private sector participation in integrated sustainable ...file/dis3381.pdfprivate sector...

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 well-

addressed 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 policy-

makers 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

I

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 Middle-

Income 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

Table of Contents

II


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


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

Table of Contents

III

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

Table of Contents

IV

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

Table of Contents

V

11.6 Implications and Directions for Policy and Practice ..........................................251

List of References ................................................................................................................ XI

List of Annexes ................................................................................................................. XXI

List of Figures

VI

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

List of Tables

VII

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

List of Tables

VIII

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

Abbreviations

IX

Abbreviations

ADB Asian Development Bank

ANPE National Agency for Environmental Protection (Agence Nationale pour la

Protection de l’Environnement)

A.D. Anno Domini

AGBAR Aguas de Barcelona

BBO Buy Build Operate

B.C. Before Christ

BOO Build Operate and Own

BOT Build Operate and Transfer

BOOT Build-own-operate-transfer

BTO Build Operate and Transfer

CBO Community Based Organisations

CDR Council for Development and Reconstruction

CEDARE Centre for Environment & Development for Arab Region and Europe

CESPA Compania Espanola de Servicios Publicos Auxiliares

CP Community Participation

CWG Collaborative Working Group

CSCs Common Service Councils

DBO Design Build and Operate

e.g. Exempli gratia. (for example)

ESM Environmentally sound management

Etc. Et ectera (and so forth)

EU European Union

FDI Foreign Direct Investment

GDP Gross Domestic Product

GEF Global Environment Facility

GNP Gross National Product

GTZ German Technical Co-operation (Deutsche Gesellschaft für Technische

Zusammenarbeit)

IDRA International Debt Restructuring Agency

ICSID International Centre for Settlement of Investment Disputes

IDB Inter-American Development Bank

IEA International Energy Agency

IETC International Environmental Technology Centre

IPCC Intergovernmental Panel on Climate Change

IFC International Finance Corporation

Abbreviations

X

IFI International financial institutions

IMF International Monetary Fund

IFI International Financial Institutions

ISSWM Integrated Sustainable Solid Waste Management

LBO Lease Build Operate

LMIC Low- and Middle Income Countries

MCD Municipal Corporation of Delhi

MDG Millennium Development Goals

METAP Mediterranean Environmental Technical Assistance Project

MSWM Municipal Solid Waste Management

NAFTA North American Free Trade Agreement

NDMC New Delhi Municipal Corporation

NGO Non-governmental organisations

NIMBY Not In My Back Yard

OECD Organisation for Economic Co-operation and Development

PAHO Pan American Health Organization

PMO Prime Minister's Office

PPP Public Private Partnerships

PRS Poverty Reduction Strategy

PSP Private Sector Participation

RSWMP Regional Solid Waste Management Project

RTO Rehabilitate Transfer Operate

SKAT Swiss Centre for Development and Cooperation

SW Solid Waste

SWM Solid Waste Management

TZS Tanzanian shilling

UMP Urban Management Programme

UN United Nations

UNDP United Nations Development Programme

UNEP United Nations Environmental Programme

UNDP United Nations Development Programme

UNICEF United Nations Children’s Fund

US United States

UWEP Urban Waste Expertise Programme

WASH Water Sanitation Hygiene

WHO World Health Organisation

WRI World Resources Institute

WSSD World Summit on Sustainable Development

WSSP Water and Sanitation Programme, UNDP/World Bank

1. Background to the Research

1

I. INTRODUCTION


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 low-

income 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.


2

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 “throw-away” 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.


3

More waste managed indiscriminately, more

pollution

Rapid urbanisation, inadequate financial means

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.


4

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).

Less pressure on the municipal

budget, more flexibility Privatisation, economic growth

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).


5

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.



17 However, the decision to privatise a public service should not be based on ideological considerations but rather on economic merits.

2. Research Issues and Hypotheses

6


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.


7

Minimisation

Transport

Collection

Landfill

Hie

rarc

hy P

rincip

le

Priv

ate

Secto

rTreatment

Minimisation

Transport

Collection

Landfill

Hie

rarc

hy P

rincip

le

Priv

ate

Secto

rTreatment

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 contractor-

agency 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.


8

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-Agent26 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.


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.


9

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

BOO33 , 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.


10

Hypotheses Problems

Privatisation: more foreign investment, more economic growth

• Bankruptcy: problems with “On again” / “Off again”

• Bearer of hazards remediation costs International private sector: high interest of more generation of waste

• Conflict of interest with hierarchy principle

Efficient PSP: competition • Long-term contract: no competition, risky • Competition in same areas: collision effect

PSP model: franchise34 Waste element: collection

• Non-payment: contradiction of public goods theory

PSP model: contract management Waste element: collection

• Low rate of cost recovery • Contradiction of polluter pays principle • No incentive for waste minimisation

PSP model: concession Waste element: landfill management

• In case of bankruptcy: contradiction of principle of continuity,

• More waste to dispose of: contradiction of hierarchy principle

PSP model: BOOT Waste element: landfill management

• 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

PSP model: open competition Waste element: collection

• Higher cost, contradiction of public goods theory, collision effect

• Adequate tariff: Asymmetric Information PSP model: open competition Waste element: landfill management

• Higher cost, contradiction of continuity and of non-exclusivity principle

• Lack of adequate tariff: Asymmetric Information

PSP model: BOO • 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.


11

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;

4. To design an appropriate conceptual framework for achieving ISSWM based on the

results obtained from objectives 1, 2 and 3.


12

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?


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, Cointreau-

Levine 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


13

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?


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.


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


14

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 small-

and 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.


15

2. Inadequate SWM is negatively impacting public health, the environment and the

national economy in LMIC;

3. 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;

4. All citizens are indiscriminately and negatively affected by inadequate SWM.

2.4 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


16

will be subject to careful analysis, in particular with regard to the compatibility of the

concept of ISSWM with PSP models.

{

ISSWM

E M P I R IC A

L

T H E O R Y

Strategy of International

Organisations

METAP illustrative Case Studies

CESPA Case study

Waste Collection

Contracting-out

Privatisation and PSP

Goods and Market Theory

CONCEPTUAL FRAMEWORK

Introduction

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


17

establish my own ISSWM concept in Section IV, and to analyse and interpret the single-

case 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.


18

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



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.


19

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

PSP SWM

Mashreq / Maghred

Morocco

Contracting-

out

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.


20

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.

3. Solid Waste Management

21

II. LITERATURE REVIEW

{

ISSWM

E M P I R IC A L

T H E O R

Y


Organisations


CESPA Case study

Waste Collection

Contracting-out




Introduction

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.


22


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 ever-

growing 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.


23

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).





24

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









58 In his book „Vues sur la propreté de Paris, 1782“.


25

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).


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).


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).


26

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).


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.



27

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”




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.




28

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


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 co-founders 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).



29

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.


86 This can be counted as the first experience of waste segregation in this country.





30

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.


31

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.


32

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.


33

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 legislation104 , 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 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).


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.


106 Klunder, A./Anschütz, J., Integrated Sustainable Waste Management, WASTE, 2001, p. 10.


34

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 Definition

Construction debris Detritus minerals from construction and demolition Organic waste Biodegradable component of municipal waste (e.g. food and

yard waste) Household waste Waste from private households Household-commercial waste

Waste from commercial establishments, businesses, the service sector, public institutions, and industries that possess similar characteristics than household waste

Commercial waste Waste with characteristics similar to household waste Municipal solid waste (MSW)

Household, bulky, household-like commercial, yard, open 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.


35

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 pre-

nineteenth 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.


36

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-


37

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.

4. Solid Waste Management in LMIC: Key Features

38


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.


39

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 low-

income 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.


40

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.


