copy the linklink copied!Chapter 3. Institutional and policy framework

This chapter reviews key results from the Environmental Performance Reviews on the legal and policy frameworks for waste management and the circular economy in the 11 focus countries. It then discusses institutional frameworks and the role of the private sector, highlighting key challenges, lessons and good practices.

    

“The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.

This chapter reviews key results from the Environmental Performance Reviews on the legal and policy frameworks for waste management and the circular economy in the 11 focus countries. It then discusses institutional frameworks and the role of the private sector, highlighting key challenges, lessons and good practices (Box 3.1). The focus is on the management of MSW, as this has been addressed across the 11 countries.

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Box 3.1. Examples of good practices for institutional and policy frameworks

Legislation, strategies and planning for waste management

  • Comprehensive legal frameworks covering all aspects of waste management (seen in most focus countries).

  • Waste management plans that include clear, quantitative targets, realistic actions for their financing and implementation and a process for monitoring and review (seen in most focus countries).

  • Co-ordination between national and sub-national planning (e.g. Poland).

Policy frameworks for the circular economy

  • Policy and legal frameworks for the circular economy, as adopted in Japan, Korea and the Netherlands.

  • Integration and mainstreaming of circular economy approaches in existing policy and legal frameworks (Norway, EU), particularly economic policy as recommended in the OECD Policy Guidance on Resource Efficiency.

  • Building a greater emphasis on waste prevention in waste policy, for example through waste prevention plans (Czech Republic, Poland and other EU countries).

Institutional frameworks

  • Management of at least some aspects of waste services at the local level to ensure waste management arrangements reflect local conditions (most OECD countries).

  • Institutional platform or structure to support the horizontal co-ordination of waste policy across relevant sectors (Czech Republic).

Organising municipal solid waste services

  • Competitive tendering, where appropriate, to support efficient MSW services (a growing number of OECD countries).

  • Building institutional capacity for local governments to manage tendering and oversee waste management effectively (Poland).

  • Inter-municipality co-operation to achieve economies of scale in MSW management areas (Japan, Norway and Poland), in particular for small municipalities.

  • Separate, kerb-side collection of recyclable municipal waste (many OECD countries), to encourage separation of waste and overall recycling levels.

  • Where the informal sector plays a role, engagement strategies based on dialogue and financial incentives can integrate the sector in formal waste management (Colombia), ensuring positive contributions to recycling efforts, while limiting negative impacts, such as illegal dumping and waste leakage.

Role of the private sector

  • Public/private co-operation on waste management planning (Japan, Netherlands).

  • Public/private co-operation to boost recycling (Colombia, Israel and other countries).

copy the linklink copied!3.1. OECD policy framework for waste and materials management

OECD has supported environmentally sound waste and materials management in member countries through the publication of reports and working papers. Based on this work, the OECD’s governing body, the Council, has adopted OECD Acts – Decisions and Recommendations – in these and related fields. Key Acts include the following:

  • Recommendation of the Council on Resource Productivity [C(2008)40]

This document sets out recommendations for Member Countries on policies for the improvement of resource productivity. It encourages member countries to strengthen their capacity for analysing material flows and related environmental impacts. The Recommendation moreover calls for further actions to improve resource productivity, including the use of information in policy development, the promotion of life-cycle approaches, and the promotion of new technologies and the greater use of economic instruments. The Recommendation builds on the 2004 Recommendation on Material Flows and Resource Productivity [C(2004)79].

  • Recommendation of the Council on the Environmentally Sound Management of Waste [C(2004)100]

The Recommendation calls on member countries to elaborate and implement policies and programmes to ensure that waste be managed in an environmentally sound and economically efficient manner, including an adequate regulatory and enforcement infrastructure. It moreover sets out core performance elements (CPEs) for waste management facilities.

  • Recommendation of the Council on the Use of Economic Instruments in Environmental Policy [C(90)177]

This document recommends that member countries make use of economic instruments as a complement or a substitute to other policy instruments such as regulations, taking into account national socio-economic conditions. In waste and circular economy policy, this may involve making use of pay-as-you-throw arrangements for municipal waste to encourage waste reduction, waste disposal taxes to discourage the use of environmentally harmful waste treatment or disposal methods, or resource taxes to encourage the more efficient use and re-use of scarce resources.

  • Decision of the Council concerning the Control of Transboundary Movements of Wastes Destined for Recovery Operations [C(2001)107]

This decision builds on previous OECD Acts on the transboundary movements of waste, setting out requirements and procedures for transboundary movements of wastes destined for recovery within the OECD area.

Two OECD Recommendations on public spending are relevant for waste policy:

  • Recommendation of the Council on Good Practices for Public Environmental Expenditure Management [C(2006)84]

This recommendation calls on member countries to take effective measures to ensure that public environmental expenditure programmes are environmentally effective, economically efficient and managed in accordance with sound principles of public expenditure management. In the case of waste management, this may involve ensuring the long-term planning of investments in waste treatment based on an identification of future needs and ensuring that investments do not result in unintended, environmentally harmful consequences.

