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2.3 Topic k: Financing

The financing of solid waste systems in Western Europe is widely accepted to be a government responsibility. In most cases, local jurisdictions, mostly at the municipal level, have a statutory responsibility for collection of residential waste. The extent to which this function is actually performed by the government varies, however, with some countries preferring public collection, and others, like Denmark, relying to a greater extent on contracting out of collection, processing, or disposal operations. There is now considerable private contracting in France, and in the UK, there is competitive bidding for contract renewal, in which municipal agencies must compete with private bidders.

There is a general acceptance, among Western European governments, of the financial validity of the concept of diversion credits to internalize the avoided cost of disposal in reuse, recycling, and recovery operations. The cost of landfilling or incinerating a ton of waste is relatively easy to predict, and many jurisdictions credit avoided costs of disposal to waste diversion programs, including recycling and composting programs. In certain instances, this diversion credit is actually booked as income to the program and paid to the program operator. Where nonprofit or private-sector waste collection firms are collecting recyclables, the money from diversion credits may be specified in the contract as a part of their compensation.

In Eastern Europe, what was formerly a publicly run solid waste service sector has undergone many changes during the past decade. In some cases, cities have given the private sector very substantial control of waste management functions; in others, there is now a variety of public/private enterprises; and in still others there is considerable contracting of services to the private sector.

Fees for solid waste services

Because European governments have generally accepted the idea that waste management is a public service and public health function, it is usually either a tax-based or a flat-fee function. Most Europeans pay for waste management services in their taxes, sometimes supplemented by utility payments. In the Netherlands, for example, residents get quarterly bills for water, waste water, and solid waste collection; while water is metered, solid waste is a flat fee. Eastern European countries are finding it difficult to finance this centrally controlled model of MSW service delivery and are turning increasingly to the private sector to finance MSWM activities, including collection and disposal. In some cities, residents are paying fees directly to private collectors.

Capital costs are frequently paid for by grants or subsidies from the central government; in more southern EU countries, the EU itself is increasingly offering grants to local governments to develop infrastructure and environmentally sound facilities. Outside of the EU, especially in Eastern Europe and the former Soviet Union, a very large amount of foreign aid from countries like Denmark, Germany, and the US is currently being funneled into developing new or updated solid waste systems as part of development projects for urban infrastructure. Some of these aid monies are restricted to purchasing equipment from a vendor in the donor country; sometimes these monies are purely for planning and evaluation.

Collection costs for waste and recyclables are in most cases transparent to individual users. Some business customers, but far from all, do pay for collection and disposal based on the volume of their container, but this is not the case for most residences.

Tipping fees in Europe tend to reflect both policy considerations and "real" costs. Incinerators typically are financed and paid for out of tipping fees, so these systems are more likely to reflect the real costs of construction and operations. Landfills, on the other hand, are often relatively inexpensive to operate (particularly if they are unimproved, unlined, unmonitored, and older), and tipping fees are sometimes artificially inflated in order to achieve policy goals supporting recycling, to constrain or discourage disposal (particularly waste import), or improve the economics of other processing options.

There is some interest in Europe in volume-based fees, but this is still mostly in the discussion stage for residential waste. The closest to volume-based fees are residential systems that mimic the commercial ones, where residents pay a waste collection fee based on the capacity of their waste container, irrespective of the actual quantity of waste in it. These systems are extremely rare. Even businesses do not always pay for waste on a weight or volume basis. Where they do, the cost is frequently imputed based on the capacity of the container, rather than actually monitored.

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