International: Privatization Wave Washes Over Europe

As the trend toward privatizing solid waste services proceeds on this shore of the Atlantic, it also is gaining momentum in Europe.

One of the forces driving the Eu-ropean privatization trend - ailing public finances - is all too familiar on this continent. Even in prosperous European nations, budget deficits reportedly are preventing municipalities from investing the sums needed to keep pace with the de-mand for expanded waste systems. A popular solution is to put collection and recycling services into private hands or to rely on private capital for fa-cility construction and operation.

Private firms are rising to the occasion. Numbering about 1,000, members of the Federal Association of the German Disposal Industry (BDE), did more than half of the country's solid waste business in 1995 after making steady advances since the beginning of the 1990s (see figure).

At the start of 1995, the BDE projected an investment need of about DM 30 billion (US $20 billion) through the year 2000, in-cluding 27 new facilities for composting, 186 for packaging waste recycling, 31 for electronic equipment demanufacturing and 13 for commercial waste recycling. On top of that, new thermal processing facilities and an estimated 150 new landfills reportedly will be required to meet the criteria of a German regulation that becomes binding in 2005.

Another force behind privatization - even more common in the Old World than here - is the push to modernize. Not only does aging infrastructure demand attention, but revitalization lags within the public sector. Swiss environmental authorities have reported inefficiency problems such as slow decision-making processes and limited government capacity to act as a business. In comparison, the private sector is seen as innovative and more flexible in marketing, acquisition as well as full capacity utilization.

Perhaps the strongest shove to-ward privatization, however, came when the producer liability policy took Europe by storm. Based on the "polluter pays" principle, this policy makes manufacturers re-sponsible for the waste they generate.

The notion caught on quickly after Germany introduced its Pack-aging Ordinance in 1991 in hopes of ending the throw-away society. Retailers and manufacturers, facing the obligation to accept packaging that was returned to them, formed a private company for collecting and recycling used packaging materials. To minimize duplication, this private system has been coordinated with local authorities' existing waste collection services.

Following Germany's example, private industry in Austria established its own system. Branch re-cycling companies, commissioned with packaging waste collection and recycling, award contracts for the actual delivery of services to local private or municipal disposers.

Belgian industry also funded and organized a system that eventually will provide collection and sorting of household packaging waste nationwide. By transferring their waste take-back obligation to this established recovery chain, wholesalers, retailers, manufact- urers and importers can avoid paying ecotaxes.

French manufacturers and importers founded multiple organizations to recover and recycle various packaging materials. The organization dedicated to household packaging offers contracts to municipalities for material collection and sorting. The recovered materials are sold to designated companies that guarantee recycling.

Portugal has a system of shared responsibility whereby local governments take charge of collection and industries provide financing and ensure re-covery. Thus, one by one, Euro-pean Union member countries are developing systems to comply with the December 1994 Directive of Packaging and Packaging Waste, though with a varying mix of private and public participation.

Producer liability does not stop with packaging, of course, but leads to cradle-to-grave responsibility for a full range of products after consumer use, as already mandated in the Netherlands and other countries. Germany now is in the process of implementing this policy. The Law on Reuse and Environmentally Compatible Dis-posal of Wastes, which became effective this Octo-ber, is intended to usher in a cycle, or closed-loop, economy. With industry assuming the burden for recycling and disposing of its discarded products, great strides are ex-pected toward the German government's stated goal of privatizing public service delivery.

Not all predicted effects are positive developments, however, such as further reductions in the commercial waste stream. Pos-sible negative im-pacts that are cited include the growth of monopolies, loss of public-sector autonomy and more uncertainties that will complicate local and regional attempts to plan for the future.