  • OECD Council Recommendation on Improving the Environmental Performance of Public Procurement [C(2002)3]

This recommendation provides policy frameworks that can be used by governments in improving the environmental performance of public procurement, including procedures for identifying environmentally sound products, training and technical assistance for implementation, and indicators for monitoring and evaluation.

copy the linklink copied!3.2. Legislation, strategies and planning for waste management

3.2.1. Legal frameworks

In general, OECD countries have legislation in place ensuring that the main aspects of waste management – classification, collection, transport and treatment of municipal, industrial and hazardous waste – are regulated.

Comprehensive “umbrella” legislation, providing a framework for all regulation relevant to waste management, can also be useful in ensuring that waste legislation is coherent and consistent and that no gaps exist. This approach exists in many of the focus countries reviewed. In Korea and Japan, relevant legislation and supporting regulations are brought together under framework legislation focused on sustainable resource use. In the Netherlands and Norway, both countries took a comprehensive approach to waste management relatively early, with waste regulated under the framework of the general environmental protection legislation (the Environmental Management Act of 2002 in the Netherlands, and the 1982 Pollution Control Act and 2004 Waste Regulations in Norway). In Estonia, Poland, Hungary, Czech Republic and Slovenia, accession to the European Union prompted the reform of waste legislation: EU legislation, including the Waste Framework Directive, provides a comprehensive legal framework for these five countries and other EU member states.

Contrastingly, the regulation of waste management in Colombia and Israel is characterised by numerous pieces of legislation, creating the potential for gaps or inconsistencies. In Colombia, waste legislation has evolved over recent decades and most aspects of waste management are covered, with recent improvements in the regulation of hazardous waste. Nonetheless, some gaps remain for construction, non-hazardous mining waste and agriculture. Similarly, while there has been significant regulatory development in Israel, a comprehensive legal framework drawing together all relevant legislation is lacking. At the time of Environmental Performance Review, a significant gap in Israeli waste law remained regarding the liability for contaminated sites; however, regulations addressing this gap were awaiting approval.

3.2.2. Policies and plans

The legal frameworks for all reviewed countries set out requirements for regular waste management planning processes (the exception, Norway, has an environmental White Paper process that incorporates national waste planning)

Typically, national waste management plans:

  • set out policy objectives;

  • set targets (usually quantitative) in line with the policy objectives;

  • identify actions that will be taken to meet the objectives and targets;

  • outline a process for monitoring implementation of the plan, often setting out the indicators that will be used to assess implementation.

In all countries except Colombia,11 the national waste planning process covered all waste sectors. In Colombia, separate policy planning processes were in place for municipal waste and hazardous waste. In some cases, the national waste management planning process was part of national environmental planning processes (for example, Norway). All EU OECD countries are required under the Waste Framework Directive to ensure the preparation of waste management plans that set out, among other things, the current waste management situation, the measures to be taken to improve waste management and an evaluation of how the measures support the objectives of the Directive. The waste management plans for all countries included quantitative targets of some kind. These targets are often related to the recycling and recovery of waste, but in some cases also addressed waste reduction and resource efficiency.

In many of the focus countries, waste management plans address recycling, waste prevention and resource efficiency – and thus elements of the move to a circular economy. The EU Waste Framework Directive, for example, sets recycling targets and requires the preparation of waste prevention programmes, either integrated with waste management plans or in parallel with them.

Three focus countries – Japan, Korea and Netherlands – developed advanced circular economy policies (see Section 3.3). Other countries include circular economy policy goals in broader environmental policy documents. For example, Poland’s Strategy for Innovative and Efficient Economy 2013 includes resource efficiency goals, while Hungary’s National Environmental Technology Innovation Strategy includes quantified material productivity targets. However, often such approaches do not ensure that action plans or institutional arrangements are in place to support the achievement of these goals.

In many countries, regional and/or municipal authorities also carry out waste management planning processes, outlining how waste will be managed within their jurisdiction. Often, lower level plans are required under legislation (for example, Colombia, Estonia, Korea, Poland). In Poland and Estonia, these plans must specifically address the provisions of the national-level plan. In Japan, lower-level planning is not mandatory, but subsidies are granted to prefectures with a waste treatment plan in place. In some cases where a regional or municipal planning process is not in place, national plans will also set out goals and objectives for local governments (for example, Israel).

