Economic Analysis of Options for Managing Biodegradable Municipal Waste

1.1 Background



The main objective of the study was: To conduct an economic evaluation, that considers both private and social welfare costs and benefits, of existing options for managing the biodegradable fraction of municipal solid waste.



Although all management options (anaerobic digestion, composting, landfilling, incineration, etc.) receive some consideration in the study, the main emphasis has been on the separate collection and composting / anaerobic digestion of the biodegradable fraction of municipal solid waste. The study focuses on the Member States of the European Union and on the first wave of Accession countries, i.e. the Czech Republic, Poland, Hungary, Estonia, Slovenia and Cyprus.





1.2 Private and External Costs and Benefits of Switching Between Treatments



1.2.1 Key Messages



1. The switch from landfill or incineration is favourable to both composting and anaerobic digestion on environmental grounds;



2. The environmental benefits of switching to anaerobic digestion are greater than for composting;



3. However, the private costs are higher. Therefore, compost is more favourable from a cost-benefit perspective;



4. However, the net benefit of the switch to compost is not very large. However, the benefits from composting are probably underestimated.



1.2.2 Results



1. The external benefits of switching from landfill to composting are generally quite small (of the order ?1 – ?4 per tonne);



2. They are larger for the switch from incineration to composting (of the order ?12 – ?25 per tonne);



3. When anaerobic digestion is used to treat separately collected waste instead of composting, the external benefits of switching away from either landfill or incineration are higher;



4. However, the difference is not very large (?2 – ?5 per tonne when switching from landfill to anaerobic digestion, and ?13 – ?29 per tonne when switching from incineration to anaerobic digestion);



5. The additional benefit improvement is less than the increase in costs which a resort to anaerobic digestion appears to imply;



6. The external benefits of the switches away from landfill vary significantly (across countries) as a proportion of the costs of the change. This is due to the fact that the charges for landfilling vary significantly across countries (as well as within them). It is expected that there will be some harmonisation in gate fees as the implementation of the Landfill Directive progresses over time. This will increase the costs of landfilling and reduce the costs of the switch in those countries where the costs of switching are not already negative;



7. The external benefits of the switches away from incineration are generally more significant. The private costs of incineration also vary significantly across countries, though they are nowhere as low as landfill gate fees are in some countries.



1.2.3 Assumptions



1. Discount rates of 1%, 3% and 5% are assumed, with 3% as the central rate;



2. The private costs used in the analysis are ‘current’ gate fees;



3. The disamenity estimates derived within the study for incineration and landfill are not used due to the facts that: o there is no basis available for estimating disamenity from composting and anaerobic digestion plants (so the analysis would be skewed by virtue of the inclusion of incinerator and landfill disamenity); and o in any case, estimates of landfill and incinerator disamenity are subject to considerable conjecture;



4. The typical assumption used in life-cycle studies – that carbon dioxide emissions from the treatment of biogenic wastes can be ignored – is rejected in this study. The aim is a comparative analysis of the treatments, and the time profile for the release of greenhouse gases from biogenic fractions, whilst unimportant from the point of view of a life-cycle emissions inventory,<