526771

research-article2014

WMR0010.1177/0734242X14526771Waste Management & ResearchRen and Hu

Original Article

Cost recovery of municipal solid waste management in small cities of inland China

Waste Management & Research 2014, Vol. 32(4) 340­–347 © The Author(s) 2014 Reprints and permissions: sagepub.co.uk/journalsPermissions.nav DOI: 10.1177/0734242X14526771 wmr.sagepub.com

Xin Ren and Shunong Hu

Abstract Financial performance of waste management, the key for efficiency and sustainability, has rarely been studied in China, especially for small cities. Through questionnaires and interviews, we conducted such a case study in several cities aiming to fill the gap and improve waste service. We found that labour accounts for more than half to three-quarters of the operation cost, followed by fuel and vehicle maintenance. The waste service heavily relies on budget transfer of the municipality. User fees collected recover less than half of total operation cost at best, even if the collection rate is relatively high. The low cost recovery is mainly due to low fee rates, unchanged for years owing to public pressure. Public complaint seems to be justified by the finding that the service only accounts for 5–10% of municipal revenue annually and even lower in government spending. Contrary to general perception, per capita waste generation in small cities is not less than big ones. Waste composition is dominated by kitchen wastes, with fractions of recyclables and combustibles much lower than big cities. These findings have implications on the waste management strategy: commercial incineration or recycling may not be economically viable for small cities. The article concludes that user fees might better serve, and be designed for, behaviour change than for cost recovery. Municipalities need to first improve cost efficiency and transparency of waste services to gain public trust and support in order to tackle the biggest challenge facing developing countries, cost recovery. Keywords China, cost recovery, developing countries, municipal solid waste management, small cities

Introduction Owing to rapid economic development and urbanization, China became the world’s largest municipal solid waste (MSW) generator (World Bank, 2005). Not only big cities, but also smaller ones, began to feel the technical and financial pressure in delivering a basic service to cope with the rapid growth in MSW. There is a proliferation of literature on MSW management in China. However, studies on financial performance of MSW services remain rare, largely because financial data is among the most difficult to obtain, especially in China and more so for small cities. Yet financial viability, or cost recovery, is essential for a decent waste service to be sustainable, environmentally and socially. The objective of the study is to fill this gap and provide insights on improving MSW services in small cities. Through this study, we also hope to shed light on waste services in cities of China or other middle-income countries in general.

revised to make it more relevant to typical situations on the ground, more specific and easier to be understood by locals. The completed questionnaires were then discussed with each project city in order to close any data gaps and cross-check information received to fully understand the situation and institutional, technical and financial challenges they are facing. Findings of the study are summarized and discussed below.

Results and discussions Institutional set-up for waste service In China, as elsewhere, it is the municipal government who is primarily responsible for the MSW service. At county level, the government is responsible only for MSW service of the county-seat town and adjacent urban areas, not the vast countryside. From capital city to county seat, the same organizational structure is

Methodology for the study Taking advantage of the World Bank (WB) Han River project in Hubei Province, central China (see Figure 1), we were able to get access to necessary data and conducted investigations throughout 2012. A questionnaire was developed and distributed to the project cities with the help of Project Management Offices (PMOs). Based on experience from the first trial, the questionnaire was

World Bank Office in China and Mongolia, Beijing, Peoples’ Republic of China Corresponding author: Xin Ren, World Bank Office in China and Mongolia, 1 Jianguomenwai Avenue, Beijing 100004, Peoples’ Republic of China. Email: [email protected]

Downloaded from wmr.sagepub.com at NANYANG TECH UNIV LIBRARY on June 16, 2015

341

Ren and Hu

Figure 1.  Location of studied cities in China (indicated by  on the map). Table 1.  Overview of MSW quantification by 2012. County

Population covered presently

MSWa growth (% per year)

MSWb growth 2015–30

MSW collected (ton per day)

Estimate collection rate (%)

MSW now (per capita per day)

