Economics of Solid Waste Management. Laura J. Weber President The Lydia Company Serving our clients to build a better tomorrow

Transcription

1 Economics of Solid Waste Management President build a better tomorrow

2 Presentation Summary Sustainability Annual Operating Budget Approach to Analyzing Waste Minimization Projects Full Cost Accounting Understanding Costs Example of how to use Full Cost Accounting Key points to remember

3 What is the difference between these two containers?

4 What is Sustainability? The definition of sustainability depends on who is speaking Andy Duncan Managing a two-year-old is like nailing Jell-O to a tree, goes an old saying. Maybe getting adults to agree on a definition of sustainability is like that, too. Individuals and groups keep trying, but no one has hammered out one that everybody accepts.

5 What is Sustainability Continued Still, common themes run through most definitions of sustainability. They usually deal with nature, the economy, society or, perhaps most often, all three together. Most are not about maintaining life precisely as it is today. They are about the rate of change, and about equity between generations. Many see sustainability as a continually evolving process.

6 What is Sustainability Continued The Dictionary of Sustainable Management Development that meets the needs of the present without compromising the ability of future generations to meet their own needs. This definition was created in 1987 at the World Commission on Environment and Development (the Brundtland Commission). It is enshrined in the Swiss federal constitution. It is similar to the "seventh generation" philosophy of the Native American Iroquois Confederacy, mandating that chiefs always consider the effects of their actions on their descendants seven generations in the future.

7 What is Sustainability Con t Source: Wikipedia

8 Budgets

9 Economic & Operational Feasibility Feasibility Analysis of Solid Waste Minimization Projects Four Feasibility Factors Program Goals Does the alternative help to reach program goals? Technical & Operational answers questions regarding necessary resources needed to implement Economic cost analysis to determine if economically feasible Community equitability does the alternative fit with the culture of the community?

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11 Full Cost Accounting (FCA) Is a systematic approach for identifying, summing, and reporting the actual costs of solid waste management Takes into account past & future outlays, overhead (oversight & support services) costs, and operating costs Source:

12 Understanding Your Solid Waste Costs A solid waste management system consists of various activities and paths. Activities-building blocks of system what you do Waste collection, operation of transfer stations, transportation, waste processing, disposal, and any sale of byproducts Paths is what happens to the solid wastes Recycling, composting, waste-to-energy, land disposal Follows from generation to disposal The costs of activities & paths determine your total costs to manage solid wastes

13 SRMT Example MSW Land Disposal Path Cost to store, handle, haul out, dispose, & haul back

14 Using FCA Set rates/tipping Fees Analyze alternative options for collection, processing, disposal, etc. etc. Justify budget requests Target cost reduction efforts Determine actual program costs Plan new facilities Communicate cost information

15 Example of Using FCA in Setting Tip Fees Hypothetical Indian Community Robin River Reservation Community of 8,000 people, located in rural Maine Generate 10 tons/day of MSW=3,560 tons/year Generate 0.5 ton/day of mixed recyclables=183 tons/yr Have a direct discharge transfer station that employees 3 full time operational staff, 2 full time management staff, and receives support services from other Tribal departments There is a county transfer station located 12 miles and county landfill located 30 miles from reservation

16 Example of Using FCA in Setting Fees Hypothetical Indian Community Robin River Reservation MSW is directly discharged by customers into compaction trailer & contracts with hauler to haul Mixed recyclables are directly discharged into roll off recycling container, receives no revenue from sale of recyclables, & contracts with hauler to haul Robin River Tribe provides collection services & community are also allowed to self-haul to transfer station

17 Robin River Reservation Questions: What is the tip fee that should be charged to breakeven for MSW & recyclables? What is the cost/hour to operate the collection vehicle?

