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

When comparing costs among LGUs, it is important to note that except for
Tuba, SWM costs of the LGUs in Table 16 are total costs, i.e., capital, maintenance and
operating costs and back-end costs. In some LGUs, labor costs for permanent personnel
are not included in the SWM budget, but are placed under the budget of different
departments. Labor costs comprise a substantial proportion of the SWM budget
(Bennagen, 2003 and Sumalde, 2005). Furthermore, unit costs for SWM do not reflect
the attributes or quality of the service, such as frequency of waste collection; the type of
final disposal site, technology and local conditions. Hence, this study attempted to
determine how people valued the benefits of the ECOSWAM waste service options
based on their attributes. Two LGUs may have the same tonnage of waste or the same
population size, but if waste is collected more frequently in one LGU than the other,
then the costs of the first LGU will be higher. If the first LGU uses a sanitary landfill,
while the second LGU uses an open dump, then the costs of the first LGU will be
greater. According to the DENR-NSWMC (2004), direct comparisons between the
budgets and expenditures between LGUs are difficult to carry out because the
responsibility for solid waste management in LGUs falls in different offices so costs
may not be correctly or fully accounted.
6.3. Funding Gap
Table 17 shows the annual marginal revenues from ECOSWAM user fees vis-àvis
the marginal maintenance and operating costs (MOC) and the marginal funding gap
and the cost recovery from the user fees. To move from the base case to the scenario
with the lowest funding gap of PhP 2.2 M, Tuba will need to adopt scenario 1. This is
the option wherein municipal workers with a garbage truck collect segregated waste
once a week. It also has the highest cost recovery, i.e., the user fees would cover 35
percent of the costs of the service.
In terms of moving from one alternative scenario to another, moving from
scenario 1 to scenario 2 would not be a good move since it will entail losses and
negative cost recovery. Moving from scenario 2 to 3 will be a good move since the
marginal revenues of shifting from once a week to twice a week waste collection will be
greater than the marginal costs and thus, there will be no funding gap.
Table No 17. Funding Gap: Marginal Costs vs. Marginal Revenues
30
To move from
Marginal
Revenues, MR
(PhP)
Marginal Costs,
MC
(PhP)
Marginal Gap
= MR-MC
(PhP)
% Cost
Recovery
Base Case to Scenario 1 1,198,763 3,456,212 (2,257,449) 35%
Base Case to Scenario 2 1,166,065 5,221,780 (4,055,715) 22%
Base Case to Scenario 3 1,907,981 5,781,798 (3,873,817) 33%
Scenario 1 to Scenario 2 (32,698) 1,765,568 (1,798,266) -2%
Scenario 2 to Scenario 3 741,916 560,018 181,898 132%
Scenario 1 to Scenario 3 709,218 2,325,586 (1,616,368) 30%