61. Privatizing some aspects of municipal solid waste service delivery does not in any way take away the need for local government (or metropolitan government, if appropriate) to be fully responsible for solid waste management service. Local government needs to have adequate autonomy to enter into multi-year agreements that capture economies-of-scale, as well as efficiencies. Many Asian countries have procurement laws that place low monetary ceilings on the sizes of contracts before provincial and central reviews and approvals are required, and do not allow contracts to extend beyond one fiscal year (11).

62. For some of these services to be effectively privatized, government would need to be strengthened (5). Only a governmental organization with a competent professional staff and an adequately designated authority with commensurate responsibility would be fully able to develop, negotiate, manage, monitor, and enforce a competent contract instrument. If government does not have political leadership with the will to upgrade and professionalize the staffing of the solid waste agency as part of a decision to privatize solid waste management services, it is doubtful if the private sector will be obliged to deliver service at a low cost.

63. Beyond the strengthening of local (or metropolitan) government, there are obvious needs to strengthen central government to deal with the contextual parameters raised above. According to the World Bank's Urban Policy and Economic Development輸n Agenda for the l 990s, central government needs to "establish expectations of local performance" and to "retain some degree of oversight to ensure accountability over some areas of local decision-making" (8).

64. Some issues that are directly related to enabling private sector participation to realize low costs can be dealt with only at the central level. These issues include the minimization of risks related to environmental regulatory changes, national inflation, currency convertibility, fuel prices, pricing policies, import bans or quotas, and taxes. These also include the provision of appropriate incentives, such as guarantees for any borrowings, assumption of foreign exchange risk, tax incentives, customs duty exemption, and special lines of credit (2, 3, 12, 52).

65. Which level of government is most appropriate to conduct solid waste collection and street sweeping activities? When the technology for a given service is readily known and available, the decentralization of an activity from metropolitan government to local government and private markets may be advisable (72). Many unfamiliar with solid waste management view refuse collection and street sweeping as simple services that do not require much knowledge or specialized equipment. This is far from true. While it is possible to collect and dispose of refuse without knowledge and with only limited equipment, to do it efficiently and effectively requires substantial planning ability, appropriate equipment, and continuous managerial optimization of vehicle and worker productivity. While it is viable to decentralize refuse collection and sweeping from metropolitan government to local government after the appropriate equipment has been procured and the optimal crew size and routing has been determined, it would be ill-advised to decentralize the equipment procurement or optimization planning activities without the significant development of the technological base within local government and the private sector.

66. Which level of government is most appropriate to conduct solid waste transfer and disposal activities? When goods and services have significant spillovers (or externalities), the institutional arrangement must have sufficient authority to deal equitably with the entire area of impact (73). Some solid waste activities, such as refuse collection, have no significant spillovers. That is, all the costs, benefits, and impacts are confined to the area of service. Other solid waste activities, such as refuse disposal, can have significant spillovers, that is, water and air pollution can migrate from the area of service to surrounding areas. Because of the spillovers that typically characterize refuse disposal, it is not advisable to decentralize disposal to local governments within an metropolitan area or to private markets unless the regulatory framework and sanctions are adequate.