cost benefit waste reduction

ORIGINAL ARTICLE

Costbenefit analysis of waste reduction in developing countries:a simulation

Ricardo Diaz Suehiro Otoma

Received: 6 February 2012 / Accepted: 28 May 2013 / Published online: 20 June 2013

Springer Japan 2013

Abstract Waste reduction activities such as recycling,

composting, and pig feeding in Peru and other developing

countries are mainly informal but already reduce about

15 % of waste generation. Although much research on

informal recycling in Latin America recommends part-

nership with current waste pickers, there is a lack of

methodologies on how to systematize these activities. This

paper proposes a mathematical model that calculates yields

and costs of separate waste collection, and analyzes and

measures the effect of improvements such as source sep-

aration by residents and location of recycling and com-

posting centers. The analysis finds that the largest effect

comes from source separation. In this case, separate col-

lection yield can be increased from the current 30 kg/waste

picker/day to about 200 kg/waste picker/day, and the cost

can be reduced from 110 US$/t to 20 US$/t. These changes

affect the profitability of the recycling and composting

business. The environmental and social effects of these

improvements are also discussed.

Keywords Waste reduction Collection Recycling Composting

Introduction

According to the Peruvian Ministry of the Environment

(MINAM) [1], the generation of municipal solid waste has

increased considerably. The total amount per capita

changed from 0.70 to 1.08 kg/inhabitant/day between

2001 and 2007, and the trend is still a growth of about

4 % per year in many cities. Although phasing out

dumpsites is a priority in national policy, it becomes

increasingly difficult for local governments to find land

for new landfills while current dumpsites are near to

collapse.

This situation increases the importance of waste

reduction activities within solid waste management

strategies, although most of these activities are informal.

Current municipal programs on recycling and compost-

ing represent only 0.48 and 0.27 % of national waste

generation, respectively. On the other hand, informal

recycling (waste pickers, itinerant buyers, and others)

produces a reduction of 12.9 %, and informal pig feeding

contributes with 2.6 %. Recyclable materials (paper,

glass, plastic, and metals) are picked along the streets,

just before waste is collected, and from open dumps.

Food waste for pig feeding is collected from restaurants

and hotels [2].

Current informal activities, if improved and promoted,

can become the basis for the introduction of larger and

more sustainable waste reduction systems. Consequently,

this paper contributes to the literature on solid waste

management in two senses: one by proposing a method-

ology to simulate and analyze separate collection, and the

second by presenting a more complete picture of the

recycling and composting business, identifying cooperation

risks that affect collection.

R. Diaz (&)Graduate School of International Environmental Engineering,

University of Kitakyushu, Yahata-nishi ku,

Honjo-higashi 2-2-9-301, Kitakyushu 807-0815, Japan

e-mail: [email protected]

S. Otoma

Graduate School of International Environmental Engineering,

University of Kitakyushu, 1-1 Hibikino, Rm#205,

Wakamatsu ku, Kitakyushu 808-0135, Japan

e-mail: [email protected]

123

J Mater Cycles Waste Manag (2014) 16:108114

DOI 10.1007/s10163-013-0148-3

Literature review

The literature on informal recycling in developing coun-

tries has mainly focused on qualitative aspects such as

collective action, partnerships, and stakeholders involve-

ment [35]. In Latin American countries such as Peru [6]

and Colombia [7], scholars describe the current situation of

waste pickers and their struggles to be recognized and

included within urban solid waste management systems.

More quantitative data come from Gomes and Nobrega

[8], who present the costbenefit analysis of a separate

collection project in Brazil, Yepes et al. [9], who analyze

the times incurred in the daily activities of waste picking,

and the MINAM [2], which presents a selection of muni-

cipal recycling programs with formalization of waste

pickers in Peru. While all these studies identify the elimi-

nation of scavenging and digging in waste bags as the

major improvements, none of them estimates the effects on

yields and costs (see Table 1).

Regarding the estimation of costs, Ishikawa [11] pre-

sents the Grid City Model, which is designed for the

context of recycling operations in Japanese cities. There,

recyclables are taken by residents themselves to designed

collection points. In this paper, we develop a model where

there are no such collection points: recyclables are col-

lected door-to-door by informal collectors using man-

pushed vehicles (barrows or tricycles). However, these two

models can be utilized in combination when there are two

phases of collection: the first phase, when collectors take

recyclables from residents to intermediate recycling centers

or waste shops, which corresponds to our case study; and

the second phase, when recyclables are transported from

recycling centers to industries, where Ishikawas model is

applicable. In Peruvian cities, recyclables are initially taken

to intermediate centers from where they are sold to formal

and informal recycling companies, while other part is

exported [2].