18 Robin River Example Con t Budget Category Total Operating Budget (TOB) Collection Allocation (20% of TOB) TS Allocation (80% of TOB) Personnel $163,916 $32,783 $131,133 Fringe Benefits $54,381 $10,876 $43,505 Contractual $1,200 $240 $960 Telephone $6,077 $1,215 $4,862 Disposal Fees $319,129 $63,826 $255,303 Supplies $21,129 $4,226 $16,903 Postage $335 $67 $268 Insurance $440 $88 $352 Advertising $3,173 $635 $2,538 Maintenance-Vehicle $2,104 $2,104 $0 Maintenance-Equipment $5,503 $0 $5,503 Travel $1,400 $280 $1,120 Training $1,000 $200 $800 Mileage $500 $100 $400 Fuel $12,000 $10,000 $2,000 Equipment Rental $10,410 $0 $10,410 Equipment $10,000 $0 $10,000 Indirect $29,938 $5,988 $23,950 Total Operating Budget $642,635 $132,628 $510,007

19 Robin River Reservation Example Collection Activity MSW Collection Recyclables Collection Transfer Station Activity Transfer Station Transfer Station Transport Activity Transport Cost/ton calculation excludes collection activity Transport Landfill or MRF Activity Landfill MRF Cost/ton = (Transfer Station Activity Cost + Transport Activity Cost + Landfill or MRF Activity Cost) / total tons

20 Transfer Station Activity Cost MSW & Recyclables Cost/ton Calculation Recyclables Allocation (10% of TS Allocation) MSW Allocation (90% of TS Allocation) TS Allocation Budget Category (80% of TOB) Personnel $131,133 $13,113 $118,020 Fringe Benefits $43,505 $4,350 $39,154 Contractual $960 $96 $864 Telephone $4,862 $486 $4,375 Disposal Fees (See note below) $255,303 $25,530 $229,773 Supplies $16,903 $1,690 $15,213 Postage $268 $27 $241 Insurance $352 $35 $317 Advertising $2,538 $254 $2,285 Maintenance-Vehicle $0 $0 $0 Maintenance-Equipment $5,503 $550 $4,953 Travel $1,120 $112 $1,008 Training $800 $80 $720 Mileage $400 $40 $360 Fuel $2,000 $200 $1,800 Equipment Rental $10,410 $1,041 $9,369 Equipment $10,000 $1,000 $9,000 Indirect $23,950 $2,395 $21,555 Total Operating Budget $510,007 $51,001 $459,007 Note: Disposal Fee includes transport activity costs and landfill activity costs for MSW or MRF activity costs for recyclables MSW Generation = 10 tons/day = 3,560 tons/year Recyclables Generation = 0.5 tons/day = 183 tons/year MSW = $129/ton ($459,007/3560 ) Recyclables = $279/ton ($51,001/183)

21 Collection Activity Costs Recyclables Collection Allocation (10% of Collection TOB) MSW Collection Allocation Budget Category Collection Allocation (20% of TOB) (90% of Collection TOB) Personnel $32,783 $3,278 $29,505 Fringe Benefits $10,876 $1,088 $9,789 Contractual $240 $24 $216 Telephone $1,215 $122 $1,094 Disposal Fees (See note below) $63,826 $6,383 $57,443 Supplies $4,226 $423 $3,803 Postage $67 $7 $60 Insurance $88 $9 $79 Advertising $635 $63 $571 Maintenance-Vehicle $2,104 $210 $1,894 Maintenance-Equipment $0 $0 $0 Travel $280 $28 $252 Training $200 $20 $180 Mileage $100 $10 $90 Fuel $10,000 $1,000 $9,000 Equipment Rental $0 $0 $0 Equipment $0 $0 $0 Indirect $5,988 $599 $5,389 Total Operating Budget $132,628 $13,263 $119,365 Note: Disposal Fee includes transport activity costs and landfill activity costs for MSW or MRF activity costs for recyclables Total Operating Hours for Truck Recyclable Collection = 187 hrs/year MSW Collection = 1685 hrs/year Recyclable Collection Cost = $70/hr ($13,263/187) MSW Collection Cost = $70/hr ($119,365/1685)

22 Key Points to Remember Operate your program like a business with the goal to at least breakeven Establish fees that are reasonable considering local market conditions Keep good data & records Be flexible Analyze analyze and make changes to improve your economics

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