications
undertaken by these stakeholders.
There is an increasing understanding worldwide that the private sector is a competent and
efficient partner and that there are several advantages to private sector involvement in
ISSWM. The role of the public sector has shifted increasingly. It is often stated that PSP
could be useful in delivering those services that are provided least efficiently by the public
sector; or activities where new technologies are needed (such as solid waste treatment,
disposal, or recycling). Strong evidence provided by both the illustrative case studies (see
Chapter 9) and the single case study (see Chapter 10) will further clarify this statement.
Other arguments include tight municipal budgets. Nonetheless, by outsourcing the SW
services, public authorities have to bear the costs of the service provided by the private
sector. How can one explain that some municipal authorities are in favour of PSP? This
dissertation will address this issue with strong empirical evidence. In sum, the following
arguments justify PSP:
1.
SWM is one of the largest, and often the largest, municipal expenditure in LMIC, but
benefits from these expenditures are often uncertain and are not maximised;
35
Freire, M./ Stren R. (eds.), Urban Government, Washington: WBI Development Studies , 2001, p. vii.
14
2. Research Issues and Hypotheses
2.
3.
4.
2.4
Inadequate SWM is negatively impacting public health, the environment and the
national economy in LMIC;
Enhanced waste management is possible and affordable, and can simultaneously
address national objectives for sustainable development, public health,
environmental quality and ultimately meet the MDG;
All citizens are indiscriminately and negatively affected by inadequate SWM.
Research Procedure
This dissertation seeks to identify controversial issues existing between some PSP models
and the ISSWM concept neglected in academic discussion to date, and to present a
sustainable one. This study is divided into four main sections, as shown in Figure 4. Section
I introduces the dissertation by addressing among others the background to the research, the
research aims, the research questions, the research procedure, etc.
Section II is devoted to a literature review regarding ISSWM, privatisation, PSP, goods
theory, market theory and organisational theory. However, it not only surveys the most
relevant literature, but instead clarifies some key issues. This literature survey demonstrates
the limitations of PSP models in theory. In effect, this section opens with the historical
background to SWM (see Chapter 3.1). The first attempts to theorise PSP are discussed and
their limitations or failures are underlined. Subsequently, several key definitions and
preliminaries will be provided (see Chapter 3.2), thereby further clarifying various key ideas
and assumptions. Furthermore, key characteristics of SWM in LMIC will be set out (see
Chapter 4). These characteristics are relevant to further discussions in Chapters 6 and 7. The
concept of ISSWM is detailed in both its historical background and its core principles.
These theoretical principles are discussed in relation to PSP in Chapter 6. Evidence will
then be furnished to demonstrate the limitations of PSP. Chapter 6.1 and Chapter 6.2
highlight the issue of liberalisation; regulation and deregulation are considered briefly prior
to discussing privatisation/PSP, since these notions occur in the privatisation debate and are
sometimes confused. Chapter 7 embraces market and organisational theory to challenge the
Standard Market Model in providing public goods in general and SW services in particular.
Chapter 7.1 considers theoretical issues on goods theory. Chapter 8 addresses the empirical
theory of various international organisations, in particular that of the World Bank Group, as
it is one of several prestigious international organisations to have financed and carried out
research in the field of SWM in LMIC. The privatisation concepts of these organisations
15
2. Research Issues and Hypotheses
will be subject to careful analysis, in particular with regard to the compatibility of the
concept of ISSWM with PSP models.
Introduction
T
H
E
O
R
Y
{
ISSWM
Privatisation and PSP
Goods and Market Theory
Strategy of International
Organisations
E
M
P
I
R
I
C
A
L
METAP illustrative Case
Studies
CESPA Case study
Waste
Collection
Contracting-out
CONCEPTUAL FRAMEWORK
Figure 4: Structure of the dissertation
Section III is devoted to empirical illustration. Since this study has a clear conceptual
approach, some examples of tangible PSP experiences gained in the Mediterranean
Environmental Technical Assistance Project (METAP) Regional Solid Waste Management
Project (RSWMP) are not presented until Chapter 9. This project, financed by the World
Bank Group and the European Union Fund, has been developed with the national
governments of the region to assist in catalysing appropriate responses to the challenge of
effectively managing solid waste. It is worth noting that these examples are both
qualitatively and quantitatively discussed in the context of the theoretical principles
discussed in Chapter 9.6. The shortcomings of concrete examples are shown and elements
for ISSWM are derived from these examples. These elements will be ultimately used to
16
2. Research Issues and Hypotheses
establish my own ISSWM concept in Section IV, and to analyse and interpret the singlecase study in Morocco. Furthermore, this empirical section provides a comprehensive
analysis of a single case study in Chapter 10 (see Figure 4). This chapter takes a closer look
at one key element of solid waste, namely solid waste collection, and at one single PSP
model, namely contracting-out. This will allow for a deeper discussion in Chapter 10.4.
Finally, Section IV delineates a conceptual approach. Chapter 11 attempts to respond to
each research question and hypotheses. A conceptual approach is presented, including what
the answers provided imply for policy-making and practice in this chapter. This
investigation concludes with an agenda for further research. The core of my research
includes the incentives in any PSP contract for private entrepreneurs to achieve ISSWM. A
concept without any contradiction between PSP and ISSWM will be developed, thus
creating a system without conflicts of interest (see Figure 1). This concept will be based on
the theoretical background to important principles derived from both the concept of PSP and
the ISSWM concept.
2.5
Ethical Considerations
The issue of ethics is considered in both the theoretical and empirical parts of this
investigation. Ethics are a matter of principled sensitivity towards the rights of others.
Ethical issues arise not merely in quantitative research, but also in qualitative research;
neither is unencumbered by ethical dilemmas. There are no one-size-fits-all answers to
many ethical issues encountered in qualitative research. In effect, there is no right or wrong
answer. Nonetheless, this issue has to be taken into account. Bulmer (2001) identified the
following ethical issues, to which due heed will be paid in this investigation:
• What the respondent is told about the auspices and purpose of the study?
• What the conditions are under which the names and addresses of respondents are
used, and how the data will be published?
• How the anonymity of individual respondents will be preserved, and how the
confidentiality of the final dataset will be safeguarded?36
As far as this investigation is concerned, the research presented here is ethically sound. One
key ethical principle observed here is that while truthfulness is good, respect for human
36 Bulmer, M., the Ethics, in Gilbert, N., Researching Social life, London: Sage publications, 2001, p. 53.
17
2. Research Issues and Hypotheses
dignity is better, even if, in the extreme case, respecting human dignity leaves one ignorant
of human nature.37 Such ethical considerations impinge upon all scientific research, but they
impinge particularly sharply upon research in the human sciences, where people are
studying other people. The social researcher faced with potential ethical problems while
conducting research may have to resort to guidance provided by codes of ethical conduct
and to ethical guidelines provided by professional associations.38
Many principles have been cited to justify taking an ethical view of the activity of social
research. One general principle is the need to strike a balance between the desire to expose
the hidden processes at work in modern society on the one hand, and to protect the privacy
of individuals and groups, on the other, and to recognise that there are private spheres into
which the social scientist may not, and perhaps even should not, penetrate.39 Accordingly,
questionnaires will not include any confidential information.
Furthermore, Bulmer identified a second very important principle widely considered the key
player of ethical behaviour in research, namely the doctrine of informed consent. This
grants persons invited to participate in social research activities the freedom to choose to
take part or to refuse, having been given all information concerning the nature and purpose
of the research, including any risks which they might be exposed to, and the arrangements
made for maintaining the confidentiality of the data, and so on.40 According to Bulmer, a
continuing concern in social research has been not merely with the conditions under which
data is collected, but also with how it is stored and disseminated. Therefore, the participants
in the questionnaires or interviews conducted here were assured that this data is needed for
the purposes of improving PSP, by contracting-out the solid waste services, and that the
individual will not be identifiable in subsequent analysis.
Finally, there has been considerable debate about the ethical implications of harm in social
research, involving both harm to those being researched and harm to those conducting
research.41 Deceit and lying in the course of research is another issue. As a general principle,
the use of deception in research has been condemned, and concealing the fact that one is a
researcher has attracted criticism.
Finally, the views presented in this investigation are solely the author’s and do not represent
37 Bulmer, M., the Ethics, in Gilbert, N., Researching Social life, London: Sage publications, 2001, p. 45.
38 Bulmer, M., the Ethics, in Gilbert, N., Researching Social life, London: Sage publications, 2001, p. 47.
39
Barnes, 1979: 13-24 cited in Bulmer, M., the Ethics, in Gilbert, N., Researching Social life, London: Sage
publications, 2001, p. 49.
40
Bulmer, M., the Ethics, in Gilbert, N., Researching Social life, London: Sage publications, 2001, p.49.
41
Bulmer, M., the Ethics, in Gilbert, N., Researching Social life, London: Sage publications, 2001, p.51.
18
2. Research Issues and Hypotheses
the views of the institutions from which the case studies were obtained. All information
shown on any map in this research (such as boundaries, colours, denominations, and so
forth) does not imply any judgment concerning the legal status of any territory or the
endorsement or acceptance of such boundaries.
2.6
Delimitations of Scope of this Dissertation
This investigation starts out from the broad area occupied by two principal notions –
privatisation and SWM – and refines these continuously while considering all relevant
aspects. It is worth noting that the answers to the research questions combined both key
theoretical elements and profoundly empirical findings. Figure 5 delineates the scope of this
study.
Privatisation in Low- and Middle Income Countries
Privatisation
Municipal SWM
Mashreq / Maghred
PSP
SWM
Morocco
Contractingout
SW
Collection
Figure 5: Delimitation of scope of the dissertation
LMIC will be defined in terms of their economic levels (see Chapter 4.1). This study
focuses on privatisation in terms of financial policy; legislation and technical SWM issues
will not play a major role. Moreover, it focuses on solid waste from private households due
to the high percentage of such waste compared to commercial and industrial waste. The
concept of integrated SWM will also be considered in this context. Large-scale privatisation
(landfill, transfer station, high level transport companies, etc.) is discussed on account of the
significant investment required.
Natural disasters and other emergency situations tend to generate large quantities of debris
that is difficult to handle under conventional waste management arrangements. Besides, it is
also important to continue to manage regular municipal waste under emergency conditions.
19
2. Research Issues and Hypotheses
However, such cases of “force majeure” are not examined here.
For the purposes of a clear-cut discussion, various key SWM terms (collection, transfer,
recycling, resource recovery) refer exclusively to the disposal of municipal solid waste. By
definition, municipal solid waste includes solid waste from households, non-hazardous solid
(not sludge or semisolid) waste from industrial and commercial establishments, waste from
institutions (including non-pathogenic waste from hospitals), market waste, yard waste, and
street sweepings (see Chapter 3.2). In this study, construction and demolition debris is not
included in the definition of municipal solid waste, because it could dramatically deform
waste generation rates and waste composition, particularly in LMIC.
20
3. Solid Waste Management
II.
LITERATURE REVIEW
Introduction
T
H
E
O
R
Y
{
ISSWM
Privatisation and PSP
Goods and Market Theory
Strategy of International
Organisations
E
M
P
I
R
I
C
A
L
METAP illustrative Case
Studies
CESPA Case study
Waste
Collection
Contracting-out
CONCEPTUAL FRAMEWORK
The following chapters will take a closer look at key Solid Waste (SW) issues, privatisation
and PSP, Goods and Market theory and finally the strategy of international organisations.
Chapter 3.1 will consider its historical background. Parallels will be drawn between the SW
situation in European cities in former times and the present situation of LMIC. PSP
experiences in European municipalities will be underlined. This will not amount to a
literature survey of SWM issues, but instead this chapter will attempt to show the
limitations of some PSP models with regard to the principles of ISSWM used in the past.
Furthermore, the definitions of Solid Waste will be discussed in the context of ISSWM.
Chapter 4 will consider the key features of SWM in LMIC. Chapter 5 will address the
theoretical principles of sustainability in the context of solid waste. Chapter 6 will discuss
the issue of privatisation and PSP in rendering SW services. Chapter 7 will focus on Goods,
Market and Organisational theory. Finally, Chapter 8 which is considered in this dissertation
as empirical theory will highlight the privatisation policy of international organisations
especially the World Bank Group. Each chapter concludes with observations relevant to the
overall conclusion.
21
3. Solid Waste Management
3.
Solid Waste Management
3.1
Historical Background
To assess the recent issues of SWM in Low- and Middle Income Countries (LMIC) and to
learn about appropriate management tools, it is imperative to consider the situation
worldwide, in particular before the nineteenth century. Several comprehensive historical
studies on solid waste issues in the European and Northern American context have been
furnished by various authors, such as Savas, Silguy, Tchobanoglous, Bilitewski, Härdtle,
Marek, Wittmaier, and others.
The history of SWM is inevitably linked to urban history. Prior to Neolithic times (circa
10,000 B.C.), when the human race was mostly nomadic, the natural decomposition of
waste was obvious. Waste became an issue as humans began to congregate in villages and
communities and as the accumulation of waste became a consequence of life. The evergrowing municipalities in Europe and in Northern America made necessary the elaboration
of appropriate systems to properly manage solid waste. In effect, urbanisation stopped the
natural cycle of SWM. As a consequence, municipal managers and citizens have struggled
with the problem of solid waste for six thousand years. Between 1347 and 1352, about
25 million people (circa 30% of the entire population) died in Europe from disease (see
Table 2).42 Houses used to be swept and the contents of waste bins were simply flung into
the streets. Until 1950, in some French cities like Marseilles, solid waste and faecal sludge
were evacuated through the windows instead of being brought to the sidewalk every
morning.43 Paris is known under the term Lutèce (from Latin “Lutum”) meaning sludge.
People learned to dispose of the waste generated outside their own settlement as early as
8,000 to 9,000 B.C. The first experience with waste collection was made in ancient
European and Asian cities. The first regulations dealing with waste management in general
and with the sweeping of streets in particular were set up in Athens (320 B.C.).44 Physicians,
like the Greek scholar Hippocrates (around 400 B.C.) and the Arab Avicenna (Ibn Sina,
1,000 A.D.), were the first to link epidemics to contaminated water. Therefore, Roman
civilisation presents some positive indicators of the modern approach to SWM. In Crete, for
instance, specific places had been set aside for the disposal of certain organic waste by 1500
42
Bilitewski, B/Härdtle, G/Marek, K: Abfallwirtschaft, Springer Verlag: Berlin/Heidelberg, 1994 cited in Wittmaier,
M., Straßenreinigung, Neuruppin: TK Verlag Karl Thomé-Kozmiensky, 2003, p. 71.
43
Silguy, C., Hommes et Ordures, Le Cherche Midi éditeur, 1996, p. 20.
44
Tchobanoglous, et al., Solid waste, cited in Bilitewski, B./Härdtle, G./Marek, K., Waste Management,
Heidelberg:Springer, 1994, p. 1.
22
3. Solid Waste Management
B.C.; such waste was subsequently reused as compost.45 The City of Athens can be cited as
a good example in Europe. Indeed, solid waste was probably better organised there than in
any other city prior to the nineteenth century. Nevertheless, the Athenean waste
management system had several shortcomings; among others, it was unable to overcome the
issue of how to dispose of a very large quantity of waste. Municipal waste collection was
hence confined to state-sponsored events.46 Legally, property owners were responsible for
the cleanliness of streets fronting their property, although this seems to have been generally
ignored. However, independent scavengers collected a significant percentage of residential
waste for resale as fertiliser, and wealthier residents were able to use their own slaves to
perform any necessary further removal.47 In short, street sweeping can be traced back to the
fifteenth century in many European cities, for instance in Bremen in 1450.
From an early stage, municipal managers and authorities tried to contend with the waste
issue with new regulations, legislation, decrees, fines, and even with prison sentences.
However, if legislation and fines alone could not produce sustainable solutions to perennial
waste problems, such decrees resulted in the first contracting-out measures. High-income
residents hired poor ones or, as mentioned above, affluent residents used their slaves to
carry out this task. Thus, the first municipal dumps were organised by the Greeks in circa
500 B.C.; at approximately this time, the Council of Athens began to enforce a regulation
according to which scavengers were required to dump waste no less than one mile from the
city walls. In 320 B.C., Athens promulgated the first known edict which forbade the
throwing of refuse into the streets.48 In the same context, as early as 1243, the magistrates of
Avignon (France) decreed that no one should throw any waste into the street, on the pain of
a fine of two shillings per offence, of which the accuser would receive one-third. In the
Netherlands, dumping waste in canals was first prohibited by guild bylaws, so that
breweries would been assured a supply of clean water.49 In 1296, Siena officially employed
a sow with four young pigs to clean the campo after every market; by 1382 six pigs had the
official duty of cleaning the streets, which can be considered to be the first step to waste
recycling. Venice and Florence also raised pigs especially for scavenging, while in Bologna
the Ospitalieri di Sant’ Antonio had the privilege of feeding one hundred pigs in the streets.
45
Savas, E. S., Efficiency of Solid Waste, Lexington: Columbia University, 1977, p. 12.
46
These events include the removal of the bodies of animals and men after the games and the cleansing of streets after
parades as well as the regular cleaning of principal streets (the latter by decree of Caesar, 47 B.C (Savas, 1977,
p. 13).
47
Savas, E. S., Efficiency of Solid Waste, Lexington: Columbia University, 1977, p. 13.
48
Savas, E. S., Efficiency of Solid Waste, Lexington: Columbia University, 1977, p. 13.
49
Savas, E. S., Efficiency of Solid Waste, Lexington: Columbia University, 1977, p. 17.
23
3. Solid Waste Management
Finally, in circa 1320, Paris took the first sanitary measures, which included street paving,
waste canalisation (open sewers) and, of course, organised scavenging.50
In the United States of America, waste collection systems were established in various cities
in the seventeenth century. Prior to 1691, according to official legislation, citizens were
required to load their own waste onto waste carts, but could then outsource this task.
However, in 1676, New York residents had a foretaste of what was to become a bane of
urban existence, namely municipal strikes, when the cart men refused to move waste from
the streets to protest what they considered a too low rate of pay.51
As mentioned above, Paris was not doing any better in 1666. In that year, given that the area
under the Pont Marie was a favourite dumping ground, the city magistrate had to order local
residents to remove the waste to a dumpsite because the Seine was no longer able to move
freely under the arches. 52 Each Paris citizen generated 200g of SW in 1872, whereas
production reached 700g per inhabitant in 1922 and 1.6 kg in 1994.53 Moreover, offenders
were punishable by severe sanctions, including prison terms with limited access to bread
and water. These sanctions had little effect and failed to curb reoffending. 54 Under the
pressure of public opinion, the Parisian authorities required that the coercion of sweeping
should be converted into a municipal tax that every owner was obliged to pay. This
requirement was accepted and accordingly a specific solid waste tax was introduced in
1883. Gradually, individuals were relieved from street cleaning duties.55 On 24 November
1883, the prefect Eugène Poubelle published a decree obliging all house owners and
landlords to provide their tenants with special bins for the purpose of waste disposal. Three
different bins were necessary: one for organic waste, one for paper, and one for glass,
earthenware, and so forth.56 In 1799, a regulation enacted by the municipal police obliged
any owner or tenant of a house in Paris to sweep the public street in front of their house
every day. 57 In 1782, J.-H. Ronesse 58 noticed that a number of edicts, decrees, and
ordinances had been published in the last three centuries and that those laws had never been
50
Savas, E. S., Efficiency of Solid Waste, Lexington: Columbia University, 1977, p. 15.
51
Savas, E. S., Efficiency of Solid Waste, Lexington: Columbia University, 1977, p. 18.
52
Savas, E. S., Efficiency of Solid Waste, Lexington: Columbia University, 1977, p. 17.
53
Silguy, C., Hommes et Ordures, Le Cherche Midi éditeur, 1996, p. 14.
54
Silguy, C., Hommes et Ordures, Le Cherche Midi éditeur, 1996, p. 23.
55
Silguy, C., Hommes et Ordures, Le Cherche Midi éditeur, 1996, p. 29.
56
Silguy, C., Hommes et Ordures, Le Cherche Midi éditeur, 1996, p. 31.
57
Silguy, C., Hommes et Ordures, Le Cherche Midi éditeur, 1996, p. 27.
58
In his book „Vues sur la propreté de Paris, 1782“.
24
3. Solid Waste Management
enforced. L.-S. Mercier59 lamented the individualist mindset of Parisians.60 At the beginning
of the twentieth century, waste collection and waste transport in Paris was undertaken on a
daily basis by a private enterprise. In early 1662, Tokyo systematised its solid waste
collection, contracted out the collection and the disposal of household waste, and provided a
dumping ground.
It is important to recognise the importance of regulations at the beginning of solid waste
history, specifically as an economic instrument to enforce the so-called polluter pays
principle or the hierarchy principle. Accordingly, the Roman emperor Vespian imposed a
waste tax in 69-79 A.D. to prevent waste accumulating in public places. Several provincial
English towns were providing collection and the fencing off of dumps by the end of the
seventeenth century. In 1690, the Mayor of Portsmouth was fined for throwing garbage into
the streets of his own town. It is reputed that Shakespeare’s61 father paid a fine in 1552 for
depositing filth in a public street.62 An English law of 1714 required every municipality to
engage a scavenger. By the end of the Middle Ages, general public awareness of waste as a
health hazard had become quite common. 63 However, the knowledge and concomitant
know-how gathered during that period about the importance of proper waste management
has since been lost over time in Europe. One of the reasons cited is the disappearance of the
Roman Empire and subsequent migration. As mentioned earlier, legislation and scavenging
proved not to be the sustainable solution to the high quantity of waste generated. The main
reason was the lack of inadequate alternatives to available methods of collection and
disposal. After all, except for those living in heavily polluted areas, public opinion was very
much against such measures.64
59
Louis-Sébastien Mercier (1740 - 1814), one of the first French writers of drames bourgeois. Mercier also wrote a
work of prophetic imagination “Le Tableau de Paris”. Mercier was strongly influenced by Jean-Jacques Rousseau's
views of society, rejecting the prevalent belief in progress. As a moderate member of the Convention, he opposed
the death penalty for Louis XVI. (Encyclopædia Britannica, 1994-1999).
60
Silguy, C., Hommes et Ordures, Le Cherche Midi éditeur, 1996, p. 27.
61
William Shakespeare (1564 – 1616), English poet, dramatist, and actor, often called the English national poet and
considered by many to be the greatest dramatist of all time (Encyclopædia Britannica, 2007).
62
Savas, E. S., Efficiency of Solid Waste, Lexington: Columbia University, 1977, p. 16.
63
In 1462, the Aldermen in Amiens decided to hire certain men with horses and dung carts to remove the filth from
the streets daily (Savas, 1977).
64
People were asking themselves if the poor man should be deprived of his pigs to make way for the horses of the
wealthy or if the poor man should be forced to spend his time carting garbage in order that lords and ladies not soil
their costly garments (Savas, 1977, p. 16).
25
3. Solid Waste Management
During the eighteenth century, Europe65 showed little of the change that was to characterise
the next century.66 The nineteenth century marks the beginning of all modern concepts of
solid waste collection and disposal. It brought a radical change in the history of humanity in
terms of proper SWM. Until the publication of the works of Pasteur67, proving the existence
of the microbe, hygienists adopted empirical methodology. Various nineteenth-century
scientists, including Robert Koch68 and Ignaz Semmelweiß69, and engineers like William
Lindle, 70 made pathbreaking contributions to elucidating the link 71 between SWM and
hygiene (see Table 2). Gradually, European cities started to introduce solid waste collection
and organised street sweeping. In this context, as mentioned above, the French Prefect
Eugène Poubelle 72 introduced waste containers in Paris. 73 Table 2 presents the most
important milestones in the history of SWM.
65
In comparison, in the United States the native population had not built any cities with populations much over
10,000. Mesoamerican civilizations, on the other hand, had maintained complex urban systems, including
sophisticated drainage and waste collection, for at least a thousand years (Savas, 1977, p. 17).
66
Savas, E. S., Efficiency of Solid Waste, Lexington: Columbia University, 1977, p. 19.
67
Louis Pasteur (1822-1895) French chemist and microbiologist. Pasteur has proved that micro organisms cause
fermentation and disease. He was the first to use vaccines for rabies, anthrax, and chicken cholera. Louis Pasteur
brought about a veritable revolution in the 19th-century scientific method (Encyclopædia Britannica, 1994-1999).
68
Robert Heinrich Hermann Koch (1843 - 1910), German physician, one of the founders of the science of
bacteriology, who discovered the tubercle bacillus (1882) and the cholera bacillus (1883). He cultivated the anthrax
organisms in suitable media on microscope slides, demonstrated their growth into long filaments, and discovered the
formation within them of oval, translucent bodies--dormant spores. He won the Nobel Prize for Physiology or
Medicine in 1905 (Encyclopædia Britannica, 1994-1999).
69
Ignaz Philipp Semmelweis (1818 – 1865), German-Hungarian physician who discovered the cause of puerperal
("childbed") fever and introduced antisepsis into medical practice. In 1861 Semmelweis published his principal
work, Die Ätiologie, der Begriff und die Prophylaxis des Kindbettfiebers ("Etiology, Understanding and Preventing
of Childbed Fever"). His influence on the development of knowledge and control of infection was hailed by Joseph
Lister, the father of modern antisepsis (Encyclopædia Britannica, 1994-1999).
70
William Lindley (1808 - 1900), British civil engineer who helped renovate the German city of Hamburg after a
major fire. Lindley settled in Hamburg as engineer in chief to the Hamburg-Bergedorf Railway (1838-60). He
constructed a system of sewers, waterworks, gasworks, and public baths and washhouses, and he planned extensions
to the port. He constructed a sewerage system for Frankfurt am Main that was widely imitated in Europe and
America (Encyclopædia Britannica, 1994-1999).
71
Although the link was discovered, 9000 people died in Hamburg in 1892 through cholera disease (Wittmaier, M.,
Straßenreinigung, Neuruppin: TK Verlag Karl Thomé-Kozmiensky, 2003, p. 71).
72
Eugene Poubelle (1831 – 1907), Eugene Poubelle became Prefect of the Seine in 1884 and created the final laws
governing the garbage collection and street cleaning, building on the earlier regulations about sweeping in front of
the building and not throwing anything out the window. He defined the garbage can as having a maximum of 120
liters and the time of passage of the tipcarts. Poubelle organized garbage collection in this manner to allow for the
household waste to be composted at Saint Ouen.
73
Silguy, C., Hommes et Ordures, Le Cherche Midi éditeur, 1996, p. 14.
26
3. Solid Waste Management
In England, the Sanitary Act of 1845, and especially the Public Health Act of 1875, had a
radical effect on the general level of sanitation, notably in working-class urban areas; they
included provisions for the creation of “united districts” for “specified sanitary purposes”.
Tokyo required each family to furnish a waste box in 1807, and began municipal waste
collection in 1900. In New York City, George E. Waring was appointed commissioner of
the Department of Street Cleaning in 1894 and, untroubled by political considerations,
proceeded to reorganise and clean up the department. The organic waste fraction was sold to
farmers as fertilisers, and some markets could be found for other waste. Until 1884, Boston
sold all its waste to New England farmers.74 Although the idea of burning waste had been
around for some time, the invention of the incinerator (in England in 1874) was a marked
step forward in the clean disposal of solid waste.
The search for technological solutions became relatively more intensive in the twentieth
century. Waste grinding was invented in the 1920s and compactor trucks in the 30s (see
Table 2). From 1913 to 1915, Chicago had a privately owned tunnel system which removed
building debris, ashes, and delivered freight.75 In order to minimise environmental problems
with dumpsites and especially to protect water resources, two Englishmen, Call and Dawed,
introduced the concept of sanitary landfilling which was first experimented with in the city
of Bradford in 1930.76 In London, the first incinerator was constructed in 1876, whereas in
Hamburg/Germany77 the first one was constructed in 1893. Comprehensive management
tools were also being introduced into the solid waste industry. Improved procedures were
being employed to schedule work crews, route waste collection vehicles, and to locate
disposal facilities. Major technological advances were taking place in the recovery and
recycling of materials.78 Nevertheless, it took time before a real breakthrough in the solid
waste industry occurred. For instance, a team of mules collected solid waste in Los Angeles
until 1933; and as recently as 1941, several New Yorkers were prosecuted for keeping
hogs.79
The nature of waste was also an issue from the beginning. Is it about “Pure Public Goods”
74
Savas, E. S., Efficiency of Solid Waste, Lexington: Columbia University, 1977, p. 21.
75
Savas, E. S., Efficiency of Solid Waste, Lexington: Columbia University, 1977, p. 22.
76
Silguy, C., Hommes et Ordures, Le Cherche Midi éditeur, 1996, p. 52.
77
Other relevant milestones in solid waste management in Germany are the following: In 1972, the Waste Disposal
Act in Germany was published; in 1975, the first waste management programme of the German Government took
place with the introduction of technical environmental studies into the curriculum of the Technical University of
Berlin; finally, the first German Institute for Technical Environmental Protection in Berlin was created in 1977.
78
Savas, E. S., Efficiency of Solid Waste, Lexington: Columbia University, 1977, p. 22.
79
Savas, E. S., Efficiency of Solid Waste, Lexington: Columbia University, 1977, p. 22.
27
3. Solid Waste Management
or “Public Goods” or “Private Goods”? The question is considerable. In 1506, Louis XII
decided that the crown should be in charge of waste collection in the capital, including its
evacuation. 80 The nineteenth century is commonly associated with “laissez-faire” 81
capitalism. Ever since, this has transformed society and created unprecedented levels of
wealth, and also produced severe environmental destabilisation (Sclar, 2000). In her
discussion of the century of modern public goods theory or so-called “municipal socialism,”
Beatrice Webb82 has observed: “Neither a pure water supply nor the collective disposal of
garbage could be left to private conscience or attended to only if they could be provided for
a profit”. Public authorities recognised that the management of solid waste was their
responsibility instead of leaving it to particular initiatives. Savas (1977) has affirmed that
despite repeated attempts to legislate improvement, “almost every aspect of sanitary
conditions was worse in 1825 than it had been at the end of the century… Instead of
developing an effective garbage collection system, the City alternated between private
contractors and a city-operated program, neither of which worked satisfactorily. A major
part of the scavenging came to be done by the ever-present hogs.”83 This phenomenon called “On-again / Off-again” - will be addressed later in this dissertation (see
Chapter 6.6.2).
Europe was not the only continent to take first steps towards modern waste management in
the Middle Ages. Nor was it the only continent where citizens faced tough sanitary
problems especially due to badly managed waste. Prior to the nineteenth century, in waste
terms, the world could not be divided into industrialised countries with comprehensive
waste management, on the one hand, and LMIC with vulnerable sanitation systems, on the
other. Good examples and bad examples of waste management outside Europe will be
discussed in the following. According to archaeological surveys, the city of Haiderabad in
India used appropriate bins as waste recipients over 6500 years ago. Sewerage systems
made of ceramic materials were constructed in Turkey 8000 years ago. In Jerusalem, solid
80
Silguy, C., Hommes et Ordures, Le Cherche Midi éditeur, 1996, p. 23.
81
laissez-faire (French: "allow to do"), policy based on a minimum of governmental interference in the economic
affairs of individuals and society. The policy of laissez-faire received strong support in classical economics under
the influence of Adam Smith. It was a political as well as an economic doctrine. In the late 19th century the acute
changes caused by industrial growth and the adoption of mass-production techniques proved the laissez-faire
doctrine insufficient as a guiding philosophy. (Encyclopædia Britannica 1994-1999).
82
Martha Beatrice WEBB (1858 – 1943), English Socialist economists, early members of the Fabian Society, and cofounders of the London School of Economics and Political Science. She pioneered in social and economic reforms
as well as distinguished historians. She deeply affected social thought and institutions in England. In 1891 she
published, “The Co-operative Movement in Great Britain”, which later became a classic. (Encyclopædia Britannica
1994-1999).
83
Savas, E. S., Efficiency of Solid Waste, Lexington: Columbia University, 1977, p. 20.
28
3. Solid Waste Management
waste was systematically composted and incinerated 2000 years ago.84 A Chinese “Record
of Institutions” dating from around the second century B.C. mentions sanitary police
charged with the removal of all carcasses, whether of men or animals, and traffic police
whose duties, among others, was to organise street sweeping in the major cities. The Indus
Valley city of Mahenjo-Daro, founded no later than 2500 B.C., represents a very significant
conceptual leap in terms of waste management. Here, a well-designed drainage system was
devised early on: each house had waste chutes and waste containers were provided at the
foot of each building at street level; also, waste containers were placed at convenient
locations in the streets from which scavengers, who were presumably under some central
authority, removed the waste. 85 In the Egyptian town of Herakopolis (circa 2100 B.C.),
waste in low-income districts was treated pretty much as of old in that organic waste was
either left on the floor or dumped just outside the dwellings, while inorganic waste was put
into nearby depressions, perhaps to level off the ground. 86 In the high-income districts,
however, efforts were made to remove all kinds of waste, organic and inorganic, to
locations outside the living and/or communal areas which usually meant into the river.87
Mosaic law (circa 1300 B.C.) specifically refers to public sanitary practices; everyone was
expected to act as their own scavenger - to remove their own waste and bury it in the earth.88
In Chinese cities, by 900 A.D., the guilds provided street cleaning services (waste
collection) for their own streets. By 1250 A.D., in the city of Hang Chow, the streets were
cleansed by public authorities that had the waste removed to the countryside by boat, and
once a year the prefecture undertook a thorough cleansing of the streets and a general
cleaning out of the canals.89 Table 2 displays some milestones in the history of SWM.
84
Wittmaier, M., Straßenreinigung, Neuruppin: TK Verlag Karl Thomé-Kozmiensky, 2003, p. 66.
85
Savas, E. S., Efficiency of Solid Waste, Lexington: Columbia University, 1977, p. 11.
86
This can be counted as the first experience of waste segregation in this country.
87
Savas, E. S., Efficiency of Solid Waste, Lexington: Columbia University, 1977, p. 12.
88
Savas, E. S., Efficiency of Solid Waste, Lexington: Columbia University, 1977, p. 1.
89
Savas, E. S., Efficiency of Solid Waste, Lexington: Columbia University, 1977, p. 14.
29
3. Solid Waste Management
Milestones
Key Features
10,000 B.C.
Neolithic evolution: decomposition of organic waste on site
2100 B.C.
First experience of waste segregation in Egypt
81-96 A.D.
Emperor Domitian (Roman Emperor) ordered pest control due to a lack
of hygiene, proliferation of rats in the City
69-79 A.D.
Emperor Vespian imposed a urine tax to avoid urinals in public places
6th to 14th
Epidemics claim the lives of one-third of the population (25 million) in a
few short years90
15th century
First paving of streets, introduction of garbage cans
19th Century
Creation of the Public Health Act in England
9 cholera epidemics claimed 380,000 lives in Prussia91
Construction of the first incinerators in England in 1876
1843
Introduction of the first mechanical street sweeping machine
1850 to 1890
Breakthrough in waste management: scientists (Ignaz Semmelweiß,
Louis Pasteur, Robert Koch) reveal bacteria and viruses as the causes of
disease
1892
9,000 people in Hamburg/Germany died due a cholera epidemic
Mid-1960s
The Federal Government of Germany establishes the legal basis for the
disposal of waste
1970s
“Waste avalanche” due to economic growth in the post-war era
1973/74
Oil crisis, World economic crisis, first thoughts about sustainable
resources management
1980s
First breakthrough in integrated SWM: recycling, composting and
anaerobic technology are a priority for waste disposal
Table 2: Milestones in the history of SWM
(Source: Bilitewski, B./Härdtle, G./Marek, K., Waste Management, 1994)
In recent years, solid waste has increasingly become a major issue on the agenda of many
international organisations. There have been a number of international cooperation
90 Bilitewski, B./Härdtle, G./Marek, K., Waste Management, Heidelberg:Springer, 1994, p. 1.
91 Hösel, G, Beseitigung von Abfallstoffen, (Kennz 0120). Hösel/Schenkel/Schnurer: Müll-Handbuch. Berlin:Erich
Schmidt 1991 cited in Bilitewski, B./Härdtle, G./Marek, K., Waste Management, Heidelberg:Springer, 1994.
30
3. Solid Waste Management
initiatives, seeking to promote shared regulations and measures. Some of these initiatives
are summarised below.
a)
World Summit on Sustainable Development (WSSD)
In June 1992, the United Nations Conference on Environment and Development (UNCED,
the so-called “Earth Summit”) was held and adopted a global action plan called “Agenda
21” for international activities in environment protection. Ten years later, in August 2002,
WSSD was held to review the action plan and to discuss new challenges. As far as SW is
concerned, these include developing ISSWM systems, placing utmost priority on waste
prevention and minimisation, re-use and recycling, and ultimately on environmentally sound
disposal facilities; another challenge is to promote waste prevention and minimisation by
encouraging the production of reusable consumer goods and biodegradable products. Hence,
WSSD amounts to strengthening the application of the hierarchy principle.
b)
Millennium Development Goals (MDG)
The MDG that were adopted by the U.N. General Assembly in 2000 include as their seventh
goal the endeavour “to ensure environmental sustainability,” and within that goal targets 9
and 11 to integrate the principles of sustainable development into country policies and
programmes, reverse the loss of environmental resources, and achieve significant
improvement in the lives of at least 100 million slum dwellers by 2020.
c)
Action Plan (Science and Technology for Sustainable Development: "3R")
At the June 2004, the G8 Summit came out with the “3R Initiative,” aimed at building a
global recycling-oriented society through promoting the three R’s - Reduce, Reuse, Recycle.
As far as foreign aid to LMIC is concerned, cooperation in areas such as capacity
development, raising public awareness, and the implementation of recycling projects is
being sought.
d)
Global Climate Change
The Protocol came into force in February 2005. In the field of solid waste, two approaches –
the recovery of methane (CH4) gas from landfill sites and recapturing energy from organic
waste – are attracting increasing attention. In terms of cooperation with LMIC, possibilities
of supporting financially underpinned projects under the Clean Development Mechanism
(CDM) are being explored. At present, different SW initiatives in LMIC are being
supported through the CDM mechanism.
31
3. Solid Waste Management
e)
Transboundary movements of solid waste
With regard to transboundary movements of hazardous waste, illegal “exports” of hazardous
waste from industrialised countries to LMIC took place in the 1980s. The Basel
Convention92 adopted on the Control of Transboundary Movements of Hazardous Waste
and their Disposal regulates the ‘export’ of hazardous waste from a country with waste
processing technologies to other countries.93 In effect, the Convention came into force in
May 2002. In recent years, the export and import of solid waste for recycling purposes are
on the rise also in LMIC.
3.2
Solid Waste: Definitions
This investigation addresses Municipal Solid Waste Management (MSWM) 94 in LMIC
because in terms of quantity municipal waste makes up the largest part of waste generated
compared to hospital waste, industrial waste, demolition waste, and hazardous waste. Based
on the quantity of waste generated - and for other various reasons - the SW market in LMIC
is becoming attractive to the private sector. MSWM includes the management of household
waste, non-hazardous solid waste from industrial, commercial and institutional
establishments, market waste, yard waste, and street sweeping. It excludes radioactive
waste, hazardous waste and hospital waste, whose characteristics are beyond the scope of
this research. Comprehensive MSWM 95 requires an appropriate distribution of
responsibilities, authority and revenues between national, regional and local governments.
There is still no single scientific definition of solid waste. According to Savas (1977), the
notion of solid waste (SW) was not used in its current meaning until the twentieth century.
Pongrácz (2002) states that the notion of waste96 is relative in two main respects. Firstly,
92 The "Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal." It
controls exports of hazardous waste by transboundary movement, and obligates exporters to have approval for
exporting hazardous waste, to make advance notice, and to import waste again if inappropriate export or treatment is
carried out. http://www.mofa.go.jp/mofaj/gaiko/kankyo/jyoyaku/basel.html (Accessed in September 2004).
93 However, in August 2006, the Panamanian flagged ship Probo Koala unloaded more than 550 tonnes of toxic waste
at Abidjan port in Côte d'Ivoire. Emissions from that toxic waste have since killed seven people and poisoned
thousands. The deadly cargo was shipped to Abidjan from Amsterdam, where port authorities rejected the tanker
because of its toxic load. http://www.baselpretoria.org.za/Sept06.htm.
94 MSWM encompasses the functions of collection, transfer station, aerobe and anaerobe treatment, resource recovery
and disposal of municipal waste.
95 Schübeler, P./Wehrle, K./Christen, J., Conceptual Framework, St Gallen: SKAT, 1996, p. 10.
96 Pongrácz, E., Re-Defining the Concepts, Oulu, 2002, p. 70.
32
3. Solid Waste Management
something becomes waste when it loses its primary function for the user; hence, one
person’s waste output is often someone else’s raw material input. Secondly, the notion of
waste is also relative to the technological state of the art and to the location of its generation.
Waste is therefore a very dynamic concept and the notion has to be understood within this
context. Different international organisations like the EU97 , OECD98, UNEP99 have their
own approach to, and definitions of, the notion of waste. In some literature, especially North
American, the terms “refuse” or “garbage” are commonly used. Those wastes that are solid
are referred to as “solid waste” or “refuse”. The two terms are used synonymously. 100
Pfeffer (1992)101 states that solid waste is defined as “any solid material in the material flow
pattern that is rejected by society.” Other authors102 define solid waste as “all the wastes
arising from human and animal activities that are normally solid and that are discarded as
useless or unwanted.” Material discarded because it has served its purpose or is no longer
useful is called solid waste. 103 According to German legislation 104 , wastes are portable
objects that have been abandoned by the owner. Furthermore, German legislation has
identified different types of waste; the German Technical Guidance for MSWM defines
waste according to its type (see Table 3).
Depending on the context, the term “waste”’ can have different meanings. One of the
common definitions is that waste is ‘unwanted’ by the person who discards it. Accordingly,
the most interesting definition comes from Indonesia, designating household waste as
“Sampa,” that is, “the thing which has no use for the person which discards it.”105 It is
therefore a product or material that no longer has a value for the first user and is therefore
thrown away.106 However, ‘unwanted’ can also be a question of timing, that is, waste can
have some value for the same person or society in different circumstances. Examples of
97
According to the EU: Waste shall mean any substance or object in the categories set out in by the EU which the
holder discards or is required to discard (European Council 1991a) (Pongrácz, 2002).
98
According to OECD: Wastes are materials other than radioactive materials intended for disposal, for reasons
specified (OECD 1994) (Pongrácz, 2002).
99
100
For the UNEP: Wastes are substances or objects, which are disposed of or are intended to be disposed of or are
required to be disposed of by the provisions of national law (UNEP 1989) (Pongrácz, 2002).
Savas, E. S., Efficiency of Solid Waste, Lexington: Columbia University, 1977, p. 3.
101
Pfeffer, J.T., Solid waste management engineering, 1992.
102
Peavy, H.S. et al, Environmental Engineering, 1992; Tchobanoglous, G./Theisen, H./Eliassen, R., Solid wastes:
Engineering principles and management issues, 1977.
103
Encyclopædia Britannica 1994-1999.
104
The term waste is defined in the German Waste Act of August 27, 1993.
105
Silguy, C., Hommes et Ordures, Le Cherche Midi éditeur, 1996, p. 190.
106
Klunder, A./Anschütz, J., Integrated Sustainable Waste Management, WASTE, 2001, p. 10.
33
3. Solid Waste Management
such waste are provided by societies that have suffered wars or natural catastrophes, where
victims are more likely to use recycled materials that they would have discarded in better
times.
Waste Type
Construction debris
Organic waste
Definition
Detritus minerals from construction and demolition
Biodegradable component of municipal waste (e.g. food and
yard waste)
Household waste
Waste from private households
Household-commercial Waste from commercial establishments, businesses, the service
waste
sector, public institutions, and industries that possess similar
characteristics than household waste
Commercial waste
Waste with characteristics similar to household waste
Municipal solid waste
Household, bulky, household-like commercial, yard, open
(MSW)
market, and construction and demolition waste; street
sweepings; etc.
Table 3: Definition of waste relating to their types
(Source: German Technical Guidance for MSWM)
Solid waste today is increasingly defined as “natural resources out of place” or as “new
materials for technologies not yet found.” Waste has come to be regarded as a useful
material, providing a potential source of income. The recycling market, for instance, is now
an important industry generating revenues and jobs for many people in LMIC.
Increasingly, SW is being regarded as a resource to exploit rather than as a problem to be
dealt with. In the LMIC context, SW can be either:
a)
a natural resource which has to be exploited, or
b)
a serious environmental and health issue which has to be coped with.
It is commonly accepted that solid waste definitions are ambiguous and do not really give
an insight into the ISSWM concept. Pongrácz (2002) rightly argues that the various
definitions of waste do not fall under the sense of valuable materials. She states: “…despite
its explicit wish of waste prevention, when, according to present legislation, a thing is
assigned the label of a waste, it is going to be treated like waste... The philosophical
ramifications inherent in such definitions mean that they are not capable of constructing a
system that, by its very nature, results in a sustainable waste management system.”107 In
other words, the ISSWM concept does not fit into the various definitions that waste is a
107 Pongrácz, E., Re-Defining the Concepts, Oulu, 2002, Abstract.
34
3. Solid Waste Management
thing to be discarded. If it were so, there would no longer be the desire to make this system
sustainable.
3.3
Concluding Remarks
This chapter has begun with an analysis of the overall waste management situation in cities
worldwide and especially in Europe. The present situation in LMIC is very similar to prenineteenth century Europe. Some parallels exist not only in terms of the quantity of waste
generated and its composition, but also in terms of its management. Waste collection in
residential areas in eighteenth-century Paris is comparable to the current situation in some
LMIC capitals. In principle, ad-hoc programmes organised in LMIC on the occasion of
public holidays, during an election period, due to the presence of politicians, and so forth,
can be compared with events to remove SW after the games in Rome during Caesar’s era.
The administration of municipal waste dumps in Athens in 500 B.C. has some parallels with
the management of dumpsites in Tangier / Morocco in the twenty-first century.
This chapter has also examined the consequences of haphazardly managed solid waste in
Europe in the fourteenth century, which led to living conditions similar to those currently
existing in LMIC. This chapter has also considered the consequences of haphazardly
managed solid waste in fourteenth-century Europe that are very similar to the existing
situation in LMIC. As well as looking at the similarities between current solid waste
characteristics and management in LMIC and European countries in the past, we have also
looked at the actual consequences of haphazardly managed solid waste in fourteenth-century
Europe, realising that these gave rise to a situation similar to that in LMIC at present. We
have seen that one consequence is the death of millions of people worldwide. At present in
LMIC, just as it used to be in fourteenth-century Europe, people dispose of their waste in
the streets with fatal environmental and economic consequences. It has been demonstrated
that European citizens became aware of the seriousness of this situation once scientists
proved the link between epidemics and irregularly managed solid waste. With regard to the
nature of solid waste, it has been proved that in the past, public authorities have tried to
consider SW as private goods, by placing the responsibility for managing their waste with
waste generators. In this context, according to legislation in some European countries,
property owners were responsible for cleaning the front of their houses. This attempt failed
because as public goods (see discussion in Chapter 7.1), SW is deemed the responsibility of
public authorities, a fact that will be considered in the PSP discussion.
35
3. Solid Waste Management
This chapter has also looked at the opinions of some authors on the characteristics of solid
waste (“private goods”/”public goods”). Many national and international organisations have
conducted well-designed awareness campaigns on sound waste management that have failed
mainly because of the characteristics of solid waste. For instance, a campaign instructing the
citizens in LMIC that they have to identify with their city, and keep it clean accordingly,
will be less effective than telling them that dirty cities will result in diseases and potentially
the death of their children, as their children’s health is of utmost private concern.
Another interesting issue examined in this chapter is the importance of legislation in SWM.
The enforcement of appropriate legislation in Europe as well as its effectiveness has been
seen as lacking. In many LMIC, waste legislation is very often well-designed; however, its
enforcement remains a formidable challenge to public authorities. It is worth noting that the
breakthrough in SWM in Europe occurred with the recognition that SW counts as public
goods (as stipulated by Louis XII, for instance, in 1506), and accordingly by introducing
public tax to cope with it.
The discussion about considering solid waste to be public goods entered a decisive phase at
the end of the nineteenth and the beginning of the twentieth century. Interesting results
arose with the introduction of public taxation and the improvement of waste technology such as the introduction of waste containers and the publication of remarkable scientific
works (for instance by Pasteur).
This chapter has shown that waste recycling by waste pickers occurred on the same scale in
Europe in the thirteenth and fourteenth centuries as currently in LMIC. Animals were used
to recycle waste and waste recycling was informal as currently in LMIC with almost the
same concerns. Even in terms of waste quantity and waste characteristics, the waste
situations are similar. Overall, in order to set up comprehensive waste management in
LMIC, including PSP, one should look carefully at the situation in Europe from the
thirteenth century onwards. Mistakes can then be avoided and positive lessons can be
learned.
As far as the hierarchy principle is concerned, it has been demonstrated that waste
segregation, waste reutilisation, and waste treatment were introduced in many countries and
cultures at early stages of their development. The hierarchy principle focuses on the
awareness of the natural limits of resources. It was somehow obvious in ancient times; in
the meantime, however, this awareness has gradually been lost.
With regard to PSP, this chapter has reviewed various experiences made across the world.
PSP has been experimented with at a low level in many countries in Europe and elsewhere
(in Japan, for instance) by contracting-out street cleaning (as enacted by legislation) to so-
36
3. Solid Waste Management
called scavengers (waste pickers). At a higher level, SW collection on a citywide basis has
also been experimented with in many cities, for instance in seventeenth-century Japan.
Finally, the definitions of solid waste need be considered in context. For many, waste is
what can be discarded, whereas for others it is a source of revenue, especially in LMIC. In
these countries, it is considered both a natural resource and at the same time a serious
environmental hazard, associated with health concerns. It has been demonstrated that the
SW market in LMIC is becoming attractive to both the international and the national private
sector, due to the quantity of waste generated, the demand for technology, the lack of sound
public management, and the lack of financial means.
37
4. Solid Waste Management in LMIC: Key Features
4.
Solid Waste Management in LMIC: Key Features
In this research, the notion of Low- and Middle Income Countries (LMIC) is based on the
economic classification of the World Bank Group; notably, the notion is merely economic
rather than geopolitical. The World Bank Group characterises economies as low-income,
middle-income (subdivided into lower-middle and upper-middle), and high-income (see
Annex 1). Low-income and middle-income economies are sometimes referred to as
developing countries or the so-called “Third World”. On the basis of 2001 gross national
income, low-income countries are those with average annual per capita incomes of US$ 745
or less. For lower-middle-income countries, the figures are US$ 746 to US$ 2,975; for
upper-middle-income countries, US$ 2,976 to US$ 9,205; and for high-income countries,
US$ 9,206 or more. In this study, the term “developing” refers to countries whose
economies are classified as low-income or middle-income. The terms “industrial countries”
or “developed countries” refer to countries whose economies are high-income.108
4.1
Urbanisation in LMIC: Economic and Ecological Issues
According to Yue-man Yeung (1995), one of the most interesting developments since
World War II has been rapid urbanisation in LMIC and the concentration of urban
populations in large cities. Between 1950 and 1990, the number of “million cities” in the
world more than tripled, from 78 to 276, and is now projected to reach 511 by 2010. In
1990, 33% of the world's population lived in “million cities,” and 10 % in cities of more
than 8 million inhabitants. 26 mega cities109 are expected to exist around the world by the
year 2015, when the three largest urban agglomerations will be Tokyo, Bombay, and Lagos
(U.N. 1998). 110 Where Africa was 80% rural in the 1960s, its rate of urbanisation had
reached 50% by 1998.111 The growth of Africa’s cities has outstripped local management
and financing capacities. 50 million people are expected to migrate to the cities of West
Africa over the next 10 years. It is projected that by 2020, 63% of the population will live in
108 The World Bank „A guide to the World Bank“ Library of Congress, 2003, p. 73.
109 Cities of 10 million or more inhabitants.
110 Freire M., The Challenges, in Freire, M./Stren R. (eds.), Urban Government, Washington: WBI, 2001, p. xxiv.
111 Farvacque-Vitkovic, C./ Godin, L. , Future of African Cities, The World Bank: Washington, D.C.,1998, Foreword.
38
4. Solid Waste Management in LMIC: Key Features
cities.112 There will be 100 so-called “mega cities,” each with a population of more than 5
million inhabitants113 (see also Annex 4). This will require further investment, among others
in solid waste management. Asia alone will need to invest US$ 280 billion a year over the
next 30 years (Brockman and Williams 1998).114 By the year 2025, one can expect a further
2 billion— almost all in LMIC. Figure 6 presents global population projections until 2050.
Figure 6: World population projections, 1950–2050 (Billions)
(Source: United Nations, Critical Trends, 1997)
This rapid urbanisation poses formidable challenges to the governments of LMIC and their
societies, making environmental degradation, the declining quality of life, and the untapped
wealth of human resources all the more easily observable. In addition, a typical municipality
in LMIC is not homogenous. Two main areas are distinguished: high-income areas and lowincome areas. Even Plato observed in 400 BC that “….any city, however small, is in fact
divided into two, one the city of the poor, the other of the rich.”115 In effect, SW collection is
112 Farvacque-Vitkovic, C./ Godin, L. , Future of African Cities, The World Bank: Washington, D.C.,1998, summary.
113 E. Bergmann & H.P.Gatzweiler; S. Schmitz et al, 1996.
114 Freire M., The Challenges, in Freire, M./Stren R. (eds.), Urban Government, Washington: WBI, 2001, p. xxvii.
115 O'Meara, M., New Vision for Cities, in Freire, M./ Stren R. (eds.), Urban Government, Washington: WBI, 2001,
p. 337.
39
4. Solid Waste Management in LMIC: Key Features
usually carried out in the city centre and high-income areas on a regular basis. Low-income
municipal areas, on the other hand, do not benefit from the service regularly, and indeed
sometimes never do. SWM in low-income areas means having a festering, stinking pile of
waste, with erratic waste collection by a municipal agent.116 The rest remains on roadsides,
in open drains, and in low-lying areas, worsening the physical environment of the
municipality. Consequently, common features of urban areas in LMIC, most particularly of
low-income areas, include haphazard waste disposal in roadsides, open spaces, or valleys.117
In addition, the rapid rate of uncontrolled and unplanned urbanisation in LMIC has caused
environmental degradation. A.G. Onibokun and A.J. Kumuyi (1999) state that “Recent
events in major urban centres in Africa have shown that the problem of waste management
has become a monster that has aborted most efforts made by city authorities, state and
federal governments, and professionals alike.”
The problems posed by inadequate SWM in LMIC are numerous: health hazards from
uncollected waste, health hazards from collected but poorly disposed of waste, the economic
burden of waste disposal on cities, and social issues arising in connection with informal
waste recyclers (waste pickers or waste scavengers) (see Annex 14). It has been estimated,
for example, that about 50 million tons of solid waste in India, find its way into the coastal
waters of the Arabian Sea and the Bay of Bengal. This results in intensified environmental
damage and human health hazards.118 In LMIC, solid waste services often fail to keep pace
with rapid urbanisation. Accordingly, the municipalities in LMIC are unable to cope with
the ever-growing volumes of waste generated.
Urbanisation poses also significant economic concerns. In fact, in LMIC, two-thirds (²/3) of
the population live in cities (see Table 4) and generate 60% to 70% of the Gross Domestic
Product (GDP). Moreover, 80 % of GDP growth in LMIC is expected to come from cities in
this decade.
116 “Beyond Boundaries” PPIAF/ADB Manila: 2002, p. 5.
117 This situation was reflected in articles in East African newspapers in 1985 that referred to Dar es Salaam as a
“garbage city” (Sunday News (Tanzania), 2 Nov 1985, p. 5) and a “litter city” (African Events, Nov 1985, pp. 3–5)
and to Nairobi as a “city in a mess” (Weekly Review (Kenya), 25 Jan 1985, pp. 2–3).
118 Pearce, D./Turner, K.R., Economics and Solid Waste, Birmingham: CSERGE, 1994, p. 1.
40
4. Solid Waste Management in LMIC: Key Features
Region
1950
1975
1995
2015
[%]
[%]
[%]
[%]
Africa
14.6
25.2
34.9
46.4
Asia119
15.3
22.2
33.0
45.6
Latin America
41.4
61.2
73.4
79.9
Industrial
countries120
54.9
69.9
74.9
80.0
World
29.7
37.8
45.3
54.4
Table 4: Percentage of population living in urban areas (with projections for 2015)
(Source: O'Meara, M., New Vision for Cities, in Freire, M./ Stren R. (eds.), Urban
Government, Washington: WBI, 2001, p. 340 (cited from U.N. 1998)
Table 4 displays the percentage of population living in urban areas by region between 1950
and 1995 with projections for 2015.
It is especially difficult when the poor are living in rapidly growing, spontaneous, and oftenillegal settlements outside government control and which public providers may be restricted
from serving by law.121 Low-income areas normally have the highest population densities
and the lowest level of municipal SW service provision. It is worth noting that the
unsanitary conditions abiding in such areas pose a health threat not only to their residents,
but also to the wider population. This fact is fundamental to the present study in terms of
proving the limitations of some PSP models regarding the ISSWM concept. Solid waste
services being public goods (Chapter 7.1), it is not recommended to exclude a part of the
population from benefiting. Therefore, franchising the collection service of SW, for
instance, will most likely result in failure, especially in low-income areas in LMIC, since
many people cannot afford the service. They will not contribute and will continue to throw
away their waste on open sites or in drains, which will negatively affect everyone, even
those who pay regularly. Moreover, the logistics of collecting waste from poorer areas are
frequently challenging for the formal private sector and sometimes require unconventional
approaches to be sustainable. Narrow, unpaved, and crowded streets place particular
constraints on conventional waste collection systems that usually include large SW
119 Excluding Japan
120 Europe, Japan, Australia, New Zealand, and North America excluding Mexico.
121 “Beyond Boundaries” PPIAF/ADB Manila: 2002, p. 6.
41
4. Solid Waste Management in LMIC: Key Features
containers and modern collection vehicles from the private sector. In low-income
communities 122 , characterised by limited access to SW collection trucks, door-to-door
collection service is not economically feasible, and only a communal container system is
viable. Joint ventures between formal private firms and local ones are often required.
At the end of her classic book on the urban environment, The Granite Garden, Anne
Whiston Spirn (1984) reminds us that “in the present lies not only the nightmare of what the
city will become if current trends continue, but also the dream of what the city could be.”
Taking today’s urban problems to an apocalyptic conclusion, Spirn envisions an “infernal
city” that has disintegrated, following uprisings by city dwellers denied water and other
public services. Economic and environmental concerns have followed those fleeing cities
into a countryside ravaged by suburban development. Numerous surveys have addressed the
growing challenges of building and maintaining more sustainable cities, and have helped to
reveal two key obstacles to progress in sustainable urban planning: first, a lack of financial
means; and secondly, a lack of political strength (Carlson 1996; United Nations 1996).123
Simply put, sustainable cities including ISSWM are essential more than ever before.
Nonetheless, rapid urbanisation in LMIC is threatening the environment and urban
productivity.124 For this reason, adequate SWM is urgently required; otherwise economic
development risks becoming counterproductive. ISSWM represents one of the outstanding
challenges facing municipal authorities in LMIC (World Bank, 1996).
4.2
Waste Generation and Characteristics
The quantity of SW generated is a function of the population, the level of economic
development (see Annex 3), the level of goods consumption, and not least the waste policy
in place to endorse waste minimisation. Schübeler et al. (1996) argued that the waste
generated by a population is primarily a function of consumption patterns and thus of socioeconomic characteristics and the interest in, and willingness to pay for, collection
services.125 By comparison, cities in industrial countries generate up to 100 times more solid
122 Cointreau-Levine, S., PSP in MSW services, UMP, Washington, D.C.: World Bank, 1994, p. 6.
123 O'Meara, M., New Vision for Cities, in Freire, M./ Stren R. (eds.), Urban Government, Washington: WBI, 2001,
p. 347.
124 Cointreau et al. 2000; Bartone et al., 1994, Leitmann, J. 1995.
125 Schübeler, P./Wehrle, K./Christen, J., Conceptual Framework, St Gallen: SKAT, 1996, p. 35.
42
4. Solid Waste Management in LMIC: Key Features
waste per person than their counterparts in LMIC (UNCHS, 1996).126 Income also affects
the waste generation rate. 127 Upper and middle-income individuals tend to generate more
waste than their low-income counterparts. Each person in low-income countries generates
between 0.3 and 0.6 kg of waste every day, whereas in middle-income countries each
person generates between 0.7 and 1.1 kg of waste every day (see Table 6) At present, 30%
to 50% of the population of LMIC live in municipalities (see Chapter 4.1). LMIC generate
approximately 158,000,000 tons/year of waste. By 2025, this figure will have increased to
480,000,000 tons/year of waste. LMIC generate 40% of the world’s solid waste and only
one-third (1/3) of this amount is collected. Hence, less than 5% is properly disposed of.128
Consequently, there are over 200,000 open dumping areas in the world that will require
environmental protection and rehabilitation in the future. Therefore, there is also a potential
market for private firms with adequate sound know-how in such rehabilitation. Table 5
presents the waste generation in LMIC in comparison to high-income countries.
Mixed urban waste – large
city
Mixed urban waste – small to
medium city
Residential waste only
Generation rates kg / capita/day
Low-income
Middle-income
High-income
country
country
country
0.5 to 0.75
0.55 to 1.1
0.75 to 2.2
0.35 to 0.65
0.45 to 0.75
0.65 to 1.5
0.25 to 0.45
0.35 to 0.65
0.55 to 1.0
Table 5: Global perspective on solid waste quantities
(Source: Cointreau-Levine, S., PSP in MSWM, Part II : Guidance Note,
St Gallen: SKAT, 2000, p. 5)
Regarding the characteristics of SW, Gouhier (1993) claimed: “….show me the type of
waste, I will tell you what kind of society.”129 Accordingly, Solid Waste (SW) characteristics
are directly correlated to the societies in question. SW is considered to be “a mirror of the
society,” since SW generation, characteristics and management all reflect the economic,
126 O'Meara, M., New Vision for Cities, in Freire, M./ Stren R. (eds.), Urban Government, Washington: WBI, 2001,
p. 344.
127 Medina, M., Recycling sector in northern Mexico, CWG on SWM in LMIC and WASH Workshop 2006,
Kolkata/India, 2006, p. 3.
128 Ahmad, I., Franchise in Pakistan: Master thesis, Trondheim: NTNU, 2003 (non published).
129 Jean Gouhier from Le Mans University (France) cited by Carde, Daniel [Waste Management in France] in Sander,
A./Küppers, P. (eds.) [Environmentally Sound Waste Management?], Vol. 4, Frankfurt am Main: Lang, 1993,
p. 171.
43
4. Solid Waste Management in LMIC: Key Features
historical, cultural, and environmental aspects of a given country. The characteristics of
solid waste are heterogeneous. The composition of the waste is influenced by various
factors, such as geographical location, the standard of living, and the weather. On the basis
of physical existence, SW includes food waste, paper, plastics, woods, animal dung, metal,
glass, debris, and so forth. The nature of the waste can be organic, inorganic, putrescent,
non-putrescent, combustible, and non-combustible. Classifying waste on the basis of
material encompasses food waste, waste (degradable, non-degradable), market waste, ashes,
street waste, dead animals, industrial waste, demolition waste, construction waste,
hazardous, and special waste. Waste characteristics are also affected by income. 130
Currently, LMIC generate the highest quantity of waste on a mass basis (high-income
countries on volumetric basis) and will be the largest generator on that very basis in 2025,
too (see Annex 5). The densities calculated in low-, middle-, and high-income countries are
500 kg/m³, 300 kg/m³, and 150 kg/m³ respectively.131 Therefore, the lower the economic
level of a country, the higher the waste density. LMIC generate highly organic
(biodegradable) waste,132 consisting mostly of food residues with moisture content.133
Organic treatment is not yet well-established in LMIC in terms of generating revenue in
comparison to the recycling market. Some LMIC even import recycling materials.