Data and methodology

Waste generation and composition

Waste distribution along the streets in residential areas of

Peruvian cities is about 0.62 t/km [12, 13] and has a

composition of 18 % recyclables (paper, glass, plastic,

and metals), 60 % organic waste, and 22 % non-recov-

erable waste [2]. Our case study is the district of Chiclayo,

in the north of Peru, that, in the year 2010, had a popu-

lation of 360,330 inhabitants, with a density of 7,330

inhabitants/km2 and waste generation per capita of

0.62 kg/capita/day. The area of the district is 50.4 km2

and the total length of streets is 371 km, giving a ratio of

7.36 km of streets/km2.

In this simulation, we consider that waste is uniformly

distributed along the streets with a lineal distribution of

0.12 t/km for recyclables and 0.25 t/km for organic waste

that can be recovered.

We use the parameter of lineal distribution of waste (t/

km) because our case study is based on curbside (door-to-

door) collection; consequently, operation variables (times,

yields, and costs) can be calculated with this parameter

directly. The alternative parameter of waste generation per

square km (t/km2) is useful when collection is done

through collection points (each of them covering a defined

area), such as in the case of Japanese cities.

Table 1 Research on waste picking in Latin American cities

Research City Source

separation

kg/collector/

day

US$/ta Vehicle Income/

collector/

day

Suggestions for improvement

Gomes and

Nobrega [8]

Joao Pessoa

(pilot

project),

Brazil

Yes 75 70 Barrows USD$

3.0

(1) Organization of recycling centers,

(2) reduction of middle men,

(3) implementation of pilot projects

Yepes et al. [9],

University of

Antioquia [10]

Medellin,

Colombia

No 6070 Bags,

barrows,

tricycles

USD$

26

(1) Reduction of digging and scavenging,

(2) agreements with neighborhoods and

companies, (3) improvement of vehicles

MINAM [2],

Ruz Ros et al.

[6]

Average

(Peru)

No 20 120 Bags,

barrows,

tricycles

USD$

2.5

(1) Source separation, (2) agreements with

neighborhoods and companies

MINAM [2] Pilot

municipal

projects

(Peru)

Yes 40560 80120 Tricycles USD$

1.56

(1) Implementation of pilot projects in other

Peruvian cities

a Price of recyclables paid to waste pickers

J Mater Cycles Waste Manag (2014) 16:108114 109

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Separate collection

Our model analyzes curbside separate collection. A dia-

gram showing the operations of separate collection is

presented in Fig. 1, where B is the travel distance in a

collection zone and D0 is the distance between the recy-cling or composting center and that collection zone.

Estimation of yields

We consider that there are two main speeds during sep-

arate collection. The first is speed to transit along the

streets and is given by the speed of smooth curbside

collection (approximately 3 km/h). Additionally, there is

the speed to load up the vehicle, which is given by the

activities of scavenging, digging in the bags, and loading

the waste. Yields are then estimated considering how

much waste a waste picker can gather in a period of

8.5 h.

Yepes et al. [9] measured that a waste picker takes 6 out

of 8.2 h in gathering 70 kg of recyclables. Then, the uni-

tary time to load up his/her barrow [tu* in Eq. (3)] is 6 h/

70 kg or 86 h/t. In Peru, where the average yield is only

20 kg/waste picker/day, the time for loading up is

approximately 300 h/t.

Another factor contributing to yield is the percentage of

waste bags that are available at the moment of separate

collection. We label this parameter as residents

participation.