41

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 often-

illegal 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.



42

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 socio-

economic 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.


124 Cointreau et al. 2000; Bartone et al., 1994, Leitmann, J. 1995.



43

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.

Generation rates kg / capita/day Low-income

country

Middle-income

country

High-income

country

Mixed urban waste – large city

0.5 to 0.75 0.55 to 1.1 0.75 to 2.2

Mixed urban waste – small to medium city

0.35 to 0.65 0.45 to 0.75 0.65 to 1.5

Residential waste only 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.


44

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.


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.


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.


45

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 sanitary-

related 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


46

sources137, 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 low-

income 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 LMIC138 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.



47

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 large-

scale 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 Cointreau-

Levine (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.


48

Low-income

countries

Middle-income

countries

Waste generation (kg/person/day) 0.3 ~ 0.6 0.7 ~ 1.1

Collection coverage Less than 70% 80 to 90%

Disposal costs (US$/person/year) Less than 1 1 – 3

SWM expenditure in total municipal

budget (%)

15.4 ~ 38 6 ~ 23,2

Recycling 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





49

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-


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.


50

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 health149 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).



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.


51

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 Delhi156, 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.


52


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


5. Theoretical Principles of ISSWM

53


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 NACHHALTIGKEIT- DIE ZEIT Nr. 48/ 25.11.1999, page 98.



54

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 inter-

related collection and treatment options, at different habitat scales (household,

neighbourhood, city). In addition, it involves all stakeholders, be they governmental or non-

governmental, 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.


55

of municipal officials represents the beginning of an alarming tendency towards donor-

dependency.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.


56

• 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.


57

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 so-

called “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.


58

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, decision-

makers 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


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.


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).


59

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.




60

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

Effectiveness193 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 socio-




61

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 non-

payment 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



62

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.


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:


63

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?

6. Privatisation and Private Sector Participation

64


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.


65

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 cross-

border 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.


66

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.


67

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.

5) 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

6.2 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.



68

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


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.


69

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.


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.


214 Savas, E., Privatisation and PPP, New York: Seven Bridges Press, 2000, p. xiv.


70

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)”.


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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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




223 Sclar, E. D., Economics of privatisation, 2000, Foreword Page viii.



226 However evidence in the field of ISSWM in LMIC is still lacking.


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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.



230 Cointreau-Levine, S./Coad, A., PSP in MSWM, Part I : Executive overview , St Gallen: SKAT, 2000, p.8.


73

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).

Opponents233 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 sub-

national levels. Secondly, privatisation subordinates broader public goods, including long-

term 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.


233 Weizsäcker, E./Yong, O./Finger, M., Limits to Privatisation, London: Earthscan, 2005, pp. 11-12.


74

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 state-

owned 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 state-

owned, 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


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.



75

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.




76

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.





77

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.


78

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 labour-

intensive 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


246 Drefus, M., Régulation service public, Paris : LED, Colloque international, 2005.

247 In French “Gestion déléguée”.


79

to the private sector. Delegation248 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 “on-

again / 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


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).


251 These schemes are sometimes referred to as PPP or P3.


80

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 Duration Features Limitations

Street sweeping Not usual Waste collection Not usual Waste transport Not usual Transfer station Feasible 3 years

to 15 years

• Joint venture between public and private

• Costs and profit sharing • Private sector makes

investment • Private sector provides

technical expertise

• Symmetric Lack of Information

• High degree of scrutiny required

• Contestability • Difficulties in

applying penalties Recycling treatment plant

Feasible 3 years to

15 years


• Costs and profit sharing • Private sector provides

technical expertise



applying penalties Composting treatment plant

Feasible 5 years to

30 years



technical expertise

• Degree of scrutiny must be high


applying penalties Landfill management

Feasible 6 months to

2 years



technical expertise



applying penalties

Table 7: Limitations of Public-Private Partnerships model to SW elements



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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.





82

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





83

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).


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).


84

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.



85

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.


86


Street sweeping

common 6 months to

2 years

• Public authorities legally responsible for the service

• Low technology required • Unbundling in

geographical section • High involvement of

national SME • Low economic risk • Labour intensive

• Challenge in establishing threshold in contractual agreement

• Sound public awareness required

• High transaction costs

Waste collection and transport

common 6 months to

2 years



national SME • Low economic risk

• Setting up threshold in the contract challenges

• Sound public awareness required

• High transaction costs • Risk “On-again / Off-

again” • Principal-Agent

problem • Asymmetric

Information (Symmetric Lack of Information)

Transfer station

common 3 years to

10 years

• Competition foreclosed after bidding

• Risk “On-again / Off-again” 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)

Recycling treatment plant

common 3 years to

15 years


• same as above

Composting treatment plant

common 3 years to

15 years


• same as above

Landfill manage-ment

common 5 years to

30 years


• same as above

Table 8: Limitations of contracting-out/delegation to SW elements


87

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.



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).


88


Street sweeping

Not very common

6 months to

2 years

• Exclusive rights to perform in a zone

• Private sector pays a fee for the license and charge directly beneficiaries



national SME

• Difficulties in establishing threshold

• Challenge public goods theory by non-payment of beneficiaries


Quite Common

6 months to

2 years

• Exclusive rights to perform in a zone

• Private sector pays a fee for the license



national SME

• Collision effect • Challenge public goods

theory by non-payment of beneficiaries

• Free-rider problems

Transfer station

Not very common

3 years to

10 years


• Private sector pays a fee for the license

• Weakening public management



Not very common

3 years To

15 years

see above • Weakening public management

• Free-rider problems Composting treatment plant

Not very common

3 years to

15 years


• Free-rider problems Landfill management

Not very common

5 years to

30 years



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.


89

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-Own-

Operate (BOO), Build-Transfer-Operate (BTO), Contract-Add-Operate (CAO), Develop-

Operate-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.


90

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.


Street sweeping

Not very common

6 months to 2 years


Not very common

6 months to 2 years

Transfer station

Quite common

3 years to

10 years

• Private sector provides financing

• Key driver: Polluter pays principle (user charging)




Quite common

3 years to

15 years


• Generation of fees by selling recycling materials

• See above

Composting treatment plant

Quite common

3 years to

15 years


• Generation of fees by selling compost

• See above

Landfill management

Very common

5 years to

30 years



• High quantity of waste required

• Minimum quantity of waste required

• No incentive in waste treatment


• Problems with hierarchy principle

Table 10: Limitations of concession model to some SW elements



91

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, RTO277. 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. BOT278 and its many variations are used


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).



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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.


93

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

Not very common


Common 6 months – 2 years

• Waste generator contracts directly private firms

• Collision effect • Contradiction to the

public goods theory Transfer station

Not very common

3 years – 10 years

Competition foreclosed after bidding Private monopoly/oligopoly instead of public

monopoly Recycling treatment plant

Not very common



monopoly Composting treatment plant

Not very common


Competition foreclosed after bidding Private monopoly/oligopoly instead of public monopoly

Landfill management

Not very common



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.


94

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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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



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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,


284 Harper, M., Micro-Privatization, 2000, p. 14.



97

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.

7. Goods, Market and Organisational Theory

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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.


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.


99

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 non-

excludability. 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.


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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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.



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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

Â=s i

j

XXj1

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 “free-

riders” 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.



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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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 non-

excludable. 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




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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


311 Olson, M., Theory of Groups, Cambridge: Harvard University Press, 1980, p. 2.


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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


313 Private Provision of Public Goods and Services (Deepak Lal).


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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 neo-

classical 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.


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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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 free-

riding 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.


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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.



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.





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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.


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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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

j

xyixy MRSMRS = for all i and j, (exchange efficiency)341

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.


