Day 24 - Economics of Waste PDF

Introduction to Economics of Waste Anders Damgaard Slides made in collaboration with: Veronica Martinez Sanchez 26 November 2024 DTU Sustain 2  Why is Economics of Waste important? Because … Option A: 0.1-0.4% GDP of a country...

Introduction to Economics of Waste Anders Damgaard Slides made in collaboration with: Veronica Martinez Sanchez 26 November 2024 DTU Sustain 2  Why is Economics of Waste important? Because … Option A: 0.1-0.4% GDP of a country Waste handling is really 1,000 – 3,000 DKK/family/year expensive and money is a scarce resource? Option B: Waste producers should pay the ”correct” price for the handling of their waste? Option C: It can help us to find the optimal waste management? 26 November 2024 DTU Sustain 3  Why is Economics of Waste important? Because … Option A: Waste handling is really expensive and money is a scarce resource? Option B: Too low prices -> too much waste Waste producers should pay Too high prices -> illegal dumping the ”correct” price for the handling of their waste? Correct price -> Optimal solution Option C: It can help us to find the optimal waste management? 26 November 2024 DTU Sustain 4  Why is Economics of Waste important? Because … Option A: Waste handling is really expensive and money is a scarce resource? Option B: Waste producers should pay the ”correct” price for the handling of their waste? Option C: It can help us to find the optimal waste management? 26 November 2024 DTU Sustain 5  Agenda 1. Economic terms 2. Cost of treatment – Simple Exercise – Collection cost 26 November 2024 DTU Sustain 6  1. Economic terms Cost types: Private cost: What the waste generator pays (Real cash) External cost: What the waste generator does not pay for (e.g. impacts) – Some external Costs -> Private Cost (as taxes) Social cost: What it costs society to dispose waste Social cost = Private cost + External cost Assessment types: Private Costs -> Financial Assessment Social Costs -> Welfare Economics Assessment: 26 November 2024 DTU Sustain 7  1. Economic terms Private costs -> Financial Assessment It can focus on a technology or a system It includes: 1. Capital costs (fixed cost), e.g. land, buildings and equipment. 2. Operation and Maintenance cost (variable costs): e.g. labour 3. Taxes and fees 26 November 2024 DTU Sustain 8  Social Costs -> Welfare Economics (or Socio-economic) Assessments Social cost = Private cost + External cost It has a societal perspective (system focus) It includes: – Private costs without taxes. – External costs: Emissions to air, water, soil, Disamenities, etc. How to attach money value to unpriced services provided by the environment? Challenging! Some techniques as: Contingent valuation (Willingness to pay (WTP and Willingness to accept (WTA) environmental goods), Hedonic pricing, (Change in property value) 26 November 2024 DTU Sustain 9  2. Treatment Costs Collection Landfilling Incineration Recycling Etc. 26 November 2024 DTU Sustain 10  2. Treatment Costs Collection cost represents 50-75% of the total MSWM costs Its costs depends on the: – Technology used – Accessibility – Distances – Etc. 26 November 2024 DTU Sustain 11  2. Treatment Costs Landfilling was the cheapest disposal option for long time But costs increased due to: – scarcity of sites – opposition of residents ”NIMBY” – Taxation to promote recycling Private cost of Landfilling; – Capital cost of land, machinery, etc. – Variable cost of diesel, labour, leachate treatment, gas recovery, etc. – Back-end cost of closure and aftercare period. – Landfill tax –> 475 DKK/t (+ban) External cost: – Disamenities: 33 DKK/t (property values) – Emissions, etc. https://www.av.dk/CustomerData/Files/Folders/3-pdf/89_takster2023.pdf https://www.letsrecycle.com/prices/efw-landfill-rdf/efw-landfill-rdf-2023-gate-fees/ 26 November 2024 DTU Sustain 12  2. Treatment Costs Incineration is known for its high investment costs which can be partly balanced by the energy revenues. Incineration tax to promote recycling (in Denmark 430 DKK/t) External cost: – Disamenities, Air emissions, etc. Economies of scale – It needs steady waste flow, – Overcapacity -> Higher cost per ton. – Undercapacity -> Storage cost 26 November 2024 DTU Sustain 13  2. Treatment Costs Recycling: – Benefits: + Costs: Sales of recyclables Processing costs Reduced residual waste Collection cost of Recyclables collection Reduced disposal cost Sales are highly fluctuable Separate collection of recyclables are really expensive and co-mingled compromise the quality of the materials Reduced disposal can increase disposal cost, e.g. remove burnables from WtE Only some materials are economically good candidates (e.g. Aluminum) others aren’t (e.g. some plastics) 26 November 2024 DTU Sustain 14  What makes collection so expensive? Results (DKK) Per Round Per tonne of waste Capital Cost ??? ??? Fuel Cost ??? ??? Labour Cost ??? ??? 