EMS in URBIS 2003

| HOME | ABOUT EMS | EVENTS | OPPORTUNITIES | PROGRAMMATIC AREAS | INFO-EMS |
ESPAÑOL

 

URBAN SOLID WASTE MANAGEMENT
Calls for Proposals 1996 and 1998
APPROVED CASE STUDIES

This research was developed with a donation granted by the Environmental Management Secretariat (EMS)) with funds of the International Development Researc Centre (IDRC), Otawa, Canada

"Real cost assessment and rate alternatives for municipal clean-up services" (1998) 

Country:

CHILE

Municipality: 

Municipality of Tomé

Contact:  Mr. Eduardo Letelier
E-mail: ealetelier@entelchile.net 

Institution:  CET - Centro de Educación y Tecnología de Tomé
SUMMARY
The study described and analysed the municipal rate-fixing and collection process for domestic garbage clean-up services, by applying cost-centre methodology and by assessing a real overvaluation of rates charged in 1999 (82.3% real) and for the period between 1997 and 1999 (around 76,8% real), in average. This situation was generated basically by a wrong inclusion of the cost for public thoroughfare clean-up services in the costs of domestic clean-up services which, in turn, originated in administrative information systems that were oriented to accounting and financial control rather than to management control. Notwithstanding the above, when improving the rate-fixing methodology in order to incorporate a broader depreciation definition and include the cost of municipal capital, the overestimation resulting from the rate would only reach 17.3% for the year 1999.

When analysing the clean-up service operation, research revealed the existence of idle capacity in the garbage collection fleet of vehicles, to such an extent that the simple reduction of collection frequencies could imply a rate reduction of at least 12% --vis-à-vis the values estimated for the year 2000. Whereas the investment aimed at the decommissioning of the current landfill and its later extension for three extra years could increase the cleaning rate by 24.9%, in terms of the optimal level reached in the short run, the study revealed that if the municipality took steps to improve rate-fixing and operation, it could maintain cleaning rates at the present levels and reduce its real operational deficit by 12%.

As regards the efficiency of collecting the bills for clean-up services, it was determined that around 30% of such municipal bills are returned by the local agency of the Post Office of Chile, as the addressee is not found. In addition, it was revealed that a large percentage of bills collected through the Municipal Tax collection, represent a double billing to the same users. This points to a reality: the exact number of municipal debtors cannot be determined accurately. Formally, debt accumulated between 1996 and 1998, at current currency value, reaches 420 thousand US dollars. However, around 75 thousand US dollars could be due, in practice, to charging the same user twice.

In terms of equity in the collection of clean-up fees, the municipal exemption policy has determined that up until now nearly 58% of users in the commune are potentially exempt from clean-up payment. In practice, this policy has been creating objective difficulties to the municipality over the years, for an effective collection of the clean-up rates. The fact that this activity has not turned into a free-of-charge service is due to a weak municipal collection which makes it unnecessary for users to start the exemption request procedures.

An evaluation of collection efficiency revealed that by including cleaning services in the Land Tax bills and in Municipal Tax bills, users paid almost 25% of service costs estimated by the municipality and almost 35% of costs re-estimated by the study, with a delinquency rate of just 22% and 5%, respectively. The above can be compared to the clean-up bills, where delinquency reached 82%. To tackle this issue, the study undertook the hypothesis that the Polluter-Payer Principle and the different rates based on emissions do not represent good policy guidelines for the management of household solid waste under generalised poverty conditions. Rather, it would be more pertinent to deal with an approach that considers environmental hygiene as a public good. The result of this is the need for flat rates in payment for the clean-up right and of incentives to promote recycling, on the basis of minimising final disposal costs and to capture environmental and social externalities generated by activities of this nature.

In this regard, the survey shows that the introduction of recycling systems in the commune is well received by the users as a way to contribute to environmental conservation. In general, it can be said that for over two thirds of the population surveyed, recycling is perceived as a "moral" issue or, in other words, there is some willingness to pay for a cleaner environment, by classifying domestic waste in origin. In addition, research detected that a recycling system in the commune could at first be implemented through three systems. The first is a network of 12 composting plants. The second is an urban agriculture programme that incorporated composting within the houses and, in addition, generated high social benefits in terms of food production. The third programme consists of quarterly campaigns of recyclable, inorganic waste collection, mainly paper, cardboard and glass containers. Cost reduction associated to a combination of these programmes was estimated in the range under 10%, despite the fact that they ended up by contributing a reduction of almost 38% of municipal waste in an inter-community landfill.

Despite the above, the composting plants network resulted in a high, social profitability, enough to allow at the beginning the operation of a private concession modality of such services, either in the hands of companies or non-profit social organizations.

In addition to these savings in costs, additional discounts would be justifiable on the basis of these positive externalities resulting from recycling. This would imply the transformation of the current municipal subsidy for domestic garbage collection service, into a social investment focused on participation in the comprehensive recycling programme that has been proposed. At present, the subsidy that is implicitly delivered by the municipal clean-up service is equivalent to 23.6% of municipal public use services expenses and to 21,6% of municipal transfers for healthcare, education and social security (excluding transfers from the respective ministries).

This proposal not only implies calculating rates according to real cost and a strong municipal commitment to an effective collection of the bills, but basically the implementation of a new institutional attitude to support municipal collection procedures to allow for identification and discrimination of users on the basis of their degree of involvement in recycling. We specifically propose the implementation of a redeemable coupon system, distributed as part of the activities of an urban agriculture programme that contains the promotion of classification at origin, domestic composting and, eventually, support to recyclable, inorganic waste collection campaigns. The urban agriculture programme should represent a means through which the municipality encourages the users not only to incur in more cost-effective actions in the management of domestic solid waste but also, in addition, trains them to transform such waste into new local resources.

Some estimations for the commune of Tomé show that an urban agriculture programme for 2.400 families in the commune, who almost represent the total population under the poverty line, would cost 330 thousand US dollars a year. However, the net income for annual food production was estimated at 1.1 million US dollars. This creates an economic basis so that the contribution of the poorest families to finance municipal clean-up activities could be increased, as the net income generated by each user joining an urban agriculture programme, is equivalent in average to over12 times the annual value of the clean-up rate. From the financial point of view, if the urban agriculture programme were incorporated as part of the costs of the clean-up service, the net expense for the municipality would be of only 60 to 55% of the total cost, and the rest would be transferred to users with higher paying capacity in the commune, thus generating a re-distributive effect. In turn, the highest municipal cost could be financed by re-directing funds and ongoing courses, contributing to the maximisation of the social impact of policies implemented in sectors (for example: healthcare promotion, alleviation of poverty, etc.).


HOMEABOUT EMS |PROGRAMMATIC AREAS | EVENTS | FUNDING | CALLS FOR PROPOSALS | INFO-EMS BULLETIN  



Contact: info@ems-sema.org