Recycled by scavenger

Shayang Dawu Xiaochang Hanchuan

130,000 120,000 100,000 250,000

4% 4-7% 12% 4-5%

4% 4.3% 5% 3.5%

170 140 120–130 280

90% 70% 90% 100%

1.30kg 1.16kg 1.25kg 1.12kg

~8% ~5% ~20% ~1%

aAnnual

growth rate is calculated from actual amount of MSW collected 2008–2012. made in their feasibility studies dated 2007–2009, using extrapolation of historical trend based on the projection of population growth, which is at almost the same rate as MSW growth. MSW: municipal solid waste.

bPredictions

followed, as observed by our study and other similar ones (Chung and Lo, 2008). Namely, the Sanitation Bureau (SB) is the agency actually responsible for street sweeping, MSW collection and transportation to disposal. The user fee for the MSW service is collected by SB and refurbished to the Finance Bureau to pool with other non-tax revenue. From it, the Finance Bureau allocates funds to SB to subsidize its operation and MSW service. The user fee rate is set by the municipal government. So far, no involvement of the private sector is planned among the cities covered in this study.

Quantification of MSW The basics of MSW in any city concern primarily its amount and composition and the projection of the future trend, which

determines the scale and structure of the municipal waste service needed. Some data in Table 1 are estimate by SB staff from their observation and experience over years, e.g. percentage of MSW picked by scavengers, which corresponds well with other studies (Chen et al., 2010). The MSW not collected by a waste service is only partly recovered by scavengers (i.e. collection and scavenged rate do not sum up to 100%). Other uncollected MSW are recycled and sold by households/entities or littered. The average amount of MSW collected daily is estimated from the number of rides per day by different weight of trucks in the fleet and thus considered quite accurate; so is the current MSW collected per capita derived from it. Though this is smaller than per capita daily MSW generation, it is a close

Downloaded from wmr.sagepub.com at NANYANG TECH UNIV LIBRARY on June 16, 2015

342

Waste Management & Research 32(4)

Table 2.  Comparison of MSW generation rate (kg/capita/day). Studied cities

Beijing

Shanghai

Wuhan

Mid income

EAP

1.12–1.3

0.86a/1.13 (2007)b

0.82a/0.93 (2011)b

1.01 (2010)b

0.78–1.161c

0.95c

aData

from China Statistical Yearbook (2011). MSW from the latest media reports divided by urban population from China Statistical Yearbook of that year. cAverage MSW generation of countries in EAP region and of mid-income countries in the world, from the World Bank 2012 study. EAP: East Asia and Pacific. bCollected

Table 3.  Latest MSW composition (in wet weight, %). County

Kitchen organic

Coal ash and debris

Plastic

Paper

Metal

Glass

Rags

Other

Remarksa

Shayang Dawu Xiaochang Hanchuan EAP region L-m income Beijing Shanghai Hangzhou

48 39 23 55 62 55 63.4 66.7 64.5

36 30 65 38.5 NA NA 5.9 2.8 15

6 6.5 3 2 13 13 12.7 20 10.1

3 3 2 2 10 10 11 4.5 6.7

2 2 1 1 2 3 0.3 0.3 0.3

2 2 1 0.5 3 4 1.8 2.7 2

1 3 1 — NA NA 2.5 1.8 1.2

2 14.5b 4 2 10 15 1.8 1.2 0.1

Update in 2011 Update in 2012 2009 FS data 2007 FS data World Bank et al., 2012 World Bank et al., 2012 Zhang et al., 2010 Zhang et al., 2010 Zhuang et al., 2008

aHanchuan

and Xiaochang County carried out waste characterization in 2007 during feasibility study for the WB project and did not update since then. Dawu County updated in 2012 and Shayang in 2011. bDawu included construction and demolition (C&D) wastes (14.5%) in total MSW statistics. EAP: East Asia and Pacific; FS: feasibility study.

proxy under the high MSW collection rate. Per capita MSW collected from these small cities is higher than what the recent studies and statistics (see Table 2) would suggest for small towns in rural China. The MSW growth rate in project cities is comparable with each other, except that of Xiaochang (12%/year). A case study in Hangzhou, a provincial capital in the coastal region more affluent than small cities in our study, reported an average MSW increase of 3.3% during 2003–2008 and a MSW daily per capita of 0.92 kg (Zhuang et al., 2008). The comparison also offers an opportunity for cities, in the same geography with similar social-economic status, to compare with and learn from each other.