According to Medina (2006), the United States134 is the world’s largest source of recyclable
materials and the largest exporter. In fact, Mexico purchased recyclables worth 1 billion
dollars from the US in 1998. The North American Free Trade Agreement (NAFTA) has
eliminated most tariffs on recyclables, which has increased imports by Mexico from
700,000 tons in 1993 to 1.2 million tons in 1997. Mexican cartoneros 135 recover
approximately 2,770 tons of cardboard every month. All the cardboard recovered in El Paso
by Mexican cartoneros136 is transported across the border using pushcarts and pickup trucks
to be recycled in Mexico.
130 Medina, M., Recycling sector in northern Mexico, CWG on SWM in LMIC and WASH Workshop 2006,
Kolkata/India, 2006, p. 3.
131 Ahmad, I., Franchise in Pakistan: Master thesis, Trondheim: NTNU, 2003 (non published), p. 2.
132 The presence of moisture content results in the variation of decomposition of solid wastes, which subsequently
leads to leachate being produced and biogases generated.
133 Ahmad, I., Franchise in Pakistan: Master thesis, Trondheim: NTNU, 2003 (non published), p. 2.
134 Medina, M., Recycling sector in northern Mexico, CWG on SWM in LMIC and WASH Workshop 2006,
Kolkata/India, 2006, p. 3.
135 Medina, M., Recycling sector in northern Mexico, CWG on SWM in LMIC and WASH Workshop 2006,
Kolkata/India, 2006, pp. 5-6.
136 The typical cartonero who recovers cardboard in Texas earns the equivalent of 10 times the minimum wage in
Juarez. It is a stable activity that has allowed them to raise a family. The economic impact of scavenging in El
Paso, Texas and Juarez, Mexico has been estimated at 2.5 million dollars a year.
44
4. Solid Waste Management in LMIC: Key Features
According to various surveys, some 60-70% of the waste generated in LMIC is organic
waste (biodegradable) compared to 40% in industrial countries that is appropriate for
composting and between 5-10% which can be recycled. Based on the hierarchy principle of
the ISSWM concept, those fractions should be treated or recycled prior to any disposal. The
question which arises: what shall be the incentives of a private landfill manager to dispose
of as less organic fraction of waste generated as possible? This is considered as the key
issue of this dissertation.
4.3
Institutional and Managerial Framework
Any comprehensive SWM system requires the development of a responsible and competent
regulatory institution and the setting up of a sound managerial system. In LMIC, waste
management is very often a shared responsibility at national, regional and local level and, in
turn, of various government ministries and agencies at a national level. Generally, the
Ministry of the Environment or Environmental Agency is responsible for the provision of
national level waste management services in any region. In most LMIC, institutional
capacity to provide leadership on waste management issues remains weak. By and large, the
SWM sector is inadequately structured and staffed by public authorities. The funding
system is often outmoded and incapable of covering the total costs of the service. It is
noteworthy that the legal frameworks addressing environmental issues in general, and SW
in particular, often exist and are well-designed. However, the enforcement of these laws
falls short for several reasons (among others, the regulatory framework, financial capacity,
and technical means). For instance, India has some of the most detailed environmental
legislation in the world; nonetheless, the country faces enormous environmental and solid
waste-related concerns.
Years ago, solid waste did not have priority on the political agenda in LMIC in comparison
to other services like water supply or electricity. In response to this weakness, international
organisations, such as the UNEP and the World Bank Group, have introduced sanitaryrelated topics such as “Ecosystem Management in Low Income Countries” to strengthen
national initiatives. As the quantity of waste produced increases - due, among other factors,
to urbanisation (see Chapter 4.1) - municipal budgets in LMIC for removing, transporting,
and disposing waste are being stretched. In parts of some cities, this predicament results in
local populations and municipalities facing major solid waste problems. Many
municipalities in LMIC can obtain finance to cover capital costs from the potential
45
4. Solid Waste Management in LMIC: Key Features
sources 137 , such as transfers from the central government, grants from multilateral and
bilateral organisations, renewal funds from user fees, or other solid waste tariffs.
Total government expenditure is roughly 20% of GNP in Low-Income countries and 30% of
GNP in Middle-Income countries (see Table 6). This means that public spending in lowincome countries is relatively high for their level of development and provides very low
returns. Hence, there is an urgent need for a more efficient public sector; accordingly,
proponents of privatisation argue in favour of PSP.
In most LMIC, SW service involves labour-intensive street sweeping and waste collection
techniques. Because labour costs are relatively low, labour intensive techniques are
appropriate. There are roughly 2,000 SW workers for every 1 million urban residents in
LMIC. Finally, another key feature of SWM in LMIC 138 is that equipment costs often
exceed 50% of the total costs, while labour costs are typically less than 25% of total costs.
Therefore, any ISSWM has to take this factor into account in order to create jobs and save
hard currency destined to buy expensive mechanical equipment abroad.
4.4
Financing and Costs Recovery
Any sound SW management service requires the allocation and management of sufficient
financial means to do the job properly. As stated earlier, this is frequently insufficiently
addressed in LMIC. Adequate allocation and proper management of these resources has to
be made available.
Sources of investment finance, in particular credits from international organisations and
concessions arranged with the private sector, have to be assessed meticulously to ensure that
their conditions are within the financial capacity of the local entity and the country to
reimburse the credits. This could result in incentives from the side of public authorities to
apply the hierarchy and polluter pays principles. Operational funding requirements and
recurrent funding sources should be identified before investment funds are committed. At
least a fraction of the costs to be recovered from a waste management system shall be paid
directly by beneficiaries, within the economic context of their ability to pay. This proportion
should be directly linked to the quantity of SW generated in order not to compromise the
polluter pays or user pays principle. Various financing sources (very often a combination of
different sources) are required in LMIC. The interest of public and private sector funding
137 Cointreau-Levine, S., PSP in MSWM, Part II : Guidance Note, St Gallen: SKAT, 2000, p. 31.
138 Cointreau-Levine, S., PSP in MSWM, Part II : Guidance Note, St Gallen: SKAT, 2000, p. 38.
46
4. Solid Waste Management in LMIC: Key Features
sources at the national and international levels to finance SW services depends on the
effectiveness with which initial funds are used. Negotiations can be held with the respective
multilateral (World Bank Group, IMF, etc.) and bilateral (KfW, GTZ, AFD 139 , etc.)
organisations through which national funds can be linked with the objectives of the national
ISSWM policy to leverage international funds. Local and institutional structures for
financing and recovering costs may need to be different for waste management than for
other infrastructure services like drinking water given that SW is being considered a public
good.
Public authorities are generally unaware of the exact cost of their services. A recent largescale study has found that the true costs of a particular municipal service are 30% greater on
average than the amounts reported in municipal budgets. 140 However, by knowing their
financial costs, public authorities can control their own solid waste improvements, both
financially and technically. To a large extent, this reflects the organisational arrangements
through which the services are provided, the methods through which they are funded, and
the accounting systems through which service costs are recorded. This situation, coupled
with a lack of reliable information on the actual costs of new services, means that
municipalities frequently find it particularly difficult to make available the financial
resources necessary to sustain service quality and to establish proper contract specifications
with the private sector.
In most municipalities in low-income countries, SWM costs consume over 20% of the
municipal budget (see Table 6). Despite the high level of expenditure on SWM
management, collection service levels are low, that is, only 70% of urban residents receive
service and most disposal is by unsafe open dumping (see Table 6). According to CointreauLevine (2000), SW services in LMIC do not satisfy the full demand existing in urban areas.
In low-income areas, service sometimes only reaches 10% to 40% of the urban population.
Cointreau-Levine states further that in LMIC, accounting systems show no clear delineation
between recurrent and capital expenditures. There is no attempt to aggregate MSWM costs
incurred by all the various organisations participating in the system. The result is that most
LMIC estimate their costs for MSWM services to be less than half of what they actually are.
139 Agence Francaise de Développement (French Agency for Development).
140 Savas, E., Privatization and PPP, New York: Seven Bridges Press, 2000, p. 25.
47
4. Solid Waste Management in LMIC: Key Features
Waste generation (kg/person/day)
Collection coverage
Disposal costs (US$/person/year)
SWM expenditure in total municipal
budget (%)
Recycling
Low-income
countries
0.3 ~ 0.6
Less than 70%
Less than 1
15.4 ~ 38
Middle-income
countries
0.7 ~ 1.1
80 to 90%
1–3
6 ~ 23,2
Informal (metal, glass,
plastic, composting)
Formal + Informal
(metal, glass, plastic,
composting)
Table 6: Key data of solid waste management in LMIC
(Source: Based on JICA, Capacity Development in Solid Waste, Tokyo: IFIC, 2005, p. 64.)
Finally, in LMIC 141 , most municipal authorities experience a serious shortcoming in
meeting their revenue needs from their tax base. One solution often cited is user charges, as
one of the key principles of the ISSWM concept, even though most solid waste management
services are public goods. User charges force waste generators to minimise the production
of waste. Moreover, LMIC municipalities are hard pressed to obtain enough capital to
finance their solid waste systems and are burdened with political constraints limiting their
ability to generate revenues. 142 This problem results from years of inadequate efforts to
ensure effective cost accounting for cost recovery in solid waste management, and from
competing political agendas. Municipalities143 may attempt to set solid waste management
tariffs by charging owners or residents according to the area of their properties.
Nevertheless, this system works well in countries where the cadastral (land survey)
information is up to date and where billing landowners is relatively easy or automated and is
not obliged to contend with informal settlements.
Municipal government performance in the collection of waste service fees is often
insufficient to cover the full cost of service. People are reluctant to pay for municipal waste
collection services which are perceived to be unsatisfactory; at the same time, poor payment
performance leads to a further deterioration of service quality, and a vicious circle may
141 Cointreau-Levine, S., PSP in MSW services, UMP, Washington, D.C.: World Bank, 1994, p. 7.
142 Cointreau-Levine, S., PSP in MSW services, UMP, Washington, D.C.: World Bank, 1994, p. 15.
143 Cointreau-Levine, S., PSP in MSWM, Part II : Guidance Note, St Gallen: SKAT, 2000, p. 32.
48
4. Solid Waste Management in LMIC: Key Features
arise. 144 Public solid waste departments often employ large numbers of relatively
unproductive workers.
The sustainability of waste management facilities requires the establishment of cost
recovery frameworks. The entity responsible for the environment has to work with the
ministry responsible for municipalities. Other public agencies have to ensure that145:
• Legal and institutional structures for financing and recovering costs for waste
management are in place at national and local levels;
• Economic instruments are applied, as appropriate, for the purposes of minimising
waste generation and for encouraging desired waste management behaviours and
actions;
• Accounting, budgetary, and management systems are in place at the local level to
support the effective implementation and operation of municipal solid waste
management services by the private sector;
• Contracting-out, cost recovery systems, and performance monitoring;
• Waste management technologies are appropriate to fit local specifications.
4.5
Informal Sector and Recycling
As discussed in the previous chapter regarding waste characteristics, the recyclable fraction
of SW is considered to be an important market generating employment and revenue. This
sector remains mainly informal in LMIC. Informal waste management is highly efficient
and the fact that such a high proportion of recyclables is separated before the waste goes to
the landfill offers unequalled economic and ecological opportunities.
In the 1950s and 1960s,146 the informal sector was not taken into consideration by most
LMIC governments. However, this is changing increasingly. There is no scientific definition
of the term “informal sector”. Among various definitions, one of the most commonly used is
provided by the ILO,147 which defines some characteristics of the informal sector: existence
of low entry barriers, utilisation of domestic (local) resources, predominance of family
businesses and child labour, domination of small-sized enterprises, use of fairly labour-
144 Schübeler, P./Wehrle, K./Christen, J., Conceptual Framework, St Gallen: SKAT, 1996, p. 40.
145 Source: METAP-RSWMP project
146 Spies, S./Wehenpohl, G., Informal sector in SWM, CWG on SWM in LMIC and WASH Workshop 2006,
Kolkata/India, 2006, p. 2.
147 International Labour Organization.
49
4. Solid Waste Management in LMIC: Key Features
intensive and adapted technologies, training for the skills required takes place outside the
formal school system, utilisation of unregulated and competitive markets, etc. The informal
sector subtracts a high proportion of recycled materials from landfilling. Suchada (2003)
indicates that the amount of waste to be disposed of at the landfill is reduced by one-third.148
In fact, it is estimated that 90% of recyclable materials are diverted from landfilling.
In LMIC, waste pickers are responsible for the informal recycling of solid waste (so-called
scavenging), operating both upstream (collected from waste generators) and downstream
(landfill). Waste pickers or scavengers operating on landfill sites, without proper facilities
and equipment, are typically exposed to a range of public health 149 and environmental
hazards associated with open landfill sites. Waste pickers have a long track record in some
countries. In Cairo, the Zabbaleen150 people (see Chapter 9.3) have been waste pickers since
they began coming to Cairo in the mid-twentieth century.151 Medina (2006) 152 identified
three categories of waste pickers, namely:
1. Scavenging for self-consumption;153
2. Recovery of materials for sale to consumers;154
3. Recovery of materials for sale to industry.155
SWM from high-income areas tends to contain a greater percentage of recycling material,
such as metals, glass, paper, and plastics. Waste pickers reduce the need for collection,
transport and disposal equipment, facilities, and personnel. Further, as mentioned above,
waste pickers diminish the amount of waste requiring final disposal. Hence, they contribute
148 Suchada P., J. Tränkler, Cholada K., W. Schöll (2003) The role of formal and informal sectors in solid waste
management of developing countries, paper for 9th International Waste Management and Landfill Symposium
2003, Sardinia.
149 During periods of heavy rain, stagnant water ponds are commonly found on such sites. These serve as breeding
grounds for mosquitoes, which act as vectors of infective agents spreading malaria and filariasis.
150 Two categories could be noted among the Zabbaleen. The first group are those who held a license for waste
collection. The other category is the actual Zabbaleen (called Zarraba) who collect, transport, sort, and dump waste.
Zarraba receive their fees from the service provider mainly in the form of waste, though occasionally they are paid
a part of the fees collected by the service providers (Nagwa El-Karawy, CWG, Kolkata, India, 2006).
151 O'Meara, M., New Vision for Cities, in Freire, M./ Stren R. (eds.), Urban Government, Washington: WBI, 2001,
p. 344.
152 Medina, M., Recycling sector in northern Mexico, CWG on SWM in LMIC and WASH Workshop 2006,
Kolkata/India, 2006, p. 5.
153 Waste pickers salvage old lamps, desks, sofas, chairs, tables, radios, pots, pans and other items that can be cleaned,
refurbished, repaired and reused.
154 Entrepreneurs salvage reusable items, such as furniture, appliances, kitchen utensils and construction materials,
which they then sell to their mostly low-income clientele.
155 The most important and steady source of income for scavengers is the recovery and sale of recyclable materials.
Demand for a particular material depends on the kind of industries that are located in each region.
50
4. Solid Waste Management in LMIC: Key Features
to extending the life span of sanitary landfills. Hence, waste pickers in LMIC provide clear
economic, social, and environmental benefits. The issue is how to integrate them in the
formal sector, for instance in cooperation with the private sector, and how to improve their
working conditions.
As stated above, millions of people work in collecting, separating, and processing recycled
materials. Thus, they contribute to using and reusing resources, returning material as a
secondary raw material into industrial production cycles, increasing the life span of
landfills, and generating income. In Delhi 156 , for instance, it is estimated that between
80,000 and 100,000 people work in the informal sector as waste recyclers. 157 Another
example is the municipality of Buenos Aires, which has over 9,000 waste pickers.158
However, waste pickers pose a major challenge for public authorities. The presence of many
people making a living from waste, often in unhealthy sanitary conditions, is an
embarrassment to municipal authorities. One aim of improving waste management is to
increase recycling so as to apply the hierarchy principle. Therefore, it makes sense to create
incentives to promote the existing recycling system. A major challenge of waste
management in LMIC is how best to work with the existing informal recycling sector to
improve livelihoods, working conditions, and recycling efficiency.159
Municipalities in LMIC often fail to integrate the informal sector into their SW policy.
Integrating them would, however, mean a sustainable and significant improvement of solid
waste management – thereby curbing the need for trucks and personnel, ensuring a longer
life for sanitary landfills, creating jobs, reducing poverty, preventing contamination,
improving natural resources conservation, providing a better supply of cheap secondary raw
material, and hence contributing to a better environment.160
156 Rouse, Jonathan, Embracing not displacing, CWG on SWM in LMIC and WASH Workshop 2006, Kolkata/India,
2006, p. 2.
157 Assuming each earns just Rs50 per day, their daily turnover as a workforce is an astonishing Rs 50 lakh (more than
US$ 100,000).
158 Jahan-E-Kabadi „Privatising Waste Services: Clearing Waste or People?“ July 2006.
159 UNEP, Waste Management Planning, 2004, p. 4.
160 Spies, S./Wehenpohl, G., Informal sector in SWM, CWG on SWM in LMIC and WASH Workshop 2006,
Kolkata/India, 2006, p. 8.
51
4. Solid Waste Management in LMIC: Key Features
4.6
Concluding Remarks
This chapter has covered a wide range of SW issues, such as waste generation, waste
characteristics, the informal sector, and so forth. In terms of quantity, the municipalities in
LMIC generate disproportionately more SW than the rural regions in LMIC. This chapter
has shown that rapid urbanisation in LMIC is considered to present a serious environmental
and economic challenge, especially for LMIC. Public authorities should therefore adopt the
principles of ISSWM for environmental and economic reasons. However, PSP is being
challenged by those principles especially due to low-income areas. These areas are usually
characterised not only by low-income (people are not able to bear the full costs of the
service), but also by narrow roads and a high density of waste. It has been highlighted that
the abiding unsanitary conditions pose a health threat not only to the residents of those areas
directly affected, but also to the wider population. It follows that some principles, such as
the polluter pays principle, will prove enormously difficult to implement. As SW
characteristics are directly correlated with the societies in question, this chapter has shown
that solid waste generated in LMIC differs to that in industrialised countries. Moreover,
public authorities in LMIC do not possess the exact figures of the cost of SW services. And
finally, the recycling market in LMIC is considered an important market as it generates jobs
and revenue. However, due to its informality, waste pickers drive this market, thereby
challenging public authorities.
Finally, a century ago, those who reflected on life-threatening urban pollution feared that
cities might eventually self-destruct. Today, it is not only inhumane living conditions, but
also the unsustainable use of resources that pose a threat. Efforts to overcome the political
and financial barriers to sustainable city planning have one thing in common: the dynamism
of committed people trading ideas and working together. It is this concentration of human
energy that allowed cities to give birth to human civilisation, and that may ultimately save
it.161
161 O'Meara, M., New Vision for Cities, in Freire, M./ Stren R. (eds.), Urban Government, Washington: WBI, 2001,
p. 351.
52
5. Theoretical Principles of ISSWM
5.
Theoretical Principles of ISSWM
This chapter introduces the key principles informing the notion of sustainability and
integrated sustainable SWM underpinning this dissertation: the hierarchy principle, the
polluter pays principle, effectiveness and efficiency. A brief definition of these principles in
the context of SWM in LMIC will provide a useful focus to further clarify both the
theoretical and the empirical discussion undertaken so far.
Generally speaking, sustainability aims at providing the best outcomes for the human and
natural environments both now and in the future. It is a concept relating to the continuity of
economic, social, institutional and environmental aspects of human society. The word
sustainability was first used in 1712 by the German forester and scientist Hans Carl von
Carlowitz in his book Sylvicultura Oeconomica. 162 “Sustainability” and “sustainable
development” are often used interchangeably in the literature. In 1987, the Brundtland
Report defined sustainable development as development that “meets the needs of the present
generation without compromising the ability of future generations to meet their own needs.”
One of the important milestones of the development of the concept of sustainability is the
1992 Rio Conference, informally known as the “Earth Summit” (see Chapter 3.1). Later, in
2002, the World Summit on Sustainable Development expanded this definition by
identifying the “three overarching objectives of sustainable development” to be (1)
eradicating poverty, (2) protecting natural resources, and (3) changing unsustainable
production and consumption patterns.
As far as SWM is concerned, the Earth Summit produced the so-called Agenda 21.163 It
stated that environmentally sound waste management should prioritise the recovery of waste
and waste treatment and finally waste disposal. This is referred thereafter to the hierarchy
principle (see Chapter 5.1). Furthermore, it stated that a preventive waste management
approach focused on lifestyle changes, and ones in production and consumption patterns,
offered the best chance for reversing current trends. However, Agenda 21 is not legally
binding. Its implementation has been left more to national rather than international action.
Few countries have been consistent in their Agenda 21-related policies so far.
162 Hans Carl von Carlowitz (1645 - 1714 ) was a german tax accountant and mining administrator. His book
Sylvicultura oeconomica was the first comprehensive treatise about forestry. He is considered to be the father of
sustainable yield forestry. The idea of sustainability emerges in time of crisis and scarcity. He was the first one to
formulate the concept of sustainability. Source: “Grober, Ulrich -DER ERFINDER DER NACHHALTIGKEITDIE ZEIT Nr. 48/ 25.11.1999, page 98.
163 UNEP, Waste Management Planning, 2004, p. 5.
53
5. Theoretical Principles of ISSWM
Scientifically, there is no single definition of Sustainable Solid Waste Management
(SSWM). SSWM means that the model is appropriate to local conditions and feasible from
a technical, environmental, social, economic, financial, institutional, and political
perspective. It can maintain itself over time without exhausting the resources upon which it
depends meaning that the generators of waste (polluters) bear the whole costs of the service.
Chapter 5.2 will discuss this issue as polluter pays principle. SSWM can be realised by
using the technical, organisational, and financial resources available in a particular country.
Some components are indispensable to implementing a system designed to achieve overall
environmental objectives, such as national waste policy, waste planning, regulatory
frameworks and law enforcement.
The ISSWM164 concept has been developed by WASTE (Netherlands organisation), and has
first been presented in 1995 during the UMP Workshop on Municipal Solid Waste
Management in Ittingen, Switzerland165. It is an approach to reach better, more sustainable
solutions to solid waste problems, especially in cities in LMIC. The ISSWM principles are
based on studies carried out by different authors (Lardinois & van de Klundert, 1995,
Hemelaar & Maksum, 1996, Moreno et al., 1999, Coffey, 1996, Schuebeler et al., 1996, van
Beukering et al., 1999). ISSWM differs from conventional approaches towards solid waste
management by seeking stakeholder participation, by including waste prevention and
resource recovery explicitly, by encouraging the analysis of interactions with other urban
systems and by promoting an integration of different habitat scales (city, neighbourhood,
household) 166 . In this context “Integrated” means that the system uses a range of interrelated collection and treatment options, at different habitat scales (household,
neighbourhood, city). In addition, it involves all stakeholders, be they governmental or nongovernmental, formal or informal, profit- or non-profit oriented. Finally, “Integrated” takes
into account interactions between the waste management system and other urban systems.
In the last fifteen years, the ISSWM concept has also evolved and is slowly becoming
accepted by decision-makers. Although this process is successful in most industrial
countries, it is rather slow in LMIC. There is a tendency in LMIC that only financial and
technical means are required for implementing environmentally sound projects and
therefore nothing can be contemplated without external funding. This mentality on the part
164 ISWM (Integrated Waste Management) is used by WASTE. However, ISWM and ISSWM are used
interchangeably in this dissertation.
165 Klunder, A. /Anschütz, J., Sustainability in Waste Management, Working paper for UWEP/CWG, 2000, p. 2.
166 Klunder, A. /Anschütz, J., Sustainability in Waste Management, Working paper for UWEP/CWG, 2000, p. 2.
54
5. Theoretical Principles of ISSWM
of municipal officials represents the beginning of an alarming tendency towards donordependency.167
Klunder, Anschütz, and Scheinberg A. (2001) of the Netherlands organisation WASTE168
(see Annex 2) have carried out one of the most important studies on the concept of
Integrated Sustainable Solid Waste Management (ISSWM) to date. 169 Accordingly, the
ISSWM concept provides a systematic analysis of all issues relating to sound waste
management. These include the technical, socio-economic, financial, 170 and managerial
capacities of city councils as well as environmental and political aspects and not least the
socio-cultural171 context.
The ISSWM concept takes as a point of departure four basic principles172:
1. Equity: all citizens are entitled to an appropriate waste management system for
environmental health reasons.
2. Effectiveness: the waste management model applied will lead to the safe removal of
all waste.
3. Efficiency: the management of all waste is done by maximising the benefits,
minimising the costs and optimising the use of resources, taking into account equity,
effectiveness and sustainability.
4. Sustainability: the waste management system is appropriate to the local conditions
and feasible from a technical, environmental, social, economic, financial,
institutional and political perspective. It can maintain itself over time without
exhausting the resources upon which it depends.
Assessment of the degree of ‘integrated sustainability’ needs an analysis that uses a range of
criteria, both quantitative and qualitative indicators. Some examples of indicators of
‘integrated sustainability’ are given below (see also PAHO, 1995)173:
•
Technical: amount of waste collected by area of the city and per source
167 Scheinberg, A, Central & Eastern Europe, WARMER Bulletin 68, 1999, p. 3.
168
www.waste.nl.
169 Klunder, Arnold van de/Anschütz, Justine/Scheinberg, Anne (eds.) [Concept of ISWM]: Integrated Sustainable
Waste Management: The Concept: Tools for Decisions-makers: Experiences from the Urban Waste Expertise
Programme (1995-2001), Gouda: WASTE, 2001.
170 In many cities, however, officials responsible for MSWM do not have accurate information concerning the real
costs of operations. Where accounting expertise is lacking, it may be brought in from the private sector.
171 The principle social objectives are: to orient municipal waste management towards the real service needs and
demands of the population, to encourage patterns of waste handling and disposal which contribute to the
effectiveness and efficiency of municipal waste services.
172 Klunder, A./Anschütz, J./Scheinberg, A. (eds.), Concept of ISWM, Gouda: WASTE, 2001, p. 11.
173 Klunder, A./Anschütz, J., Design of Sustainable System, CEDARE/IETC Alexandria/Egypt, 1999, p. 10.
55
5. Theoretical Principles of ISSWM
Environmental: amount and % of waste recycled extent of pollution of air, soil and
water
•
Financial: degree of cost recovery, overall cost of waste management services
provided, Socio-economic: service coverage (% of citizens receiving minimum
required waste collection service), user satisfaction with the service by area of the city
•
Institutional: degree of formalisation of informal sector
The key principles of ISSWM namely: hierarchy principle, polluter pays principle,
effectiveness and efficiency will be detailed in the following chapters.
•
5.1
Hierarchy Principle
According to Lardinois and Furedy174 (1999), the waste management hierarchy includes the
following steps.175
1. Avoid the generation of SW
2. Reduce the negative impacts of the waste that is generated
3. Reuse the materials recovered from the waste stream
4. Recycle, compost, or recover materials to new products
5. Recover energy by incineration, anaerobic digestion or similar processes
6. Dispose of waste in sanitary landfills
The hierarchy principle does not constitute compulsory legislation, but rather a guideline. It
is considered one of the most important principles of ISSWM. Klunder and Anschütz (2001)
stated that the hierarchy principle considers products from the ‘cradle’ to the ‘grave’.176
Waste avoidance, waste minimisation177, waste treatment, reuse and recycling occupy an
important place in the waste management hierarchy. In sum, the hierarchy principle is about
174 cited in Klunder and Anschütz, 2001.
175 Klunder, A. /Anschütz, J., Concept of ISWM, Gouda: WASTE, 2001, p. 15.
176 Klunder, A. /Anschütz, J., Concept of ISWM, Gouda: WASTE, 2001, p. 15.
177 According to Riemer and Kristoffersen a definition of waste minimisation encompasses three elements in the
following order or priority (Riemer & Kristoffersen 1999 cited in Pongrácz, E., Re-Defining the Concepts, Oulu,
2002, p. 27): (1) preventing and/or reducing the generation of waste at source; (2) improving the quality of the
waste generated, such as reducing the hazard; and (3) encouraging re-use, recycling and recovery.
56
5. Theoretical Principles of ISSWM
sound resource management.178 Based on the hierarchy principle, all waste recovery and
treatment options have priority and controlled disposal and landfilling are at the bottom of
the pyramid (see Klunder and Anschütz, 2001). The hierarchy principle promotes the socalled “4Rs”: reduce, reuse, recycle, and recover waste.
Waste avoidance and waste minimisation actions address the importers, distributors, and
manufacturers of products that become waste. They are responsible for the costs of
managing these products when they become waste; production and sales data are available
with which to calculate the extent of the waste management accountabilities of these
entities.
The last option of the pyramid regarding the hierarchy principle is sanitary landfilling. In
effect, all waste management systems contain some residual materials for which
environmentally sound waste disposal facilities are required. Therefore, the so-called “Zero
Waste” discussion, which is currently in vogue, will remain a point of purely academic
discussion for many years to come, especially in LMIC.
Most local governments179 subscribed to “take or pay” contracts where quantities of waste
to be supplied to a landfill managed by the private sector are fixed for very long periods of
time (e.g. 20 years). This is a definite disincentive for recycling and waste avoidance.
Another issue is contract duration. The duration of most contracts is oriented to the
investment cycle of general disposal. This represents a major failure since the life cycle of
waste can be left open to more flexible options instead, such as material recycling, waste
avoidance, and resource efficiency. Such possibilities should also be analysed when PSP is
introduced. According to Bleischwitz, R., Proske, A. (2005), economic incentives should be
identified before the involvement of the private sector in SW industry.180 This does not
mean a backward-looking return to the public provision of SWM. Instead, they may well
lead to a waste management future where the positive effects of PSP and competition in the
areas of recycling, reuse and waste avoidance are reconciled with public needs in the areas
of disposal.
The hierarchy should be applied in a flexible manner and should take account of the fact
that, for many LMIC, the first priorities are to improve the collection service for a large part
178 “Integrated Resources Management is the recovery of economic value from any resource produced naturally or by
society while considering ecological, economic, technological and social implications of recovery, recycling and
re-integration technologies”.
179 Bleischwitz, R., Proske, A. [No time to waste]: in Weizsäcker, E./Yong, O./Finger (eds.), M., Limits to
Privatization, London: Earthscan, 2005, p. 110.
180 Bleischwitz, R., Proske, A. [No time to waste]: in Weizsäcker, E./Yong, O./Finger (eds.), M., Limits to
Privatization, London: Earthscan, 2005, p. 111.
57
5. Theoretical Principles of ISSWM
of the population, and to enhance the quality of landfills. 181 No matter how much
prevention, reuse and recycling a society manages to realise, there will always be a role for
landfills in an integrated waste management system. This means that landfills are a valuable
and essential element of an integrated waste management system and should be recognised
as such. 182 As the saying goes, “An illiterate person does not worry about the author’s
rights.” Accordingly, since SWM in LMIC is a kind of stepchild of ISSWM, decisionmakers should prioritise waste separation, higher rates of waste collection in LMIC
municipalities, and not least adequate disposal.183
5.2
Polluter Pays Principle
The polluter pays principle was first adopted in 1916 by Richmond in California. However,
years later many municipalities have still not enforced this principle.184 The polluter pays
principle has enjoyed quite a long history of acceptance in the USA and in the EU.185 The
1972 Stockholm Conference, however, did not mention this principle. Later on, Agenda 21
did not relate to this principle explicitly, but only echoed the allocation of responsibility. In
Johannesburg in 2002, the polluter pays principle was reaffirmed as a framework within
which sustainable development could be attained.
The polluter pays principle states that those responsible for pollution should pay for the
costs of this pollution whereas the “user pays” principle holds that those benefiting from a
waste disposal service should bear the cost of this service. These two notions are used
interchangeably here. The polluter pays principle is an economic policy which allocates the
costs of pollution and environmental damage. It encompasses the costs to human health,
environmental, natural resources, and social and cultural harm. In a waste management
context, the amount paid for a waste disposal service should be proportional to the
generation of waste. Nevertheless, the costs of the service depend not only on the quantity
of waste generated, but also on the distance to the landfill, road accessibility, etc. Whereas
181 UNEP, Waste Management Planning, 2004, p. 2.
182 Scharff, Heijo, Sustainable landfills, in Waste management world Review, London: PennWell Corporation, issue
May-June 2006, p. 78.
183 Dorvil L., PSP in Morocco, Solid Waste, health and the Millennium Development Goals – CWG SWM in LMIC
and WASH Workshop 2006, Kolkata, India, 2006, p. 9.
184 Silguy, C., Hommes et Ordures, Le Cherche Midi éditeur, 1996, p. 40.
185 Examples of Use of Polluter pays Principle: European Union (Convention on the protection of the environment
through criminal law (Nov., 1998)); Germany (“Verpackungsverordnung” The Ordinance on the Avoidance of
Packaging Waste (1991)); USA Superfund (EPA).
58
5. Theoretical Principles of ISSWM
waste collection traditionally falls under local jurisdiction, this is not the same for waste
disposal. Another issue concerns the financial capacity of people living in low-income areas
to pay for services; overall, such capacity is normally weak. Therefore, the strict application
of this principle to householders is troublesome.
The polluter pays principle implicates national and international law in liability for
environmental damage. The fact that environmental damage is not confined to municipal
boundaries or national borders means that the polluter pays principle should be part of
international environmental legislation. Mechanisms like the so-called Clean Development
Mechanism (CDM) have been recently set up to address this principle at an international
level, since environmental pollution, including SW, does not necessarily occur in the
country in which it is detected.
Pongrácz (2002) discovered that the polluter pays principle 186 raises awareness and
encourages householders to segregate their waste when a separate recyclables collection is
available. In the same context, some economists187 rightly argue that when beneficiaries of
the SW service must pay a fee, which increases as the quantity of SW generated increases,
they will generate less waste than other beneficiaries. However, Pongrácz (2002) recognised
that this principle can result in abuse. People put non-recyclables into the free collection
waste container to avoid paying for their removal.188
However, the accountability of residents for the waste they generate continues to be
reflected in the allocation of taxes for the management of their waste.
Bird (2001) rightly argued that taxes are not directly correlated with the services that
taxpayers receive. In contrast, financing local SW services through user fees not only
provides financial means but also provides information on the type of services, the quantity
and quality, and beneficiaries.189 Simply put, user charges promote economic efficiency. A
well-designed tariff system is essential to achieve this objective. Bird (2001) stated that the
economically efficient price for any service is the price that would be charged in a perfectly
competitive market. 190 Sound SWM provides not only “private” benefits to direct
beneficiaries, but also “public” benefit in the form of an externality.191 The obvious way to
186 Pongrácz, E., Re-Defining the Concepts, Oulu, 2002, p. 96.
187 Savas, E. S./Baumol, D./ Wells, W. A., Financing Solid Waste, in Savas, E. S., Efficiency of Solid Waste,
Lexington: The Trustees of Columbia University, 1977, p. 85.
188 When the City of Munich increased waste disposal charges by 42% in 1993, the illegal dumping of waste increased
alarmingly (Pongrácz, E., 2002).
189 Bird, R. M., User Charges, in Freire, M./ Stren R. (eds.), Urban Government, Washington: WBI, 2001, p. 171.
190 Bird, R. M., User Charges, in Freire, M./ Stren R. (eds.), Urban Government, Washington: WBI, 2001, p. 172.
191 Bird, R. M., User Charges, in Freire, M./ Stren R. (eds.), Urban Government, Washington: WBI, 2001, p. 177.
59
5. Theoretical Principles of ISSWM
take external benefits into account in setting up an adequate tariff system for beneficiaries is
to estimate the size of the marginal benefit provided to an additional user by the service in
question, and then to set the price equal to marginal cost less this external benefit. The
resulting financial deficit could then be funded from general revenues. It is always
challenging to measure external social benefits in any convincing way. 192 In sum, the
polluter pays principle or user pays principle cannot be strictly met in LMIC for many
reasons, including SW being considered public goods. Furthermore, as mentioned earlier,
SW is not necessarily generated where it is found. Hence, international organisations are
increasingly addressing this issue in establishing new mechanisms. As far as PSP is
concerned, some arrangement models are limited to franchising or licensing SW collection,
for instance, where households have to pay the private contractor directly.
5.3
Effectiveness
Effectiveness 193 means producing or being capable of producing a result. Effectiveness
stresses the power to produce an effect. Effectiveness in our context means providing
effective SWM services for an entire population. This is measured by determining the extent
to which the required quality of services is being provided. In this respect, the notion of
equity is closely related to the notion of effectiveness. However, rapidly growing, informal
settlements of low-income residential areas present a particular challenge to this principle in
LMIC. These districts are also often characterised by physical constraints that present waste
management challenges. Among other relevant factors are multi-storey buildings often
constructed without in-depth reflection on waste collection. Streets in low-income areas are
often very narrow, and are not readily accessible to the conventional waste collection
vehicles mentioned in the contract specifications agreed with the private sector. Residents
are often not sufficiently informed about preparations for waste collection, such as where
they should place the waste for collection and at what time. Moreover, population densities
in low-income areas that have inadequate waste management services are often very high.
Although the quantity of waste generated per capita in low-income areas is lower than in
high-income areas, the population density prevalent in such areas means that the amount of
waste generated per unit area of ground can be correspondingly high. In principle, solid
waste services have to be rendered in a satisfactory manner irrespective of the socio192 Bird, R. M., User Charges, in Freire, M./ Stren R. (eds.), Urban Government, Washington: WBI, 2001, p. 178.
193 Encyclopædia Britannica 1994-1999.
60
5. Theoretical Principles of ISSWM
economic situation of a given district (low-income areas or high-income areas). This is not
only a moral issue, such as that of public goods, but bad SW waste management affects not
only those who cannot afford the services in question. All citizens are entitled to an
appropriate waste management system for environmental health reasons. Unlike other
public services, such as water supply or electricity, which can be readily cut off for nonpayment of the services, solid waste collection cannot be discontinued without jeopardizing
general public welfare. While the fees charged to beneficiaries of the service for waste
collection services may cover primary collection costs, it seldom covers full transfer,
treatment and disposal costs, especially in low-income districts. To render effective waste
service access, some cross-subsidisation and/or financing out of general revenues will be
required.
As far as SW service is concerned, some indicators for effectiveness are calculated as
follows:
• Population provided with collection services divided by total population;
• Households provided with collection services divided by total households;
• Length of paved streets regularly cleaned divided by total length of paved streets.
5.4
Efficiency
Efficiency 194 is the quality or degree of being efficient; that is, effective operation as
measured by a comparison of production with cost. The ratio of the useful energy delivered
by a dynamic system to the energy supplied to it. Efficiency in terms of solid waste means
providing the specified quantity and quality of service at minimum cost, thereby
maximising the benefits and optimising the use of resources.
The costs for the solid waste services in LMIC prior to PSP experience are commonly
underestimated. Some of the reasons given for this include the organisational arrangements
involved in the provision of services, the methods through which they are paid, and the
accounting systems employed to record the costs of the service. On average, the costs after
the introduction of PSP increased compared to municipal management. Very often, some
relevant costs are not taken into consideration by comparing SW costs prior to and after
PSP. These costs include transaction costs. Nonetheless, service accountability under
194 Encyclopædia Britannica 1994-1999.
61
5. Theoretical Principles of ISSWM
municipal management is often lacking. The monopoly of the municipal administration
reduces the much-needed increases in efficiency.
In theory, and in order to improve efficiency, public authorities are turning to the private
sector. Strong evidence showing that this does actually improve efficiency is lacking,
however. The provision of waste collection and waste disposal services are among those
most often outsourced in this way. One of the largest problems faced by municipal waste
management in LMIC is the difficulty in keeping expensive capital equipment operational.
The problems include a lack of maintenance technicians, a shortage of spare parts, and
insufficiently sound management.
Finally, regarding SW services, efficiency can be calculated in terms of the following ratios:
• Sum of all direct annual costs, indirect costs, social benefits, contract payments,
financial costs, depreciation and others, for
• Total cost divided by population served
• Total cost divided by households served
• Total cost divided by number of commercial outlets served.
5.5
Concluding Remarks
This section has covered the main key principles of the notion of sustainability in the
context of solid waste management. Sustainability has been seen in this context as a concept
relating to the continuity of the economic, social, institutional, and environmental aspects of
human society. Solid waste has been viewed holistically (that is, in integral terms),
encompassing the financial, technical, socio-economic, and managerial features of the
municipalities in question. It has been established that the application of some principles
like the polluter pays principle in LMIC, especially in low-income areas, challenges public
and private sector for various reasons. Some of these include the beneficiaries’ low
economic capacity to afford the full costs of the SWM services, physical constraints, etc.
However, even such stakeholders must be provided with some incentive to minimise their
waste. SW is considered to be a public goods (see Chapter 7.1). As such, solid waste
services cannot exclude some beneficiaries. Concepts have to be developed in the
municipality through which waste management services can be rendered to people living in
low-income areas to ensure the application of those principles. The notion of effectiveness
has been considered, since solid waste services have to be rendered both in low-income
areas and high-income areas. This notion not only constitutes a moral imperative:
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5. Theoretical Principles of ISSWM
environmental pollution negatively affects all citizens of a municipality. As far as the notion
of efficiency is concerned, it has been noted that transaction costs are not usually considered
when comparing SW costs prior to and after PSP to demonstrate its efficiency.
There is certainly a long way to go to achieve ISSWM, in particular in LMIC. Over time,
the implementation of these principles by public authorities and private sector will have the
effect of encouraging the generation of reduced amounts of waste including their treatment
and safe disposal. The question is how to make the private sector meet those principles in
pursuing their “for profit” business?
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6. Privatisation and Private Sector Participation
6.
Privatisation and Private Sector Participation
Before taking up the theoretical discussion of privatisation and PSP, the following chapters
will deal with the notions of globalisation, liberalisation, regulation, and deregulation. These
notions will be outlined briefly. The main reason is that these notions are often used
improperly in both academic and public debate. Consequently, their interpretations are often
misleading. A careful analysis of these notions will facilitate our understanding of the actual
discussion of privatisation in general and of Private Sector Participation (PSP) in particular.
Thereafter, Chapter 6.6 will consider privatisation. It will analyse and discuss the most
relevant PSP models. Their limitations of the models will be highlighted. Chapter 6.7 is
concluded with some pertinent remarks.
6.1
Globalisation and Liberalisation
In economic literature, globalisation refers to a situation of the increasing closeness of
nations in economic terms through trade, capital flow, and a new international division of
labour. For Alan Gilbert (1990), globalisation is the third most important reorganisation of
the international division of labour, the first having been the use of colonies as suppliers of
raw materials, and the second the industrialisation of LMIC through entrepreneurs.
Accompanied by rapid technological innovation and falling raw materials prices,
globalisation has brought about the tertiarisation195 of old metropolitan areas.
At present, the notion of privatisation cannot be considered without taking into account the
forces of globalisation. 196 Globalisation is the tendency of businesses or technologies to
spread throughout the world, or the process of making this happen. The notion was first
used as early as 1944 but economists only began applying it more consistently in the early
1980s. Theodore Levitt (1983) pioneered this notion, and is usually credited with its coining
in the article he wrote in 1983 for the Harvard Business Review entitled “Globalization of
Markets”. On the one hand, as an engine of commerce, the notion includes some positive
economic and social aspects. Hypothetically, it results in an increased standard of living and
economic prosperity in LMIC as well as bringing further wealth to industrial countries. On
195 Development of the service sector.
196 Yong, O., The Global Context, in Weizsäcker, E./Yong, O./Finger, M. (eds.), Limits to Privatisation, London:
Earthscan, 2005, p. 190.
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6. Privatisation and Private Sector Participation
the other hand, globalisation is considered to be an engine of “corporate capitalism”. In this
meaning, it encompasses negative economic, social, and ecological aspects. It is often
considered to be a force trampling on the human rights of societies in LMIC, claiming to
bring prosperity, yet often simply amounting to plundering and profiteering.
From an economic point of view, a typical – and entirely positive – definition is provided by
the International Monetary Fund (IMF), which stresses the growing economic
interdependence of countries worldwide through an increasing volume and variety of crossborder transactions in goods and services, free international capital flows, and a more rapid
and widespread diffusion of technology.
According to Weizsäcker’s more realistic point of view (2005), globalisation has various
strands, including the growth of international trade and financial flows, a weakening of the
democratic nation state, the movement of human populations across borders, and the onset
of global environmental changes.
As far as PSP in SWM in LMIC is concerned, international private firms are playing an
active role due to their financial and technical capacity. In Morocco, for instance,
international firms from France, Spain, and USA are operating in the solid waste market.
Global players like “Vivendi” and “Lyonnaise des Eaux” are also operating in this market,
mostly in joint ventures with Moroccan firms (see Chapter 10). This is considered to be an
effect of globalisation. It is not about stopping this process, but it is a question of finding the
best approach to meet sustainable principles, especially in the SW sector. Other notions in
the same context include liberalisation, deregulation, and so forth. There is a distinction
between privatisation, deregulation 197 , and liberalisation, which all refer to actions
undertaken by governments to stimulate competition among private firms. The following
paragraphs will briefly outline these notions.
Liberalisation means the introduction of competition into the provision of various public
services customarily provided by state-owned companies, such as water,
telecommunications, and SWM. Liberalisation is a form of deregulation because it requires
changing the competition rules concerning infrastructural provision so that competition can
occur. Liberalisation often requires unbundling198, so that the parts suitable to be exposed to
competition are separated from the non-competitive (monopoly or oligopoly) elements of
any given infrastructure.
The most interesting liberalisation opportunities at present seem to concern a systematic
recourse to contracting-out from the public to the private sector. Although economic
197 Weizsäcker, E./Yong, O./Finger, M., Limits to Privatisation, London: Earthscan, 2005, p. 5.
198 That means splitting different stages of service delivery and allocating to different organisations.
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6. Privatisation and Private Sector Participation
liberalisation is often associated with privatisation, the two terms have to be considered
separately. For example, the European Union has liberalised some public markets, such as
the gas and electricity markets, instituting a system of competition. However, state-owned
companies like “Electricité de France” (EDF) remain under government ownership.
In the context of SW, contrary to municipal solid waste, commercial and industrial waste is
characterised by free competition. This is simply achieved by contracting-out the service.
Why could the same regime not be adopted for household waste, which this dissertation is
addressing? The following reasons might be cited.
1)
Municipal solid waste services fall into the category of public goods (see
Chapter 7.1), meaning that competition in some segments of this market does not
always make sense.
2)
Private operators of sanitary landfills are not willing to engage in the collection of
separated SW since they have invested in disposal capacity. 199 In terms of the
limitations of PSP, two points should be highlighted: firstly, different private firms
cannot compete in the same area or district in solid waste collection (collision
effect); and secondly, if the same private firm is used in SW collection and in
landfill management, and if it is paid according to the quantity of waste collected
and disposed, it will have no economic interest in supporting a waste minimisation
programme or waste recycling. This is considered to limit ISSWM principles.
3)
The questions that have to be addressed are: In which element is competition
useful? In which element will liberalisation jeopardise the ISSWM concept? This
can be accomplished by the unbundling of activities in which economies of scale
are not important. Due to the characteristics of solid waste services, these activities
can be separated by markets - either geographically or by system elements, such as
street sweeping. The possibility of unbundling can create attractive opportunities for
PSP in a competitive environment. 200 Nevertheless, unbundling is economic
nonsense in some SWM sectors, such as landfill management.
4)
A further question that has to be addressed is the capacity of people in LMIC to pay
for SW services, especially those living in low-income areas. If the SW market is
fully liberalised, issues such as cost recovery, or the effectiveness of the ISSWM,
can challenge the private sector. Golakai (2005) rightly remarked that “evidence to
date has shown that liberalisation can directly threaten the protection and
199 Massaruto, A., Waste management economic interest, Paris: LED, 2005, p. 13.
200 Bartone, C. R., Private Sector in MSW, in Freire, M./ Stren R. (eds.), Urban Government, Washington: WBI, 2001,
p. 216.
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6. Privatisation and Private Sector Participation
5)
6.2
promotion of consumer interest, particularly for poor consumers who cannot afford
services provided on a purely commercial basis.” 201 The contracting-out of SW
collection through franchising (that is, where private firms are directly paid by the
beneficiaries) will fail in LMIC.
Finally, another possibility for PSP is that while large private firms could be
responsible for the integrated cycle, they could also subcontract some of the
services out to small private firms, NGO or CBO. This model allows for more
intense competition and leaves space for SME, especially in labour-intensive
activities such as solid waste collection and in knowledge-based innovative
segments (recycling opportunities). Large private firms could then concentrate on
more complex business processes, such as treatment facilities.202
Deregulation and Regulation
In economic theory, deregulation is the process by which governments remove restrictions
on businesses in order to raise the level of competitiveness, create more efficiency, and
lower prices for the beneficiaries. Privatisation203 is not the same as deregulation, which
means the removal or attenuation of restrictions, including the requirements and
prohibitions imposed by a public authority on the actions of public or private actors or, in
essence, any reductions of state control over the activities of societal actors. However,
privatisation often comes with deregulation, especially the removal of exclusive rights and
the opening-up of a service to competition.
A liberalised market can be regulated to protect the rights of the beneficiaries, especially to
prevent de facto oligopolies. However, the terms are often used interchangeably.
Deregulation gained momentum in the 1970s, influenced not only by research at the
University of Chicago and the theories of Ludwig von Mises, Friedrich von Hayek, and
Milton Friedman, among others, but more importantly by the work of Alfred E. Kahn.
The problems experienced with unregulated or weakly regulated private ownership have led
many to conclude that private ownership can bring benefits if there is a strong framework of
regulation to ensure that companies look after the needs of all their customers of goods and
201 Golakai, N., Experiences of African Consumers, in Weizsäcker, E./Yong, O./Finger, M. (eds.), Limits to
Privatisation, London: Earthscan, 2005, p. 212.
202 Massaruto, A., Waste management economic interest, Paris: LED, 2005, p. 17.
203 Weizsäcker, E./Yong, O./Finger, M., Limits to Privatisation, London: Earthscan, 2005, p. 4.
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6. Privatisation and Private Sector Participation
beneficiaries of services and support broader public policy goals, such as environmental
protection and equal opportunities.204 Privatisation cannot solve public infrastructure issues
in the absence of a strong regulation of the rules of the game that are widely understood and
generally regarded as legitimate (Yong, 2000). Regulatory institutions that are independent
and have access to necessary information about costs, prices and service quality, are
important key players of successful infrastructure reform. Creating such institutions is a
“conditio sine qua non” for the success of PSP in the solid waste market in LMIC.
A privatisation process accompanied by regulation and corporate restructuring leads to
higher growth.205 Accordingly, about 200 regulatory agencies have been created in LMIC
over the last decade. Finally, if private operators decide to terminate the contract, there is
generally little the regulator can do about it.206 To be precise, deregulating the SW market
can only be successful if comprehensive steps are taken towards unbundling sectors, thereby
enabling fair competition and at the same time building and developing capacity within
municipal administrations in LMIC.
6.3
Privatisation: Academic and Empirical Discussion
The intellectual foundation for privatisation was laid and pioneered by Milton Friedman.207
However, the veritable conception of privatisation was first proposed in 1969 by Peter
Ferdinand Drucker.208 Other influential scholars include Gordon Tullock, Anthony Downs,
and William Niskamen who coined the term “re-privatise”, the precursor of privatisation,
also in 1969. 209 Considerable academic attention has been devoted to the theoretical
204 Weizsäcker, E./Yong, O./Finger, M., Limits to Privatisation, London: Earthscan, 2005, p. 9.
205 Stiglitz, J. E., Democratizing the IMF, Columbia University, 2005, p. 122.
206 Wolff, P., Private Funding of Infrastructure, in Weizsäcker, E. /Yong, O../Finger, M. (eds.), Limits to Privatisation,
London: Earthscan, 2005, p. 322.
207 Milton Friedman (1912 – 2006), American economist criticising government intervention in consumer product
safety, one of the leading proponents of monetarism. Friedman's best-known contributions are in the realm of
monetary economics, where he is seen as the founder of monetarism and as one of the successors of the “Chicago
school” tradition of economics. He was awarded the Nobel Prize for Economics in 1976 (Encyclopædia Britannica,
2007).
208 Peter Ferdinand Drucker (1909 – 2005), Austrian-born American management consultant, educator, and author.
His early works discuss the nature of industrial society. A second line of books explains general ideas about
modern business management. A third body of work offers speculation on the future impact of such developments
as technological change. Finally, there are writings that address questions of practical corporate management
(Encyclopædia Britannica 2007).
209 Savas, E., Privatisation and PPP, New York: Seven Bridges Press, 2000, p. xiv.
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6. Privatisation and Private Sector Participation
differences in the motivation and performance of public and private organisations. William
Niskamen Jr., Graham Allison, et al. are among the many who have considered the
matter. 210 Further research was conducted in the 1970s by R. W. Poole, R. M. Spann,
Rothbard, and Fisk et al., who all strengthened the case for privatisation. 211 Since the
beginning of the 1970s, much academic research has been carried out, devoted to
privatisation in general, Public-Private Partnerships 212 (the notion of Public-Private
Partnerships is used interchangeably with the notion of PSP; see Chapter 6) and their impact
on the performance of public enterprises. Important researchers include E. Savas, 1970; R.
W. Poole, 1976; R. M. Spann, 1977; M. N. Rothbard, and D. Fisk in 1978. Other authors
(Williamson, Powel, McNeil,) also furnished thorough studies on specific PSP models. In
the 1970s, E. Savas contributed to strengthening the case for Public-Private Partnerships in
solid waste services, especially waste collection services. E. Sclar and M. Harper recently
carried out an in-depth study on privatisation and PSP in relation to the goods and services
required. Other researchers, including Gädeke, 2002; Ludwig, 1997; Pippke, 1999;
Völmicke, 1996, investigated the link between PSP and SWM. Their research comprised
German case studies, and the PSP discussion differs in its essence from LMIC to
industrialised countries like Germany.
Privatisation can be broadly defined as relying more on private institutions and less on the
government to deliver public services. It is the act of reducing the role of government or
increasing the role of other institutions in producing goods, providing services, and owning
property.213 There are several types and degrees of privatisation. One involves the sale to
private owners of state-owned assets, and this is most correctly called privatisation. Others,
where public services have been contracted out to private firms, and where the public
authorities remain legally responsible for the public services, are called PSP in this study.
Throughout the world, privatisation has sometimes been adopted improperly. Very often, it
is considered to be key to a vibrant economy and, ultimately, to achieving a better society
for all. 214 However, the historical record suggests that private provision might not be
enough.
210 Savas, E., Privatization and PPP, New York: Seven Bridges Press, 2000, p. 78.
211 Savas, E., Privatisation and PPP, New York: Seven Bridges Press, 2000, p. 15.
212 According to Savas, a public-private partnership is defined as any arrangement between a government and the
private sector in which partially or traditionally public activities are performed by the private sector.
213 Savas, E., Privatisation and PPP, New York: Seven Bridges Press, 2000, p. 3.
214 Savas, E., Privatisation and PPP, New York: Seven Bridges Press, 2000, p. xiv.
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6. Privatisation and Private Sector Participation
The elections of Margaret Thatcher as Prime Minister of Great Britain and of Ronald
Reagan as President of the United States of America, in 1979 and 1980 respectively215,
afforded high visibility and a pronounced ideological impetus to what became the
privatisation movement.216 It has been flourishing throughout the world since the end of the
1980s, in terms of both the number of transactions conducted and the amount of revenue
generated. According to Sader (1995), the number of privatisations worldwide rose from 62
in 1988 to 868 in 1993, while the total number of transactions over this period in 93
countries amounted to 2,655 at a total value of US$ 271 billion. However, the success of
privatisation has been erratic, differing from one country and one region to another.
Between 1988 and 1993, most privatisations (85% of all transactions) took place in
industrialised countries, generating US$ 175 billion, compared to US$ 96 billion for LMIC.
Thus, privatisation has been more successful in developed economies, in particular in
OECD countries. Nonetheless, there is a discrepancy between the statistical evidence of
privatisation and public perceptions. To some people, the very word “privatise” causes
misunderstanding and polarisation. None of the empirical studies undertaken so far
adequately explains the growing popular disenchantment with such reforms.217
6.4
Privatisation: Advantages and Limitations
Neoclassical economic theory218 and recent theories of state failure advocate competitive
market mechanisms, essentially on the grounds of efficiency. It is argued that, by
comparison, non-competitive provision leads to inefficiency and productive (sometimes
known as internal or technical) inefficiency.
Savas is famous for his work in this area and has conducted remarkable research on
privatisation in general and Public-Private Partnerships in particular. As the discussion on
privatisation is not ideologically free, Savas can be considered to be one of the advocates of
privatisation amongst North American economists. Savas (2000) states that the word govern
comes from Greek “kybern,” “to steer.”219 In his opinion, it is the duty of the government to
215 The rallying cry of the Reagan Revolution was “Get the Governments back off our backs and out of our pockets”,
while in Thatcherite Britain it was “Rolling back the frontiers of the state (Savas 2000)”.
216 Savas, E., Privatisation and PPP, New York: Seven Bridges Press, 2000, p. 15.
217 Kessides, I. N., Infrastructure Privatisation, The World Bank, 2005, p. 28.
218 Batley, R., PPP for Urban Services, in Freire, M./ Stren R. (eds.), Urban Government, Washington: WBI, 2001,
p. 201.
219 The same root appears in cybernetics, the science of control.
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6. Privatisation and Private Sector Participation
steer, not to row.220 According to him, privatisation is a fundamental strategy to improve the
productivity of government agencies. It invokes the power of private property rights, market
forces, and competition to give people more for their money.221 Furthermore, he argues that
mercenary troops have been used since ancient times and private air forces came into being
in recent times to conduct wars under contract.222 In his opinion, privatisation is normally
based on the conviction that profit motives and competition are necessary to provide the
proper incentives for efficiency and quality.223 He states, perhaps a little provocatively, that
“It’s fun spending other people’s money! Those who have served in government and made
expenditure decisions may admit to the satisfying thrill, the power, and the regal sense of
self importance-to say nothing of the flattery from grateful beneficiaries-that comes with
dispensing tax money, all at no cost to one’s own pocket!”224 Compared to the considerable
previous work he undertook in the 1970s, his more recent arguments, particularly in a study
published in 2000, are anything but serious research. Supporting the benefits of privatisation
by citing the example of mercenary troops without due ethical consideration is
irresponsible.
One of the most frequently cited advantages of the private sector over government is its
management flexibility. Private sector management has greater ease in firing personnel for
non-performance and in providing upward mobility for workers with good performance.
Also, the private sector is not constrained to government hours and overtime constraints. It
is generally easier for a public agency to influence the behaviour of a private organisation
than the behaviour of another public agency.225 Public administration does not pursue public
agencies in court.
Regarding LMIC, PSP advocates argue that privatisation results in more competition226 ,
better service, economic growth, reduction of national debt, and benefiting from more
Foreign Direct Investment (FDI). Privatisation means less pressure on municipal budgets,
and therefore provides more flexibility. It is also perceived as a way of reducing overall
public deficits by increasing short-run revenues. A key argument for privatisation is that
compared to state-owned, non-competitive utilities, private owners and operators have
220 Savas, E., Privatisation and PPP, New York: Seven Bridges Press, 2000, p. 7.
221 Savas, E., Privatisation and PPP, New York: Seven Bridges Press, 2000, p. 6.
222 Savas, E., Privatization and PPP, New York: Seven Bridges Press, 2000, p. 71.
223 Sclar, E. D., Economics of privatisation, 2000, Foreword Page viii.
224 Savas, E., Privatisation and PPP, New York: Seven Bridges Press, 2000, p. 29.
225 Savas, E., Privatization and PPP, New York: Seven Bridges Press, 2000, p. 101.
226 However evidence in the field of ISSWM in LMIC is still lacking.
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6. Privatisation and Private Sector Participation
stronger incentives and are better able to control costs, respond more effectively to
consumer needs, and adopt new technologies and management practices.227 As far as public
services are concerned, this argument is not true.
In addition, those advocating228 privatisation advance three lines of argument:
(a) Privatisation promotes efficiency and enhances social welfare by creating incentives
to allocate resources to their highest use.
(b) Transferring property from the public domain to the private sector and reducing
regulatory restrictions increases personal freedom, avoids the effects of rigid
bureaucracies, and reduces corruption and cronyism in public places.
(c) A combination of private property and appropriate incentives and rules produces
equitable results in the sense of rewarding those who work hard, take risks, and
exercise ingenuity. The following paragraphs will discuss this issue with regard to
SW services.
Cointreau-Levine (2000) observes that the main reasons229 for this enhancement are that
private sector service providers are accountable to their customers and are obliged to react
to customer dissatisfaction. Competition between the private and public sectors is effective
in improving cost-effectiveness. If thresholds are specified in the contractual agreement, and
the private sector operator is monitored effectively, good standards of operation can be
achieved. Private sector management has more flexibility to hire qualified staff, to pay staff
according to their performance, to terminate the employment of unsatisfactory workers, and
to adjust working hours according to service demand. The private sector can optimise the
size of the work force and the ratio of professional to operational staff, and to concentrate its
resources on the service for which they are intended, without staff or equipment being
requisitioned for other purposes. In her opinion, private sector companies are both less
restricted by bureaucratic procedures and more able to concentrate resources where they are
needed.
Competition, accountability, and transparency are the three keywords in this respect. 230
There should be competition between different private sector companies, and also, if
possible, between the private and public sectors. Public support can be expected to result in
more widespread payment of charges or taxes, and fair competition to result in lower costs
227 Kessides, I. N., Infrastructure Privatisation, The World Bank, 2005, p.25.
228 Weizsäcker, E./Yong, O./Finger, M., Limits to Privatisation, London: Earthscan, 2005, p. 11.
229 Cointreau-Levine, S., PSP in MSWM, Part II : Guidance Note, St Gallen: SKAT, 2000, p. 10.
230 Cointreau-Levine, S./Coad, A., PSP in MSWM, Part I : Executive overview , St Gallen: SKAT, 2000, p.8.
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6. Privatisation and Private Sector Participation
and better services. According to Cointreau-Levine (2000), some reasons 231 for this
increasing focus by municipalities on alternative arrangements include:
• Many requirements of the MSW rules have not been fulfilled by municipalities in the
past – such as primary door-to-door collection or sanitary landfilling – and therefore,
there are very limited skills and knowledge within municipalities to handle these
activities.
• Most municipalities lack the finance to expand operations into new geographic areas
or into new activities.
• The increased need to focus on efficiency improvements to reduce cost and reallocate
expenses within the waste management chain to activities like treatment and disposal.
In theory, the main reasons for private sector engagement in ISSWM are the following: first,
the private sector has easy access to specialist skills; secondly, it can form joint ventures;
and thirdly, it has better access to capital financing, which in turn enables the private sector
to mobilise appropriate equipment and other resources quickly. Very often, the private firm
has to make high initial investments and will only be paid during the contract period.
However, other authors like Sclar (2000), Kessides (2005), and others argue that
privatisation is oversimplified, oversold, and ultimately somewhat disappointing. Kessides
(2005) remarks that privatisation has proved to be more difficult to implement effectively; it
is also less magical in its accomplishments than what was believed or promised
beforehand. 232 Privatisation, although useful, is easily overworked. It is not an
uncontroversial solution to the problem of providing public goods when both costs and
benefits are hard to measure. Without sound public management, PSP does little to enhance
public value (Sclar, 2000).
Opponents 233 of privatisation advance a parallel set of propositions. Firstly, privatisation
tends to weaken the state and its capacity to care for social equity. By weakening the state,
privatisation also erodes the significance of democratic participation at national and subnational levels. Secondly, privatisation subordinates broader public goods, including longterm ecological and cultural values, to commercial imperatives. Thirdly, the need of private
providers to make a commercial return (in the form of profits, dividends, rents and/or
interest) adds to the cost of providing public services. Thus, the costs of services are higher
231 Mehta, R./Dasgupta, S., municipal waste services in Delhi, CWG on SWM in LMIC and WASH Workshop 2006,
Kolkata/India, 2006, p. 2.