Estimation of costs

Collection cost is estimated considering man-pushed

vehicles (barrows or 1 m3 tricycles), with collectors (waste

pickers) earning 3 US$/day (in Peru, the minimum wage is

about 6.5 US$/day) and working 8.5 h a day. There is only

one collector per vehicle. Variables such as round trips,

number of vehicles, and collection cost are estimated using

the following equations:

CColl K P NV K NV P 1

Time:1r B 2D0

v tu tL 2

tu W tu 3

Time:1r Ts 4

B LzWz

WWz

Lz, in t/km, is the distribution of waste along

the streets in the collection zone Z5

N Ceiling WzW

6

Nmax CeilingTs

Time:1r

7

NV Ceiling NNmax

8

where Ceiling (x) denotes the minimum integer which is

not smaller than x and:

CColl Cost of separate collection (US$/day)

K Capital cost (US$/day)

P Personnel cost (US$/day)

K* Capital cost of an individual vehicle (1 US$/

vehicle/day)

P* Daily income of collectors (3 US$/collector/

day)

NV Number of vehicles

Time.1r Time spent in one round trip (h/trip)

B Travel distance in a collection zone (km/trip)

D0 Distance to recycling/composting center (km/trip)

Ts Effective operation time per day (h/day)

Fig. 1 Diagram of movementsof separate waste collection.

One round trip consists of

traveling between collection

zones and recycling centers or

depots

110 J Mater Cycles Waste Manag (2014) 16:108114

123

v Average speed to transit along the street (km/h)

tu Time spent in loading up the vehicle (h/trip)

tu* Unitary time to load up the vehicle (h/t)

tL Time spent at the recycling center (h/trip)

Wz Amount of waste in collection zone Z (t/day)

Lz Total length in collection zone Z (km)

W Collected waste (t/trip); the capacity of a vehicle

is 200 kg

N Number of round trips (trips/day)

Nmax Maximum number of round trips per vehicle

(trips/vehicle/day)

Composting and recycling plants

The costs of composting plants vary according to the

composting method, size, local economy, climate, and

other factors. Plants with capacity on the order of 1 t/day

have investment and operation costs ranging from 10 to 40

US$/t [1417]. Analogously, the costs of recycling vary

with the level of mechanization and size. The average cost

for recycling plants in this study is 15 US$/t [16].

Results

Separate collection: simulation cases

We simulate four cases: (a) no cooperation, (b) some

cooperation, and (c.1), (c.2) good cooperation. The level of

cooperation refers to cooperation among waste pickers,

cooperation with residents (through source separation and

collection schedule), and cooperation with the municipality

(through the location of recycling centers). Table 2 pre-

sents the main parameters considered in each case.

Separate collection of recyclables

Equations (1) to (8) are applied to estimate yields and costs

in every case. Figures 2 and 3 show the results of the

simulation.

We notice that yields increase (and costs decrease) due

to: (i) increase of residents participation (availability of

waste bags) and (ii) improvement of unitary time to load up

the vehicle (tu*), which changes from 170 to 30 h/t.

Additionally, there is an improvement due to shorter dis-

tances to the recycling center, but considering that collec-

tors make only one round trip per day, this improvement is

marginal.

Finally, when the collection frequency is changed to

once per week, the distribution of waste along the streets (t/

km) increases; however, the time to load up the vehicle still

predominates over transit and preparation times and there

is almost no variation in yields and costs.

At a unitary loading time of 30 h/t, collectors use up 6 h

in loading up a vehicle with a 200-kg capacity. This means

that they can only make one round trip per day (for a

time constraint Ts of 8.5 h/day) and explains the fact that

costs cannot be lower than 20 US$/t, even for weekly

collection.

In recycling programs in Peruvian cities, digging in the

bags and scavenging are eliminated, but under the new

system, collectors have to knock on the doors of residents,

receive bags with recyclables, verify them, and even weigh

them. As a consequence, the total loading time remains

lengthy. We estimate that, if collectors were able to make

two round trips per day, the average collection cost would

decrease to 10 US$/t. However, this situation would be

possible only if residents put recyclables in designated

places or along the streets in advance.

Separate collection of organic waste

Figures 4 and 5 show the results of the simulation. The

yields and costs are similar to the collection of recyclables

because, as already pointed out, the time to load up the

vehicle predominates.

Costbenefit analysis of recycling and composting

Table 3 presents a summarized costbenefit analysis of the

recycling and composting business. In both cases, net

income increases with residents participation and

improvement of the time to load up the vehicle. The No

cooperation case refers to 50 % of residents participation

and no source separation (170 h/t of unitary loading up

time), while Good cooperation represents 80 % of resi-

dents participation and source separation (30 h/t of unitary

loading up time).