Composition of MSW The MSW composition data (Table 3) should be taken with caution as they are either outdated or questionable since the condition under which the waste characterization was undertaken is unclear. Seasonal variation can influence considerably the relative share of kitchen wastes and coal ash in MSW. Higher usage of natural gas in bigger cities leads to less inorganic waste, which takes away a sizable share of MSW by weight. Small cities using more coal tend to have more ash in MSW, which also increases the overall weight of MSW per capita. Moreover, county SBs admitted that MSW collected is found to contain some industrial and hospital wastes, not rare in small cities of China. According to the feasibility studies, Shayang recorded about 1 tonne/day of non-hazardous industrial waste dumped, together with MSW in 2006 and that for Hanchuan,

averaged 47 tonnes/day in 2007. Some small cities did not follow the standard MSW quantification and characterization procedure owing to limited knowledge (e.g. Dawu has included construction and demolition (C&D) wastes in MSW statistics). A combination of all these factors might explain why per capita MSW in rural towns is not necessarily smaller than that in bigger and richer cities. Despite the deficiency in the data, some general trends in MSW amount and composition are still apparent after factoring out data error. For example, the share of recyclables in MSW in all cities studied is much lower than big cities in China (Table 3). This was confirmed by daily observation of waste service staff who attribute this mainly to more intensive household recycling and scavenging in rural areas. This has implications on which MSW strategy these small cities should adopt. A commercialized scale for the recycling of material might not be economically viable at county level. Organic separation and recycling (e.g. composting and bio-digestion) should be explored, given that the highest share is organic wastes and this is expected to rise with the share of coal ash in MSW decreasing, owing to the rapid expansion of gas supplies to small cities. Given the high organic content and moisture, as well as low caloric value, MSW incineration does not seem to be a viable alternative either for these small cities.

Financial performance of waste service Given the generally low transparency in Chinese governments, financial information is among the most confidential, and thus

Downloaded from wmr.sagepub.com at NANYANG TECH UNIV LIBRARY on June 16, 2015

343

Ren and Hu Table 4.  Cost and revenue of waste service 2011–2012.

Current O&M cost (,000¥ a per yr) Current revenue (,000¥ per yr)   Fund allocated by local gov   User fee collected per year   – from households   – from entities and shops   Other revenue Shortfall (%) Cost recovery by user fee (%)

Shayang

Dawu

Xiaochang

Hanchuan

8400 6400 4000 2400 300 2100 0 –23.8 28

4270 5250 4000 1200 600 600 50 21.8 28

3730 2490 820 1670 20 1650 0 –33.2 45

10,000 7900 6000 1650 450 1200 250 –23.5 16

a1 USD = 6 Chinese currency (¥). O&M: operation and maintenance.

;LDRFKDQJ06:VHUYLFH2 0FRVW 2WKHUFRVWV 

&RQVXPDEOHV  8WLOLW\  2OGGXPS 2 0  ROGGXPS UHQW 

'DZX06:VHUYLFH2 0FRVW

RIILFH H[SHQGLWXUH 

&RQVXPDEOHV 

RIILFH H[SHQGLWXUH 

8WLOLW\ 

2WKHUFRVWV 

2OGGXPS2 0  3HUVRQDOH  )XHO LQFO UHSDLU 

ROGGXPS UHQW 

6KD\DQJ06:VHUYLFH2 0FRVW &RQVXPDEOHV  SXEOLF WRLOHWV GXVWELQ UHQHZDO 

RIILFH H[SHQGLWXUH 

8WLOLW\ 

ROGGXPS UHQW 

)XHO 

+DQFKXDQ06:VHUYLFH2 0FRVW

2WKHUFRVWV 

3HUVRQDOH 

2OGGXPS2 0 

UHSDLU 

3HUVRQDOH 

)XHO LQFO UHSDLU 

2OGGXPS2 0  LQFOLQ FRQVXPDEOHV ROGGXPS UHQW 

&RQVXPDEOHV 

RIILFH H[SHQGLWXUH 

2WKHUFRVWV 

8WLOLW\ 

UHSDLU 

)XHO 

3HUVRQDOH 

Figure 2.  Distribution of O&M cost of MSW service in four cities. O&M: operation and maintenance; MSW: municipal solid waste.

