4.3 Green Bond Financing for SWM Systems

established practice, and municipalities in emerging countries such as India are increasingly adopting them as well. Egypt is the first country in the Middle East and North Africa to move in this direction by recently issuing sovereign green bonds to increase affordable financing for environmental projects, including pollution management (box 4.3).

BOX 4.3

Green Bond Financing for SWM Systems

Since 2007, when the European Investment Bank issued the first green bond, the green bonds market has become a booming sector for financing green infrastructure projects, growing at an annual rate of 94 percent. In the United States, issuing bonds to finance the establishment and operation of waste management systems has a long history, with the establishment of tax-exempt private activity bonds (PABs) in 1968. These PABs can be issued by private companies to raise capital for a variety of infrastructure projects, including solid waste disposal facilities and projects like airport or port construction (Ruth 2017). Recent issuances for solid waste management (SWM) in the United States included the September 2020 placement of bonds worth US$40 million for Castella Waste Systems Inc., which provides SWM services in the northeastern United States, and the issuance of bonds worth US$150 million for Waste Management Inc. by the California Municipal Finance Authority (CMFA 2020; CTBH 2020).

Internationally, including in low- and middle-income countries, the issuance of bonds by municipalities or related corporations for infrastructure investments is a more recent phenomenon, but the issuance of green bonds is growing. For example, the Ahmedabad Municipal Corporation in the Indian state of Gujarat raised over US$26 million in January 2019 for “green projects” by issuing municipal bonds. It intends to use the funds for several projects, including waste management investments, and this was the fifth time the municipality raised funds by issuing such bonds. In the 2018/19 fiscal year, eight local governments in India floated municipal bonds worth more than US$400 million (Verma 2020).

In September 2020, the Arab Republic of Egypt became the first country in the Middle East and North Africa to issue green bonds as part of a set of projects for renewable energy and pollution management. The issuance floated US$750 million worth of bonds, which were five times oversubscribed. The projects financed are part of a five-year plan to satisfy growing demand from investors and to increase affordable financing in these sectors in an innovative way (Barbuscia and Ramnarayan 2020). Egypt has a portfolio of eligible green projects worth US$1.9 billion, of which almost 40 percent is aimed at pollution reduction and control. Financial experts expect green bonds in Egypt to become widely popular following a global trend; such bonds will have a positive impact on Egypt’s budget and increase the volume of foreign investment (Abu Zaid 2020).

Investing in disposal infrastructure. However they are financed, investments in formal waste disposal and establishment of safe disposal sites are critical to address plastic pollution and prevent leakage. Formal disposal is very low in the Middle East and North Africa region. Increasing the share of formal waste disposal to 50 percent by 2040, largely by replacing dump sites with managed landfills, can reduce vast amounts of plastic leakage into the ocean (Pew Charitable Trusts and SYSTEMIQ 2020). Improving the efficiency and convenience of disposal, scaling up waste separation at the source, and improving the logistics and economic viability of whole waste management system are critical to ensure the environmental and economic benefits of clean urban and rural places.

Upgrading capacity and equipment. Upgrading existing equipment in the collection process and investing in more efficient pickup services are also important. Given the obsolescence of large parts of the region’s equipment and collection fleet, investments in these areas are imperative, especially given the region’s growing population and increasing waste generation. The adoption of proper capacity plans, collection frequency, and vehicle-routing plans for existing fleets may reduce leakage while simultaneously reducing total vehicle mileage, traffic congestion, and hence carbon emissions caused by trucks picking up waste (Mostafa 2020).

Studies show that direct dumping of postcollected waste could be reduced by 80 percent by combining technological innovation and stronger regulatory control. For instance, the movement of waste collection vehicles could be monitored through telemetry, which enables cost-effective vehicle tracking. This technology has already been applied in some cities in low- and middle-income countries (Pew Charitable Trusts and SYSTEMIQ 2020).

Integrating SWM systems. Moving toward an integrated solid waste management system that integrates the “3 R’s” is key to decreasing plastic leakage into the seas. A strategy focusing only on collection and disposal, with an emphasis on safe and controlled disposal methods, is likely insufficient by itself to solve marine-plastic pollution. As cities and countries continue to grow, plastic waste will worsen as it grows faster than the ability to expand waste infrastructure.

The impacts of fast growth of waste due to the increased consumption of disposable products and medical waste can be seen in the waste generation associated with COVID-19. Some countries lack a special infrastructure for hazardous and medical waste, which ends up mixed with household waste that is burned or deposited in landfills, increasing the risk of environmental contamination. Reducing the amount of waste in the system and replacing plastics with other materials is essential to reduce marine pollution and decrease plastics’ impacts on human health.

Employing new business models to drive up formal collection rates— including new models for waste aggregation and decentralization and management of waste—can bring many benefits in new jobs and more investment.

By combining technology, an adequate business environment, and incentives, waste management can become a source of income generation. Heading toward such a system may be a steep climb for many economies in the Middle East and North Africa, but it would increase their resilience to future challenges associated with growing populations and increased waste generation. Improving the circularity of waste in general, and of plastics in particular, requires a rethinking of current practices; however, a circular-economy approach will yield a broad spectrum of health and economic benefits at the local and national levels, as well as, of course, advancing the blueing of the region’s skies and seas. The alternatives to a circular-economy approach—a business-as-usual or piecemeal approach—will only lead to additional pollution, additional morbidity and mortality, and increased constraints on local and national economic development.

Policies to Reduce Production and Consumption of Plastics

Solving the plastic trap requires reducing consumption and production levels. It requires rethinking to cut production and consumption in ways that will nudge plastic-related industries to rethink business models to still thrive economically and boost new market opportunities. Many large private sector companies, including ones in the Middle East and North Africa, are embracing the opportunities for a circular economy and adapting to consumer demands by making important commitments to increase recyclable materials, improve capacities, and eliminate the stream of plastics to landfills and open dumps that pollute rivers and oceans. The following subsections discuss pathways for such rethinking.

The Low Price of Plastics Relative to Green Alternatives

In the Middle East and North Africa, prices for SUPs are significantly lower than greener alternatives, according to a desk assessment of prices on the websites of major supermarkets and online retailers in selected countries (figure 4.15).14 The prices discussed here for SUP products and their comparable green alternatives refer to a single unit of each good obtainable in supermarkets and the like.15

In the countries under consideration, plastic cups cost one-third, or less, what comparable biodegradable cups cost. Similarly, for single-use alternative cutlery (such as spoons, forks, and knives), prices are on average four times higher, and they can be substantially higher than that in