the economics of landfills

The economics of landfills

Learning from the city of Cape Town coupled with some trends in interna8onal work on the external costs of landfills

Presented at The Vision Zero Waste Seminar, Sandton Conven8on Centre, 27 July 2012

by Mar8n de Wit

[email protected]

Landfills as an environmental problem

Image Credit: utminers.utep.edu

Landfill space and 8ming as a problem

“Based on the latest assessments, the remaining lifespan of the City’s landfills, when no addi8onal diversions from landfill are implemented over and above current diversions and excluding private landfills, is between 12–14 years coun8ng from 2010 onwards.

Remaining landfill space is below the interna8onal benchmark of banked landfill space of 15 years“

Source: Akhile Consor8um (2011)

Waste trends Municipal waste disposed at landfills, Cape Town (kg/pp/day)

Notes: Popula-on data based on Census 1996, 2001, GHS 2005-‐2008, QLFS 2009. Es-mated growth figures in popula-on for periods in between 1996 and 2001 and between 2002 and 2005

Source: De Wit & Nahman (2009)

Waste trends: more than what meets the eye

•  Economy ma]ers: –  As a rule of thumb, a 1% change in GGP leads to a 0.6% change in MSW

generated (but very large variance) •  Structure of economy ma]ers:

–  Fluctua8ons in MSW generated is influenced most by rela8vely larger economic sectors, such as the trade, manufacturing and transport sectors.

–  Smaller sectors such as electricity, gas and water as well as construc8on less detectable impacts.

•  Demography ma]ers: –  The largest posi8ve correla8ons between age groups and the amount of MSW

produced (from 1996 to 2009) is for those aged between 45 and 69 years old as well as those aged between 15 and 19 years old.

•  Gender ma]ers: –  There is a high posi8ve correla8on between the percentage of males in the

popula8on and the amount of MSW generated in the City as measured over the period 1997 to 2009.

Note: Data and analysis for Cape Town and subject to further sta8s8cal tes8ng

Waste characteris8cs (mass)


Waste characteris8cs (volume)


Towards a Cos8ng Model

•  Full Cost = Financial Cost + External Cost •  Costs can be categorised into four main func8ons of solid waste management –  cleaning, collec8ng, disposal as well as waste minimisa8on, and suppor8ng func8ons.

•  Costs expressed in terms of physical units of waste cleaning, collec8on and disposal (R/t or R/m3).

•  The focus is on direct and indirect financial costs to the municipality.

Municipal Costs -‐ baseline data

Source: Akhile Consor8um (2011) as based on City of Cape Town data, 2009/10

R1.5bn R317m

+/-‐ R480pp

The opera8onal budget expenditure for solid waste management in Cape Town for 2009/10 was approximately R1.5bn, of which R332m (22%) for disposal (incl. drop-‐offs)

Unit Disposal Costs in Cape Town

•  The unit cost of disposal in landfills, including normally projected OPEX and CAPEX, as well as addi8onal rehabilita8on and closure costs not budgeted for earlier, increases from R216/t in 2011 to R248/t in 2019*

* When CAPEX is amor8sed at 8% and all landfill closure costs counted for

Valuing landfill airspace The model that is used is as follows:

where Capital cost includes planning and (sunk) upfront capital costs Opera8onal cost includes opera8ng costs over the life8me of the landfill Closure costs include the costs of closure, rehabilita8on, and post-‐closure maintenance and monitoring

Value of airspace ranges between R150/m3 and R250/m3 from 2007/8 to 2013/14.

Source: De Wit & Nahman (2009); Akhile Consor8um (2011) as based on City of Cape Town data, 2009/10

Coun8ng for external costs

•  Monetary es8mates of environmental costs –  increase costs of landfilling in mostly poor control landfills

–  One interna8onal study suggests an increase of 20-‐45% above baseline landfill costs, but much lower (1-‐4%) for land-‐fills with best prac8ce controls*

*BDA Group, 2009. The full costs of waste disposal in Australia

Landfill external costs es8mates Study Year Country/Region External costs/ton

European Commission 2000 Europe € 11 -‐ 20

Porter 2002 US US$ 3 -‐ 15

Davies & Doble 2004 UK £ 4.6 -‐ 6

Dijkgraaf & Vollebergh 2004 Netherlands € 26

Fullerton 2005 US US$ 5.8 – 14.2

Kinnaman 2006 US US$ 5.38 – 8.76

Pearce 2005 UK £ 6 – 7

Covec 2007 New Zealand NZ$ 10 -‐ 60

BDA 2009 Australia $ 1 – 19

Nahman 2010 Cape Town R 111 Of which -‐ Dis-‐amenity: R 57 -‐ Emissions: R 29 -‐ Transport: R 24

Summary of exis8ng cost numbers for Cape Town

•  Best available es8mate of full municipal cost of landfilling (2010) is in order of R327/t – Municipal cost of landfilling = R216/t – External costs of landfilling = R111/t

•  These figures must be compared with financial and external costs of alterna8ve waste service delivery mechanisms

Direct and indirect costs of alterna8ves

•  Direct costs – Addi8onal Costs to Collect (incl. Transport) – Addi8onal Costs to Process

•  Indirect costs – Avoided Disposal Costs – Decrease in Revenue from Disposal

– Savings in Planned Expansions of Landfills

Landfilling as default op8on •  Cape Town’s S78(3) ASD assessment concluded: “It remains

financially more feasible to landfill waste rather than to collect, process and divert waste … if funded by the City alone”.

•  Interven8ons are costly, in general more costly than current default landfilling op8on

•  Es8mated direct and indirect costs of landfilling in Cape Town at R220–R250/t*

•  Municipali8es, and thus residents, should not bear costs alone •  There is value in waste, waste is a resource with financial value

–  Private sector involvement in alterna8ve op8ons for managing post-‐consumer waste needed

–  Towards PPPs •  Move towards precau8on; responsible produc8on and

consump8on – address the waste problem closer to source for real sustainability

*subject to changes in medium term budgets on disposal

Conclusions •  Landfills have undesirable environmental impacts •  Landfill space is a growing concern •  Waste trends are strongly influenced by socio-‐economic condi8ons •  Cost comparison needed between all waste management op8ons,

incl. baseline financial, addi8onal and external costs –  External costs in order of R100-‐R120/t, but site specific

•  Landfills remain a least-‐cost op8on when compared to alterna8ve waste management systems –  Affordable tariffs to broad popula8on a key concern

•  Certain waste streams are valuable resources in local economies •  Develop cost-‐sharing model between municipali8es and private

sector to ensure sustainable provision of recycling services

Acknowledgements This presenta8on is based on work done for the City of Cape Town in the period 2008-‐2011, both in own capacity and as part of a team managed by Akhile Consul8ng. Key documents are:

Akhile Consul8ng. 2011. MSA Sec-on 78(3) to Assess Alterna-ve Service Delivery Op-ons RFP NO: 554C/2008/09 CONSOLIDATED REPORT. Final Report (Version 7.0) prepared for Solid Waste Management Depatment, City of Cape Town, 4 February 2011

De Wit, M.P. & Nahman, A. 2009. Cos-ng the Integrated Waste Management Bylaw with specific reference to airspace savings. Drav report to Solid Waste Management Department, City of Cape Town and School of Public Management and Planning, University of Stellenbosch, 30 June 2009

the economics of landfills

Business