difficult to obtain. SB staff in cities studied are reluctant to provide their books. Most of them did not fill out this part of the questionnaire completely. Information in Table 4 is, therefore, estimated and clarified by SB staff and their accountants through interviews. The data in Table 4 represent all cost and revenue that entered the books of the SB in the past 2 years, with small variation from year to year. The past capital investment in hauling fleet, as well as new landfill, and transfer stations being built at present under the WB project, including loan interest, are shouldered by the municipal government. Still, all except Dawu have a shortfall, ranging from one-fifth to one-third of the total operation cost,

which is met by an additional budget allocation from the government upon request by the SB. Even for Dawu, the only difference is that its government has allocated a timelier sufficient budget relative to the operation and maintenance (O&M) cost of the waste service so that a shortfall was avoided at the year end. In terms of cost recovery, it does not fare better than others. Distribution of operation cost.  The Figure 2 depicts the distribution of the O&M cost across major categories typical for waste services in all cities studied. As demonstrated in Figure 2, the biggest cost of running a MSW service is labour, ranging from more than 50% to around

Downloaded from wmr.sagepub.com at NANYANG TECH UNIV LIBRARY on June 16, 2015

344

Waste Management & Research 32(4)

Table 5.  Unit cost of waste service of small cities by 2012. Different parameters

Shayang

Dawu

Xiaochang

Hanchuan

Remarks

Urban population served Total population in the county Serviced area presently (km2) Population density in served area (person km-2) O&M cost/person served (¥ per capita) O&M cost/MSW collected (¥ per tonne) O&M cost/MSW collected (¥ per tonne)

130,000 620,000 20 6500 64.62 137.25 59

120,000 640,000 13 9231 35.58 84.72 50

100,000 620,000 13 7692 37.30 82.89 55

250,000 1,110,000 26 9615 40.00 99.21 65

        In 2012 In 2012 In 2007a

aFrom the WB’s Project Appraisal Document: actual in 2007. O&M: operation and maintenance; MSW: municipal solid waste.

70%. This is understandable given that the current MSW service in county towns is dominated by street sweeping and garbage collection, both labour intensive. The second biggest spending is on fuel and the repair of vehicle and equipment combined, ranging from 15% for Hanchuan to 28% for Dawu. The exception is Xiaochang, only 8% of the cost on fuel and repairs combined. Such variation is largely because of the size, type and age of the MSW fleet each city has, as well as the level of maintenance. A similar pattern was observed in other countries, including developed countries, which sometimes have an even higher share of personnel cost owing to higher labour costs. A study in Belgium (Jacobsen et al., 2013) found that salaries make up 75% of the total MSW service cost. The other two major cost factors are transportation related (fuel, maintenance) and depreciation of vehicles and equipment. However, depreciation and capital investment are usually not included in the books of publicoperating waste firms, which is similar to China where these costs are also shouldered by the city government. As a result, city SB and MSW companies do not have the overview of all costs, let alone full cost accounting (USEPA, 1997). Unit cost comparison.  Unit costs are good indicators for efficiency of waste service (Jacobsen et al., 2013; Koushki et al., 2004). The unit costs for project cities are calculated (see Table 5) based on the cost breakdown in Table 4 and waste information in Table 1. Though technical performance and people’s satisfaction of MSW services (i.e. cleanness of streets, etc.) in each city is not captured in the balance sheet, some lessons can be drawn. Shayang appears to be the least efficient, nearly double the cost per capita of Xiaochang, although both have achieved 90% of the garbage collection. Shayang SB also has to take on some other costs (dustbins, etc.) and pay past debts that other cities do not. It is worth noting that Shayang has seen the most urban sprawl among all cities studied, well indicated by its population density, the lowest among all. As a result, Shayang has the highest cost related to fuel and vehicle repair, both in terms of absolute number and share in total O&M cost, even doubling that of Hanchuan, a city with a population double that of Shayang. This confirms the conclusions by previous studies (Jacobsen et al., 2013; Koushki et al., 2004) that population density, MSW amount, area