232 Kessides, I. N., Infrastructure Privatisation, The World Bank, 2005, p. 21.
233 Weizsäcker, E./Yong, O./Finger, M., Limits to Privatisation, London: Earthscan, 2005, pp. 11-12.
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6. Privatisation and Private Sector Participation
when supplied by the private sector. Commercially, optimal decisions are often suboptimal
for public goals, and competition forces providers to ignore externalities (see Chapter 7.1).
The private sector never really assumes risks in providing public services. Where costs
exceed revenues, private operators respond by demanding subsidies, raising charges, cutting
necessary investment and maintenance, or walking away. Finally, new operators may
generally start shedding excess employees – one of the most vexing problems facing stateowned utilities in nearly every developing and transition economy.234
Finally, even in the USA, the country which most forcefully advocates the principles of
privatisation, there are some public services that are not allowed to be provided by the
private sector. These services include 3,304 commercial airports. These airports are stateowned, by municipalities and cities respectively. Although these airports are locked into
competition, they are not profit-oriented. In 2004, James May, President of the American
Transport Association, stated in the House of Representatives: “They are not private
enterprises. They are public utilities developed and maintained with important input of
public money.”235 Federal laws prohibit these airports from using their profits to other ends
than the improvement of their infrastructure. This system is called the “Principle of
Diversion of Income”.
On balance, the privatisation policy debate has largely amounted to little more than
competing anecdotal evidence. Those favouring privatisation tell their favourite stories, and
those opposed peddle theirs. According to Sclar (2000), this is “Like the blind men who
each touch a single part of an elephant and self-assuredly contradict each other, they
extrapolate their narrow experiential evidence into general descriptions of entirely different
creatures.” 236 Hence, the question is not whether privatisation and private sector
development should occur, but about how it can be done in an optimal way, that is, how to
reach social goals through enterprise growth, how to avoid market distortions by supporting
enterprises, and how to regulate and enter into dialogue with the business sector (Nellis and
Kikeri, 2002; Kikeri and Nellis, 2004).237
The decision to privatise a public service should not be based on ideological considerations
but rather on economic merits. 238 One of the most fundamental determinants of the
234 Kessides, I. N., Infrastructure Privatisation, The World Bank, 2005, p. 25.
235 Leser, Eric « Un service public que les Etats-Unis n’envisagent absolument pas de privatiser » Daily Newspaper
« Le Monde », 3 June 2005.
236 Sclar, E. D., Economics of privatisation, 2000, p. 13.
237 Obser, A. Privatisation and Development, in Weizsäcker, E./Yong, O./Finger, M. (eds.), Limits to Privatisation,
London: Earthscan, 2005, p. 260.
238 Sclar, E. D., Economics of privatisation, 2000, p. 44.
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6. Privatisation and Private Sector Participation
efficiency and effectiveness of any PSP arrangement is competition. That is, the degree of
competition that an arrangement permits will, to a major extent, determine how efficiently
that arrangement will supply a service. 239 As far as SWM is concerned, the formidable
question is in which SW element fair competition is possible during and after the bidding
procedure?
6.5
Prerequisites for PSP
Cointreau-Levine (2000) argues that various issues are necessary when addressing the
involvement of the PSP in SW services. They include efficiency, accountability,
management, legislation, finance, and costs. Cost effective and adequate service standards
can only be reached by creating effective competition amongst several private sector
contractors, transparent bidding procedures, and fair competition; accountability for both
contract parties; and the comprehensive monitoring of contracted services. Tailor-made
benchmarks need to be defined and followed up in order to assess the effectiveness of
private sector services. To achieve successful PSP, she recommends observing the
following principles240:
̇ Maintain a balance between the private sector and public management;
̇ Develop contractual periods that enable economic depreciation of assets and
repayment of loans;
̇ Develop techniques and facility sizes that are appropriate and economically viable;
̇ Define private sector service zones that are equitable and comparable for optimum
competition and achieve economies of scale and optimum spans of management;
̇ Rationalise collection and transfer haul distances to minimise costs;
̇ Seek harmony and co-operation with private sector partners for win-win contractual
and operational relationships;
̇ Build government capacity to work as an effective partner in contracting and
performance monitoring;
̇ Encourage private sector joint ventures that bring in foreign expertise and optimise the
use of local knowledge and skills.
239 Savas, E., Privatisation and PPP, New York: Seven Bridges Press, 2000, p. 94.
240 Cointreau-Levine, S., PSP in MSWM, Part II : Guidance Note, St Gallen: SKAT, 2000, p. 23.
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6. Privatisation and Private Sector Participation
Furthermore, the following points are essential to ensuring the sustainable participation of
the private sector in providing public services:
a)
Contestability
To achieve optimum contestability, the zones served by public authorities should cover at
least 30% of the population of the urban area. To create contestability and to guarantee a
minimum managerial capacity of the municipalities, the private sector should service no
more than 70% of any city; the remainder should be serviced by the government.241
b)
Capacity building
The introduction of PSP usually requires municipal strengthening.242 Municipal managers
should be able to set up contract specifications or delegate these to private agencies. New
responsibilities encompass monitoring the performance of the new private operators.
c)
Competition
Competition is the key condition for successful PSP as it results ultimately in more
efficiency and effectiveness. However, competition strongly depends on the type of services
to be provided. As PSP in ISSWM is not fully developed in LMIC, all approaches need to
consider the current number, capability, and interests of private contractors. Options to
develop the market by offering attractive and contestable packages or involving
international operators need to be assessed. Savas (2000) observes that the most thorough
studies included the costs encumbered by cities for contract preparation, bidding,
monitoring contractor performance, contract administration, and the like in the cost of the
contract work. These studies concluded that the cost of municipal collection is about 35%
greater than the total cost to the city of contract collection. In these studies, municipal
collection was monopolistic and not the result of managed competition.243
d)
Provision of accurate information
All relevant financial and technical information and data needs to be clearly and
transparently outlined in the bidding documents. Contract specifications need to be
comprehensive and objective to avoid Asymmetric Information. They need to be applied in
a fair manner during the operation period.
241 Cointreau-Levine, S., PSP in MSWM, Part II : Guidance Note, St Gallen: SKAT, 2000, p. 15.
242 Cointreau-Levine, S., PSP in MSWM, Part II : Guidance Note, St Gallen: SKAT, 2000, p. 32.
243 Savas, E., Privatization and PPP, New York: Seven Bridges Press, 2000, p. 161.
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6. Privatisation and Private Sector Participation
e)
Accountability
Both contract partners, the public and the private sector, should embrace the principle of
accountability. The private partners should sense that they are accountable to the
beneficiaries of the service and to the contractual authorities. Contract performance should
be managed by good inter-organisational relationships, the use of performance bonds, and
finally the use of penalties. Such accountability results from well-designed and cutting-edge
contract specifications and effective contract enforcement.
f)
Monitoring
Performance monitoring is a key condition to establishing a proper basis for evaluating
efficiency and service effectiveness. Capacity building and adequate means are required in
order to develop adequate contract monitoring units to follow up the performance of service.
However, contract specifications or conditions often fail to reflect the actual features of the
city in question. The service level is often not affordable by residents living in low-income
areas. Public management often has no accurate information on the real costs of the service.
Finally, comprehensive unbundling of service areas in order to allow several private
contractors to provide sweeping and waste collection services, as well as the participation of
public service providers in tender procedures, are among the options to facilitate more
competition in the SW market.
6.6
Analysis and Discussion of PSP Models
PSP covers a wide spectrum of arrangements in which private enterprises are involved in
the provision of services that have hitherto been provided by public authorities. In theory,
the private sector has three important roles to play in the SWM field. Firstly, where the
public authority renders SWM services inefficiently and inadequately, PSP offers a means
of enhancing efficiency. Secondly, in situations where local public funds for investment are
restricted by budgetary constraints 244 , the private sector has easier access to financial
institutions and can mobilise the necessary financial means. Thirdly, the private sector is
244 Between 1994 – 1995 in Dar Es Salaam, the DCC (Public authorities) requested 89 million TZS from the central
government to repair existing vehicles and equipment and buy new ones. Vehicles aside, the DCC usually lacks
money to buy fuel. This study found that in each of the months of July and August 1994, work at the landfill site
came to a standstill for 6 days for lack of fuel for the bulldozer.
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6. Privatisation and Private Sector Participation
well-positioned to draw on international technical know-how, as these companies can
introduce sound new technologies245 into LMIC.
The economic importance of SWM for the private sector has rapidly increased in the last 20
years, not least because of increasing public awareness especially in industrial countries.
Solid waste has for a long time remained an activity of local interest with limited market
implications. The private sector has essentially been involved as a provider of labourintensive activities, having little value added and industrial complexity, or as suppliers of
disposal capacity in landfills (Massaruto, 2005). This tendency is changing increasingly in
both LMIC and industrial countries. In fact, private firms in France collect 45% of all waste
and 87% of all waste is treated by private firms.246
Because PSP can be accomplished using many different models or arrangements, confusion
arises when discussing PSP issues in LMIC. Various models have been experimented with
in the past, such as Public-Private Partnerships, contracting-out, franchising, leasing,
concessions, BOT, and the like. The selection of an appropriate contract model depends on
the type of service to be provided (street-sweeping, waste collection, waste treatment,
management of transfer station, waste disposal), service standards, the typology of the
district in question, funding ability, and finally the existence of a marketplace with regard to
the interests and financial and technical capability of the private firm. In addition, many of
these arrangement models are complex to set up, and they may call for explicit guarantees
from the government, meaning that the government is left with significant contingent
liabilities. The differences between some of these models can be subtle.
Public authorities in LMIC have to assess which PSP method will deliver good results and
achieve ISSWM. For example, should a landfill be implemented through a turnkey contract
or concession, or should the government build the facility and outsource a service contract
for its operation? Should a contractor under franchise arrangement collect all solid waste in
a given area? In this chapter, delegation and concession models will be focused on.
Contracting-out will be analysed in-depth due to its importance in this investigation.
The first broad PSP arrangement model is delegation. 247 Sometimes called partial
privatisation, delegation requires continuous and active government involvement. The state
effectively remains legally responsible for the functions by simply delegating SW services
245 Bartone, C. R., Private Sector in MSW, in Freire, M./ Stren R. (eds.), Urban Government, Washington: WBI, 2001,
p. 215.
246 Drefus, M., Régulation service public, Paris : LED, Colloque international, 2005.
247 In French “Gestion déléguée”.
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6. Privatisation and Private Sector Participation
to the private sector. Delegation 248 is carried out in Public-Private Partnerships (PPP),
contracting-out, franchise, etc. These will be detailed in the following.
6.6.1
Public-Private Partnerships
There is no single definition of Public-Private Partnerships (PPP). Various international
organisations have their own interpretations. For some, it means any form of private sector
involvement, or joint ventures involving a public sector and a private sector partner; for
others (for instance the German Technical Cooperation -GTZ)249, it refers to a particular
programme or development tool. For instance, PPP is a legally defined term in Indonesia to
designate a joint venture. Therefore, the present study refers to Private Sector Participation
(PSP) rather than PPP in order to avoid confusion. As municipalities are legally responsible
for solid waste services, PPP is the arrangement model most used in this field. When a
public-private partnership is based on the operation of highly specific public assets for
which the public sector retains responsibility, such as SWM, the degree of scrutiny must be
extraordinarily high, but scrutiny is costly in terms of both time and money (Higby,
1995).250
The debate on PPP in public services began more than 100 years ago. Among others,
Emmanuel Savas has researched this area in-depth. Indeed, Savas was the first to link the
PPP model to municipal waste services in the 1970s. More recently, the economist Moshe
Adler carried out investigations into PPP in SW. He investigated the phenomenon of “onagain / off-again” in PPP history, that is, the process of involving the private sector in
SWM, then returning the service to public administration, and then back again to the private
sector, and so forth. Examples of “on-again / off-again” will be discussed in the following
chapter.
As stated above, PPP251 are usually defined as any arrangement between a government and
the private sector in which partially or traditionally public activities are performed by the
248 Savas, E., Privatization and PPP, New York: Seven Bridges Press, 2000, p. 126.
249 Within PPP, also known as development partnerships with the private sector, GTZ cooperates with businesses and
business associations in developing and transition countries. The PPP programme combines the respective
strengths of public and private partners: PPP projects are planned, financed, and implemented jointly. Since the
PPP programme began, GTZ has formed more than 300 partnerships with private firms and associations in more
than 60 countries. More than 140 million euro have been invested in these projects, with the public share averaging
around 40 percent.(http://www.gtz.de/en/themen/uebergreifende-themen/ppp/2362.htm).
250 Sclar, E. D., Economics of privatisation, 2000, p. 121.
251 These schemes are sometimes referred to as PPP or P3.
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6. Privatisation and Private Sector Participation
private sector.252 Theoretically, PPP recognises that both the public sector and the private
sector have certain advantages relative to the other in the performance of specific tasks. In
some types of PPP, the government uses tax revenue to provide capital for investment, with
operations run jointly with the private sector or under contract (see next section on
contracting-out). As this dissertation takes a holistic view of solid waste elements, each PSP
model is assessed in terms of its suitability to the ISSWM concept. Regarding the
limitations of this model to some waste elements, Table 7 includes: symmetric lack of
information, high degree of scrutiny required, difficulties in applying penalties, etc. Key
characteristic of this model is the sharing of costs and profit. However, due to the fact that
this model is about a joint venture between public management and private sector, it might
be very difficult to apply penalties in case of non-performance of the contract. Table 7
reveals some limitations to the PPP model.
Application
Not usual
Not usual
Not usual
Feasible
Duration
Features
Limitations
3 years
to
15 years
Recycling
treatment plant
Feasible
3 years
to
15 years
Composting
treatment plant
Feasible
5 years
to
30 years
Landfill
management
Feasible
6 months
to
2 years
• Joint venture between
public and private
• Costs and profit sharing
• Private sector makes
investment
• Private sector provides
technical expertise
• Joint venture between
public and private
• Costs and profit sharing
• Private sector provides
technical expertise
• Joint venture between
public and private
• Costs and profit sharing
• Private sector provides
technical expertise
• Joint venture between
public and private
• Costs and profit sharing
• Private sector provides
technical expertise
• Symmetric Lack of
Information
• High degree of
scrutiny required
• Contestability
• Difficulties in
applying penalties
• Symmetric Lack of
Information
• Contestability
• Difficulties in
applying penalties
• Degree of scrutiny
must be high
• Contestability
• Difficulties in
applying penalties
• Symmetric Lack of
Information
• Contestability
• Difficulties in
applying penalties
Street sweeping
Waste collection
Waste transport
Transfer station
Table 7: Limitations of Public-Private Partnerships model to SW elements
252 Savas, E., Privatization and PPP, New York: Seven Bridges Press, 2000, p. 4.
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6. Privatisation and Private Sector Participation
6.6.2
Contracting-out
Contracting-out became a popular buzzword in business management in the 1990s.
Contracting-out or outsourcing253 is often defined as the delegation of operations from a
public to a private firm with strong financial capacity and sound technical background in the
field in question. Under this arrangement, the public authority remains legally responsible
for the service, and it bears the same risks. Private contractors usually receive payment
according to contract specifications and not their operational efficiency. Contracting-out is a
business decision that is often based on more efficiency or a focus on core competencies.
It is instructive to look closely at the most studied SWM service worldwide: SW collection.
Many large research studies were conducted in the 1970s and 1980s, offering a great deal of
compelling evidence concerning the efficiency, effectiveness, and equity of contracting-out.
In the United States, 38% of all cities were using contract collection for household waste
collection in 1992, and 50% of large cities were doing so.254
The same surveys revealed that contracting for exclusive collection zones is much more
efficient than having open private competition along common collection routes. The private
sector can operate more efficiently than the public sector in providing municipal solid waste
services, as long as the requirements for contestable markets are met255 (see Chapter 6.5).
Sclar (2000) raised another issue in the discussion on contracting-out, namely cost. He
argued that decisions to contract out usually involve complex transaction costs related to
product specifications (here, the term “product” designates the service), the negotiation of
prices, the close monitoring of quality, and the need to anticipate unforeseen contingencies.
In such cases, the managerial decision process involves analysing not only the comparative
costs but also the transaction costs associated with contract design and monitoring. In such
situations, obtaining all the relevant information can be difficult or can require considerable
time and money.256
The hypothesis that involving the private sector makes for higher levels of efficiency
received only cautious endorsement. There were often knock-on effects of PSP that actually
increased the costs of the public sector: the need to manage private contractors and to retain
a reserve capacity, and the inability to shed staff in spite of PSP. These additional costs are
253 These two terms are often used interchangeably in the relevant literature.
254 Savas, E., Privatization and PPP, New York: Seven Bridges Press, 2000, p. 160.
255 Bartone, C. R., Private Sector in MSW, in Freire, M./ Stren R. (eds.), Urban Government, Washington: WBI, 2001,
p. 219.
256 Sclar, E. D., Economics of privatisation, 2000, p. 19.
81
6. Privatisation and Private Sector Participation
called transaction costs, as stated above. Very often, those costs are not considered by
comparing SW costs prior to and after PSP. A key conclusion is that the effects of PSP must
be considered “all around”. That is, it is essential to take into account not just the possibly
greater efficiency of the private part of a service but the gross effects on the total cost of
providing the service.257
Three sets of costs must be considered when deciding between “contracting-out”,
“contracting-in” (public management), and direct public management: the direct costs of
public management, the costs of the outside service contractor, and the internal costs
include personnel, equipment, and materials. The costs of outside service typically include
the agreed-upon price of the contract. Internal costs include everything related to bidding
and monitoring the contractual agreement. The comparative cost analysis of public and
private management must take into account the transaction costs incurred regardless of
whether the private sector is more efficient at providing the service than the public sector.
The crucial issue is whether the sum of the contractually agreed price and the transaction
costs is less than the cost of direct public provision.258
Contracting-out is the arrangement most commonly referred to when talking about SWM
services. In this contractual arrangement, the government259 is ideally a skillful purchasing
agent, a sophisticated monitor of the services rendered by the private sector, an efficient
collector of taxes, and a parsimonious disburser of proper and timely payments to the
contractor. However, prima facie evidence is still lacking, especially in LMIC where
municipal authorities (or public authorities) manage SW services inadequately and do not
even know the exact costs of the services, possess no accurate information on the quantity
and characteristics of waste generated, and have difficulty in establishing thresholds. The
issue is how one can expect a municipal authority to monitor a service properly when it has
no experience of what a sound SW service should look like. In addition, contracting-out
arrangements in some waste elements are short, typically lasting 5 years, and they usually
only focus on improving services to existing customers rather than reaching the urban poor,
which normally challenges the effectiveness of the SW service.
Another key issue of contracting-out is the “On-again / Off-again” phenomenon. As
mentioned above, Adler conducted an in-depth survey on the “On-again / Off-again” type
257 Batley, R., PPP for Urban Services, in Freire, M./ Stren R. (eds.), Urban Government, Washington: WBI, 2001,
p. 211.
258 Sclar, E. D., Economics of privatisation, 2000, p. 64.
259 Savas, E., Privatization and PPP, New York: Seven Bridges Press, 2000, p. 70.
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6. Privatisation and Private Sector Participation
of contracting-out to show the limitations of this arrangement. He260 states symbolically that
to cure governmental ills with contracting-out, one might just as well cure anaemia with
blood letting. Adler reported that in 1849 when Mayor Caleb Woodhull evaluated the
performance of this round of contracting-out, he stated: “The system of cleaning the streets
by contract has signally failed of fulfilling public expectations, and I assume that it is no
longer entitled to public favor. At first it seemed to promise important advantages, both as
to economy and efficiency, but in its operation it has proved entirely inadequate to
accomplish either of these desired results....” Once again, the city had no choice but to hire
government employees to do the job, and once again they got the job done. Furthermore,
Adler mentioned that in 1851 Woodhull summed up their performance in the following
way: “I believe I echo the sentiments of every citizen in according my commendation to the
system now in operation: Of having the streets cleaned by the city authorities.” But the
charter mandated contracting-out, which one member of the Committee on Street Cleaning
lamented bitterly: “The amended charter of 1853, so far as cleaning the streets is
concerned, has proved (sic.) an utter abortion.... The proceedings of the Common Council
teem with....information of contracts broken, engagements unfulfilled on the part of the
contractors, and the consequent filthy condition of the streets.” Similar assessments were
issued over the next 25 years, until finally, in 1880, the Committee on the Affairs of Cities
signed the death certificate for contracting-out: the contract system has since been tried
repeatedly in all kinds of forms. Adler argued that even when sophisticated contract
specifications are established, contracting-out remains cumbersome.
Adler found that municipal authorities each time municipal authorities revised the issue of
contracting-out, they asserted that this time they really knew how to write a foolproof
contract; nonetheless, they never really succeeded in this task. Adler found that every single
contemporary argument for and against privatisation had already been used in the past.
Every single trick to overcome Principal-Agent problems has been tried.261
As far as LMIC are concerned, the situation is no different. In Abidjan / Côte d’Ivoire, for
instance, three different stages comprise the principal history of SWM. 262 The period
between 1953 and 1990 involved waste management undertaken by a private company.263
From 1991 to September 1992, the public waste department of the city of Abidjan
260 Adler, Moshe “Why Do We Have Government Employees” Columbia University, Dept. of Urban Planning,
General Accounting Office, Commercial Activities Panel, June 11, 2001
(http://www.gao.gov/a76panel/adler1.pdf).
261 Sclar, E. D., Economics of privatisation, 2000, p. 154.
262 Attahi, K., Abidjan, Côte D’Ivoire, in Onibokun, A. G. (eds.): Managing the Monster: Ottawa: IDRC, 1999, p. 19.
263 Société industrielle des transports automobiles africain (SITAF, private solid-waste operator).
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6. Privatisation and Private Sector Participation
undertook management under the auspices of the state. Finally, the period starting from
September 1992 consisted of managed contracting-out. Under the contract, SITAF264 had to
undertake the clearance of household SW and sweep the principal streets of Abidjan. The
municipal administration paid the company a fee for the services provided. This was also a
long-term contract renegotiated every 5 years. The calculation of the monthly fee was based
on a formula combining the tonnage of waste transported and the distance covered, as
declared by SITAF. The monitoring of the service provider was not considered. The whole
arrangement was based on mutual trust until the beginning of the 1980s, when doubts about
the escalating costs of the services were expressed.265 Once again, due to Principal-Agent
difficulties (Asymmetric Information), this contractual agreement failed.
Another example of “On-again / Off-again” is the PSP experience in Ghana. Over a decade
ago, concerted efforts were made to involve PSP to deliver solid waste collection services in
Ghana. Over the years, the local authorities had provided the services directly and then
decided to outsource SW services in some municipalities. The purpose of contracting-out
SW services to the private contractors was to improve the efficiency of the SW service.
Indeed, between 1985 and 1995, the German Technical Agency (GTZ) provided equipment
and financial means, backed by 5 years of spare parts supplies for SW services. There was a
big gap after German technical assistance was withdrawn. Thereafter, SW services were
contracted out to a private company. This resulted in a private monopoly which charged
public authorities US$ 12/ton collection266, which is considered too high for the economic
level of the country. Simply put, this PSP experience was anything but efficient.
Consequently, the government terminated the contract in 2001. The SW waste service was
returned to public and municipal authorities, and now involved the participation of small
local entrepreneurs. The experience in Ghana has shown that simply turning over public
service delivery to private contractors, without ensuring that the fundamentals that make
them successful are put in place, results in weakening public management capacity.
Successful contracting-out is feasible under the following set of conditions267 : unambiguous
service specifications, the availability of several potential providers, and a competitive
climate. The government should be able to monitor the performance of the firm contracted;
appropriate terms and conditions should be included in the contract document and enforced.
264 Société Industrielle des Transports Automobiles Africain.
265 Attahi, K., Abidjan, Côte D’Ivoire, in Onibokun, A. G. (eds.): Managing the Monster: Ottawa: IDRC, 1999, p. 19.
266 Boakye Charles “Solid Waste Collection Systems in Ghana” World Bank Urban Forum, 2005
http://www.worldbank.org/urban/uswm downloaded, 2006.
267 Savas, E., Privatization and PPP, New York: Seven Bridges Press, 2000, p. 75.
84
6. Privatisation and Private Sector Participation
As far as limitations of this model are concerned, the utmost challenge is to establish
comprehensive threshold in the contractual agreement. More precisely, it is difficult to state
in a contract when waste collection is not performed or when a landfill is not
comprehensively managed by the private sector. Another important issue are the
transactions cost. Very often these costs are not considered by comparing public
management to private sector. Other problems concern Principal-Agent dilemma,
Asymmetric information, etc. Table 8 summarises some limitations to the contracting-out
model.
85
6. Privatisation and Private Sector Participation
Street
sweeping
Application
common
Duration
6 months
to
2 years
•
•
•
•
Waste
collection
and
transport
common
6 months
to
2 years
•
•
•
•
•
•
Transfer
station
Features
Public authorities legally
responsible for the service
Low technology required
Unbundling in
geographical section
High involvement of
national SME
Low economic risk
Labour intensive
Low technology required
Unbundling in
geographical section
High involvement of
national SME
Low economic risk
common
3 years
to
10 years
• Competition foreclosed
after bidding
Recycling
common
treatment
plant
Composting common
treatment
plant
Landfill
common
management
3 years
to
15 years
3 years
to
15 years
5 years
to
30 years
• Competition foreclosed
after bidding
Limitations
• Challenge in
establishing threshold in
contractual agreement
• Sound public awareness
required
• High transaction costs
• Setting up threshold in
the contract challenges
• Sound public awareness
required
• High transaction costs
• Risk “On-again / Offagain”
• Principal-Agent
problem
• Asymmetric
Information (Symmetric
Lack of Information)
• Risk “On-again / Offagain” due to weakness
of public management
• No incentive from
private sector side to
strengthen and develop
public managerial
capacity
• Principal-Agent
problem
• Asymmetric
Information (Symmetric
Lack of Information)
• same as above
• Competition foreclosed
after bidding
• same as above
• Competition foreclosed
after bidding
• same as above
Table 8: Limitations of contracting-out/delegation to SW elements
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6. Privatisation and Private Sector Participation
6.6.3
Franchise
A franchise is an award of monopoly privileges to a private firm to supply a particular
service in a specified area, usually with a price regulation imposed by a government agency.
The private firm collects its own revenues from generators within the zone or from the sale
of solid waste by-products removed from the zone. Concession is another term for this
arrangement. 268 Public authorities own all the waste within their boundaries, once it has
been discharged for collection and disposal. The public authority is allowed to give
qualified private firms the exclusive right and responsibility to provide services to
beneficiaries in various zones under its jurisdiction. In return for such an exclusive
franchise, the private firms pay a fee to the municipality. They subsequently charge their
customers appropriate fees to cover the costs of services. Public authorities remain
responsible for the monitoring of the performance of private contractors, including some
regulation of user charges; they also retain the right to renew or terminate licences in
accordance with contract specifications. The biggest concern 269 associated with using
private subscription and franchise systems for solid waste collection is that some waste
generators would not be willing to pay for the service and that they would not properly
dispose of their waste themselves (the so-called “free-rider” problem). Such conduct will
even affect those who regularly pay270 their fees. Chapter 7.1, Chapter 7.2, and Chapter 7.3
(on Goods theory) will examine this issue more closely. Table 9 summarises some
limitations of this model.
268 Savas, E., Privatization and PPP, New York: Seven Bridges Press, 2000, p. 79.
269 Cointreau-Levine, S., PSP in MSWM, Part II : Guidance Note, St Gallen: SKAT, 2000, p. 20.
270 The private sector has been given a major role in SW collection in the central area of Dar es Salaam. The contractor
has only been able to collect 10% of the expected RCCs, even though it collects 70% of the waste. It has not,
therefore, made the expected investments in equipment, and this keeps the collection service from being what it
was intended to be. (Lusugga K., J.M., Dar Es Salaam, Tanzania, in Onibokun, A. G. (eds.): Managing the
Monster: Ottawa: The IDRC, 1999, p. 130).
87
6. Privatisation and Private Sector Participation
Application Duration
Features
Street
Not very
6 months • Exclusive rights to
sweeping
common
to
perform in a zone
2 years • Private sector pays a fee
for the license and charge
directly beneficiaries
• Low technology required
• Unbundling in
geographical section
• High involvement of
national SME
Waste
Quite
6 months • Exclusive rights to
collection
Common
to
perform in a zone
2 years • Private sector pays a fee
and
transport
for the license
• Low technology required
• Unbundling in
geographical section
• High involvement of
national SME
Transfer
Not very
3 years • Competition foreclosed
station
common
to
after bidding
10 years • Private sector pays a fee
for the license
Recycling
Not very
3 years see above
treatment
common
To
plant
15 years
Composting
Not very
3 years see above
treatment
common
to
plant
15 years
Landfill
Not very
5 years see above
management
common
to
30 years
Limitations
• Difficulties in
establishing threshold
• Challenge public goods
theory by non-payment
of beneficiaries
• Collision effect
• Challenge public goods
theory by non-payment
of beneficiaries
• Free-rider problems
• Weakening public
management
• Free-rider problems
• Weakening public
management
• Free-rider problems
• Weakening public
management
• Free-rider problems
• Weakening public
management
• Free-rider problems
Table 9: Limitations of franchise model to SW elements
According to Table 9 limitations include difficulties in establishing threshold, for instance,
for street sweeping (when is a street not carefully swept?). Another relevant issue is the non
payment for the service rendered to the private firm, what would be the consequences if
some beneficiaries cannot pay for the SW service? However, bad SW waste management
affects not only those who cannot afford the services in question. All citizens are entitled to
an appropriate waste management system for environmental health reasons. Solid waste
collection cannot be discontinued without jeopardizing general public welfare.
88
6. Privatisation and Private Sector Participation
6.6.4 Concession
Concession includes a number of variations of contractual arrangements, such as Build and
Transfer (BT), Build-Lease-Transfer (BLT), Build-Operate-Transfer (BOT), Build-OwnOperate (BOO), Build-Transfer-Operate (BTO), Contract-Add-Operate (CAO), DevelopOperate-Transfer (DOT), Rehabilitate-Operate-Transfer (ROT), Rehabilitate-Own-Operate
(ROO), etc. It is noteworthy that the nomenclature used to describe all concession models
has not been standardised. There are several terms which are often used interchangeably –
such as turnkey and Build-Operate- Transfer (BOT), for example. There are also single
terms that are used loosely and can be applied to situations that are fundamentally different.
Indeed, the terminology debate surrounding the definition of PSP arrangements itself
mirrors the evolution of PSP approaches and the evolving regulatory environment defining
PSP.271
A concession is awarded, for instance, by a municipality to a private company to
Design-Build-Operate (DBO) a facility for the transfer, treatment, or disposal of solid waste.
Variations include Build-Own-Operate (BOO) when a private sector company provides
funding, and Build-Own-Transfer (BOT) when ownership transfers to the public authorities
on an agreed date. Concession agreements are commonly long-term agreements wherein the
private firm provides the capital investment for a new facility. However, a concession also
means that a private firm is given the opportunity to generate revenue from the waste
management activity, typically by charging a gate fee for receiving waste and through the
sale of compost or recyclables.
Under concession arrangements, the private sector finances and owns SWM facilities during
the period contractually agreed. In return, the municipality typically grants and enables
access to a specified quantity and quality of SWM services and provides some fees. The
concession agreement might specify performance standards, methods of judging
performance, liquidated damages for delay or non-performance, risk assignment, dispute
resolution, standards for worker safety, health protection and environmental standards, and
so forth. A concession arrangement generally lasts between 10 and 45 years. The private
company makes all the investments, including major ones.272
271 Guidelines for successful Public-Private Partnerships, European Commission Directorate – General Regional
Policy, March 2003, http://ec.europa.eu/regional_policy/sources/docgener/guides/pppguide.htm.
272 Finger, M., Privatization of the Infrastructures, in Weizsäcker, E. /Yong, O. /Finger, M. (eds.), Limits to
Privatization, London: Earthscan, 2005, p. 238.
89
6. Privatisation and Private Sector Participation
Concessions for sanitary landfill operations are a highly interesting business opportunity for
the international private sector because they have significant economies of scale and major
environmental spillover effects, along with greater investment and skills requirements.
These characteristics offer opportunities for PSP private-sector involvement through
comprehensive management contracts, lease contracts, or concession arrangements to build
and operate disposal and recycling facilities.273 The following table displays the key features
and limitations of this arrangement.
Application
Not very
common
Not very
common
Duration
6 months
to 2 years
6 months
to 2 years
Features
Quite
common
3 years
to
10 years
Recycling
treatment
plant
Quite
common
3 years
to
15 years
Composting
treatment
plant
Quite
common
3 years
to
15 years
Landfill
management
Very
common
5 years
to
30 years
• Private sector provides
financing
• Key driver: Polluter
pays principle (user
charging)
• Key driver: Polluter
pays principle (user
charging)
• Generation of fees by
selling recycling
materials
• Key driver: Polluter
pays principle (user
charging)
• Generation of fees by
selling compost
• Key driver: Polluter
pays principle (user
charging)
• Competition
foreclosed after
bidding
Street
sweeping
Waste
collection and
transport
Transfer
station
Limitations
• Weakening public
management
• Competition foreclosed
after bidding
• See above
• See above
• High quantity of waste
required
• Minimum quantity of
waste required
• No incentive in waste
treatment
• Weakening public
management
• Problems with hierarchy
principle
Table 10: Limitations of concession model to some SW elements
273 Bartone, C. R., Private Sector in MSW, in Freire, M./ Stren R. (eds.), Urban Government, Washington: WBI, 2001,
p. 221.
90
6. Privatisation and Private Sector Participation
Concerning the limitations of this model, Table 10 underlines the necessity of high quantity
of waste for the private landfill manager. Hence, the hierarchy is compromised.
Furthermore, this model if thoughtless applied could result in weakening the managerial
capacity of municipalities in LMIC. The question which arises: what should be the incentive
of the private sector to build capacity of municipal managers?
Most concessions are operated on a “take or pay” basis, where fees are paid even if the
guaranteed daily quantity of waste is not reached. The international private sector is usually
interested in a minimum landfill capacity of 300 tons per day274, both for the full utilisation
of landfill equipment and its amortisation. This represents a limit to the ISSWM concept, as
public authorities are forced to deliver the maximum quantity of waste whenever possible;
besides, they have no incentive to minimise, recycle, or treat waste. Since few cities have
this quantity of waste, bundling the needs of several small to medium-sized cities into one
regional facility needs to be considered if private sector investment (such as through a
“design, build, own, and operate” concession agreement) is desired.
Concessions always involve operations and maintenance by the concessionaire, and they
must last long enough to recover investments. Therefore, if major private sector investments
are needed (LBO, BTO, BOT, BBO, BOO), concessions will need to be granted for a longer
duration, sometimes even for more than 20 years. In contrast, if the public sector is
responsible for investment, as in a lease-and-operate arrangement, the period can be as little
as five to fifteen years (see Table 10). Other arrangements include DBO275, BTO276, Build
and Sell, RTO 277 . They are commonly used in the privatisation of infrastructure. Other
concession arrangements include Build Operate Transfer and Build Own Operate and
Transfer. They are discussed in the following.
a)
Build Operate Transfer
Build Operate Transfer (BOT) and Build Own Operate (BOO) contracts are similar to
Design Build Operate (DBO) contracts, but leave facility ownership and financing
obligations in the hands of the private firm. BOT 278 and its many variations are used
274 Cointreau-Levine, S., PSP in MSWM, Part II : Guidance Note, St Gallen: SKAT, 2000, p. 28.
275 Design, build, operate contracts that combine design, construction and operation for 15 to 20 years of a facility,
such as sanitary landfills, treatment plants, and transfer stations.
276 Build Transfer Operate.
277 Rehabilitate-transfer-operate (RTO): this is like BTO, but is based on rehabilitating existing infrastructure rather
than building new facilities. The duration and type of the contract depends upon primarily the amount of money
that the private operator had to put up for the rehabilitation (Finger, M., Privatization of the Infrastructures, in
Weizsäcker, E. /Yong, O. /Finger, M. (eds.), Limits to Privatization, London: Earthscan, 2005, p. 239).
278 “Beyond Boundaries” PPIAF/ADB Manila: 2002, p. 8.
91
6. Privatisation and Private Sector Participation
primarily for specific large investments, among others in sanitary landfills. Such
arrangements can last up to 30 year, depending on the size of investment that has to be
amortised. The private firm treats guaranteed amounts of waste in exchange for guaranteed
prices, although usually including some amount of demand risk. A private developer is
awarded a franchise (concession) to finance, build, own, and operate a facility. This is
sometimes referred to as BOOT (build, own, operate, and transfer); here, user fees are
collected for a specified period, after which ownership of the facility is transferred to the
public sector.279 Limitations of this arrangement are similar to those displayed in Table 10.
b)
Build-Own-Operate-Transfer
Many public authorities in LMIC promote the (Build-Own-Operate-Transfer) BOOT
arrangement of PSP. BOOT involves the private sector in building, owning, operating, and
after a pre-specified number of years, transferring infrastructure to a public authority. The
BOOT arrangement is considered to be a means of having private sector financed facilities
whose ownership will be transferred to municipality authorities. BOOT arrangements
require a high level of scrutiny by formulating contract specifications. However, as
underlined above, no one can foresee all potential contingencies, so this arrangement is
cumbersome. Regarding a foolproof contract, Adler states that no matter what safeguards
are placed around it, the system remains vicious. 280 Most importantly, they outline the
regular maintenance requirements which the private sector must ensure are fulfilled for the
facilities in question, as well as the final condition in which the facilities must be presented
to the local authority at the time of ownership transfer. One issue is that if the private firm
goes out of business before the termination deadline stated in the contract specifications,
public management with its lack of know-how has to continue providing the service without
interruption. This is considered one of the principal challenges of this arrangement. Table
10 presents an overview of the principal limitations of this arrangement.
6.6.5
Open Competition
In open competition of SWM collection services, each household contracts a private
collection firm and pays the SWM removal fees charged by the contractor. However, if
several firms are competing with each other in the same neighbourhood, a certain collision
279 Savas, E., Privatization and PPP, New York: Seven Bridges Press, 2000, p. 244.
280 Sclar, E. D., Economics of privatisation, 2000, p. 154.
92
6. Privatisation and Private Sector Participation
effect occurs. Governments license private firms to compete with each other in providing
SWM services. No firm has a monopoly within a zone and price regulation is not required.
Each firm collects its own revenues from its beneficiaries. Strong empirical evidence proves
that this arrangement is useful for commercial and industrial waste. However, this could be
cumbersome regarding municipal waste.
An example of the flaws of open competition is provided by Nigeria. The private waste
collectors in Ibadan are all members of the Association of Environmental Contractors. In
1994, they served an estimated 10,000 households in the Ibadan urban area. No particular
part of the city is allocated to any contractor, and they are free to make their own
arrangements. Many companies in the city make use of these private collectors. Some SME
use low-tech equipment to collect over short distances. They operate in the Sabo area and in
some markets and motor parks, charging their clients agreed fees. However, they dispose of
the waste collected in dumpsites within the neighbourhood. These are often not cleared
regularly and therefore constitute both an environmental hazard and an impediment to
traffic. 281 The following table presents both key features and limitations of this PSP
arrangement.
Street
sweeping
Waste
collection
and transport
Transfer
station
Recycling
treatment
plant
Composting
treatment
plant
Landfill
management
Application
Not very
common
Common
Not very
common
Not very
common
Not very
common
Not very
common
Duration
Features
Limitations
6 months • Waste generator
• Collision effect
– 2 years
contracts directly
• Contradiction to the
private firms
public goods theory
3 years –
Competition foreclosed after bidding
10 years
Private monopoly/oligopoly instead of public
monopoly
3 years –
Competition foreclosed after bidding
15 years
Private monopoly/oligopoly instead of public
monopoly
3 years –
Competition foreclosed after bidding
15 years Private monopoly/oligopoly instead of public
monopoly
5 years –
Competition foreclosed after bidding
30 years
Private monopoly/oligopoly instead of public
monopoly
Table 11: Limitations of open competition model to SW elements
281 Onibokun, A.G./ Kumuyi, A.J, Ibadan, Nigeria, in Onibokun, Adepoju G. (eds.): Managing the Monster: Ottawa:
IDRC, 1999, p. 46.
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6. Privatisation and Private Sector Participation
Regarding the limitations of open competition, Table 11 underlines the collision effect. In
effect, it is not economic sound to bring different firms in the same waste collection area for
instance. As far as management of transfer station, recycling treatment plant, composting
treatment plant and landfill are concerned open competition is foreclosed. Furthermore, due
to the fact that competition is foreclosed after the bidding procedure, public monopoly could
turn to private monopoly/oligopoly (see Chapter 9.4).
6.7
Concluding Remarks and Discussion
This chapter has examined the privatisation issue in-depth in general and in SWM in
particular. The notions of globalisation, liberalisation, deregulation, etc., have been
introduced. The differences between them have been highlighted. It has been shown that the
general public very often wrongly perceives the notion of privatisation. As far as SWM is
concerned, the only options are Private Sector Participation (PSP) or Public-Private
Partnerships (PPP) as public authorities are legally responsible for SWM. On balance, it is
not about privatisation or not, but about whether fair competition is possible or not.
Both international and national private firms are playing an active role in SWM services in
LMIC for many reasons, among others on financial and technical grounds. One positive
effect of globalisation is that the so-called “global players” (that is, large international firms)
are now operating (and very often successfully) in LMIC. The remaining challenge is to
apply sustainable principles like the hierarchy principle, polluter pays principle,
effectiveness, and efficiency in the SW sector by carrying out private business.
As far as SWM is concerned, PSP arrangements present some limitations in terms of both
the “collision effect” and the economic interest of some systems. This chapter has shown
that a private landfill operator who collects SW at the same time in a municipality will have
no interest in minimising SW if paid according to the quantity of waste collected. With such
an arrangement, the hierarchy principle will be jeopardised. Thus, the solid waste market
should be unbundled into segments where proper competition can be created. As observed,
another approach is geographical division.
Introducing PSP into SWM in LMIC can only have benefits if a strong regulatory
framework is in place. Capacity building, capacity development, and institutional
strengthening are some key requirements facing municipal management when dealing with
this issue. However, the formidable question remains: how can private firms achieve
capacity building and the strengthening of municipal institutions in LMIC by performing
their profit-making business operations?
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6. Privatisation and Private Sector Participation
The privatisation debate is a polarised one. Privatisation advocates argue that privatisation
results in more competition, better service, economic growth, reduction of national debt, and
beneficially attracts more Foreign Direct Investment (FDI). Opponents, on the other hand,
argue that privatisation is oversimplified, oversold, and disappointing. It should not be
considered to be a panacea to SWM problems in LMIC. Sound public management is
essential to PSP. The issue is not about being “for” or “against” privatisation. It has been
stressed that the issue is merely about “monopoly” or “competition”. The decision to
involve the private sector in providing public services, such as SWM, should not be based
on ideological considerations but rather on economic merits. Echoing Cointreau-Levine
(2000) and Weizsäcker (2005), some key lessons learned are:
• Develop strong regulations and regulatory units within public management;
• ”Contracting-in” prior to “contracting-out”;
• PSP should be based on economic merits and not on ideological ones;
• Secure control over regulatory institutions and enable the state to provide the service in
case of failure;
• Improvement of solid waste planning, analysis of the efficiency of the public and
private services;
• Reorganisation of public services, capacity building and training to develop a
competent public partner;
• Analysis of the contract models available in order to assess possible alternatives and
furnish stringent criteria to ensure the best choice as well as effective guidelines and
regulations.
Another issue discussed in this chapter is the notion of transaction costs. When the arranger
and the provider of the service are one and the same, a bureaucratic cost is incurred, that is,
the cost of maintaining and operating a hierarchical system. When the arranger is different
from the provider, there is a transaction cost, that is, the cost of hiring and dealing with a
private enterprise. The relative magnitude of these two costs determines whether it is worth
separating the arrangement and provision of functions.282
While certain advantages certainly exist and can be leveraged, PSP should not be regarded
as representing either a miracle cure or indeed a quick solution to SW services. As a result,
public authorities should become increasingly involved as regulators and focus resources on
282 Savas, E., Privatization and PPP, New York: Seven Bridges Press, 2000, p. 66.
95
6. Privatisation and Private Sector Participation
service planning, performance monitoring, and contract management. PSP requires effective
contract monitoring procedures to be successful.
SWM is not a homogeneous product that can be uniformly provided. Every municipality or
every jurisdiction is idiosyncratic. The service must be tailor-made to local requirements,
which makes it difficult to change providers with sufficient frequency to sustain effective
competition while maintaining product quality.283 Success in PSP depends on how much the
service in question lends itself to competitive versus non-competitive market structures.
To summarise, competitive bidding and a careful definition of the area and service in
question are essential for the success of PSP. In addition, the municipality should render the
service in one of the districts (waste collection for instance), in order to maintain its capacity
to replace private firms which go out of business or those failing to perform well without
interrupting the service.
Where the privatised service operates in a competitive environment, no new problems arise.
Where privatisation occurs but monopoly continues, however, there are new difficulties.
The question to be raised is whether it is uneconomical for services such as landfill
management, waste collection, or the management of a composting plant to be provided by
many different suppliers in the same area. However, a single private firm might be expected
to exploit its monopoly.284 If privatisation merely converts a public monopoly into a private
monopoly/oligopoly, the service will not be compelled by competitive pressures to improve
its productive efficiency, while at the same time the traditional allocative efficiency problem
will arise (Killick and Commander, 1988). One may argue that it is possible that the
privatisation of a monopolistic service like municipal landfill management can be
effectively regulated. However, the regulator is unlikely to obtain accurate information on
the real costs and the technical performances of the private firm. In a world in which
existing information, regardless of its adequacy, is not uniformly distributed, organisations
with diverse access to superior information are in a position to act opportunistically, and
frequently at the expense of the other, less-informed party to the contract. This situation is
called information asymmetry (see Chapter 7.5.1). As a result of information asymmetry,
the transaction costs imposed by contracting during the life of the contract have to be
considered.285 In a situation where Asymmetric Information exists, the regulated firm enjoys
some payments which may prove to be costly to extract. This is particularly important in
LMIC, where influence can often override regulations and good political intentions (Henley,
283 Sclar, E. D., Economics of privatisation, 2000, p. 83.
284 Harper, M., Micro-Privatization, 2000, p. 14.
285 Sclar, E. D., Economics of privatization, 2000, p. 97.
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6. Privatisation and Private Sector Participation
1993; Jome, 1993). In LMIC, this risk is real, due to the weak capacities of public
administrations (Krueger, 1974).
As far as limitations of some PSP models are concerned, another relevant issue is the
number of private contractors involved. More precisely, is it about one single private firm
delivering solid waste collection, managing a transfer station, or managing a sanitary
landfill? This fact is highly relevant especially in Europe where instead of contracting
different companies for different services, municipalities are increasingly relying on a single
big enterprise for the whole service. Consequently, large and medium-size enterprises
providing a wide range of services, including waste collection, waste transport and waste
treatment, have the best chances of surviving. This structure will lead to "vertical
integration," in which one firm controls every aspect of a solid waste management of a
region. Policy makers shall avoid potential problems associated with vertical integration to
control for instance raise prices. Contracts may stipulate renegotiation if a merger brings all
services under one firm. The takeover of RWE Umwelt AG by Remondis AG in Germany
can be cited as a case in point. There will be an increase in private monopolies in the SWM
sector in the future due to this “takeover” strategy, leading to less competition and
presenting an increasing challenge to the principles of ISSWM. The limitations of some
models described in hypothetical terms above presume that one private contractor provides
each waste element. If this is not the case, ISSWM principles might be contradicted.
97
7. Goods, Market and Organisational Theory
7.
Goods, Market and Organisational Theory
The starting point for determining the proper roles and the economic limitations of the
private sector in rendering solid waste services is an all-encompassing examination of the
economic characteristics of these services. Due to the characteristics involved, sectors such
as telecommunication are more easily rendered by private industry than sectors like
SWM. 286 The following paragraphs will not only survey the literature on public goods,
market and organisational theory in an exhaustive manner, but also point out some of the
key issues relating to the provision of SW by the private sector.
7.1
Characteristics of Public Goods
More than 2,000 years ago, Aristotle suggested that a public good is “that which is owned in
common by the greatest number has the least care devoted to it.”287 Furthermore, before
Adam Smith’s pathbreaking Inquiry into the Nature and Causes of the Wealth of Nations288,
David Hume289 published an unambiguous statement about public goods: “Two neighbours
may agree to drain a meadow, which they possess in common; because ‘tis easy for them to
know each other’s mind; and each must perceive, that the immediate consequence of his
failing in his part, is the abandoning of the whole project. But it’s very difficult, and indeed
impossible, that a thousand persons [should] agree in any such action; it being difficult for
them to execute it: while each seeks a pretext to free himself of the trouble and expense, and
[would] lay the whole burden on others. Political society easily remedies both these
inconveniences.”290 Research interest in public goods grew rapidly with the publication of
the works of Samuelson in 1954 and in 1955. Samuelson developed various ideas addressed
by other earlier economists, such as Lindale, Sax and Wicksell (Musgrave and Peacock
1958). Initially, economists focused on the two poles of a spectrum of goods, namely pure
public goods and pure private goods. According to their definitions, private goods could be
286 See van de Walle, 1989; Kragh et al, 2000 cited in Obser, A. Privatization and Development, in Weizsäcker,
E./Yong, O./Finger, M. (eds.), Limits to Privatization, London: Earthscan, 2005, p. 260.
287 Savas, E., Privatization and PPP, New York: Seven Bridges Press, 2000, p. 52.
288 Inquiry into the Nature and Causes of the Wealth of Nations.
289 The work of David Hume entitled „Treatise of Human Nature“ was first published in 1739.
290 Hume, D. (1976, p. 538) cited in Cornes, R./ Sandler, T., Theory of public goods and club goods, Cambridge:
Cambridge University Press, 2nd edition, 2003, p. 3.
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7. Goods, Market and Organisational Theory
parcelled out among individuals and efficiently provided by the market, whereas public
goods could not be divided among individuals. Furthermore, as developed later, public
goods have two main characteristics, among others, namely non-rivalry and nonexcludability. Since the 1960s, many economists have devoted their research to the theory
of public goods. After the publication291 of Mancur Olson’s “’Logic of Collective Action”
and James M. Buchanan’s “An Economic Theory of Clubs” in 1965, economists undertook
a meticulous analysis of the whole spectrum of goods, including impure public goods. The
definition of a public good is sometimes controversial. Further, Buchanan argued in 1967
that “any good or service that the group or the community of individuals decides, for any
reason, to provide through collective organisation will be defined as public.” More recently,
Sandler and Cornes (2003) presented a comprehensive theoretical treatment of public goods,
externalities, and club goods. The second edition of Sandler and Cornes is the authoritative
work that provides an outstanding overview of the economic issues associated with public
goods.
Indeed the economic development of any nation depends upon two main types of goods:
private and public. Nevertheless, there are numerous other goods between these two poles.
Impure public goods, whose benefits are partially rival and/or partially excludable, occupy
the in-between points along this spectrum. If, therefore, a good does not display both
excludability (non-excludability292) and rivalry (non-rivalry293) in their pure forms, the good
is called impurely public. An important subclass of such goods comprises those whose
benefits are excludable but partially non-rival; these are club goods. 294 They include
individual goods295, toll goods296, common-pool goods297 and worthy goods298. Simply put,
291 Cornes, R./ Sandler, T., Theory of public goods and club goods, Cambridge: Cambridge University Press,
2nd edition, 2003, p. 4.
292 Meaning that once it is provided to some portion of a community it benefits the overall public welfare, not only the
resident that specifically receives the service.
293 Any resident can enjoy the benefit of the service without diminishing the benefit to anyone else. Beyond this, it is
not feasible to exclude from service those who do not pay, because public cleanliness and the safe disposal of waste
are essential to public health and environmental protection.
294 Cornes, R./ Sandler, T., Theory of public goods and club goods, Cambridge: Cambridge University Press,
2nd edition, 2003, p. 9.
295 Individual goods pose no conceptual problem of supply. The marketplace provides them.
296 Like individual goods, toll goods can be supplied by the marketplace. Because exclusion is readily possible, users
have to pay and then suppliers will supply the goods. Individuals and organizations, for-profit or not-for-profit, can
purchase and give away toll goods, such as recreational facilities and libraries (Savas, 2000).
297 Unlike individual and toll goods, common-pool goods pose a supply problem. With no need to pay for such goods,
and with no means to prevent their consumption, such goods will be consumed-even squandered-to the point of
exhaustion, as long as the cost of collecting, harvesting, extracting, appropriating, or otherwise taking direct
possession of the free goods does not exceed the value of the goods to the consumer (Savas, 2000).
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7. Goods, Market and Organisational Theory
private goods are goods with excludable benefits.299 Public goods, by contrast, are in the
public domain, available for all to consume or affecting all. In recent years, transnational,
global or regional public goods have become a field of great interest for many economists.
These are goods whose benefits are public and cut across several countries (in the case of
regional public goods) or countries in several regions, as well as several generations (in the
case of global public goods).300 Recently, a debate has arisen concerning the idea of “global
public goods”. Inge Paul and Ronald Mendoza (2003) have identified a set of public goods,
such as the global environment, whose benefits are not limited to a particular country but
are global in nature. According to this principal, global public goods are “goods whose
benefits extend to all countries, people and generations”. They are, quite naturally, referred
to as global public goods.301 Putting in place good environmental policies is costly, and
when the benefits are global public goods (such as reduced atmospheric concentrations of
greenhouse gases), it is appropriate that those most able to bear the costs of providing for
these global public goods should do so. Attention has focused on the need for global
collective action and requisite political institutions, owing to a host of environmental
phenomena with worldwide spillovers, including ozone shield depletion from
chlorofluocarbons, atmospheric warming from greenhouse gases, tropical deforestation,
acid rain from the release of sulphur dioxide and nitrogen oxides, and so forth. 302 The
Global Environmental Facility administered by the World Bank Group can be cited as one
of the international programmes coping with this category of goods. However, more similar
programmes will be necessary before there is a real impact on global public goods.
The main characteristics of public goods, namely Non-rivalry, Non-excludability, Theory of
Externalities and Groups Theory are discussed in relation to SW services in the following.
298 If no use is made of the exclusion property of individual and toll goods, that is, if there is little or no charge for
their use, then in effect the good is being treated as a common-pool or collective good (Savas, 2000).
299 Individuals can appropriate them and prevent others from enjoying the good.
300 Kaul, I., Global Public Goods, in Weizsäcker, E. /Yong, O. /Finger, M. (eds.), Limits to Privatization, London:
Earthscan, 2005, p. 312.
301 Stiglitz, J. E., Globalization, Columbia University, 2005, pp. 9-5.
302 Cornes, R./ Sandler, T., Theory of public goods and club goods, Cambridge: Cambridge University Press,
2nd edition, 2003, p. 33.
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7. Goods, Market and Organisational Theory
a)
Non-Rivalry
As far as the economy is concerned, the basis for the classification of different goods is
exclusivity and non-rivalry. The expressions non-rivalry303 of consumption and indivisibility
of benefits are used interchangeably in the relevant literature. A good is non-rival or
indivisible when one individual can consume a unit of the good without detracting, in the
slightest, from the consumption opportunities still available to others from the same unit.304
The resulting classification determines the roles of the government and of the private sector
in supplying goods and services.305 Samuelson306 identified two categories of goods: firstly,
ordinary private consumption goods (X1, …, Xn), which can be parcelled out among
different individuals (I, 2, …, i, …, s) according to the relations
s
i
1
j
Xj = ÂX
Secondly, he identified collective consumption goods (Xn+1, …., Xn+m), which everyone can
enjoy in common, in the sense that each individual’s consumption of such a good leads to
no subtraction from any other individual’s consumption of that good, so that Xn+j=Xin+j
holds simultaneously for every ith individual and each collective consumptive good.
Regarding SWM, the required services are enjoyed by individuals without detracting from
the other beneficiaries, hence constituting non-rivalry.
One of the characteristics of public goods and services has to do with consumption. Many
consumers may consume such goods and services jointly and simultaneously, without being
diminished in quality or quantity, while private goods are available only to the individual.
Of the above-mentioned examples, food and fuel can be qualified as private goods, whereas
environmental quality control is purely a public good. They are generally hard to measure
and they offer little choice to the consumer. Moreover, they raise a basic question about the
size of the collective entity that should make decisions about public goods and services.
Efforts to supply public goods give rise to the “free-rider307” problem. The more “freeriders” a society has, the more difficult it is to supply such goods. As far as SWM is
303 Sunsets are for instance non rival or indivisible when views are unobstructed.
304 Cornes, R./ Sandler, T., Theory of public goods and club goods, Cambridge: Cambridge University Press,
2nd edition, 2003, p. 8.
305 Savas, E., Privatization and PPP, New York: Seven Bridges Press, 2000, p. 41.
306 Samuelson, P. A., Theory of Public Expenditure, The Review of Economics and Statistics, Volume 36, Issue 4
(Nov., 1954), p. 387.
307 Free riders are those who enjoy a public good without contributing to its production, preservation or replenishment.
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7. Goods, Market and Organisational Theory
concerned, the size of the group will be discussed below. In contrast to private goods, public
goods and services pose a serious problem whenever they have to be provided by the private
sector. The main characteristics are detailed below.
b)
Non-excludability
Mancur Olson (1965) was one of the pioneers to spell out the criterion of non-excludability:
“If a good is provided to any individual member of a group, no one else in the group can
feasibly be excluded from consuming it, as well.” Olson was actually referring to “collective
goods”, but the two terms “public goods” and “collective goods” are used interchangeably.
Accordingly, benefits that are available to all, once the good is provided, are termed nonexcludable. Comprehensive SWM services yield non-excludable benefits, because once
they are provided, it is difficult, if not impossible, to exclude individuals from their benefits.
For instance, in a franchise-based waste collection contract, residents failing to pay their
fees (and hence being excluded from service) will compromise the whole collection system,
even if the majority pays its fees. Indeed, waste indiscriminately endangers the entire
neighbourhood and not only the premises of non-paying residents.
c)
Theory of Externalities
Externalities are considered as a cost or benefit from an economic transaction that parties
“external” to the transaction bear. Externalities can be either positive, when an external
benefit is generated, or negative, when an external cost is imposed upon others. For
instance, industrial production, which causes pollution, may impose costs on others, by
making use of good public air.
In one of the best discussions of the theory of externalities to date, Meade (1973) states: “An
external economy (diseconomy) is an event which confers an appreciable benefit (inflicts an
appreciable damage) on some person or persons who were not fully consenting parties in
reaching the decision or decisions which led directly or indirectly to the event in
question.”308 In addition to Meade’s treatment309, further discussion of definitional issues
has been provided by Baumol and Oates (1988), Buchanan and Stubblebine (1962), and
Heller and Starrett (1976). Instead of pursuing this debate, it is more important to underline
the alternative formulation of the notion of an externality presented by Arrow (1970). In
contrast to Meade, Arrow places the definition of an externality within a very specific
308 Cornes, R./ Sandler, T., Theory of public goods and club goods, Cambridge: Cambridge University Press,
2nd edition, 2003, p. 39.
309 Cornes, R./ Sandler, T., Theory of public goods and club goods, Cambridge: Cambridge University Press,
2nd edition, 2003, p. 40.
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7. Goods, Market and Organisational Theory
institutional framework – namely that of competitive markets. In addition, although
ultimately motivated by the search for allocations that are Pareto-efficient, Arrow relies on a
definition that is in the first place more analytical, inviting one to consider why it is that
externality recipients may be unable to consent fully to actions that affect them.
To return to SW: landfilling carries with it external costs that are not reflected in the price of
landfill disposal, while recycling has ecological benefits that are not reflected in either
recycling market revenues or avoided disposal costs. Recycling, in fact, is a prime example
of the failure of competitive markets to correctly cost and price goods and services that
provide ecological and economic benefits. Conversely, landfilling is an example of the
failure of competitive markets to correctly cost and price goods and services that are
ecologically damaging.
d)
Groups Theory and Solid Waste Services
A fourth relevant characteristic is the size of the group affected by the benefits of public
goods. When a public good confers benefits outside the political jurisdiction providing it,
and no compensation is paid by these outside recipients, a spillover of benefits exists. If, for
example, two nations border a polluted lake and only one expends resources to clean the
lake, then the non-paying country receives a benefit spillover from the other nation’s
action.310
The discussion about the size of the group is essential for a comprehensive understanding of
SWM. As these services are often not rendered in low-income areas in LMIC, communities
often organise the provision of basic services, such as solid waste collection. Nevertheless,
this entails voluntary action and therefore they cannot be qualified as a sustainable service.
Olson has devoted remarkable work to this field in his book The Logic of Collective Action:
Public Goods and the Theory of Groups (1980). Indeed, unless the number of individuals in
a group is quite small, or unless there is some degree of coercion to make individuals act in
their common interest, rational, self-interested individuals will not act to achieve their
common interest. However, if the members of a large group rationally seek to maximise
their personal interest, they will not act to advance their common objectives unless they are
compelled to do so, or unless some separate incentive is offered to the members of the
group individually on condition that they help bear the costs or burdens involved in the
achievement of the group objectives.311
310 Cornes, R./ Sandler, T., Theory of public goods and club goods, Cambridge: Cambridge University Press,
2nd edition, 2003, p. 32.
311 Olson, M., Theory of Groups, Cambridge: Harvard University Press, 1980, p. 2.
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7. Goods, Market and Organisational Theory
Such participation represents a significant voluntary contribution by a community’s
residents. Also, it is not feasible to conduct an accurate accounting of which residents bring
solid waste to the municipal collection point. Municipal systems of solid waste collection
are considered a public good, and direct charges are difficult to implement unless a strong
community organisation exists to enable cost recovery. However, if voluntary action fails to
provide an adequate supply of collective goods, for example in cities, where the social unit
is large and diverse, contributions must thus be obtained by legally sanctioned coercion,
such as tax collection.
As far as solid waste services are concerned, they can be seen as an individual good in a
rural area whereas they are a collective good in a city, because all citizens will benefit from
the regular collection of solid waste and will be harmed if this service is not in place.
Another reason is that people can and do create the need for public services by transforming
their individual goods, thereby shifting the burden of payment onto public management. In
this context Savas provides an interesting example: “the small-town resident who throws his
waste on the side of the road instead of subscribing to a refuse-collection service eschews
the individual good called waste collection and creates a need for the collective good called
highway cleaning.”312 Street cleaning is another illustration of a joint-consumption good.
The well-being one enjoys from cleaned streets in no way diminishes the well-being
available to our neighbour.
7.2
Provision of Public Goods and Services
After providing some definitions and preliminaries of different goods, this section discusses
the provision of such goods. In the case of private goods, the solution is quite simple: the
market will allocate the provision of private goods according to the theory of the Standard
Market Model. The provision of public goods, however, is troublesome. The first historical
traces of the private provision of public goods and services did not appear until the late
nineteenth century. It would appear that the worldwide move for such public provision
began at that time. In their well-known textbook, Atkinson and Stiglitz (1980)313 began by
making a distinction between the public production and the public provision of public
312 Savas, E., Privatization and PPP, New York: Seven Bridges Press, 2000, p. 57.
313 Private Provision of Public Goods and Services (Deepak Lal).
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7. Goods, Market and Organisational Theory
goods.314 Their definition seeks to include any good and service that is provided freely to all
members of society so that with public provision there is not necessarily any monitoring of
usage. They provide the standard reasons for the public provision of such goods, such as the
non-excludability of those who do not pay for the good, non-rivalry in consumption, and
distributional considerations for merit goods such as environmental protection.