Limited vertical co-ordination between such plans set out at different government levels can result in missed opportunities in terms of building a comprehensive approach to waste management. This was noted in Colombia, where it was noted that the failure to develop policies and management plans in parallel undermined the potential to improve the effectiveness and efficiency of waste policies and build an efficient waste infrastructure network. In Colombia and in many OECD countries, municipal governments play a key role in managing MSW collection and treatment: consequently, co-ordination is needed to ensure a common, national approach. However, vertical co-ordination may become too burdensome if the requirements are too complex. This was noted in the previous planning process in Poland, where waste planning was carried out at four levels (national, regional, county and municipality), with requirements that each plan be consistent with the plan at the level above, with reporting requirements flowing upwards. This approach was amended to a two-level (national and regional) approach. Norway’s Pollution Control Act previously required municipalities to prepare waste management plans for municipal waste. This legal requirement was dropped; however, some municipalities still prepare such plans.

copy the linklink copied!3.3. Policy frameworks for the circular economy

A review of the Environmental Performance Reviews of the focus countries suggests that comprehensive policy frameworks for the move to a circular economy, though increasing, are still relatively rare in OECD countries.2 Nonetheless, aspects of circular economy principles are increasingly seen in the legal and policy frameworks of OECD countries. While some countries refer to the transition to a circular economy (especially in EU Member States), others refer to resource productivity, resource efficiency, sustainable materials management and sustainable production and consumption (the latter, for example, in Colombia). Japan has a policy framework for a sound-material cycle society and the “3Rs” (reduce, reuse, recycle); Korea’s policies also support the 3Rs and resource circulation. The OECD has aimed to support policy making in this area through, for example, the 2008 Recommendation of the Council on Resource Productivity (Box 3.2).

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Box 3.2. OECD Policy Guidance on Resource Efficiency, 2016

This guidance for policy-makers, which was prepared at the request of G7 leaders, notes a number of key policy actions to be taken at the national level to effectively support resource efficiency, contributing to the shift to a circular economy. These policy actions include:

  1. 1. Apply mixes of policy instruments so as to provide a coherent set of incentives for resource efficiency throughout the policy lifecycle.

    These policy mixes should ensure that each of the main stages of a product’s lifecycle are addressed: material extraction, transport, production, consumption, recycling and final disposal. Currently, evidence suggests that policies are more focused on the post-consumption stages, and policy mixes could be rebalanced to provide more focus upstream in the production and consumption phases. In particular, waste prevention is not being fully exploited in policy mixes.

  2. 2. Implement policies that promote resource efficiency across the lifecycle of products.

    To avoid shifting problems being displaced along product lifecycles, environmental risks need to be managed in an integrated way. Three policy approaches are outlined that use different policy mixes to address resource efficiency along the lifecycle: EPR; green public procurement; partnership with business and other stakeholders.

  3. 3. Treat resource efficiency as an economic policy challenge and integrate it into cross-cutting and sectoral policies.

    Integrating resource efficiency into cross-cutting and sectoral policies, in the manner of other economic policy challenges, helps support the transition to a circular economy. This can help to ensure coherence in policy-making by aligning sectoral policies with resource efficiency objectives. Resource efficiency can also be promoted by integrating it into cross-cutting policy domains, including innovation policy, investment planning, and education and vocational training. Such mainstreaming requires effective governance arrangements, at a sufficiently high level of government.

  4. 4. Strengthen policy development and evaluation through better data and analysis.

    Material flow accounts and indicators for resource efficiency are necessary for policy setting and implementation; however, significant data gaps impede the development of these tools. The Guidance notes that better evidence on the macroeconomic benefits of resource efficiency and the costs of environmental externalities of current resource consumption patterns could help to build the case for policies that improve resource efficiency.

The shift from a linear approach to a circular approach can be seen in policies and measures that emphasise resource efficiency and link waste management with other phases in life-cycle of products and materials (design, production, consumption). The implementation of the waste hierarchy into waste management; policy objectives or measures promoting ecodesign, recycling and re-use; targets for decoupling waste generation from economic growth; and extended producer responsibility (EPR) schemes – these may all be seen as means of incorporating circular economy principles into policy and legal frameworks. As noted in the 2016 OECD Policy Guidance on Resource Efficiency, an effective combination of these instruments can improve their overall impact and efficiency.

Three of the focus countries had a comprehensive policy framework for the circular economy at the time of their Environmental Performance Reviews: Korea; Japan; and the Netherlands.3 In Japan (Box 3.3) and Korea, the circular economy framework has been set out in legislation. Korea’s Framework Act on Resource Circulation, adopted in May 2016 and coming into effect in 2018, is intended to move from a waste and pollution-oriented strategy towards an integrated, circular economy approach. The Framework Act brings together all legislation on waste disposal, recycling and international movement of waste. It sets quantitative targets for landfilling (no more than 3% of waste treatment) and waste recovery (87% of all waste), and establishes incentives for business actions for resource recovery.

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Box 3.3. Japan’s Sound Material-Cycle Society framework

In Japan, circular economy policy is integrated into the legislative and policy framework for waste through the Basic Law for a Sound Material-Cycle (SMC) Society (2000) and the Fundamental Plan for Establishing a SMC Society (2003, revised in 2008).