size and geometric design of streets, etc., have profound impacts on the cost of MSW service. A smart growth and compact city should be the way forward, which also can reduce the investment needed for infrastructure and operation costs of utilities and other public services. Table 5 also shows a sharp rise of unit cost from 2007 for all cities in terms of cost per ton of MSW collected. Owing to a lack of cost breakdown back in 2007 during project preparation, it is hard to pinpoint cost items that contribute the most. However, given the rapid increase of labour costs and fuel prices in the past few years in China, it is reasonable to consider both are major drivers. This also corresponds well with the cost structure of waste service found in these cities. User fee and its collection.  User fees are paid by residents and commercial and institutional establishments for the MSW collection and street cleaning services they enjoy. As direct income from sources of MSW and beneficiaries of waste services, it reflects the Polluter Pay Principal (PPP). Table 6 summarizes the user fee and its collection in four project cities. As can be seen, Shayang and Dawu have achieved a fairly high user fee collection rate, mainly owing to the new method of combining it with the water bill collection. Despite dispute about this method, experiments elsewhere in China have also yielded satisfactory results in addressing the persistent difficulty in collecting user fees. In Shayang, the user fee remains a flat rate for every household, but is now collected by the Water Bureau when charging the water bill to households. In Dawu, it is included in the water bill in a fixed proportion to monthly water consumption. For non-residential users of the MSW service, all cities reported to have to negotiate with shops, restaurant and offices, and often only got a lower amount than required. SB staff find it particularly difficult to collect fee door to door, facing complaints from people who feel they have already paid tax and so should enjoy the waste service for free or at low cost. Even in places where the urban population has sufficient income to afford (e.g. Xiaochang, see Table 8 mentioned later in the article), the rate of the user fee has been kept rather low for fear of public pressure. The generally accepted benchmark for affordability of utility charges is less than 5% of the total household income and less than 8% if the MSW user fee is included (World Bank, 2008). The user fee rate in all project cities remains well below these benchmarks.

Downloaded from wmr.sagepub.com at NANYANG TECH UNIV LIBRARY on June 16, 2015

345

Ren and Hu Table 6.  MSW user fee and its collection. User fee

Shayang

Dawu

Xiaochang

Hanchuan

Rate for household Rate for instituti and commercial

5¥ per household month 1000:0.2¥ M-2 month Residential: by water Commercial: by SB Household: 60% Commercial: 90%

0.2¥ M-3 water use –0.4¥ M-2 month but actual is less after negotiation Residential: in water bill since 2009 Household: 90% Commercial: 80%

3¥ per household month Charged by negotiated package SB collect at door

5¥ per household month 0.4¥ M-2 month but actual is less after negotiation SB collect at door

Household: 45% Commercial: 45%

Household: NA Commercial: NA

Collecting method Collection rate SB: Sanitation Bureau.

Table 7.  Total cost of MSW service versus cities’ income.

Recent capital investment   Landfill and transfer stations (,000¥)   Designed lifespan of landfill (years)   Depreciation (,000¥ per year) Waste service O&M cost (,000¥ per year) MSW service total cost (,000¥ per year) Gov yearly income and spendinga   Total income in 2011 (million¥ per year)   Total income in 2012 (million¥ per year)   Total spending, 2011(million¥ per year) Estimate urban budget (million¥ per year) MSW investment in urban budget (%) MSW service cost in urban budget (%)

Shayang

Dawu

Xiaochang

Hanchuan

Remarks

56,340 28 2012 8400 10,412

48,320 15 3221 4270 7,491

66,530 13 5118 3730 8848

98,410 19 5179 10,000 15,179

Including equipment From their FSs   From Table 4 Depreciation plus O&M

410 562 1600 85.9 2.3 12

660 841 1000 124 2.6 6

540 734 1150 81.8 6.3 11

1100 1816 2000 247.7 2.1 6

      In 2011 In 2011 In 2011

aMost

data are from Statistic Communiqué of Hubei Province. Data on government spending are mainly from official website of Finance Bureau of respective counties and the latest available is for 2011. FS: feasibility study; O&M: operation and maintenance; MSW: municipal solid waste.