For the provision of public goods and services, many economists argue in terms of the
necessity of the state. The two notions “the necessity of the state” and “the necessity of
government” are often used interchangeably. For the purpose of this discussion, both terms
will be used hereafter. Indeed, the argument that the state is a natural and efficient
alternative to the market concurs with the first mid-twentieth century vision when neoclassical economics envisaged central planning as a perfect substitute for the market with
regard to resource allocation. Accordingly, the state should manage public goods in order to
avoid the issues of free-riders, externalities, etc. The marketplace is unable to supply such
goods because, as mentioned above, by their nature, many people use them simultaneously
and no one can be excluded from enjoying them. Every individual has an economic
incentive to be a “free-rider,” that is, to use public goods without paying for them. Thus, the
state has to provide such goods by using coerced contributions, taxes, subsidies, etc. Even
Adam Smith, often regarded as a champion of laissez-faire, recognised a need for
government intervention. Thus, the interest in public goods, whose benefits simultaneously
affect a group of individuals, can be traced back to classical economics.315
In political and economic theory 316 , it is commonplace to assert that government is
necessary because of the existence of public goods. This justification for government dates
back to Hobbes. According to Hobbes, rational individuals in a “state of nature” enter into a
social contract by which each submits to an absolute sovereign, provided everyone else does
the same. In The Limits of Government, David Schmidtz takes on the second of these ideas,
the public goods justification for the state. The state can step in and force us all to contribute
toward the production of these goods, and we can all thereby be made better off.
Schmidtz317 reminds us that “the state is coercing people for their own good… Moreover,
314 They cite defence as an example of a good that is publicly provided but is often purchased from private producers.
315 Cornes, R./ Sandler, T., Theory of public goods and club goods, Cambridge: Cambridge University Press,
2nd edition, 2003, p. 3.
316 Sugden Robert “Suckers, Free Riders, and Public Goods” Humane Studies Review Volume 7, Number 1 Winter
1991/92.
317 See the beginning of Chapter 5, " From Prisoner's Dilemma to Public Goods".
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7. Goods, Market and Organisational Theory
they want the state to do this, because they cannot get what they want with voluntary
provision mechanisms.” 318
Another argument for public intervention is the presence of non-excludable319 goods: a large
coalition of private interests in a city is unstable, for instance. The assumption is that
individual members of large coalition may easily defect (not contributing to the costs) while
continuing to benefit from the collective good (free-rider). This third version of the freeriding hypothesis is indebted to Olson’s theory of collective action (1965). It considers that
the propensity to contribute to collective goods diminishes with the size of the group. The
underlying idea is that the larger the group, the easier it is for individuals to cheat, because
the probability of non-compliance to be noticed and sanctioned is lower. This is usually
considered a disadvantage for the private supply of collective goods versus state supply in a
large community. In other terms, private systems of monitoring compliance and sanctioning
are implicitly assumed to be weaker than state enforcement capacities.
Economists argue that governments intervene in urban markets to compensate for “market
failures,” that is, those factors that prevent free private markets from achieving an efficient
allocation of resources. Market failures include the existence of public goods whose
consumption by some consumers does not imply non-consumption by others, such as street
lighting or fire protection; natural monopoly; large transactions costs; and externalities. Due
to the existence of market failures, the social costs (benefits) of producing a given
commodity or service are higher (lower) than the private costs incurred. In this context, if
the service were left to the discretion of the private sector, it would be produced at levels
that would be lower than the social optimum. Public intervention is required to bring
production to the point of social equilibrium.320
Indeed, the idea that the state should provide public goods and services goes back more than
a century (Olson, 1980).321 The most notable tradition in the nineteenth century (the British
laissez-faire) largely ignored the theory of public goods. More than a century and a half
after Smith’s Inquiry into the Nature and Causes of the Wealth of Nations, Pigou (1946)
introduced another rationale for government intervention. The Pigouvian correction
concerned externalities in which the action of one economic agent influences the utility or
production function of another and where no mechanism for compensation exists. The
relationship with public goods was perhaps disguised by the fact that the latter were
318 Garrett, D. “Public Goods and the Justification for the State” Humane Studies Review, 1992.
319 Lévêque, F., Externalities, public good, CERNA, Venice, 1996, p. 13.
320 Bartone, C. R., Private Sector in MSW, in Freire, M./ Stren R. (eds.), Urban Government, Washington: WBI, 2001,
p. 233.
321 Olson, M., Theory of Groups, Cambridge: Harvard University Press, 1980, p. 98.
106
7. Goods, Market and Organisational Theory
identified with particular goods and services, while externalities were often thought of as
essentially unintended by-products of activities undertaken primarily with a view to
generating private benefits.322 Governments were viewed as outside agents who, through the
imposition of taxes (subsidies), could induce the externality generator to limit (or increase)
their activities so as to achieve efficiency.323
Another analytical argument about the natural necessity of state intervention to control
pollution is provided by the theory of public goods (Samuelson, 1954). Environmental
damage, and SWM in particular, often displays non-excludability and non-rivalry, that is,
precisely those features characterising mainly public goods. Pollution324 is characterised by
an externality325 feature. In order to cope with externality and collective goods issues, the
traditional recommendation of normative economics is to call for government intervention.
In setting a tax or environmental standards, governments will remedy market failures.
Economists inferring that state intervention is strictly necessary to cope with the harmful
effects of pollution on the environment often use the concepts of externality and public
goods. Since Pigou (1932)326, externalities are associated with market failures, and state
intervention is the natural means to resolve this. The competitive market diverges from a
Pareto equilibrium.
Finally, Coase (1960)327 was the first economist to envisage the treatment of externalities
without state intervention, such as via direct bargaining between polluter and polluted and
the integration of the generator and recipient of externality within the same firm. This
concept might be true whenever public services are rendered in a small community. When
the number of affected individuals is large and interests are diverse, purely voluntary action
is no longer adequate to provide collective goods.328 This particularity is also considered in
the chapter concerning scope for further research later on this study.
322 Cornes, R./ Sandler, T., Theory of public goods and club goods, Cambridge: Cambridge University Press,
2nd edition, 2003, p. 5.
323 Cornes, R./ Sandler, T., Theory of public goods and club goods, Cambridge: Cambridge University Press,
2nd edition, 2003, p. 6.
324 Lévêque, F., Externalities, public good, CERNA, Venice, 1996, p. 3.
325 An externality occurs when a transaction between two parties does not take into account a benefit or a loss for a
third party who is not in the market arena.
326 Lévêque, F., Externalities, public good, CERNA, Venice, 1996, p. 6.
327 Lévêque, F., Externalities, public good, CERNA, Venice, 1996, p. 7.
328 Savas, E., Privatization and PPP, New York: Seven Bridges Press, 2000, p. 64.
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7. Goods, Market and Organisational Theory
7.3
Economic Classification of Solid Waste Services
As Lévêque (1996) rightly remarked about SWM, it seems more suitable to speak about
“bads” rather than “goods”.329 However, the terms are perfectly substitutable because the
non-provision of a desired collective good is a collective bad (Brubaker, 1975) and the
remission of a collective bad is a collective good.330 The first argument for government
intervention 331 is that sanitation is a public good, or is characterised by significant
externalities (see above). Strictly speaking, a public good is characterised by zero marginal
social cost and/or by the inability to exclude additional people from enjoying it, whether or
not they contribute to its provision. The economic classification of solid waste services is
not uncontroversial. Edwards and Stevens (1977) thus stated: ““Law and order” and
“national defense” are such goods. Clearly, refuse collection does not fit this mold”.
However, according to Cointreau-Levine, solid waste collection and disposal services332 are
essential333, non-exclusive334, and non-rivalled335. Therefore, SWM can be categorised as
public goods336 (see Annexes 6 and 7). These features of being non-exclusive, non-rivalled,
and essential place responsibility for SWM with public authorities. Essential services337 are
public goods. As such, their benefits, such as public health and economic productivity,
extend well beyond the particular individuals who consume them. Annex 6 provides a
framework for categorising various activities of SWM as pure public goods (also called
collective goods) or as pure private goods. Annex 7 also categorises the activities that fall
somewhere between these two categories, such as toll goods and common-pool goods.
329 Lévêque, F., Externalities, public good, CERNA, Venice, 1996, p. 10.
330 Public goods and bads have the same nature just as negative and positive externalities have the same nature. The
change in the sign does not affect the problem except when one considers that the individual behaviour is
differently sensitive to a loss and a gain. However, the hypothesis of loss aversion as proposed by Kahneman
(1991) is not considered here (cited in Lévêque, 1996).
331 Edwards, F. R./Stevens, B. J., Local Government Regulation, in Savas, E. S., Efficiency of Solid Waste, Lexington:
The Trustees of Columbia University, 1977, p. 141.
332 Cointreau-Levine, 1994.
333 The services are essential to public welfare.
334 Meaning that once it is provided to some portion of a community it benefits the overall public welfare, not only the
resident that specifically receives the service.
335 Any resident can enjoy the benefit of the service without diminishing the benefit to anyone else. Beyond this, it is
not feasible to exclude from service those who do not pay, because public cleanliness and the safe disposal of waste
are essential to public health and environmental protection.
336 Cointreau-Levine, S., PSP in MSW services, UMP, Washington, D.C.: World Bank, 1994, executive summary.
337 At the 2003 Human Development Report states, governments have traditionally provided essential services because
“their market value alone would not capture their intrinsic value and social benefits” (UNDP, 2003, p111) cited in
Kessler, T./Alexander, N., Essential Services, in Weizsäcker, E./Yong, O./Finger, M. (eds.), Limits to Privatization,
London: Earthscan, 2005, p. 229.
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7. Goods, Market and Organisational Theory
According to the characteristics discussed above SWM is seen in this dissertation as public
goods. As such the state shall be legally responsible for providing the service.
7.4
Theory of Market Competition
The competitive contract market as privatisation advocates generally envision it, is derived
from the modification of the Standard Market Model, the bedrock of neoclassical economic
theory.338 Some economists use Pareto efficiency as an argument to justify privatisation or
PSP. Pareto efficiency339 is an important notion in neoclassical economics with applications
in social sciences among others. It is the most frequently used normative criterion of
modern economics. Given a set of alternative allocations and a set of individuals, a
movement from one allocation of resources to another that cannot make one individual
better off, without making any other individual worse off, is called a Pareto optimisation
(also called Pareto optimality). The term is named after Vilfredo Pareto, an Italian
economist, who used the concept in his studies of economic efficiency and income
distribution.
One of the fundamental theorems of welfare economics states that every perfectly
competitive equilibrium is a Pareto optimum in the absence of externalities and public
goods. For private goods, exchange efficiency is achieved when the Marginal Rate of
Substitution (MRS)340 between each pair of goods is the same for all consumers consuming
both goods. Hence, for goods x and y, we have
341
MRS xyi = MRS xyj for all i and j, (exchange efficiency)
where the superscripts refer to the individuals, and the subscripts indicate the two goods
being exchanged. Furthermore, production efficiency is achieved for any type of good when
the marginal rate of technical substitution (MRTS)342 between each pair of inputs is the
same across all industries using these inputs.
338 Sclar, E. D., Economics of privatisation, 2000, p. 6.
339 It is also called Pareto optimality.
340 MRS is the rate at which consumers are willing to give up units of one good in exchange for more units of another
good. For instance, the MRS of good X for good Y is the amount of good Y that a person is willing to give up to
obtain one additional unit of good X.
341 Cornes, R./ Sandler, T., Theory of public goods and club goods, Cambridge: Cambridge University Press,
2nd edition, 2003, p. 22.
342 In economics, the marginal rate of technical substitution (MRTS) is the amount by which the quantity of one input
can be reduced ( - x2) when one extra unit of another input is used ( x1 = 1), so that output remains constant
). (http://www.answers.com/topic/marginal-rate-of-technical-substitution).
(
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7. Goods, Market and Organisational Theory
That is
p
q
MRTS KL
= MRTS KL
for all p and q, (production efficiency)343
In the case of private goods, a Pareto optimum is achieved when exchange efficiency,
production efficiency, and a top-level condition are all satisfied. This top-level condition
ties together the exchange and production sides and requires
344
MRS xy = MRT xy (top-level conditions)
The Standard Market Model assumes a world of markets, each of which is composed of a
large number of unrelated buyers and sellers. Each is assumed to be pursuing his or her own
gain independent of other agents. In the Standard Market Model world, economic decisionmaking can be essentially reduced to a technical matter – a mere mathematical algorithm.345
Consequently, the Standard Market Model is essentially a highly formal theory of exchange.
It is not necessarily a theory of continuing relational behaviour between individuals or
organisations.346
For pure public goods, a different top-level condition must be satisfied. Because the pure
public good simultaneously benefits all citizens in a community, each of these individuals’
marginal valuation must be accounted for when resource allocation is being decided.
Samuelson (1954, 1944) has shown that Pareto optimality for pure public goods requires
that the following first-order condition be satisfied:347
n
ÂMRS
i=1
i
zy
= MRT
zy
where n is the number of individuals in the community, and z is the pure public good. Pure
public goods do not have an exchange efficiency requirement, because of the nonexcludability characteristic of those goods.
343 Cornes, R./ Sandler, T., Theory of public goods and club goods, Cambridge: Cambridge University Press,
2nd edition, 2003, p. 22.
344 Cornes, R./ Sandler, T., Theory of public goods and club goods, Cambridge: Cambridge University Press,
2nd edition, 2003, p. 23.
345 Sclar, E. D., Economics of privatisation, 2000, p. 8.
346 Sclar, E. D., Economics of privatisation, 2000, p. 95.
347 Cornes, R./ Sandler, T., Theory of public goods and club goods, Cambridge: Cambridge University Press,
2nd edition, 2003, p. 23.
110
7. Goods, Market and Organisational Theory
However, Armatya Sen states that “A society or an economy can be Pareto optimal and still
be perfectly disgusting.”348 If economists argue that an economic system is Pareto efficient,
then it is the case as mentioned above that no individual can be made better off without
another being made worse off. This could obviously be true under certain idealised
conditions; a system of free markets will lead to a Pareto efficient outcome. Kenneth Arrow
and Gerard Debreu first demonstrated this mathematically. To be Pareto efficient, the
following conditions have to be fulfilled: markets exist for all possible goods, markets are
perfectly competitive, and transaction costs are negligible. Nonetheless, these conditions are
not necessarily fulfilled in welfare economics. These ideal conditions rule out the existence
of externalities, public goods, Asymmetric Information, etc. (Bator 1957; Arrow 1970).349
Bringing this back to SWM, due to the investment required for some segments of SWM
services (landfill management, composting plant, biogas plant, etc.), PSP contracts are
typically written for multiyear periods. As a result, it is the character of the contractoragency relationship which principally determines effectiveness and efficiency, and not the
competitive marketplace, as stated in the Standard Market Model. The stronger the terms of
the contract and the more complex the service provided, the smaller the role played by
market competition becomes in the costs and benefits of privatisation.350 Thus, the Standard
Market Model, which serves as the basis for this individualised theory of organisational
change, actually has no inherent theory on organisational behaviour. It is a powerful theory
with regard to the operation of a decentralised system of resource allocation, but has nothing
to say about the operation of organisations351 , such as municipalities and private sector
companies.
7.5
Theory of Market Failures
Market failure applies to a situation in which markets do not efficiently allocate goods and
services. The term “market failure” is also often used to describe situations where market
forces do not serve the perceived public interest. The two main reasons why markets fail
are:
348 Amartya Sen (Economist and Nobel Prize winner) cited in Sclar, E. D., Economics of privatisation, 2000, p. 8.
349 Cornes, R./ Sandler, T., Theory of public goods and club goods, Cambridge: Cambridge University Press,
2nd edition, 2003, p. 23.
350 Sclar, E. D., Economics of privatization, 2000, p. 14.
351 Demsetz (1993) cited in Sclar, E. D., Economics of privatization, 2000, p. 15.
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7. Goods, Market and Organisational Theory
1.
2.
Costs or benefits are inadequately expressed in prices;
Presence of sub-optimal market structures.
The different types of market failures include imperfect competition (monopoly, oligopoly),
externality (pure public goods), transaction costs, information asymmetry (incomplete
markets, quality uncertainty), and organisational failures (Principal-Agent problem). When
the market fails for a certain economic activity, it is often argued that market forces should
not direct the activity in question. The most common response to a market failure is to fall
back on the government to produce certain goods and to provide public services. The
following chapters will address the most relevant types of market failures, namely public
goods, Asymmetric Information, and transactions costs.
7.5.1
Asymmetric Information
In 1970, Akerlof 352 established the fundamentals of asymmetrical information theory.
Market failure may occur when any of the following are present: public goods 353 ;
externalities 354 ; incomplete markets 355 ; imperfect markets and especially markets with
imperfect competition. The theory of Pareto Optimisation, which shows how free markets
achieve efficiency, also assumes that information and knowledge is fixed. However, in
general, whenever information is imperfect (or markets incomplete) the economy is not
Pareto efficient.356 Information asymmetry (also called asymmetrical information) occurs
when one contractual party to a transaction has more or better information than the other
contractual party. In economics, one party is referred to as Principal and the other as Agent.
352 "The Market for Lemons: Quality Uncertainty and the Market Mechanism" is a paper by George Akerlof written in
1970 that established the fundamentals of asymmetrical information theory. Akerlof, Michael Spence, and Joseph
Stiglitz jointly received the Nobel Prize of Economics in 2001 for their research related to asymmetric information.
353 Items that are difficult to exclude people from enjoying, and where the cost of an additional individual enjoying
them, is zero or very low.
354 Situations in which the action of an individual has repercussions (negative or positive) on others for which the
individual neither pays nor is compensated.
355 Situations in which certain markets are absent, especially risk markets and markets for intertemporal trades.
356 Stiglitz, J. E., Globalization, Columbia University, 2005, p. 9-4.
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7. Goods, Market and Organisational Theory
Kenneth J. Arrow first described this situation. 357 Simply put, Asymmetric Information
results in the so-called Principal-Agent problem, namely the difficulties that arise under
conditions of incomplete and Asymmetric Information when a principal hires an agent.
Spence and Zeckhauser (1971) and Ross (1973) pioneered the Principal-Agent framework.
The theory was soon generalised to cover dilemmas associated with contracts in other
contexts by Jenson and Mecklin (1976) and Harris and Raviv (1978). An agency
relationship exists when one individual, called the agent, acts on behalf of another, called
the principal. Often the principal owns an asset and hires the agent to increase its value.
Many examples of Principal-Agent relationships exist in society, such as a municipal
authority and the contractors it uses to provide public services.
Figure 7: Basic Idea of Agency theory: P (Principal) A (Agent)
(Source: www.wikimedia.org)
The Principal-Agent problem arises when a principal compensates an agency for performing
certain acts that are useful to the principal and costly to the agent, and where there are
elements of the performance that are costly to observe. To some extent, this applies to all
contracts written in a world of information asymmetry and uncertainty. In a world in which
existing information, regardless of its adequacy, is not uniformly distributed, organisations
with differential access to accurate information are in a position to act opportunistically and
frequently at the expense of others.
357 Kenneth J. Arrow described asymmetrical information in a seminal article on health care in 1963 entitled
"Uncertainty and the Welfare Economics of Medical Care," in the American Economic Review. George Akerlof
later used the term asymmetric information in his 1970 work “The Market for Lemons”.
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7. Goods, Market and Organisational Theory
Based on the theory of perfect competition, privatisation is effectively advocated as a
process of wholesale remote-control organisational change. Nevertheless, the following
points need to be highlighted:
• The degree of uncertainty (Asymmetric Information) about services;
• Bounded rationality of the principal and the agent;
• Opportunistic guile of principal and agent.
Feigenbaum and Henig (1997) argue that privatisation is too often pushed as an ideological
proposition with little or no basis in good agency management.358 The questions that arise
are as follows: why should an agency that could not competently manage itself
automatically be able to competently manage private contractors? Why would a market
necessarily produce desirable contractor behaviour? Or why would an agency left to its own
devices more likely reward positive behaviour than negative behaviour, given the pressures
of the market?359
The three most important forms of information scarcity in incomplete contracting situations
are Principal-Agent problems, adverse selection 360 , and moral hazards. 361 A difficulty in
drafting contracts is dealing fairly and adequately with unforeseen circumstances. A wellconstructed contractual framework will include not only a comprehensive specification of
services, but also provide delineating procedures for amending or modifying the
contractor’s objections, as well as any other part of the contract, as dictated by altered
circumstances.362 The bottom line is that public contracting continues to be a cumbersome
and expensive instrument for the delivery of public services. There is an ongoing cost tradeoff between the inherent risk of moral hazard and the cost of effective monitoring.
If additional contractors are foreclosed (especially in long-term contracts over five years),
the greater the lack of access to sound information on the part of public authorities will be,
and the less likely it is that contracting will provide meaningful improvement. In this case,
the notion that privatisation is a quick and easy way to overcome bureaucratic inefficiency
and move us closer to a state of Pareto optimality is seriously compromised.363
358 Sclar, E. D., Economics of privatisation, 2000, p. 166.
359 Sclar, E. D., Economics of privatisation, 2000, p. 132.
360 Adverse selection is a situation in which the party with inferior information about the market situation acts first in
seeking to establish a contractual relationship (Salanié 1998 cited in Sclar 2000).
361 Moral hazards refer to potential problems of reduced incentives on the part of the agent to fulfil the goals of the
principal (Sclar, 2000).
362 Jaffee, B. C., Contracts for Refuse Collection, in Savas, E. S., Efficiency of Solid Waste, Lexington: The Trustees
of Columbia University, 1977, p. 154.
363 Sclar, E. D., Economics of privatisation, 2000, p. 9.
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7. Goods, Market and Organisational Theory
Considering this problem with regard to SWM in LMIC, public authorities very often do not
have accurate information on the quantity and characteristics of the solid waste generated in
their municipalities. On the other hand, private firms do not possess accurate information on
the typology of different districts of municipalities (in particular low-income districts with
narrow roads). Moreover, they lack information regarding public awareness (for instance if
citizens are going to put their waste in containers on time). However, such information is
highly relevant when setting out contract specifications. A lack of this information results in
disputes between contractual parties. Whereas the term Asymmetric Information refers to a
situation where one party has more information than the other, in this case neither of the
contractual parties possesses the relevant information in LMIC, so that one could call this
scenario a “Symmetric Lack of Information”. Due to information asymmetry (or Symmetric
Lack of Information), the transaction costs imposed by contracting in the form of
opportunistic actions taken by one party or the other during the life of the contract364 are
considered to be the most serious concern (see also case study CESPA Chapter 12). The
following chapter will deal with this issue.
7.5.2
Transaction Costs
Transaction costs are the costs incurred in engaging in an economic exchange. The term
“transaction costs” is frequently thought to have been coined by Ronald Coase. Coase did
indeed pioneer the concept of transaction costs in his 1937 paper “The Nature of the Firm”.
The term “transaction costs” itself can be traced back to the monetary economics literature
of the 1950s. Arguably, transaction costs reasoning became most widely known through
Oliver E. Williamson’s Transaction Cost Economics. According to Williamson, the
determinants of transaction costs are frequency, specificity, uncertainty, limited rationality,
and opportunistic behaviour.
Steven N. S. Cheung has broadly defined transaction costs as any costs that are not
conceivable in a “Robinson Crusoe economy,” in other words, any costs that arise due to the
existence of institutions. Starting with the broad definition, many economists then ask what
kind of institutions minimise the transaction costs of providing a particular service. Often,
these relationships are categorised by the kind of contract involved. In effect, three main
factors result in the inefficiency of a contract:
364 Sclar, E. D., Economics of privatisation, 2000, p. 97.
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7. Goods, Market and Organisational Theory
1) The frequency or volume of transactions engendered by the relationship,
2) The degree of uncertainty in the contract situation, and
3) The need to make asset-specific investments to carry out the contractual agreement.
To expand on each of these points:
(1)
The more frequently the parties to an agreement must do business with one
another, the more cost-effective it becomes to integrate the two operations
organisationally.
(2)
In addition, the higher the degree of uncertainty about output quality, the more
expensive transaction costs are in relation to thwarting opportunistic
behaviour.
(3)
Finally, the more asset-specific investment required to foster a contractual
relationship, the higher the costs are to respond to any of the parties’
opportunism, for instance by pulling out of the relationship. Owing to the
presence of such asset specificity, in a context of uncertainty (Asymmetric
Information) it is often more rational to expand organisational size to
accomplish the task in question. Similarly, the lower the volume of
transactions, the easier it is to assess the quality of the output; and the lower
the asset specificity of the investments required, the easier it is to use marketbased contracting relative to larger organisations.365
On the one hand, there are the concerns of transaction-cost economics. On the other hand,
we have organisational alternatives: market-related ones (classical contracting, hierarchy,
in-house production) and hybrid ones (relational contracting). It is important to recognise
public agencies as historically evolved and institutionally complex in social, political, and
economic terms. Besides, a one-size-fits-all approach to the concept of a contract has no
basis in reality in either the private or the public sector. Thus, public agencies need to move
forward on two tracks: firstly, internal relations reform; and secondly, the establishment of
stable and long-term external networks, that is, the antithesis of competitive contracting.366
Various techniques can attract potential contractors to compete, and “contracting-in” can
supplement “contracting-out”. The former term refers to “managed competition” in that
government agencies bid for contracts on a fair and equitable basis against private
contractors. Where feasible, dividing the work among several contractors and an in-house
365 Sclar, E. D., Economics of privatisation, 2000, p. 98.
366 Sclar, E. D., Economics of privatisation, 2000, p. 129.
116
7. Goods, Market and Organisational Theory
unit assures effective competition, knowledgeable contract supervision, a safeguard against
possible collision effects, and certainty of service.
In addition, contract specifications do not describe the services in an unambiguous manner.
Payment procedures do not include fair rules for price adjustment. Payments are often
considerably delayed without any chance for the contractor to receive compensation;
moreover, penalties are often applied in the case of non-performance. Contract
specifications must be comprehensive because they will affect overall success. Comparing
in-house and contract costs must be carried out astutely. Once a contract is in effect,
performance must be monitored systematically.
A basic concept during the development and implementation of PSP in ISSWM is to ensure
that both parties understand the project and the services required, and know the various
contract specifications and the critical contract issues in sufficient detail to build up enough
confidence and a solid basis to enable each partner to assume its responsibility. One main
criterion for the selection of the most appropriate contract model is the scope of a given
project, which is often linked to the size of the municipality.
7.6
Concluding Remarks and Discussion
This chapter has covered a great deal of ground, focusing primarily on the main
characteristics of different types of goods and especially public goods. Private goods by
definition could be parcelled out among individuals and efficiently provided by the private
market, whereas public goods could not be divided among individuals. This chapter has also
examined the main characteristics of public goods: non-rivalry, non-excludability, presence
of externalities, etc. Furthermore, transnational, global or regional public goods have been
discussed. Indeed, these are goods (or bads) whose benefits are public and cut across several
countries.
Another issue mentioned in this chapter is group size. As highlighted, the larger the group
(for instance a municipality), the easier it is for individuals to cheat (by not paying for the
solid waste service, for instance, or discarding waste in neighbouring containers). In
summary, some privatisation models are limited in terms of achieving ISSWM because the
probability of non-compliance to be noticed and sanctioned is lower.
The characterisation of solid waste begs a crucial question: who should provide SWM
services? Therefore, this section has discussed in some detail the notion of the necessity of
the state. Given that every individual has an economic incentive to be a “free-rider,” that is,
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7. Goods, Market and Organisational Theory
to use public goods or to enjoy public service without paying for them, the state has to
provide these goods by using coerced contributions, such as taxes. This section has also
suggested that SWM is characterised by non-excludability, non-rivalry, and externalities. In
order to cope with this fact, governments should intervene to remedy market failures.
Following Coase, this chapter argues that the treatment of externalities should occur without
state intervention, such as via direct bargaining between polluters and the polluted and the
integration of the generator and recipient of externality within the same firm. This idea
might be true whenever the public services are rendered in a small community. In the case
of a municipality, however, voluntary action is no longer adequate to provide SWM
services.
Based on the principal features of goods, and although such economic classification is not
uncontroversial, solid waste services are classified here as public ones based on various
characteristics of public goods (see chapter 7.1). This does not mean that such services
cannot be delegated to the private sector. The more the private sector becomes engaged in
service delivery, the more public sector parties have to focus on capacity building and
development, and on furnishing a sound regulatory framework. The roles of government are
to increase the efficiency and the effectiveness of SW services and to meet standard
requirements. PSP, if well-designed, can make a major contribution to these objectives by
ensuring that adequate services are delivered at an affordable price over a defined period,
provided that the most appropriate choice of contract model is selected for each special case
and that sound inter-organisational relationships with the private sector are established.
Despite national environmental awareness and the bond of a common culture, no major state
in modern history has been able to support itself through voluntary dues or contributions.
Taxes, that is, compulsory payments by definition, are needed. Therefore, there is the
“conditio sine qua non” for any municipal authority. Olson rightly observes that “If the
state, with all of the emotional resources at its command, cannot finance its most basic and
vital activities without resorting to compulsion, it would seem that large private
organisations might also have difficulty in getting the individuals in the groups whose
interests they attempt to advance to make the necessary contributions voluntarily.”367
Economists rely on the theory of Pareto efficiency to rationalise the privatisation or PSP of
goods and services. However, it has been demonstrated in this chapter that to be Pareto
efficient, markets must be perfectly competitive and transaction costs should be negligible.
This is not the case in welfare economics due to externalities, public goods, and
Asymmetric Information. In some segments of SWM (solid waste collection, landfill
367 Olson, M., Theory of Groups, Cambridge: Harvard University Press, 1980, p. 13.
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7. Goods, Market and Organisational Theory
management, composting plant), PSP contracts are agreed for many years. Thus, it is sound
Principal-Agent relationships that principally determine the effectiveness and efficiency of
the service and not the competitive marketplace, as stated in the Standard Market Model
(Pareto efficiency). The Standard Market Model is being challenged with regard to the
provision of public goods. In addition, public authorities and private contractors lack highly
relevant information when setting out contract specifications. As far as SWM in LMIC is
concerned, one should not only discuss Asymmetric Information, but also a “Symmetric
Lack of Information”. As a result, transaction costs are considered to be the most serious
concern. Public authorities have to consider, among other alternatives, in-house contracting
and assess contract costs realistically prior to involving the private sector.
Simply put, the well-formulated Standard Market Model is very compromised in rendering
SWM services, especially in LMIC, due to Asymmetric Information, the limited rationality
of the principal and the agent, and the opportunistic guile of the principal and agent. In other
words, Pareto efficiency has little to do with good agency management and sound interorganisational relationships. Public services can only be improved if the wise use of
contracting is combined with a strategy of internal agency reform. Sclar (2000) presents
some rules for improving the public sector368, including carefully delineating the output of
any public service considered for reorganisation, knowing the fundamentals369, comparing
privatisation with in-house operation by using avoidable cost accounting, fully addressing
the reality of transaction costs, and removing politics from contracting.
368 Sclar, E. D., Economics of privatisation, 2000, p. 157.
369 ABC stands for activity-based cost accounting.
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8. International Organisations and Privatisation Policy
8.
International Organisations and Privatisation Policy
In contrast to the privatisation debate in industrialised countries, the debate in LMIC is
tightly linked to the strategy of international donor organisations as many LMIC depend
financially on development aid from these organisations. Chapter 8.1 opens a new
discussion regarding the issue of sovereign debt, particularly regarding its scope. The
privatisation policy of international donor organisations, especially the privatisation policy
of the World Bank Group, will be focused on. Thereafter, Chapter 8.4 will consider these
International Organisations policies regarding SWM. This section will conclude with some
remarks.
8.1
Sovereign Debts
Privatisation in LMIC is generally directly linked to debt issues. In order to demonstrate the
strategy of the international organisations, the debt issues in LMIC will be discussed below.
The absence of a well-established insolvency concept, stringent workout procedures, and
limited formal access to debtors, drives a wedge between the parties involved in debt
management. The sovereign insolvency process is crucial to the management of debts for
both debtors and creditors; it ensures the stability of the world economy. Due to its
complexity, policy makers and international institutions, such as the International Monetary
Fund (IMF), the World Bank Group, and the financial experts of the Paris Club face
difficulties in setting up sustainable concepts that all parties could agree with. Nevertheless,
some progress has been made in the debate on sovereign insolvency over the past few years.
The most important improvement is the increased level of awareness in important creditors’
institutions like the IMF. Its experts agree that the current situation is not sustainable. In any
sovereign country, there are bankruptcy laws dealing with the protection of both debtors and
creditors. For sovereign debt, however, there is no legal framework.
The discussion about the insolvency procedure for sovereign countries is not new. The first
idea of applying bankruptcy principles to sovereign countries goes back to Adam Smith
(1776), who states: “When national debts have once accumulated to a certain degree, there
is scarce, I believe, a single instance of their having been fairly and completed paid. The
liberation of the public revenue, if it has ever been brought about at all, has always been
brought about by a bankruptcy…When it becomes necessary for a state to declare itself
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bankrupt, in the same manner as when it becomes necessary for an individual to do so, a
fair, open and avowed bankruptcy is always the measure which is both least dishonourable
to the debtor, and least hurtful to the creditor (Smith, 1910, II: 412-413).”
Rogoff and Zettelmeyer (2002) focused on early academic studies on creating bankruptcy
reorganisation procedures. They started to analyse propositions made in the late 70s and
then analysed some proposals made by Oechsli in 1981. Concerning the bankruptcy issue,
Ohlin (1976) referred particularly to LMIC. He noted that “Development finance needs
something like the institution of ‘honourable bankruptcy’ (…). It is not recognised how
important the institution of bankruptcy is to enable the credit system to work without too
much risk aversion and to recover quickly from failures.” Sachs (1995) provided one of the
major contributions to the bankruptcy debate. His “Theoretical Issues in International
Borrowing” (1984) can be considered a milestone in the discussion on sovereign
insolvency. Sachs’ main argument was that “Even in bank syndicates significant free rider
problems remain”. In other words, individually these creditors have an incentive to call in
their claims against the overextended debtor countries, even if doing so injures the
economic performance of the debtor so much that the creditors suffer collectively. This idea
was promoted by a range of scholars in the 1980s; subsequently, it was strongly endorsed by
UNCTAD in its groundbreaking 1986 Trade and Development Report. Further, Raffer
(1990) proposed an international insolvency procedure based on Chapter 9 of the US
bankruptcy code. In this respect, Reinisch (1994) called for an “independent international
insolvency tribunal”. Much of the existing sovereign debt literature is devoted to identifying
such incentives so as to explain why sovereign debt markets exist at all.
In summary, the existing sovereign debt literature is primarily focused on the repayment
incentive of the borrower and the existence of a positive lending equilibrium. Most works in
the sovereign debt literature assume an exogenous interest rate and do not characterise the
sovereign yield spread over a risk free rate. The influential works by Eaton and Gersovitz
(1981) and Bulow and Rogoff (1989a) make the same assumption. Kulatilaka and Marcus
(1987) also modelled the sovereign debt in a continuous time framework. Some other
authors like Eichengreeen and Portes, 1995; Chun, 1996, Schwarcz, 2000, Yilmaz Akyux,
2001; Krueger, 2002, also suggest adopting a sustainable approach so as to ensure the
orderly resolution of debt crises.
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8.2
Scope of the Debt and Financial Crises
The debts of the LMIC soared from US$ 9 billion in 1955 to US$ 572 billion in 1980. Apart
from weakening the G77, developing countries were also hit very badly by another
development from 1979 onwards. The US Federal Reserve Bank under Paul Volcker
sharply raised interest rates on the US dollar to peak levels of over 20%. LMIC, mostly
indebted in US currency, were suddenly confronted with huge burdens of debt servicing.
This marked the beginning of the debt crisis (Gyothen and Volcker, 1992, p. 198).370 In
1994, the aggregate debt of LMIC was about US$ 1,800 billion. This debt has been
increasing since, not only in absolute figures but also in percentage of these countries’ GDP:
in 1980, it represented 27% of the GDP; in 1991 it was 40%. For the countries situated in
sub-Saharan regions, it amounted to 101%. The debts of Egypt, Jamaica, Madagascar, and
Panama represent 130% of their GDP. Annexes 27 through 29 present the actual scope of
LMIC debts in a comprehensive fashion.
The increase in international private capital flows is a negative consequence of globalisation
in the past decade and has caused a number of financial crises. Indeed, a crisis is usually a
point of discontinuity, such as a market collapse. For LMIC, however, such crises are a
continuous process. Short-term finance and unpaid debts have become a serious threat to the
world economy. They are causing widespread popular concern. The biggest financial crisis
of the last century occurred in the 1920s and the early 1930s in the USA and in Europe. At
the beginning of the 1980s, a debt crisis broke out in Mexico and other countries in Latin
America. The crisis of the European monetary system followed in 1992/1993. Other crises
occurred in Mexico (1994/1995), Asia (1997/1998), Russia (1998,) Brazil (1998/1999), and
Argentina (2001).
Since the crisis in 1982, funding development in LMIC has become one of the most
controversial discussions of the world economy. As these countries require foreign financial
aid for implementing development projects, debts are accumulated. In fact, 90% of
investment today comes from external aid. Another milestone of sovereign debt was the
creation of the Bretton Wood institutions after the Second World War, especially the World
Bank Group and the IMF. Currently, debts are reaching a peak as the budgets of many
governments in LMIC increasingly depend on them. Hence, they are not able to pay back
the money borrowed, not even so-called debt servicing fees. Consequently, they have to
370 Weizsäcker, E., Post-War History, in Weizsäcker, E./Yong, O./Finger, M. (eds.), Limits to Privatization, London:
Earthscan, 2005, p.184.
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obtain more credits just to pay for debt servicing. Most seriously, these countries are not
able to stop this vicious cycle of over-indebtedness.
There is no mechanism in place today to resolve the sovereign debt crises in a timely
fashion. At present, different organisations are dealing with debt issues in different ways.
These organisations include governmental creditors (Paris Club 371 ), commercial banks
(London Club), and multilateral creditors (IMF, World Bank Group and Regional
Development Banks). Actual procedures for sovereign insolvency have so far failed to
prevent national debt crises and to manage them in a sustainable manner. Whenever
countries fall into extreme debt distress, they are affected for many years.
As stated above, 90% of investment today comes from external aid. This assistance remains
vital.372 Consequently, most LMIC are under pressure to privatise or to introduce PSP in the
public sector, due to the scarcity of government resources or the influence of aid donors.373
8.3
World Bank Group and Privatisation Policy
The World Bank Group is an independent specialised agency of the United Nations, and it
works particularly in close cooperation with the International Monetary Fund (IMF). The
World Bank and the IMF were both established in 1944 at a conference of world leaders in
Bretton Woods, New Hampshire, with the aim of placing the international economy on a
sound footing after World War II. To become a member374 of the IBRD, a country must first
join the IMF. Consequently, these two institutions are often referred to collectively as the
Bretton Woods institutions. While these institutions were primarily established to promote
the reconstruction of Europe as an afterthought, the World Bank was also charged with
promoting the development of LMIC.375
371 The Paris Club as the most important organisation and was created in 1956. It is an informal body representing all
creditors, including the IMF. It has no legal status. The measures of the Paris Club include currency devaluation,
reduction of public services, market policies, and trade policies.
372 Farvacque-Vitkovic, C./ Godin, L. , Future of African Cities, The World Bank: Washington, D.C.,1998, summary.
373 Batley, R., PPP for Urban Services, in Freire, M./ Stren R. (eds.), Urban Government, Washington: WBI, 2001,
p. 200.
374 For more information consult http://worldbank.org/members.
375 Stiglitz, J. E., Globalization, Columbia University, 2005, p. 9-1.
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The terms “World Bank376” and “the Bank” refer only to IBRD and IDA, whereas the terms
“World Bank Group” and “the Bank Group” include all five institutions. These five
institutions are IBRD, IDA, IFC, MIGA, and ICSD. Through its five institutions377, the
Bank Group works in more than 100 LMIC. Its role has grown in relative importance in the
world of international finance in recent years as private sector 378 net financial flows to
LMIC have declined; hence, the less private sector investment is made in LMIC, the greater
the necessity of the World Bank Group is.
The World Bank Group supports a broad range of programmes through its loans, policy
advice, and technical assistance. It divides its work between IBRD379, which assists middleincome and creditworthy poorer countries, and IDA380, which focuses exclusively on the
poorest countries of the world. 381 Together with IFC, the Bank also helps countries
strengthen and sustain the fundamental conditions they require to attract and retain private
investment. The following paragraphs will summarise the key features of the five
institutions of the World Bank Group and their role in supporting privatisation policies.
a) IBRD, established in 1945, is the original institution of the World Bank Group. The
IBRD plays an important role in development policy in LMIC by providing LMIC
with loans and advisory services.
b) IDA lends to very poor developing countries on easier terms by providing credits. The
objective of IDA is to reduce disparities across and within countries – especially in
terms of access to primary education, basic health care, water supply, and sanitation.382
c) IFC promotes economic development through the private sector. In contrast to IBRD
and IDA, which can lend only to sovereign states, IFC can lend directly to the private
376 The term “World Bank” was first used in reference to IBRD in an article in the Economist on July 22, 1944, in a
report on the Bretton Woods Conference. What began as a nickname became an official shorthand for IBRD and
IDA in 1975 (The World Bank “A guide to the World Bank” Library of Congress, 2003, p. 11).
377 Each of the five institutions of the World Bank Group has its own articles of agreement or an equivalent founding
document. By signing these documents and meeting the requirements set forth in them, a country can become a
member of the Bank Group institutions (The World Bank “A guide to the World Bank” Library of Congress,
2003).
378 The World Bank “A guide to the World Bank” Library of Congress, 2003, p. 4.
379 IBRD: International Bank for Reconstruction and Development; Year established: 1945; Number of member
countries: 184; Cumulative lending: US$ 371 billion; Fiscal 2002 lending: US$ 11.5 billion for 96 new operations
in 40 countries; http://www.worldbank.org/ibrd.
380 IDA: International Development Association; Year established: 1960; Number of member countries: 164;
Cumulative lending: US$ 135 billion; Fiscal 2002 lending: US$ 8.1 billion for 133 new operations in 62 countries;
http://www.worldbank.org/ida.
381 The World Bank “A guide to the World Bank” Library of Congress, 2003, p. 11.
382 The World Bank „A guide to the World Bank“ Library of Congress, 2003, p. 15.
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d)
e)
sector.383 It also provides guidance on attracting Foreign Direct Investment (FDI). IFC
has been interested in financing municipal projects. The latest example is IFC’s
participation in a municipal fund in Johannesburg, South Africa. 384 The fund is
financing infrastructure projects, including solid waste management throughout the
city. IFC’s Environmental Finance Group has conducted feasibility studies of solid
waste disposal options for Durban, South Africa, and solid waste processing centres
for the Greater Moscow area.
MIGA385 encourages foreign investment in LMIC by providing guarantees to foreign
investors against losses cause by non-commercial risks. MIGA’s technical assistance
services also play an integral role in catalysing FDI, by helping developing countries
and implementing strategies to promote investment.386
Finally, the International Centre for Settlement of Investment Disputes (ICSID) 387
helps encourage foreign investment by providing international facilities for
conciliation and arbitration of investment disputes, thus helping to foster an
atmosphere of mutual confidence between states and foreign investors.
Today, the World Bank Group is the most important source of financial aid (as opposed to
investment) for LMIC. In fact, it provides nearly US$ 18 billion in loans annually to more
than 100 client countries. The policy of the World Bank Group is a dynamic one. It has
evolved considerably in the last 15 years. Indeed, during the 1960s and 1970s388, the focus
of the World Bank Group was on the provision of classic “development aid” rather than the
promotion of private investment. After the reorganisation of the Bank in 1987, Private
Sector Development (PSD) became a programme of special emphasis.
After 1993, PSD became a general principle. PSD divisions and departments were created
throughout all institutions of the Bank. During the last 15 years, the World Bank Group has
been assisting privatisation in more than 80 countries. More than 8,500 state-owned
383 The World Bank „A guide to the World Bank“ Library of Congress, 2003, p. 18.
384 Paimela-Wheler, A., World Bank Financed Waste Management Projects, Washington, 2004, p. 7.
385 MIGA: The Multilateral Investment Guarantee Agency; Year established: 1988; Number of member countries:
163; Cumulative guarantees issued: US$ 10.34 billion; Fiscal 2002 guarantees issued: US$ 1.36 billion;
http://www.miga.org.
386 The World Bank „A guide to the World Bank“ Library of Congress, 2003, pp. 20-21.
387 Year established: 1966; Number of member countries: 139; Total cases registered: 103; Fiscal 2002 cases
registered: 16; Web: http://worldbank.org/icsid.
388 Katharina Hay in Weizsäcker, E./Yong, O./Finger, M., Limits to Privatization, London: Earthscan, 2005, p. 261.
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enterprises (SOEs) have been privatised, transferring close to US$ 1 trillion in assets from
government-controlled enterprises into private hands.389
FDI is often considered the driving force behind PSP. According to the World Bank Group,
approximately 1,707 private infrastructure projects worth US$ 458.2 billion were completed
between 1990 and 1998. During this period, LMIC received approximately US$ 138.3
billion in FDI (Sader, 2000). However, FDI made in LMIC in infrastructure and services
was not the same across all sectors (roads, telecommunications, electricity, water sector,
waste water, solid waste). Developing countries saw investment of nearly US$ 755 billion
in nearly 2,500 infrastructure projects between 1990 and 2001.390
In sum, almost all five institutions of the World Bank Group work in one way or another to
promote and strengthen the private sector. For the World Bank Group, a “vital private
sector” is essential for success in the development of a country. There is growing evidence
that private investment in some economic sectors is smaller than expected. Accordingly, the
World Bank economist Nemat Safik grants that “we were too optimistic concerning the
willingness to invest in these countries… despite far-reaching reforms, many countries do
not find investors.”391
8.4
Solid Waste Management Policy
Contrary to conventional belief, PSP, both in financing and managing public infrastructure,
is not a new phenomenon. In 1562, Sully contracted a private enterprise for waste collection
in Paris (see Chapter 3.1). In 1662, the city of Tokyo contracted out waste collection,
including waste disposal, to private contractors.392 Recently, both in industrialised countries
and in LMIC, municipal infrastructure and services markets have undergone unprecedented
change in terms of the financial volume of transaction, mostly in the last two decades.
Figure 10 displays comprehensively three general developments in foreign aid for SWM.
389 Dyck, 2001 cited in Weizsäcker, E./Yong, O./Finger, M., Limits to Privatization, London: Earthscan, 2005, p. 261.
390 Wolff, P., Private Funding of Infrastructure, in Weizsäcker, E. /Yong, O../Finger, M. (eds.), Limits to Privatization,
London: Earthscan, 2005, p. 319.
391 Hoering, 2003 cited in Weizsäcker, E./Yong, O./Finger, M., Limits to Privatization, London: Earthscan, 2005,
p. 261.
392 Dorvil L., PSP in Morocco, Solid Waste, health and the Millennium Development Goals – CWG SWM in LMIC
and WASH Workshop 2006, Kolkata, India, 2006, p. 1.
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They are:393
1.
1970s - 1980s (Hardware Approach)
2.
1980s – 1990s (Software Approach), focused on planning management and operation
and maintenance
3.
Since 1990s (Capacity Development Approach)
Those approaches will be discussed separately below.
1.
1970s - 1980s (Hardware Approach)
Since the World Bank’s first urban project was launched in Senegal in 1972, some 7,500
projects (all sectors included and representing investments of close to US$ 500 billion),
have been completed. The first urban projects financed by the Bank in some LMIC were
usually devoted to upgrading technical services, at great expense in terms of both equipment
and technical assistance. These undertakings improved services for a few years, but they
eventually failed due to a plethora of problems -- principally, the lack of sustainable
funding. As a result, equipment was eventually abandoned, technical staff drifted away,
know-how was lost, and the service typically ended up meeting less than 10% of actual
demand.394 The Bank’s urban strategy document (World Bank, 1999) recognised that, while
these projects brought benefits, they fell short of a sufficient recognition that achieving
sustainable urban development requires a more integrated approach across the physical
environment, infrastructure networks, finance, and institutional and social activities.395
In fact, from 1976, the World Bank Group promoted projects in 40 cities around the world,
including Cairo, Alexandria, Manila, Djakarta, and Singapore. 396 More than US$ 500
million was invested in SWM as part of this programme. However, although much
hardware has been provided, this approach has a short-lived, unsustainable effect; it can
even have adverse consequences. In effect, LMIC very often lack managerial know-how to
utilise and maintain the equipment and facilities provided, or they have an outmoded
administrative system.
393 JICA, Capacity Development in Solid Waste, Tokyo: IFIC, 2005, page V.
394 Farvacque-Vitkovic, C./ Godin, L. , Future of African Cities, The World Bank: Washington, D.C.,1998.
395 Freire M., The Challenges, in Freire, M./Stren R. (eds.), Urban Government, Washington: WBI, 2001, p. xix.
396 Cointreau, 1982 cited in JICA, Capacity Development in Solid Waste, Tokyo: IFIC, 2005, p. 16.
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2.
1980s - 1990s (Software Approach)
The urban policy analysis developed during the late 1980s and early 1990s, building in part
on Bank-supported research, remains a sound guide to the Bank’s assistance activities.397
This shift in the Bank’s approach to urban development was articulated in its urban strategy,
which maintains that municipalities are to promote the welfare of their residents. The
approach in the late 1980s is defined as the “Software approach”. This approach is defined
as the provision of assistance for planning, the development of waste management systems,
and technology transfer.
The aim of the World Bank’s urban strategy was to promote sustainable municipalities.
According to the Bank, sustainable cities are first and foremost liveable, competitive,
bankable, well-managed and well-governed. A well-managed municipality represents and
includes all groups. Further, it is characterised by the accountability, integrity, and
transparency of government actions; finally, it rests on strong local government capacity to
fulfil public responsibilities based on knowledge, skills, resources, and procedures anchored
in workable partnerships.398
3.
Since 1990s (Capacity Development Approach)
Taking integrated approaches to supporting LMIC to improve their overall waste
management capacity has become more apparent in recent years. Since the 1990s399, a new
approach has been emerging. This new approach is called the “capacity development”
approach. This approach is defined as a process of comprehensive environmental policy. It
also includes the level of capacity of LMIC according to their socio-economic background
as well as an examination of the most appropriate contents, strategy, and methodology of
the assistance granted.
The concept of capacity development emerged through the process of self-critical evaluation
with respect to technical cooperation and foreign aid projects promoted during the previous
four decades. Simply put, traditional foreign aid cooperation was focused on “What and
Why” questions, but had neglected the “How” questions for the parties involved in LMIC.
Therefore, one should focus on capacity development as one of the key elements. Thus, the
capacity development approach emphasises the primary role of LMIC; it should be coupled
397 World Bank policy papers issued in this period include Urban Policy and Economic Development: An Agenda for
the 1990s, 1991; Housing: Enabling Markets to Work, 1993; Better Urban Services: Finding the Right Incentives,
1995; and an unpublished sector review, "An Agenda for Infrastructure Reform and Development," INU, 1993,
which served as an input to the Banks 1994 World Development Report cited in Freire M., The Challenges, in
Freire, M./Stren R. (eds.), Urban Government, Washington: WBI, 2001, p. xx.
398 Griffin, A., Sustainable Cities, in Freire, M./ Stren R. (eds.), Urban Government, Washington: WBI, 2001, p. 63.
399 JICA, Capacity Development in Solid Waste, Tokyo: IFIC, 2005, p. 15.
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with developing a comprehensive understanding of the institutions dealing with SWM.
Based on the experiences of past technical cooperation in SWM, the method of assistance
for capacity development can be roughly grouped into the following five categories:400
̇ Increase: to provide the expertise, know-how, equipment and ‘software’, and help
enhance skills, management capabilities, and planning capabilities;
̇ Build: to help build up the institutional/organisational capacity, such as a legal system
for SWM, administrative organisation for SWM, and a forum for citizens to participate
in SWM;
̇ Disseminate: to set the SWM system of a specific area as a model, and disseminate it
to other areas with similar conditions;
̇ Sustain: to help sustain an existing or newly structured SWM system through proper
financial management and/or economic incentives;
̇ Reduce loss: to help achieve more efficient utilisation of human and physical assets
and improve management through modification/improvement of the existing SWM
system.
The next section reviews the general global trends and evolution in foreign aid with regard
to SWM in LMIC. It 401 includes an overview of the activities of the most important
international organisations in the last decade.
a) The World Bank Group and Regional Development Banks
The World Bank Group is the world’s largest foreign aid organisation in SWM. The first
municipal solid waste project financed by the World Bank Group was for Singapore in
1973. Since then, lending has slowly risen to 72 projects, totalling over one billion dollars.
About 15 new projects, with a total estimated value of about US$ 660 million, have been
approved or are being approved.402 Since the 1980s, the Bank has promoted more than 100
SWM projects worth an aggregate of more than US$ 1 billion in LMIC. These projects were
carried out by adopting two approaches:
• Assistance in SWM improvement from the viewpoint of urban development, and
• SWM and disposal from the viewpoint of environmental protection, pollution
abatement, and removal of environmental contamination.
400 Categorization based on Mabuchi and Kuwajima (2004) cited in JICA, Capacity Development in Solid Waste,
Tokyo: IFIC, 2005, p. 21.
401 JICA, Capacity Development in Solid Waste, Tokyo: IFIC, 2005, p. 24.
402 Paimela-Wheler, A., World Bank Financed Waste Management Projects, Washington, 2004, p. 5.
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These approaches took the form of two different programmes. The first is called the Urban
Development Programme 403 , and the latter is included in the New Ideas in Pollution
Regulation as projects for hazardous waste disposal. For the Bank, the key issues are
strategic service planning, institutional arrangements, PSP, financial management, and
environmental management. The World Bank Group approved a new infrastructure action
plan in 2003; this plan strongly supports substantial increases in infrastructure lending,
including solid waste.404
It is worth noting that the regional banks essentially very often follow the same policy
regarding SWM in LMIC as the World Bank Group. Thus, like the World Bank Group, the
Inter-American Development Bank (IDB) extends assistance for MSWM to Caribbean and
Latin American countries, as a component of urban development. IDB has clearly indicated
its preferred assistance to PSP projects. Furthermore, the Asian Development Bank (ADB)
has extended assistance to projects that include SWM as a part of urban development. The
European Bank for Reconstruction and Development (EBRD) is also actively engaged in a
number of MSWM improvement projects in former Soviet Union cities. Together with the
improvement of obsolete facilities and systems, EBRD has decided to strongly advocate
PSP. Finally, the African Development Bank (AfDB) has few records of assistance in the
SWM sector.
Cointreau-Levine, one of the well-known solid waste specialists within the Bank, has been
carrying out outstanding research work in the field of SW for over two decades. Recently,
she undertook an interesting survey, applying well-designed guidelines and a contract form
to strengthen the implementation of private sector participation in solid waste (CointreauLevine et al, 2000a, b, c). Although her opinion does not necessarily express the policy of
the World Bank Group on SWM, some of her ideas will be analysed and discussed below in
terms of the economic limitations of some PSP models.
According to Cointreau-Levine (see Chapter 6), PSP in delivering SW services is more
efficient than public management because efficiency is driven by competition. However,
competition occurs in some SWM elements without challenge. Competition in long-term
contracts, especially in SW infrastructure management, is foreclosed. Thus, efficiency and
effectiveness can only be achieved through sound inter-organisational relationships. In her
opinion, different arrangements between the private sector and the public authorities can be
made, such as Public-Private Partnerships, franchise, concessions, etc. A private-public
403 http://www.worldbank.org/urban/solid_wm/swm_body.htm (Accessed in October 2004). This World Bank portal
for solid waste management contains much basic literature on foreign aid granted to developing countries to
promote solid waste management.
404 Paimela-Wheler, A., World Bank Financed Waste Management Projects, Washington, 2004, p. 6.
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partnership is a joint venture of public authorities and the private sector. However, there are
some limitations in this arrangement in terms of the contestability existing between public
authorities and the private sector. As a partner of this joint venture, a public authority might
have difficulty to sanction itself (as a partner) if this partnership is not performing very well.
Another, albeit less obvious, issue is the termination of this partnership. Although this
arrangement presents some advantages in theory, strong evidence is still lacking.
Another PSP arrangement examined in-depth by Cointreau-Levine is the franchise. In her
opinion, a franchise arrangement is created whenever a firm is given exclusive monopoly in
a specified zone to provide SW services. Residents sign up to pay for the service and a
private sector contractor collects and transports their waste to a transfer station or to a
landfill. The beneficiaries of the services pay the franchisee directly. Cointreau-Levine
argues that this arrangement is suitable where beneficiaries would not be willing to pay user
charges to the government or would be willing to pay more to the private sector. It is also
suitable where the fee for the service needs to be determined for each customer. She
recommends that franchise arrangements must be long enough for a depreciation of assets to
occur as well as the development of a good cost recovery relationship with customers. Four
key issues should be highlighted regarding the arguments concerning this arrangement.
First, this arrangement is challenged by the theory of public goods, which states that it is not
recommended to exclude beneficiaries from this service. Bad SW management has
widespread negative effects, even those who regularly pay the fees required. Another
relevant issue in this context is affordability, especially in low-income areas in LMIC.
Thirdly, the theory of market failure (see Chapter 7.5) challenges this argument; due to
Asymmetric Information (or Symmetric Lack of Information), the private sector could
impose inadequate tariffs without the intervention of the state, since information on the
quantity of SW generated and on related costs is usually lacking in LMIC. Finally, if the
contract must be long, competition is foreclosed during the contractual term. Thus, a state
monopoly could be turned into a private monopoly/oligopoly.
A concession arrangement is realised when a private firm is given exclusive access to public
SW facilities management. This is common in management of transfer stations as well as
landfill management. The beneficiaries of the service pay a tipping fee to the private firm.
The private sector finances and owns the facility for a long-term period (20 years for
instance).
Cointreau-Levine proposes some useful guidelines for PSP. Accordingly, local public
capacity has to be built to develop technical specifications, tender competitively, and
comparatively monitor performance. Further, capacity has to be built to provide a
contestable government service. Local capacity has to be strengthened to generate revenue
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and operate as an accountable cost centre. If capacity building and capacity development are
on the actual agenda of international donors, there is as yet no comprehensive policy as to
how the private sector should build the capacity of municipal managers, since there is no
incentive to do so. One reason cited in favour of private sector involvement is the
inefficiency of public management. Why should the private sector strengthen the managerial
and technical capacity of municipal managers? Further, municipal managers quantify output
to enable comparative performance monitoring. However, the analysis of the CESPA case
study has proved that establishing a threshold for monitoring the SW service is anything but
obvious. Is a street considered not cleaned if the private entrepreneur does not collect 1 kg
of SW or is the SW collection performance not achieved if a SW container is not empty at a
specific time according to the contract specifications? Moreover, public awareness plays a
vital role in setting up a monitoring system. Citizens have to be aware of the private
entrepreneur’s collection schedule. Should they impose penalties on the private firm for
failing to respect the collection schedule? Does competitive, transparent procurement create
efficiency? Are agreements long enough to allow for the full depreciation of investment?
However, as stated above, LMIC lack sound technical and managerial capacity in the field
of SWM. Therefore, most relevant private enterprises are international ones. Contractual
agreements that are long enough to allow economies of scale limit competition during the
contract period.
Cointreau-Levine rightly argues that efficiency, which is the basic of positive argument in
favour of PSP in delivering SW services, is driven by competition. However, SWM in
LMIC encompasses various waste elements, such as street sweeping, waste collection,
waste transport, waste recycling, waste composting, management of transfer stations,
landfill management, etc. Not every waste element allows for fair competition. If
competition in a solid waste element like street sweeping is obvious due to the availability
of staff, low technology and management, and the short duration of contract, competition in
SW infrastructure with heavy investment, like sanitary landfill management, is limited
within the time frame of the contract.
It is often advocated by international organisations that PSP policy will ultimately result in
more foreign investment and more economic growth. However, the issues of bankruptcy
and “On-again / Off-again” are not considered despite their importance to guaranteeing
continuity of service. Who should bear the costs of hazard remediation if a private company
goes out of business? Another concern is the affordability of the service. Very often, SWM
elements financed by international credit organisations are technically upgraded in terms of
providing mechanical equipment and financial means without any consideration of the
polluter pays/user pays principle.
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8. International Organisations and Privatisation Policy
According to Cointreau-Levine, the international private sector, for instance, typically looks
for a minimum landfill capacity of 300 tons per day, both for the efficient utilisation of
landfill equipment and for having an adequate base of income to support the cost of foreign
expertise. Thus, with an average waste generation of 0.60 kg per day per inhabitant, and
taking into account the waste treatment sector (recycling and composting), only a
municipality with more than 600,000 inhabitants is attractive to the private sector in terms
of landfill management or management of transfer stations. Therefore, small to medium-size
cities and small islands are not attractive to the international private sector. Simply put,
some PSP models are limited because of the size of the population. If the international
private sector is highly interested in more waste generation by managing a landfill, a
conflict of interest with the hierarchy principle will arise. Another concern is the collision
effect whenever different private entrepreneurs are operating in the same collection areas.
Cointreau-Levine argues that to create contestability, the private sector should service no
more than 70% of any city.405 If this is true for some SW elements, such as street sweeping
and SW collection, this argument is challenged by managing treatment and disposal
facilities.
Finally, she asserts that in transfer, treatment and disposal contracts, flow control needs to
be carefully addressed to minimise the risks borne by private investors. Flow control
involves the guarantee that a minimum quantity of waste will be delivered to a facility. PSP
contracts should specify the minimum amount of waste to be delivered. Public authorities
should be committed to ensuring that the agreed amount of waste is brought to the facility or
alternatively that it pays the sum that it would pay for that specified minimum.406 According
to the hierarchy principle, however, the main purpose of any comprehensive SWM should
be recycling and treatment. Thus, as far as landfill management is concerned, the target
should be to dispose of as little waste as possible and not vice versa. How could municipal
authorities conduct a waste minimisation awareness campaign and at the same time promise
the private sector that more waste is possible? The empirical section of this dissertation
demonstrates that if the private firm is paid according to the quantity of waste disposed, this
will result in the non-application of the hierarchy principle. In sum, the overall objectives of
the World Bank projects for solid waste collection and disposal are to:407
405 Cointreau-Levine, Sandra, PSP in MSWM, Part II : Guidance Note, St Gallen: SKAT, 2000, p. 15.
406 Cointreau-Levine, Sandra, PSP in MSWM, Part II : Guidance Note, St Gallen: SKAT, 2000, p. 24.
407 Environmental Assessment Sourcebook 1999 CHAPTER 9 “Population Health and Nutrition; Urban Development;
Transportation; Water supply and Sewerage”, http://lnweb18.worldbank.org/ESSD/envext.nsf/47ByDocName/
Chapter9PopulationHealthandNutritionTransportationUrbanDevelopmentWaterSupplyandSewerage/$FILE/
Chapter9PopulationHealthAndNutritionTransportationUrbanDevelopmentWaterSupplyAndSewerage.pdf.
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8. International Organisations and Privatisation Policy
• Provide appropriate and efficient collection of solid waste in municipalities;
• Provide effective and economic transport of collected waste to disposal facilities;
• Provide environmentally safe, technically practical, and low-cost disposal; and
• Strengthen institutions technically and financially to ensure cost effective operation
and the long-term maintenance of solid waste systems.
There is no incentive for beneficiaries in LMIC to prevent or minimise the generation of
waste according to the hierarchy principle when international donors bear the full costs of
local waste services. Simply put, there is a contradiction between the polluter pays principle
and foreign aid. In general, PSP is viewed by the most important international organisations,
including the World Bank Group, as more efficient and more effective than the public
sector. Potential benefits of PSP in delivering SW services are usually presented. Figures of
efficiency gained are put on view without economic limitations. More advantages but fewer
disadvantages are cited and anecdotal evidence is used only to illustrate successful
applications of the PSP concept. Simply turning over public service delivery to private
agents, without ensuring that the principles of sustainability and the key issues of PSP
making these successful are put in place, leads to a worse situation than portrayed in surveys
conducted by specialists of international organisations like the World Bank Group.
b) United Nations organisations
Different United Nations organisations render assistance to SWM in LMIC (see
Table 12). The following table summarises these organisations, including the objectives of
their programmes.
