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Subtitle D Raises Costs to Own, Operate Landfills
October 1, 2000
3 Min Read
Adrian Moore and Geoffrey Segal Reason Public Policy Institute Los Angeles
Thanks primarily to Subtitle D, the cost to own and operate a landfill has risen dramatically. This, coupled with increasing demands on municipal budgets, has led many cities and counties to leave the landfill business and rely on the private sector for disposal, according to a recent report by Reason Public Policy Institute (RPPI), Los Angeles, entitled “Privatizing Landfills: Market Solutions for Solid-Waste Disposal.”
In the report, RPPI details the evolution between local governments and private firms handling municipal solid waste (MSW). For example, public sector ownership of solid waste facilities has been declining from 83 percent in 1984 to 73 percent in 1997 and to 64 percent in 1998. And, 27 percent of municipalities with populations greater than 100,000 are considering privatization a disposal option, according to “Trends in Privatization and Managed Competition: National Survey Results,” a 1998 R. W. Beck survey.
Currently, private firms operate almost half (48 percent) of this nation's landfills. Approximately half of all landfills in cities with more than 100,000 residents are operated by the public sector; another 10 percent are publicly owned but operated by private firms. The remainder, 38 percent, are both privately owned and privately operated, documents Chartwell Information, Directory of Solid Waste Disposal, 1998.
But although private firms own only 38 percent of the total number of landfills, they dispose of 58 percent of MSW (by volume) and own 67 percent of current total landfill capacity. In contrast, public agencies own 62 percent of landfills, but they dispose of only 42 percent of MSW (by volume) and own only 33 percent of the current waste disposal capacity.
Interestingly, most of the nation's landfill capacity exists in the West. The private sector handles more waste in Midwestern and Western states, and more firms operate in the West, states RPPI research.
Who in local government is driving privatization? According to R.W. Beck, more than 25 percent of the privatization cases, city councils or county commissions spearheaded privatization initiatives. Solid waste management officials are the driving force behind privatization 17 percent of the time.
Common forms of privatization include minor transfers of responsibility to private firms to outright service shedding. According to the report, common arrangements include:
Cooperative agreements between public and private agencies. In a typical form of public/private partnership, landfill operations are separated into different divisions. The local government operates some functions; the private firm operates other, often capital-intensive, functions. For example, private firms may operate compaction, construction and soil top-off, while local governments operate scales, groundwater monitoring or methane gas recovery.
Contract facility management. Private firms manage or operate 10 percent of publicly owned landfills. Contracting facility management creates a competitive environment that can lower costs. Cost savings may result in service enhancements in other areas, such as fee stabilization or environmental improvements, because more money can be directed to these programs.
Complete divestiture of assets. Although a government no longer provides the service, it is responsible for monitoring and planning. This form of privatization is relatively rare, although many private firms have built and operated landfills as merchant facilities independent of any government asset sales or operational contract.
“Solid waste management officials are the driving force behind privatization 17 percent of the time.”
Merchant facilities. Some local governments never have owned a landfill, or they have closed it. Instead, they rely on private landfills that charge for their use. Rather than put capital up for landfill construction, these governments rely on the private sector to make the initial investment. And, depending on the local circumstances, many communities find it cost-effective to ship its waste to more distant private facilities.
A variation on merchant facilities are those sites built and operated privately to meet a local government's need for additional disposal capacity.
For a copy of the report, “Privatizing Landfills: Market Solutions for Solid-waste Disposal,” visit www.rppi.org/ps267central.html.
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