For example, the user fee in Dawu was 4¥/household/month. Since 2009, Dawu has shifted to charge a user fee in the water bill, i.e. 0.2¥/M3 of water used. In small cities of Hubei Province, the average water consumption is about 0.2–0.4 M3/person/day, according to the National Code for Urban Water Supply Engineering Planning (GB 50282-98). The user fee for a standard urban family of three persons is thus 4–8¥/household/month. Given that China’s design codes tend to leave ample margin, actual household water use can be closer to the lower end of the code. As a result, the user fee under the new scheme is likely to be around 6¥/household/month, unable to increase much further. Even in a mega city like Beijing, the capital of China, with a much higher average income than these small cities, the current MSW user fee only totals nearly 4¥/household/month (including 30¥/year of garbage collection fee and 36¥/year of sanitation fee). In comparison, the user fee in Palestinian West Bank, a waraffected area poorer than Beijing, was about 3.3USD/household/ month in 2008 (El-Hamouz, 2008), which is about 20¥/household/month in Chinese currency, five times that of Beijing today. Cost recovery.  O&M cost recovery by users of the waste service has been one of the major goals of the WB in its investment to improve urban public services in China. Capital investment in

MSW facilities, equipment and vehicles under the project are made by government fund and WB loan, as elsewhere across China. Public disclosure of government budgets in China is still in its infancy. The municipality budget in small cities is far from the public attention, thus not under any pressure to be open. We can only use government total fiscal income, publicized in the official statistics, as a proxy for municipal budget, given that many Chinese cities are overspending (e.g. Table 7). Information on municipal spending is scarce and scattered. To get an estimate about government budget spent on urban areas (i.e. the cities studied), we used urban population served, divided by total population under the county’s jurisdiction (Table 5), then times government income to arrive at a proxy of municipal budget for urban area (see Table 7). As displayed in Table 7, capital investment in MSW infrastructure, as expressed in terms of depreciation each year over the designed life time, accounts for 2–6% of the municipal budget for urban areas in 2011. As investment in MSW service is spread out evenly over the designed lifetime in cash-flow practice, the share of MSW service investment is expected to drop further as long as the government income increases every year, which has been the case so far for most cities in China, including those

Downloaded from wmr.sagepub.com at NANYANG TECH UNIV LIBRARY on June 16, 2015

346

Waste Management & Research 32(4)

Table 8.  Basic economic status of studied cities in 2012a.

Primary/secondary/tertiary sector (%) Average annual urban income (¥ per capita) Farmers net annual income (¥ per capita)

Shayang

Dawu

Xiaochang

Hanchuan

Jiandeb

27/44/29 14,706 9164

30/29/41 16,270 5740

31/32/37 16,490 5526

16/59/25 17,794 9020

11/55/34 28,802 13,059

aThe

latest data available are for 2012, all from Statistic Communiqués of Hubei Province. County is at average level in Zhejiang Province, southeast China, and the wealthiest region in China. The WB is also building similar MSW infrastructure there, thus it is chosen for comparison. The latest data available are for 2012, from the Statistic Yearbook of Zhejiang Province.

bJiande

studied. Although investment in vehicle fleet in the recent years is not included owing to incomplete data, experience in similar cities indicates that it is around one magnitude lower than infrastructure investment. Thus, its omission will not change the percentage of MSW investment in the government budget. Investment plus O&M, the overall cost of running MSW services accounts for 6–12% of the government budget (last row of Table 7). Since O&M cost varied little 2011-2012 according to SBs interviewed, its share in urban budget is about 4–9% in 2012. Given that urban population in a county usually consumes more municipal budget than its share in total population (more civil servants dwelling in county seats and better public services, such as utilities, school, hospital, police etc., in urban areas), the actual share of the MSW service in the municipal budget of studied cities could be even lower. This finding is a bit intriguing, since it differs from what was previously considered more common in developing countries. Namely, municipalities in developing countries often spend 20– 50% of their budget on MSW services (Ramayah et al., 2012; Rotich et al., 2006). However, a further check of the literature reveals that the former was a quotation of even earlier studies by USAID in 1993 and the latter seems to be referring to a study published in 2003. This indicates the need for updating cost information about waste services in developing countries. It is also possible that vastly different situations exist in countries with a different socio-economic context. In fact, the share of about 5–10% found in our study is closer to what is typical for high income countries (Cointreau-Levine and Coad, 2000). Up to now, user fees can only pay for 28–45% of the cash operating cost in the studied cities, and as low as 16% in the case of Hanchuan (see Table 4), even lower than 2007 when cost recovery averaged 60%. This might be attributable to inflation in the past 5 years. But the stagnated user fee rate in all project cities has enlarged the shortfall and lowered cost recovery. Countrywide, user fees collected typically covers 20–50% of the total MSW budget in China (Chen et al., 2010), corresponding well with our findings. On the other hand, for these hugely over-spending cities, MSW services, as an indispensible public service, only costs a small percentage of the municipal budget. This seems to justify the public’s assertion that the user fee should not be increased, since they already paid heavy taxes and fees (tax revenue contributes about 50–70% of local government income with the rest from land sale and various fees collected from tax payers too), seemingly more