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8. International Organisations and Privatisation Policy
International Organisations
1 United Nations Environment
Programme (International
Environmental Technology Centre)
United Nations Development
2
Programme
3 United Nations Industrial
Development Organisation
4 United Nations Institute for
Training and Research
5
International Labour Organisation
6 United Nations Centre for Human
Settlements (UNCHS-Habitat)
Objectives
Collection of technical information and accumulation of
appropriate technologies for SWM
Promotion of SWM in LMIC in cooperation with the
World Bank, UNIDO, UNEP, and UNCHS
Assistance to SWM focusing on African cities
Promotion of “Chemical and Waste Management
Programme”; training and capacity building programme
for implementation of the globally harmonised system
of classification and labelling of chemicals
Promotion of “Chemical and Waste Management
Programme”; training and capacity building programme
for implementation of the globally Harmonized System
of classification and labelling of Chemicals
Urban Management Programme, assistance projects for
MSWM
Table 12: International organisations and their programmes regarding SWM
(Source: JICA, Capacity Development in Solid Waste, Tokyo: IFIC, 2005)
Finally, bilateral cooperation through bilateral institutions (GTZ, KfW, DANIDA, etc.)
plays an important role in assisting LMIC in SWM. Mutual partnership and coordination
will be a crucial challenge.
8.5
Concluding Remarks
This chapter has introduced the issue of debt in relation to privatisation in LMIC. The link
between sovereign debt and privatisation has been shown unambiguously. As yet, no
sustainable concept exists to resolve the debt issues facing creditors and debtors alike.
Unpaid debts result in popular concern. In effect, most investment in LMIC comes from
international aid and most LMIC governments depend on it. The influence of the so-called
donor organisations is therefore very high. International organisations, especially the World
Bank Group and the IMF, force these countries to privatise state-owned companies or to
introduce PSP in public services. Two key points should be noted. Firstly, the success of
PSP differs from one country to another. Secondly, PSP is not the same across all sectors.
Due to the lack of financial means to achieve the MDG in LMIC, the issue of PSP,
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8. International Organisations and Privatisation Policy
especially in the solid waste industry, will preoccupy academic and professional discussion
for at least the next 15 years. As these countries require foreign financial aid to implement
development projects, debts are accumulated. In order to stop this vicious circle of overindebtedness, the concept of PSP is crucial to the development process. Accordingly, the
issue is no longer one of public versus private. Meeting financing needs and the MDG will
require resources from all possible sources, including aid from international organisations
and comprehensive PSP.
The international institutions mentioned promote and strengthen the private sector in LMIC.
As shown, Foreign Direct Investment (FDI) is often considered the driving force behind
PSP. This chapter has demonstrated that the privatisation discussion is not free of
ideological beliefs. The opponents and advocates of privatisation argue according to their
ideological preferences rather than in terms of environmental and economic merits. Finally,
this chapter has identified the issues of SWM in LMIC, including donors trends. It has been
demonstrated that the “1970s-1980s” (“hardware”) approach does not have a lasting effect
unless it is accompanied by a sound management system.
Credits from international organisations can result in LMIC failing to assess the suitability
of the technology to be funded, its full costs, and the affordability of the services provided.
Not enough attention may be paid to whether the technology is proven to fit the specific
conditions of a given country, whether the total costs have been recognised, and whether
sufficient attention has been given to how facilities will be replaced at the end of their useful
lives.
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9. Illustrative Case Studies
III. EMPIRICAL EVIDENCE
Introduction
T
H
E
O
R
Y
{
ISSWM
Privatisation and PSP
Goods and Market Theory
Strategy of International
Organisations
E
M
P
I
R
I
C
A
L
METAP illustrative Case
Studies
CESPA Case study
Waste
Collection
Contracting-out
CONCEPTUAL FRAMEWORK
This section is assigned to the empirical foundation of this dissertation. It encompasses three
illustrative case studies from Egypt, Lebanon and Tunisia which will be presented and
analysed. Thereafter, a single case study (CESPA) addressing one solid waste element
(Solid waste collection) and one PSP model (Contracting-out) will be analysed and
discussed.
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9. Illustrative Case Studies
9.
Illustrative Case Studies
This section presents empirical illustrations and applications of PSP experiences in some
LMIC. After presenting the overview and background of the case studies, key features of the
solid waste section in the project region will be taken up. Thereafter, three PSP case studies
from Egypt, Lebanon and Tunisia will be presented and analysed. A discussion of the main
results regarding the hierarchy principle, the polluter pays principle, effectiveness,
efficiency and inter-organisational relationships will conclude this section.
9.1
Overview and Background of the Case Studies
These illustrative case studies of PSP experiences have been obtained from the
Mediterranean Environmental Technical Assistance Project (METAP) - Regional Solid
Waste Management Project (RSWMP). The beneficiary countries of the METAP-RSWMP
project are Algeria, Egypt, Jordan, Lebanon, Morocco, the Palestinian Authority, Syria, and
Tunisia. Hereafter, these countries will be referred to either as METAP-RSWMP region or
simply the project region. The project is funded by the European Commission and executed
by the World Bank Group. These examples will be analysed both qualitatively and
quantitatively with respect to some of the principles of integrated sustainable solid waste
management (ISSWM), such as the hierarchy principle and the polluter pays principle;
various core elements of PSP will be considered as well, including inter-organisational
relationships, effectiveness, and efficiency. Significant insights regarding both the economic
limitations of PSP and its appropriateness will be gained from these illustrative case studies.
This knowledge will ultimately be used to set up the conceptual framework of this
dissertation.
Unlike the single case study, which deals in-depth with SWM at a national level (Morocco),
these three illustrative cases will focus on SWM at a broader level, namely in the Maghreb
and Mashreq regions. The data presented are obtained from the documents of the METAPRSWMP project. The Mannheim-based GKW consultancy is the joint owner of the
documents. The main documents are:
Volume 1: Overall Introduction: Decision Maker’s Support Document: Glossary
Volume 2: Policy, Legal and Institutional Guidelines & Aids to Implementation
Volume 3: Regional Guidelines: Finance and Cost Recovery Guideline & Aids to
Implementation
Volume 4: Private Sector Participation Guideline & Aids to Implementation
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9. Illustrative Case Studies
Volume 5: Regional Guidelines: Public Awareness & Community Participation Guidelines
& Aids to Implementation
Volume 6: Case Studies PLI, FCR, PSP, PA&CP, TEC
Unlike the single case study, the author does not claim to be presenting his own fieldwork
here. These illustrative case studies cover a wide range of solid waste services, including
landfill management, collection systems, treatment facilities, etc.; by contrast, the single
case study treats one single Solid Waste (SW) system, albeit in detail, namely SW
collection, and one single PSP model, namely contracting-out. The main results are
displayed in Table 15, Table 16 and Table 19 as strengths and weaknesses. The strengths
will be used in establishing a conceptual framework at the end of this dissertation, while the
weaknesses are useful in addressing its main objectives, namely the economic limitations of
PSP.
9.2
Key Features of the Solid Waste Sector in the METAP-RSWMP
Region
The following sections address some key features of SWM in the region. These are PSP,
institutional issues, waste generation, the management of solid waste, and the economic
value of the recycling sector. These are discussed in accordance with the regional PSP
concept.
a)
Private Sector Participation
Countries in the METAP-RSWMP region have traditionally funded SWM services out of
national and municipal budgets, against a background of non-accurate information. Progress
in the region to render the SW service more effective and efficient, and to comply with
stricter environmental standards, has meant that countries and municipalities are faced with
financial challenges within the context of limited municipal financial resources. As a result,
the private sector is financing the achievement of public policy waste management
objectives in some countries of the region. However, the strategy regarding the Private
Sector Participation (PSP) policy in the field of SWM differs from one country to another. It
is considered advanced in Egypt, Lebanon, Syria, and Morocco. In recent years, several
projects for waste collection, transfer and disposal, have been tendered nationally and
internationally. Long-term contracts have been agreed in Lebanon, Egypt, and Morocco.
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9. Illustrative Case Studies
However, some contractual agreements have failed, due to insufficient funding and nonfulfilment of contractual obligations (e.g., Tunisia, Algeria, and Morocco), due to
inefficiency, poor performance by the service provider, and poor monitoring by the public
sector.
Successful implementation of a PSP approach requires a comprehensive framework, within
which both contractual parties can operate with continuity, and which defines both the rules
and the interfaces (see Chapter 6.6).
b)
Institutional Issues
In the project region, waste management is a shared responsibility at national, regional, and
local levels and, at the national level, of various government ministries and agencies.
Generally, the Ministry of the Environment or Environmental Agency is responsible for the
provision of waste management services in the region. In 2002, for instance, Algeria created
a dedicated SWM agency through which it sought to promote enhanced SWM services. In
Tunisia, a National Waste Agency has been considered; this agency would undertake waste
management studies as well as the implementation of waste management facilities and cost
recovery on behalf of local communities. In most countries of this region, institutional
capacity to provide leadership on waste management issues remains weak, nevertheless.
Generally, across the region, the SWM sector is inadequately structured and regulated by
public authorities. Although SW services consume between 20 and 50 % of the annual
budget of the municipalities in the region, solid waste is not prioritised on the political
agenda. However, the prerequisite for institutional capacity building for the effective
regulation of public sector services is a very important step towards mobilising private
entrepreneurs in the ISSWM projects. Instead of the usual two parties, independent experts
or regulatory agencies can assist public institutions.
c)
Waste Generation
Approximately 160 million people live in the project region, and the population is growing
rapidly. More than 50% of the population live in urban areas. The region generates about 35
million tons of municipal waste per year. It is estimated that waste generation will increase
across the region by up to almost 50%, due to increasing urbanisation, ever-growing
populations, and nonetheless, the increasing levels of economic development. This will
result in changes in both the quantity and the characteristics of the waste generated. Many
cities remain under-serviced in terms of SWM which represents a great opportunity for both
national and international private firms. As a rough guide, Germany, with a population of
82.5 million, generates about 380 million tons of SW each year. As one of the biggest in
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9. Illustrative Case Studies
Europe, the SW market in Germany generates a turnover of more than € 35 billion every
year. About 75% of the market are run by the private sector. These figures obviously have
to be understood within the socio-economic context of the country. While they can
obviously not be projected onto the METAP-RSWMP countries, they suggest what the solid
waste market could look like in future. Finally, there is little accountability for waste
generation, so that accurate data is lacking.
d)
Waste Management
In the region, SWM is considered inadequately managed. It has focused primarily on the
removal of waste from the municipalities and its subsequent disposal, giving no priority to
avoidance and treatment as the hierarchy principle requires (see Chapter 5.1). Accordingly,
open dumps, which pose a serious threat to environmental quality, are legion.
In Tunisia, for instance, the government has identified over 400 unregulated dumps in need
of rehabilitation. In Morocco, there are over 180 dumpsites.408 In fact, 90% of the waste
generated in the project region, amounting to over 30 million tons per year, is disposed in
inappropriate places with inadequate environmental standards. This has resulted in
transferring health and environmental issues from one place to another at great cost, and has
furthermore created new and costly problems such as the rehabilitation of dumpsites. The
central issue is that environmental remediation is more costly than prevention.
According to the World Health Organisation (WHO), over 10% of preventable illness is due
partly to inadequate SWM. The latter also poses a serious threat to the national economy in
general, and in particular to the tourism-driven economy. For instance, inadequate SWM in
Tangier leads to the pollution of beaches and US$ 23 million in lost revenues for hotels.409
This figure will increase as more waste is generated due to an ever-improving standard of
living, urbanisation, and not least due to the ambitious programme of the Moroccan
government to strengthen the tourist industry. Furthermore, in 1999, the cost of
environmental degradation in Tunisia is estimated at about US$ 565 million (representing
2.7% of the GDP). In Morocco, the annual cost of environmental degradation is estimated at
between 2.75% and 4.65% of the GDP, representing about € 1.3 billion410, and the cost of
inadequate SWM alone is estimated to be about 0.5% of the GDP.
408 « Les nouvelles bases d’une politique “déchets” : Enfin une loi ! www.lopinion.ma, 9th August 2006.
409 Royaume du Maroc « Evaluation du Coût de la dégradation de l’environnement », June 2003, Rapport No. 25992MOR World Bank, www.worlbank.org , June 2003, p. 1.
410 Royaume du Maroc « Evaluation du Coût de la Dégradation de l’Environnement » Document de la Banque
Mondiale, Rapport No. 25992-MOR, 2003.
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9. Illustrative Case Studies
e)
Informal Sector and Recycling
Recycling is largely undertaken by the informal sector in all Maghreb and Mashreq regions
in question, due to a lack of formal recycling processing plants. The informal sector
operates differently in each country, and sometimes it even operates differently within one
city. In fact, 10,000 people across the METAP-RSWMP region live on the revenue derived
from waste management-related activities in the informal sector.
The impact of the informal sector on the amount of waste requiring disposal varies across
the region. It is considered the highest in Cairo411, where the Zabbaleen community (waste
pickers) has developed an internal economy based on the collection, recovery, sale, and
reutilisation of waste materials. SW is collected by the Zabbaleen through agreements with
individual residents, and specifically those living in higher income areas of the city. Over
80% of the waste collected by the Zabbaleen community is utilised. This has created over
3,000 jobs, as well as a micro-enterprise based on the materials recovered. Across the city as
a whole, this translates into a reduction of the amount of waste requiring disposal, of less
than 10% of the waste generated.
In other parts of the region, the impact of the informal sector on the total amount of waste
requiring disposal, is probably in the range of 5 – 20% of the waste generated. In Lebanon,
40% or more of all solid waste has been estimated to be handled by the informal sector. In
Tunisia, the ECO-Lef412 initiative has created other opportunities for the integration of the
informal sector into the formal sector.
Finally, the informal sector leads to direct economic and environmental benefits and
removes non-organic materials from the waste stream, and hence facilitates the achievement
of the hierarchy principle. Simply put, any PSP initiative in LMIC should consider and
integrate the informal sector into its activities. In light of the above, PSP initiatives should
not create conflict with informal waste management activities. This has occurred in Cairo in
connection with the contracting-out of waste management services, resulting in the isolation
of the informal sector. Door-to-door collection by the informal sector is replaced by a
modern collection system, and waste separation in the street and on new sanitary landfills is
restricted, thus considerably limiting the extraction of recyclable materials from the waste
stream and at the same time affecting the revenues of the informal sector.
Recycling is an important socio-economic activity across the region and the informal sector
plays a considerable role in this activity. In fact, recyclable materials comprise between 20 30% of the waste generated in METAP-RSWMP countries in terms of weight. The extent of
411 Within the households served by Zabbaleen collection contracts.
412 Eco-Lef is a waste packaging system for the collection of used packaging and its treatment in Tunisia.
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9. Illustrative Case Studies
this activity varies widely within a country. In some cities (Cairo/Egypt), the recycling
activities of the informal sector remove virtually all the recyclable materials from the waste
generated from at least some parts of the city. In the year 2000, there were about 220
recycling workshops in Alexandria/Egypt with an average number of six workers. These
carry out sorting and loading activities.
The METAP-RSWMP experts have identified three ways to enhance the recovery of
recyclable materials in the region:
• The provision of incentives in return for specific recyclable materials;
• The separation of dry materials from wet materials at the source of waste generation;
• The recovery of recyclable materials from mixed waste, following collection.
9.3
Illustrative Case Study: Egypt
The quantity of solid waste generated in Egypt is estimated to be around 60 million tons a
year. Solid Waste generated from urban and rural areas amounts to about 15 million tons
yearly, while the remaining quantities include agricultural waste, demolition waste, etc. The
major SWM issues include insufficient SW collection and a lack of sanitary disposal.
The SWM services used to depend on three main players:
• Municipalities responsible for street cleaning and servicing municipal SW containers.
• The Zabbaleen 413 traditional system, in which they “contract” with individual
households to collect their waste in exchange for a fee that ranges between L.E.414 1-5
per month. They offer a door-to-door service daily or once every two days in return for
a monthly fee. Waste collected either by the private sector is delivered to the
Zabbaleen communities or directly to disposal sites (see Chapter 4.8 on the informal
sector).
• Additional Non Governmental Organisations (NGO) also perform some limited solid
waste services.
The solid waste issues only came onto the agenda of the government as a priority in 1999,
when a severe air pollution episode attacked Greater Cairo due to the open burning of
accumulated waste disposed in inappropriate places. Since then, important measures have
413 Common name of waste pickers in Egypt.
414 Exchange rate in November 2003: approximately 6.2 Egyptian Pounds to 1.0 US Dollar.
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9. Illustrative Case Studies
been undertaken to tackle these issues. Thus, a Ministerial SWM Committee co-chaired by
the Minister of the Environment and the Minister of Local Development was funded in
order to address the institutional and financial aspects of the system. In December 2000, the
Committee prepared a “National Programme for Waste Management”. The programme
addressed the policy and institutional actions, as well as the projects needed to manage
different streams of waste. A policy decision has been taken by the Government of Egypt
(GoE) to introduce economic incentives for SWM services. These included a tax break for
at least 5 years, as well as exemption from custom duties for the equipment used in waste
management services.
One of the initiatives was to transfer the integrated SWM services to the private sector. A
private service has since been started in Alexandria, 3 zones of Cairo, 2 zones of Giza, Suez,
and Aswan. The first step was to establish a Ministerial SWM Committee, and then the
necessary decrees allowing for the contracting-out of the service were issued, including a
decree allowing the inclusion of solid waste fees from the service beneficiary in electricity
bills. Afterwards, experienced private operators were invited to provide the services in some
Governorates (see Table 13).
The Qena-Egypt project has been self-financed without using any funds from sources
outside Qena City. The SWM services have been commercialised through the collection of a
monthly fee from households. In reality, alongside the above-mentioned revenues,
households today are requested to pay 2 L.E.415 per month for waste collection. By taking
account of some 45,000 households of which 90% regularly pay the fee, an annual amount
of about 1 million L.E. is collected directly from the waste generators. In addition to the
revenues collected for the cleansing fund, fees are also collected along with the issue of car
and business licenses, so that almost 50% of the revenue comes from private sources
whereas the remaining part is still financed by the public sector.
There are some goods examples of improvement of national institutions dealing with SWM.
One of them is given in Egypt (Qena) where 20 employees have carried out monitoring and
enforcement policies. Furthermore, the project is supervised by a project steering
committee, personally headed by the Governor. In addition to the operational crews, about
20 people are involved in performance monitoring. Reports are directed to the project
manager, who takes immediate action in the case of mismanagement. A committee which
represents the Governorate, the City Council, and the police, supports enforcement. The
Governor himself and his key staff are involved in monitoring and instructing the waste
collection crews to achieve best SWM practice.
415
Exchange rate in November 2003: approximately 6.2 Egyptian Pounds to 1.0 US Dollar.
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9. Illustrative Case Studies
The progress achieved by the different governorates in Egypt on the PSP process is not
homogeneous. The larger, urban governorates, have progressed steadily, while others,
especially rural governorates, have failed. Table 13 provides data concerning the
governorates that have completed their outsourcing and have entered into a contractual
agreement with private operators. Accordingly, the SW sector is driven mostly by
international private companies. The issue is how to integrate local SME and the informal
sector into the business?
Governorate
Alexandria
Cairo North
District
Cairo East
District
Cairo West
District
Giza Urban
District I
Giza Urban
District II
Suez
Aswan
Total
quantity of
waste
(tons/day)
2,700
Annual contract
value at start of
service
(L.E. Million)
85
Price
(L.E./ton)
Operator
86
CGEA Onyx416
(International)
AAEC417
(International)
(FCC and Urbaser)
(International)
FCC and Urbaser
(International)
Jacorossi418
(International)
FCC419
(International)
Tanzifco420 / MD
(Regional)
ICC
(Consortium National
& International)
52
59.5
48
1,400
36
1,600
44.9
325
9
435
12
75
Table 13: Overview of PSP in SWM in Egypt
(Source: METAP-RSWMP project)
416 A division of Vivenvi http://www.cgea-onyx.fr.
417 AMA Arab Environment Company (AAEC) of Italy and Arab Contractors (Osman Ahmed Osman & Company)
418 Jacorossi: Italian Company (Jacorossi company – El Dawallia).
419 (FCC – Giza for environmental services): Spanish Company. FCC was created in 1992 by the merger of
CONSTRUCCIONES Y CONTRATAS, S.A. and FOMENTO DE OBRAS Y CONSTRUCCIONES, S.A.
http://www.fcc.es/fcc/corp/ing/sdp_n_ddln_250.htm.
420 Tanzifco is one of the leading cleaning companies in Kuwait as well as the gulf. Tanzifco was established on the
January 29, 1963.Today Tanzifco executes over 200 cleaning contracts, ranging from complete buildings, airports,
workshops and personal homes. Tanzifco has progressively and successfully expanded in the cleaning industry
throughout the gulf, in Egypt, Dubai, etc. http://www.tanzifco.com/index-1.html.
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9. Illustrative Case Studies
Alexandria Governorate421 was the first to contract an international private sector operator
to render SW services in the area. In October 2000 three companies (SoClean of Lebanon,
FCC of Spain and CGEA Onyx of France bid for the contract. In the end, CGEA Onyx
signed the contract. The city is extensively industrialised, including about 40% of the
industrial base of Egypt. The full scope of the SWM services included the collection,
transportation, treatment and final disposal of all kinds of non-hazardous solid waste, such
as municipal, healthcare, and industrial non-hazardous waste has been contracted-out. The
annual contract value at the start of the provision of the integrated service in Alexandria city
was L.E. 85 million. 422 Table 14 displays the fees charged per month to different
beneficiaries based on their electricity consumption.
Beneficiaries
Households
Small offices, workshops and commercial shops
Commercial, industrial and medical activities
Large consumers, hospitals, tourist establishments, hotels,
etc.
Fees per Month
[L.E.]
2 – 15
3 – 65
5 – 80
5 – 150
Table 14: Fees charged per month to different beneficiaries
Nevertheless, the correlation between electricity consumption and the service fee for
commercial, tourist, and industrial activities does not reflect the quantity of waste generated
by these activities. As a result, many people refused to pay, arguing that a shop processing
diamonds and using a lot of electricity, by implication, but producing little waste, paid more
than a butcher using little electricity, but generating a huge quantity of waste. Hence, the
strict application of the polluter pays principle was challenged.
In 1999, the municipal administration contracted-out the full scope of the city’s waste
services (cleanliness, SW collection, transport, treatment and final disposal) for a duration
of 15 years. Responsibility for funding the necessary SWM infrastructure was assigned to
the private sector operator. The international private operator was estimated to have invested
about L.E. 200 million by the end of the first month of operations. The annual contract
value, together with the income from the sale of organic compost, represented the annual
revenues of the international private operator during the operation of this project.
421 Alexandria is Egypt’s second largest city, with a population approximately 3.5 million.
422 L.E. 85 million including sales taxes, approx. 14 million US$.
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9. Illustrative Case Studies
As presented in Table 15, the international private operator introduced a new collection
system for the municipal solid waste, using a collection fleet appropriate for the type and the
size of the streets and areas served in Alexandria city. The collection service also included
new areas which were not previously served, thus increasing effectiveness (see Table 15).
The introduction of new mechanical equipment for beach cleaning was also one of the tools
for the success of this service. Trucks of varying sizes run collection routes between their
respective zones and the three transfer stations.
As a result of good effectiveness, the number of complaints from residents and visitors
about the project’s progress decreased significantly following the contracting-out of the SW
service, accompanied by a rapid increase in public satisfaction with the quality of the
service provided by the international operator (see Table 15). The project also provided a
large employment opportunity: around 4,000 employees joined the international private
operator in addition to around 130 employees by Alexandria Governorate as monitors for
the quality of service provided by the private operator. The project was monitored by the
Alexandria Governorate.
The awareness campaign represented one of the main factors contributing to the success of
the international operator in providing the foreseen services in Alexandria City. A targeted
awareness campaign at the beginning of the project was directed at all residents to be
served, and prior to the operation phase. According to the contract, at least 60% of the
families in residential units had to be informed and made aware of the provision of the
waste collection services from the first day of operation. In addition, at least 90% of all
businesses and residential units in the service area had to be made fully aware of the
provision of the waste collection services within six months of the commencement of
operation. Finally, at least 80% of housewives in residential units as well as businesses had
to be fully aware of their duties in participating in the service of waste collection.
It was also learned that the role of the local private sector in the consortium with an
international company is very important for the optimal execution of further projects.
Regarding inter-organisational relationships, the contractual authority set up a system of
fines for dealing with violations of the contract specifications by the private operator (see
Table 15). According to the contract specifications, if the private firm delayed the work
programme laid down for executing the general cleaning service for one day beyond the
date of starting work mentioned in the contract, a fine amounting to L.E. 5,000.00 was
imposed for each day of delay. Furthermore, if the private firm disposed of the waste in
places other than those designated by the first party, a fine amounting to L.E. 2,000.00 was
imposed for each violation. In addition, if the streets were in a bad condition (scattered dust,
147
9. Illustrative Case Studies
waste from workshops and residential units on sidewalks and in the streets), a fine
amounting to L.E. 200 was imposed for each violation.
However, an unambiguous definition of threshold for non-performance of contract was
lacking. Furthermore, according to the contract specifications, if any kind of dispute related
to this contract arises, it was set out that both parties of the contract would seek settlement
of such a dispute within thirty days through amicable negotiations. If such negotiations
proved unsuccessful during the fixed period, both parties were obliged to refer disputes to
arbitration. A company or a contractor might assist the private firm with prequalification in
the same activity, provided that this contractor/company worked under his umbrella with the
same conditions and specifications. Such arrangements had to be carried out with the
approval of the contractual authority.
Table 15 summarises the strengths and weaknesses of the Egyptian case study. Regarding
the application of the hierarchy principle, it is stated that the ration of waste to be recycled
and waste recycled is almost 1 (at least theoretically). The reason is that the Egyptian
legislation (Law No 4 for 1994) considers the application of this principle explicitly. In
addition, according to the remuneration modes the private firm is paid partly from the
revenue of the sale of compost. Other positive measures regarding the application of the
hierarchy principle include the transport of SW to the Zabbaleen area. It is noteworthy that
the monitoring system set up by the public authorities is considered as ground-breaking.
Nonetheless, regarding the weaknesses of this case study the cost recovery, the non-accurate
information with regards to quantity of waste generated and not at least the absence of clear
mechanism to address unforeseen circumstances must be cited.
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9. Illustrative Case Studies
Principles
Theories
Hierarchy
principle
/ Analysed Parameters
I
S
S
W
M
Polluter pays
principle
Effectiveness
P
S
P
Strengths
%R
% Rd
Ã1
%O
%Od
%L
% Ld
Ã1
Analysis of national
waste legislation with
respect to “Hierarchy
Principle”
Accompanying measures
for recycling
Accompanying measures
for organic treatment
% Cost recovery
Ã1
Law No.4 for 1994 takes
into account SW treatment
SW transport to the
Zabbaleen area for recycling
SW transport to the
Zabbaleen area
<100%
Areas covered / Areas to
be covered
Local Know-how
Asymmetric
Information
Accessibility to accurate
information prior to
contracting-out
PrincipalAgent
dilemma
Addenda
Degree of uncertainty
Organisational
Theory
Weaknesses
More areas covered than
prior to PSP
Sound local knowledge
through consortium between
international and local firm
Non-accurate information
regarding waste
generated, available
facilities and resources
Tender documents not
reflect features of the
governorates
Relationship between.
private sector and
municipalities
Frequency of
transactions between
agent and principal
Owner of equipment
Relationship between.
private sector and
beneficiaries
Inter-organisational
relationships
Introduction of government
agencies for controlling
Periodic meetings, monthly
and annual progress reports
Absence of clear
mechanisms to address
unforeseen
Introduction of appropriate
equipment
Less complaints from
beneficiaries; sound public
awareness programme
Co-operation between
private firm and other
operators
Table 15: Strengths and weaknesses of contracting-out in Egypt
(R: Potential quantity of SW to recycle; Rd: Quantity of waste recycled; O: Potential
quantity of SW for organic treatment; Od: Quantity of SW organically treated;
L: Potential quantity of SW to dispose of; Ld: Quantity of SW disposed)
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9. Illustrative Case Studies
9.4
Illustrative Case Study: Lebanon
The Council for Development and Reconstruction (CDR) in Lebanon is a national public
authority established in early 1977 partially in replacement of the Ministry of Planning.
CDR is the government unit responsible of reconstruction and development. CDR initiated
the participation of the private sector in providing SWM services in 1994. The scope of the
services included collection, sweeping, treatment, and landfilling. According to the contract
specifications, 2 million people were served. Without the active role of the municipalities,
the CDR contracted out the daily collection of 1,400 tons of solid waste to the private
sector, called SUKLEEN 423 , for one year. This contract was later renewed for five
additional years and covered Beirut and parts of Mount Lebanon. SUKLEEN was
responsible for street sweeping and waste collection. The contract value was US$ 23 million
per year. The waste generated was transported to the sorting plants to be sorted into organic
and non-organic fractions. Organic material was sent to a composting plant, while
recyclables were recovered from the inorganic fraction and the remaining waste was sent to
the landfill.
In 1997, the private sector was involved in the design, construction and operation of the
waste facilities, and a contractor named SUKOMI424 (belonging to the same group involved
in SW collection) was entrusted with the construction and operation of the treatment and
disposal facilities. The contract with the private firm SUKLEEN ended in the year 2000.
However, due to the absence of competition, this contract was periodically renewed for a
period of six months (see Table 16). Finally, the collection contract was renewed for 5 years
to the same private contractor. Due to the expansion of the area of collection, the contract
was amended to collect a total of 1,700 tons of waste every day, instead of the 1,400 tons as
specified before.
The CDR, Ministry of Environment (MOE) and Sector Implementation Unit (SIU) put forth
an emergency plan consisting of the construction of two sorting plants, one composting
plant, a depot, and two sanitary landfills. The emergency plan requested the recovery of
10% of the waste stream as recyclables, sending organic material (50% of the waste) for
423
SUKLEEN started operations in June of 1994 as a waste collection and street sweeping company, covering parts of
Greater Beirut. Today, the company's role has expanded to cover all areas of Greater Beirut and most of Mount
Lebanon. http://www.sukleen.com/SKL-About.htm.
424
SUKOMI is the first privately owned waste Treatment Company in Lebanon. Today Sukomi has taken a new turn,
diversifying its field of activities to the operation and maintenance of waste treatment plants as well as to the
design, operation and monitoring of landfills. Sukomi branches out into two divisions: Sukomi Waste Treatment
(SWT), and Sukomi Landfill Projects (SLP). http://www.sukomi.com/Sukoi-About.htm.
150
9. Illustrative Case Studies
composting, and landfilling the non-organic inert fraction of the waste. After the adoption of
the emergency plan, the private sector took over the construction and operation of the waste
treatment and disposal facilities. However, the costs were high due to the absence of
competition. The private firm failed to meet the contractual requirements regarding recovery
of recycling materials and composting of organic waste during the first year. It took the
contractor four years to improve its performance sufficiently to meet the contractual
requirements with respect to recovery of recyclables. Due to the lack of sufficient space for
composting, the targets for organic material were never met. As a result, excess organic
material was sent to the landfill which reached its design capacity within 5 years. Initially,
the landfill was designed to operate for 10 years. Therefore, the hierarchy principle was not
applied. The costs and status of the contracts were as follows:
In effect, the CDR had taken over responsibility for SWM from the municipalities, launched
a tender for SW collection on their behalf in 1994, and involved the private sector through
collection contracts. Although the law of municipalities permitted the contracting-out of SW
collection to the private sector, the CDR did not consult the municipalities and contracted
SWM activities to the private sector. The private firm was paid by CDR through national
funds. Consequently, no direct tax was levied to collect SWM fees from waste generators
and there was no system in place at the time to impose any SWM system on municipalities.
The costs of the services were as follows: collection and sweeping US$ 18 per ton, sorting
and composting US$ 39.7 per ton; landfilling US$ 35 per ton. The costs of the services
provided by the private sector are significantly higher than the services provided by the
public sector, due to a lack of competition and the monopoly market. The PSP experience
was therefore jeopardised in terms of efficiency (see Table 16). This case study presents the
impact of a monopoly market and a lack of competition on the performance and efficiency
of providing waste management services. Furthermore, no indications of a monitoring
framework were evident. Even the municipalities as the direct beneficiaries of the services
were neither paying for them nor were they involved in the decision-making. Table 16
summarises the strengths and weaknesses of contracting-out in Lebanon. According to the
contract 10% of SW should be recycled. This is considered strength in Table 16. However,
this is unfortunately not achieved. Furthermore, 50% of SW should be composted according
to the contractual specifications. Nevertheless, this is again not achieved. Therefore, more
waste has been disposed of as foreseen (the ration: potential quantity of SW to dispose of by
the quantity of SW disposed of is >1 which is considered as weakness according to the
hierarchy principle). Other positive elements include the transport to sorting plant and the
ratio (areas covered by areas to be covered) is higher than prior the involvement of the
private sector. It is noteworthy that the success of this PSP experience has occurred after 4
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9. Illustrative Case Studies
years and not at the beginning as usually expected and stated in the literature. One major
weakness is the remuneration modes. Accordingly, the private firm is paid per tonnage of
waste disposed, hence it has no incentive to minimise waste. Another one is the absence of
competition. As usually stated in the literature, PSP means more competition. This is not
necessary true in the SW sector especially in landfill management. Finally the managerial
capacity of the public management is weakened through this thoughtless PSP, as the
municipalities are not involved neither the planning procedure for the involvement of the
private sector nor in the management of its performance.
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9. Illustrative Case Studies
Principles /
Theories
Hierarchy
principle
Analysed Parameters
Ã1
%O
%Od
Ã1
>1
Analysis of national waste
legislation with respect to
“Hierarchy Principle”
Remuneration modes
I
S
W
M
Polluter pays
principle
Continuity
Principle
Effectiveness
Efficiency
Asymmetric
Information
Principal-Agent
dilemma
Organisational
Theory
Strengths
%R
% Rd
%L
% Ld
S
Weaknesses
Accompanying measures
for recycling
Accompanying measures
for composting
Payment Modus
Cost of the service
% subsidies from central
government
Managerial capacity of
municipality
Areas covered / Areas to be
covered
Municipal costs versus
private sector costs
Accessibility to accurate
information prior to
contracting-out
Addenda
Degree of uncertainty
Relationship between
private sector and
municipalities
Frequency of transactions
between agent and principal
Absence of legislation
Per tonnage meaning
no incentive to
minimise SW
No area available for
composting; landfill
full after 5 years
No tax to SW
generators
100%
Transport to the
sorting plant
Transport to the
sorting plant
No experience
available within the
municipality
Higher than prior to
PSP
No competition
Higher costs
Accurate quantity of
SW unknown
Contract amended due
to more waste
No public awareness
prior to the year 2000
Success after 4 years
Renewal of contract
for 5 years
Table 16: Strengths and weaknesses of contracting-out in Lebanon
(R: Potential quantity of SW to recycle; Rd: Quantity of waste recycled; O: Potential
quantity of SW for organic treatment; Od: Quantity of SW organically treated; L: Potential
quantity of SW to dispose of; Ld: Quantity of SW disposed)
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9. Illustrative Case Studies
9.5
Illustrative Case Study: Tunisia
The government of Tunisia ordered the contracting-out of SW services, following
instructions from the Home Office in Memo no. 73 (dated 3rd November 1992). As a result,
municipalities entered into contracts based on standard contract specifications prepared by
the Home Office. 425 The same applied to the National Agency for the Protection of the
Environment (ANPE)426, which also used standard contract specifications. At the time, such
contracts did not normally take into consideration specific features of the municipality in
question. In fact, of the 60 collection contracts established by the municipalities in Tunisia
since the launch of the PSP, only 30 were executed right up until the end of the contract
period. The other contracts were either cancelled by the municipality, or abandoned by the
private firm. Irregular payments for services, the incompetence of the inspectors, the
absence of a comprehensive monitoring system, and so forth, were all considered
weaknesses of the contract with the private firm. ANPE was in charge of the collection of
packaging materials, the construction and management of solid waste, transfer stations, and
the construction of a landfill. Once the construction works at the landfill and transfer centres
were complete, ANPE operated its units at its own cost for a whole year, before contracting
a private company through an international tendering procedure. This approach resulted in
the strengthening of the municipal management capacity (see Table 19).
The illustrative case concerns the contracting-out of municipal waste collection, street
sweeping, the operation of the landfill in the Tunis district (Jebel Chekir) (see Table 19),
along with its two transfer stations, and the collection of packaging waste (ECO-Lef).
According to the waste collection contract, 11,500 tons of waste were collected yearly and
38,950 inhabitants were served in “Arrondissement” El OMRANE. The contract
specifications stated that:
• Trucks must be loaded automatically without any labour force.
• It is forbidden to subcontract part of the assignments.
• Waste pickers are not allowed.
As far as the payment modus was concerned, the private firm was paid for waste collection
and transportation to the landfill per ton of waste collected and received a lump sum price
for street sweeping. Prices in the first year of service could not be revised. One positive
425 Ministère de l’Intérieur.
426 At present, the SW responsibility has been transferred to a new national organisation called „ANGeD“ (Agence
Nationale de Gestion des Déchets) –National Agency for Waste Management.
154
9. Illustrative Case Studies
element was the approach adopted to managing conflict, namely by amicable settlement of
disputes foreseen in the contract specifications.
Another service contracted out in Tunisia was the management of transfer stations (see
Table 17). Two transfer stations in Ben Arous and in Jedaida were contracted out with a
respective capacity of 110,000 tons per year and 60,000 tons per year. The following table
displays their technical details. The private company named ASME427 has been operating
the two transfer stations since 1999, based on a 5-year contract.
Region428
Area
Capacity
Max of waste
Timetable
Monthly report
Payment (Lump sum)
Payment (Per ton)
Ben Arous
200 ha
110,000 tons per year
300 tons/day
24 hours/day (7 days/week)
Tonnage, expenditure, etc.
7,511.280 DT/month
2.138 DT/ton
Jedaida
100 ha
60,000 tons/year
170 tons /day
24 hours/day (7 days/week)
Tonnage, expenditure, etc.
7,511.280 DT/month
2.138 DT/ton
Table 17: Key data of the transfer stations
Because ASME is paid by the tonnage of waste delivered, the waste is weighed when
entering the transfer station. Documents which have to be submitted to the municipality
include data regarding the waste accepted, a daily report on the management of the transfer
station, a monthly report regarding the quantity of waste in tons, expenditure arising from
maintenance works, and an annual report (quantity of waste in tons, characteristics,
generators, etc.).
PSP is also being introduced in the recycling industry of Tunisia. About 200,000 tons of
packing waste is discarded every year in waste containers and very often along public roads.
Furthermore, plastic bottles are often abandoned, and metal beverage cans and plastic bags
are often abandoned along the roads, creating a negative impact on the aesthetic appeal of
the municipalities. In order to cope with this issue, solid waste collection is carried out
within the framework of the national programme of refundable and reusable packaging,
known as ECO-Lef and regulated by decree no. 97.1102 dated 2nd June 1997. According to
the decree, the ANPE is the designated manager of the programme ECO-Lef. It has issued
invitations to tender for packaging waste collection and has monitored the services of the
427 ASME (Agence Municipale des Services Environnementaux) : Municipal Agency for Environmental Services.
428 Gouvernorat
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9. Illustrative Case Studies
private sector. Two private firms named, STPE and AEROPLAST429, have been contracted
to execute the ECO-Lef programme.
A study carried out in September 2000 revealed that approximately 24,000 tons of
recyclable plastic packaging waste is produced annually. Approximately 1,600 tons/year of
this amount are recovered, which corresponds to less than 7% of the country’s potential
source of packaging waste material. Cost recovery is carried out by ANPE based on the
contribution to ECO-Lef membership from the manufacturers of packaging on the market
and the packagers. The membership tariffs for the ECO-Lef system vary depending on the
nature of the waste produced by the manufacturer.
The fact that this contract was lump sum did not help ANPE to optimise the collection of
packaging waste; the private company had no incentive to collect more waste (see Table
19). As a result, ANPE has not renewed the contracts. Instead, it introduced a new system
(Eco-Lef) of packaging waste collection based on the quantity of recyclable delivered to
provide a greater incentive to collect more packaging waste (see Table 19).
Finally, the landfill of the district of Tunis also relates to the PSP experience in Tunisia. A
private company, named SOMAGED 430 , has operated it since 1999, based on a 5-year
contract (see Table 18). The private firm has benefited from the support of the contractual
authority (ANPE). Indeed, according to the operator, ANPE is reliable in its payments to the
company, makes technical executives available on a consistent basis to solve operating
problems, provides the landfill and transfer station management together with a monitoring
service, and grants any necessary authorisation without causing delays, etc.
124 ha
8.4 million of tons
2,000 – 2,500 tons/day
12 years
24 hours/day; 7 days/week
Tonnage, expenditure, etc.
2.65 DT/ton
200,000 DT
Area
Capacity
Quantity of waste
Span of life
Timetable
Monthly report
Payment
Lump sum for the 1st year (security
devices)
Lump sum for the 1st year
(meteorological devices)
1,000 DT
Table 18: Landfill Jebel Chekir
429 http://www.matee.gov.ma/dwn/dechets/FRENCH/French-RG/V6_CS-Final%20Version-fr/CaseStudy-PACP06fr.pdf
430 SOMAGED (Société Maghrébine de Gestion des Déchets): joint venture between French and Tunisian company.
156
9. Illustrative Case Studies
The relationship between SOMAGED and the contracting authority (ANPE) is considered a
good example of sound inter-organisational relationships (see Table 19). The contracting
authority supports SOMAGED and is paid according to agreement. Simply put, joint
responsibility is a hallmark of the Tunis case. In effect, the operation of the landfill in the
Tunis district and the transfer stations also faced some difficulties, for example management
of leachate, of which the outflow rate is higher than the space available for it due to a lack
of accurate information when designing the landfill (see Table 19). Due to the lack of
accurate information in the contract on the one hand, and in order to help SOMAGED on
the other hand, ANPE has, on several occasions, committed itself to solving the problems
encountered.
Table 19 summarises the strengths and weaknesses of results obtained so far from PSP
experience in Tunisia. The application of the hierarchy principle is not considered in most
of the PSP experiences in Tunisia, mostly due to the remuneration modes. However, after
reassessing the Eco-Lef programme and after reconsidering the payment system of the
private firm (it is paid according to the quantity of recycling waste collected), the quantity
of recycling waste collected has been increased, hence the application of the hierarchy
principle. It is worth mentioning that the public administration -ANPE- has managed the
SW facilities and gained some experiences prior the involvement of the private sector. This
is resulting in strengthening the managerial capacities of the public management. Another
interesting element is the amicable settlement of dispute. As far as weaknesses of this PSP
case study are concerned, there was lack of accurate information and the quantity of
leachate produced by the landfill was higher than assumed in the contract. However,
through sound inter-organisational relationships between ANPE and SOMAGED this issue
has been harmoniously resolved.
157
9. Illustrative Case Studies
Principles /
Theories
Hierarchy
principle
Analysed Parameters
Weaknesses
%R
% Rd
>1
%O
%Od
>1
%L
% Ld
Polluter pays
principle
S
S
>1
Accompanying measures
for recycling
Lump sum for EcoLef: No incentive to
collect max
packaging waste
Cost of the service
Costs unknown, no
management
accounting system
% subsidies from central
government (Incentives to
minimise waste)
I
W
Managerial capacity of
municipality
Effectiveness
P
Asymmetric
Information
S
P
Organisational
Theory
Areas covered / Areas to
be covered
Accessibility to accurate
information prior to
contracting-out
Relationship between
agent and principal
Frequency of transactions
between agent and
principal
Conflict management
Satisfaction of private
sector
Payment per ton in the
following contract for
ECO-Lef: High incentive
to collect max packaging
waste
Municipalities bear the
cost for SW services
Packaging SW collection
is paid by manufacturers
3 year contract of
Eco-Lef not renewed
Continuity
principle
M
Strengths
No accurate
information; Quantity
of leachate produced
in landfill higher than
assumed
60 SW collection
contracts signed, 30
cancelled, Lack of
monitoring system,
Public awareness not
considered in the
contract
Irregular payment of
collection contractor
(up to 10 months)
Guarantee in the contract,
in the case of contract
failure, take-over by
municipality within 24
hours
1 year management by
ANPE prior to
contracting-out
Well-defined in contract
specification
Amicable settlement of
disputes
Regular payment to
SOMAGED
Support from ANPE to
SOMAGED and ASME
Amicable settlements of
dispute
Table 19: Strengths and weaknesses of contracting-out in Tunisia
(R: Potential quantity of SW to recycle; Rd: Quantity of waste recycled; O: Potential
quantity of SW for organic treatment; Od: Quantity of SW organically treated; L: Potential
quantity of SW to dispose of; Ld: Quantity of SW disposed)
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9. Illustrative Case Studies
9.6
Discussion of the Main Results
The key objective of the previous section has been to identify the strengths and weaknesses
of PSP experience in the METAP-RSWMP region. To achieve this, issues such as the
hierarchy principle, the polluter pays principle, and the efficiency and effectiveness of the
private sector have been analysed. These issues will be discussed further in this section.
The METAP-RSWMP region is characterised by an outstanding opportunity to both attract
the private sector (in terms of the quantity of waste generated) and govern its effective
performance in delivering sustainable SWM services. Within the framework of ISSWM,
PSP is the subject of debate all over the region with varying degrees of understanding of the
key principles of this concept. On the one hand, PSP is often considered to be a panacea for
all SWM issues, whereas on the other hand, there are serious reservations against any type
of PSP in the provision of SWM services. The reality is that only a tailor-made solution can
provide the right answer.
Algeria, for instance, has created two programmes to achieve ISSWM, namely the National
Plan of Action for Environment and the Sustainable Development (PNAE-DD) and the
National Programme of Integrated Municipal Waste Management (PROGDEM). The
concept of the programmes is to preserve public health and the cleanliness of cities within
the context of sustainable development. The programme is based on some key principles of
the ISSWM concept, such as the hierarchy principle, the polluter pays principle, the role of
public awareness, and the role of the municipalities. Thus, the achievement of ISSWM in
METAP-RSWMP countries sometimes features on the development agenda.
In most countries of the region, SW disposal consumes about 20 to 50 % of the annual
budget of many municipalities. These budgets are in general insufficient to cope with evergrowing demand. Finally, the monopoly position of public service providers, including staff
incentives, hinders the urgently required increases in efficiency. Due to the abovementioned facts, the issue of PSP in the SW industry will be a topic of both academic and
professional discussion in the region for at least the next 15 years.
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9. Illustrative Case Studies
9.6.1
Hierarchy Principle
Throughout the region, the organic fraction of the solid waste ranges from 55-70% and the
recycling fraction respectively from 5-10% by weight. Accordingly, this fraction is more
suitable for treatment than landfill disposal. Some countries in the region consider the
hierarchy principle in their SWM policy. In Egypt, for example, an international private
firm is paid partly from the revenue of the sale of compost (see Chapter 11.3). Legislation is
the basis for overall waste management in any country. It should in itself be a “sustainable”
law with respect to various key principles, such as the hierarchy principle and polluter pays
principle. Producer responsibility as a major principle should also be addressed in local
legislation. In Morocco, environmental framework laws are in force that also address waste
as an environmental challenge. Nonetheless, these framework laws are not sufficient to
achieve ISSWM at municipal level. Legislation should at first reflect the hierarchy of waste
management: preventing and minimising waste generation is the top priority, and the
recycling/composting/reuse of discarded materials is preferable to their disposal. The most
desirable option is to minimise waste generation, whereas the last resort is to provide for the
disposal of residual waste in ways that protect human health and the environment. As far as
the hierarchy principle in the METAP-RSWMP region is concerned, the application of this
principle is lacking.
9.6.2
Polluter Pays Principle
Most households in the METAP-RSWMP region pay indirectly for their waste management
services and therefore have no incentive to reduce or recycle the waste they generate. Total
costs to society are higher than the cost of resources used to provide waste collection and
disposal services, and greater than the additional negative effects that waste disposal has on
the environment (see Chapter 9.2.4). In some countries, direct user charges have been
introduced; these require households to pay fees in proportion to the amount of waste they
produce, either on the basis of volume or weight. They can only succeed if they are
accompanied by awareness campaigns, comprehensive recycling plants, and an appropriate
monitoring framework. Direct user charges to households, which are related to the amount
of waste generated, depend on a high level of information and enforcement capability.
There are different mechanisms for financing SWM services:
1)
Indirect payments through general municipal revenues (e.g., property taxes) and
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9. Illustrative Case Studies
2)
3)
Direct payments (or fees) for services rendered and
Grants and loans from international organisations.
Many countries in the region are examining the option of charging users directly for waste
management services. Egypt, for example, has introduced a system by which waste
management costs are recovered by placing a 2% charge on property rentals; when
introduced the charge was estimated to cover 70% of waste management costs but because
rents are controlled and not inflation-linked, the value of the charge fell progressively over
time so that revenues would today barely cover 2% of costs. In some countries, local
government law enables municipalities to charge directly for waste management services
and specifies a minimum level for the fee. Although this provides the power to charge users,
specifying a minimum fee often makes municipal administrators reluctant to set charges
higher than at a minimal level. No municipal politician ever wants to increase charges;
nevertheless, the aim should be to identify a waste management programme that is suitable
and affordable for the local community and could claim fees accordingly.
ISSWM can be achieved with high standards if sound management practices are combined
with a high level of public awareness. The generators of waste should contribute to
financing the service, even in middle- and in low-income areas, if the regulatory
institutional set-up is efficient, the top management is committed, and public participation is
maintained.
9.6.3
Inter-organisational Relationships
The formalisation of the informal sector such as the ECO-Lef system in Tunisia (see
Chapter 9.5) or the licensing of scavengers on the Damascus landfill can be cited as good
examples of inter-organisational relationships in the region. In addition, the Alexandria
Governorate should also be noted as having a sound inter-organisational relationship for its
monitoring system (see Chapter 9.3). The means of communication between the
implementing bodies have included periodic meetings, monthly progress reports, and an
annual report (see also Chapter 11.3). Moreover, the Egyptian experience is the only
illustrative case study featuring inter-organisational relationships not only between the
contractual bodies (private firm and public authority) but also with the beneficiaries. The
contract foresees both an awareness campaign and presents figures to be achieved during the
contract period (see Chapter 11.3). This new approach has consequences for the PSP. Very
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9. Illustrative Case Studies
often, private entrepreneurs complain about the misuse of their equipment and the lack of
respect for the SW collection schedule by local residents. For instance, CESPA (a private
firm in Morocco) has faced enormous difficulties because of the lack of public awareness
(see Chapter 12). The beneficiaries do not consider the time schedule set out in the contract
specifications. Cooperation between the existing informal Zabbaleen collectors and
recyclers, and the new formal contractors in Cairo, also lacks effectiveness.
Given the considerable length of the contracting period (15 years), clear mechanisms should
be identified in the contract to address unforeseen increases in tonnage, inflation rates, and
changes in exchange rates of foreign currencies.
9.6.4
Effectiveness
A higher percentage (generally between half (1/2) and two-thirds (2/3), or more) of the waste
generated in low-income areas are inadequately collected. Across the region, the failure to
provide adequate waste management services is felt primarily in urban low-income areas.
These areas are also often characterised by physical constraints that present waste
management challenges for both public services and private firms (see Chapter 9.2). Among
other relevant factors, buildings are often constructed without considering how or where
residents will cope with waste within the building (see Chapter 9.2). Residents themselves
are unaware of how they should prepare waste for collection. Cairo/Egypt, for example, has
some of the highest waste generation rates in the world in terms of the quantity of waste
generated per square metre of ground; other major cities are also experiencing the severity
of the problem of very high levels of waste generation in low-income-areas.
Comprehensive models have to be developed through which SWM services can be provided
in low-income and other inadequately serviced city districts. Cooperation with the so-called
informal sector represents a “conditio sine qua non”. The illustrative example from Egypt
serves as a model of effectiveness where the international private operator has introduced
appropriate vehicles for SW collection in Alexandria city (see also Chapter 11.3). The
collection service also included new areas that had not been serviced previously, hence
increasing effectiveness.
Private entrepreneurs should make use of NGO and CBO with sound local expertise. They
can intervene by carrying out solid waste services with low technological equipment and
materials where modern collect truck and containers are not appropriate. A good example of
this approach are the municipalities of Giza and Sohag (Egypt), where SWM is based on
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low technology operated at the local community level by local residents. Issues regarding
the performance of the private sector by carrying out its assignment have to be discussed in
a pro-active manner instead of just relying on the application of penalties. The establishment
of an appropriate and effective legal framework is a prerequisite for creating an environment
that fosters PSP in SWM in the region. A regulatory framework to monitor the private
provision of SW services has to be established. Unambiguous legal rules should ensure
transparent and fair administrative procedures for the set-up, execution, monitoring, and
termination of the contractual agreements.
9.6.5
Efficiency
The example of the waste management services being provided for the Greater Beirut Area
(GBA) illustrates a typically non-efficient SW service. In fact, the role of the municipalities
has been minimised by introducing PSP. The Council for Development and Reconstruction
(CDR) acted independently in 1994 by tendering the collection of solid waste from GBA
(see Chapter 11.4). This results in a monopoly on waste management services in GBA, not
of the public sector, as one might expect, but the private sector. Consequently, costs became
very high compared to other countries in the region (see Chapter 9.4). As providing an
efficient SW service is a key element of the ISSWM concept, SWM as described here fails
to contribute to achieving the principles of sustainability. This experiment is bound to fail.
In contrast, SWM in Jordan is generally efficient. Indeed, the SW disposal of municipal
solid waste in Jordan is managed by Common Service Councils (CSC). Each CSC provides
the service for a number of municipalities. SWM is thus conducted on a much broader scale
than if it were confined to a single operator. Consequently, a small number of larger
facilities has been created through which all municipalities benefit from the lower costs
associated with the resultant economies of scale. Such tailor-made solutions can have a
significant impact on costs and ultimately on service efficiency.
Key issues with regard to national policy, legislation, institutions, financing, affordability431,
inter-organisational relationships, and public awareness 432 are closely linked to the
involvement of the private sector in SWM.
431 It is internationally accepted that households in low-income countries pay between 0.7 and 2.5 % of the monthly
living expenditures for SWM services (Agro Vision Holland cited in METAP-RSWMP documents, 1996).
432 Raising public awareness in SWM programmes is creating understanding and appreciation among the population to
deal with solid waste issues. A campaign makes people more aware of the fact that proper waste collection and
disposal have a positive effect on public health” (Muller and Hoffman, 2001).
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9. Illustrative Case Studies
The implementation of PSP requires the adjustment of various regulations and the
development of a responsible and competent regulatory institution. Private firms can only
be as successful and effective as the institutional framework, within which they operate,
allows them to be.
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10. Single Case Study: CESPA
10.
Single Case Study: CESPA
This section focuses on a single case study (CESPA), and examines one solid waste element
(Solid waste collection) and one PSP model (Contracting-out). It first develops a
methodological approach, including the design of the case study protocol, ethical
considerations, conducting the case study, as well as analysing and discussing its main
results. Subsequently, the analysis of this case study is carried out at both the national and
municipal level. The national level encompasses the macroeconomic level, the privatisation
policy, the legislative framework, and SWM issues. The municipal level includes the socioeconomic background of Tangier, its typological classification, pertinent SW issues, and the
value of the recycling market. Chapters 10.2 and 10.3 will only present and analyse the
qualitative and quantitative data of the case study. Discussion will be carried out in
Chapter 10.4.
10.1 Methodological Approach
One of the main objectives of this research is to challenge existing theoretical principles and
to demonstrate the economic limitations of some PSP models with regard to the ISSWM
concept. In order to answer the research questions in-depth, to gain new insights, and
ultimately to conceptualise the answer, one case study will be examined more exhaustively.
It studies the case of CESPA433, a Spanish company with a solid financial background and
technical know-how contracted by the municipality of Tangier in Morocco for street
cleaning and waste collection. The theoretical and methodological foundation for the
analysis of case study is adopted from Yin (1984, 1994), one of the most cited authors of the
case study approach. According to Yin (1994), single cases may be used to confirm or
challenge a theory. He notes that justification occurs because a well-formulated theory is
tested by the critical case (Yin, 1984).434 A single case can meet all the conditions of testing
a given theory in order to confirm, challenge, or extend it. Thus, some existing theoretical
principles, such as the hierarchy principle and the polluter pays principle will be challenged
by this single case study of CESPA. Since this case only examines the global nature of
433 See also www.cespa.es.
434 Yin, K. Robert, Case Study, London: Sage Publications, 1984, p. 42.
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10. Single Case Study: CESPA
ISSWM under a contract with the private sector, a holistic design will be used. With this
aim in mind, the following sections will:
a)
Design the case study protocol
b)
Conduct the case study
c)
Analyse the case study
d)
Develop conclusions, recommendations, and implications based on the evidence
gathered.
10.1.1 Design of the Case Study Protocol
The design of this research will deal with various components, such as the questions of the
investigation, its units of analysis, and the logic of linking the data to the questions. At the
very beginning of this investigation, “open questions” beginning with “How” and “What”
were posed. In particular, this empirical part will address the following questions:
1)
Is the waste hierarchy principle being applied in the PSP model (contracting-out)
between CESPA and the municipality of Tangier?
2)
Is the polluter pays principle being considered by carrying out the solid waste
services?
3)
Can the solid waste services be considered efficient and effective?
4)
Was all information about the SWM situation and the services required in the
contract specifications available to the Agent (CESPA) and the Principal
(municipality of Tangier)?
Table 20 comprehensively displays the relevant tactics for dealing with construct validity,
internal and external validity, and finally reliability.
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10. Single Case Study: CESPA
Tests
Description
Case study tactic
Phase of research
in which tactic
occurs
Construct
validity
Establishing correct
operational measures for
the concepts being
studied
Establishing a causal
relationship
Use multiple sources of
evidence
Establish a chain of evidence
Data collection
Data collection
Internal
validity435
External
validity436
Reliability437
Perform pattern-matching
Undertake explanationbuilding
Establishing the domain Use replication logic in
into which a study’s
multiple-case study
findings can be
categorised
Demonstrating that the Use case study protocol
operations of a study can Develop case study data base
be repeated with the
same results
Data analysis
Data analysis
Research design
Data collection
Data collection
Table 20: Case study tactics for four design tests
(Source: Based on Yin, K. Robert, Case Study, London, 1984, Table 2.1, p. 36)
According to Yin (1994), a case study protocol has to be set up for the analysis of the case
study. Therefore, an overview of the case study project will be presented first. This will
include project objectives, such as showing the limitations of existing theories on a
particular PSP model to some principles of the ISSWM concept. Issues like the hierarchy
principle, efficiency, effectiveness, etc. will be presented and analysed. Thereafter, a field
procedure will be proposed, such as access to data sources, and the location of those
sources. Finally, the outline and format of the report will be presented in this section.
To understand the test of construct validity, two steps will be made (Yin, 1984, 1994):
1) The specific types of changes to be studied (in relation to the original objectives of
the study), and
2) The selected measures of these changes, reflecting the specific types of change
chosen.
435 Internal validity is a concern only for causal or explanatory studies, where an investigator is trying to determine
whether event x led to event y.
436 Concerning the external validity, Yin argues that survey research relies on statistical generalization, whereas case
studies (as with experiments) rely on analytical generalization.
437 According to Yin, the goal of reliability is to minimize the errors and biases in a study. One pre condition for
allowing this other investigator to repeat an earlier case study is the need to document the procedures followed in
the earlier case.
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10. Single Case Study: CESPA
As the table above shows, there are three potential tactics to increase construct validity. The
first is the use of multiple sources of evidence, in a manner encouraging convergent lines of
inquiry (see Table 20). A second tactic is to establish a chain of evidence, also relevant
during data collection. Multiple sources of evidence (Yin, 1984; 1994) and having key
informants review the draft case study report will help to construct validity (see Table 20).
In this investigation, data triangulation will be used, that is, several sources of data
concerning the same phenomenon, involving several different methods to gather data on the
same phenomenon. The final product will ultimately be a formal concept, thus providing
some degree of critical distance to the data.
10.1.2 Conducting the Case Study
Two different approaches will be used in analysing this case. Private Sector Participation
(PSP) depends first of all upon the political willingness of a given country. Therefore, the
first approach, the national level approach, concerns the national macroeconomic
framework in Morocco, national policy, Moroccan environmental legislation, etc. The
second one, the municipal level, embraces the implementation of national PSP policy at the
municipal level between the private agent (CESPA) and the principal (the municipality of
Tangier). These two approaches (see Figure 7) will be used to challenge existing theoretical
principles, and to develop an improved concept with respect to ISSWM.
The first section presents the national and municipal situations without further qualification.
In the second section, specific parameters of PSP and ISSWM will be analysed and
interpreted in accordance with the research questions.
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10. Single Case Study: CESPA
Macroeconomic
framework
Privatisation policy
Legislative
framework
SWM policy
National Strategy
Municipal Action Plan
Socioeconomic
Features
Typological
classification
SWM Services
Contracting-out of
the SW services
Figure 8: Methodological approach: “National level” and “Municipal level”
One waste element, namely “waste collection”, and one PSP model, namely “contractingout”, will be investigated in detail, using a variety of data to produce evidence that leads to
an understanding of the case and answers the research questions.
Questionnaires have been sent to key representatives of the municipality of Tangier to
document the reasons for contracting-out, their future directions, and what impact this
model has on the concept of Integrated Solid Waste Management (ISSWM). Sources of
evidence are:
• Documentation (Memoranda, written reports, articles in the mass media 438 ,
environmental legislation especially on solid waste, contract specifications between
CESPA and the municipality of Tangier, addenda, etc.);
• Archival records (Organisational records, maps and charts of the geographical
characteristics of Tangier and relevant neighbourhood maps, formal studies or
evaluations, newspaper clippings and commentaries in the mass media, minutes of
meetings, letters administrative documents);
•
Questionnaires (Closed and open questions);
•
Direct observations (Site visit to the landfill in Tangier / routine visits to the city),
Participants-observation (being a resident in Tangier).
438 Morocco Times: http://www.moroccotimes.com/; Le Matin: http://www.lematin.ma/; Le Journal de Tanger :
http://www.lejournaldetanger.com/; La Vérité : http://www.laverite.ma/; L’Economiste :
http://www.leconomiste.com/; L’Opinion : http://www.lopinion.ma/.
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10. Single Case Study: CESPA
As mentioned earlier, the method of gathering data will involve multiple techniques that
will allow for strengthening the study by providing opportunities for triangulation during the
analysis phase of the case study. Consideration will be given to construct validity, internal
validity, external validity, and reliability (Yin, 1989).
Questionnaires to CESPA top management and municipal manager
Two different types of questions can be distinguished: closed and open questions. Closed
questions are developed in advance, complete with a number of possible answers that can be
given. Each respondent is asked to choose from one of the listed options.
As mentioned before, two different types of questionnaires were set up and sent to the top
management of the private firm (CESPA) and of the municipality of Tangier, so as to
substantiate the validity of information obtained from other sources (mass media,
contractual specifications, site visit, etc.). The questionnaire is divided into 7 main
categories, namely the hierarchy principle, the polluter pays principle, the continuity
principle, effectiveness, efficiency, Asymmetric Information, and Inter-organisational
relationships. Some questions addressed to the management of CESPA differ from those
addressed to the representative of the municipality. The questions relating to the continuity
of the service, for example, only concern the municipal authorities. All questionnaires
started with closed questions to make the respondent comfortable at the beginning. Open
questions conclude both questionnaires.
a)
Questionnaire submitted to the municipality (see Annex 16)
The questionnaire submitted to the municipality starts with some questions concerning the
hierarchy principle. The quantity of waste collected in m³/day or in tons/day is enquired
about. This figure provides important information on the application of the hierarchy
principle in the management of solid waste in the municipality. As the amount of waste
generated depends on the number of inhabitants, the socio-economic situation, the level of
public awareness, etc., this quantity will be compared with the most probable quantity of
waste generated in the city.