Japan’s SMC Society package, adopted in 2000, represents a comprehensive circular economy framework for waste management. While a circular economy approach could be seen in the legal and policy framework prior to 2000, for example in the emphasis on recycling in the Law for the Promotion of the Effective Utilisation of Resources (1991), the SMC framework represents a further shift “from waste management to sound materials management”, consolidating and broadening the scope of Japan’s waste legislation. The framework integrates the 3Rs – reduction, re-use and recycling – into Japanese legislation. It also emphasises the responsibilities of the waste generator in the sound management of materials, and extends producer responsibility for end-of-life products.

The legal framework (the Basic Law) sets out an action planning process, the Fundamental Plan, which is revised periodically according to the recommendations of the Central Environmental Council, a consultative body composed of experts, industry associations, consumer organisations, trade unions, and non-governmental organisations (NGOs). This plan sets out a broad range of quantitative targets on resource efficiency, cyclical material use rate, waste reduction, awareness raising, and environmental business practices (e.g. green purchasing). The Plan also sets an approach for monitoring performance against the targets, based on economy-wide material flow indicators. At the time of the Environmental Performance Review, Japan was on track to meet its targets for 2015.

Since the adoption of the SMC framework in 2000, the 3Rs approach has been integrated into other legislation to ensure a coherent approach to waste management. These pieces of legislation include laws on soil contamination, polychlorinated biphenyls (PCB) and agriculture, forestry and fishery biofuels.

In the Netherlands, the second National Waste Management Plan (covering the period 2009-17, with a view to 2021) introduced a new emphasis on resource efficiency. Following the government’s broader Green Growth Strategy, the 2012 “Waste to Resource” programme set out ambitious circular economy objectives, including a target to halve the volume of material that leaves the economy by 2024.4

Japan’s Fundamental Plan Establishing a SMC Society sets out a detailed approach for monitoring performance against policy objectives according to economy-wide material flow indicators. Both Korea and the Netherlands were considering information and monitoring approaches at the times of their Performance Reviews: for both countries, the reviews recommend the development of material flow accounts and indicators.

Other review countries did not have comprehensive circular economy policy frameworks, but circular economy principles can often be seen in the general legal and policy frameworks for waste, environmental protection, industrial development and waste. For example, in Norway, circular economy policy can be seen in aspects of the country’s waste policy, including its extensive use of EPR programmes. The country’s general environmental policy framework, set out in white papers, included waste reduction targets and actions to achieve these targets. Israel’s Towards Green Growth Strategy of 2012 seeks to build the information basis for circular economy policy and start to put a policy framework in place. The Strategy has been integrated into the work plans of ministries but is not yet integrated in government development strategies. In Switzerland, the Green Economy Action Plan sets out the country’s strategy for clean technology innovation, resource efficiency, consumer awareness and environmental taxation. In Slovenia, one of the four main objectives of the National Environmental Action Programme for 2005-12 was to ensure sustainable production and consumption, and it called for a shift from waste incineration towards materials recovery. The Czech Republic includes goals relevant to resource efficiency in its State Environmental Policy, the National Strategy for Sustainable Development and the Ten-Year Programme for Sustainable Consumption and Production, as well as relevant sectoral policy documents (for example, the State Energy Policy). In Hungary, the National Environmental Technology Innovation Strategy includes quantitative targets for reducing the material intensity of production. However, these targets are indicative and are not supported by specific actions or a review process.

Circular economy objectives may also be set out in economic development programmes. While its waste policy framework is largely focused on managing and limiting the immediate negative impacts of waste, Colombia’s Sustainable Production and Consumption Policy, regarded to be the most comprehensive in Latin America, indicates progress towards a comprehensive circular economy policy framework. The Sustainable Production and Consumption Policy sets out resource efficiency targets, supporting efforts for cleaner production and plans for the future implementation of EPR and green public purchasing. The national development plan (PND) includes environmental sustainability as a cross-cutting goal and the 2010-14 PND adopts some of the resource efficiency targets set out in the Sustainable Production and Consumption Policy. Similarly, Poland’s 2003 strategy on production and consumption called for decoupling resource consumption from economic growth. The National Reform Programme in the Czech Republic includes objectives on the effective use of secondary raw materials, conversion of waste to resources and recycling.