than enough for paying for the MSW service. However, as economic conditions of inland China are substantially different from that in south-eastern China (see Table 8), the findings cannot be generally applied to all small cities as yet. Although our on-going study in small cities of Yunnan Province, southwest China, with average incomes higher than cities in Huibei is yielding similar findings, further investigation in other regions of China with different climatic and economic conditions is needed.

Conclusions and recommendations Our findings of per capita MSW generation in small cities of China being not less than that in big cities highlights the importance and urgency of promoting reuse, reduce and recycling (3R) in China. However, given the prevailing composition of MSW in small cities, centralized commercial incineration or material recycling through a joint venture of a small cities cluster, being considered by many small cities in China, may not be economically and technically viable. Considering the highest share of organics and kitchen wastes that is expected to increase with expansion of the gas supply in Chinese cities, organic waste treatment through composting and bio-digestion should be encouraged instead. Cost recovery proves to be the biggest challenge for MSW services especially in developing countries, as evident in our study. Our study also leads to the conclusion that user fees of MSW services might better serve as an incentive for 3R than a tool for cost recovery. Such a shift has implications on the MSW management, e.g. design of cost recovery mechanism and performance indicators/criteria for incentive mechanism or service outsourcing. Furthermore, cost recovery targets for MSW services can not be isolated from the overall structure of government revenue and spending. Without responding to questions about financial performance of public services in general and MSW services in particular, local government may continue to face the public’s resistance to increase in any user fee. In order to improve cost recovery by user fees or tipping fees, municipality needs first to improve cost efficiency of MSW services and narrow down the shortfall. This will help build public trust, needed for any price increase. Thus it is important to analyse each major cost item to identify potential for saving without compromising service standard. Partnership with the private sector through outsourcing/privatizing part of the MSW service is a way to rationalize incentive mechanisms and improve service efficiency.

Downloaded from wmr.sagepub.com at NANYANG TECH UNIV LIBRARY on June 16, 2015

347

Ren and Hu Second, transparency is crucial in justifying rate increases to the public. Breakdown of all O&M cost and revenue should be disclosed to the public, preferably each year. Details of how each cost item is derived should be explained for the public to understand whether costs incurred are reasonable. Without financial transparency, the public will be worried that the money they paid will just be squandered by careless management of MSW services and corrupt government officials, even though they can afford a higher user fee. Finally, the performance and cost efficiency of MSW services should be viewed in relation to the overall government planning, budgeting and spending on infrastructure and public services. In addition to enhanced education and awareness raising on 3R, it would be useful to explain to the public with data about various demands of a city competing for limited resources. A similar survey (Chung and Lo, 2008) also found generally insufficient public expenditure on MSW services at the grassroots level in China and the importance of transparency in spending. All these require good governance which is a much broader issue than waste management. As rightly pointed out by many (Marshall and Farahbakhsh, 2013; Wilson 2007), the state of MSW services in a city is an indicator for good governance. Our findings point to the need for continuous institutional development and capacity building, even for middle-income countries like China where many of its local governments are not really lacking in financial resources anymore. Nevertheless, caution should be taken when applying our findings, owing to vastly different social-economic conditions of small cities across China and limited scope of our investigation. After a survey of more than 40 cities around the globe, researchers (Guerrero et al., 2013) discovered that an effective MSW system is not only based on technology but also, if not more importantly, socio-cultural, institutional, legal and economic solutions to enable the whole system to function and sustain. Therefore, international financial institutions like the WB should continue their effort in institutional development and capacity building, keeping abreast with the recent development in different countries, in addition to their investment in infrastructure.