Table 2 Parameters of separatecollection

Case Source

separation

Distance to recycling/

composting center

Frequency Unitary time to load

up the vehicle (h/t)

(a) No cooperation No 2 km Every day 170

(b) Some cooperation Some 2 km Every day 100

(c) Good cooperation Yes (c.1) 2 km Every day 30

(c.2) 1 km Every day


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Considering that recyclables have a higher market price,

the recycling business appears attractive, even for low

levels of cooperation. However, when there is no cooper-

ation, waste pickers must reduce their income and recy-

cling plants must be rudimentary in order to match market

prices. In the case of composting, two reasons contribute to

negative net income: (i) conversion factor of organic waste

to compost and (ii) lower market price of compost.

Finally, Table 3 shows the number of collectors (waste

pickers) that participate in separate collection in each case

for a middle-sized city in Peru. As a consequence of the

increase in productivity, some collectors will have to be

transferred to other occupations, for instance, to operating

recycling and composting plants. The next section dis-

cusses these results in detail.

Discussion

The simulation and costbenefit analysis presented in this

paper indicate that separate collection costs in residential

areas can be as large as plant costs and, on the whole, the

level of cooperation among waste pickers, residents, and

the municipality affect business profitability.

Additionally, we observe that recycling has a much

greater margin than composting. With good cooperation,

the recycling business is very attractive and the incomes of

collectors (waste pickers) can improve and even reach the

minimum wage (complete formalization).

In the case of composting, the net income is always

negative (net cost), and only when there is good coopera-

tion, this net cost can be lower than the alternative

Fig. 2 Separate collection ofrecyclable waste: yields (kg/

collector/day). Waste collected

increases with separation at

source (cases c.1 and c.2), waste

bags available according to a

collection schedule, and shorter

distance to the recycling center

(case c.2)

Fig. 3 Separate collection ofrecyclable waste: costs (US$/t).

Costs decrease with separation

at source (cases c.1 and c.2),

waste bags available according

to a collection schedule, and

shorter distance to the recycling

center (case c.2)


123

municipal cost of collection, transportation, and landfilling

of about 30 US$/t [15, 16]. Therefore, one option to reduce

cooperation risks and overall costs of composting is to

locate composting plants next to city markets, parks, or

clusters of restaurants and hotels, and, once there, serve

nearby residential areas as an additional role. This is the

strategy adopted in Surabaya, Indonesia, where, in addition,

baskets are provided to residents for composting at home [14].

Another key measure to the profitability of composting is to

give compost equivalent tax incentives or subsidies compared

to those given to conventional fertilizers.

Reducing the distance to recycling and composting

centers adds a marginal improvement to yields and costs.

However, these centers have two important roles:

(i) receiving a surplus of waste pickers that results from

productivity improvement in collection and (ii) contribut-

ing to create a more transparent market for recyclables and

compost, since they can provide better information on the

available quantities and prices.

Conclusions

1. Research on composting and recycling almost neglects

separate collection and focuses on composting and

recycling plants. However, the simulation presented in

this paper shows that the costs of separate collection in

residential areas with low levels of cooperation can be

Fig. 4 Separate collection oforganic waste: yields (kg/

collector/day). Waste collected

increases with separation at

source (cases c.1 and c.2), waste

bags available according to a

collection schedule, and shorter

distance to the recycling center

(case c.2)

Fig. 5 Separate collection oforganic waste: costs (US$/t).

Costs decrease with separation

at source (cases c.1 and c.2),

waste bags available according

to a collection schedule, and

shorter distance to the recycling

center (case c.2)


123

much larger than the costs at recycling and composting

plants.

2. Waste reduction in developing countries coexists with

poverty and unemployment. If some waste pickers are

formalized, new waste pickers will appear. Addition-

ally, if recyclables are separated and put along the

streets, they will probably disappear. Therefore, coop-

eration with residents must be achieved in terms of

quality of separation and also collection schedules.

Intensive educational campaigns, door-to-door expla-

nations, and some economic incentives are then

needed in order to engage residents in these activities,

in which municipalities must play also an active role.

3. Better analytical methodologies will contribute to

systematize waste reduction activities and to design

better policy. For instance, subsidies or grants can be

given to separate collection and waste reduction

projects, provided that they demonstrate sustainability

and good strategies to manage cooperation and other

risks of the business. In this way, private entrepre-

neurship is stimulated as part of a comprehensive solid

waste management strategy.