Under EU legislation, all EU Member States are required to adopt certain policy measures that support a circular economy approach. The Waste Framework Directive has a particularly strong role here. The Directive requires the incorporation of the waste hierarchy into legal and policy frameworks, the establishment of waste prevention programmes, and encourages Member States to adopt EPR schemes. Other pieces of EU legislation support, at least to some extent, a circular economy approach to waste management, including the Waste Electrical and Electronic Equipment (WEEE) Directive, the Batteries Directive, the Directive on End-of-Life Vehicles, and the Packaging Directive. (The Circular Economy Legislative Package proposed in 2015 would amend some of these pieces of legislation, setting new and/or more ambitious targets than those currently in EU legislation.) Thus, all EU OECD countries have, at least to some extent, incorporated circular economy policy into their legal and policy frameworks. This is seen, for example, in Slovenia, where changes to the waste legal framework following its 2004 accession to the EU integrated, at least to some extent, circular economy principles.

The OECD Council Recommendation on Resource Productivity (OECD, 2008) emphasises the importance of improving the productivity of resource use at all stages of the life-cycle for products to avoid waste of resources and reduce negative environmental impacts. As noted in the OECD’s 2014 Report on the Implementation of the 2008 Recommendation, however, only a few OECD countries have developed policies to address several stages of the materials life-cycle: it appears that many so far have focused on products and waste stages rather than up-stream activities such as resource extraction. Moreover, countries have tended to focus on life-cycle stages occurring within their territories rather than those that take place beyond their boundaries.

copy the linklink copied!3.4. Institutional frameworks

The regulation of waste management requires government institutions to carry out a number of different activities: the development of legal and policy frameworks; setting of policy objectives; implementation of those frameworks (including permitting and enforcement functions); data collection, monitoring and evaluation; information and knowledge sharing; consultation of stakeholders; and the co-ordination of actors. These activities are shared among a number of institutions, and, in OECD countries, are almost always shared across different levels of government (OECD, 1999).

The 11 OECD countries studied in-depth display a broad range of institutional arrangements for waste management policy. Nonetheless, all focus countries have some common features, with a two-tiered or three-tiered governance system in place in all countries. Typically, national governments set the high-level policy objectives (for example, in national waste plans and strategies) and establish the legal framework.

The ministry responsible for environmental policy is the lead agency for waste policy in all focus countries. These ministries consult horizontally with other relevant ministries in the national government, such as the ministries responsible for economy or industrial development (on circular economy issues and/or industrial waste), agriculture (agricultural waste), health (clinical waste, public health), and land-use planning (planning of waste treatment sites). In some countries, different ministries are in charge of overall waste management policy and MSWpolicies. For example, in Hungary the lead ministry for waste management policies is the Ministry of Agriculture while MSW falls under the responsibility of the Ministry of National Development. Similarly, in Colombia, the Ministry of Environmental and Sustainable Development is in charge of waste policies, the Ministry of Housing, Cities and Territories being in charge of MSW. In the Czech Republic, the Ministry of Environment established the Waste Management Board, composed of relevant experts from all government departments and NGO representatives, to advise on waste policy and support the coherence of waste policy across relevant policy areas. Often a separate enforcement agency may be involved in enforcement and compliance (for example, the Green Policy in Israel, the Chief Inspectorate for Environmental Protection in Poland, the Environmental Inspectorate in Estonia). Separate national environmental authorities may also have a role in the implementation and enforcement of waste management policy (for example, Slovenia) or in policy-focused research (for example, the Netherlands Environmental Assessment Agency). In some cases, a national, independent regulatory authority monitors waste activities (for example, in Portugal). (See Section 4.7 for a further description of regulatory approaches for enforcement.)

National authorities may also carry out a number of other roles: permitting of certain activities (for example, the national authority in Norway is responsible for the permitting of hazardous waste operators); operating national hazardous waste facilities (for example, in Israel and Estonia); collecting reported information from municipalities; supporting local authorities in their implementation roles through capacity building actions (for example, Korea, Poland); and co-ordinating inter-municipality collaboration (for example, the Local Government Policy Council in Korea).

In some OECD countries, regional or provincial governments also play a role in both policy-setting and action planning. This role is typically stronger in countries with a federal system of government, where the regional government may set policy objectives and legislative frameworks, and national government may have a more restricted role. However, even in countries where a unitary system is in place, regional or sub-national governments will often have a strong role in waste management policy and action-planning. This is seen in Poland, where the voivods prepare waste management plans for their voivodeship and are responsible for most permitting of waste facilities. Similarly, provincial authorities play a role in permitting and enforcement in the Netherlands and Korea.

