2. There is a simplistic argument that public goods should be paid for by public funds and delivered by public agencies, while private goods should be paid for by private individuals (through user charges) and delivered by the private sector. Issues of private sector participation in solid waste management services should not be confused with those of cost recovery. One premise of this paper is that there are sometimes reasons for involving the private sector in solid waste management activities, regardless of whether these activities are public goods or private goods.

3. Many activities within the overall purview of solid waste management vary in the extent to which they are public goods. Taking into consideration only the factor of the degree to which a solid waste activity is exclusive or rivaled, Figure 1 illustrates that most solid waste activities are public goods. For example, public cleansing, which involves sweeping of public streets and cleaning of public parks and lands, is clearly a public good because it benefits the public at large and not any specific individual. As a public good, the cost of these services is expected to be covered through general revenues of local government. This includes the cost for public education regarding the individual's civic duties in maintaining a clean community.

4. The safe disposal of all collected solid waste within a sanitary landfill is also a public good; it benefits no specific individual but is required for environmental protection purposes that benefit the public at large. The use of a sanitary landfill is usually the lowest cost method of safe disposal. All other methods of disposal also involve the sanitary landfill of residuals (ash from incineration) or of wastes that are incompatible with the disposal method (non-compostables from comporting).

5. It is theoretically appropriate for the cost of sanitary landfill to be covered through general revenues. Nevertheless, tipping fees (user charges on a per tonne basis) can be readily collected from private refuse haulers and from individual industrial and commercial establishments that bring their solid waste to the landfill. For tipping fees to be levied in a manner that does not encourage clandestine dumping, relevant local government laws and sanctions need to be comprehensive, and inspection and enforcement systems need to be consistently vigilant in their monitoring of such.

6. In developing countries, resource recovery (comporting, waste-to-energy incineration) can provide safe disposal of solid waste which is comparable environmentally to sanitary landfill. The cost of resource recovery, however, is usually significantly higher than the cost of sanitary landfill. Resource recovery should not be implemented unless a) the recovered resources (compost, secondary materials, steam) can be counted as public goods worthy of subvention from government, or b)

6 Cost difference between sanitary landfill and resource recovery can be covered by revenue from marketing the recovered resources.

7. In low-income communities characterized by limited access to refuse collection trucks or carts, door-to-door collection service is no/economically feasible, and only a communal container or bell system is viable. Collection by communal systems a) inherently involves collection from a public area not from a private establishment or household, and b) requires the participation of residents who bring their refuse to a communal container or to an attending refuse collection vehicle (upon bell ringing). Such participation represents a significant, voluntary contribution by the community residents. Also, it is not feasible to make an accurate accounting of which residents bring refuse to the communal collection point. Communal systems of solid waste collection are considered a public good, and direct charges are difficult to implement unless a strong community organization exists to enable cost recovery.

8. Whether refuse collection from private establishments or individual households can be treated like a private good (even though it is a public good) depends on the education and culture of the residents. In communities wherein residents have been sensitized to the need for public cleanliness and to the problem of limited resources (or efficiencies) of government, the door-to-door collection service to households, institutions and to industrial and commercial establishments can be treated as a private good for which those being serviced would be willing to pay. In communities wherein the residents have not been similarly sensitized, there will be resistance, however, to direct user charges and a tendency toward clandestine dumping. Service to all customers, whether paying or nonpaying, is in the public interest. Unlike water supply or electricity, which can be readily cut off for nonpayment of user charges, solid waste collection can not be discontinued without jeopardizing the public welfare.

9. Recycling has historically been treated as a private good in most countries, except during war time when governments have conducted recycling in the interest of national security. China has been an exception, and state-operated recycling systems are perceived as an important element of self-sustainable development. In the last decade, industrialized countries have slowly changed their perspective on environmental awareness, thus recognizing that everyone benefits from recycling as a public good. Through recycling, foreign exchange is saved, natural resources are conserved, industrialization is promoted, and waste disposal cost is minimized.

10. While it is true that industries save on their materials and energy costs through the use of recovered waste materials as feedstock and that they are willing to buy recyclables, recycling is seldom achieved at an optimal level when left purely to market forces. Thus, recycling can be labeled a merit good (20,47). Even in the poorest of developing countries, many recyclable materials that could have been effectively recycled remain in disposal sites. In recognition of recycling as a public good, the governments of industrialized countries are beginning to sponsor education about recycling, to facilitate recovery and purchasing networks, and to provide financial incentives to buy back (redemption) centers and industries that recycle.

11. Figure 1 provides a framework for categorizing various activities of solid waste management as pure public goods (also called collective goods) or as pure private goods. Public goods (national defense) are consumed jointly and are nonexclusive. Private goods (store-bought items) are consumed individually, and the producer can deny the good to the consumer until payment

7 has been made. Figure 1 also categorizes these activities that fall somewhere in between these two categories, such as toll goods and common-pool goods. To be economically viable, toll goods (cable television) are like private goods, in that some people can be excluded from benefiting, and like public goods, in that they need to be provided to a collective group of beneficiaries. Common pool goods (air) are those for which consumption is not joint and to which access is non excludable.

12. Figure 2 links activities of solid waste management to the methods of private sector arrangement. For example, for pure public goods (collective goods), which can not exclude any potential user within the service area, contracting and concession are the most appropriate methods of private sector participation. On the other hand, toll goods can be exclusive, thus franchise and open competition are also appropriate methods. For activities that fall between pure public goods and toll goods, contracting, concession, and franchise are appropriate methods. For activities that fall between private goods and toll goods, contract, franchise, and open competition are appropriate methods. For pure private goods, open competition is the most appropriate method of private sector participation.

13. In developing countries, most local governments experience a serious shortfall in meeting their revenue needs from their tax base (60). User charges, as one means to cover solid waste cost, 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 all other government agencies for their share of general revenue. User charges also may render the solid waste agency more directly accountable to residents for the cost and value of services that they provide.

14. Whether to involve the private sector in solid waste management services is an issue that is separate from cost recovery. Instead, the question of whether to involve the private sector in solid waste management activities is to be examined from the perspective of service coverage, efficiency, reliability, cost, economies of scale, equitability, and accountability, as discussed below.