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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That is qKL

pKL MRTSMRTS = 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

xyxy MRTMRS = (top-level conditions)344

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 decision-

making 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

Â=

=n

izy

i

zyMRTMRS

1

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 non-

excludability characteristic of those goods.







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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 contractor-

agency 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.



351 Demsetz (1993) cited in Sclar, E. D., Economics of privatization, 2000, p. 15.


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1. Costs or benefits are inadequately expressed in prices;

2. 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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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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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 selection360, and moral hazards.361 A difficulty in

drafting contracts is dealing fairly and adequately with unforeseen circumstances. A well-

constructed 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 trade-

off 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



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.



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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:



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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 market-

based 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




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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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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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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 inter-

organisational 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.


369 ABC stands for activity-based cost accounting.

8. International Organisations and Privatisation Policy

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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.


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 sector378 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 middle-

income 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.



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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.

d) 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

e) 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


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.



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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 (Cointreau-

Levine 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.



131

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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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.


134

• 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.


135

International Organisations Objectives

1 United Nations Environment Programme (International Environmental Technology Centre)

Collection of technical information and accumulation of appropriate technologies for SWM

2 United Nations Development Programme

Promotion of SWM in LMIC in cooperation with the World Bank, UNIDO, UNEP, and UNCHS

3 United Nations Industrial Development Organisation

Assistance to SWM focusing on African cities

4 United Nations Institute for Training and Research

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

5 International Labour Organisation 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

6 United Nations Centre for Human Settlements (UNCHS-Habitat)

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.


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,


136

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 over-

indebtedness, 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.

9. Illustrative Case Studies

137

III. EMPIRICAL EVIDENCE

{

ISSWM

E M P I R IC A L

T H E O R Y


Organisations


CESPA Case study

Waste Collection

Contracting-out




Introduction

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.


138


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 METAP-

RSWMP 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


139

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.


140

However, some contractual agreements have failed, due to insufficient funding and non-

fulfilment 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


141

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. 25992-MOR 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.


142

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.


143

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.


144

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.


145

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 Total

quantity of

waste

(tons/day)

Annual contract

value at start of

service

(L.E. Million)

Price

(L.E./ton)

Operator

Alexandria 2,700 85 86 CGEA Onyx416 (International)

Cairo North District

52 AAEC417 (International)

Cairo East District

59.5 (FCC and Urbaser) (International)

Cairo West District

48 FCC and Urbaser (International)

Giza Urban District I

1,400 36 Jacorossi418 (International)

Giza Urban District II

1,600 44.9 FCC419 (International)

Suez 325 9 75 Tanzifco420 / MD (Regional)

Aswan 435 12 ICC (Consortium National

& International)

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.


146

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 Fees per Month

[L.E.]

Households 2 – 15 Small offices, workshops and commercial shops 3 – 65 Commercial, industrial and medical activities 5 – 80 Large consumers, hospitals, tourist establishments, hotels, etc.

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$.


147

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,


148

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.


149

Principles /

Theories

Analysed Parameters Weaknesses Strengths

Ã1

Ã1

Hierarchy

principle

Ã1

Analysis of national waste legislation with respect to “Hierarchy Principle”

Law No.4 for 1994 takes into account SW treatment

Accompanying measures for recycling

SW transport to the Zabbaleen area for recycling

Accompanying measures for organic treatment

SW transport to the Zabbaleen area

Polluter pays

principle

% Cost recovery <100%

Areas covered / Areas to be covered

More areas covered than prior to PSP

I

S

S

W

M

Effectiveness

Local Know-how Sound local knowledge through consortium between international and local firm

Asymmetric

Information

Accessibility to accurate information prior to contracting-out

Non-accurate information regarding waste generated, available facilities and resources

Principal-

Agent

dilemma

Addenda Degree of uncertainty

Tender documents not reflect features of the governorates

Relationship between. private sector and municipalities

Introduction of government agencies for controlling

Frequency of transactions between agent and principal

Periodic meetings, monthly and annual progress reports

Owner of equipment Introduction of appropriate equipment

Relationship between. private sector and beneficiaries

Absence of clear mechanisms to address unforeseen

Less complaints from beneficiaries; sound public awareness programme

P

S

P

Organisational

Theory

Inter-organisational relationships

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)

Od

O

%

%

Rd

R

%

%

Ld

L

%

%


150

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.


151

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


152

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.


153

Principles /

Theories


Ã1

Ã1

Hierarchy

principle

>1

Analysis of national waste legislation with respect to

“Hierarchy Principle”

Absence of legislation

Remuneration modes Per tonnage meaning

no incentive to minimise SW

Accompanying measures

for recycling Transport to the

sorting plant

Accompanying measures

for composting Payment Modus

No area available for composting; landfill

full after 5 years

Transport to the sorting plant

Cost of the service No tax to SW generators

Polluter pays

principle % subsidies from central

government 100%

Continuity

Principle

Managerial capacity of municipality

No experience available within the

municipality

Effectiveness Areas covered / Areas to be

covered Higher than prior to

PSP

I

S

S

W

M

Efficiency Municipal costs versus

private sector costs No competition

Higher costs

Asymmetric

Information

Accessibility to accurate information prior to

contracting-out

Accurate quantity of SW unknown

Principal-Agent

dilemma

Addenda Degree of uncertainty

Contract amended due to more waste

Organisational

Theory

Relationship between private sector and

municipalities Frequency of transactions

between agent and principal

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


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)

Ld

L

%

%

Od

O

%

%

Rd

R

%

%


154

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.


155

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

Ben Arous Jedaida

Area 200 ha 100 ha Capacity 110,000 tons per year 60,000 tons/year Max of waste 300 tons/day 170 tons /day Timetable 24 hours/day (7 days/week) 24 hours/day (7 days/week) Monthly report Tonnage, expenditure, etc. Tonnage, expenditure, etc. Payment (Lump sum) 7,511.280 DT/month 7,511.280 DT/month Payment (Per ton) 2.138 DT/ton 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


156

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 SOMAGED430, 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.

Area 124 ha Capacity 8.4 million of tons Quantity of waste 2,000 – 2,500 tons/day Span of life 12 years Timetable 24 hours/day; 7 days/week Monthly report Tonnage, expenditure, etc. Payment 2.65 DT/ton Lump sum for the 1

st year (security

devices)

200,000 DT

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-PACP06-fr.pdf

430 SOMAGED (Société Maghrébine de Gestion des Déchets): joint venture between French and Tunisian company.


157

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.


158

Principles /

Theories


>1

>1

>1

Hierarchy

principle


Lump sum for Eco-Lef: No incentive to

collect max packaging waste

Payment per ton in the following contract for

ECO-Lef: High incentive to collect max packaging

waste Cost of the service Costs unknown, no

management accounting system

Municipalities bear the cost for SW services

Polluter pays

principle

% subsidies from central government (Incentives to

minimise waste)

Packaging SW collection is paid by manufacturers

3 year contract of Eco-Lef not renewed

Guarantee in the contract, in the case of contract failure, take-over by

municipality within 24 hours

Continuity

principle


1 year management by ANPE prior to contracting-out

I

S

S

W

M

Effectiveness Areas covered / Areas to be covered

Well-defined in contract specification

Asymmetric

Information

Accessibility to accurate information prior to

contracting-out

No accurate information; Quantity of leachate produced in landfill higher than

assumed

P

S

P

Organisational

Theory

Relationship between agent and principal

Frequency of transactions between agent and

principal

Conflict management Satisfaction of private

sector

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)

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



quantity of SW to dispose of; Ld: Quantity of SW disposed)

Ld

L

%

%

Od

O

%

%

Rd

R

%

%


159

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 ever-

growing demand. Finally, the monopoly position of public service providers, including staff

incentives, hinders the urgently required increases in efficiency. Due to the above-

mentioned 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.


