Financial Management of Urban Solid Waste Services:

Lessons from a Decade of World Bank Lending

Carl R. Bartone Partnership in Municipal Solid Waste Management Cairo, 10-12 April, 2000

More effective financial management requires:

Improving cost recovery ? Increasing municipal access to sources of investment financing ? Strengthening municipal systems for service cost accounting, budgeting and management information
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Improving Cost Recovery

Introduce residential user charges based on affordability and willingness to pay ? Apply polluter pays principle for IC&I waste, and user pays for residential wastes ? Find more robust collection mechanisms ? Protect the poor through carefully designed cross-subsidies in user charges or taxes
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Options for enhancing cost recovery in developing countries

Instrument User Charges: ? Refuse tax ? Volumetric tariff ? Tipping fee Other Sources: ? Property tax ? Business licenses ? Utility surcharge ? Grants Adequate Revenues? Easily Collected? Polluter Pays? Politically Feasible? Easily Enforced?

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Increasing municipal access to sources of investment financing

Help strengthen municipal creditworthiness ? Set up special lines of credit for municipalities ? Promote private sector investment ? Consider matching grants to help deal with disposal externalities
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Strengthening financial management systems

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Strengthen systems for

service cost accounting
to provide sufficiently detailed costs of operation and maintenance, billing, contact management, debt service, and depreciation to distinguish between costs for residential versus IC&I wastes

budgeting management information

Introduce segregated accounts ? Focus on performance indicators

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Typical MSWM Costs in Latin American and Asian Cities

Service Collection Street sweeping Transfer Disposal Cost US$ 15-45 per ton US$ 10-20 per km US$ 5-15 per ton US$ 3-10 per ton

Landfill investments
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Significant economies of scale in landfills

consider regional landfills shared by groups of smaller municipalities also seek inter-municipal cooperation for shared landfill in a metropolitan area

Can consider matching grants to promote investments in environmentally sound landfills ? Proper site selection can control costs
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high remedial engineering costs for poor sites

Sustainable landfill financing?

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A landfill is a work in constant construction

high operational costs relative to investments will revert to open dump if operational costs cannot be sustained

IS THERE POLITICAL WILL TO IMPOSE TIP FEES? WILL FUTURE ADMINISTRATIONS RESPECT EARLIER COST RECOVERY DECISIONS?

incremental investments can be phased in 3-5 year periods

WILL FUNDS BE AVAILABLE WHEN NEEDED? opportunity for phased environmental improvements