5.5.3 Integrated service (resource management) providers Waste and resource management policy, especially in some high-income countries, is driving towards waste prevention and the circular economy.60 This means from a business perspective that a new market is arising that considers production and waste management from a life-cycle point of view and strives to integrate resource and waste management services into a single vertically integrated service package. A new business model is emerging for this market, called ‘resource management contracting’ or ‘productservice systems’ that incentivizes innovation in the fundamental redesign of the product and service combination of a business and its suppliers in order to reduce life-cycle impacts. The contractor is paid for a service package rather than a tariff per tonne of waste handled, which provides a strong incentive to minimize resource usage, extend product lifetimes, regenerate and reuse products and minimize wastage. This approach is suitable for manufacturing facilities, institutions, school districts and property managers.61
BOX 5.4 EXAMPLE OF A PRODUCT-SERVICE SYSTEM OR RESOURCE MANAGEMENT CONTRACTING General Motors (GM) outsourced its chemical management services, including procurement of chemicals, their use, monitoring, data tracking, recycling, treatment and disposal. After contract implementation, General Motors reported a 20% overall reduction in waste generation, a 65% increase in recycling and a 60% decrease in disposal across 50 plants in North America, resulting in considerable cost savings. GM generated USD 2.5 billion in revenue between 2007 and 2010 through various recycling initiatives, including resource management contracting. It now approximates its annual by-product recycling and reuse revenue at about USD 1 billion a year, made possible through using a holistic GM by-products management system combining the environmental and financial benefits of all plant materials. One example seen at Pontiac Metal Center in Michigan resulted in the generation of 7.5 million USD in recycling revenue, including metals, in 2011 alone.
5.6
MSWM FINANCING MODEL – DELIVERING SERVICES
Referring to Figure 5.2, this section focuses on alternative models for the delivery of MSWM services. Much of the evidence base comes from a recent GIZ study on ‘operator models’ as part of a sector project on Concepts in Sustainable Solid Waste Management.62
5.6.1 Options for delivering MSWM services Figure 5.3 shows that there is a continuum of options in choice of models between purely public and purely private service delivery. The research revealed that there are a variety of models in use in low- and middle-income country cities and that neither private nor public service provision is dominant. Rather, the results suggest that some form of small-scale service provision, by micro- or small enterprises (MSEs), community-based organizations (CBOs), non-governmental organizations (NGOs) or the informal sector, is the most common among the cases considered. On average there are 2.5 different service delivery models per city and no city chooses a single homogeneous model for all its waste management activities. This is because in any particular local situation, different models may be more suitable for particular activities, so, for example, different models may be chosen for street sweeping, primary waste collection, secondary collection, composting and landfilling.
60 61 62
224
See Box 4.1 in Section 4.1, as well as Sections 1.2, 2.2 and 4.3.6,. See also Topic Sheets 3 on SCP and 4 on Waste Prevention, both found after Chapter 2. Wilson, Parker, et al. (2012) – listed under Chapter 2, Waste prevention. See also Section 4.8.1. The GIZ work is reported by Soos et al. (2013a, 2013b), listed in Annex A, Chapter 5, Service delivery and private sector participation in SWM.
Global Waste Management Outlook