160

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


161

2) Direct payments (or fees) for services rendered and

3) 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


162

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


163

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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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.

10. Single Case Study: CESPA

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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 socio-

economic 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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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.


167

Tests Description Case study tactic Phase of research

in which tactic

occurs

Construct validity

Establishing correct operational measures for the concepts being studied

Use multiple sources of evidence Establish a chain of evidence

Data collection Data collection

Internal validity435

Establishing a causal relationship

Perform pattern-matching Undertake explanation-building

Data analysis Data analysis

External validity436

Establishing the domain into which a study’s findings can be categorised

Use replication logic in multiple-case study

Research design

Reliability437 Demonstrating that the operations of a study can be repeated with the same results

Use case study protocol Develop case study data base

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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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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Mu

nic

ipa

l Actio

n P

lan

Macroeconomic

framework

Privatisation policy Legislative

framework

SWM policy

Socioeconomic

Features

Typological

classification

SWM Services Contracting-out of

the SW services

National Strategy

Mu

nic

ipa

l Actio

n P

lan

Macroeconomic

framework

Privatisation policy Legislative

framework

SWM policy

Socioeconomic

Features

Typological

classification

SWM Services Contracting-out of

the SW services

National StrategyNational Strategy

Figure 8: Methodological approach: “National level” and “Municipal level”

One waste element, namely “waste collection”, and one PSP model, namely “contracting-

out”, 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/.


170

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 well-

designed 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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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 contracting-

out 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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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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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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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

% waste to recycle (R) versus % recycled (Rd)

Accompanying measures for minimising and recycling

% organic waste (O) versus % waste treated (Od)

Accompanying measures for treatment

Hierarchy

principle

% waste to dispose (L) versus % waste to be disposed of (Ld)

Contract specifications, payment modus

% cost recovery Socio-economic affordability Polluter pays

principle % subsidies from central government

Incentives to minimise waste

Managerial capacity of CESPA Continuity

principle


Effectiveness Areas covered / Areas to be covered

Local Know-How

Equity Degree of satisfaction of areas covered

I

S

S

W

M

Efficiency Costs under municipal administration versus costs of private sector

Asymmetric

Information

Accessibility to information

Principal-Agent

dilemma

Addenda Degree of uncertainty Relationship between Agent and Principal Frequency of transactions between agent and principal

P

S

P

Organisational

Theory

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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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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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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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.


179

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 know-

how, 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.


181

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 Article Specifications

Dahir of 25 August 1914 Article 5 Unhealthy and harmful premises requiring an authorisation

Dahir of 11 April 1922 Article 6 Relating to fishery, prohibition of polluting waters

Law n°10-95 relating to water management

Article 54 Prohibition of disposal of waste in rivers, wells, etc.

Law n°78-00 of 3 October 2002

Article 39 Responsibility of the municipalities to collect, to transport, to treat and dispose household waste and similar

Law n° 78-00 regarding municipal charter

Article 69 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 Subject

Law N° 11-03 Dahir no. 1-03-59 of 10 Rabii I 1424 (12 May 2003)

Protection and Improvement of the Environment

Law No 12-03 Dahir no. 1-03-60 0f 10 Rabii I 1424 (12 May 2003)

Environmental Impact Studies

Law n°13-03 Dahir no. 1-03-61 of 10 Rabii I 1424 (12 May 2003)

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. 13-

03) 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).


187

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 Legislation Specifications

Hierarchy principle

Chapter II, section I, article 7 Chapter IV, section I, article 42

Avoidance and reduction of waste Re-use, recycling and treatment

Polluter pays principle

Chapter I, section I and article 2 Application of “user pays” and polluter pays principle

Liability Chapter II, section I, article 7 Chapter IV, section I, article 41

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

Principles

Legislation Specifications

Hierarchy principle Chapter III, article 4 and 6

Prevention, reduction of harmful emission, avoidance


Chapter V, article 14 Instructions to avoid harmful emission, Penalty between 1,000.00 MAD and 20,000.00MAD, also 1– 6 months prison

Liability Chapter II, article 2 Individual, public body Regulatory system Chapter IV, article 10 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

Legislation Specifications

Hierarchy principle

Chapter 1 Avoidance and reduction at production stage, priority not specified


Article 23 Fixation of waste fees by the municipalities

Public awareness Chapter 1 Public awareness of waste management Monitory system Chapter 1 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).


189

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 “off-

shore” 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 Areas

[ha]

Percentage

[%]

Slums 9.83 0.59 Non regulated settlements 283.44 17.15 Villa (low density) 110.96 6.71 Villa (high density) 381.46 23.08 Building 219.69 13.29 Individual housing (simple) 424.82 25.71 Old Medina 23.58 1.42 New Medina 48.50 2.94 Rural housing (low density) 98.01 5.93 Rural housing (high density) 52.37 3.18 Total 1,652.6 100.00

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».


193

(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 CESPA470 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

Year

2001

Year

2002

Year

2003

Year

2004

Year

2005

Year

2006

Population estimated 174,519 179,056 183,711 188,488 193,389 198,417 203,576

Household waste and similar [Ton/Year]

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).


195

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 hammam471 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


196

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.


197

Recycled materials [Kg/week]

Plastic (soft) 6,000.00 White bottles 3,080.00 Can PVC (1 litre and 5 litres) 3,000.00 Paper 2,700.00 Cardboard 2,500.00 Rest of fabric 2,000.00 Coloured glasses 1,000.00 Bottle (beers) 1,000.00 items Metal (aluminium and cupper) 200.00 Rubber sole 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/economie-details37978.html?mod=petition-football on the 22 July 2005.


198

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 inter-

organisational relationship is anything but good.


199

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 Price per ton [MAD]

Collection and transport of household waste and similar to the landfill

178.07

Manual and mechanical sweeping of the roads in sectors with a frequency of 3days/7days

5,784.17


6,790.83

Manual and mechanical sweeping of the roads in sectors with a frequency of 1day/7days

6,931.67


7,083.33

Manual and mechanical sweeping of the roads in sectors with a frequency of 1day/15days

8,585.83

Collection and transport of green waste, gravel, bulky waste 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.


200

Organic fraction

70%

Paper/Cardboard

10%

Plastic

8%

metal

4%

ceramic

2%miscellaneous

6%

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 by-

products 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 ».


201

Landfill basis and

insulation layer

52%

Leachate (Collection

and treatment)

19%

Site services

5%

Gas (Collection and

Treatment)

9%

Site offices

8%

Infrastructure

6%

Fencing

1%

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.


202

Analysed Parameters Interpretation

«1

«1

»1

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

and Fehler! Verweisquelle konnte nicht gefunden werden..

Qualitative Data Interpretation


No incentives to recycle by CESPA Strong informal sector

Accompanying measures for organic treatment

No incentives to treat waste by CESPA

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 so-

called “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

Ld

L

%

%

Rd

R

%

%

Od

O

%

%


203

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

Interpretation

Cost recovery [%] <40% Subsidies from government [%] > 60% Generation of waste Quantity of waste generated differs between districts,

taxes shall not be the same for all beneficiaries Affordability 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.


204

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


205

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. ».


206

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.


207

Journal of daily

activities Numbered

register481

Protocol of road

incidents

Log book482

• 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.

• Day, date, hour of incoming letter,

• The origin (telephone, letters, message…),

• Name of the person,

• Text of the demand and eventually the motivation,

• 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 contracting-

out 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 ».


