Solid waste, the funding fixation

  • 15 June 2011
  • Planet Earth

Recognized as a major issue of concern due to its environmental and public health impacts, solid waste management unfortunately also is scarred by inadequacy of service provision due to insufficient funds. This in turn is exacerbated by the non-availability of suitable technology and facilities, for treatment and disposal of the collected waste with the local municipal bodies. With increasing attention being focussed on urban infrastructure and efficiency in cities to accelerate their overall economic growth, it is also equally essential for the state authorities to improve the finances of local municipal bodies, especially when it comes to handling solid waste.

Recommendations have been made by the State Finance Commissions, constituted as per the provisions of the Constitution (74th) Amendment Act, for strengthening the finances of urban local bodies that provide an array of social and economic services including solid waste management services. Some of which include restructuring the property tax, proper pricing of services and designing of user charges and privatisation of services.

Conditions laid down by the Municipal Solid Waste (Management & Handling) Rules-2000, insist that the local body has to collect garbage from the source, segregate and dispose it scientifically. If these rules are adhered to, the amount being spent on solid waste management increases initially, until economies of scale sets in, which in all probability may actually bring down the per unit cost of solid waste management. However, the important question is how exactly can the expenditure for the solid waste management be met? Before we get to answer the question, it is also important to get a feel of the basic financial structure for the service. Most Indian cities obtain funds for solid waste services from general revenues and grants, with the services claiming almost 20 per cent of the city budget. Due to political reluctance to the introduction of user charges and resistance by waste generators, to acceptance of the levied charges, governments in the past have either not levied any user charges or imposed only nominal user charges, which have been inadequate to cover even the 0 & M costs for the municipality, forcing it to compromise on quantity and the quality of services. Therefore, it is very important for the governments to bring their user charges closer to realistic levels at the earliest; their success in doing so could play a decisive role in their effort to restore the state of their finances and quality of solid waste management in the cities.

Designing user charges based on the polluter pays principle, with in-built fines and penalties for clandestine dumping, littering or improper storage of waste becomes imperative in the current situation; though enforcement may be a challenge. Initially a step in this direction can be taken by creating a pricing structure that levies a conservancy tax, or user charge or a garbage cess to cover at least the cost of door-to-door collection and transportation of waste.

Treatment of the waste can generate income to cover the cost. Over time the user charges may include part of the treatment and disposal costs too. Provision of good quality service here will create willingness on part of the citizens to pay the fees without much hesitation. The defined fee can be linked to utility bills like electricity and water or to the property tax, which will also address equity concerns. The charges could be levied on a monthly basis and can be marked into categories based on the various types of waste generators such as domestic (households). Shops and commercial establishments, hospitals, institutions and others. Here, the challenge will be to bring into loop the poorer sections of society and create distributive justice.

It is also likely that the local bodies may have to cross-subsidise the costs of solid waste management for the poor, to address the issue of affordability. Also, service user charges should be based on the actual costs of solid waste management, and related, if possible to the volume or weight of waste. Here, for large generators of waste, variable fees may be designed to manage the demand for waste services by providing added incentive for waste minimisation.

The fee thus generated could be used as an incentive to encourage source segregation in the form of rebates, provision of coloured bins for the generators to facilitate waste segregation, and bags for collectors to collect waste in the segregated form. It would be good to see governments, RWAs coming forward in this regard and encourage private investment.

Interestingly, the role of private companies involved in waste collection has been expanding in cities like Varanasi, Kanpur and Gandhinagar. While they may be already doing so, but private companies too can collect user fee from citizens as prescribed by local bodies, to sustain their activities on a long-term basis. However, glitches are not uncommon either. These companies may be striving hard to improve the existing system of solid waste management services, but they often tend to neglect garbage collection from urban poor of solid waste management and design user charges appropriately.

It is important to understand that user charges are directed at "internalising" the externalities associated with the production, transport and disposal of wastes, and can be considered as instruments for reducing wasteful use, managing demand, and inducing conservation and recovering cost or financing supply expansion. At the same time, one has to ensure that the designed user charges are simple and easy to understand for both the users and the urban local bodies in order to avoid any disputes or anomalies. Any fixing, revision and implementation of the user charges needs to adopt a transparent procedure.