The economics of waste

NORA-SA collectors collecting used oil from generators in industry and completing the paperwork required to ensure compliance
048 (2)[1].JPG

February 2015 saw the gazetting of changes to the pricing strategy for waste management charges, in terms of Act No. 26 of 2014: National Environmental Management: Waste Amendment Act, 2014. This legislation provides a framework for the implementation of economic instruments for the South African waste sector, to serve as incentives or disincentives to encourage a change in behaviour towards the generation of waste and waste management by all sectors of society.

South Africa is estimated to generate in excess of 108 million tonnes of wastes, of which 98 milliontonnes (or 90%) is disposed of to landfill. With a value of at least R25.2 billion per year, these secondary resources are largely lost to the South African economy.

By international standards, certain waste streams generated in South Africa have achieved encouraging levels of recycling through voluntary programmes, such as the system implemented by the major stakeholders in the lubricants industry through the successful establishment of the ROSE Foundation (Recycling Oil Saves the Environment) over twenty years ago.

Raj Lochan, CEO of ROSE, comments on the latest developments in waste: “Government’s Waste Pricing Strategy has an overall aim of putting a value on waste, thereby diverting it from landfill, and increasing the amount of waste that is recycled – subsequently creating a waste economy with income opportunities for many South Africans.”

“This ‘value’ includes fees, incentives, taxes, levies and deposit schemes. The revenue from waste will be collected and redirected through a new departmental Waste Management Bureau, which will promote and facilitate the minimisation, re-use, recycling and recovery of waste, while managing the disbursement of incentives and funds,” says Lochan.

The new pricing strategy contains the methodology for setting waste management charges, including for the funding of:

  1. The implementation of industry waste management plans for those activities that generate specific waste streams;
  2. The re-use, recycling or recovery of waste in previously disadvantaged communities;
  3. The identification, further development and promotion of best practice in the minimisation, re-use, recycling and recovery of waste;
  4. The implementation of approved guidelines, norms and standards for the minimisation, re-use, recycling and recovery of waste;
  5. The monitoring of the implementation and impact of industry waste management plans;
  6. The creation and the monitoring of the impact of incentives and disincentives for the minimisation, re-use, recycling and recovery of waste; or
  7. The management of the disbursements of incentives for the minimisation, re-use, recycling and recovery of waste.

Lochan says the pricing strategy may differentiate in respect of different geographic areas, considering their socio-economic, physical and demographic attributes.

“The pricing may also differ in respect of different types of uses, depending on how the waste is generated or disposed of, and whether it is re-used, recycled or recovered. Consideration will also be given to whether previously disadvantaged groups are impacted upon or derive any benefit from the process,” explains Lochan.

“The pricing strategy may provide for a differential rate for waste management charges, on the basis of the characteristics and volume of the waste, its toxicity and the impact on the environment.”


The aims of volumetric charging for waste collection services (pay-as-you-throw) are to ensure that waste generators are charged per unit of waste set out for collection (ideally on a weight basis, or else per bag, or varying with bin size), thereby creating incentives for a reduction in waste generation. Secondly, having established volumetric charging, it is possible to incorporate the external (social, environmental and health) costs associated with waste generation and disposal, in the form of an environmental tax (over-and-above tariffs reflecting full financial cost recovery).

There will be a level of government involvement right down to the municipalities, in the collection of charges, operation of the EPR scheme, and in the monitoring of the EPR performance.

Collection and disbursement

The new act will include detail on the setting and imposition of waste management charges; procedures for collection of charges; and procedures for the allocation and use of generated funds. This is of particular relevance to the implementation of disposal taxes, and input, material or product taxes, levied by national government. Funds will be allocated for monitoring and evaluation by the bureau, and the implementation of approved industry waste management plans for specific waste streams.

Downstream charges

The disbursement of funds collected through downstream charges should be informed by the Integrated Waste Management Plan (IWMP) and Integrated Development Plan (IDP) in the case of Municipality collected charges (e.g. volumetric tariffs). However, in the case of National government charges (e.g. disposal taxes), the disbursement of funds is informed by by the DEA and the Bureau's Strategic Plans.

“In the case of government collected charges, revenues could be allocated to the fiscus, and then possibly be ring-fenced for spending on specific environmental programmes,” comments Lochan.

He says used oil collectors have been paying generators for used oil for years, creating value for hazardous waste and keeping it from being irresponsibly disposed of in a way that can harm the environment.  The collection, transport and recycling of used oil has also provided economic opportunities for NORA-SA members.  ROSE promotes and incentivises the responsible storage, collection and processing of used oil across South Africa in both urban and rural areas,” concludes Lochan.

The National Pricing Document is published on www.environment.gov.za and www.sawic.environment.gov.za.





comments powered by Disqus


This edition

Issue 68