26 November 2024 DTU Sustain 15  Results Per round Capital cost - truck 30 DKK/h * (5)h/round = 150 DKK/round 150 DKK/round / 6 ton/round = 25 DKK/ton Fuel cost 20 l/round*10DKK/l = 200 DKK/round 200 DKK/round / 6 ton/round = 33 DKK/ton Labour cost 2 man * (5)h / round*200DKK/man*h =2000 DKK/round 2000 DKK/round / 6 ton/round = 333 DKK/ton 26 November 2024 DTU Sustain 16  3. Payment Schemes Who pays for the waste handling? Households -> Households waste fee Manufacturers -> Advanced waste fee – Internalized in the price of the product (consumer pays) Payment schemes: Volume-based (number and sizes of bins) – Home compaction issues in US Weight-based – Higher cost because of weighting systems Fixed price system – Marginal cost =0 (too high waste generation) 26 November 2024 DTU Sustain 17  What do I pay? – Example from House in Gladsaxe Municipality House Tax Rat control Community Fee Container Fee 26 November 2024 DTU Sustain https://gladsaxe-dk.translate.goog/kommunen/borger/affald-og-genbrug/gebyrer- 18 beholdere-og-regler? x tr sl=auto& x tr tl=en& x tr hl=en& x tr pto=wapp  What do I pay? – Example from House in Gladsaxe Municipality 26 November 2024 DTU Sustain 19  Example from Apartments in Gladsaxe Municipality 26 November 2024 DTU Sustain 20  3. Payment Schemes Waste fee for a single family villa In Denmark: Collection service out to bid, private collectors price the Administration service and municipalities distribute costs between Residual waste households. Bulky waste and garden waste Recyclable fractions Each municipality has its own waste fees whose calculations Hazardous waste depends on many factors Recycling Stations Landfills Administration Residual waste Bulky waste and garden waste Recyclable fractions Hazardous waste Recycling Stations Collection at household Resource Information and administration stations Treatment costs Purchase of bins Across municipalities: 1663 – 4318 DKK 26 November 2024 DTU Sustain 21  Expansion of the collection to 10 fractions Economy in the Recyclable Fractions Costs divided into % Space costs Containers Operation Sales Emptying Information IT Sales, income Sales, expenses Emptying and containers, Total Salary expenses Administration Residual waste Bulky waste Dry recyclable Garden and park Fractions https://cirkulaer.dk/affaldsgebyrer#:~:text=Producentansvar%20kan%20give%20besparelse%20p% C3%A5,husstand%20%2D%20og%20ikke%2055%20kr. https://cirkulaer.dk/gebyrkortlaegning 26 November 2024 DTU Sustain 22  Sale of recyclable materials Sale price for collected waste kr/ton Metal Paper Cardboard Glass Food waste Residual waste Food and drinking cartons Plastic Textile Hazardous waste https://danskaffaldsforening-dk.translate.goog/affald- tal/oekonomi?_x_tr_sl=auto&_x_tr_tl=en&_x_tr_hl=en&_x_tr_pto=wapp Sources: Affaldsviden.dk, Dansk Affaldsforening og medlemmer, Energistyrelsen: Benchmark 26 November 2024 DTU Sustain affaldsforbrændingssektoren 2020, Miljøstyrelsen: Økonomi ved behandling af emballageaffald i 2025, 23 Miljøstyrelsen: Sortering og indsamling af tekstilaffald fra husholdninger.  References Quadrio Curzio, A. ; Prosperetti, L.; Zoboli, R. 1994. The management of municipal solid waste in Europe. Economic, technological and environmental perspectives. Porter R.C. 2002. The Economics of Waste. http://ec.europa.eu/environment/waste/studies/pdf/eucostwaste.pdf http://www.renosam.dk/c/document_library/get_file?uuid=fd6d1b7e-d091-417f-9322- ba157b0125c9&groupId=19854 http://www.recobaltic21.net/downloads/Public/Conferences/Baltic%20Waste%20Manage ment%20Seminar%202012/07_christian_riber_waste_to_energy_in_denmark.pdf Solid Waste Management and Technologies. Thomas Christensen Teerioja et al. 2012. Pneumatic vs. Door-to-door waste collection systems in existing urban areas: a comparison of economic performance http://www.frederiksberg.dk/~/media/Forside/Borger/Affald-og-miljoe/Affald- genbrug/PDF/AltOmAffald2011UKWeb.ashx 26 November 2024 DTU Sustain 24  With your neighbour(s) Discuss how you think the split is between costs in your area, is it similar to Denmark? Discuss how the waste payment will look in your areas – can it be improved? 26 November 2024 DTU Sustain 25