Naz, Antonia Corinthia C and Mario Tuscan N. Naz. 2006. Modeling ...

Table 1: Estimated Costs of Sanitary Landfill Construction and Operation
City Cost of
Sanitary
Landfill, SLF
(PhP Million)
Capacity,
(‘000 m 3 )
Useful Life
of SLF,
years
Total Capital
Investment
Cost*
(PhP’000)
Annual
Operating
Cost **
(PhP’000)
Proposed
Mode of
Financing
Legaspi City 96 280 8.4 256,520 9,749 Loan
Butuan City 113 620 15 305,360 10,721 Loan
Muñoz City 99 510 8-11*** 196,570 5,602 Loan
*These include the cost of the SLF and other infrastructure like material recovery facilities, compost
plant, leachate treatment plant and collection vehicles
** These include personnel, electricity, fuel, repair, supplies, etc.
***The life of the SLF would be shorter in case it accepts wastes from surrounding municipalities and
cities
2.3. Financing of Solid Waste Management Services
Schubeler (in UNDP/UNCHS, 1996) mentions three main options for financing
the recurrent costs of municipal SWM: user charges, local taxes and intergovernmental
transfers. To promote the responsiveness of the supplying agency to user needs and
ensure that collected funds are actually applied to waste management, it is preferable to
finance operations through user charges rather than general tax revenues. Adding solid
waste charges to utility charges may increase collection efficiency. User charges should
be based on the actual costs of solid waste management, and related to the volume of
collection service provided. Among larger waste generators, variable fees may be used
to manage the demand for waste services by providing incentive for waste
minimization. To achieve equity of waste service access, some cross-subsidization
and/or financing out of general revenues will be required.
Transfers from national governments (NG) to local governments may encourage
specific type of expenditures, such as education, health, or environmental protection.
Conditional or matching grants will create that incentive and may therefore induce
investment at a lower cost (smaller transfer) for the national government. These grants
effectively reduce the relative cost of providing sanitary landfill services relative to the
cost of providing other local public goods. For example, in the United States, the
Federal Government offers up to 90 percent of grants for the construction solid waste
management facilities. On the ground of both economic efficiency and equity, transfers
from NG to LGUs are justified to support the costs of improving solid waste
management facilities, and to support the incremental costs associated with the adoption
of sanitary landfills. If possible, the NG may wish to provide technical and/or financial
assistance to clusters of LGUs to help reduce the transaction costs associated with the
negotiation and design of the contractual agreement (Laplante, 2001).
Cointreau-Levine (2000) posits that the collection of user charges enables the
service to be financially sustainable. Surveys can indicate which methods of waste
collection are preferred and also provide information on households' ability to pay for
the service. In developing countries, most local governments experience a serious
shortfall in meeting their revenue needs from their tax base. User charges, as one means
to cover solid waste costs, should not be neglected, even though most solid waste
management services are public goods. User charges give the solid waste agency some
autonomy by eliminating the need to compete with other government agencies for their
share of general revenue.
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