The OECD Council Recommendation on Resource Productivity (OECD, 2008) highlights the importance of involving all relevant government bodies. The 2014 Report on the implementation of this recommendation, found that only a few countries have effective mechanisms for policy co-ordination and coherence. The Environmental Performance Reviews also suggest that national institutional frameworks dedicated to the horizontal co-ordination of circular economy policy are rare. Such arrangements can integrate circular economy goals into relevant cross-cutting and sectoral policies. In the review for the Czech Republic, while it was noted that the Waste Management Board plays an important role in circular economy policy, there is a need for an institutional platform specifically dedicated to broader co-operation beyond waste policy. Where institutional responsibilities for circular economy (or sustainable material use) have been allocated, it is often the ministry responsible for environmental policy that takes the leading role. This is seen, for example, in the Netherlands, the Czech Republic, and in Japan, where the Ministry of Environment is responsible for 3Rs policy. In the Netherlands, it was noted that some consideration is being given to the roles and responsibilities of different actors for circular economy.

copy the linklink copied!3.5. Organising municipal solid waste services

In many OECD countries, the management of MSW is carried out at multiple levels of government, with municipal governments often playing a key role. Their implementation role may involve ensuring the collection, transport and treatment of waste. Municipalities may also be involved in the setting and collection of fees (often in line with regional or national legislation), while the licensing and permitting of waste facilities is more often carried out at the national level or at the regional level (particularly in countries with a federal system of government). Municipalities may also be involved in action planning (for example, through a local waste management plan). Often these roles are carried out in districts that bring together neighbouring municipalities.

Arrangements for the collection and transport of municipal waste often vary between municipalities in a country, with most countries displaying a mix of approaches (Box 3.4). These arrangements can usually be categorised into one of three main approaches:

  • In-house service delivery. Municipal governments may directly deliver waste management services. For example, in Israel, municipal waste collection is predominantly carried out by the municipal sanitation department, although private sector collection is increasingly more common. In other cases, as in some municipalities in Norway, the collection and transport and treatment may be delegated to a municipality-owned company or a company jointly owned by a number of municipalities through an exclusive contract.

  • Competitive tendering. Waste collection and transport services for one (or more) municipal areas may be contracted out to commercial providers. This occurs in a number of OECD countries, for example, Estonia, Poland and Colombia.

  • “Side-by-side” collection. Individual households are responsible for arranging the collection and transport of their waste. This approach results in direct contracting between households and waste collectors so that multiple companies may be operating “side-by-side” in the same municipality. This approach is increasingly rare in the OECD: it was in place in Poland prior to the 2013 reforms and continues to be used in Ireland.

The experience in some countries – Poland, Israel and Japan – suggests that tendering is increasingly being used to provide municipal waste collection and transport services. Cost effectiveness is likely to be a key driver behind this shift. In the Netherlands, liberalisation of the waste market is a goal in both the National Waste Management Plans prepared to date, and the liberalisation of the waste treatment market has seen waste treatment prices increase at a lower rate than inflation. Studies comparing waste collection services in Israel suggest that costs are lower in municipalities where private operators collect waste.

Side-by-side collection - direct contracting between municipal waste generators and commercial service providers does occur in OECD countries (for example, Ireland), but is unusual. Until recently, in Poland, municipalities were not directly responsible for household waste collection, and households contracted directly with commercial providers for the collection and transport of waste. With multiple companies operating in the same municipality, the increased number of trucks resulted in increased traffic, air and noise pollution. In addition, illegal dumping by both households and operators was relatively easy, due to the weak role of municipalities and the possibility of free-riding by households. Reforms in 2011 made municipalities responsible for competitive tendering to ensure waste collection services for households. While challenges were observed during the transitional period, early results suggest the reforms were leading to benefits, such as improved service coverage and increased separate collection of waste.

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Box 3.4. Overview of municipal solid waste collection arrangements in the focus countries

Colombia Predominantly competitive tendering.

Czech Republic Mix of in-house delivery and competitive tendering.

Estonia Competitive tendering, with households directly paying companies.

Hungary Competitive tendering among certified public sector operators via municipal governments, with central authority responsible for fee setting, collection and payment of contractors.

Israel Predominantly in-house, with increasing use of competitive tendering.

Japan Predominantly competitive tendering, with some in-house service delivery.

Korea Mix of in-house delivery and competitive tendering.

Netherlands Mix of in-house delivery and competitive tendering.

Norway Predominantly in-house through a municipal department or municipally-owned company. Some competitive tendering.

Poland Previously “side-by-side”, replaced by competitive tendering. In-house delivery is also possible since January 2017.

Slovenia In-house, predominantly through publicly-owned companies.

Challenges in the implementation of reforms to institutional arrangements for municipal waste are not unique – private sector or informal sector operators already in the market can be expected to challenge reforms that threaten their investments, and municipalities may lack the capacity to manage new roles (OECD, 2013) – as the example in Estonia highlights. Changes in the Estonian institutional framework for management of municipal waste have created continuing uncertainty concerning the role of municipal governments and the private sector in waste collection. Similarly, in Hungary, frequent recent changes in the role of municipal governments regarding MSW, particularly in the setting and payment of service fees, risk undermining the potential for cost-recovery in MSW collection and reducing incentives for municipal governments to pursue waste reduction and recycling improvements.