208

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

ÙÚ×

ÈÉÇ

+

+ÙÚ

×ÈÉ

Ç++

+

++=

TVAo

TVA

Mtno

Mtn

Go

G

ChtpooS

ChtpSV

100

10040.010.0

)1)(2(

)1)(2(35.015.01


209

Price variation for street sweeping

ÙÚ×

ÈÉÇ

+

+ÙÚ

×ÈÉ

Ç++

+

++=

TVAo

TVA

Mtno

Mtn

Go

G

ChtpooS

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100

10020.005.0

)1)(2(

)1)(2(60.015.02

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.


210

Municipality of Tangier

[District) Total Households

Charf (Mghogha – Souani) 257,826 55,984 Tanger-Médina 173,477 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


211

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).


212

Non Performance of Services Interpretation

1 Sector not swept or not collected Quantity not mentioned 2 Solid waste left (non collected or non swept) or

not properly collected after a period of two hours after warning from the municipality

Quantity not mentioned

3 Waste containers destroyed by CESPA personnel and not replaced 24 hours after warning from the municipality

What about destruction by the beneficiaries?

4 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


213

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 Interpretation

Relationship between Agent and Principal

Introduction of government agencies for controlling

Frequency of transactions between agent and principal

Periodic meetings, monthly and annual progress reports at the beginning however indifference from municipality’s side

Owner of equipment Introduction of appropriate equipment Relationship between private sector and beneficiaries

Relationship not homogenous, good relationship where public awareness programme conducted

Duration of the contract Six (06) years Payment of the private sector Payment not always on terms, delay on payment Satisfaction of private sector Not completely dissatisfied, participation in the next

bidding left opened Satisfaction of municipalities 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.


214

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 inter-

organisational 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).


215

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 inter-

organisational 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 non-

asphalted 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.


216

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 high-

income 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

Eff

ecti

ven

ess o

f C

ES

PA

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).


217

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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10.4.9 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


219

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


220

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.

11. Conclusion about the Research Questions

221

IV. CONCLUSIONS AND IMPLICATIONS

{

ISSWM

E M P I R IC A L

T H E O R Y


Organisations


CESPA Case study

Waste Collection

Contracting-out




Introduction

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.


222

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 long-

term 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.


223

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


224

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.


225

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


226

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 “free-

rider”, 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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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 non-

contradictory, 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 well-

planned 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 free-

riders). 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 Qena-

Egypt 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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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 inter-

organisational 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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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 inter-

organisational 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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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


239

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.


240

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 never-

ending 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).


241

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


242

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


243

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. 13-

03, 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 (so-

called 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.


244

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



245

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 Results

Ã1

Ã1

Ã1

Table 40: Ratios to achieve hierarchy principle



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):

LT XX >

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

Od

O

%

%

Rd

R

%

%

Ld

L

%

%


246

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 contracting-

out 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


247

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.


248

Public Private Partnerships Contracting-out Franchise Concession Open Competition

Street Sweeping Further empirical research required • Comprehensive threshold

• Sound public awareness • Consideration of transaction costs • Unbundling geographically the

sector • Involvement of national SME,

CBO, NGO

• Comprehensive threshold

• Sound public awareness

• Unbundling geographically the sector

• Involvement of national SME, CBO, NGO

Further empirical research required

• Collision effect • Not efficient • Challenge public

goods theory

Waste Collection Further empirical research required • Comprehensive threshold

• Sound public awareness • Consideration of transaction costs • Unbundling geographically the


CBO, NGO

• Challenge public goods theory

• Collision effect

Further empirical research required

• Collision effect • Not efficient • Challenge public

goods theory

Waste Transport Further empirical research required

• Comprehensive threshold • Sound public awareness • Consideration of transaction costs • Unbundling geographically the


CBO, NGO

• Challenge public goods theory

• Further empirical research required

Collision effect

Transfer Station • Continuous adaptation of

contract • High scrutiny required • Sound inter-organisational

relationships

• Provision by public management • Provision by private firm else

than those include in transport

• Could be considered like Contracting-out model

• Increasing incentive through payment system (recycling and organic material higher than inert material

• Provision by private firm else than those include in transport

Competition foreclosed after bidding

Recycling treatment

plant

• Continuous adaptation of contract

• High scrutiny required • Sound inter-organisational




• Increasing incentive through payment system

• Provision by private firm else than those

Competition foreclosed

after bidding


249

Public Private Partnerships Contracting-out Franchise Concession Open Competition

relationships include in transport

Composting

treatment plant


• High scrutiny required • Sound inter-organisational

relationships




• Very common • Good inter-

organisational relationships


after bidding

Landfill

management


• Sound inter-organisational relationships

• Comprehensive threshold • Consideration of transaction costs • Sound public management • Good inter-organisation

relationships • Adaptation of contract

continuously


• Comprehensive threshold

• Consideration of transaction costs

• Sound public management

• Good inter-organisation relationships

• Adaptation of contract continuously


after bidding

Table 41: Towards a comprehensive framework of PSP models to achieve ISSWM

Not very common

Common


250

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


251

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 inter-

organisational 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


252

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:

( ) ...+++= BATxxf

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


253

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.

List of References

XI

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Stadtentwicklung“ Informationen zur Raumentwicklung Heft 2/3 1996

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Annexes

XXI

List of Annexes

Annex 1: Classification of countries by region and level of income ..........................XXII

Annex 2: Integrated Sustainable Waste Management............................................... XXIV

Annex 3: Economic development levels and SWM systems in cities ........................XXV

Annex 4: Population of cities with 10 million or more inhabitants .......................... XXVI

Annex 5: Waste characteristic in LMIC................................................................... XXVII

Annex 6: Public versus private goods in solid waste management.........................XXVIII

Annex 7: Private sector arrangements in solid waste management .......................... XXIX

Annex 8: Recapitulation of the limitations of some PSP models ...............................XXX

Annex 9: Statistics of tourists visiting in Tangier ..................................................... XXXI

Annex 10: Length of stay in Tangier in day................................................................ XXXI

Annex 11: Subdivision of the municipality of Tangier in homogenous zones .......... XXXII

Annex 12: Optimisation of the collection system in Bni Makada ............................XXXVI

Annex 13: Optimisation of the collected routing in Bni Makada ........................... XXXVII

Annex 14: 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

Annexes

XXII

Annex 1: Classification of countries by region and level of income

Sub-Saharan Africa Asia Europe and Central Asia Middle East and

North Africa

Income

group

Sub-

group

East and

Southern

Africa

West

Africa

East Asia

And Pacific

South

Asia

Eastern

Europe and

Central Asia

Rest of

Europe

Middle

East

North

Africa

Americas

Low-

Income

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

Yemen,

Rep. of

Haiti

Nicaragua

continuous…

Annexes

XXIII

Sub-Saharan Africa Asia Europe and Central Asia Middle East and

North Africa

Income

group

Sub-

group

East and

Southern

Africa

West

Africa

East Asia

And Pacific

South

Asia

Eastern

Europe and

Central Asia

Rest of

Europe

Middle

East

North

Africa

Americas

Middle-

income

Lower-

middle

Namibia

South Africa

Swaziland

Cape Verde China

Fiji

Kiribati

Marshall

Islands

Micronesia,

Federated

States of

Philippines

Samoa

Thailand

Tonga

Vanuatu

Maldives

Sri Lanka

Albania

Belarus

Bosnia and

Herzegovina

Bulgaria

Kazakhstan

Macedonia,

FYR1

Romania

Russian

Federation

Turkmenistan

Yugoslavia,

Fed. Rep.