Questions are also raised about awareness campaigns after contracting-out. Even a welldesigned contract without an awareness campaign might result in mutual disadvantages for
both the principal (municipality) and the agent (the private sector). One way to find out if
the hierarchy principle is respected is through the presence of the recycling and/or
composting industry in the city (irrespective of whether it is formal or informal).
Furthermore, the presence of a weighbridge is very relevant to acquiring accurate
information on the quantity of waste being disposed of.
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10. Single Case Study: CESPA
The second section embraces the polluter pays principle. There are questions about how the
solid waste services are financed, and the level of tax recovery. If the beneficiaries do not
bear the cost of the service, there will be no incentive from their side to minimise the
quantity of waste which has to be ultimately disposed into a landfill. Since not all citizens
have the same economic situation in a given city, one of the questions asked relates to the
fees the citizens are charged in order to ascertain whether this amount is the same for all
citizens or not.
The third section concerns the principle of continuity. It is a fact that solid waste services
must be rendered in a continuous manner. This means that even if a private firm provides
the service, the municipality legally responsible for the service must ensure the continuity of
the service. As a matter of fact, the conditions known as the “5Ms” have to be fulfilled to
ensure the continuity of the solid waste service: efficient Management, sufficient
Manpower, sufficient Money, reliable Machines and Material. By questioning the
municipality managers involved, no matter what they answer, one has to verify whether all
these “Ms” can be mobilised in a very short-term period or not. Therefore, the municipality
is asked whether it is delivering the service in some of the other districts of the city or not,
in order to ensure that some “Ms” are available. Furthermore, managers are asked if they
can ensure continuity should the private firm go out of business.
The fourth section deals with the aspect of effectiveness. Due to the key characteristics of
solid waste as public goods (see Chapter 7.1), it is relevant to recognise whether every
district somehow benefits from the basic services provided at a satisfactory level.
Another question concerns the degree of satisfaction in the community. The next section
concerns efficiency. One of the arguments put forward when contracting-out solid waste
services in a given city concerns the efficiency of the private sector in comparison to public
administration. Hence, a question about the cost of the service before and after contractingout to the municipality is raised.
Asymmetric Information is another of the key issues of contracting-out. The principal (and
the agent) might try to use the information to the detriment of the other. Therefore, the
question about how many addenda they have asked for to date is raised in Section 5. What
kind of information in the main contract has been changed in the addenda to the first
contract? The last section concerns the inter-organisational relationship; here, questions deal
with penalties, the presence of a regulatory agency, the frequency of meetings, the degree of
satisfaction, and the interest of the municipality in extending the contract.
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10. Single Case Study: CESPA
b)
Questionnaire submitted to CESPA Top Management (see Annex 15)
Like the questionnaire submitted to the municipality, the questionnaire submitted to CESPA
starts with some questions concerning the hierarchy principle. A question is posed
concerning the quantity of waste collected in m³/day or in tons/day in order to create
internal validity. The private firm is also asked if this quantity is variable over the year.
Questions about awareness campaigns prior to contracting-out are also posed to the private
entrepreneur. As stated earlier, even a well-designed contract which does not include an
awareness campaign might result in a never-ending dispute between the private firm and the
municipality (see example above).
The existence of the recycling and/or composting industry in the city should be established,
as this may determine whether the hierarchy principle is respected or not. Furthermore, the
presence of a weighbridge is very relevant, as this facilitates the gathering of accurate
information concerning the quantity of waste disposed.
Another question concerns the basis for payment in the private sector (lump sum or
according to quantity of waste disposed of). Incentives to establish the hierarchy principle
can obviously be better achieved using a lump sum charge, rather than one which is
calculated according to the quantity of waste disposed of, or by setting different prices for
different types of waste (lower price for recyclable and treatable waste). The question
whether the contract specifications take into account the treatment of waste, such as
recycling or composting, is also raised in this context.
Another important issue of contracting-out is the accessibility of areas. It is relevant to
establish whether the contract specifications take into account the specific characteristics of
the municipality, such as road conditions, accessibility to the landfill, etc. Very often,
municipalities use standard contracts, set up by the central government; although these are
well-designed, they do not take into consideration the key features of a given city, such as
its road conditions.
The questionnaire comprehensively tackles the issues of market failure (Asymmetric
Information) in terms of the exact quantity of waste collected and disposed of, any relevant
addenda, and so forth. Regarding Asymmetric Information and inter-organisational
relationships, the following main patterns will be elucidated:
• The frequency of transactions resulting from the relationships between Principal
(municipality of Tangier) and Agent (CESPA);
• The degree of accuracy of the information prior to and following the contract.
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10. Single Case Study: CESPA
Furthermore, a question concerning the private enterprise’s interest in an extension of the
contract is raised. If this question is answered positively, this can be interpreted to mean that
the private contractor is satisfied with its cooperation with the municipality.
Towards the end of the questionnaire, there are some open questions relating to the
incorporation of waste treatment in contracting-out, or whether parties believe that
contracting-out automatically results in a conflict of interest with the hierarchy principle.
The last section concerns inter-organisational relationships. Questions deal with penalties,
the frequency of meetings, the set-up of a regulatory agency, the degree of satisfaction, and
the interest of the municipality to extend the contract.
10.1.3 Analysing the Case Study
The data gathered will be both qualitative and quantitative. Qualitative and quantitative
empirical data will be compared. For instance, the recycling and composting fraction will be
determined based on the composition of the waste in Tangier (see Figure 9). The analysis of
the contract specifications will reveal whether the above-mentioned waste characteristics are
considered with respect to the hierarchy principle or not. Thereafter, data will be tabulated
and recombined to address the initial propositions or purposes of the study, and to conduct
crosschecks of facts and discrepancies. Quantitative data about the amount of waste
generated, its recycling, and its composting potential will be used to interpret the rationale
underlying the relationships.
As stated above, quantitative data with regard to the hierarchy principle will be compared in
respect of ISSWM principles, as shown in Table 21. Basically, the solid waste fraction
which has to be recycled and/or treated will be compared to the solid waste fraction actually
recycled and/or treated in the municipality. It is worth noticing that the main target is not to
arrive at exact figures but to state whether the hierarchy principle is applied or not.
Therefore, comparisons will be summarised thus: Ã 1 (ideal case of the application of the
principle); » 1 (the principle is highly considered); « 1 (the principle is clearly ignored).
The hierarchy principle can also be checked by qualitative data (see Table 21), for instance
through the payment modus. In effect, if the private firm is paid in accordance with the
quantity of waste transported and disposed into a landfill, different fees for different types
of solid waste have to be considered. To be precise, if the private firm is paid according to
the quantity of waste transported and disposed into a landfill, different prices for different
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10. Single Case Study: CESPA
types of solid waste have to be set, whereas the solid waste to be recycled or treated should
cost less than the inert part.
Principles /
Theories
Quantitative data
Qualitative Data
Hierarchy
principle
% waste to recycle (R)
versus % recycled (Rd)
% organic waste (O) versus
% waste treated (Od)
% waste to dispose (L)
versus % waste to be
disposed of (Ld)
% cost recovery
% subsidies from central
government
Accompanying measures for
minimising and recycling
Accompanying measures for
treatment
Contract specifications, payment
modus
I
S
S
Polluter pays
principle
W
M
Continuity
principle
Effectiveness
Equity
Efficiency
P
S
P
Socio-economic affordability
Incentives to minimise waste
Managerial capacity of CESPA
Managerial capacity of
municipality
Areas covered / Areas to be Local Know-How
covered
Degree of satisfaction of areas
covered
Costs under municipal
administration versus costs
of private sector
Accessibility to information
Asymmetric
Information
Principal-Agent
dilemma
Organisational
Theory
Addenda
Degree of uncertainty
Relationship between Agent and
Principal
Frequency of transactions between
agent and principal
Satisfaction of private sector
Satisfaction of municipalities
Conflict management
Table 21: Case study analysis
Another relevant issue of the theoretical part of any comprehensive ISSWM is the polluter
pays principle. The financing system, including the level of tax recovery, will be addressed
in this respect. If the beneficiaries do not bear the cost of the service, there will be no
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10. Single Case Study: CESPA
incentive from their side to minimise the quantity of waste ultimately requiring disposal into
a landfill. Due to the fact that in a given city not all citizens have the same economic
situation, one of the questions relates to the amount of the fees charged in order to
determine whether this amount is the same for all citizens or not. Consideration is also given
to the socio-economic situation of the beneficiaries with respect to their affordability.
Table 21 also addresses the principle of continuity. It is worth noting that the principle of
continuity does not mean sustainability. The continuity of solid waste service does not
necessarily result in sustainability. The service can be rendered continually and not be
sustainable for a long time period. New insights with respect to this issue will be achieved
chiefly through questioning the municipal managers involved, various private company
executives, contract specifications, etc.
Effectiveness and efficiency represent, among others, key elements of the PSP model in
SWM, especially contracting-out. To provide sound solid waste service in any city, a private
contractor must have in-depth knowledge of the physical conditions of the districts or areas
to be serviced. Ideally, the contractor will have carried out similar assignments.
Furthermore, the comparison of service costs before and after contracting-out, the
satisfaction of the beneficiaries, and other related aspects will represent the core of both the
analysis and the interpretation of various key notions.
In this context, the notion of equity involves the degree of satisfaction in the areas covered.
In principle, solid waste services have to be rendered in a satisfactory manner regardless of
the socio-economic situation of a given district (low-income areas or high-income areas).
After analysing basic elements of the ISSWM concept, the other section of the empirical
part of this investigation will embrace key elements of contracting-out, such as Asymmetric
Information, the Principal-Agent dilemma, and inter-organisational relationships with
respect to ISSWM principles. Table 21 sums up the key parameters to be analysed.
Finally, the theory of inter-organisational relationships will conclude the empirical part of
this study. Questions regarding penalties, disputes, the frequency of meetings, etc. will be
addressed (see Table 21). These issues and others will be analysed and discussed in the
following chapters.
In order to determine whether the PSP model (contracting-out) conforms with ISSWM
principles, the municipal level results are the most relevant (see Chapter 10.3). Nonetheless,
the “National level” results are also displayed to ensure that the conditions for this
conformity are given at the national level (see Chapter 10.2).
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10.2
National Level
The national policy in a given country should reflect the principles of ISSWM and the
willingness to implement privatisation policy. These principles should maximise social,
economic, and environmental benefits. In order to be implemented effectively, roles and
responsibilities in institutional arrangements should be clearly established. Further, the
national strategy should provide direction, support, and context to waste management
initiatives. The following chapters will address the Moroccan macroeconomic framework as
well as the country’s privatisation policy, national solid waste legislation, and relevant solid
waste management issues.
10.2.1 Macroeconomic Framework
The macroeconomic framework in a given nation is very relevant to the PSP process.
Obviously, PSP experiences in the USA could not be the same as in a socialist country like
Cuba.
According to the World Bank Group, the total external government debt in Morocco has
been steadily decreasing from 34% of the country’s GDP in 2000 to an estimated 16% in
2004. 439 The Moroccan economy has improved considerably as a result of sound debt
management, low inflation, an ongoing programme of structural reforms, etc. These reforms
include trade liberalisation, financial sector strengthening, and privatisation. Mainly
multilateral financing and foreign direct investment have managed to fill the declining
external financing gap. Under the base case, the aggregate financing gap will be about US$
15 billion during 2005-08 440 (see Table 22). Multilateral financing and foreign direct
investment will play an increasing role in filling the gap, as privatisation proceeds. Table 22
unambiguously reveals the objective of the national government to reduce debt through
more investment. If public debt was 75.6% of GDP in the year 2000 it is expected to be
66.0% of GDP in 2009. On the other hand, gross investment was 23.6% of GDP in the year
2000, while it is expected to be 25% of GDP in 2009 (see Table 22).
In order to accelerate growth in Morocco, the government is expanding the role of the
private sector and its efficiency is being enhanced. To create a sound competitive
439 IBRD and IFC, Country Assistance Strategy of Morocco, Report No. 31 879, 2005, p. 3.
440 IBRD and IFC, Country Assistance Strategy of Morocco, Report No. 31 879, 2005, p. 9.
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10. Single Case Study: CESPA
environment, especially for the private sector, the national government has embraced
several important steps, including new public procurement regulations, passing new laws on
competition policy, liberalising prices, diversifying the economy, and so forth. Exports have
diversified as tourism and other service sectors have grown. In short, the increasing
investments in the Moroccan economy are a result of comprehensive privatisation and
liberalisation legally enabled by the government.
Table 22: Selected macroeconomic indicators
(Source: IBRD and IFC, Country Assistance Strategy of Morocco, 2005, p. 10)
One outstanding challenge remains, namely the participation of the private sector in the
environmental sector. Particular emphasis has to be placed on pollution control. Morocco
faces a crucial challenge in its need to address the institutional bottlenecks that cause less
than satisfactory governance and financial management in the environmental sector,
including solid waste management. The roles and capacities of the private sector in
developing and implementing a more effective solid waste sector strategy have to be
optimised. This entails improving intra-sectoral coordination, matching sector financing
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10. Single Case Study: CESPA
mechanisms to sector priorities (including integrated sustainable solid waste management),
and strengthening private sector regulation.
There is an urgent need to:
• Support infrastructure development
• Reverse widespread environmental degradation and resource depletion
• Promote the sustainable use and conservation of environmental resources, and
• Open more equitable access to services in municipal areas
a) By establishing sustainable mechanisms of output-based interventions to minimise
waste generation,
b) By establishing an incentive and cost-recovery system for municipal solid waste
services, and
c) By adopting an efficient compliance and enforcement system based on upstream
considerations in planning solid waste national policy.
10.2.2 Privatisation Policy
The privatisation process of the network industries in Morocco is progressing. Some
markets, such as communication, have been successfully privatised while others have not.
The efforts of the Moroccan government have been geared towards rescuing the national
environment. Since the 1990s, national policies have targeted a decentralised administration
in an attempt to achieve effective local governance and the active involvement of the private
sector in the provision of SWM services441.
In SWM, different aspects of the national laws of a given country may have an impact on
their implementation, without necessarily dealing directly with private provision of public
services or privately financed infrastructure projects. Reviewing and, as appropriate,
improving legal provisions in those areas, will substantially contribute to securing a
welcoming climate for private sector investment in ISWM. Principally, the national
legislation enables the transfer of state-owned enterprises to the private sector, governs
privatisation in Morocco. Furthermore, it sets up the bodies involved in the privatisation
process, including the procedures and the legal and financial modalities regulating
transfers442 in Morocco.
441 Royaume du Maroc « Participation du secteur privé dans les infrastructures » World Bank, 1997.
442 Royaume du Maroc, Ministry of finance and privatisation “Privatisation: Bilan et perspectives”, June 2004, p. 4.
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By the end of 2005, about 70 state-owned units (44 enterprises and 26 hotels) had been
partially or fully privatised. These operations resulted in an income of 77 billion Moroccan
Dirhams (MAD), of which 81.8 came from Foreign Direct Investment (63 billion MAD)
and the remainder from Moroccan investors. 443 Nevertheless, strictly speaking, this
privatisation is not the same as the PSP process in legal terms, due to the fact that the state
remains legally responsible for providing solid waste services.
In Morocco, PSP in SWM is considered the engine of both economic growth and
sustainable development. It creates opportunities for entrepreneurs, and enables a faster
response to satisfying new needs in environmental infrastructure, new capital investment,
access to technical know-how, and more efficiency.
There are various reasons that justify the participation of the private sector in SWM in
Morocco; these include Foreign Direct Investment (FDI), tight municipal budgets, lack of
managerial and technical know-how, and efficiency. Indeed, the scope of municipal SWM
services often exceeds resources currently available in the municipalities. Therefore, PSP is
the most popular privatisation model in tackling these issues. Subsequently, the private
sector plays a fundamental role in financing SWM services in Morocco. Another relevant
argument for the involvement of the private sector is the debt issue (see also Table 22).
Another argument favouring the involvement of international private sector concerns
corruption. It is one of the biggest issues affecting the Moroccan market economy. As the
saying goes in Morocco “Dhane s’sir issir,” that is, “One has to grease somebody’s palm”.
According to the Corruption Perceptions Index (CPI), Morocco ranks seventieth (of
133 countries) with a score of 3.3 (Prognos, 2003). More than 80% of Moroccan
entrepreneurs believe that corruption in administration is very normal.444 Nevertheless, in
the past few years, measures have been taken to improve transparency. The Moroccan
government has enforced four agreements, including the “United Nations Agreement
Against Corruption” signed by Morocco in New York on 31st October 2003.445 Contracting
national firms by local or national authorities very often encourages “clientelism”. In the
absence of international players, PSP is only profitable for certain groups or families
somehow related to local or national politicians. Thus, municipal contracts have often
involved the transfer of public assets to national private firms on preferential terms.
Alternatively, international investors with solid financial backgrounds and managerial
expertise, as well as good governance records, are highly considered in the PSP process.
443 www.lematin.ma (on 2nd May 2006).
444 www.leconomiste.com.
445 www.lematin.ma.
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Another reason for the involvement of the private sector is the inefficiency of municipal
governance. The Moroccan administration is rather slow in comparison to the dynamic
economic expansion of the country. The Moroccan municipalities finance environmental
infrastructure projects using transfers from the central government (subsidies), credits446,
and their own revenue. Nevertheless, depending on economic capacity, subsidies from the
central government can amount to 70% of the municipal budget (Prognos, 2003).
Consequently, procedures to finance SWM services and infrastructure are very slow.
The last reason favouring the involvement of the private sector concern trade unionism.
According to the Ministry for Employment and Professional Education, 154 strikes were
recorded in 2005 in 116 services, amounting to 72,745 lost working days.447
In Morocco, approximately 40% of all municipal waste collection and transportation is
realised through PSP contracts, known as “Gestion déléguée.”448 In some Moroccan cities,
PSP can be considered a success; in others, the situation remains difficult. The PSP
experience is too recent and an unbiased comparison is hence not possible.
The previous sections have argued that there are still valuable reasons in favour of involving
the international private sector. Nonetheless, the PSP process must be fair, transparent, and
efficient. National policy shall focus on changes involving institutional development on
both a central government and local municipality level; they should also focus in particular
on capacity building. Local municipalities should set up monitoring committees and should
be assisted by independent experts or regulatory agencies.
Establishing a sound financing framework to meet growing solid waste infrastructure needs
in Morocco remains a key challenge which must be overcome before the Millennium
Development Goals (MDG) can be achieved in this country.449 PSP can create opportunities
for both national and international entrepreneurs; it also enables a faster response to new
needs for environmental infrastructure, new capital investment, access to technical knowhow, and increased efficiency. Many Moroccan cities have already taken significant strides
in the SWM sector, but the challenges remain formidable.
446 Fonds d’Equipement Communal.
447 www.lematin.ma (on 01. May 2006).
448 Zakarya, 2003.
449 Dorvil L., PSP in Morocco, Solid Waste, Health and the Millennium Development Goals – CWG SWM in LMIC
and WASH Workshop 2006, Kolkata, India, 2006, p. 1.
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10.2.3 Legislative Framework
Achieving the objectives of the ISSWM requires an appropriate legal framework. Frame
legislation should identify the basic ISSWM principles necessary to achieve policy
objectives while providing adequate flexibility to define specific actions under the
legislation. The components of the frame legislation should provide the national
environmental institutions with substantial control over the SWM sector while leaving the
implementation of SWM initiatives with municipalities. The institutional framework
identified in the model policy should seek to strengthen roles and responsibilities
established by legislation. Policy should link the functions that will be performed by the
municipality to the functions that are identified in legislation.
Different Moroccan laws deal with environmental issues in general and with solid waste in
particular. Table 23 sums up the most important ones.
Legislation
Dahir of 25 August 1914
Article
Article 5
Dahir of 11 April 1922
Article 6
Law n°10-95 relating to water
management
Law n°78-00 of 3 October
2002
Article 54
Law n° 78-00 regarding
municipal charter
Article 69
Article 39
Specifications
Unhealthy and harmful premises requiring
an authorisation
Relating to fishery, prohibition of polluting
waters
Prohibition of disposal of waste in rivers,
wells, etc.
Responsibility of the municipalities to
collect, to transport, to treat and dispose
household waste and similar
Fixation of waste fees by the municipality
Table 23: Moroccan legislation relating to waste management
(Source : GTZ-PGPE Tanger « Etude socio-économique des chiffonniers » March 2003)
Recently new environmental laws have been enforced to tackle environmental pollution.
Law no. 11-03450, law no. 12-03451, and law no. 13-03452 were published three years ago (see
Table 24). These laws will be considered below with regard to some ISSWM principles.
450 Government of Morocco, Official Bulletin No 5118 of Thursday 19 June 2003.
451 Government of Morocco, Official bulletin No 5118 of Thursday 19 June 2003.
452 Government of Morocco, Official bulletin No 5118 0f Thursday 19 June 2003.
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Date of promulgation
Law N° 11-03 Dahir no. 1-03-59 of 10 Rabii I 1424
(12 May 2003)
Law No 12-03 Dahir no. 1-03-60 0f 10 Rabii I 1424
(12 May 2003)
Law n°13-03 Dahir no. 1-03-61 of 10 Rabii I 1424
(12 May 2003)
Subject
Protection and Improvement of the
Environment
Environmental Impact Studies
Air Pollution
Table 24: Date of promulgation and subject
(Source: Government of Morocco, Official Bulleting No 5118)
Law no. 11-03 pertains to the protection and improvement of the environment. It
encompasses 6 chapters with different sections that include various articles. One of the
relevant objectives of this law is to take into consideration the protection of the environment
and ecological balance when elaborating and implementing town and country development
plans. It is worth mentioning that the polluter pays principle is explicitly underlined in the
law, meaning that any regional or municipal enforcement of this law has to include it.
Among many different definitions, the notion of sustainability has been elucidated.
In Chapter IV of law no. 11-03, regarding pollution and nuisance, unequivocal reference is
made to the notion of waste and some of its relevant principles. Section I, regarding Waste
Article 41, states that the administration, and the local communities and their organisations,
must take all measures necessary to reduce the danger of waste and to manage, process, and
eliminate waste in a way that is appropriate to avoid or reduce harmful effects on human
health, natural resources, fauna and flora, and on the quality of the environment in general.
Furthermore, Article 42 affirms that for the implementation of Article 41 above, legislative
and statutory measures shall define the conditions and operations for the elimination of
waste, notably its collection, sorting, storing, transportation, importation, exportation,
disposal in controlled rubbish dumps, exploitation, re-use, recycling or any other means of
permanent treatment, management or elimination.
The authorities charged with this responsibility must take all measures necessary to protect
human settlements from the harmful effects resulting from any kind of pollution and
nuisance, notably solid waste that do not comply with the quality norms and standards for
the environment as laid down in the relevant laws and regulations. They must also take all
measures necessary to protect human settlements from natural and technological disasters.
The second law (no. 12-03) concerns environmental studies which have to be undertaken at
national, regional, and local level respectively. Law no. 12-03 is divided into three main
sections, namely definitions and scope, objectives and contents of the environmental impact
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study, national committee and regional committees on environmental impact studies, cases
of non-compliance, and the right to sue. Each section includes various articles. Before going
into more detail, law no. 12-03 (relating to environmental impact studies) defines some
terms and preliminaries concerning the environment in its first chapter. The last law (no. 1303) deals solely with air pollution. The law (no 13-03) is applicable to every legal entity or
individual subject to public or private law, including the incineration of waste. Accordingly,
any person (private or public) must prevent, reduce, and limit the emission of pollutants into
the air that are harmful to the environment, even if standards are lacking.
Finally, since pollution threatens human and environmental health, the administration must
instruct those causing pollution how to avoid hazards. If persons fail to comply with the
instructions given, the administration must order the discontinuation of the source of
pollution and request the intervention of the competent authorities and the necessary means
to execute the necessary emergency measures to contain the possible dangers of air
pollution. Penalties include fines between 1,000.00 MAD - 20,000.00 MAD as well as one
to six months’ prison.
Law no. 28-00 is the most specific legislation regarding solid waste management in
Morocco and the latest to have been published. It pertains specifically to the management of
waste, including its treatment, and includes the following sections:
Section I:
Preliminaries
Section II: Management of household waste and similar
Section III: Management of inert waste, agriculture waste, non-hazardous industrial waste
Section IV: Management of hazardous waste
Section V: Management of hospital waste
Section VI: Cross border waste management
Section VII: Sanitary landfills and treatment units, incinerators, transfer stations, etc.
Section VIII: Monitoring, penalties
Section IX: Measures for the transition phase
It has to be underlined that Article 18 of this law unambiguously specifies different modes
of waste management, including public management by the municipality, concessions,
contracting-out, delegation, etc. The law fixes the period of time that the municipalities or
the association of municipalities have to set up the various facilities, including sorting
and/or treatment facilities. The law prescribes that the municipalities, the inter-communal
association or the private sector under contractual agreement bear the costs and expenditures
in relation to the management of the waste collection system, transport, landfill
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management, treatment facilities for household waste and similar and also sorting stations.
Moreover, they also bear the cleaning costs of the areas where this service is rendered.
Chapter 1 of this law includes some relevant definitions and preliminaries, like different
types of solid waste management including recycling and waste treatment. Finally, the law
specifies the roles and responsibilities at different governmental levels (municipal, regional,
etc.). Accordingly, the governor of the prefecture or the province is responsible for waste
collection and treatment, the localisation of appropriate landfill sites, and human resources
management. A ten-year master plan shall be established to cope with municipal solid
waste. Other relevant principles, including waste avoidance, the polluter pays principle, and
so forth, are also considered.
The enforcement of these laws at local level is nevertheless not mentioned. Another issue is
the time frame for enforcing legislation. No one can expect that solid waste services will be
fully rendered immediately in a sustainable manner across all Moroccan cities.
Nevertheless, those laws can be considered as prerequisites for the implementation of
ISSWM at local level.
10.2.4 Solid Waste Management Issues
The Kingdom of Morocco is committed to many international environmental agreements:
biodiversity, climate change, climate change-Kyoto protocol, desertification, endangered
species, hazardous waste, marine dumping, ozone layer protection, ship pollution, wetlands,
etc. The country faces a range of environmental issues in general and in SWM in particular.
Every year, about 7 million tons of solid waste are generated in Morocco453. The collection
rate is between 60% and 85%. The annual damage cost of environmental degradation in
Morocco is estimated at 2.75 – 4.65 % of the Gross Domestic Product (GDP), amounting to
about 13 billion MAD (about € 1.3 billion).454 In particular, the cost of inadequate SWM is
estimated to be about 0.5% of the GDP. This figure will increase as more waste is
generated, due to an ever-increasing standard of living and urbanisation.
453 Royaume du Maroc « Rapport sur l’environnement du Maroc, Chapitre IV : Déchets » www.minev.gov.ma.
454 Royaume du Maroc « Evaluation du Coût de la Dégradation de l’Environnement » Document de la Banque
Mondiale, Rapport No. 25992-MOR, 2003.
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Traditionally, waste management units have provided SWM services in Morocco, and these
services have been funded through municipal tax or what is known as Taxe d’Édilité455 government tax. However, its recovery rate is low due to an inadequate collection system
and the weak economic capacity of people leaving in low-income areas. Consequently, the
municipalities lack sufficient financial means to tackle the steadily growing amount of
waste, which in turn results in poor municipal sanitation and environmental degradation. At
present, 40 % of municipal waste collection and waste transport is carried out by PSP
contracts, so-called “Gestion déléguée”.
In 2001, only 11 PSP contracts were agreed between the private sector and the
municipalities; two years later, however, there were twice as many (Zakarya / Prognos,
2003). A certain dynamism can be observed in this sector (see Annexes 25 and 26). With
respect to efficient public management, international investors with solid financial
backgrounds and managerial expertise, as well as good governance records, play an
important role in the SWM sector in Morocco.
Besides the “Taxe d’Edilité”, the Moroccan municipalities finance environmental
infrastructure projects by means of transfers from the central government (subsidies),
credits, and their own revenue. Depending on their economic capacity, subsidies from the
central government can reach up to 70% of the municipal budgets. However, procedures to
secure funding for SWM services and infrastructure are very slow. Moroccan administration
procedures are rather sluggish in comparison to the dynamic economic expansion of the
country. To avoid rigid bureaucratic procedures, municipal managers therefore prefer to
contract the private sector to save time. For instance, buying a new truck for solid waste
transport can take up to one year. Any request must pass through the following stages: from
the technical unit to the Director of Technical Affairs, then to the President of the
municipality, then to the main rate collector456, then to the Mayor, then to the Wali457, and
finally to the central administration.458 The reply has to follow the same path in the opposite
direction. Accordingly, municipal managers prefer to contract private firms in order to avoid
this bureaucratic procedure.
According to the Department of Supervision and Risk Prevention, the current financial
management of the solid waste sector reveals some shortcomings regarding accounting,
investment, and budget planning. These shortcomings can be summarised as follows:
455 “Taxe d’édilité” is used to finance a range of municipal services including solid waste management.
456 Receveur principal.
457 Governor of the region.
458 Ministry of the Interior.
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• The expenses relating to solid waste management are still not known because of the
lack of cost accounting;
• The exact data relating to the total revenue of the “Taxe d’Édilité” received by the
municipality are not available;
• The expenses relating to the solid waste management by most Moroccan municipalities
do not exceed 20% of total municipal income (“Taxe d’Édilité” and other financial
sources);
• The collection rates of the “Taxe d’Édilité” are low;
• The absence of an improvement plan for the collection rate of tax revenues in general
and the “Taxe d’Édilité” in particular, represents a major constraint to the
improvement of the solid waste management sector.
10.2.5 Concluding Remarks and Discussion
National policy should reflect ISSWM systems; these should incorporate various key
principles emphasised in this study, such as the hierarchy principle, the polluter pays
principle, etc. However, solid waste services should be managed according to local features
and priorities. Any effective implementation of SWM systems requires clearly defined roles
and responsibilities in institutional arrangements. A national ISSWM strategy should
provide clear direction, support, and context to waste management initiatives. Another key
issue concerns the flexibility of the legislation in place. As one major concept in ISSWM
legislation, flexibility also has to reflect the relationship between the national and the local
level. In this respect, flexibility means that national legislation leaves the door open for
locally adapted solutions.
The economic importance of the Solid Waste Management (SWM) industry in Morocco has
been increasing over the last 5 years. For a long time, SWM services were chiefly rendered
by Moroccan municipalities. However, in recent years, market liberalisation has been taking
place and is being supported by the central government (see Chapter 10.2.1). Consequently,
the Solid Waste (SW) industry is being partly deregulated. The government has taken
considerable measures to accelerate growth and to expand the role of the private sector.
According to the Moroccan Prime Minister, Morocco is “fully committed” to sustainable
development.459 In this context, the government has embraced several important steps in this
459 www.moroccotimes.com (17th January 2006).
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area, including new public procurement regulations, new laws, liberalising prices, economic
diversification, network industry liberalisation, etc. Nevertheless, the participation of the
private sector in the environmental sector remains a challenge. The following paragraphs
will take a closer look at all legislation regarding the liability and the principles in place.
In Morocco, environmental framework laws are in force that also address waste as one
environmental challenge. Nonetheless, these framework laws are not sufficient to achieve
ISSWM at a municipal level. The following table outlines some theoretical principles with
respect to Moroccan legislation. Specific chapters, sections and articles of current
legislation unambiguously consider the hierarchy principle and the polluter pays principle
(see Table 25).
Principles
Hierarchy
principle
Polluter pays
principle
Liability
Legislation
Chapter II, section I, article 7
Chapter IV, section I, article 42
Chapter I, section I and article 2
Chapter II, section I, article 7
Chapter IV, section I, article 41
Specifications
Avoidance and reduction of waste
Re-use, recycling and treatment
Application of “user pays” and polluter
pays principle
Competent authorities
Local communities
Table 25: Analysis of principles in Moroccan law no. 11-03
Furthermore, Table 26 also considers the main principles of ISSWM, specifically with
regard to law no. 13-03.
Theoretical
Legislation
Principles
Hierarchy principle Chapter III, article 4 and
6
Polluter pays
Chapter V, article 14
principle
Liability
Regulatory system
Chapter II, article 2
Chapter IV, article 10
Specifications
Prevention, reduction of harmful emission,
avoidance
Instructions to avoid harmful emission,
Penalty between 1,000.00 MAD and
20,000.00MAD, also 1– 6 months prison
Individual, public body
Set up possible monitoring system by
public administration
Table 26: Analysis of some theoretical principles of law no. 13-03
One of the important parts of legislation is law no. 28-00 which has been recently adopted
by the Moroccan parliament. Its main contents can be summarised as follows:
• Definition of different types of waste including the liability;
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• Give waste generators the sense of responsibility, clear compliance to the polluter pays
and the hierarchy principles;
• Sustainable development principles are taken into consideration under this law;
• This law envisages a monitoring system by the municipal administration including
fines and other forms of sanctions;
• It takes into consideration the financial, technical and personal constraints of some
municipalities. Consequently, a transition period of 5 years is observed.
Furthermore, Table 27 sets out the hierarchy principle and the polluter pays principle in
relation to legislation.
Theoretical
principles
Hierarchy
principle
Polluter pays
principle
Public awareness
Monitory system
Legislation
Chapter 1
Article 23
Chapter 1
Chapter 1
Specifications
Avoidance and reduction at production stage, priority
not specified
Fixation of waste fees by the municipalities
Public awareness of waste management
Elaboration of monitoring system and definition of
sanctions and fines.
Table 27: Theoretical principles and the legislation of law no. 28-00
With respect to the polluter pays principle, the House of Representatives has now finally
voted on the bill concerning waste management and processing launched in 1995. Current
legislation stipulates a sentence of 6 months to 2 years’ imprisonment and a fine of MAD
10,000 to MAD for anybody who throws, buries, or destroys any dangerous waste. The
reinforcement of this penalty also applies to those responsible for “rubbish bin fires”. They
will be liable to one-month imprisonment and a fine in excess of MAD 20,000. 20% of the
revenue of these fines will be earmarked for the National Fund for the Environment (FNE).
In future, legislation will also regulate an ambitious recycling, sorting, and harmonising
plan.460
The Moroccan government is intensifying the role of the private sector to support economic
growth and to reduce international debts. In this context, this new national policy is in line
with the strategy of international organisations. PSP has been progressing in the network
industries since the 1990s. The telecommunications industry was targeted by the private
460 www.moroccotimes.com (on 15th January 2006).
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sector, whereas public authorities face some difficulties in addressing SWM holistically due
to a lack of political awareness. However, this chapter has demonstrated that there are good
reasons for PSP in the solid waste market in Morocco. These include administrative
burdens, the financial system of municipal services in place, corruption, the workers’ union,
etc. Concerning SWM at national level, some principles of ISSWM are considered in
Moroccan legislation. For instance, the polluter pays principle is explicitly underlined in the
legislation. The more particular SW legislation in Morocco and the latest Moroccan Solid
Waste legislation (law no. 28-00) have unambiguously embraced the concept of
sustainability in SW. Even the notion of sustainability itself has been elucidated. Waste
avoidance as a key factor of the hierarchy principle, public awareness, monitoring systems,
and so forth has also been integrated into this legislation. As far as ISSWM is concerned,
this chapter has shown that the hierarchy principle and the polluter pays principle are taken
into significant account in current legislation. The principles of continuity, effectiveness,
and efficiency are also considered in legislation; in particular legislation rates equity very
highly. Regarding PSP, current legislation pays heeds to various PSP models, including
contracting-out, delegation, etc., without going into detail regarding inter-organisational
issues like Asymmetric Information, Principal-Agent dilemma, etc.
10.3
Municipal Level
The following sections will deal in-depth with the socio-economic background and the
typological classification of the municipality of Tangier. Furthermore, the city’s SWM,
including the main principles of the ISSWM, will be analysed.
10.3.1 Tangier: Socio-economic Background
The municipality of Tangier is located in northern Morocco. It lies on the North African
coast at the western entrance to the Strait of Gibraltar. The city represents a meeting-point
of routes to many destinations. Tangier has a Medina461, including a couple of markets with
narrow roads. First known as an ancient Phoenician trading post, it later became a
Carthaginian and then a Roman settlement called Tingis. The strategic location of Tangier,
461 The old Arab town.
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as a meeting point of the European and African continents, gives the city an attractive and
cosmopolitan character. The development process of the city is not homogenous; it shows
different features in different districts. In some cases, it presents a high population density,
such as in Beni Makada and Jdida, and in other cases geographical dispersion, such as in Bir
Chifa and Bouhout, for example. According to the town planning master plan462, the annual
increase rate of the population shows some imbalance between the districts: 0.7% for the
“Ville nouvelle” (a district of the municipality of Tangier) and 12.13% for the eastern
districts.
The population of the municipality of Tangier is estimated at about 203,000 inhabitants in
2006 based on the contract specifications between CESPA and the municipal authorities.
This population generated about 54,572 tons of solid waste in 2006.
The economy of Tangier is tourist-driven. According to statistics, 501,943 tourists visited
Tangier in 2003, whereas this figures reached 533,368 in 2004463 (see Annexes 9 and 10).
On average, each tourist spends 2 days in the city. The city has 7017 beds, amounting to
about 6.4% of the total capacity in Morocco. The city has 33 classified hotels and 50
restaurants. In addition, according to the Office for Port Management (ODEP)464 , about
1,650,000 people and 425,000 vehicles went through the port of Tangier in 2004. In
comparison, those figures increased by 10% for passengers and by 15% for vehicles in
2005.465 According to the 2004 census, more people now live in Tangier in comparison to
the figure stated in the contract specifications with CESPA (see Table 28).
Municipality of Tangier
Moroccan
Foreigners
Total
Households
Bni Makada (AR)
238,308
74
238,382
47,384
Charf-Mghogha (AR)
141,645
342
141,987
30,036
Charf-Souani (AR)
115,566
273
115,839
25,948
Tanger-Medina (AR)
171,154
2,323
173,477
40,929
Al Manzla
3,031
0
3,031
555
Aquouass Briech
4,129
3
4,132
787
Azzinate
4,895
0
4,895
920
Dar Chaoui
4,495
0
4,495
877
Dar Chaoui (Centre)
1,424
0
1,424
310
Table 28: Population of Tangier according to the 2004 census
(Source: Haut Commissariat au Plan du Royaume du Maroc, 2004)
462 Royaume du Maroc: SDAU Tanger : rapport final, Mars 1997.
463 Source : Ministère du Tourisme, de l’Artisanat et de l’Economie sociale.
464 Office d’Exploitation des Ports.
465 Source : www.lejournaldetanger.com .
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Finally, the industrial sector is also growing, not least because of the municipality’s “offshore” area. Tangier is the second biggest industrial centre in Morocco after Casablanca. In
sum, more tourists and more industries will result in more generation of solid waste.
Contract specifications should consider this fact to avoid claims from the private sector.
10.3.2 Typological Classification of the Municipality of Tangier
Primary indicators allow an initial understanding of effectiveness and efficiency to be
gained when measuring the performance of SWM services. The data required for these
primary indicators are:
• Physical typological classification of the municipality: population, type and number of
households, length of paved streets, etc.;
• SWM service information: cost of services, tonnage of waste collected/disposed.
The municipality of Tangier is characterised by both a well-structured framework in the city
centre and a traditional structure in the Medina, plus a regular layout in the “Ville Nouvelle”
(see Table 29 and Annex 11). Unstructured occupation that is also sometimes very dispersed
in the surrounding districts is another key feature of the municipality. The city centre is
categorised by mobility and accessibility issues in terms of traffic congestion. Most of the
municipal civil services are concentrated in the “Commune Urbaine”: administration
district, trade, cultural institutions, the Marshan stadium, the Marshan palace, the Mohamed
V hospital, etc. Road accessibility is very limited in some districts. As a result,
communication between districts leads to serious traffic problems and not least to difficult
waste collection circumstances (see Annex 11).
Some areas in Tangier where solid waste services have to be rendered are not reachable by
conventional waste collection equipment (see Annex 11). Waste collecting vehicles have
difficulties when approaching the slum settlements due to physical constraints (narrow
roads).
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Typological classification
Slums
Non regulated settlements
Villa (low density)
Villa (high density)
Building
Individual housing (simple)
Old Medina
New Medina
Rural housing (low density)
Rural housing (high density)
Total
Areas
[ha]
9.83
283.44
110.96
381.46
219.69
424.82
23.58
48.50
98.01
52.37
1,652.6
Percentage
[%]
0.59
17.15
6.71
23.08
13.29
25.71
1.42
2.94
5.93
3.18
100.00
Table 29: Typological classification in terms of areas of the housing structure in Tangier
(Source : Royaume du Maroc: SDAU Tanger : rapport final, Mars 1997)
In Tangier, there are about 50 small, non-regulated districts, mostly in the former communes
urbaines (Tanger-Médina, Charf and Bni Makada). These non-regulated districts occupy an
area of about 283.44 ha (see Table 29).
In the past decade, the non-regulated habitat has been growing, mostly due to the high level
of illegal immigrants. Indeed, these districts lack any environmental infrastructure:
wastewater is neither collected nor treated; there is no SWM service and internal
accessibility is very difficult. This leads to a high level of environmental pollution.
Accordingly, the lake of Tangier and the tourist area are heavily polluted. Annex 11
displays some of the constraints affecting waste collection services in various districts in
Tangier; moreover, these constraints will obviously impair the effectiveness of CESPA and
the equity of its service besides fuelling disagreement between the contractual parties.
10.3.3 Solid Waste Management in the Municipal Context
According to a GTZ466 survey and a study carried out by the Ministry of the Environment467
(Observatoire de l’environnement), 70% of the waste generated in Tangier is biodegradable
466 GTZ « Etude socio-économique des chiffonniers de la décharge publique de Tanger » March 2003.
467 Royaume du Maroc « Rapport sur l’état de l’environnement au Maroc : Milieux humains Chapitre IV Déchets».
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(see Figure 9) and more than 20% of it is recyclable, that is, more suitable for treatment and
recycling than disposal.
SWM in the municipality is characterised by a “collect and dump” approach that focuses
principally on the removal of waste from the districts and its subsequent disposal (see
Annex 14). This approach results in transferring environmental issues associated with waste
from one place to the dumpsite. The costs of remediation are higher than the costs of
preventing this issue468. Also, often no attempt is made to aggregate the costs incurred by all
of the various agencies involved in the provision of waste collection services. As a result,
the municipal administration significantly underestimates its waste management costs.
Reliable cost information is needed to provide affordable and efficient services, to recover
costs from users, and to encourage the participation of the private sector.
Before the year 2000, there were various problems with the financial management of the
solid waste sector regarding accounting, investment, and budget planning. The expense
relating to solid waste management was not known due to a lack of cost accounting, and the
collection rate of the “Taxe d’Édilité” was low. Between 1999 and 2000, only 20% of the
“Taxe d’Edilité” was collected in Tangier. A collection rate of 100% of the tax would result
in a tax revenue of roughly € 2 million for the city469. The absence of any improvement plan
for the collection rate of the taxes in general, and the “Taxe d’Édilité” in particular, had
proved a major constraint to the improvement of the solid waste management sector. This
resulted in the contracting-out of the SWM service to a private firm (CESPA) in the year
2000.
The CESPA 470 Group works throughout Spain and in Portugal, Argentina, Bolivia, and
Uruguay. CESPA is a group of companies that covers the whole waste cycle, offering
customised services for the benefit of the community and the environment. The AGBAR
Group (Aguas de Barcelona) and the SITA Group each own 50% of CESPA. AGBAR is the
leading private sector provider of potable water market in Spain, and one of the biggest
operators in Solid Waste Management (SWM). CESPA ensures the provision of SWM
services by using mechanised systems with the most up-to-date equipment on the market.
468
"An ounce of prevention is worth a pound of cure." Benjamin Franklin (1706 – 1790) one of the best-known Founding Fathers of
the United States of America.
469 Source: Department of Supervision and Risk Prevention
470 www.cespa.es.
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10.3.4 Key Features of the Contract Specifications with CESPA
CESPA commenced solid waste services on 2nd August 2000 for the municipality of
Tangier. The scope of work includes the collection of household waste and similar, the
transport and clearance of household waste and similar, and the sweeping of municipal
roads and public places, including the clearance of cleaning products and the washing of
municipal roads and public places. According to the contract, the population of Tangier was
estimated at 174,519 inhabitants in the year 2000. The generation of waste for the first year
was estimated at 47,120 tons per year with a variation of approximately 5% (see Table 30).
Year
2000
Population estimated
Household waste
and similar [Ton/Year]
Year
2001
Year
2002
Year
2003
Year
2004
Year
2005
Year
2006
174,519 179,056 183,711 188,488 193,389 198,417 203,576
47,120 48,345 49,602 50,891 52,214 53,572 54,572
Table 30: Population of the municipality of Tangier including waste generated per year
At the end of each year, both contractual parties meet to assess the annual generation of
solid waste in the city according to Table 30. The duration of the contract is 6 years.
According to the contract, CESPA shall collect household waste and similar generated by
industries, hospitals, schools, etc. CESPA is also responsible for bulky waste. In order to
carry out this task comprehensively, it has to use special transportation means. The
collection (and clearance) of household waste has to be carried out by CESPA vehicles
(compactor vehicles). The contract makes no provision for segregated collection. The
following sections will briefly outline various contractual specifications, including
collection frequency, clearance and unloading procedures, staffing, equipment, and
awareness campaigns (as stated in the contract with CESPA).
a)
Frequency
Waste collection has to be performed according to an annual calendar which must be made
available to the municipality for approval. The collection and clearance of household waste
and similar has to be undertaken between 6 a.m. and 2 p.m., (or any other time schedule
commonly agreed in any of the sectors of the municipality), except on Labour Day (1st
May).
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b)
Clearance and Unloading
Clearance is carried out according to a transport route agreed by the municipal management
without any transfer station. The unloading of the compactor vehicles has to be done in the
place designated by the management of the landfill. If CESPA has to unload the waste
collected in another place than the one mentioned above, for any other reason, both parties
have to meet to find a jointly workable solution. Finally, in terms of the contract, CESPA is
committed to collecting and evacuating all household waste disposed of in “dumpsites”.
c)
Personnel
CESPA took on about 400 former workers from the municipality, guaranteeing them jobs
for a period of 3 years. It also guaranteed them a 15% bonus during the contract time period,
independent of work performance. The salaries of these workers were deducted from the
financial envelope of the contract. Nonetheless, the performance of these 400 workers
remains one of the key contractual issues. A high rate of absenteeism, bad use of equipment,
lack of motivation, non-flexibility in working hours, etc., are some reasons quoted by the
CESPA management for its dissatisfaction with former municipal workers. Consequently,
the management board decided to hire 50 more workers. According to CESPA management,
these workers undertake about 60% of the entire work (Source: open interview with CESPA
management).
d)
Equipment
CESPA took over municipal material and equipment in accordance with the contract, at a
residual value agreed between the two contractual parties. This equipment comprises 13
used vehicles and 2 pick-up vehicles for waste collection, 10 bins measuring 5m³ each, 30
metallic bins with a volume of 1,100 litres, and 20 plastic bins containing 600 litres. When
the contract between CESPA and the municipality of Tangier expires, the latter (or the new
contractor) commits itself to taking over all equipment and materials at their respective
residual value. All equipment bought by CESPA must be renewed after 10 years of service.
However, new equipment, particularly plastic containers bought by the company at the
beginning, has been misused. Ashes from bakeries and hammam 471 have resulted in the
destruction of plastic containers. Thus, their value was reduced very soon after commencing
service. (Source: open interview with CESPA management)
471 Arabic sauna
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e)
Awareness Campaign
The contract envisages an awareness campaign under the slogan “City Clean”. This
campaign falls under CESPA’s responsibility. The municipality draws up the campaign
agenda. Organising and financing it are CESPA’s responsibility. The vehicles and the
material can be used to support the campaign. According to the contract, the respective
concierge of any building must bring all bins outside and place them close to the sidewalk.
However, CESPA has the right to claim any compensation should this rule not be enforced.
Bulky waste has to be brought out by the beneficiaries while the collection truck passes
through. The agenda of this awareness campaign should include the above-mentioned
aspects in order to bring the beneficiaries of the SW collection system in line with the
approach with the new management. Basically, public awareness campaigns should have
been set up prior to this contract. These campaigns are extremely useful in educating people
on how to treat and store the waste they generate. In the district of Sallah, for instance, good
results were achieved because of a sound awareness campaign conducted by CESPA.
10.3.5 Economic Value of the Recycling Market
In Tangier, the recycling sector is driven by market demand. Due to the fact that the city
lacks formal recycling industries, recycling is carried out by the so-called “informal” sector
(see Annex 20). This includes waste pickers operating in the city and in the landfill. About
21 families have been recorded working and living on the landfill in Tangier as waste
pickers. Furthermore, it is estimated that about 620 animals are currently living in the
landfill472 (see also Annex 14, Annex 21, Annex 22, Annex 23 and Annex 24). The waste
pickers working in the landfill segregate the waste collected and disposed of by CESPA.
Table 31 displays the quantity of waste recycled.
472 GTZ « Etude socio-économique des chiffonniers de la décharge publique de Tanger » March 2003, p. 23.
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10. Single Case Study: CESPA
Recycled materials
Plastic (soft)
White bottles
Can PVC (1 litre and 5 litres)
Paper
Cardboard
Rest of fabric
Coloured glasses
Bottle (beers)
Metal (aluminium and cupper)
Rubber sole
[Kg/week]
6,000.00
3,080.00
3,000.00
2,700.00
2,500.00
2,000.00
1,000.00
1,000.00 items
200.00
150.00
Table 31: Quantity of recycled materials in [kg/week] from the landfill in Tangier
(Source: GTZ « Etude socio-économique des chiffonniers de la décharge publique de
Tanger » March 2003, p. 26-27)
Waste pickers and animals undertake in an unhealthy and risky manner473 the tasks that are
supposed to be done upstream, specifically the segregation of waste at source or before it is
transported to the landfill (see Annex 14). Transport costs could have been minimised.
Therefore, waste pickers and animals should be part of any ISSWM concept whereas they
are usually perceived as part of the problem. According to the GTZ, 20% of waste generated
in Tangier are recyclable (Annex 21 and Annex 22). In fact, there are about 50 waste
pickers living on the landfill, 100 mobile scrap merchants, 10 middlemen, 2 wholesalers,
and 3 plastic recycling units in Tangier. Generally, the mobile waste pickers operate by
night, before the waste collection service provided by the municipality or CESPA
commences. Depending on the materials collected, the final destination can be Kenitra (for
paper and cardboard), Casablanca (for plastic cans) and Tangier (transparent plastic for
packaging).
473 A waste picker was run over on the dumpsite in Tangier by a CESPA vehicle on 20. July 2005. According to
CESPA, the accident was due to poor accessibility. Source: http://www.aujourdhui.ma/economiedetails37978.html?mod=petition-football on the 22 July 2005.
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10.4
Analysis and Discussion of the Key Principles
At the municipal level, SW services are funded through a specific government tax – Taxe
d’Édilité – and not through direct charges to the beneficiaries in accordance with the
quantity of SW generated. This chapter has demonstrated that the recovery rate of this tax is
rather low. Thus, many Moroccan municipalities, including the municipality of Tangier,
have opted for PSP due to the fact that the financing of private contractor is considered in
the municipal budget and subsidies from central government (depending on the financial
capacity of the municipality). Once the contract is agreed between the private contractor and
the municipality, public authorities no longer depend on Taxe d’Édilité to finance SW
services. PSP is becoming attractive to both national and international private investors with
solid financial backgrounds and managerial expertise.
On the one hand, the strategic position of Tangier gives the municipality a cosmopolitan
character. On the other hand, this strategic position prompts some concern regarding
environmental issues, particularly about SW services given the large number of tourists and
ship passengers passing through the municipality. In terms of infrastructure, the
municipality is not homogenous. Some districts have very limited road accessibility. This
fact is very relevant to the private contractor in terms of effectiveness and equity of the SW
services rendered by CESPA. Furthermore, the SW approach adopted by the municipality is
characterised as “collect and dump” (see Annex 14) without any enforcement of various
sustainability principles, such as the hierarchy principle, the polluter pays principle, etc.
Thus, this approach results in transferring SW concerns from one place to the dumpsite:
waste pickers working and living there, as well as resident animals. Segregated SW
collection is not considered in the contract with CESPA, raising serious environmental and
economic concerns, such as high levels of leachate and methane gas. According to the
contract, CESPA has taken over former municipal workers. This is considered an instance
of management failure, due to the high rate of absenteeism, bad use of equipment, lack of
motivation, non-flexibility in working hours, etc. As far as ISSWM is concerned, the
principle of continuity and the effectiveness of the SW service are attached considerable
importance in the contract with CESPA. Other important principles, such as the hierarchy
principle, are ignored. Regarding PSP, the relationship between CESPA and the
municipality is regulated by penalties. Due to Asymmetric Information and the absence of a
comprehensive monitoring system, such penalties are dubious. In sum, the interorganisational relationship is anything but good.
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In sum, this chapter has shown that while some principles of ISSWM, such as the hierarchy
principle and the polluter pays principle, are considered highly important in Moroccan SW
legislation, the enforcement of these laws at the municipal level remains a formidable
challenge.
10.4.1 Hierarchy Principle
Based on the remuneration modes, one can state whether the hierarchy principle has been
taken into consideration or not. CESPA’s remuneration is based on an annual lump sum
price (see Table 32). Details are given below:
Description of the services
Collection and transport of household waste and similar to the
landfill
Manual and mechanical sweeping of the roads in sectors with
a frequency of 3days/7days
Manual and mechanical sweeping of the roads in sectors with
a frequency of 4days/7days
Manual and mechanical sweeping of the roads in sectors with
a frequency of 1day/7days
Manual and mechanical sweeping of the roads in sectors with
a frequency of 2days/7days
Manual and mechanical sweeping of the roads in sectors with
a frequency of 1day/15days
Collection and transport of green waste, gravel, bulky waste
Price per ton [MAD]
178.07
5,784.17
6,790.83
6,931.67
7,083.33
8,585.83
102,417.55
Table 32: Description of the services provided, including prices per ton
According to Table 32CESPA is paid according to the quantity of waste collected and
dumped. However, due to the composition of solid waste in Tangier (see figure below), it is
much more expensive to transport the waste collected and dispose it entirely in a landfill
than if it were partly recycled and treated.
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Plastic
8%
ceramic
2%
metal
4%
miscellaneous
6%
Paper/Cardboard
10%
Organic fraction
70%
Figure 9: Waste composition in Tangier474
The following figure identifies the costs of a sanitary landfill in terms of the estimated
percentage related to direct investment. As shown, the insulation layer required to protect
the base of the landfill represents 80% of the total cost of the intensive capital of the unit,
together with appropriate leachate and gas management. In effect, leachate and gas are byproducts of the digestion by micro-organisms of deposited organic waste. Selected
collection, including waste treatment (e.g., composting), will considerably diminish the
organic part, and therefore leachate and gas production. In sum, the non-consideration of the
hierarchy principle is not only an environmental matter but also an economic issue.
474 GTZ « Etude socio-économique des chiffonniers de la décharge publique de Tanger » March 2003, Royaume du
Maroc « Rapport sur l’état de l’environnement au Maroc : Milieux humains Chapitre IV Déchets ».
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Fencing
1%
Site services
5%
Infrastructure
6%
Site offices
8%
Gas (Collection and
Treatment)
9%
Landfill basis and
insulation layer
52%
Leachate (Collection
and treatment)
19%
Figure 10: Direct investment of a sanitary landfill
(Source: Author’s estimation)
Any contracting-out of the service should hence consider solid waste management
holistically. Accordingly, there should also be incentives for a private operator to minimise
waste. However, CESPA is paid by the amount of waste disposed of, in contradiction to this
principle. 70% of the waste generated in Tangier is biodegradable, making it more
appropriate for aerobic and anaerobic treatment than disposal. Although the local informal
recycling industry is very active, there is no clause in the contract with CESPA referring to
the waste hierarchy principle. Economic instruments are not used in the contract
specifications to provide incentives in support of the recovery of these materials. The
following table presents some quantitative ratios of the hierarchy principle.
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Analysed Parameters
%R
% Rd
%O
%Od
Interpretation
«1
«1
»1
%L
% Ld
Table 33: Quantitative data of the hierarchy principle in Tangier
R: Potential quantity of SW to recycle; Rd: Quantity of waste recycled; O: Potential
quantity of SW for organic treatment; Od: Quantity of SW organically treated;
L: Potential quantity of SW to dispose of; Ld: Quantity of SW disposed of
The hierarchy principle is totally neglected in the contract specifications. CESPA is paid per
quantity of solid waste disposed of; therefore, there is no incentive for the private sector to
encourage waste minimisation awareness campaigns, recycling initiatives, and aerobic and
anaerobic waste treatment. The interpretation of the qualitative data is presented in Table 33
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Qualitative Data
Interpretation
Accompanying measures for No incentives to recycle by CESPA
recycling
Strong informal sector
Accompanying measures for No incentives to treat waste by CESPA
organic treatment
Contract specifications
Do not consider minimisation through waste treatment
Payment Modus
Payment according to quantity of waste collected, no
incentive to consider hierarchy principle
Table 34: Analysis of qualitative data of the hierarchy principle
Solid waste recycling is one of the principal elements of the hierarchy principle; it is
therefore central to any ISSWM concept. Although the recycling fraction is quite high
(about 20%) in Tangier, this is completely ignored in both the solid waste management
policy of the municipality and in the contract specifications with CESPA. The municipality
of Tangier lacks any formal recycling industry. Consequently, waste pickers from the socalled “informal” sector run this segment. Thus, waste segregation (which ought to be
undertaken at source) is carried out in a risky manner on the landfill by waste pickers and
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animals. They should be included in any ISSWM concept. Every year, the informal
recycling sector generates about 1,946,600 MAD475. More could be done if the sector were
well-organised.
Finally, Article 19 of the contract specifications mentions that the waste collected will be
put in a landfill; however, it fails to specify any treatment options. Simply put, based on the
particular payment modes and contract specifications (see Table 33 and Table 34), there are
no incentives for CESPA to treat or to recycle solid waste in Tangier. Therefore, the
hierarchy principle has not been considered in the contract specifications.
10.4.2 Polluter Pays Principle
SWM services in Tangier are funded through a specific municipal tax, the so-called “Taxe
d’Édilité”. This tax represents 10% of the annual rental value of a house, irrespective of the
amount of solid waste generated. The collection rates of the “Taxe d’Édilité” are low (on
average 50%) 476 . Besides the “Taxe d’Edilité”, Tangier finances its environmental
infrastructure projects through transfers from the central government (that is, Home Office
subsidies), credits, and also its own revenue. According to the Department of Supervision
and Risks Prevention, a 100% collection rate of the tax will result in tax revenue totalling 20
million Dirhams in Tangier.
Analysed parameters477
Cost recovery [%]
Subsidies from government [%]
Generation of waste
Affordability
Interpretation
<40%
> 60%
Quantity of waste generated differs between districts,
taxes shall not be the same for all beneficiaries
Socio-economic situation of the beneficiaries differs
between districts
Table 35: Analysis of polluter pays principle
475 GTZ « Etude socio-économique des chiffonniers de la décharge publique de Tanger » March 2003 (non-published).
476 Source: Department of Supervision and Risk Prevention.
477 R: Potential quantity of SW to recycle; Rd: Quantity of waste recycled; O: Potential quantity of SW for organic
treatment; Od: Quantity of SW organically treated; M: Potential quantity of SW to minimise; Md: Quantity of SW
minimised; L: Potential quantity of SW to dispose of; Ld: Quantity of SW disposed.
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The polluter pays principle states that those responsible for pollution should pay for the
costs of its remediation. Normally, people living in low-income areas generate less waste
than those living in high-income areas in Tangier. They should not pay the same costs for
this service, particularly since service levels differ between districts. Moreover, the costs of
solid waste services depend not only on the quantity of waste generated, but also on the
distance to the landfill and road accessibility. The collection rate “Taxe d’Édilité”, which is
very low in Tangier, does not consider the amount of solid waste generated. In sum, the
application of the polluter pays principle is not taken into account.
Another issue is the international character of the generation of SW. As a result of
globalisation, it has become more difficult to identify the original manufacturer of a given
product. Hence, charging fees to the manufacturer as required by the polluter pays principle
is troublesome. Furthermore, SW generated by others countries is very often found on the
beaches of other countries. Thus, how can the municipality of Tangier apply penalties to
CESPA management for uncleaned beaches? In sum, this issue should be addressed at both
national and international level.
10.4.3 Continuity Principle
As mentioned earlier, the so-called 5M conditions must be fulfilled to ensure the continuity
of solid waste services, namely Management, Man Power, Money, Machine, and Material.
Article 50 of the contract specifications comprehensively describes the principle of
continuity. As a result, CESPA management is committed to ensuring a sound waste
management service for the entire contract period, as specified in the contract’s terms, and
under any circumstances, except in the case of force majeure (such as war, riots, natural
catastrophes, or other circumstances preventing accessibility to the transfer station or public
landfill). Otherwise, it will be liable for all costs involved if the municipality must provide
the services instead. Measures to ensure continuity are written into the CESPA contract in a
comprehensive manner because the municipality has a strong interest in maintaining city
cleanliness. Furthermore, CESPA is committed to ensuring the provision of:
• The vehicles, machines and equipment required, and their accessories,
• The management and the maintenance of the vehicles, and
• The provision of the required personnel.
The requisite personnel and equipment must be provided in sufficient quantities so that SW
services remain uninterrupted. If the service has to be interrupted, even partially, CESPA is
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obliged to inform the municipality at least 24 hours in advance, and to take all required
measures together with the municipality. In addition, if an accident occurs with a vehicle,
the latter has to be replaced within 24 hours in order to avoid any interruption to the service.
Throughout the summer period, the management is committed to guaranteeing the manual
and mechanical cleaning of municipal beaches. Should any disruption occur, the
municipality has the right, without any formality, to take immediate possession of all
equipment, materials, personnel, and the premises and facilities required to supply the
service, in order to provide the service itself. CESPA will have to bear the costs and risks of
this action until it is able to supply the service again. Within one month of the disruption to
the service, CESPA has to make a final decision about pursuing the contractual arrangement
or terminating it.
During the winter period, CESPA is contractually committed to cleaning municipal gutters
and removing all waste, dead leaves, earth sands, and the like to prevent waste from
entering the sewage system with the rainwater.
The continuity of service478 is a very relevant issue when setting up contractual agreements
between the private and public sectors. The continuity of the SWM service must be
guaranteed at all times, independently of whether this service is rendered by the
municipality or a private enterprise.
Will the municipality be able to take back the responsibility for rendering the service at
short notice should CESPA be unable to meet its commitments? The answer is negative.
According to the municipality, the termination of the contract marks the worst-case scenario
because the municipality will not be able to carry out the solid waste services required due
to a lack of means.479
For the time being, both parties are trying to maintain collaboration despite some
contractual dissatisfaction on both sides. The municipality is establishing new contract
specifications to launch new tender procedures after 2007. As the saying goes, “By trying to
walk like a pigeon, the crow has forgotten how to walk like a crow.”480; that is, municipal
managerial capacity is being reduced through the contracting-out of the solid waste service.
Finally, the liberalisation of the SW industry in Morocco raises some concerns about a
private monopoly gradually coming into force, together with the resultant loss of public
know-how. These results reveal that the relationship between the municipality and CESPA
478 The principle of continuity is about the guarantee that the solid waste service in any municipality will be rendered
without any interruption whether it is managed by the private sector or the municipal administration.
479 www.lejournaldetanger.com (09th August 2004).
480 « Le corbeau qui en voulant imiter la marche du pigeon a oublié sa propre marche. ».
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is anything but good. However, bringing back the solid waste services to the municipality
will result in a fiasco.
10.4.4 Monitoring
It is important that an orchestrated relationship is developed between the municipality and
CESPA through a monitoring committee. The task of this committee is to prepare a strategy
through which the ISSWM policy can be implemented. While this committee should then
monitor performance standards, the national institution responsible for environment should
enforce environmental standards.