Acknowledgements The authors would like to thank all the PMOs at provincial and county level in the Han River Urban Environment project, Huibei Province of China. Without their support, such a study would not have been possible. The authors also thank peer reviewers for their valuable comments and suggestions.

Declaration of conflicting interests The author declares that there is no conflict of interest.

Funding This research received no specific grant from any funding agency in the public, commercial, or not-for-profit sectors.

Reference Chen X, Geng Y and Fujita T (2010) An overview of municipal solid waste management in China. Waste Management 30: 716–724. China Statistic Yearbook (2007–2011). Available at: http://www.stats.gov. cn/tjsj/ndsj/2011/indexch.htm (accessed August 2013). Chung SS and Lo CWH (2008) Local waste management constraints and waste administrators in China. Waste Management 28: 272–281. Cointreau-Levine S and Coad A (2000) Guidance pack: private sector participation in municipal solid waste management. Published jointly by Swiss Agency for Development and Cooperation and the World Bank. Dawu County Financial Bureau. Available at: http://www.hbcz.gov. cn/420922/lm1/2012–12–19–9146970.shtml (accessed August 2013). El-Hamouz AM (2008) Logistical management and private sector involvement in reducing the cost of municipal solid waste collection service in the Tubas are of the West Bank. Waste Management 28: 260–271. Guerrero LA, Maas G and Hogland W (2013) Solid waste management challenges for cities in developing countries. Waste Management 33: 220–232. Jacobsen R, Buysse J and Gellynck X (2013) Cost comparison between private and public collection of residual household waste: Multiple case studies in the Flemish region of Belgium. Waste Management 33: 3–11. Koushki PA, Al-Duaij U and AL-Ghimlas W (2004) Collection and transportation cot of household solid waste in Kuwait. Waste Management 24: 957–964. Marshall RE and Farahbakhsh K (2013) Systems approaches to integrated solid waste management in developing countries. Waste Management 33: 988–1003. Ministry of Construction, China (1999) National Code for Urban Water Supply Engineering Planning. Ramayah T, Lee JWC and Lim S (2012) Sustaining the environment through recycling: an empirical study. Journal of Environmental Management 102: 141–147. Rotich HK, Zhao Y and Dong J (2006) Municipal solid waste management challenges in developing countries-Kenyan case study. Waste Management 26: 92–100. Shayang County Financial Bureau. Available at: http://www.hbcz.gov. cn/420822/lm1/lm3/2012–07–12–9100202.shtml (acessed August 2013). Statistic Communiqué of Hubei Province. Available at: http://www.stats-hb. gov.cn/ndtjgb.htm (accessed August 2013). Statistic Yearbook of Zhejiang Province, China. Available at: http://www. zj.stats.gov.cn/zjtj2013/indexch.htm (acessed January 2014). USEPA (1997) Full cost accounting for municipal solid waste management: a handbook. Serial number: 530-R-95–041. Wilson DC (2007) Development drivers for waste management. Waste Management & Research 25: 198–207. World Bank (2005) Waste management in China: issues and recommendations. Urban Development Working Papers 9, East Asia Infrastructure Department. World Bank (2008) Project appraisal document of Han River Urban Environment Improvement Project. Available at: http://www.worldbank.org/projects/P087224/han-river-urban-environment-improvementproject?lang=en (accessed January 2014). World Bank (2012) What a waste: A global review of solid waste management. Urban Development Knowledge Papers No. 14, Urban Development and Local Government Unit of the Sustainable Development Network. Zhang DQ, Tan SK and Gersberg RM (2010) Municipal solid waste management in China: Status, problems and challenges. Journal of Environmental Management 91: 1623–1633. Zhuang Y, Wu S, Wang Y, Wu W and Chen Y (2008) Source separation of household waste: a case study in China. Waste Management 28: 2022–2030.

Downloaded from wmr.sagepub.com at NANYANG TECH UNIV LIBRARY on June 16, 2015

Cost recovery of municipal solid waste management in small cities of inland China.

Financial performance of waste management, the key for efficiency and sustainability, has rarely been studied in China, especially for small cities. T...
3MB Sizes 0 Downloads 2 Views