(Serbia and

Montenegro)

Turkey Iran, Islamic

Rep. of

Iraq

Jordan

Syrian Arab

Republic

West Bank

and Gaza

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

Upper-

middle

Botswana

Mauritius

Mayotte

Seychelles

Gabon American

Samoa

Malaysia

Palau

Croatia

Czech Republic

Estonia

Hungary

Latvia

Lithuania

Poland

Slovak

Republic

Isle of

Man

Lebanon

Oman

Saudi

Arabia

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

Annexes

XXIV

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)

Annexes

XXV

Annex 3: Economic development levels and SWM systems in cities

Economic levels

of countries

Activity

Low-income countries Middle-income countries

Waste

minimisation

No organised programs, but reuse and low per capita

waste generation rates are common

Some discussions on waste minimisation, but rarely

incorporated into any organised program

Collection Service is limited to high visibility areas, the wealthy,

and businesses willing to pay

Expanded collection areas. Trucks are used for collection

Recycling Recycling activities are performed by the informal

sector (scrap dealers and waste pickers). Localised

markets for recycling are common

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

Composting No organised programs. Wastes including organic

matter are not put to good use

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

Incineration 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

Incinerators are sometimes used but not common due to

economic reasons

Landfilling Usually open dumping with virtually no environmental

controls

Some controlled and sanitary landfills with some

environmental controls. Open dumping is still common

Costs Collection costs represent 80-90% of the SWM budget.

Collection fees are regulated by some municipalities,

but the quality of collection service is low

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)

Annexes

XXVI

Annex 4: Population of cities with 10 million or more inhabitants

1950 1975 2000 2015

1. New

York

12.3 1. Tokyo 19.8 1. Tokyo 25.2 1. Tokyo 27.2

2. New York 15.9 2. Sao Paulo 18.3 2. Dhaka 22.8

3. Shanghai 11.4 3. Mexico City 18.3 3. Mumbai 22.6

4. Mexico 10.7 4. New York 16.8 4. Sao Paolo 21.2

5. Sao Paulo 10.3 5. Mumbai 16.5 5. Delhi 20.9

6. Los Angeles 13.3 6. Mexico City 20.4

7. Kolkata 13.3 7. New York 17.9

8. Dhaka 13.2 8. Jakarta 17.3

9. Delhi 13.0 9. Kolkata 16.7

10. Shanghai 12.8 10. Karachi 16.2

11. Buenos Aires 12.1 11. Lagos 16.0

12. Jakarta 11.4 12. Los Angeles 14.5

13. Osaka 11.0 13. Shanghai 13.6

14. Beijing 10.8 14. Buenos Aires 13.2

15. Rio de Janeiro 10.8 15. Metro Manila 12.6

16. Karachi 10.4 16. Beijing 11.7

17. Manila 10.1 17. Rio de Janeiro 11.5

18. Cairo 11.5

19. Istanbul 11.4

20. Osaka 11.0

21. Tianjin 10.3

(Source: Paimela-Wheler, A.., World Bank Financed Waste Management Projects, Washington, 2004, P. 18)

Annexes

XXVII

Annex 5: Waste characteristic in LMIC

City

Country

Laos Nicaragua Tanzania Philippines Honduras Poland Paraguay Turkey

Vientiane Granada Managua Dar

es

Salaam

Metro

Manila

Tegucigalpa Lublin Asuncion Adana

Greater

Munici-

pality

Mersin

Greater

Munici-

pality

Component Unit (with

ash)

(without

ash)

Kitchen waste % 16.9 49.84 34.86 42 45.82 47.2 45.27 65.26 36.6 70.77 75.53

Paper % 2.8 5.29 5.37 3.1 15.39 11.5 13.67 11.11 6.4 13.8 9.88

Textiles % 1.6 1.98 1.87 1.2 4.33 2.8 2.1 3.77 1.3 3.43 1.77

Plastic % 6.1 6.11 3.88 2.2 15.6 7.1 4.4 3.8 3.9 6.42 5.87

Glass and wood % 38.2 24.9 27.11 25.3 7.45 11.6 1.61 2.3 22.2 1.04 1.62

Leather and

rubber

% 1.1 0.29 2 0.9 0.8 2.2 2.67 1.83 0.7 0.17 0.29

Combustibles-

Total

% 66.7 88.41 75.09 74.7 89.39 82.4 69.72 88.06 71.1 95.63 94.96

Metal % 3.7 1.11 1.69 2 5.47 1.9 3.31 3.05 1.3 0.72 0.53

Bottles and

glass

% 9.3 1.05 2.91 3.5 2.69 3.5 5.23 6.51 3.1 2.55 3.33

Ceramics and

stones

% (included in

glass)

5.21 8.07 0.4 1.26 12.1 21.74 2.38 2.5 0.96 1.14

Miscellaneous % 20.3 4.22 12.24 19.4 1.19 0.1 - - 22 0.14 0.04

Non

combustible-

Total

% 33.3 11.59 24.91 25.3 10.61 17.6 30.28 11.94 28.9 4.37 5.04

Total % 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)

Annexes

XXVIII

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)

Annexes

XXIX

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)

Annexes

XXX

Annex 8: Recapitulation of the limitations of some PSP models

PSP Model Solid Waste Element Limitations

Franchise Solid Waste Collection Non-payment of some beneficiaries: Contradiction to public

goods theory

Contracting-out Solid Waste Collection Low rate of cost recovery

Contradiction of polluter pays principle

No incentive for waste minimisation

Open competition Solid Waste Collection Higher cost, no guarantee of continuity of the service, non-

exclusivity principle, collision effect

Amount of fees: Asymmetric information or symmetric lack of

information

Concession Landfill management Bankruptcy: Continuity of the service is jeopardised

More waste to dispose of: Contradiction of hierarchy principle

BOOT Landfill management 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

Open competition Landfill management Higher cost, contradiction of continuity and public goods theory

Amount of fees: Asymmetric information

BOO Landfill management No transfer of facilities to LMIC: Contradiction to public goods

theory

BOO Management of transfer

station

No transfer of facilities to LMIC: Contradiction to public goods

theory

Contracting Landfill Eventual conflict between planning and environmental

considerations.

Limited incentive for whole life costing approach to design.

BOT Landfill / transfer stations 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)

Annexes

XXXI

Annex 9: Statistics of tourists visiting in Tangier

Nationalities Year 2001

(January –

September)

Year 2003

January –

September)

Year 2004

January –

September)

1 Moroccan 262,231.00 300,244.00 315,131.00

2 Spain 66,245.00 60,831.00 73,688.00

3 France 32,977.00 36,971.00 40,658.00

4 United Kingdom 17,699.00 15,915.00 17,334.00

5 Arabic countries 12,009.00 11,317.00 12,437.00

6 USA 18,538.00 11,631.00 10,882.00

7 Germany 14,469.00 8,085.00 9,435.00

8 Portugal 6,723.00 13,102.00 6,738.00

9 Italy 6,085.00 4,845.00 5,485.00

10 Netherlands 3,753.00 4,581.00 4,854.00

11 Others 42,484.00 34,421.00 36,726.00

Total 483,213.00 501,943.00 533,368.00

(Source : Ministère du Tourisme, de l’Artisanat et de l’Economie sociale, 2004)

Annex 10: Length of stay in Tangier in day

Nationalities Year 2001

(January –

September)

Year 2003

January –

September)

Year 2004

January –

September)

1 Moroccan 2 2 2

2 Spain 2 2 2

3 France 2 2 2

4 United Kingdom 3 2 2

5 Arabic countries 3 3 3

6 USA 1 1 2

7 Germany 2 2 3

8 Portugal 2 4 3

9 Italy 3 2 2

10 Netherlands 2 2 2

11 Others 2 2 2

(Source : Ministère du Tourisme, de l’Artisanat et de l’Economie sociale, 2004)

Annexes

XXXII

Annex 11: Subdivision of the municipality of Tangier in homogenous zones

Homogenous

Areas

Areas

[ha]