All services and works undertaken in Tangier should be under the control of the President of
the municipality and his representatives, in particular the municipal engineer. Control over
all services is based on making the general performance of cleaning work subject to visual
checks, and on the beneficiaries’ claims and complaints. A municipal technician is
responsible for checking that any work undertaken is done according to the contract
specifications. In the event of a dispute, a further check will be carried out together with the
manager of CESPA or his representative, using forms to evaluate the quality of the services
rendered, journals of daily activities, reports of road accidents, etc. A meeting to review data
is planned once a year. Regarding personnel matters, a meeting is scheduled once a week.
Table 36 presents the monitoring system in place according to the contract specifications.
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Journal of daily
activities
• List of collected
sectors
• List of roads cleaned
•
•
•
•
•
by sweeping and
washing
Weight of waste
collected
Quantity of cleaning
material in this day
and the quantity of
hours
Quantity of personnel
Total hours
Miscellaneous:
accidents, incidents,
non-cleaned sectors,
etc.
Numbered
register481
• Day, date, hour
of incoming
letter,
• The origin
(telephone,
letters,
message…),
• Name of the
person,
• Text of the
demand and
eventually the
motivation,
Log book482
Protocol of road
incidents
• Holes in the roads
and the sidewalks,
• Potholes,
• Opened trenches,
• Construction
waste,
• Rubble dumps,
• Missing or
deterioration of
signalisation,
• Graffiti
• Name of the driver,
• Starting kilometre and
•
•
•
•
return kilometre,
Working Sectors,
Periodical maintenance
Changing of sweepers
and wear parts,
Incidents, the accidents
and any relevant
observation
Table 36: Control system in the contractual agreement in Tangier
Performance measurement should be integrated into MSWM departmental management
information systems. In practice, this means establishing a reporting system to monitor the
performance of the SWM services rendered, and to collect information on a routine basis
(daily, weekly, monthly, yearly).
The control and monitoring in place have resulted in a never-ending dispute because of the
lack of threshold for cleanliness. For instance, should a street in which someone discovers a
plastic bag containing 1 kg of waste be considered unclean? Or should it be considered
unclean if there is only one container full of waste? The contract specifications mention that
the municipality is responsible for monitoring and controlling collection; however, it does
not mention the means required and the frequency needed.
According to GTZ,483 the investment costs of monitoring the contracting-out service are
estimated at about 210,000.00 MAD, representing half of the marginal 3% that the
municipality is obliged to pay in the case of uncertainty. Some concerns of the contractingout include a bureaucratic regulatory system. Indeed, a contractual arrangement is important
481 Daily notice in a chronological order, the demands of intervention or reclamation. This register shall be made
available to the municipality.
482 Log book and maintenance: Each vehicle has to have a log book where the following will be noted.
483 GTZ « Analyse du fonctionnement de la gestion déléguée de la collecte des déchets de la commune de Charf
Wilaya de Tanger ».
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but no contractual agreement can take every contingency into account. Contract
specifications, as well as the managerial capacity of municipal authorities related to
performance evaluation and monitoring, are inadequate. Accountability of both contractual
parties is lacking.
In Tangier, contract specifications failed to specify any threshold: tasks were either carried
out completely or not at all. Therefore, a binary system should be chosen to adequately
assess the effectiveness of the tasks carried out by CESPA. Finally, the municipality should
set up an effective regulatory framework that gives investors sufficient confidence.
Municipalities will have to set up monitoring committees or will have to be assisted by
independent experts or regulatory agencies.
10.4.5 Principal-Agent Dilemma and Asymmetric Information
In terms of the contract, CESPA has hypothetically gathered all relevant information and
data prior to the contractual agreement; this data is considered the basis for defining the
financial proposal. Additionally, CESPA has in theory checked the existing waste collection
and cleanliness services, including the transport system, and has assessed the nature and the
condition of the equipment and vehicles. Moreover, CESPA is aware of the services
required by the municipality, taking into account potential difficulties and bottlenecks as
well as working conditions. It is doubtful that CESPA possessed appropriate local
knowledge prior to contracting-out. Claims from CESPA’s side about the specific situation
of the landfill, the behaviour of residents, and road accessibility confirm this hypothesis.
In theory, CESPA has carried out similar services before and is therefore aware of the
regional context and technical challenges involved. Finally, according to the contract
specifications, CESPA cannot claim any compensation if, when carrying out the services, it
becomes clear that it is suffering losses due to a lack of information. Furthermore, price
variation is considered in the contractual agreement. The price variation is limited to 7% per
year.
Price variation for waste collection
Ç
( S 2 )(1 + Chtp )
G
Mtn Ç 100 + TVA
V 1 = È 0 .15 + 0 .35
+ 0 .10
+ 0 .40
( S 2 o )(1 + Chtpo )
Go
Mtno ÙÚ ÈÉ100 + TVAo ÙÚ
É
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10. Single Case Study: CESPA
Price variation for street sweeping
Ç
( S 2 )(1 + Chtp )
G
Mtn Ç 100 + TVA
V 2 = È 0 .15 + 0 .60
+ 0 .05
+ 0 .20
Ù
( S 2 o )(1 + Chtpo )
Go
Mtno Ú ÈÉ100 + TVAo ÙÚ
É
S2: Salary; Chtp: Welfare costs; G: Fuel costs; Mtn: Cost for private transport; TVA: VAT
It is still questionable whether the municipality takes into account changes in these prices
variations.
The contractual agreement specifies that CESPA be required to collect 432 tons of solid
waste every day. According to the contract agreement, the municipality will not accept any
financial claim by the contractor due to a lack of information. On the other hand, CESPA
has to submit information regarding the weight of all the waste disposed of at the dumpsite
to the person responsible at the municipality if required. CESPA is committed to collecting,
and systematically cleaning the waste of any newly constructed roads, pedestrian zones, and
new public places belonging to the municipality during the contract period. However, any
change in the development of the city will not result in an increase in the financial envelope.
CESPA is committed to submitting a protocol to the municipality every year before the end
of the first month of the following year, supplying at least the following information: total
number of personnel, total number of compactors in service, the total kilometres run by each
of the compactors and fuel consumption, any modification which could result in price
revision, and details of management expenses.
The 1994 census provided the basis for the contract with the private sector. However, more
accurate figures on the population of Tangier-Médina were published 2004. In addition to
the fact that there is a discrepancy between the figures published by the 1994 census and
that of 2004 (see Table 28), Tangier’s economy is a tourist-driven one (see Chapter 10.3.1).
In addition, as mentioned earlier, Tangier serves as a thoroughfare to different destinations;
between June and September, many people pass through the city’s harbour every day,
generating an additional 8,000 tons of solid waste. More waste is therefore generated than is
stated in the CESPA contract, but the main issue is that it is generated within a short time
period. The main challenge for a profit-driven company is to guarantee an operational
service during the peak season without having superfluous equipment and manpower in
normal season. Clearly, the generation of solid waste in this case is not uniform throughout
the year as often appears to be assumed in the literature. Due to the fact that accurate figures
are missing in Tangier, and since contractual authorities use theoretical data when setting up
agreements with the private sector, conflicts and never-ending disputes are inevitable.
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10. Single Case Study: CESPA
Municipality of Tangier
[District)
Charf (Mghogha – Souani)
Tanger-Médina
Total
Households
257,826
173,477
55,984
40,929
Table 37: Population of Tangier according to the census 2004
According to the contract, CESPA is required to collect 432 tons of solid waste every day.
But during the holiday season, June to September, this amount increases very significantly
(see Figure 11), due to the number of tourists and transit passengers visiting the city.
However, a fine of about 10,000 MAD will be charged if waste in a sector is not properly
collected. According to the contract agreement, the municipality will not accept any
financial claim by the contractor due to a lack of information. Simply put, there is no room
for any financial manoeuvring after signing the contract, even though the data on which the
contract is based are not accurate.
Figure 11: Waste quantities – estimated and contractual
- - - - - Solid waste collected according to contract
Most likely quantity of solid waste generated
Another contractual issue concerns the taking over of the municipality’s machinery and
equipment (see Annexes 17 and 18). According to the management of CESPA, most of
these items were not in good working condition (source: open interview). According to
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10. Single Case Study: CESPA
CESPA management, only 9 out of 15 vehicles taken over from the municipality were in
good working condition484. The vehicles inherited from the municipality were up to 95%
non-operational, causing serious accidents as a result.485 CESPA and the municipality have
no accurate information on the quantity of waste and weighbridge is not in service. Indeed,
CESPA has no experience in the areas prior to the contract. Two (2) addenda486 have been
issued as a indication of uncertainty.
The transporting of the SW is performed according to routes agreed with the municipality.
In reality, waste is disposed into a dumpsite that has been in operation since 1970, situated
5 km from the city centre of Tangier along the Route of Tétouan. The disposal site occupies
a total area of 32 ha, and a slope of about 40%. Because of this slope, accessibility,
especially in the rainy season, is not easy (see Annex 14). Accordingly, the contractor is not
fined because of improper disposal, as specified in the contract, because accessibility can be
problematic. Finally, CESPA has to submit information regarding the weight of all the
waste disposed of at the dumpsite to the responsible municipal official if required. Since
there is no weighbridge at the landfill, the quantities of solid waste are estimated. This kind
of estimation on CESPA’s side, and its evaluation by the municipality, is likely to result in
mutual accusations. To summarise, contracts should be flexible to allow for the lack of
accurate information in the SWM industry in LMIC, whether it is provided by private
entrepreneurs or municipalities.
The DGCL487 (General direction of local authorities) has established the standard contract
specifications for the municipalities which intend to contract out their solid waste services.
Nevertheless, these specifications do not consider the features of the given municipality, in
this case Tangier.488 For instance, the contract specifications have envisaged the mechanical
washing of non-asphalted streets (see Chapter 10.3.4).
484 http://www.aujourdhui.ma/economie-details37978.html?mod=petition-football on 22. July 2005
485 www.lejournaldetanger.com (07. April 2004).
486 Royaume du Maroc, Ministère de l’Intérieur : «Avenant No 1 du marché No 17/C.U.C./99-2000 relatif à la gestion
du service de la collecte et d’évacuation des déchets ménagers et assimilés et de nettoiement ».
Royaume du Maroc, Ministère de l’Intérieur : «Avenant No 1 du marché No 18/C.U.T./99-2000 relatif à la gestion
du service de la collecte et d’évacuation des déchets ménagers et assimilés et de nettoiement ».
487 Direction Générale de Collectivités Locales.
488 Royaume du Maroc, GTZ-PGPE « Analyse du fonctionnement de la gestion déléguée de la collecte des déchets de
la commune de Charf, Wilaya de Tanger » Rapport EDIC, April 2003 (non published).
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10. Single Case Study: CESPA
1
2
3
4
Non Performance of Services
Interpretation
Sector not swept or not collected
Quantity not mentioned
Solid waste left (non collected or non swept) or Quantity not mentioned
not properly collected after a period of two
hours after warning from the municipality
Waste containers destroyed by CESPA
What about destruction by the
personnel and not replaced 24 hours after
beneficiaries?
warning from the municipality
Vehicle in service in bad condition
Exact definition of bad condition
missing
Table 38: Interpretation of the penalties
CESPA has faced enormous difficulties due to lacking public awareness. The beneficiaries
fail to consider the time schedule set out in the contract specifications. Therefore, one
sometimes has the impression that the job has not been done, which is in actual fact not the
case (see Table 38). Moreover, redundant information, such as fixed time schedules for
waste collection and/or the type of waste collection vehicles, can result in never-ending
disputes between the two contractual parties. As the ultimate target is to achieve integrated
solid waste management, the contractual agreement has to follow the principles of
sustainable waste management, and must focus on achieving a workable inter-organisational
relationship instead of trading mutual accusations.
10.4.6 Inter-organisational Relationships
As stated in the contract, CESPA is committed to complying with orders from the
municipality. As far as inter-organisational relationships are concerned, the municipality
will assist CESPA in administrative matters by carrying out its activities as required by this
contract. CESPA is constrained to responding to any requirement imposed by the
municipality within a maximum of two hours. According to the contract, penalties and fines
are foreseen to regulate the relationships between the municipality and CESPA. In
consequence, a detailed list of penalties is provided in the contract specifications. Cases in
point include waste not collected or not swept in a given sector (10,000 MAD), solid waste
not collected or not swept 2 hours after a reminder issued by the municipality (2,500 MAD),
or vehicles not cleaned and not painted (500 MAD). A fine of about 10,000 MAD will be
charged if waste is not properly collected in a given sector. The transportation of SW is
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10. Single Case Study: CESPA
performed according to a routing system agreed with the municipality. However, the routing
system should be refined and optimised in an ongoing manner (see also Annexes 12 and
13). Compactor vehicles have to be unloaded at the place designated by the landfill
management. If CESPA, for any reason, is obliged to unload the waste in a place other than
that mentioned above, both parties are obliged to cooperate to find a feasible solution.
Contrary to contract specifications, the quantity of the waste for billing is just estimated.
There is no weighbridge in service at the landfill. This results in discord between the two
parties. Table 39 clearly displays the main results of the organisational theory and
contractual management issue.
Analysed parameters
Relationship between Agent and
Principal
Frequency of transactions between
agent and principal
Owner of equipment
Relationship between private
sector and beneficiaries
Duration of the contract
Payment of the private sector
Satisfaction of private sector
Satisfaction of municipalities
Interpretation
Introduction of government agencies for controlling
Periodic meetings, monthly and annual progress
reports at the beginning however indifference from
municipality’s side
Introduction of appropriate equipment
Relationship not homogenous, good relationship
where public awareness programme conducted
Six (06) years
Payment not always on terms, delay on payment
Not completely dissatisfied, participation in the next
bidding left opened
Not completely dissatisfied because municipality
approached CESPA for the next bidding
Table 39: Organisational theory and contract management
Town councillors have strongly criticised the management of CESPA at the beginning,
going as far as mentioning a termination of their contract with the company. The councillors
justified their criticism by insisting on CESPA’s violation of the terms and the conditions of
the contract, as well as several service disruptions which led to a deterioration of the city’s
image during the summer tourist season. As observed, none of the contractual parties
possessed accurate information on the quantity of SW generated in Tangier. Some
municipal councillors have underlined some non-performance of the contract on the part of
CESPA, including the insufficiency of waste containers, non-renewal / replacement of
damaged waste containers, and disregarding the collection time schedule. 489 CESPA has
489 http://www.leconomiste.com/article.html?a=73395.
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10. Single Case Study: CESPA
also complained about the fact that the budget attributed was insufficient compared to actual
needs, and that the inhabitants of Tangier were not collaborating enough. A public inquiry
was requested as early as 2002 to examine the causes of the concessionaire’s low output.490
The average citizen is not aware of the environmental issues involved. According to the
Technical Director of CESPA, there was no collaboration with the municipality at the
beginning when CESPA distributed flyers without municipal participation; such unilateral
initiatives can hardly be successful, however.491
Since 2004, there has been a latent conflict between CESPA and the municipality, mostly
due to CESPA’s billing practices. According to CESPA management, the daily generation
of solid waste is 690 tons instead of 432 tons. To improve the quality of the service, CESPA
management claims 15 MAD per inhabitant.492
Moreover, settlement of CESPA’s bills is subject to delays.493 In 2005, CESPA management
claimed the non-payment of 36 million Dirhams failing transfer of outstanding sums.494 A
string of CESPA letters to the municipality remained unanswered. 495 Another interorganisational issue concerns the monitoring framework to be established as a discussion
forum for the contractual parties. As far as the monitoring system is concerned, the
contractual authority in Tangier was inactive. While meetings took place in the first year,
the municipality expressed no subsequent interest.496
According to the municipality, more than 20% of SW generated in Tangier are not collected
by CESPA. 497 Issues regarding performance need to be identified and solved in a better
inter-organisational relationship instead of relying just on the application of penalties (see
Annex 19).
PSP can improve SWM services in Tangier, but performance improvement also relies on
better public management. This will result in a better inter-organisational relationship
between the private sector and public administration. Indeed, a contractual arrangement is
important but no contractual agreement can take every contingency into account. No one
can foresee the future. Contracts have to be set up in more flexible way. One difficulty in
490 www.moroccotimes.com (on 12th September 2004).
491 According to M. Belmokhtar, www.lejournaldetanger.com.
492 www.leconomiste.com (on 31. October 2005).
493 www.lejournaldetanger.com (on 10th July 2004).
494 http://www.aujourdhui.ma/economie-details37978.html?mod=petition-football; On 22 July 2005.
495 http://www.aujourdhui.ma/economie-details37978.html?mod=petition-football, on the 22 July 2005.
496 http://fr.allafrica.com/sendpage.html (on 27 September 2006).
497 http://fr.allafrica.com/sendpage.html ( on 27 September 2006).
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10. Single Case Study: CESPA
drafting contracts is how to deal in a fair way with information that the other contractual
party does not possess, and how to deal adequately with unforeseen circumstances. A
thorough contractual framework should not only include a comprehensive specification of
services, but also provisions delineating procedures allowing for the objections of the
contractor, dictated by more accurate information and changed circumstances.
Finally, contracts between the municipality and CESPA are agreed for six years; therefore,
competitive access to alternative providers is foreclosed. As a result, service quality and
cost savings are principally determined by the characteristics of the relationship between
private firms and public administration, and not by the competitive marketplace. Ultimately,
performance improvement relies solely on both better public management and interorganisational relationships.
10.4.7 Effectiveness
Performance measures and indicators allow the effectiveness of a service to be monitored
and compared with similar services elsewhere or at an earlier time. Effectiveness in this
context means satisfying the need for solid waste management services. This is measured by
determining the extent to which the required quality of services is being provided.
In several districts, such as in Chenq, Charf, Tanja Balia, Moghogha Sghira, Hafam, Beni
Makada, the solid waste service is either not carried out properly or sometimes not carried
out at all (author’s source). The reasons for the service not being provided include
deficiencies in the traffic network, road and sidewalks in bad condition, especially in the
district of Beni Makada (see Chapter 10.3.2). To summarise, the infrastructural issues in
some districts of Tangier are as follows: an insufficient road network, difficult road access
in some districts, lack of paved roads and sidewalks especially in Beni Makada, some
deficiencies in the solid waste services in certain districts (Charf, Tanja, Balia, Moghogha
Sghira, Hafa, Beni Makada).
The length of roads asphalted in the municipality of Tangier498 runs to 90.8 km and of nonasphalted to 41.8 km. Tracks make up 29.1 km. In general, very few changes have occurred
in the traffic network in Tangier in the last decade. According to the town planning master
plan, traffic increases by about 5% every year.
498 Royaume du Maroc „Annuaire Statistique Régional Tanger-Tétouan » 2002, Direction Régionale Tanger-Tétouan
B.P. 104, Tanger.
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10. Single Case Study: CESPA
Effectiveness of CESPA
The accessibility of roads is an important issue for contracting-out in terms of penalties in
general and for effectiveness in particular (see also Annex 11: Typological classification of
the municipality; see further Table 29): Subdivision of the municipality into homogenous
areas). The contractual authorities in Tangier have used standard contracts which fail to
consider this fact. The main asphalted streets are served properly; some of them are swept
mechanically. Nevertheless, small ones are sometimes neglected. In short, residents in highincome areas are better served than those in poorer districts. Simply put, CESPA fails to
provide a homogenous solid waste service.
Year 2000 Year 2001 Year 2002 Year 2003 Year 2004 Year 2005 Year 2006
Time
Figure 12: Effectiveness of CESPA over time
CESPA’s effectiveness in delivering its service is somewhat inconstant over the whole
duration of the contract (see Figure 12). While some residents and municipal civil servants
were initially not convinced of CESPA’s performance499, improvements were noted during
the period of investigation. 500 Contrary to common belief, it is not true that a private
contractor will be completely effective immediately in the wake of outsourcing. Therefore,
contract specifications have to take this fact into account. The longer the duration of the
contract, the better the remuneration of the private firm should be for the same service,
presuming that the service provided will improve over time. This constitutes one feasible
499 www.moroccotimes.com (on 12th September 2004).
500 www.lejournaldetanger.com (on 15th January 2006).
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10. Single Case Study: CESPA
method of coping with the Asymmetric Information issue, which is common in contract
services in the solid waste sector.
10.4.8 Efficiency
Efficiency means providing the specified quantity and quality of service at minimum cost.
The costs for the solid waste services in Tangier prior to the contracting-out were unknown.
Until contracting-out of the solid waste service in the municipality was introduced, public
administration carried out the service on a monopoly basis. Service accountability was
lacking.
In order to ascertain whether PSP is carried out in an efficient manner in Tangier,
comparative studies have to be conducted. The cost of municipal waste collection including
transport in Tangier is 307.24 MAD/Ton.501 However, prior to this PSP experience with
CESPA, the solid waste unit was not subject to stringent analysis; therefore, any unbiased
basis for a fair comparison is lacking. Furthermore, as shown above, transaction costs and
monitoring costs should be added to the costs incurred by the private sector when
comparing “contracting-in” versus “contracting-out”.
One aspect often ignored when assessing PSP experience is the improvement of the private
sector. Expectations held about the private sector are very high compared to a state-driven
service. Nonetheless, synergies can be gained from both organisational forms. It is worth
noting that after “Aïd Al Adha502” (a major public holiday), the citizens of Tangier were
used to seeing a dirty city, full of waste, including animal waste emitting bad odours.
However, the picture changed completely in the year this study was undertaken. Just one
day after the celebration of “Aïd Al Adha”, the city had been cleaned due to the fact that
CESPA had taken relevant measures prior to the holiday.503 CESPA deployed more than 47
vehicles of all types, and a team of 344 people, purely for this purpose.504
501 Source: Royaume du Maroc : Secrétariat d’Etat auprès du Ministre de l’Aménagement du Territoire, de l’Eau et de
l’Environnement chargé de l’Environnement Direction de la Surveillance et de la Prévention des Risques.
502 Religious feast of the sacrifice.
503 www.lejournaldetanger.com (on 15th January 2006).
504 www.leconomiste.com (on 6th January 2006).
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10. Single Case Study: CESPA
10.4.9 Concluding Remarks
This case study has aimed at challenging existing theoretical principles; it has also sought to
demonstrate the economic limitations of some PSP models with respect to ISSWM. In order
to respond to the research questions in-depth and to conceptualise the answer, a single case
has been examined, namely CESPA in Tangier, Morocco. At the outset of this case study,
several questions were raised: is the waste hierarchy principle being applied? Is the polluter
pays principle being considered? Can the service be considered efficient and effective? Was
all information available to the Agent (Private Sector) and the Principal (municipality)? The
paragraphs below deal in detail with the answers to these questions.
Firstly, some key principles of the Integrated Solid Waste Management (ISSWM) have been
analysed and discussed. As far as the hierarchy principle is concerned, it has been shown
that the application of this principle is not only an environmental issue but also an economic
one. In fact, the insulation layer for protecting the base of the landfill, together with
appropriate leachate and gas management (derived from organic fraction which could be
treated), represents 80% of the total costs of a sanitary landfill. As CESPA is paid according
to the quantity of waste collected and disposed of, there was no incentive to apply the
hierarchy principle. In addition, although the recycling fraction makes up some 20% of the
waste generated in Tangier, this is completely ignored in the contract specifications.
Therefore, recycling materials and organic waste are just collected and transported to the
dumpsite with serious environmental and economic consequences. In sum, based on the
payment modus and particular contract specifications, there is no incentive for CESPA to
support treatment and/or recycling initiatives in Tangier.
As one of the key principles of any comprehensive ISSWM, the polluter pays principle has
been examined in detail in this case study. In effect, the municipality finances the SW
service partly through the so-called “Taxe d’Édilité”. Its recovery is very low and it is not
linked directly to the quantity of waste generated. Therefore, the application of the polluter
pays principle is not taken into account. Further, the strict application of this principle to
householders, especially in low-income areas, remains a formidable challenge for both the
public management and the private sector due to the fact that people living in these areas
can normally not afford the full costs of the service (collection, transport, and landfilling).
Whether the SW service is rendered by Tangier’s municipal authorities (i.e., public sector
management) or CESPA (i.e., private enterprise), it has to be provided on a continuous
basis. Measures to ensure continuity are considered comprehensively in the contract.
However, the municipality is not able to reassume responsibility for rendering the service at
short notice, such as when CESPA fails to perform well. Indeed, the managerial capacity of
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10. Single Case Study: CESPA
the municipality is being reduced through this contracting-out experience. Although there is
some dissatisfaction with PSP, a return to public sector provision of SWM services is
currently out of the question. There is no guarantee that municipal bodies could provide a
better service. There are still valid reasons in favour of involving the private sector in the
field of SWM in Tangier. The municipality usually enjoys central government funding; on
account of bureaucratic procedures, it prefers contracting-out SWM services to private
enterprises to providing such services itself. Once an annual budget is planned and allocated
to a given service, the municipal administration no longer has to deal with waste services
(and closely related issues like industrial action, fuel purchasing, vehicle repairs, etc.) on a
daily basis. One of the central notions of the polluter pays principle, “affordability”, will
remain academic for some years in the LMIC context. Nonetheless, a certain threshold of
administrative competence must be guaranteed to ensure that the PSP process is fair,
transparent, and efficient.
Following the discussion of some key ISSWM principles, relevant elements of
comprehensive Private Sector Participation (PSP) have been examined. They include a
workable monitoring framework, Asymmetric Information (Symmetric Lack of
Information) and inter-organisational relationships. Regarding the control and monitoring in
place in Tangier, a threshold for assessing the performance of services is lacking. As a
consequence, a never-ending dispute between the contractual parties occurred. Indeed,
contract specifications and the managerial capacity of municipal authorities related to
performance evaluation and monitoring are inadequate.
Asymmetric Information is considered a major problem of the contractual agreement
analysed in this case study. For instance, exact population figures were missing on account
of a discrepancy between the figures published in the 1994 and 2004 censuses. Moreover,
Tangier’s tourist-driven economy exceeds usual waste generation rates during the summer.
In sum, the generation of solid waste in this case is not uniform throughout the year as often
appears to be assumed in the contract. However, the contract has foreclosed any financial
claim by the contractor due to a lack of information. Moreover, CESPA took over some
equipment from the municipality; most of these items were not in good working condition
as stated in the contract. Additionally, as defined in the contract, CESPA has to dispose the
collected waste in the designated location; however, accessibility, especially in the rainy
season, is impaired. Accordingly, the contractor is not fined for improper disposal, as
specified in the contract.
CESPA suffers losses due to a lack of information but claims that financial compensation is
not allowed in accordance with the contract. Lacking public awareness is another issue for
CESPA. Local beneficiaries do not consider the time schedule set out in the contract
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10. Single Case Study: CESPA
specifications. CESPA is hence accused by the municipality of breaching contractual
clauses. On the one hand, the municipal authorities claim that CESPA does not respect the
contract specifications and that there has been insufficient investment in new equipment.
Moreover, districts are not cleaned and there is no proper disposal of waste.
On the other hand, CESPA management argues that the contract is incompatible with the
actual situation in the city and there is a lack of public awareness regarding the use of
collection and transportation equipment. In addition, settlement of accounts suffers delays
and the streets are too narrow for CESPA vehicles. Finally, access to the disposal site is
difficult. Therefore, there is a clear need to focus on improving the inter-organisational
relationship instead of trading mutual accusations.
As shown, none of the contractual parties possesses accurate information on the quantity of
SW generated in Tangier. Concerning the payment of bills, CESPA mentioned delays to
settling accounts. As far as the monitoring system is concerned, the contractual authority
was active only in the first year of the contract.
Finally, the notions of effectiveness and efficiency have also been examined in this case
study. Residents in high-income areas are better served than those in poorer districts due to
physical constraints (narrow roads). The solid waste service could not be rendered in an
effective manner. Nevertheless, CESPA’s SW service has been improving over the years.
Normally, a private sector firm is expected to perform very well from the outset. This is
simply not true. Synergy effects can be gained from both the public management and the
private sector. This should be considered in particular with regard to ensuring the timely
payment of a contractor’s invoices in response to the dynamic improvement of its SW
service.
220
11. Conclusion about the Research Questions
IV.
CONCLUSIONS AND IMPLICATIONS
Introduction
T
H
E
O
R
Y
{
ISSWM
Privatisation and PSP
Goods and Market Theory
Strategy of International
Organisations
E
M
P
I
R
I
C
A
L
METAP illustrative Case
Studies
CESPA Case study
Waste
Collection
Contracting-out
CONCEPTUAL FRAMEWORK
The final section will present the main results of this investigation. To do so, the research
questions raised at the beginning will be answered systematically. Chapter 13.1 will address
the most relevant contradictions between theoretical ISSWM principles and some existing
PSP models. Chapter 11.2 will consider the strategies adopted by international donor
organisations, particularly by the World Bank Group. The third question will be answered
extensively both through the illustrative case studies and the single case study. Finally, a
general conclusion including the implications for theoretical research and the practice of the
results will be drawn.
221
11. Conclusion about the Research Questions
11.
Conclusion about the Research Questions and Hypotheses
11.1
Objective 1: Contradictions between existing Theories and ISSWM
The first question raised at the beginning of this dissertation was: What are the main
contradictory issues in existing theories on privatisation and goods theory with regard to
achieving ISSWM in LMIC?
The main objective of the first research question was to examine the main contradictory
issues, that is, the limitations of some theories or theoretical principles when achieving
Integrated Sustainable Solid Waste Management (ISSWM) in Low- and Middle Income
Countries (LMIC). Questions regarding the characterisation of the nature of “waste” were
posed. To tackle this question, an analysis of the overall waste management situation in
municipalities worldwide and especially in Europe was first carried out. As highlighted
throughout this study, rapid urbanisation, the expansion of informal settlements, insufficient
financial means, and a lack of public awareness all present public authorities with enormous
challenges (see Chapter 4.1). Ever-growing waste generation and the non-application of the
hierarchy principle as well as a lack of interest in solid waste problems among public
authorities are considered to be some of the key problems concerning SWM in LMIC. In
addition, the lack of coordination systems among sectors, organisations and municipalities,
together with insufficient law enforcement, makes the whole situation worrying.
Furthermore, the lack of managerial capacity in municipal waste management, absent longterm solid waste planning, and the use of inappropriate technology are crucial SWM issues
in these countries, among others (see Chapter 4.4).
Consequently, uncollected SW in LMIC offends communities, attracts disease, and
threatens national economic viability. Pollution from solid waste dumps threatens ground
water and the air. As shown, repairing the damage done is more costly than preventing
environmental damage. Mostly, SW in LMIC is managed through collection and disposal in
dumps, that is, through the “collect and dump” approach (see Chapter 4.3 and Chapter 9.2).
This approach can keep some districts cleaned but simply transfers the environmental issues
associated with solid waste to dumpsites. As a consequence of urbanisation and growing
economies, this approach results in ever-increasing waste, ever-increasing costs for
managing waste, and an ever-increasing number of dumps (see Chapter 4.3). Often, national
policies fail to address the minimisation of SW. Moreover, the quantity of waste generated
is not minimised. Economic value from waste generated is hence not adequately extracted.
Thus, resources are not used in a sustainable manner. Despite all the problems associated
with environmental conditions, the environmental balance in LMIC can be re-established
through implementing the ISSWM concept.
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The present situation in LMIC is very similar to that in nineteenth century Europe in terms
of the quantity, composition, and management of the waste generated (see Chapter 3.1). The
consequences of haphazardly managed SW in fourteenth century Europe are the same in
LMIC at present. This investigation has shown that waste recycling (labour-intensive) and
waste pickers existed on the same scale in thirteenth and fourteenth century as they do at
present in LMIC. Animals were used to recycle waste and waste recycling was informal, as
is currently the case in LMIC, giving rise to all the same concerns. Even in terms of waste
quantity and waste characteristics, similar waste situations exist. Europeans became aware
of matters when scientists demonstrated the link between disease and irregular SWM.
Although this link is well known in LMIC, comprehensive SWM in these countries is still
lacking for the reasons cited above.
As far as the nature of solid waste is concerned, it has been proved that in the past, public
authorities have tried to consider SW as private goods, by placing the responsibility for
managing their waste with waste generators. Property owners were responsible for cleaning
the front of their houses (see Chapter 3.1). This attempt failed because of the nature of SW
as a public good. Therefore, SW should actually be the responsibility of public authorities, a
fact that is often not considered in the current PSP discussion. Public authorities and
international donor organisations have used various PSP models, such as franchising or
licensing, to undertake SW collection in some municipal districts. The present study has
proved that the success of these models is limited due to the nature of SW. In the same
context of the nature of SW, this study has shown that many awareness campaigns
conducted by decision-makers have failed due to the nature of SW. For instance, and as
demonstrated in the case of Tangier, an awareness campaign using the slogan “Keep your
city cleaned” will be less effective than one promoting the message “Dirty cities will result
in disease and potentially the death of your children”, as child health is of utmost private
concern (see Chapter 10).
Another interesting issue examined in this dissertation is the importance of legislation in
SWM. Tough decrees and fines (even prison) used to be issued in former times in Europe to
contend with waste problems in cities (see Chapter 3.1). Despite repeated attempts to
legislate for improvement, they were not successful. The enforcement of such laws,
including their effectiveness, has been seen as lacking. In contrast to statements often made
in the literature, national waste legislation is very often well-designed in many LMIC;
however, its enforcement at municipal level remains a formidable challenge to public
authorities (see CESPA case study in Chapter 10). The acceptance of SW as a public goods
entered a decisive phase at the end of the nineteenth century and the beginning of the
twentieth. Improvement in European cities occurred in the same time period. Sound SWM
started in Europe with the acceptance that SW counts as a public good, and that public taxes
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should be introduced accordingly to address this problem. Therefore, public taxes should be
introduced in LMIC, and public authorities should assume legal responsibility.
As far as the limitations of sustainability are concerned, this study has shown that waste
segregation, waste reutilisation, and waste treatment were introduced in early stages in
many cities in European countries (see Chapter 3.1). The hierarchy principle focusing on the
awareness of the natural limits of resources was obvious in former times but less in present
times.
With regard to PSP, this study has reviewed many experiences. PSP has been introduced at
a low level in many countries in Europe and elsewhere by contracting-out street cleaning (as
envisaged by legislation) and by allowing so-called scavengers (waste pickers) without
contradicting the theoretical principles of ISSWM. At a higher level, SW collection on a
citywide basis has also been experimented with in many cities down the ages, for instance in
seventeenth-century Japan. Some of those experiences failed whenever waste generators had
to directly bear the cost of the service provided due to the fact that some people failed to pay
their dues. Economists call these people free-riders.
The key result is: PSP models, such as employing franchising or licensing, where SW
services are charged directly to waste generators will fail. PSP in SWM can be useful if the
limitations of some models are considered prior to any contractual agreement.
Different definitions of SW have been analysed with regard to the concept of sustainability
(see Chapter 3.2). This study has furnished clear evidence that for many, solid waste is
something to be discarded, whereas for others it is a source of revenue. In LMIC, SW is
considered both a natural resource and at the same time a serious environmental hazard,
associated with health concerns. On the other hand, it has been shown that the SW market in
LMIC is becoming attractive to both the international and the national private sector, due to
the quantity of waste generated the demand for technology, a lack of public sound
management, and the lack of financial means (see Chapter 4.3),.
In effect, SWM in LMIC differs from SWM in industrialised countries. Public authorities in
LMIC do not possess accurate information about the costs of SW services, for instance,
which are normally considered a prerequisite for the involvement of the private sector. And
finally, the recycling market in LMIC is considered an important market as it generates jobs
and revenues. However, due to its informality, this market is mostly driven by waste
pickers; as noted, these present a challenge to public authorities in terms of working and
living on the dumpsite in very unhealthy and dangerous conditions.
As far as the principle of sustainability is concerned, this study has covered a great deal of
ground, focusing on the hierarchy principle, the polluter pays principle, effectiveness,
efficiency, and equity to show the limitations of some PSP models. It has demonstrated that
it is less expensive to prevent environmental damage than to remedy its ill effects.
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According to the principles of ISSWM, solid waste should be seen holistically. ISSWM
encompasses the financial, technical, socio-economic, and managerial features of the
municipalities in question. The notion of “integrated” is used in this investigation. As far as
the ISSWM concept is concerned, this concept is only just being introduced into LMIC
whereas it has already been developed to a great extent in industrialised countries.
The notion of the polluter pays has been thoroughly tackled in this dissertation. It has been
demonstrated that PSP is being challenged by the above-mentioned principles chiefly in
low-income areas. These areas are usually characterised not only by low-incomes (people
are not able to bear the full costs of the service), but also by physical constraints (narrow
roads and a high density of waste). It has been proved that unsanitary conditions pose a
health threat not only to the residents of these areas, but also to the wider population,
meaning that some principles like the polluter pays principle (or user pays principle) will
prove enormously difficult to implement.
This dissertation has established that the application of this principle in LMIC, especially in
low-income areas, is challenging for various reasons, including the low economic capacity
of the people living in those areas. However, these stakeholders should have some
incentives to minimise their waste. A combined financial system is presented in this
dissertation where the financial participation of beneficiaries is considered in terms of the
quantity of waste generated as well as in terms of national government and international
donor organisations (see Chapter 11.4). As a public good, solid waste services should not
exclude any beneficiaries. The notion of effectiveness (see Chapters 5.3) has been discussed
comprehensively since solid waste services have to be rendered in both in low-income areas
and high-income areas. This notion is not only a moral imperative; environmental pollution
negatively affects all citizens of a municipality. Therefore, the notion of efficiency (see
Chapter 5.4) has been also discussed. It has been noted that transaction costs, monitoring
costs, etc., are not considered properly when comparing SW costs prior to and after PSP.
This will directly affect the SW policy because until now proponents of PSP argue the cost
issue to support the private sector.
To show the limitations of some PSP models, this dissertation has based itself on goods
theory (see Chapter 7.1) and on market competition and theory of market failure (see
Chapter 7.4 and Chapter 7.5). With regard to goods theory, economists have focused on
pure public goods and pure private goods. Private goods could be efficiently provided by
the private market, whereas public goods could not be divided among individuals. Two
main characteristics of public goods have been examined: non-rivalry and non-excludability
(see Chapter 7.1). Furthermore, cross-border, global or regional public goods have also been
discussed. As noted, public goods and services may be consumed jointly and simultaneously
by many beneficiaries without being diminished in quality. Another issue examined in this
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investigation is group size. The larger a particular group, the easier it is for an individual to
not pay for the solid waste service (free-rider). In sum, some privatisation models are
limited in terms of achieving ISSWM because the probability of non-compliance being
actually noticed and sanctioned is lower. The notion of the necessity of the state has been
thoroughly discussed. As argued, every individual has an economic incentive to be a “freerider”, that is, to use public goods or to enjoy public service without paying for them. The
state has to provide such goods by coercing contributions through taxation. As SWM is
marked by non-excludability, non-rivalry and externalities, governments should intervene to
remedy market failures. The intervention of the state in the provision of these services is
essential. Municipal SW is definitely considered a public good, because all citizens benefit
from the regular collection of solid waste and its treatment (including its safe disposal);
besides, everyone faces harm if this service is not in place. Based on the principal features
of goods, and although their economic classification is not uncontroversial, this study has
classified solid waste services as public goods. However, this does not mean that these
services cannot be delegated to the private sector. With the introduction of PSP in SWM,
the role of the public authorities is subject to change. The more the private sector becomes
engaged in service delivery, the more the public sector has to focus on institution building,
regulation, monitoring, and enforcement management. PSP can make a major contribution
to these objectives by ensuring that adequate services are delivered at an affordable price
over a defined period, provided that the most appropriate choice of PSP model regarding a
SW element is selected for each special case; moreover, sound inter-organisational working
relationships with the private sector also need to be established.
As far as market and organisational theory is concerned, this dissertation has discussed key
issues which are considered limitations of the private sector in providing SW services (see
Chapter 7). These issues include the theory of externalities, the theory of market
competition, and the theory of market failures. As stated, some economists rely on the
theory of Pareto efficiency to rationalise privatisation or PSP in public services. However, it
has been demonstrated that to be Pareto efficient, markets must be perfectly competitive,
and transaction costs should be negligible; as noted, this is not the case with SW services. In
some segments of SWM, PSP contracts are agreed for many years. Thus, it is sound
Principal-Agent relationships that principally determine the effectiveness and efficiency of
the service and not the competitive marketplace, as stated in the Standard Market Model
(Pareto efficiency). In addition, public authorities and private contractors lack the highly
relevant information required in the contract specifications. As far as SWM in LMIC is
concerned, this study goes one step further by calling this phenomenon a “Symmetric Lack
of Information”. Simply put, the well-formulated Standard Market Model is being
challenged in rendering SWM services, especially in LMIC. In other words, SWM services
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can only be improved if a wise use of contracting is combined with a strategy of internal
agency reform.
This investigation has rightly noticed the dangers of a high-profile attempt to modernise or
upgrade the technical aspect of a single waste element rather than adopting a holistic
approach. Hence, the term “integrated” is used in this dissertation, meaning that SWM has
to be considered holistically. It is stated that the SW system should be considered an
integrated whole and seen through the lens of all aspects. The process of development must
be environmentally sound. Consideration of the environment should therefore be integrated
into efficient natural resource planning, so that environmental damage is prevented. In
LMIC, the most critical waste management problems are related to a complex network of
events. Step by step, the isolated ‘end of pipe’ view of waste management must be
transformed into a ISSWM concept, among others through comprehensive PSP. This will
help to realise genuine sustainable development. In sum, the main contradictory issues of
existing theories or theoretical principles when considering ISSWM in LMIC through PSP
are:
• The nature of solid waste (public goods)
• Presence of externalities
• Free-rider issues
• Low-income areas
• Lack of accurate information
• Asymmetric Information (or as stated in this dissertation “Symmetric Lack of
Information”)
11.2
Objective 2: Strategy of international Donor Organisations
The second question raised at the beginning of this dissertation was: What is the strategy of
the international donor organisations and what are the economic limitations of the PSP
policy towards ISSWM?
The second research question addresses the strategy of international donor organisations
(see Chapter 10). It has been stated that privatisation and PSP are not new phenomena.
Privatisation is often viewed by international donor organisations as a means of improving
overall economic efficiency. They believe that it reduces fiscal burdens and external
national debts (see Chapter 8.1). They also expect that this process will stimulate both
technical efficiency and investment to increase the pace of economic growth. To answer this
question, this study has introduced the issue of the sovereign debt of LMIC. The link
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between sovereign debt and privatisation has been shown unambiguously. The key result is
that sustainable concepts to resolve the debt issues still exist.
As most investments in LMIC come from international aid, and since governments in LMIC
depend on this aid, the influence of international donor organisations is therefore very high.
International donor organisations, especially the World Bank Group and the IMF through
their institutions, force these countries to privatise state-owned companies or to introduce
PSP into public services.
Two key points are underlined. Firstly, the success of PSP differs from one country to
another. Secondly, PSP is not the same across all public service sectors. Due to the lack of
financial means to achieve the Millennium Development Goals (MDG) in LMIC, it is stated
that the issue of PSP, especially in the solid waste industry, will remain a topic of both
academic and professional debate for many years. As these countries require foreign
financial aid to implement development projects, debts are accumulated. The concept of
PSP is crucial to stop this vicious circle of over-indebtedness. Accordingly, the issue is no
longer one of public versus private. Meeting specific financing needs as well as attaining the
MDG will require resources from all possible sources, including aid from international
donor organisations and through comprehensive PSP.
This dissertation has demonstrated that the privatisation discussion is not free of ideological
beliefs. Opponents and advocates of privatisation argue according to their ideological
preference and not according to environmental and economic merits. The issues of SWM in
LMIC have been clearly identified, including donor’s trends. It has been demonstrated that
the “1970s-1980s” (“hardware”) approach does not have a lasting effect on SW
improvement (see Chapter 8.4).
In addition, this dissertation has focused on the PSP strategy of the World Bank Group as it
is the strongest international financial organisation in LMIC and is carrying out outstanding
research work in the field of PSP in SWM. Very few experiences in the field of solid waste
privatisation in LMIC have shown SWM to have been successfully implemented so far.
Existing research, including various surveys on PSP conducted by one of the famous solid
waste specialists of the Bank (Cointreau-Levine), has been considered in-depth. This
specialist’s arguments do not necessarily express the policy of the World Bank Group on
SWM. Her opinion on competition which serves as the bedrock of efficiency in SWM is
considered true only for some waste elements, as competition in long-term contracts after
bidding procedure especially in SW infrastructure management is foreclosed (see Chapter
8.4). Thus, this dissertation argues that efficiency and effectiveness can only be achieved
through sound inter-organisational relationships. Regarding the specialist’s arguments
concerning the Public Private Partnerships (PPP), it is stated that although PPP present some
advantages in theory, it has been proved that strong evidence is still lacking. In effect, PPP
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11. Conclusion about the Research Questions
are interpreted differently by different organisations; hence, there is no single definition of
PPP. In the specialist’s opinion, a franchise arrangement is met whenever a firm is given an
exclusive monopoly in a specified zone to provide SW services. The beneficiaries of the
service pay their fees directly to the private contractor and the public authorities receive a
franchise fee for establishing contract specifications, monitoring performance, and setting
up an adequate tariff structure.
Three key issues have been elucidated to challenge the arguments favouring franchise
arrangements: the theory of public goods, the affordability to pay for the service,
Asymmetric Information (or, as proved in this dissertation, a Symmetric Lack of
Information), lack of competition in a long-term contract, and a private rather than a public
monopoly. Concerning capacity building for public management, this study has argued that
until now no comprehensive policy exists as to how the private sector should build the
capacity of municipal managers since there is no incentive to proceed this way. In addition,
it is stated that setting up thresholds for monitoring a SW service is not obvious, albeit
necessary due to the complexity of some SW services. Moreover, public awareness has been
recognised as fundamental when setting up a monitoring system. Very often, competition
and transparent procurement procedures with firms are considered highly relevant to
obtaining efficiency. However, LMIC lack sound technical and managerial capacity in the
field of SWM. Thus, most private enterprises are international ones mostly interested in
economies of scale (management of landfill) and for this a high quantity of waste should be
guaranteed; thus, there is less interest in waste minimisation (conflict to hierarchy
principle), hence constituting one more limitation to the ISSWM concept.
Cointreau-Levine rightly argues that efficiency, which is the basic positive argument
advanced in favour of PSP in delivering SW services, is driven by competition. However,
not every waste element allows for fair competition during the contractual period. For
instance, competition in SW infrastructure like sanitary landfill management is foreclosed
within the time frame of the contract. Moreover, this study has argued that the issues of
bankruptcy and “On-again / Off-again”, which are highly relevant to guaranteeing the
continuity of SW services, are not considered by international donor organisations,
including the World Bank Group. If an international company goes out of business, the
bearer of the costs of hazard remediation is generally not clearly determined. The same
argument is true for the national private sector. Another concern discussed in the same
context is the financial affordability to the beneficiaries of the service. Very often, due
consideration is not given to the polluter pays (user pays) principle when international donor
organisations are lending technical and financial support to a SW project. Credits are
awarded over many years to improve SW services technically, so that waste generators do
not bear the costs of the service, as stated by the polluter pays principle. Therefore, they
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have no incentive to minimise SW, and hence restrict the adoption of the principles of
ISSWM.
According to Cointreau-Levine, the international private sector typically looks for a
minimum landfill capacity to ensure the efficient utilisation of landfill equipment.
Therefore, small and medium-size cities and small islands are not attractive to the
international private sector. Simply put, some PSP models are limited because the size of
the population is not big enough. The Collision Effect has also been underlined. It is not
economically viable for different private companies to collect SW in the same areas by
providing waste containers.
In addition, Cointreau-Levine’s arguments regarding contestability only apply to some SW
elements (waste sweeping, waste collection) but not to all SW elements; for instance, public
management cannot manage 30% of a landfill facility and the private sector the remaining
70%. In addition, the argument concerning flow control has been looked at in-depth with
regard to the hierarchy principle. As far as landfill management is concerned, the target
should be to dispose of as little waste as possible and not vice versa. A waste minimisation
awareness campaign conducted by public authorities and the guarantee of delivery a
minimum quantity of SW to a private contractor of a landfill do not go together.
In theory, the SWM policy of the World Bank Group is in line with the key principles of
ISSWM. However, reality shows that the hierarchy principle and the polluter pays (user
pays) principle are considered a formidable challenge to the strategy adopted by
international donor organisations. Potential benefits of PSP in delivering SW services are
often presented by these organisations to justify their PSP strategy. Efficiency gains are
highlighted without economic limitations. More advantages but fewer disadvantages are
cited and anecdotal evidence is used only to illustrate successful applications of the PSP
concept. Simply turning over public service delivery to private contractors can result in
weakening public management and ultimately the state.
11.3
Objective 3: Empirical Evidence of PSP
The third question raised in this investigation was: what empirical evidence exists for the
PSP models and the ISSWM concept? This question considers some PSP models of
ISSSWM in empirical terms in order to identify their limitations and to propose a noncontradictory, comprehensive model. To do so, illustrative case studies and a single case
study have been analysed and discussed. The following paragraphs will outline the main
results.
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11.3.1 Illustrative Case Studies
The key objective of this section is to identify the strengths and limitations of the PSP
experience made in the context of the Mediterranean Environmental Technical Assistance
Project (METAP) - Regional Solid Waste Management Project (RSWMP) region (see
Chapter 9). To achieve this, issues such as the hierarchy principle, the polluter pays
principle, and the efficiency and effectiveness of the private sector have been considered and
discussed. The METAP region is characterised by an outstanding opportunity to attract both
international and national private industries (in terms of the quantity of waste generated,
lack of technical know-how, financial systems of the public services in the municipalities,
national policy). On the one hand, PSP is sometimes considered by many in the region as a
universal panacea and lasting solution to all SWM issues; on the other hand, some people
have serious reservations about any type of PSP in the provision of SWM services. This
investigation argues that only tailor-made solutions can provide the right answer by taking
into account the key features of the municipality in question.
Regarding the ISSWM concept, Algeria has set up two programmes to achieve ISSWM,
namely the National Plan of Action for Environment and the Sustainable Development
(PNAE-DD) and the National Programme of Integrated Municipal Waste Management
(PROGDEM). The programmes aim to preserve public health and city cleanliness within
the context of sustainable development. These programmes are based on some key
principles of the ISSWM concept, such as the hierarchy principle, the polluter pays
principle, the role of public awareness, and the role of the municipalities (monitoring
system). Thus, in some countries, the achievement of ISSWM in METAP-RSWMP
countries is not new; it is even included on the development agenda. SW services in most
countries of the region consume about 20 to 50 % of the annual budgets of many
municipalities. These budgets are in general insufficient to cope with ever-growing demand.
SW is therefore managed in a non-effective manner. Moreover, the monopoly position of
public service providers, including staff incentives, hinders the urgently needed increases in
efficiency. Due to the above-mentioned facts, the involvement of the private sector in the
SW industry is extremely relevant to this region. This dissertation has not argued that
privatisation is something good or bad, as often stated in literature. Instead, it suggests that
the involvement of the private sector should be realised in a deliberate, careful, and wellplanned manner.
Throughout the region, the organic fraction of the solid waste ranges from 55 to 70% and
the recycling fraction from 5 to 10% by weight (see Chapter 11.3.3). Accordingly, this
fraction is more suitable for treatment than landfill disposal. Regarding the hierarchy
principle, preventing and minimising waste generation should have top priority, and
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recycling, composting, and reusing SW should be preferable to their environmentally safe
final disposal. Additionally, in some countries in the METAP-region, international private
firms are paid partly from the revenue of the sale of compost; this is considered a good
application of the hierarchy principle, especially in low-income areas. However, it is stated
that the region generally sees no effective application of the hierarchy principle.
Concerning the polluter pays principle, the tariff levied should reflect the willingness and
capacity to pay of the people in low-, middle- and high-income areas. In effect, satisfied
customer beneficiaries of SW services have an increased willingness to pay. However, little
effort has been made in the region towards the application of the polluter pays principle.
This continues to challenge the region’s national authorities.
As legislation is the basis for any sound SWM, it should in itself be “sustainable” with
respect to the various key principles highlighted here, such as the hierarchy principle, the
polluter pays principle, etc. Most households in the region pay indirectly for their waste
management services and therefore have no incentive to reduce or recycle the waste they
generate. The present study confirms that total costs of remediation are higher than the cost
of resources used to provide waste collection and disposal services, and higher than the
additional negative effects that waste disposals have on the environment. In some countries
of the METAP-region, direct user charges have been introduced that require households to
pay fees in proportion to the amount of waste they generate. This approach remains
unsuccessful in low-income areas (see above for a discussion of the problems with freeriders). They can only succeed if accompanied by sound awareness campaigns and an
appropriate tariff framework. The scope for applying these kinds of waste collection
arrangements in the METAP-region is limited. Direct user charges to households, which are
related to quantities of waste generated, depend on a high level of information and
enforcement capability. This study shows that complex mechanisms for financing SWM
services in low-, middle- and high income areas include:
1) Direct payments for services rendered according to the quantity of waste generated
and in accordance with the polluter pays principle or indirect payments through
property taxes, for instance;
2) Subsidies from national public authorities;
3) Grants and loans from international donor organisations.
Some countries in the METAP-region have tried to charge users directly for waste
management services. Egypt, for example, introduced a system by which waste
management costs were to be recovered by placing a 2% charge on property rentals. When
introduced the charge was estimated to cover 70% of waste management costs. However,
because rents are not linked to inflation, the value of the charge fell progressively over time
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so that revenues would only cover 2% of costs at present. In some countries, national
legislation enables municipalities to charge directly for waste management services and
specifies a minimum level for the fee. Although this makes for the strength of the polluter
pays principle, specifying a minimum fee often makes municipal authorities reluctant to
charge the real costs of the service as this could affect their popularity.
A good example is illustrated by the Qena project in Egypt (see Chapter 9.3). The QenaEgypt project has been self-financing without using any funds from sources outside Qena
City as it has comprehensively combined different financing sources. SWM services in this
case have been commercialised through the collection of a monthly fee from households.
Finally, it is concluded that ISSWM can be achieved if sound management practices are
combined with a high level of public awareness. The generators of SW should participate
financially in the service, even in middle, low-income areas, if the institutional set-up is
efficient, the top management of both private and public sector is committed, and public
contribution is maintained. The following paragraphs will summarise the key results of
some relevant principles of the PSP, namely inter-organisational relationships,
effectiveness, and efficiency.
Key Principles of the Private Sector Participation in METAP Region
As stated in this dissertation, the success of PSP does not necessarily depend on
competition, as often stated in the literature. It merely depends on good inter-organisational
relationships. The formalisation of the informal sector, such as the ECO-Lef system in
Tunisia or the licensing of scavengers on the Damascus landfill, is cited as a good example
of how to achieve workable inter-organisational relationships in the region. In addition, the
Alexandria Governorate is also noted as having sound inter-organisational relationships
with regard to its monitoring system (see Chapter 9.3). The means of communication
between the implementing organisations have included periodic meetings, monthly progress
reports, and an annual report. The Egyptian experience is the only illustrative case study
which has inter-organisational relationships not only between the contractual parties (private
firm and public authority) but also with the beneficiaries. The contract envisages an
awareness campaign and presents figures to be achieved during the contract period.
The public awareness policy is rather vague in the METAP-region. Very often, private
entrepreneurs complain about the misuse of their equipment and the lack of respect for the
SW collection schedule by local residents. Thus, conducting a sound awareness campaign is
considered a “conditio sine qua non” for sustainable involvement of the private sector.
As noted, issues regarding the performance of the private sector in carrying out its
assignment have to be discussed in a pro-active manner instead of just relying on the
application of penalties. A regulatory framework including adequate means to monitor the
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private provision of SW services has to be established. The general rules applying to
execution failures, extension and termination of the contract, dispute settlement, etc., have
to be unambiguously defined in the contractual agreement. Asymmetric Information should
be avoided.
Another relevant issue in the PSP discussion in the METAP-RSWMP region was the notion
of service effectiveness. Across the region, generally between half (1/2) and two-thirds (2/3),
or even more, of the waste generated in low-income areas is inadequately collected (see
Chapter 9.2). Moreover, the failure to provide adequate waste management services is felt
primarily in low-income areas of municipalities and particularly in unorganised, unofficial,
or squatter settlements. These areas are also often characterised by physical constraints that
challenge both public service and private firms. Streets in such areas are often very narrow,
and are not readily accessible to conventional waste collection vehicles or waste storage
containers brought in by private firms. Residents themselves are often unaware of how they
should prepare waste for collection, and where they should place the waste for collection.
Population densities in low-income areas that often have inadequate waste management
services are normally very high. Thus, comprehensive models have to be developed through
which SWM services can be provided in low-income and other districts of municipalities
that are not currently adequately served. Cooperation with the so-called informal sector or
SME represents a “conditio sine qua non”. The illustrative example taken from Egypt serves
as a model of effectiveness where an international private operator has introduced
appropriate vehicles for SW collection in Alexandria city (see Chapter 9.3). The collection
service also included new areas that were not previously served, increasing effectiveness.
Furthermore, private entrepreneurs should make use of NGO and CBO with sound local
expertise. They can intervene by carrying out solid waste services with low technology
equipment and materials where modern collection trucks and containers are not appropriate.
Finally, good examples of this approach are Giza and Sohag (Egypt), where SW collection
is based on low technology operated at the local community level by local residents.
Regarding the level of efficiency of services, the example of the waste management services
being provided for the Greater Beirut Area illustrates the typical non-efficiency of SW
services. In fact, the importance of the municipalities was minimised when PSP was
introduced. The Council for Development and Reconstruction (CDR) acted independently
in 1994. This resulted in a monopoly on waste management services in the GBA, not of the
public sector, as one might expect, but instead of the private one. Consequently, costs
became very high compared to other countries in the region (see Chapter 9.4). As providing
SW services efficiently is a key element of sustainable PSP, SWM as described here, does
not contribute to the achievement of the principles of sustainability. In contrast, SWM in
Jordan is featured positively in terms of efficiency. In effect, the SW disposal of municipal
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solid waste in Jordan is managed by Common Service Councils (CSC). Each CSC provides
the service for a number of municipalities. SWM is thus conducted on a much broader scale
than if it were given to a single operator. Consequently, a small number of larger facilities
have been created through which all municipalities benefit from the lower costs associated
with the economies of scale. Cutting-edge solutions such as this can have a significant
impact on the costs and ultimately on the efficiency of the service.
These illustrative case studies provide key findings for successful SWM. These include:
• The necessity of public awareness campaigns. As stated in the Egyptian example, the
contract agreement between the public authorities and the private sector should
include a percentage of residents aware of the services over time, as ISSWM is
closely related to time.
• As far as the effectiveness of PSP is concerned, cooperation between the
international private sector and the national formal and national informal sectors is
considered a “Win-Win” situation, as illustrated by the Egyptian example.
• Finally, regarding efficiency, a positive lesson is drawn from the case in Jordan as
the SW disposal of municipal solid waste is managed by Common Service Councils
(CSC) where each CSC serves a number of municipalities.
11.3.2 Single Case Study: CESPA
The following sections will summarise the key results of the single case study: CESPA at
both a national and municipal level.
a)
Key Results at National Level
The economic importance of the Solid Waste Management (SWM) industry in Morocco has
been increasing over the last 5 years. For a long time, SWM services were chiefly rendered
by Moroccan municipalities. In recent years, a liberalisation process of the market has been
taking place and continues to be supported by the central government. In this context, the
government has taken several important steps, including the liberalisation of the network
industry. In Morocco, recent environmental framework legislation has comprehensively
addressed SWM. Different chapters, sections and articles of law no. 11-03, law no. 13-03
and more recently law no. 28-00 unambiguously consider the hierarchy principle, the
polluter pays principle, and the liability of competent authorities (see Chapter 10.2.5). The
establishment of a regulatory system is also considered, including fines and other forms of
sanctions.
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11. Conclusion about the Research Questions
The Moroccan government is intensifying the role of the private sector to support economic
growth and to reduce international debt. In this context, this new national policy is aligned
with the strategy of international donor organisations. The present investigation has
presented some reasons for private sector involvement in Morocco. These include the
administrative burden, the financial system of municipal services in place, the role of trade
unions, etc. Concerning SWM at a national level, some principles of ISSWM have been
considered in Moroccan legislation. The more particular SW legislation abiding in
Morocco, together with the latest Moroccan Solid Waste legislation (law no. 28-00), fully
embraces the concept of sustainability in SW. Waste avoidance as a key factor of the
hierarchy principle, public awareness, and the monitoring system has been comprehensively
considered in this legislation. As far as ISSWM is concerned, this study has shown that the
hierarchy principle and the polluter pays principle are attached considerable importance in
national SW legislation. The principles of continuity and effectiveness as well as equity and
efficiency are also considered in the relevant laws. Regarding PSP, the laws recognise some
PSP models like contracting-out, delegation, etc., without going into great detail with interorganisational issues like Asymmetric Information, the Principal-Agent dilemma, etc. In
sum, the key principles of ISSWM are well-addressed at national level. However, the key
issue remains their lack of application at municipal level. The following paragraphs will
present the major results at this level.
b)
Key Results at municipal Level
The municipality of Tangier was chosen as a case study as the city has been contracting-out
its solid waste services for more than 6 years. At municipal level, SW services are funded
through government tax – Taxe d’Édilité – and not through direct charges to the
beneficiaries in accordance with the quantity of SW generated. This fact is considered the
main challenge to the polluter pays principle. This will be comprehensively discussed in the
following.
In terms of physical infrastructure, the municipality of Tangier is not homogenous (see
Chapter 10.3.2). Some districts show serious physical constraints in terms of very limited
road accessibility. This fact is very relevant to the private contractor in terms of the
effectiveness and equity of the SW services rendered by CESPA, the private contractor.
Furthermore, the SW approach adopted by the municipality is characterised as “collect and
dump” without any enforcement of various principles of sustainability, such as the hierarchy
principle and the polluter pays principle. Thus, this approach results in transferring SW
concerns from one place to the dumpsite. Segregated SW collection is not considered in the
contract with CESPA with serious environmental and economic concerns. The principle of
continuity and effectiveness of the SW service are fully considered in the contract with
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11. Conclusion about the Research Questions
CESPA. Nevertheless, their enforcement is lacking. Another key principle of ISSWM, the
hierarchy principle, is ignored. Regarding PSP the relationship between CESPA and
municipality is regulated by penalties instead of good inter-organisational relationships. Due
to Asymmetric Information (Symmetric Lack of Information) and the absence of a
comprehensive monitoring system, these penalties are doubtful. In sum, the interorganisational relationships are anything but good. It has been demonstrated that even
though various ISSWM principles (the hierarchy principle, the polluter pays principle, etc.)
are fully considered in Moroccan SW legislation, their enforcement at municipal level
remains a formidable challenge. This will be detailed in the following.
b1) Hierarchy Principle
Due to the composition of solid waste in Tangier (70% of waste generated are
biodegradable), it is much more expensive to transport the waste collected and to dispose of
it entirely into a landfill than if it were partly recycled and treated. As stated in this
dissertation, remedial action is more expensive than prevention. As observed, the insulation
layer for protecting the base of the landfill together with the leachate and gas management
represents about 80% of all the capital costs of the unit. Selective collection, including
waste treatment (e.g., composting), will considerably diminish the organic part, and
therefore the production of leachate and gas.
In sum, the non-consideration of the hierarchy principle is not only an environmental matter
but also an economic issue. Accordingly, there should also be incentives for a private
operator to minimise waste. However, CESPA is paid by the amount of waste disposed of,
in contradiction to this principle.
Although the recycling fraction is quite high (about 20%) in Tangier, this is completely
ignored in both the solid waste management policy of the municipality and in the contract
specifications with CESPA. Consequently, waste pickers from the informal sector challenge
the public authorities in terms of working and living on the dumpsite in very unhealthy and
dangerous conditions. Thus, waste segregation, which has to be done at source, is carried
out in a risky manner on the landfill by waste pickers and animals. They should be part of
the solution instead of being considered part of the problem. As mentioned before, CESPA
is paid per quantity of the solid waste it disposes of; therefore, there is no incentive for the
private sector to encourage waste minimisation awareness campaigns, recycling initiatives,
or aerobic and anaerobic waste treatment.
