A Public-Private Partnership in Waste Management Sector
Environmental degradation poses serious challenges to sustainable development in any country and Armenia is not exclusion. Environmental pollution associated with plastic waste in Armenia is currently estimated at 5,000-6,000 tons annually, and continues to grow. Prior to 2011 less than 15 percent of total PET (polyethylene terephthalate) plastic waste was recycled. The rest remained in the local environment — burdening landfills, contaminating water sources and farmland, and posing risks to biodiversity and public health.
- 5,000-6,000 tons of PET waste that are generated annually in Armenia represent a potential income stream of $5-6 million for municipalities, national parks, and partner companies.
- The recycling of 1,000 tons of PET generates an estimated 10-15 additional jobs in the waste management sector.
In February 2011 UNDP, in partnership with USAID, launched the “Collection and Reuse of Plastic Refuse” (CRPR) project, which is currently active in 14 major urban communities in seven regions of Armenia serving over 330,000 people. In 18 months after launch of the project the targeted communities separate, process and send to recycling more than 60 percent of PET waste accumulated in the project areas. Such a result has been achieved through applying a balanced model of public-private partnership between the private PET recycling companies and local municipalities.
Waste management for ‘triple wins’
Although recycling—and waste management more generally—is often viewed primarily as an environmental concern, it can provide important employment and income-generating opportunities. Moreover, because waste management is typically managed by municipalities, improvements in this sector are often associated with local governance reform, decentralization, and community engagement. The expansion of recycling and improvements in waste management can therefore deliver important benefits in terms of the economic and social, as well as environmental dimensions of sustainable development.
In the Armenian context, efforts to modernize waste management practices face risks and constraints that discourage investment in PET recycling — particularly from the private sector. Many of these limitations reflect problems in the institutional framework for public-private partnerships — particularly in terms of:
• inadequate institutional and infrastructural capacities (in both the state and private sectors);
• incomplete knowledge of public-private partnerships modalities;
• lack of trust between the private and public sectors at the local level; and
• lack of community awareness about the importance of waste management in general, and recycling in particular.
The CRPR project, worth $540,000, was designed to address these issues and promote PET recycling in Armenia through stimulating private investments in high level PET recycling technologies. In partnership with local municipalities, UNDP created adequate conditions as well as technical and infrastructural capacities for the differentiated treatment of waste, namely the separation of PET bottles and relevant plastic products at the first stage of the waste collection cycle. The municipalities were provided with special bins for PET waste, balers, compactors and other necessary technical means, thus creating incentives for private businesses. The next step was the design and implementation of a partnership model between the local authorities responsible for solid waste management and private companies with capacities to buy and recycle the PET waste, which included facilitation and the establishment of long-term contractual relations between the parties. Through these public-private partnership initiatives the capacities of partner municipalities were further developed. An intensive public awareness campaign was also an important component to inform and encourage the general population to separate the PET waste into the special bins. The outreach effected attitudinal change among the populations resident in the partner municipalities, evidenced by the rapid adoption of the recycling facilities. UNDP not only provided the towns with the necessary technical means, but also acted as a mediator between the local authorities and the private companies for establishment of sustainable relations.
Year and half is not enough to witness the impact of the intervention, which is supposed to affect a whole country. Nevertheless, even half a year before official closure of the project the obtained results come to prove that the project has radically changed the situation with solid waste treatment in the country. Communities that have benefitted from infrastructure investments have seen 50-70 percent increases in the volume of PET waste recycled. This means significant reductions in the amounts of waste sent to landfills, as well as less pollution and better environmental quality. These increases in PET waste recycling have also supported the development and maturation of Armenia’s waste management sector, and increased income and employment-generation opportunities.
The residents’ response to the initiative in the participating towns exceeded expectations. A culture of waste sorting quickly developed at household level: “It takes nothing to throw the bottle in this bin but I know how it is helpful for the nature,” said a resident of Sevan community participating in the “Environmental march,” a special public awareness event organized within the framework of the CRPR project at the Lake Sevan.
Because the resale of a ton of recycled PET waste generates about $1,000 in revenues, the 5,000-6,000 tons of PET waste that are generated annually in Armenia represent a potential income stream of $5-6 million for municipalities, national parks, and partner companies. At present, about $800 of the $1000 accruing from the resale of a ton of recycled PET goes to the private company that collects the waste and the remainder accrues to the municipality or national parks.
However, now that PET recycling has taken hold, competition among private companies for municipal recycling opportunities is increasing. During first half of 2012 the prices received by municipalities (from the private companies that collect the waste) rose from $170 to $220 per ton—a 29 percent increase. Moreover, the recycling of 1,000 tons of PET generates an estimated 10-15 additional jobs in the waste management sector. The prospective expansion of recycling activities could therefore become an important source of “green jobs” — particularly in Armenia’s smaller cities and towns, where employment issues are particularly stark.
What to expect
As it is now being scaled up nationally — including in the capital Yerevan, where 3000 tons of PET are dumped into landfills on an annual basis — the project’s economic, social and environmental benefits are set to multiply. The initial focus of the work in Yerevan will be on recycling the PET collected from schools and public spaces. Once the economic feasibility of PET recycling in the capital is demonstrated, it is hoped that the municipal budget will cover the costs of expanding the recycling programme to other users. On the other hand, the project’s private sector partners have started investing installment of special bins in some areas of Yerevan confirming the business case of the initiative and guaranteeing the sustainability of the intervention. These developments clearly indicate that the further scaling-up and national ownership of the project will be led by the private sector.