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The economics of waste

The country’s economy is not only vulnerable to shocks but is also waste intensive.

Between 2014 and 2017, the country’s nominal GDP grew by almost 12 percent. While this growth may have translated in production and job creation, it has also triggered a 50 percent increase in the volume of waste generated.

This is according to the Environmental Accounts Statistics, 2018, a National Statistics Bureau (NSB) publication. “This indicates that the economy is becoming more waste intensive,” the report states.

The National Environment Commission’s (NEC) annual report authenticates that waste related to particular sectors increase with increasing share of that sector to the GDP. For instance, the report stated that construction waste is increasing with the growth in the construction sector.

Waste is by-product of economic activities and management of waste has economic implications.

The NSB estimated that four thromdes spent Nu 4 to manage a kilogram of waste.  This is only considering the operational cost of managing solid waste and landfills through the salary, fuel cost and maintenance of trucks and tractors, landfill management cost and other day-to-day operational costs.

The four thromdes incur an expenditure of Nu 53.61M for collection and disposition of 14,490 tons of waste to landfills, annually.

If up-front costs such as acquisition of land, building, advocacy and outreach are included the cost could further increase.

There are 218 staff including drivers and conductors working in waste management related activities in the four thromdes. A total of 39 transportation facilities (trucks and tractors) are deployed in collecting and disposing waste to the landfills.

The International Bank for Reconstruction and Development (IBRD), a global development cooperative owned by 189 member countries, estimated that urban areas in Asia spend about USD 25B on solid waste management and its projected to increase to USD 50B by 2025.

However, there is no nation-wide data as to how much of public expenditure has been put to manage waste. There is no information on waste other than waste composition based on the National Solid Waste Survey of MoWHS, which  dates back to 2008.

Executive director of Clean Bhutan, Nedup Tshering said there are numerous organisations dealing with waste because waste management is a cross cutting issue.

While data on the volume of waste is available, it does not include waste through illegal dumping, which is assumed to be significant.

However, the department of public accounts in the public environmental expenditure (PEE) review has estimated that spending on environment protection and conservation constituted 2.7 percent of the GDP in 2010-11 fiscal year and 2.6 percent in 2011-12.

This report was published in 2014 and the expenditure constitutes all sorts of environment related activities including soil conservation, forest management, waste management and climate related activities, among others. There is an indication that public expenditure on waste management is microscopic.

Chief environment officer with the waste management division in NEC, Thinley Dorji said there is hardly any budget for waste management. A year-old division ran out of fund for advertisement. “But there are other implementing agencies,” he said.

The PEE review, in 2014 has recommended that PEE status must be reflected in budget report and 11th Plan documents. “An efficient mainstreaming of the environment will make it more difficult to separate the environmental expenditures,” the report stated.

The report also recommended a review of environmental expenditures of the private sector including CSOs.

Economics of recycling

Nedup Tshering said there is no economy of scale to run a waste based industry. This means that waste generated is not a viable raw material to feed a large-scale industry.

A source, involved in an entrepreneurship programme said that every other business proposal is built around waste. He said there are brilliant ideas but there are many players in Thimphu alone fighting for the same pie of waste.

Greener Way is one such enterprise. Its Chief Executive Officer, Karma Yonten said he is facing stiff competition in the market. He said rag pickers and scrap dealers also emerge as competitors. There are at least 150 ragpickers in Thimphu and five scrap dealers in every dzongkhag, he claims.

“Greener Way is doing the most expensive job of collection and segregation,” he said. Thimphu Thromde, he said pays the firm Nu 1M a month for collecting waste in three zone of the city.

He claimed that he collects 40 tons of waste every day. Collection is done 26 days month and the volume of waste comes to 1,040 tons a month. In consideration to this, Greener Way charges chheltrum 96 to collect a kilogram of waste. “This is nowhere in the world,” he said.

“Whether you go to collect a kilo of waste or a ton, the cost is the same,” he said adding that maintenance and operation of trucks and machines increases with age.

Both the thromde and Greener Way, he said have learnt lessons and that the situation could improve in future.

He also agreed that economy of scale simply does not exist but there are opportunities in the waste business. For instance, he said Greener Way supplies waste paper to Youth Development Fund to run their egg tray-manufacturing project. It also supplies plastic to Green roads. “In the process you are creating a whole value chain around waste while minimising the waste from going to the landfills, which other wise could cost the government,” he said.

“But the reality on the ground is different,” he said. Greener Way has a five-year contract with the Thromde, which is due to expire soon. “It makes no business sense to invest Nu 350,000 in buying compactors, whose utility is uncertain after five years,” he said adding that waste business is capital intensive.

According to research by an American based waste industry, recycling will only occur if there is an economic incentive to do so.

However, one entrepreneur said that most of waste that have low processing cost and high market value are scavenged by dealers across the border.

As per his findings, 10 truckloads of empty beer bottles reach Pasakha every day. People across the border pay Bhutanese vendors Nu 3 a bottle and sells at Nu 5 to the beer factory in Pasakha. A truckload would carry about 10,000 bottles. The middlemen easily pocket Nu 600,000 a month and this meant outflow of INR.

Vendors across the border also collect metal waste and make pots out of it at a low cost. These pots are again sold to Bhutan.

“While the government provides tax incentives to the ventures in waste management, what is the use of incentive when the business is not making money?” Karma Youten said adding that government should encourage private entities to take up projects that could be replicated from across the border. This, he said would help the country manage its own waste.

Tshering Dorji

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