In sum, based on the remuneration modes, contract specifications provide no incentives for
CESPA to treat or to recycle solid waste in Tangier. Therefore, the hierarchy principle has
not been considered in the contract specifications.
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11. Conclusion about the Research Questions
b2) Polluter Pays Principle
The polluter pays (or user pays) principle is a principle in international environmental law
where the polluting party pays for the damage done to the natural environment. Less than
40% of the so-called “Taxe d’Édilité” is recovered in Tangier. Accordingly, more than 60%
of the financial means earmarked for the city’s SW services are central government
subsidies. Regarding the generation of waste, the quantity generated differs between
districts; taxes should hence not be the same for all beneficiaries if the principle of polluter
pays principle were to be strictly applied. However, due to the issue of affordability and due
to the fact that the socio-economic situations of the beneficiaries differ between districts, the
strict application of this principle in LMIC remains a challenge (see Chapter 10.6.2).
Normally, people living in low-income areas generate less waste than those living in the
high-income areas of Tangier. They should hence not pay the same costs for a service which
is not rendered equally in all districts. Moreover, the costs of solid waste services should
depend not only on the quantity of waste generated, but also on the distance to the landfill
and road accessibility, etc. In sum, the application of the polluter pays principle is not taken
into account.
The notion of “affordability” (people’s capacity to pay, especially in low-income areas) has
been underlined in this context. On the one hand, the service should not be free of charge
for fear that there would be no incentive among waste producers to minimise waste
(hierarchy principle). On the other hand, low-income households in particular cannot bear
the full costs of the service (collection, transport, treatment and landfill). Therefore, the
strict application of this principle to households in comparison to industries is challenging,
especially in low-income areas in Tangier.
b3)
Continuity Principle
Solid waste collection is a service that is vital to the daily functioning of any city. Any
disruption can result in pressure mounted by the population on the municipal authorities.
Due to the fact that private enterprises can go out of business, service disruptions are always
a possibility. The continuity of service is a very relevant issue when setting up contractual
agreements between the private and public sectors, irrespective of whether the municipality
or a private enterprise renders this service. Measures to ensure continuity are written into
the CESPA contract in a comprehensive manner because the municipality has a strong
interest in maintaining city cleanliness. One key question in this respect is whether or not
the municipality will be able to reassume responsibility for rendering the service at short
notice should CESPA be unable to meet its commitments. As shown, the answer is negative.
The managerial capacity of the municipality is being reduced through the contracting-out of
the solid waste service in Tangier. Finally, the liberalisation of the SW industry raises some
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11. Conclusion about the Research Questions
concerns about private monopoly/oligopoly and the weakening of public management. The
municipality of Tangier is still interested in contracting-out its solid waste service although
some dissatisfaction was expressed during the first experience. Bringing back the solid
waste services to the municipality will result in a fiasco.
b4) Monitoring
A sound monitoring system is considered to be the essence of any regulatory framework.
One of the objectives of monitoring is to closely observe the quality of the SWM service
being provided by the private sector in order to maintain or improve service quality. Further,
it is also about enforcing the accountability of service providers and to compare and assess
services provided against the targets set out in a municipal SWM strategy plan. In addition,
monitoring should provide information on which management can make policy and
management decisions about the service, compare the quality of service provision in a
municipality with a previous month or year, and evaluate the quality of services provided by
private service contractors. A reporting system should therefore be established to monitor
the performance of SWM services and to benchmark the routine collection of information
(daily, weekly, monthly, yearly).
All services and works have to be carried out under the control of the President of the
municipality of Tangier and his representatives, in particular the municipal engineer,
according to contractual specifications. The control and monitoring in place has resulted in a
never-ending series of disputes because of the lack of an objective threshold for cleanliness.
Is a street considered unclean if there is only a single container full of waste standing on the
sidewalk? The CESPA contract specifications mention that the municipality is responsible
for monitoring and controlling waste disposal; however, it does not mention the means
required and the frequency needed to perform this task successfully (see Chapter 10.4.4).
Some concerns of contracting-out include the bureaucratic regulatory system. Indeed, a
contractual arrangement is important but no contractual agreement can take every
contingency into account. The regulatory environment is central to determining the outcome
of the contract with the private sector. Contract specifications, as well as the management
capacity of municipal authorities concerning performance evaluation and monitoring, are
inadequate. The accountability of both contractual parties is lacking. As far as this
monitoring system is concerned, the contractual authority in Tangier was not active. While
such meetings took place in the first year of the contract, the municipality showed no further
interest as time passed.
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11. Conclusion about the Research Questions
b5) “Principal-Agent” Dilemma and Asymmetric Information
The 1994 census provided the basis for the contract between CESPA and the municipality
of Tangier. However, more accurate population figures have since been published. In
addition to the fact that there is a discrepancy between the 1994 and 2004 census figures,
Tangiers’s economy is tourist-driven and is growing on an annual basis. Tourists generate
approximately 1,000 tons of solid waste every year. Furthermore, the number of tourists is
still increasing. In addition, as mentioned, Tangier serves as a thoroughfare to many
different destinations as people pass through the city’s harbour every day, generating an
additional 8,000 tons of solid waste. More waste is therefore generated than is stated in the
CESPA contract, and it is also generated within a short and intensive time period. This
dissertation has discovered that the generation of solid waste in this case is not
homogeneous throughout the year, as often appears to be assumed in the literature. Due to
the fact that accurate figures are missing in Tangier, and contractual authorities use
theoretical data when setting up agreements with the private sector, conflicts and neverending disputes were inevitable.
According to the contract, CESPA is required to collect 432 tons of solid waste every day.
Nonetheless, during the main holiday season, this amount increases very significantly
because of the number of tourists and transit passengers visiting the city. According to the
contractual agreement, moreover, any financial claim made by the contractor on the basis of
a lack of information will not be accepted by the municipality.
Another contractual issue concerned the private contractor taking over municipal machinery
and equipment. According to CESPA management, most items were not in good working
condition.
The analysis of Asymmetric Information and Principal-Agent dilemma has demonstrated
that CESPA and the municipality have no accurate information on the quantity of waste
since the weighbridge is not in service and CESPA had no experience in these areas prior to
the contract. Moreover, a certain degree of uncertainty has been observed, especially due to
the profile of the personnel recruited and the equipment taken over by CESPA from the
municipality (see Chapter 10.3.4).
Contracts should therefore be flexible to allow for adaptation and accurate information on
the SWM industry in LMIC, from both the private entrepreneurs involved and the
municipalities.
In effect, the DGCL (General direction of local authorities) has established the standard
contract specifications for Moroccan municipalities intending to contract out their solid
waste services. Nevertheless, these specifications do not consider the features of Tangier
where even envisaged the mechanical washing of non-asphalted streets is envisaged (see
Chapter 10.3.4).
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11. Conclusion about the Research Questions
CESPA has also faced enormous difficulties because of the lack of public awareness. The
beneficiaries do not respect the time schedule set out in the contract specifications.
Therefore, one sometimes has the impression that the job has not been done. Moreover,
redundant information, such as fixed time schedules for waste collection and/or the type of
waste collection vehicles, can result in never-ending disputes between the two contractual
parties.
As the ultimate target is to achieve integrated solid waste management, the contractual
agreement has to follow the principles of sustainable waste management, and must focus on
achieving a workable inter-organisational relationship instead of trading mutual accusations.
Simply put, neither the municipal authorities nor CESPA management have accurate
information about the quantity of SW generated in the municipality. This phenomenon is
referred to as “Symmetric Lack of Information”.
b6)
Inter-organisational Relationships
In principle, a monitoring committee controls private sector performance. The transactions
between public management and private sector are considered at periodic meetings as well
as in monthly and annual progress reports. As far as the relationship between private sector
and beneficiaries is concerned, there was a good relationship in districts where public
awareness programmes were conducted in Tangier.
As stated above, contrary to contract specifications, the quantity of the waste for billing is
just estimated. This results in discrepancies between the two parties, and presents a serious
challenge to any sound inter-organisational relationships.
CESPA’s management complains because of delays in payment. On the other hand, town
councillors have strongly criticised the company for disrespecting contractual terms and
conditions. Cases in point were several service disruptions, which led to a deterioration of
the city’s image during the main tourist season. However, as stated, such deterioration is
actually due mainly to “Asymmetric Information”. On the other hand, according to the
citizens of Tangier, after the contracting-out of the solid waste services, a significant
improvement occurred.
While PSP can improve SWM services in Tangier, performance improvement also relies on
better public management. This should result in a better inter-organisational relationship
between the private sector and public administration. Contracts have to be set up in a more
flexible way. One difficulty in drafting contracts is dealing in a fair way with information
that the other contractual party does not possess (or sometimes both parties), and dealing
adequately with unforeseen circumstances. A thorough contractual framework should not
only include a comprehensive specification of services, but also provisions delineating
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11. Conclusion about the Research Questions
procedures allowing for the contractor’s objections, dictated by more accurate information
and changed circumstances.
b7)
Effectiveness and Efficiency
In Tangier, contractual specifications have not envisaged a well-defined threshold, meaning
that tasks are either carried out completely or not at all. The main asphalted streets are
served properly; some of them are swept mechanically. Nevertheless, small ones are
sometimes neglected. In short, well-off residential districts are better served than the poorer
districts. Simply put, the CESPA solid waste service is not rendered in a homogenous
manner. Service effectiveness is hence jeopardised. Some areas are not covered due to bad
road conditions, such as in Benkirane, Tanja Balia, and Mesnana.
In order to determine whether the PSP in Tangier is carried out in an efficient manner,
comparative studies would have to be conducted. However, prior to this PSP experience
with CESPA, the solid waste unit was analysed neither financially nor operationally;
therefore, any unbiased basis for a fair comparison is lacking.
One aspect often ignored when assessing PSP experience is the improvement of the private
sector. Expectations about the private sector are very high compared to those about public
management. Nonetheless, synergy effects can be gained from both organisational forms.
Indeed, after the important holiday “Aïd Al Adha”, the citizens of Tangier were used to
seeing their city in a dirty state. However, the picture changed completely after the third
year following contracting-out. As noted, CESPA service effectiveness proved to be
inconsistent over the whole duration of the contract. While some residents and municipal
civil servants were initially not convinced of CESPA’s performance, they subsequently
noted improvements over time (see Figure 12). Contrary to common belief, it is not true that
a private contractor will be completely effective from the outset. Therefore, contract
specifications have to take into account a learning process on all sides (public management,
private contractor, and citizenry). Similarly, remunerating the private sector should follow a
dynamic path instead of using fixed static prices. The longer the duration of the contract, the
better the private firm should be remunerated for the same service. One presumes that a
service will improve over time. This could be one method to cope with the Asymmetric
Information (Symmetric Lack of Information) issue, which is common in contract services
in the solid waste sector.
On the one hand, the municipal authorities claim that (see Chapter 12.6) CESPA does not
respect contractual specifications, and that the contractor has made insufficient investments
in new equipment. In addition, districts are not properly cleaned and no proper waste
disposal is in place. On the other hand, CESPA management argues that the contract is
incompatible with the actual situation in the city; and there is a lack of public awareness of
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11. Conclusion about the Research Questions
collection equipment and time schedules. Additionally, there are delays in the payment of
invoices and the streets are too narrow for CESPA vehicles. Finally, CESPA trucks have
difficulty gaining ready access to the disposal site.
The lessons learnt from this case study include the consideration of most theoretical
principles of ISSWM at a national level. The principal SWM laws in Morocco (law no. 1303, law no. 11-03, and law no. 28-00) unambiguously take into account the hierarchy
principle and the polluter pays principle. Liability in terms of public authorities being legally
responsible for delivering SWM services is clearly considered. At municipal level, the
hierarchy principle is being ignored as CESPA is paid by the amount of waste disposed of,
and is therefore not interested in minimising or recycling solid waste. Furthermore, as
polluters are not charged according to the amount of waste generated and as public
authorities finance the SW service through the “Taxe d’Édilité”, the application of the
polluter pays principle is not taken into account at municipal level. With regard to service
effectiveness and equity, low-income areas challenge both the private sector and the public
authorities. SW services were not rendered by CESPA in an effective manner, since the
contractor lacked local experience in low-income areas and approached neither the local
formal sector (SME) nor the local informal sector (NGO, CBO) to subcontract part of the
SW services. Another aspect analysed in this case study is the managerial capacity of the
municipal management. The Tangier PSP experience results in a weakening of public
management as municipal authorities are unable to render SW services in the city at short
notice. Concerning monitoring systems, although the contract specifications underline its
necessity, there were no means available to monitor CESPA’s service. The generation of
solid waste was not homogenous over the year. A high peak is reached during the summer
period due to tourists and transit passengers. Neither CESPA nor the municipal authorities
possess accurate information on the quantity of waste and its distribution over time (socalled Symmetric Lack of Information). A lack of information has been also noticed with
regard to personnel and equipment taken over by CESPA. Because no awareness campaign
was conducted prior to the contracting-out of SW services, equipment bought by CESPA
has been misused. Additionally, beneficiaries did not adhere to the time schedules stated in
the contract specifications. Instead of relying on a better inter-organisational relationship,
Tangier municipal authorities rely on penalties to monitor the performance of the service.
This results in mutual accusations and antagonism between the contractual parties.
Nonetheless, a certain improvement of the service has been realised over the contractual
period. Accordingly, private sector remuneration should follow this dynamic effect of
improved service to provide the private sector with a greater incentive to achieve better
performance.
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11. Conclusion about the Research Questions
11.4
Objective 4: Achieving ISSWM through comprehensive PSP
The fourth question raised was: How can ISSWM be achieved in LMIC through the PSP
tool without contradiction?
Savas (2000) rightly stated that privatisation is like dismantling a bomb. It must be done
very carefully, as wrong decisions can have nasty consequences. 505 As far as SWM is
concerned, public tax should be introduced by public authorities, who then assume
responsibility for its administration. In addition, concepts have to be developed within
municipal management through which waste management services can be extended into
low-income areas to ensure effectiveness. The following sections will outline the key
elements which have to be considered in PSP if ISSWM is to be achieved effectively:
• National institutions shall adopt a national legal framework appropriate to achieving
the objectives of ISSWM and the implementation of the actions identified in the
policy. Public authorities shall remain legally responsible for delivering the service.
• There shall be a focus on minimising waste generation and on recovering value from
waste in the national SW policy. The polluter pays principle with respect to SWM
shall be integrated into the framework legislation.
• Additional legislation to provide for effective ISSWM shall be developed over time
under the authority of the framework legislation. This approach shall be focused on
coordinating the upgrading of SWM systems, while at the same time providing
flexibility in how this policy is implemented.
• ISSWM shall be included on the national agenda for LMIC, and capacity building
within public management is crucial to its effective implementation. Capacity
building shall be integral to the successful implementation of ISSWM systems, and
should precede capacity development in managerial and technical areas. Leadership
in ISSWM capacity building shall be provided on a national and local level.
• Applying ISSWM is about rethinking the SWM system at a national level. SW
should be considered a resource through appropriate combinations of legal,
economic, financial, social, and technical initiatives. Residual waste shall be
disposed of in environmentally sound ways. ISSWM shall be considered holistically
by taking into account all waste elements and all stakeholders.
• Waste avoidance and minimisation shall be integrated in any national policy on
SWM as required by the hierarchy principle. Waste minimisation can also be
achieved through the polluter pays principle and public awareness. Waste
505 Savas, E., Privatization and PPP, New York: Seven Bridges Press, 2000, p. 284.
244
11. Conclusion about the Research Questions
minimisation shall be a central SWM priority. In effect, a high quantity of waste is
generated where high levels of financial resources are spent on goods in an
environment where polluters have no incentive to minimise waste. Minimisation
therefore depends on introducing economics that reflect waste management costs and
on accountabilities assigning responsibilities to those who generate waste. Table 40
displays various ratios to achieve the hierarchy principle. Nonetheless, achieving
these ratios should be the ultimate target in theory. That is, a high percentage of
organic fraction of solid waste does not necessarily mean that all this percentage can
be treated. The costs resulting from segregating SW to make it homogenous can be
too high.
Ratios
%R
% Rd
Results
Ã1
%O
%Od
Ã1
%L
% Ld
Ã1
Table 40: Ratios to achieve hierarchy principle
(R: Potential quantity of SW to recycle; Rd: Quantity of waste recycled; O: Potential
quantity of SW for organic treatment; Od: Quantity of SW organically treated; L: Potential
quantity of SW to dispose of; Ld: Quantity of SW disposed of)
Private sector remuneration (in case a single firm is collecting, transporting and at managing
the landfill) also has to reflect the hierarchy principle in accordance with the following
method (see Annex 30):
XT > X L
XT: Price of transport (per ton/m³) of recycling material or/and organic
material to the treatment facilities
XL: Price of transport (per ton/m³) of inert material to the landfill
In essence, comprehensive national waste legislation with respect to the hierarchy principle
shall be elaborated and enforced at a municipal level by taking into account SW treatment,
as mentioned above. Accompanying measures for recycling and treatment in a contractual
245
11. Conclusion about the Research Questions
agreement shall be undertaken. Finally, the remuneration of private firms has to be executed
per ton/m³ of recycling material in order to strengthen their incentive to collect more.
The most effective way of implementing the polluter pays principle is to establish in law the
responsibility of the waste generating sector. This will result in accountability for the waste
generated. Beneficiaries of the SW service should be charged according to the amount of
waste they generate. To ensure the implementation of this principle, institutional
management systems shall be strengthened at the municipal level.
Municipalities shall have the responsibility for implementing the polluter pays principle
within the context of national solid waste legislation. Implementation of the user pays
strategy shall be monitored over time and adjusted to ensure its long-term objectives are
met. Contractual agreements have to guarantee, in the case of contract failure, that
municipal managers possess sufficient managerial capacity and technical equipment to take
over the SW services within 24 hours. The managerial capacity of municipal managers has
to be built through “contracting-in” for some years prior to PSP, as demonstrated by the
case studies.
A) Key Elements for Comprehensive Private Sector Participation
Very often, private contractors lack relevant and accurate information prior to contractingout regarding the quantities and composition of waste and the available facilities and
resources. Tender documents should reflect all key features of the municipalities to avoid
uncertainty and Asymmetric Information. This dissertation has argued that sometimes both
contractual parties are not fully aware of the quality of the service required, as the necessary
thresholds in SWM services are not obvious. This feature has been called Symmetric Lack
of Information here. Therefore, contract specifications should be established in a flexible
manner. Penalties should only be the final option to regulate the Principal-Agent
relationship. A good inter-organisational relationship which will result in mutual
confidence, and should have priority.
Local know-how is essential to the participation of the international private sector,
especially in low-income areas. The involvement of local SME, NGO, and CBO through
consortiums between international operators and local firms will strengthen the capacity of
local management and increase service effectiveness. Contract specifications shall be well
defined according to local features. Flexibility shall be the guiding theme when drawing up
the initial contract.
Government agencies or private agencies for controlling the private sector and to strengthen
managerial capacity of municipal managers should be introduced. The frequency of
transactions between a private firm and public management has to be supported through
periodic meetings and monthly and annual progress reports. In addition, a sound public
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11. Conclusion about the Research Questions
awareness programme prior to PSP will strengthen the relationship between the private
sector and local beneficiaries. Clear mechanisms to address the unforeseen have to be set up
and support from central authorities has to be adequate. Enhanced private sector
performance has to be expected over the years. Accordingly, remuneration schemes should
be dynamic. Procedures for the amicable settlement of disputes shall be explicitly envisaged
rather than mere reliance on penalties. Private operator remuneration should occur on a
regular basis. Support from municipal authorities in administrative matters and with a view
to service optimisation (such as optimising collection routes, improving awareness
campaigns, etc.) should be adequate. A public awareness campaign shall be developed and
implemented to coincide with strategy implementation by the public authorities. Table 41
displays a comprehensive framework of PSP models to achieve ISSWM.
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11. Conclusion about the Research Questions
Public Private Partnerships
Street Sweeping
Waste Collection
Waste Transport
Transfer Station
Recycling treatment
plant
Further empirical research required
Further empirical research required
Further empirical research
required
• Continuous adaptation of
contract
• High scrutiny required
• Sound inter-organisational
relationships
• Continuous adaptation of
contract
• High scrutiny required
• Sound inter-organisational
Contracting-out
Franchise
Comprehensive threshold
• Comprehensive
threshold
Sound public awareness
Consideration of transaction costs • Sound public
awareness
Unbundling geographically the
• Unbundling
sector
geographically the
• Involvement of national SME,
sector
CBO, NGO
• Involvement of
national SME,
CBO, NGO
• Comprehensive threshold
• Challenge public
goods theory
• Sound public awareness
• Consideration of transaction costs • Collision effect
• Unbundling geographically the
sector
• Involvement of national SME,
CBO, NGO
• Comprehensive threshold
• Challenge public
goods theory
• Sound public awareness
• Consideration of transaction costs
• Unbundling geographically the
sector
• Involvement of national SME,
CBO, NGO
• Provision by public management
• Could be
considered like
• Provision by private firm else
Contracting-out
than those include in transport
model
•
•
•
•
• Provision by public management
• Provision by private firm else
than those include in transport
248
• Could be
considered like
Contracting-out
model
Concession
Open Competition
Further empirical
research required
• Collision effect
• Not efficient
• Challenge public
goods theory
Further empirical
research required
• Collision effect
• Not efficient
• Challenge public
goods theory
• Further empirical
research required
Collision effect
• Increasing incentive
through payment
system (recycling and
organic material higher
than inert material
• Provision by private
firm else than those
include in transport
• Increasing incentive
through payment
system
• Provision by private
firm else than those
Competition foreclosed
after bidding
Competition foreclosed
after bidding
11. Conclusion about the Research Questions
Public Private Partnerships
Composting
treatment plant
Landfill
management
•
•
•
•
•
relationships
Continuous adaptation of
contract
High scrutiny required
Sound inter-organisational
relationships
Continuous adaptation of
contract
Sound inter-organisational
relationships
Contracting-out
Franchise
Concession
Open Competition
• Provision by public management
• Provision by private firm else
than those include in transport
• Could be
considered like
Contracting-out
model
include in transport
• Very common
• Good interorganisational
relationships
Competition foreclosed
after bidding
Comprehensive threshold
Consideration of transaction costs
Sound public management
Good inter-organisation
relationships
• Adaptation of contract
continuously
• Could be
considered like
Contracting-out
model
•
•
•
•
• Comprehensive
threshold
• Consideration of
transaction costs
• Sound public
management
• Good interorganisation
relationships
• Adaptation of contract
continuously
Table 41: Towards a comprehensive framework of PSP models to achieve ISSWM
Not very common
Common
249
Competition foreclosed
after bidding
11. Conclusion about the Research Questions
11.5
Implications and Directions for further Research
There is, without doubt, plenty of scope for further useful research into theoretical and
empirical aspects of PSP models designed to achieve ISSWM. There will continue to be
considerable ongoing research in these areas. Obviously more work along these lines is
required. In an investigation covering so many different SWM models, a full list of future
directions would be quite extensive. To avoid presenting such a long list, the most crucial
extensions are focused on in the following paragraphs.
As shown by the case studies, further work should centre on private sector efforts to build
and develop municipal management capacity in LMIC. Further research could embrace not
only municipal SWM but also commercial and industrial waste. Investigations could also be
extended to industrialised countries. As mentioned earlier, new strategies in the solid waste
market include the take-over of small and medium companies operating in the sector. As far
as economic limitations are concerned, the non-application of some principles of
sustainability could be overcome if large private companies became active in different waste
areas, such as waste collection and landfill management.
The private sector shall play an important role in transferring sound technology from
industrialised countries to LMIC. Capacity building and capacity development shall be
understood as a long-term process. They are considered highly relevant to SWM in LMIC in
this investigation. Many international organisations have shifted from pure technical
improvement to this approach because the capacity and the degree of ownership of the
LMIC are critical to ensuring the effectiveness of development assistance. Major questions
arising in this context concern how donors can strengthen private investors and support the
managerial capacity of public management in LMIC.
As financial means from international donor organisations are urgently required,
development programmes like the Carbon Development Mechanism (CDM) will be
increased in forthcoming years. Future research shall also focus on how public authorities in
LMIC can be prevented from misusing such programmes while at the same time developing
incentives to apply the polluter pays principle.
Private monitoring agencies shall be involved at an early stage in policy formulation and in
the design of regulations and contract specifications as municipalities in LMIC lack sound
SW managerial know-how. Very often, SW contract specifications include the services
which have to be performed even though the establishment of thresholds challenges both
contractual parties. Contract specifications could, for instance, include a certain number of
municipal managers whose managerial capacity must be built up. An important way of
250
11. Conclusion about the Research Questions
engaging LMIC is to share the knowledge acquired through PSP lessons and experiences,
recognising that such knowledge needs to be adapted to specific local situations.
As far as the hierarchy principle is concerned, future research can explore the option of
making lump-sum payments to the private sector. A sound inter-organisation relationship
shall be considered to be a key prerequisite for such an arrangement. Good interorganisational relationships are still an academic discussion in PSP in SWM in LMIC
although this is achieved in many fields in industrialised countries. For instance, in the
mechanical industry, Principal and Agent possess symmetric information about the costs
and profits of product creation. Profits are shared and both contractual parties try to
minimise costs. Obviously, defining thresholds for products is easier than for services.
Nevertheless, research in the SW sector shall be carried out in this context. Concerning the
polluter pays principle, adequate tariffs shall be established to reflect the fee-paying
willingness and capacity of low-, middle- and high-income areas. Among others, this issue
has been challenging national authorities and international organisations so far. In effect,
satisfied beneficiaries have an increased willingness to pay. The polluter pays principle shall
be looked at in accordance with the financial capacity of the beneficiaries of SW services.
Finally, Coase (1960) was the first economist to envisage the treatment of externalities
without state intervention, such as via direct bargaining between polluter and polluted and
the integration of the generator and recipient of an externality within the same firm. This
concept might be true whenever public services are rendered in a small community.
Research shall be carried out to define the size of this community allowing the provision of
SW services by the private sector using licensing or franchise arrangement where free-riders
do not exist.
11.6
Implications and Directions for Policy and Practice
This dissertation is highly relevant to both private enterprises interested in sound business
opportunities and policy makers (national authorities in LMIC and international donor
organisations) interested in strengthening managerial capacity in LMIC and in avoiding SW
project failure. Simply put, sound policy-making and effective management are crucial. As
demonstrated, no universal panacea exists for sound waste solution; priority shall be given
to tailor-made solutions.
As far as the polluter pays principle is concerned, a coercive tax has to be imposed on waste
generators. A complete financing system effected through central government subsidies will
251
11. Conclusion about the Research Questions
result in the failure of the polluter pays or the user pays principle. At the same time, the
polluter pays principle has to be applied so that beneficiaries pay as follows for the service
according to the quantity of waste generated:
f ( x ) = Tx + A + B + ...
f(x) (Costs of SW services)
T (tons/m³ of waste generated by polluters)
x (cost per ton/m³ of waste generated charged to the polluters)
A (subsidies from central government)
B (subsidies from international organisations)
Due to the fact that those who generate more waste should have to pay more, the polluter
pays principle will be considered even if other stakeholders like the central government, the
municipality, and international donor organisations lend the service financial support. This
will force waste generators to reduce, reuse, recycle, and compost the waste they generate
from their operations.
The private sector can perform with lower operating costs if it technically upgraded the SW
service. The private sector could finance SWM facilities and infrastructure. However, public
authorities have to ultimately bear the costs involved. Therefore, a comprehensive PSP
initiative shall start by assessing public management (contracting-in) and should not be
based on ideological issues.
The private contractor should undertake an ongoing communication initiative to identify
lifestyle choices that minimise waste generation and to educate the public about them. A
lump sum price agreement between the private contractor and the municipality can
strengthen public awareness, as the private firm is not paid by the quantity of SW collected
and transported. It has been noted that transaction costs, monitoring costs, etc., are not
considered by comparing SW costs prior to and after PSP. Prior to any PSP initiative,
decision-makers have to assess public management (contracting-in). Waste management
systems must meet municipal needs and priorities if they are to be effective. Accordingly,
SWM decisions must be informed by community perspectives as well as by technical
analysis. Public authorities should therefore cooperate with all stakeholders: the national
ministry responsible for municipalities, NGO, and CBO must understand and respond to
community priorities in SWM, as appropriate. Public awareness programmes must
252
11. Conclusion about the Research Questions
effectively communicate waste management issues and initiatives. Public awareness
messages should clearly communicate issues and how they might be resolved as well as
disseminate information regarding specific initiatives.
Finally, sound and effective solid waste management, which is essential for cities, is almost
completely lacking in LMIC. This is because of a shortage of the necessary managerial,
technical, and financial means. While PSP is without any doubt a useful tool to address this
issue, it is not the full solution. Building on both existing theories and empirical evidence,
this investigation has demonstrated that PSP, although meaningful, has many limitations
before it can achieve fully successful ISSWM.
The key results of this study strongly suggest that success will only come through the
creation of good inter-organisational relationships, the establishing of sound public
awareness, and active cooperation between international, national and local organisations.
Better overall performance will only be achieved through setting comprehensive thresholds
and targets towards which the contractual parties are required to work. In any PSP, the issue
of real transaction costs and Symmetric Lack of Information has to be fully considered.
Consideration must also be given to the hierarchy principle. There must also be institutional
strengthening in the contractual agreements to provide the private sector with more
incentives to carry out good business practice and at the same time not weaken public
administration.
In sum, ISSWM is about learning from the past, accepting the shortcomings of some tools,
and building on knowledge and experience uncovered through this analysis. Successful
ISSWM will enhance living conditions, create new and viable businesses, and help build a
sustainable and vibrant environment in which people will enjoy living.
253
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List of References
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List of References
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XX
Annexes
List of Annexes
Annex 1:
Annex 2:
Annex 3:
Annex 4:
Annex 5:
Annex 6:
Annex 7:
Annex 8:
Annex 9:
Annex 10:
Annex 11:
Annex 12:
Annex 13:
Annex 14:
Classification of countries by region and level of income .......................... XXII
Integrated Sustainable Waste Management............................................... XXIV
Economic development levels and SWM systems in cities ........................XXV
Population of cities with 10 million or more inhabitants .......................... XXVI
Waste characteristic in LMIC................................................................... XXVII
Public versus private goods in solid waste management.........................XXVIII
Private sector arrangements in solid waste management .......................... XXIX
Recapitulation of the limitations of some PSP models ...............................XXX
Statistics of tourists visiting in Tangier ..................................................... XXXI
Length of stay in Tangier in day................................................................ XXXI
Subdivision of the municipality of Tangier in homogenous zones .......... XXXII
Optimisation of the collection system in Bni Makada ............................XXXVI
Optimisation of the collected routing in Bni Makada ........................... XXXVII
Landfill situation in Tangier and physical aspect of old Médina in
Morocco................................................................................................XXXVIII
Annex 15: Questionnaire to CESPA .........................................................................XXXIX
Annex 16: Questionnaire to Municipality ..................................................................... XLII
Annex 17: Residual value of vehicles taken over by CESPA......................................XLIV
Annex 18: Residual value of equipment taken over by CESPA ..................................XLIV
Annex 19: Description of penalty including rate .......................................................... XLV
Annex 20: Wholesalers in informal recycling business in Tangier .............................. XLV
Annex 21: Quantity of recycled material in Tangier....................................................XLVI
Annex 22: Quantity of recycled material in the landfill...............................................XLVI
Annex 23: Revenues generated by recycled materials in Tangier centre ...................XLVII
Annex 24: Revenues generated by recycled materials from the landfill................... XLVIII
Annex 25: PSP in streets sweeping, waste collection and transport in Morocco ........XLIX
Annex 26: PSP in landfill management in Morocco........................................................... L
Annex 27: Total fund credit and loans outstanding per country (1st Part) ........................LI
Annex 28: Total fund credit and loans outstanding per country (2nd Part)..................... LII
Annex 29: Total fund credit and loans outstanding per country (3rd Part) .................... LIII
Annex 30: Sanitary landfill, recycling and composting activities at one place ..............LIV
Curriculum Vitae.................................................................................................................. LV
XXI
Annexes
Annex 1: Classification of countries by region and level of income
Sub-Saharan Africa
Income
group
LowIncome
Subgroup
Asia
Europe and Central Asia
East and
Southern
Africa
West
Africa
East Asia
And Pacific
South
Asia
Eastern
Europe and
Central Asia
Angola
Burundi
Comoros
Congo, Dem.
Rep. Of
Eritrea
Ethiopia
Kenya
Lesotho
Madagascar
Malawi
Mozambique
Rwanda
Somalia
Sudan
Tanzania
Uganda
Zambia
Zimbabwe
Benin
Burkina Faso
Cameroon
Central African
Republic
Chad
Congo, Rep. of
Côte d’Ivoire
Equatorial
Guinea
Gambia, The
Ghana
Guinea
Guinea-Bissau
Liberia
Mali
Mauritania
Niger
Nigeria
São Tomé
and Principe
Senegal
Sierra Leone
Togo
Cambodia
Indonesia
Korea, Dem.
Rep. of
Lao PDr
Mongolia
Myanmar
Papua New
Guinea
Solomon
Islands
Timor-Leste
Vietnam
Afghanistan
Bangladesh
Bhutan
India
Nepal
Pakistan
Armenia
Azerbaijan
Georgia
Kyrgyz
Republic
Moldova
Tajikistan
Ukraine
Uzbekistan
Rest of
Europe
Middle East and
North Africa
Middle
North
East
Africa
Yemen,
Rep. of
Americas
Haiti
Nicaragua
continuous…
XXII
Annexes
Sub-Saharan Africa
Asia
Income
group
Subgroup
East and
Southern
Africa
West
Africa
East Asia
And Pacific
South
Asia
Middleincome
Lowermiddle
Namibia
South Africa
Swaziland
Cape Verde
China
Fiji
Kiribati
Marshall
Islands
Micronesia,
Federated
States of
Philippines
Samoa
Thailand
Tonga
Vanuatu
Maldives
Sri Lanka
Uppermiddle
Botswana
Mauritius
Mayotte
Seychelles
Gabon
American
Samoa
Malaysia
Palau
Europe and Central Asia
Eastern
Europe and
Central Asia
Rest of
Europe
Albania
Belarus
Bosnia and
Herzegovina
Bulgaria
Kazakhstan
Macedonia,
FYR1
Romania
Russian
Federation
Turkmenistan
Yugoslavia,
Fed. Rep.
(Serbia and
Montenegro)
Croatia
Czech Republic
Estonia
Hungary
Latvia
Lithuania
Poland
Slovak
Republic
Turkey
Isle of
Man
Middle East and
North Africa
Middle
North
East
Africa
Iran, Islamic
Rep. of
Iraq
Jordan
Syrian Arab
Republic
West Bank
and Gaza
Lebanon
Oman
Saudi
Arabia
Algeria
Djibouti
Egypt,
Arab
Rep. of
Morocco
Tunisia
Belize
Bolivia
Colombia
Cuba
Dominican Republic
Ecuador
El Salvador
Guatemala
Guyana
Honduras
Jamaica
Paraguay
Peru
St. Vincent and the Grenadines
Suriname
Libya
Malta
Antigua and Barbuda
Argentina
Barbados
Brazil
Chile
Costa Rica
Dominica
Grenada
Mexico
Panama
Puerto Rico
St. Kitts and Nevis
St Lucia
Trinidad and Tobago
Uruguay
Venezuela, R.B. de
(Source: The World Bank „A guide to the World Bank“ Library of Congress, 2003)
1
Former Yugoslav Republic of Macedonia
XXIII
Americas
Annexes
Annex 2: Integrated Sustainable Waste Management
(Source: Klunder, Arnold van de/Anschütz, Justine/Scheinberg, Anne (eds.), Integrated Sustainable Waste Management, (1995-2001):
Gouda:WASTE, 2001)
XXIV
Annexes
Annex 3: Economic development levels and SWM systems in cities
Economic levels
of countries
Activity
Waste
minimisation
Collection
Recycling
Composting
Incineration
Landfilling
Costs
Low-income countries
Middle-income countries
No organised programs, but reuse and low per capita
waste generation rates are common
Service is limited to high visibility areas, the wealthy,
and businesses willing to pay
Recycling activities are performed by the informal
sector (scrap dealers and waste pickers). Localised
markets for recycling are common
No organised programs. Wastes including organic
matter are not put to good use
Some discussions on waste minimisation, but rarely
incorporated into any organised program
Expanded collection areas. Trucks are used for collection
Not common or successful because of high capital and
operation costs. High percentage of moisture and
inorganic matters call for supplement fuel and have a
smaller impact on volume reduction
Usually open dumping with virtually no environmental
controls
Collection costs represent 80-90% of the SWM budget.
Collection fees are regulated by some municipalities,
but the quality of collection service is low
While the informal sector is still involved, relatively large
machinery is sometimes used for sorting and recycling,
Materials are often hauled out of the city as recyclables
Efforts toward composting are made at many parts of the
city. Large composting plants are generally unsuccessful.
Small-scale composting projects tend to be more successful
Incinerators are sometimes used but not common due to
economic reasons
Some controlled and sanitary landfills with some
environmental controls. Open dumping is still common
Collection costs represent 50-80% of the SWM budget.
Some municipalities regulate collection and disposal fees
Innovative arrangements are in place for fee collection
(Source: Based on JICA, Capacity Development in Solid Waste, Tokyo: IFIC, 2005)
XXV
Annexes
Annex 4: Population of cities with 10 million or more inhabitants
1950
1. New
York
1975
12.3
2000
2015
1. Tokyo
19.8
1. Tokyo
25.2
1. Tokyo
27.2
2. New York
3. Shanghai
4. Mexico
5. Sao Paulo
15.9
11.4
10.7
10.3
2. Sao Paulo
3. Mexico City
4. New York
5. Mumbai
6. Los Angeles
7. Kolkata
8. Dhaka
9. Delhi
10. Shanghai
11. Buenos Aires
12. Jakarta
13. Osaka
14. Beijing
15. Rio de Janeiro
16. Karachi
17. Manila
18.3
18.3
16.8
16.5
13.3
13.3
13.2
13.0
12.8
12.1
11.4
11.0
10.8
10.8
10.4
10.1
2. Dhaka
3. Mumbai
4. Sao Paolo
5. Delhi
6. Mexico City
7. New York
8. Jakarta
9. Kolkata
10. Karachi
11. Lagos
12. Los Angeles
13. Shanghai
14. Buenos Aires
15. Metro Manila
16. Beijing
17. Rio de Janeiro
18. Cairo
19. Istanbul
20. Osaka
21. Tianjin
22.8
22.6
21.2
20.9
20.4
17.9
17.3
16.7
16.2
16.0
14.5
13.6
13.2
12.6
11.7
11.5
11.5
11.4
11.0
10.3
(Source: Paimela-Wheler, A.., World Bank Financed Waste Management Projects, Washington, 2004, P. 18)
XXVI
Annexes
Annex 5: Waste characteristic in LMIC
City
Laos
Nicaragua
Vientiane
Granada
Tanzania
Philippines
Honduras
Poland
Paraguay
Turkey
Metro
Manila
Tegucigalpa
Lublin
Asuncion
Adana Mersin
Greater Greater
Munici- Municipality
pality
Country
Component
Kitchen waste
Paper
Textiles
Plastic
Glass and wood
Leather and
rubber
CombustiblesTotal
Metal
Bottles and
glass
Ceramics and
stones
Miscellaneous
Non
combustibleTotal
Total
Managua
Dar
es
Salaam
Unit
%
%
%
%
%
%
16.9
2.8
1.6
6.1
38.2
1.1
49.84
5.29
1.98
6.11
24.9
0.29
34.86
5.37
1.87
3.88
27.11
2
42
3.1
1.2
2.2
25.3
0.9
45.82
15.39
4.33
15.6
7.45
0.8
47.2
11.5
2.8
7.1
11.6
2.2
(with
ash)
45.27
13.67
2.1
4.4
1.61
2.67
(without
ash)
65.26
11.11
3.77
3.8
2.3
1.83
36.6
6.4
1.3
3.9
22.2
0.7
70.77
13.8
3.43
6.42
1.04
0.17
75.53
9.88
1.77
5.87
1.62
0.29
%
66.7
88.41
75.09
74.7
89.39
82.4
69.72
88.06
71.1
95.63
94.96
%
%
3.7
9.3
1.11
1.05
1.69
2.91
2
3.5
5.47
2.69
1.9
3.5
3.31
5.23
3.05
6.51
1.3
3.1
0.72
2.55
0.53
3.33
%
5.21
8.07
0.4
1.26
12.1
21.74
2.38
2.5
0.96
1.14
%
%
(included in
glass)
20.3
33.3
4.22
11.59
12.24
24.91
19.4
25.3
1.19
10.61
0.1
17.6
30.28
11.94
22
28.9
0.14
4.37
0.04
5.04
%
100
100
100
100
100
100
100
100
100
100
100
(Source: Based on JICA, Capacity Development in Solid Waste, Tokyo: IFIC, 2005, P. 64)
XXVII
Annexes
Annex 6: Public versus private goods in solid waste management
(Source: Cointreau-Levine, S., PSP in MSW services, UMP, Washington, D.C.:
World Bank, 1994, P. 8)
XXVIII
Annexes
Annex 7: Private sector arrangements in solid waste management
(Source: Cointreau-Levine, S., PSP in MSW services, UMP, Washington, D.C.:
World Bank, 1994, P. 8)
XXIX
Annexes
Annex 8: Recapitulation of the limitations of some PSP models
PSP Model
Franchise
Solid Waste Element
Solid Waste Collection
Contracting-out
Solid Waste Collection
Open competition
Solid Waste Collection
Concession
Landfill management
BOOT
Landfill management
Open competition
Landfill management
BOO
Landfill management
BOO
Management of transfer
station
Landfill
Contracting
BOT
Landfill / transfer stations
Limitations
Non-payment of some beneficiaries: Contradiction to public
goods theory
Low rate of cost recovery
Contradiction of polluter pays principle
No incentive for waste minimisation
Higher cost, no guarantee of continuity of the service, nonexclusivity principle, collision effect
Amount of fees: Asymmetric information or symmetric lack of
information
Bankruptcy: Continuity of the service is jeopardised
More waste to dispose of: Contradiction of hierarchy principle
Bankruptcy: Continuity of the service is jeopardised
More waste to dispose of: Contradiction of hierarchy principle?
Non-payment: Contradiction to public goods theory?
Amount of fees: Asymmetric information
Higher cost, contradiction of continuity and public goods theory
Amount of fees: Asymmetric information
No transfer of facilities to LMIC: Contradiction to public goods
theory
No transfer of facilities to LMIC: Contradiction to public goods
theory
Eventual conflict between planning and environmental
considerations.
Limited incentive for whole life costing approach to design.
Eventual conflict between planning and environmental
considerations.
Asymmetric information (symmetric lack of information):
Problems by establishing contract specifications
Contract management and performance monitoring systems
required.
Hazard cost if private firms go out of business
Does not attract private finance and commits public sector to
providing a minimum quantity of waste (contradiction to
hierarchy principle)
(Source Author’s analysis)
XXX
Annexes
Annex 9: Statistics of tourists visiting in Tangier
Nationalities
1
2
3
4
5
6
7
8
9
10
11
Total
Moroccan
Spain
France
United Kingdom
Arabic countries
USA
Germany
Portugal
Italy
Netherlands
Others
Year 2001
(January –
September)
262,231.00
66,245.00
32,977.00
17,699.00
12,009.00
18,538.00
14,469.00
6,723.00
6,085.00
3,753.00
42,484.00
483,213.00
Year 2003
January –
September)
300,244.00
60,831.00
36,971.00
15,915.00
11,317.00
11,631.00
8,085.00
13,102.00
4,845.00
4,581.00
34,421.00
501,943.00
Year 2004
January –
September)
315,131.00
73,688.00
40,658.00
17,334.00
12,437.00
10,882.00
9,435.00
6,738.00
5,485.00
4,854.00
36,726.00
533,368.00
(Source : Ministère du Tourisme, de l’Artisanat et de l’Economie sociale, 2004)
Annex 10: Length of stay in Tangier in day
Nationalities
1
2
3
4
5
6
7
8
9
10
11
Moroccan
Spain
France
United Kingdom
Arabic countries
USA
Germany
Portugal
Italy
Netherlands
Others
Year 2001
(January –
September)
2
2
2
3
3
1
2
2
3
2
2
Year 2003
January –
September)
2
2
2
2
3
1
2
4
2
2
2
Year 2004
January –
September)
2
2
2
2
3
2
3
3
2
2
2
(Source : Ministère du Tourisme, de l’Artisanat et de l’Economie sociale, 2004)
XXXI
Annexes
Annex 11: Subdivision of the municipality of Tangier in homogenous zones
Medina
City centre –
Western part
City centre
South
Homogenous
Areas
Areas
[ha]
Type of Housing
Key features
Medina
30
Old Medina
Hasnona
46
Individual housing
Marshan
80
Individual housing
Dradeb
29
New Medina
Aïn Ayani
26
San Francisco I
10
Simple individual housing
(designed and non-designed)
Individual housing
San Francisco II
80
Apartment building
Centre Souk
66
Apartment building
M’Sallah
29
New Medina
Ville Moderne
29
Apartment building
Level of accessibility to the city: average
Level of internal accessibility: bad
Deficiency in terms of environmental infrastructure
Level of accessibility to the city: average
Level of internal accessibility: bad
Deficiency in terms of environmental infrastructure
Degradation of Merkala beach
Level of accessibility to the city: good
Level of internal accessibility: bad
Deficiency in terms of environmental infrastructure
Network road insufficient, enclosure of the northern zone
Level of accessibility: Average
Level of internal accessibility: bad
Level of environmental infrastructure: Between high and average
Level of accessibility: Average
Level of environmental infrastructure: Between high and average
Level of accessibility: good
Level of environmental infrastructure: high
Level of Accessibility: good
Level of environmental infrastructure: high
Traffic congestion
Level of accessibility city: good
Level of environmental infrastructure: high
Lack of green spaces
Traffic congestion: Boulevard Pasteur
Level of accessibility to the city: good
Level of environmental infrastructure: high
Lack of green spaces
Level of accessibility to the city: good
Level of environmental infrastructure: high
High concentration of civil services
XXXII
continuous…
Annexes
Peri Central
South-west
Homogenous
Areas
Areas
[ha]
Type of Housing
Key features
Plage
69
Apartment building
Moulay Ismail
52
Apartment building
Slums
Souani
145
Hay Jedid
145
Pasadena
145
Simple individual housing
(designed and not designed)
Simple individual housing
(designed and not designed)
Individual housing
Boughaz
145
Simple individual housing
(designed)
Beni Makada
west
172
Slums
Level of accessibility: good
Level of environmental infrastructure: high
Seasonal traffic congestion to the port
Environmental pollution of the sea
Level of accessibility to the city: good
Level of environmental infrastructure: high
Seasonal traffic congestion to the port
Environmental pollution of the Oued (river) Souani
Level of accessibility to the city: bad
Level of environmental infrastructure: average to high
Level of accessibility to the city: good
Level of environmental infrastructures: high to average
Level of accessibility to the city: good
Level of environmental infrastructure: high
Environmental degradation of Oued (river) Souani
Level of accessibility to the city: average
Level of internal accessibility: average - bad
Level of environmental infrastructure: average
Road network: deficiency
Level of accessibility to the city: average
Level of internal accessibility: bad
Level of environmental infrastructure: average
Road network: deficiency
Peri-Central
South-east
continuous …
XXXIII
Annexes
Periphery west
Beni /
Ouriaghel
Ben Dibane
Beni Makada
Kedima
Homogenous
Areas
Areas
[ha]
Type of Housing
Key features
Beni Makada
North East
172
Simple individual housing
(designed and not designed)
Boubana
95
Individual housing
Vielle Montagne
450
Individual housing
Moujahidine
172
Individual housing
Mestarkhoch
273
Individual housing
Azib Hadj
Kadour I
600
Rural housing (illegal immigrant)
B. Ouriaghel,
B.Dibane, B.
Makada, Kedina
1,553
Illegal immigrant
Level of accessibility to the city: average
Level of internal accessibility: bad
Level of environmental infrastructure: average
Road network: deficiency
Level of accessibility to the city: average
Level of internal accessibility: bad
Level of environmental infrastructure: average
Road network: deficiency
Level of accessibility to the city: average
Level of internal accessibility: unrelieved landscape
Level of environmental infrastructure: high
Lack of green spaces
Level of accessibility to the city: average
Level of internal accessibility: average
Level of environmental infrastructure: high
Lack of green spaces
Level of accessibility to the city: good
Level of internal accessibility: average
Level of environmental infrastructure: high
Road network: deficiency
Level of accessibility to the city: good
Level of internal accessibility: average
Absence of environmental infrastructure
Road network: non existent
Level of accessibility to the city: bad
Level of internal accessibility: bad
Absence of environmental infrastructure
Road network: non existent
continuous …
XXXIV
Annexes
Periphery East
Homogenous
Areas
Areas
[ha]
Type of Housing
Key features
Charf
52
Illegal immigrant
Arènes
130
Illegal immigrant and simple nondesigned housing
Baie de Tanger I
650
Simply designed individual housing
and rural housing
Baie de Tanger
II
270
Individual housing
Moghogha
1,302
Rural housing, illegal immigrant
Level of accessibility to the city: bad
Level of internal accessibility: very bad
Absence of environmental infrastructure
Road network: non existent
Level of accessibility to the city: bad
Level of internal accessibility: very bad
Absence of environmental infrastructure
Road network: non existent
Level of accessibility to the city: average
Level of internal accessibility: bad
Level of environmental infrastructure: average
Road network: non existent
Pollution of the sea
Erosion of the beach
Pollution of the Oued (river) Moghogha
Level of accessibility to the city: average
Level of internal accessibility: bad
Absence of environmental infrastructure
Road network: non existent
(Source : Royaume du Maroc: Schéma Directeur d’Aménagement Urbain (SDAU) Tanger : Rapport final, March 1997)
XXXV
Annexes
Annex 12: Optimisation of the collection system in Bni Makada
(Source: GTZ)
XXXVI
Annexes
Annex 13: Optimisation of the collected routing in Bni Makada
(Source: GTZ)
XXXVII
Annexes
Annex 14: Landfill situation in Tangier and physical aspect of old Médina in Morocco
Recycling activities on the landfill in Tangier
Difficult accessibility to the landfill by CESPA
Recycling activities on the landfill in Tangier
Consequences of the non application of hierarchy principle in PSP contract
Recycling activities on the landfill in Tangier
Consequences of the non application of hierarchy principle in PSP contract
Medina Fès: Physical constraints
Medina Fès: Physical constraints
XXXVIII
Annexes
Annex 15: Questionnaire to CESPA
continuous …
XXXIX
Annexes
XL
continuous …
Annexes
XLI
Annexes
Annex 16: Questionnaire to Municipality
continuous …
XLII
Annexes
XLIII
Annexes
Annex 17: Residual value of vehicles taken over by CESPA
No
Description of Vehicles
1
Renault 16m³
2
Renault 4 m³
3
Renault 4 m³
4
Renault 3 m³
5
Renault 4 m³
6
Renault 8 m³
7
Renault 3 m³
8
Renault 8 m³
9
Renault 8 m³
10 Renault 8 m³
11 Renault 6 m³
12 Isuzu 5 m³
13 Isuzu 8 m³
14 Peugeot Pick-up 2.4 m³
15 Peugeot Pick-up 2.4 m³
Total
Entry in
circulation
05-12-1994
08-08-1992
08-08-1992
24-12-1993
14-09-1994
19-09-1994
13-12-1995
13-04-1995
03-04-1996
03-04-1996
13-12-1995
24-12-1993
24-12-1993
13-12-1995
13-12-1995
Total
years
of
service
4
2
2
3
4
4
5
5
6
6
5
3
3
5
Unit purchase
price [MAD]
Residual
value [MAD]
1,280,000.00
662,000.00
662,000.00
428,000.00
481,500.00
828,500.00
518,250.00
828,500.00
950,000.00
950,000.00
518,250.00
560,000.00
674,000.00
225,000.00
225,000.00
325,575.00
218,750.00
218,750.00
293,018.00
309,296.00
309,296.00
341,854.00
341,854.00
406,969.00
406,969.00
341,854.00
284,878.00
284,878.00
145,188.00
145,188.00
4,374,317.00
(Source: contract specifications with CESPA)
Annex 18: Residual value of equipment taken over by CESPA
Description
Boxes
Metallic Bins
1100 L
Plastic bins 600 L
Total
Quantity
10
30
Unit purchase
price [MAD]
20,000.00
8,730.00
Unit residual
Value [MAD]
4,000.00
1,746.00
20
6,500.00
1,300.00
(Source: contract specifications with CESPA)
XLIV
Total
40,000.00
52,380.00
26,000.00
118,380.00
Annexes
Annex 19: Description of penalty including rate
No
Description of penalty
1
2
3
Waste in a sector not collected or not swept
Management reports not submitted on time
Waste not collected or not swept 2 hours after reminding of
the municipality
Vehicle not available or not replaced after 2 hours break down
Non respect of indicated landfill place
Non respect of time schedule
Boulevards, streets or place non swept
Non evacuated swept waste
Non conform loading spreading waste on public road
Vehicle on tour in bad condition
Vehicle not cleaned and not painted
Changing of route without permission of the municipality
Daily report not submitted
Non respect of security instructions by the personnel
Waste bins and containers damaged by the personnel and not
replace 24 hours after the reminding by the municipality
Drunk personnel
Any contravention to an article of the contract and not
mentioned above
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Penalty rate per day
[MAD]
10,000.00
5,000.00
2,500.00
2,500.00
2,500.00
1,000.00
1,000.00
1,000.00
1,000.00
500.00
500.00
500.00
500.00
500.00
100.00
100.00
2,500.00
(Source: contract specifications with CESPA)
Annex 20: Wholesalers in informal recycling business in Tangier
Enterprise
Aouama
Placa Torro
Business activity
Recycling of packaging plastic for
isolating pipe of electrical cables
Recycling of packaging plastic for
isolating pipe of electrical cables
Aluminium foundry
Route des
Abattoirs
Safri Pac
Recycling of paperboard and paper
CMCP
Recycling of paperboard and paper
Dar El Mica
Maria Plast
Resinor
Mecano-plast
Production of plastic items from PVC
pipes
Production of plastic items
Production of plastic items
Recycling of plastic bags
Address
Aouama Bni makada Road
Tangier
Calame District
Tangier
Route des Abattoirs
Tangier
Industrial area
Tangier
Industrial area
Tangier
Abou Bahr Bnou Kotayba
Casablanca
Boulevard My Ismail
Casablanca
Boulevard My Sliman Casablanca
Bni Amar Street
Casablanca
(Source : GTZ-PGPE Tanger « Etude socio-économique des chiffonniers » March 2003)
XLV
Annexes
Annex 21: Quantity of recycled material in Tangier
Address
Lotissement Khair
Ennasre
Neighbourhood
Route des Abattoirs
Mly Ismail Street
Saada Beni Makada
Neighbourhood
Abi Hassan Chadi
Moujahidine
Neighbourhood
Hakkama
Aouama
My Abdelaziz Street
Souk Casabarata
Recycled material
• Transparent plastic for packaging
• Aluminium
• copper
• Glass
• Paper and paperboard
• Plastic drums
• Transparent plastic for packaging
• Aluminium
• Glass
• Paper and paperboard
• Paperboard and paper
• Plastic for packaging
• Paperboard and paper
• Transparent plastic for packaging
• Plastic drums
• Packaging plastics
• Paperboard and paper
• Paperboard
• Packaging plastics
• Glasses (bottles)
•
•
•
•
•
•
•
•
•
Quantity [Kg/Year]
28,800.00
3,650.00
1,000.00
5,000.00
50,000.00
240,000.00
43,200.00
4,000.00
500.00
10,000.00
438,000.00
70,000.00
340,000.00
10,000.00
10,000.00
10,000.00
140,000.00
200,000.00
40,000.00
50,000.00
30,000.00
3,500.00
1,500.00
180,000.00
Packaging plastics
Aluminium
Copper
Plastic drums
Plastic drums
Aluminium
Copper
Scrap iron
Scrap iron
30,000.00
2,500.00
500.00
430,000.00
100,000.00
(Source : GTZ-PGPE Tanger « Etude socio-économique des chiffonniers » March 2003)
Annex 22: Quantity of recycled material in the landfill
Address
Landfill of Tangier
Unit 1
Landfill of Tangier
Unit 2
Recycled material
• Transparent plastic for packaging
• Paper and paperboard
• Plastic drums
Iron scraps
• Transparent plastic for packaging
• Paper and paperboard
• Plastic drums
Iron scraps
Quantity [Kg/Year]
30,000.00
50,000.00
200,000.00
400,000.00
42,000.00
70,000.00
220,000.00
400,000.00
(Source : GTZ-PGPE Tanger « Etude socio-économique des chiffonniers » March 2003)
XLVI
Annexes
Annex 23: Revenues generated by recycled materials in Tangier centre
Materials
recycled
Plastic drums
Packaging plastic
Paper and
paperboard
Metals scrap
Aluminium
Copper
Glasses
Sole gums
Total
Quantity
[Tonnes/year]
480,000
217,000
540,000
530,000
13,650
2,500
15,000
15,000
1,813,150
Unit price waste
picker [MAD/kg]
0.7
2
0.25
0.20
4
5
0.2
1
Total
[MAD]
336,000
434,000
135,000
106,000
54,600
12,500
3,000
15,000
1,096,100
Unit price
Middlemen
[MAD/Kg]
1
3
0.7
0.4
7
7
0.5
2
Total
[MAD]
480,000
651,000
378,000
212,000
95,550
17,500
7,500
30,000
1,871,550
Unit Price
Wholesalers
[MAD/kg]
1.2
3.5
1
0.5
10
12
1
2.5
(Source : GTZ-PGPE Tanger « Etude socio-économique des chiffonniers » March 2003)
XLVII
Total
576,000.00
759,500.00
540,000.00
265,000.00
136,500.00
300,00.00
15,000.00
37,500.00
2,359,500.00
Annexes
Annex 24: Revenues generated by recycled materials from the landfill
Materials
recycled
Plastic drums
Packaging plastic
Paper and
paperboard
Metals scrap
Aluminium
Copper
Glasses
Total
Quantity
[Tonnes/year]
420,000
72,000
Unit price waste
picker [MAD/kg]
0,7
2
Total
[MAD]
294,000
144,000
Unit price
Middlemen
[MAD/Kg]
1
3
Total
[MAD]
420,000
216,000
Unit Price
Wholesalers
[MAD/kg]
1,2
3,5
720,000
0,25
180,000
0,7
504,000
1
800,000
0,2
160,000
0,4
320,000
0,5
4,060
4
16,240
7
28,420
10
1,500
5
7,500
7
10,500
10
15,000
0,2
3,000
0,5
7,500
1
2,032,560
804,740
1,506,420
(Source : GTZ-PGPE Tanger « Etude socio-économique des chiffonniers » March 2003)
XLVIII
Total
504,000
252,000
720,000
400,000
40,600
15,000
15,000
1,946,600
Annexes
Annex 25: PSP in streets sweeping, waste collection and transport in Morocco
Municipality
Year Inhabitants Quantity
Contractor
Duration
[Years]
2005
1998
1998
2000
2000
2003
580,820
112,00
60,000
174,519
248,540
120,000
169,725
30,000
20,000
47,120
67,106
26,280
GMF
NAKAWA
GMF
CESPA
CESPA
SEGEDEMA
9
7
5
7
7
7
2002
160,000
35,040
SEGEDEMA
7
2000
137,000
28,500
SEGEDEMA
5
2000
94,000
37,750
SEGEDEMA
7
2002
2002
157,000
208,000
53,294
59,156
CGSPONYX
TECMED
6
6
2002
212,114
59,400
6
2002
144,282
39,253
13
El Jadida
Fès
Nador
Essaouira
Tanger ville
Tanger Charf
Maknassat
Azzaytoun
Meknès
Hamria
Meknès
Ismailia
Rabat Agdal
Riad
Rabat Hassan
Rabat
Youssoufia
Rabat Yaco
El mansour
El Jadida
14
15
16
Sidi Bennour
Azemmour
Oujda
Sidi Bennour
Azemmour
Oujda
2004
2004
2002
45,320
44,577
439,861
12,411
7,663
110,000
17
Kénitra
Maamora
Kénitra
Maamora
2002
173,000
48,622
18
Kénitra Saknia
2003
193,8830
58,257
19
Salé Bab
Lamrissa
Safi
Kénitra
Saknia
Salé Bab
Lamrissa
Safi
Z1
SOS/NICOLL
IN
SEGEDEMA /
DRAGUI
TRANSPORT
SEGEDEMA
SEGEDEMA
CGSPONYX
MAROC
SEGEDEMA/
DRAGUI
TRANSPORT
SOS/NDD
2003
142,520
36,414
SOS/NDD
6
2004
2004
322,183
536,000
78,145
294,000
7
10
Z2, 4, P5
Z3, P5
Mohammadia
2004
2004
2004
1,299,000
791,000
205,600
429,000
254,000
46,942
CGSP-ONY
SMARCOLE
CT
TECMED
SEGEDEMA
SEGEDEMA
1
2
3
4
5
6
Fès
Nador
Essaouira
7
Meknès
Tanger
8
9
10
11
Rabat
12
20
20
Casablanca
21
22
23
Mohammadia
(Source: Royaume du Maroc, Ministère de l’Intérieur)
XLIX
7
7
7
7
7
7
10
10
7
Annexes
Annex 26: PSP in landfill management in Morocco
Municipality
Average
quantity per
year in Tons
Contractor
Type of service
Contract
duration
Akreuch
207,900
SEGEDEMA
1 year renewable
Essaouira
60,000
GMF
Fès
325,653
EDGEBORO
Oujda
90,000
CSD/CRB
Berkame
47,000
CSD/CRB
Landfill
management
Landfill
management
Landfill
management
Landfill
management
Landfill
management
(Source: Royaume du Maroc, Ministère de l’Intérieur)
L
7 years
10 years
15 years
10 years
Annexes
Annex 27: Total fund credit and loans outstanding per country (1st Part)
(Source: IMF)
LI
Annexes
Annex 28: Total fund credit and loans outstanding per country (2nd Part)
(Source: IMF)
LII
Annexes
Annex 29: Total fund credit and loans outstanding per country (3rd Part)
(Source: IMF)
LIII
Annexes
Annex 30: Sanitary landfill, recycling and composting activities at one place
LIV
Annexes
Curriculum Vitae
PERSONAL DATA
Name:
Date of birth:
Nationality:
Patrick Louigueur DORVIL
01. January 1970
Haitian, German
EDUCATION
University of St. Gallen (HSG), Dr. Oec., emphasis on environmental management, 2002-2007
Nottingham Trent University, MSc Management, 1995-1996
Waterford Institute of Technology, MSc Management, 1995-1996
Ecole Supérieure d'Ingénieurs de Chambéry, Certificate in management, 1996
University of Applied Sciences Stuttgart, BSc Civil engineer, 1990-1995
Collège Canado-Haïtien, Port-au-Prince, Baccalauréat, 1981-1988
PROFESSIONAL EXPERIENCE (SELECTED PROJECTS)
AHT Group AG, Essen, Germany, 2005-present
Consultant Engineer: Solid waste management in Morocco, Turkey and in the Philippines
AGR - Brochier GmbH & CO KG, 2003-2004
Project manager of piping works of a power plant station for the city of Tahaddart in Morocco
European Union, 2002
Consultant engineer: feasibility study of a solid waste management for the Comoros islands
World Bank / German Development Service, 2001 - 2002
Project co-ordinator: solid waste management concept for the city of Livingstone, Zambia
German Bank for Reconstruction (KfW) / German Development Service, 1999 – 2001
Project manager: Drinking water project in Sanaga Maritime / Cameroon
German Technical Cooperation, 1996 – 1998
Consultant engineer: Solid waste management project in Medjerda valley in Tunisia; leachate
treatment for the province of Bizerte / Tunisia
LV