Type of Housing Key features

Medina Medina 30 Old Medina Level of accessibility to the city: average

Level of internal accessibility: bad

Deficiency in terms of environmental infrastructure

Hasnona 46 Individual housing Level of accessibility to the city: average



Degradation of Merkala beach

Marshan 80 Individual housing Level of accessibility to the city: good



Network road insufficient, enclosure of the northern zone

Dradeb 29 New Medina Level of accessibility: Average


Level of environmental infrastructure: Between high and average

Aïn Ayani 26 Simple individual housing

(designed and non-designed)

Level of accessibility: Average

Level of environmental infrastructure: Between high and average

San Francisco I 10 Individual housing Level of accessibility: good

Level of environmental infrastructure: high

City centre –

Western part

San Francisco II 80 Apartment building Level of Accessibility: good


Traffic congestion

Centre Souk 66 Apartment building Level of accessibility city: good


Lack of green spaces

Traffic congestion: Boulevard Pasteur

M’Sallah 29 New Medina Level of accessibility to the city: good



City centre

South

Ville Moderne 29 Apartment building Level of accessibility to the city: good


High concentration of civil services

continuous…

Annexes

XXXIII

Homogenous

Areas

Areas

[ha]


Plage 69 Apartment building Level of accessibility: good


Seasonal traffic congestion to the port

Environmental pollution of the sea

Moulay Ismail 52 Apartment building

Slums

Level of accessibility to the city: good


Seasonal traffic congestion to the port

Environmental pollution of the Oued (river) Souani

Souani 145 Simple individual housing

(designed and not designed)

Level of accessibility to the city: bad

Level of environmental infrastructure: average to high

Peri Central

South-west Hay Jedid 145 Simple individual housing


Level of accessibility to the city: good

Level of environmental infrastructures: high to average

Pasadena 145 Individual housing Level of accessibility to the city: good


Environmental degradation of Oued (river) Souani

Boughaz 145 Simple individual housing

(designed)

Level of accessibility to the city: average

Level of internal accessibility: average - bad

Level of environmental infrastructure: average

Road network: deficiency

Peri-Central

South-east

Beni Makada

west

172 Slums Level of accessibility to the city: average




continuous …

Annexes

XXXIV

Homogenous

Areas

Areas

[ha]


Beni Makada

North East

172 Simple individual housing






Boubana 95 Individual housing Level of accessibility to the city: average




Vielle Montagne 450 Individual housing Level of accessibility to the city: average

Level of internal accessibility: unrelieved landscape



Moujahidine 172 Individual housing Level of accessibility to the city: average

Level of internal accessibility: average



Mestarkhoch 273 Individual housing Level of accessibility to the city: good




Periphery west

Azib Hadj

Kadour I

600 Rural housing (illegal immigrant) Level of accessibility to the city: good


Absence of environmental infrastructure

Road network: non existent

Beni /

Ouriaghel

Ben Dibane

Beni Makada

Kedima

B. Ouriaghel,

B.Dibane, B.

Makada, Kedina

1,553 Illegal immigrant Level of accessibility to the city: bad




continuous …

Annexes

XXXV

Homogenous

Areas

Areas

[ha]


Charf 52 Illegal immigrant Level of accessibility to the city: bad

Level of internal accessibility: very bad



Arènes 130 Illegal immigrant and simple non-

designed housing

Level of accessibility to the city: bad

Level of internal accessibility: very bad



Baie de Tanger I 650 Simply designed individual housing

and rural housing





Baie de Tanger

II

270 Individual housing Pollution of the sea

Erosion of the beach

Pollution of the Oued (river) Moghogha

Periphery East

Moghogha 1,302 Rural housing, illegal immigrant Level of accessibility to the city: average




(Source : Royaume du Maroc: Schéma Directeur d’Aménagement Urbain (SDAU) Tanger : Rapport final, March 1997)

Annexes

XXXVI

Annex 12: Optimisation of the collection system in Bni Makada

(Source: GTZ)

Annexes

XXXVII

Annex 13: Optimisation of the collected routing in Bni Makada

(Source: GTZ)

Annexes

XXXVIII

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

Annexes

XXXIX

Annex 15: Questionnaire to CESPA

continuous …

Annexes

XL

continuous …

Annexes

XLI

Annexes

XLII

Annex 16: Questionnaire to Municipality

continuous …

Annexes

XLIII

Annexes

XLIV

Annex 17: Residual value of vehicles taken over by CESPA

No Description of Vehicles Entry in

circulation

Total

years

of

service

Unit purchase

price [MAD]

Residual

value [MAD]

1 Renault 16m³ 05-12-1994 4 1,280,000.00 325,575.00

2 Renault 4 m³ 08-08-1992 2 662,000.00 218,750.00

3 Renault 4 m³ 08-08-1992 2 662,000.00 218,750.00

4 Renault 3 m³ 24-12-1993 3 428,000.00 293,018.00

5 Renault 4 m³ 14-09-1994 4 481,500.00 309,296.00

6 Renault 8 m³ 19-09-1994 4 828,500.00 309,296.00

7 Renault 3 m³ 13-12-1995 5 518,250.00 341,854.00

8 Renault 8 m³ 13-04-1995 5 828,500.00 341,854.00

9 Renault 8 m³ 03-04-1996 6 950,000.00 406,969.00

10 Renault 8 m³ 03-04-1996 6 950,000.00 406,969.00

11 Renault 6 m³ 13-12-1995 5 518,250.00 341,854.00

12 Isuzu 5 m³ 24-12-1993 3 560,000.00 284,878.00

13 Isuzu 8 m³ 24-12-1993 3 674,000.00 284,878.00

14 Peugeot Pick-up 2.4 m³ 13-12-1995 5 225,000.00 145,188.00

15 Peugeot Pick-up 2.4 m³ 13-12-1995 225,000.00 145,188.00

Total 4,374,317.00

(Source: contract specifications with CESPA)

Annex 18: Residual value of equipment taken over by CESPA

Description Quantity Unit purchase

price [MAD]

Unit residual

Value [MAD]

Total

Boxes 10 20,000.00 4,000.00 40,000.00

Metallic Bins

1100 L

30 8,730.00 1,746.00 52,380.00

Plastic bins 600 L 20 6,500.00 1,300.00 26,000.00

Total 118,380.00


Annexes

XLV

Annex 19: Description of penalty including rate

No Description of penalty Penalty rate per day

[MAD]

1 Waste in a sector not collected or not swept 10,000.00

2 Management reports not submitted on time 5,000.00

3 Waste not collected or not swept 2 hours after reminding of

the municipality

2,500.00

4 Vehicle not available or not replaced after 2 hours break down 2,500.00

5 Non respect of indicated landfill place 2,500.00

6 Non respect of time schedule 1,000.00

7 Boulevards, streets or place non swept 1,000.00

8 Non evacuated swept waste 1,000.00

9 Non conform loading spreading waste on public road 1,000.00

10 Vehicle on tour in bad condition 500.00

11 Vehicle not cleaned and not painted 500.00

12 Changing of route without permission of the municipality 500.00

13 Daily report not submitted 500.00

14 Non respect of security instructions by the personnel 500.00

15 Waste bins and containers damaged by the personnel and not

replace 24 hours after the reminding by the municipality

100.00

16 Drunk personnel 100.00

17 Any contravention to an article of the contract and not

mentioned above

2,500.00


Annex 20: Wholesalers in informal recycling business in Tangier

Enterprise Business activity Address

Aouama Recycling of packaging plastic for

isolating pipe of electrical cables

Aouama Bni makada Road

Tangier

Placa Torro Recycling of packaging plastic for

isolating pipe of electrical cables

Calame District

Tangier

Route des

Abattoirs

Aluminium foundry Route des Abattoirs

Tangier

Safri Pac Recycling of paperboard and paper Industrial area

Tangier

CMCP Recycling of paperboard and paper Industrial area

Tangier

Dar El Mica Production of plastic items from PVC

pipes

Abou Bahr Bnou Kotayba

Casablanca

Maria Plast Production of plastic items Boulevard My Ismail

Casablanca

Resinor Production of plastic items Boulevard My Sliman Casablanca

Mecano-plast Recycling of plastic bags Bni Amar Street

Casablanca


Annexes

XLVI

Annex 21: Quantity of recycled material in Tangier

Address Recycled material Quantity [Kg/Year]