3.5.1. Collecting recyclables at kerbside

The collection of recyclable MSW at the kerb (also called ‘door-to-door’) can support higher rates of separate collection and of recycling. Several Environmental Performance Reviews found that reforms have increased the use of kerbside collection: this was seen, for example, in Hungary, Korea and Poland. Other countries, however, continued to rely on voluntary deposits at containers and civic amenity sites, as seen in the Czech Republic. Environmental Performance Reviews, for example for Slovenia, have recommended greater use of kerbside collection.

3.5.2. Role of the informal sector

In some countries, the informal sector is an important player for waste management. The involvement of the informal sector in recycling is often seen in many countries, particularly in waste streams involving high-value materials (end-of-life vehicles, some WEEE), as noted in the Environmental Performance Reviews for Chile, Colombia, Estonia, Israel, Korea, Mexico and Poland. In many cases, informal recyclers make significant contributions to overall recycling efforts. Indeed, in Colombia, half of all recycling actions are carried out by the informal sector, and approximately 14 000 people rely on the sector for their livelihoods. These operators can assist in meeting recycling targets in the absence of infrastructure for the separate collection of waste. However, informal waste picking can also lead to illegal dumping of waste and undermine the cost effectiveness of formal recycling programmes, including EPR schemes.

Integrating these operators into the formal waste management system can help to maximise the positive contributions waste pickers make to recycling objectives, while minimising the risk of negative consequences. Some success in integrating the informal sector was seen in Bogota, Colombia, during the lengthy process of formalising the city’s waste pickers. The process lasted more than a decade, and involved legal challenges from the informal sector to the city’s plans to competitively award municipal waste services. At the direction of the courts, the city entered into negotiations with the informal sector and developed a social and financial plan for the integration of waste pickers into the city municipal waste management system. Formal recognition of the role of waste pickers in waste management, and providing financial incentives for them to participate in the formal system, appeared to be key factors in integrating the informal sector. A sound understanding of the sector and how it functions is critical to setting the right incentives for integration, as was recommended in the review for Korea.

3.5.3. Size of municipal waste collection areas

The size of municipal waste collection areas impacts the efficiency of collection services, and the level of competition in the waste collection market, resulting in a trade-off between economies of scale and competition. In many countries, the collection area is the individual municipality. However, legislation can be used to designate larger waste collection areas where appropriate. Alternatively, municipalities may join together for joint contracting of waste collection and transport services to achieve economies of scale: this is seen in Poland, Japan and Norway. In other countries, these opportunities to achieve efficiencies through joint action are not always taken. In Slovenia, there are a large number of small municipalities, and there is a recognition of the need to develop larger regions for waste management, which is permitted under the legal framework. However, no regions had been established at the time of the review. In Estonia as well, municipalities could voluntarily join together in common waste districts (up to a service area of 30 000 inhabitants); however, few municipalities did so. In the Czech Republic, where 6 000 small municipalities have responsibilities for waste management, most (90%) participate in some kind of inter-municipal arrangement. However, opportunities for inter-municipal co-operation are often missed in the areas where they may be most needed due to administrative capacity issues.

3.5.4. Institutional capacity for tendering

Efficient public procurement of high quality services can be challenging for the public sector. For municipalities with potentially limited experience in procurement, contracting with private sector companies to provide waste collection, transport and treatment services can be particularly challenging.

In some cases, public procurement processes may overemphasise price as a decisive factor in the award of contracts, potentially leading to poor quality outcomes in terms of how the successful bidder performs the contract. This was reported in the Poland review, although recent data suggests improvements in this area, with just 16% of tenders being awarded on price alone in 2016 compared to 83% in 2014 (European Commission, 2016). This may be in part due to investments in capacity building efforts for municipalities (Box 3.5). Slovenia also faces challenges in this area (78% of tenders awarded on price alone in 2016). Concerns may also be raised regarding the competitive advantage of municipality-owned facilities in the market for contracts, a factor seen in Poland.

Appeals from unsuccessful bidders against the tendering processes can delay the procurement of waste services. This was seen during the transition to competitive tendering in Bogota, Colombia, where the informal sector launched a challenge. It is also seen in Estonia, where appeals against the award of a contract can lead to the contract being set aside, and the process beginning again. This creates an incentive for losing bidders to launch appeals, and as a result such challenges are common. When appeals lead to contracts being set aside, waste generators are left without waste collection and transport services, increasing the risk of illegal disposal. Contrastingly, in the Netherlands, where a contract award is set aside, the incumbent contractor continues to perform its duties until the matter is resolved.

During the transition phase to competitive tendering of private sector waste services, trade unions may also oppose reforms. This was reported in Israel, where local labour unions have opposed the outsourcing of municipal waste collection. Mixed systems can create uncertainties and legal challenges: in Poland, for example, municipally owned waste companies could compete for tenders in their city, leading to court cases over potentially unfair awards.