References

1. The Peruvian Ministry of the Environment (MINAM) (2008)

Annual report on municipal solid waste management. October

2008, Lima, Peru

2. The Peruvian Ministry of the Environment (MINAM) (2010)

Report on solid waste recovery. June 2010, Lima, Peru

3. Baud ISA, Grafakos S, Hordijk M, Post J (2001) Quality of life

and alliances in solid waste management: contributions to urban

sustainable development. Cities 18(1):312

4. Troschinetz AM, Mihelcic J (2009) Sustainable recycling of

municipal solid waste in developing countries. Waste Manage

(Oxford) 29:915923

5. Schoot Uiterkamp BJ, Azadi H, Ho P (2011) Sustainable recy-

cling model: a comparative analysis between India and Tanzania.

Resour Conserv Recycl 55:344355

6. Ruz Ros A, Zela C, Pajuelo M, Roldan Ruz P, Rodrguez JC

(2009) Desde la basura: Cambiando mentes y corazones. Ciudad

Saludable, Lima, Peru

7. Betancourt AA (2005) Waste pickers in Bogota: from informal

practice to policy. Masters Thesis, Massachusetts Institute of

Technology, Boston, MA, USA, September 2010

8. Gomes HP, Nobrega CC (2005) Economic viability study of a

separate household waste collection in a developing country.

J Mater Cycles Waste Manage 7:116123

9. Yepes D, Velez P, Gomez W (2008) Factors affecting produc-

tivity of informal recycling. Gestion y Ambiente 11:8596

10. University of Antioquia (2006) Plan for integral solid waste man-

agement in Aburra Valley. March 2006, Antioquia, Colombia

11. Ishikawa M (1996) A logistics model for post-consumer waste

recycling. J Packag Sci Technol 5(2):119130

12. Municipal Government of Chiclayo (2010) Report on solid waste

management 2010. Chiclayo, Peru

13. Paraguassu F, Rojas C (2002) Indicators for municipal solid

waste management, 2nd edn. CEPIS (Pan-American Center for

Environmental Engineering), Lima, Peru

14. Maeda T (2009) Reducing waste through the promotion of

composting and active involvement of various stakeholders:

replicating Surabayas solid waste management model. IGES

Policy Brief#9, December 2009

15. Terraza H (2009) Manejo de Residuos Solidos: Lineamientos

para un Servicio Integral, Sustentable e Inclusivo. Inter-American

Development Bank, Washington DC

16. Ministry of Economy and Finance Peru (MEF) (2008) Guidelines

for formulation of projects of solid waste management. Peru,

Lima, Peru

17. Letelier E, Jiles J (2001) Diseno de concesion municipal de

plantas de compostaje de residuos solidos organicos de origen

domiciliario. March 2011, University of Concepcion, SEMA-

EMS, Chile

Table 3 Costbenefit analysis of recycling and composting

Parameters Recycling Composting

Case No cooperation Good cooperation No cooperation Good cooperation

t/km/day 0.06 0.10 0.13 0.20

Discarded waste (to landfill) 10 % 10 %

Conversion factor (waste-to-material) 100 % 25 %

Parameters per ton that enters into the plant

Collection cost (US$/t) 115.0 22.2 110.0 21.0

Plant cost (US$/t) 15.0 15.0 20.0 20.0

Discarded waste to landfill (US$/t) 2.48 2.48 2.48 2.48

Total cost (US$/t) 132.5 39.7 132.5 43.5

Market price (US$/t) 130.0 87.2

Expected income (US$/t) 117.0 19.6

Net expected income -15.5 77.3 -112.9 -23.9

Yield (kg/collector/day) 36 204.9 36.9 214.0

Number of collectors (waste pickers)a 630 178 1,240 342

a Case study is the district of Chiclayo in Peru: 46 t/day of recyclables and 92 t/day of organic waste that can be recovered [12, 13]


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Cost--benefit analysis of waste reduction in developing countries: a simulationAbstractIntroductionLiterature reviewData and methodologyWaste generation and compositionSeparate collectionEstimation of yieldsEstimation of costs

Composting and recycling plants

ResultsSeparate collection: simulation casesSeparate collection of recyclablesSeparate collection of organic wasteCost--benefit analysis of recycling and composting

DiscussionConclusionsReferences

cost benefit waste reduction

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