Lotissement Khair • Transparent plastic for packaging

• Aluminium

• copper

• Glass

• Paper and paperboard

28,800.00

3,650.00

1,000.00

5,000.00

50,000.00

Ennasre

Neighbourhood • Plastic drums

• Transparent plastic for packaging

• Aluminium

• Glass


240,000.00

43,200.00

4,000.00

500.00

10,000.00

Route des Abattoirs • Paperboard and paper

• Plastic for packaging

438,000.00

70,000.00

Mly Ismail Street • Paperboard and paper

• Transparent plastic for packaging

340,000.00

10,000.00

Saada Beni Makada

Neighbourhood • Plastic drums

• Packaging plastics

• Paperboard and paper

10,000.00

10,000.00

140,000.00

Abi Hassan Chadi • Paperboard

• Packaging plastics

200,000.00

40,000.00

Moujahidine

Neighbourhood • Glasses (bottles) 50,000.00

Hakkama • Packaging plastics

• Aluminium

• Copper

• Plastic drums

30,000.00

3,500.00

1,500.00

180,000.00

Aouama • Plastic drums

• Aluminium

• Copper

30,000.00

2,500.00

500.00

My Abdelaziz Street • Scrap iron 430,000.00

Souk Casabarata • Scrap iron 100,000.00


Annex 22: Quantity of recycled material in the landfill

Address Recycled material Quantity [Kg/Year]

Landfill of Tangier

Unit 1 • Transparent plastic for packaging


• Plastic drums

Iron scraps

30,000.00

50,000.00

200,000.00

400,000.00

Landfill of Tangier

Unit 2 • Transparent plastic for packaging


• Plastic drums

Iron scraps

42,000.00

70,000.00

220,000.00

400,000.00


Annexes

XLVII

Annex 23: Revenues generated by recycled materials in Tangier centre


Materials

recycled

Quantity

[Tonnes/year]

Unit price waste

picker [MAD/kg]

Total

[MAD]

Unit price

Middlemen

[MAD/Kg]

Total

[MAD]

Unit Price

Wholesalers

[MAD/kg]

Total

Plastic drums 480,000 0.7 336,000 1 480,000 1.2 576,000.00

Packaging plastic 217,000 2 434,000 3 651,000 3.5 759,500.00

Paper and

paperboard 540,000

0.25

135,000

0.7

378,000

1

540,000.00

Metals scrap 530,000 0.20 106,000 0.4 212,000 0.5 265,000.00

Aluminium 13,650 4 54,600 7 95,550 10 136,500.00

Copper 2,500 5 12,500 7 17,500 12 300,00.00

Glasses 15,000 0.2 3,000 0.5 7,500 1 15,000.00

Sole gums 15,000 1 15,000 2 30,000 2.5 37,500.00

Total 1,813,150 1,096,100 1,871,550 2,359,500.00

Annexes

XLVIII

Annex 24: Revenues generated by recycled materials from the landfill

Materials

recycled

Quantity

[Tonnes/year]

Unit price waste

picker [MAD/kg]

Total

[MAD]

Unit price

Middlemen

[MAD/Kg]

Total

[MAD]

Unit Price

Wholesalers

[MAD/kg]

Total

Plastic drums 420,000 0,7 294,000 1 420,000 1,2 504,000

Packaging plastic 72,000 2 144,000 3 216,000 3,5 252,000

Paper and

paperboard 720,000 0,25 180,000 0,7 504,000 1 720,000

Metals scrap 800,000 0,2 160,000 0,4 320,000 0,5 400,000

Aluminium 4,060 4 16,240 7 28,420 10 40,600

Copper 1,500 5 7,500 7 10,500 10 15,000

Glasses 15,000 0,2 3,000 0,5 7,500 1 15,000

Total 2,032,560 804,740 1,506,420 1,946,600


Annexes

XLIX

Annex 25: PSP in streets sweeping, waste collection and transport in Morocco

Municipality Year Inhabitants Quantity Contractor Duration

[Years]

1 Fès Fès 2005 580,820 169,725 GMF 9

2 Nador Nador 1998 112,00 30,000 NAKAWA 7

3 Essaouira Essaouira 1998 60,000 20,000 GMF 5

4 Tanger ville 2000 174,519 47,120 CESPA 7

5

Tanger Tanger Charf 2000 248,540 67,106 CESPA 7

6 Maknassat

Azzaytoun

2003 120,000 26,280 SEGEDEMA 7

7 Meknès

Hamria

2002 160,000 35,040 SEGEDEMA 7

8

Meknès

Meknès

Ismailia

2000 137,000 28,500 SEGEDEMA 5

9 Rabat Agdal

Riad

2000 94,000 37,750 SEGEDEMA 7

10 Rabat Hassan 2002 157,000 53,294 CGSPONYX 6

11 Rabat

Youssoufia

2002 208,000 59,156 TECMED 6

12

Rabat

Rabat Yaco

El mansour

2002 212,114 59,400 SOS/NICOLL

IN

6

13 El Jadida El Jadida 2002 144,282 39,253 SEGEDEMA /

DRAGUI

TRANSPORT

7

14 Sidi Bennour Sidi Bennour 2004 45,320 12,411 SEGEDEMA 7

15 Azemmour Azemmour 2004 44,577 7,663 SEGEDEMA 7

16 Oujda Oujda 2002 439,861 110,000 CGSPONYX

MAROC

7

17 Kénitra

Maamora

Kénitra

Maamora

2002 173,000 48,622 SEGEDEMA/

DRAGUI

TRANSPORT

7

18 Kénitra Saknia Kénitra

Saknia

2003 193,8830 58,257 SOS/NDD 7

19 Salé Bab

Lamrissa

Salé Bab

Lamrissa

2003 142,520 36,414 SOS/NDD 6

20 Safi Safi 2004 322,183 78,145 CGSP-ONY 7

20 Z1 2004 536,000 294,000 SMARCOLE

CT

10

21 Z2, 4, P5 2004 1,299,000 429,000 TECMED 10

22

Casablanca

Z3, P5 2004 791,000 254,000 SEGEDEMA 10

23 Mohammadia Mohammadia 2004 205,600 46,942 SEGEDEMA 7

(Source: Royaume du Maroc, Ministère de l’Intérieur)

Annexes

L

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 Landfill

management

1 year renewable

Essaouira 60,000 GMF Landfill

management

7 years

Fès 325,653 EDGEBORO Landfill

management

10 years

Oujda 90,000 CSD/CRB Landfill

management

15 years

Berkame 47,000 CSD/CRB Landfill

management

10 years

(Source: Royaume du Maroc, Ministère de l’Intérieur)

Annexes

LI

Annex 27: Total fund credit and loans outstanding per country (1st Part)

(Source: IMF)

Annexes

LII

Annex 28: Total fund credit and loans outstanding per country (2nd Part)

(Source: IMF)

Annexes

LIII

Annex 29: Total fund credit and loans outstanding per country (3rd

Part)

(Source: IMF)

Annexes

LIV

Annex 30: Sanitary landfill, recycling and composting activities at one place

Annexes

LV

Curriculum Vitae

PERSONAL DATA

Name: Patrick Louigueur DORVIL

Date of birth: 01. January 1970

Nationality: 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