Consequently, institutional capacity is a key factor for the success of municipal waste services procurement. To be successful, competitive tendering requires “a cultural change in government and a new mix of skills” in municipal governments, and incentives for local governments to competitively award waste management contracts are relatively weak (OECD, 2007). Often, imbalances exist in the capacity and incentives of the parties involved in tendering processes; municipalities, particularly small, often rural, communities, may be limited in terms of expertise and resources, while private operators may be well resourced with considerable financial interests to pursue. Limitations in the capacity of municipalities to manage their roles in waste management, which may include managing competitive tendering processes, were reported in a number of the focus countries, including Estonia, Korea, Poland and Slovenia. In some cases (Korea, Poland), national governments carry out capacity building activities to support municipalities in their work. The establishment of inter-municipal or regional waste management districts can also help to address this challenge, as seen in Poland, Japan and Norway and under discussion in Slovenia.

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Box 3.5. Municipality capacity building in Poland

There was a strong need to build the capacity of municipalities in Poland after the reforms of 2011. Prior to the reforms, the role of municipalities was limited to enforcement activities, overseeing the private operators collecting and transporting waste, and many municipalities did not take a strong role. Since the reforms, municipalities are responsible for the overall delivery of municipal waste services, requiring them to procure waste management services through competitive tendering, ensure separate collection of recyclables and set and collect fees from households and small businesses.

The national government, through the responsible environment ministry, took a number of capacity-building actions to ensure municipalities were to carry out their new role. The ministry published a guidance manual, held conferences and meetings, and operated an internet hotline staffed by experts on waste technology, fee collection, public procurement and contract management. In some cases, municipalities that had adopted the reforms early provided training to other towns based on their experiences. Municipalities were also provided with communications materials to provide to residents to inform them about the changes.

copy the linklink copied!3.6. Role of the private sector

As noted in Section 3.5 above, municipalities frequently contract with private operators for the collection, transport and/or treatment of municipal waste. Usually tenders are awarded to one contractor per municipality, so that economies of scale and density may be achieved. Contracting with private waste service providers by generators of industrial and hazardous waste is also common. Private sector investment in waste treatment facilities plays an important role in developing waste management infrastructure in most OECD countries (see Chapter 5).

At a broader scale, public and private co-operation has an important role for waste management and also for the move to the circular economy. For example, in the Netherlands, the private sector is involved in the development of National Waste Management Plans and has responsibilities for waste management set out in legislation. Similarly, in Japan, the private sector is involved in the SMC Fundamental Planning process and shares responsibility for waste management and resource efficiency under the SMC Law. OECD’s 2014 Report on the Implementation of the 2008 Recommendation on Resource Productivity highlights the need for stakeholder engagement in ensuring full implementation of these policies, as many economic sectors need to be involved.

Governments can support improved waste management practices in industry through information exchange networks. In Israel, a joint government-private sector initiative established a waste material exchange bulletin board, supporting relatively high rates of recycling and recovery of industrial waste. In Colombia, the National Center for Cleaner Production and Environmental Technology promotes better waste management in industry. The Centre enters into voluntary agreements with industry sectors and provides technical assistance to companies on waste management. It also operates an information system that supports the exchange of recovered materials between companies. In Japan, the government seeks to raise private sector awareness of waste and resource efficiency through the Eco-Town Programme. In the Czech Republic, the authorities support information exchange through conferences on waste reduction and a contest, Turning Waste into Resources, which promotes recycling and the use of secondary raw materials by businesses. These activities are in line with OECD recommendations on environmentally sound waste management, which recommend that OECD countries encourage information exchange between private sector operators to foster waste prevention and optimise recovery operations (OECD, 2004). More generally, gathering and sharing valuable information is a key factor for the move to a circular economy.

EPR schemes involved extensive private sector participation. These schemes are discussed in more detail in Section 4.3.

References

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Notes

← 1. 1 Since the publication of its Environmental Performance Review, Colombia adopted the National Policy for the Integrated Management of Solid Waste (Política Nacional para la Gestión Integral de Residuos Sólidos) in November 2016, which takes an integrated approach to managing all solid waste sectors.

← 2. Four of the 11 reviews did not specifically cover the subject of circular economy in their waste chapters. In these cases, the information on policy and legislative frameworks were reviewed to identify, where possible, policy objectives and measures that seek to integrate a circular economy approach into waste policy.

← 3. Other countries have taken steps for a circular economy since their environmental performance reviews. Slovenia’s recent Development Strategy 2030 includes a low-carbon circular economy among its goals. See: www.vlada.si/en/projects/slovenian_development_strategy_2030/.

← 4. Since the Environmental Performance Review, the Netherlands has taken further steps, including the publication of A Circular Economy in the Netherlands by 2050: Government-wide Programme for a Circular Economy (September 2016). See: www.government.nl/documents/policy-notes/2016/09/14/a-circular-economy-in-the-netherlands-by-2050.

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Chapter 3. Institutional and policy framework