| Abstract: | 1.1 Introduction and scope of the User Pays Framework
This document reports on the process, results, and system created by the project “Developing a User
Pays Framework for Island Waste Management in the Maldives, a part of the Maldives Environmental
Management Project that relates to modernizing waste management in the North Province of the
Maldives.
The scope of the specific assignment was to develop a User Pays Framework for island waste
management that allows for maximum cost recovery while taking into account affordability and ensuring
the desired level of services, based on a policy that everything that can be managed on the islands should
be managed on the islands.
The User Pays Framework Model consists of the present final report, a set of excel based economic
models for fee setting, a guideline for using the excel models, and a board game to be used as a
communication tool with the island communities.
1.2 A User Pays System for Island Waste Management is possible and feasible
The participatory, bottom-up field work and modelling approach indicates that a user pays system for onisland
waste management in the North Province is possible and feasible. The predicted activities and
associated costs to manage waste on North province islands suggests that cost recovery for these
activities will be possible and well within the willingness to pay range shown by the Social Impact
Assessment Report. As modelled, the monthly household fee is a maximum of 70 MVR at full cost
recovery for island based elements of waste management. This is affordable by any standards, and most
of those interviewed found this quite reasonable and acceptable.
Moving beyond the question of island waste management, the issue of full cost recovery for a future
regionalised transfer and disposal system is more complicated. First, environmentally safe management
of dangerous waste products such as paint cans or asbestos or used batteries or nappies, as well as
adequate management of specific recyclables streams such PET bottles; will be expensive and complex.
Managing disposed durable goods; automotive and marine motorised equipment; industrial and health
care products and chemicals and oils represent a challenge for a nation of decentralised islands
surrounded by an ever-present sink, the Indian Ocean.
Environmental economics suggests that while there is a real household demand for island-based
improvements in waste management, the demand for safe disposal and treatment are associated with a
policy-level commitment to environmental protection. These are system functions which provide diffuse
national collective benefits; driven by health and environmental policy concerns, in the context of
globalised good practice standards. The willingness and ability to pay of island residents in a middleincome
country like the Maldives will make cost recovery for regional and national waste management –
the things that happen beyond the island level -- a challenge.
The good news is that up to 80% of the materials can be managed or pre-processed on the islands, so
that the affordable fee covers quite a lot of waste management capacity. Moreover, the user pays
framework and model, as developed, also provide a process for extending the user pays framework to
certain regional and national waste management operations, using the same principles that beneficiaries
choose and pay for improvements, or do the work themselves. In the short term, the Maldives
government will need to pay the costs of secondary collection (lifting) and final treatment/disposal,
because it is the policymakers who recognise the need for these activities. Over the longer term, the user
pays model can be adapted to create a national cost recovery scheme targeting both the tourism industry,
because it values a serene nature at a higher quality level than the citizens, and the producers of products
and private logistics service providers such as ferry and freight operators. A full cost recovery model therefore depends on adding Extended Producer Responsibility (EPR) to the
mix of user pays instruments in the entire system, to involve producers and importers in safe end of life
management of their products, and Corporate Social Responsibility (CSR) for large-scale users such as the
resorts and shipping industry. The legislation and institutions that promote recovery, prevention, safe
management, and disposal bans of certain wastes, combined with negotiated agreements with the
economic agents involved in their production and use, represent the next challenge for the MEMP.
1.3 Affordability is key
To ensure affordability and sustainability of a user pays system, there needs to be a commitment to
affordability as a means of creating legitimacy for the user pays system, and for gaining trust of clients
who are the future payers. Maldivians do not pay any income tax, so their experience with financing their
government and its activities are severely limited. The cash costs of current waste management on the
islands is very close to zero, since the services are minimal and consist almost entirely of primary
collection. On islands where there is no waste management service provision, self-provisioning consists
of dumping, supplemented by some metal trading, providing a small cash inflow. Willingness to pay
depends on seeing and experiencing visible and obvious improvements in the waste management system
on the islands.
The model built on existing island waste streams, processing and institutional capabilities, and ideas of
island residents on the eight islands modelled. The physical options that communities can choose from
are inspired from the field work and from waste management practices in places with similar waste
streams in Asia. These are small scale and flexible biogas and compost for wet waste streams and preprocessing
options for certain dry waste streams. Through processing, the waste generated on the islands
can be reduced by up to 80% of the waste generated. The remaining waste streams consist mainly of
special and hazardous wastes that cannot be processed on the islands: nappies, paint cans, batteries, etc.
The excel model is able to calculate reduction in waste quantities due to processing, costs of island waste
management and base fees subject to community level choices for processing.
All elements of the model are built using the process flow and the economic theory. The improvements
for island based management modelled on the 8 islands show typical costs between 0.03 to 0.67 MVR per
kg of waste handled on the island. Costs are calculated as straight-line operational costs for island based
waste management up to harbour. These include cost of labour, fuel, utilities, lease of land and building
space if applicable, cost of fresh water or grey water input and other input materials, cost of maintenance
of equipment and spare parts for each processing option and for improvements of the services of the
island based waste management centre/ disposal site. Investment calculations are also made for each of
the processing options, but cost of financing is not included, since it is assumed that the installations,
equipment and training will be transferred to the islands at no cost to the communities.
The true costs of unimproved current waste management practices include environmental damage and
health risks, and these are very high. The unsafe practices of open burning, littering and ocean dumping
are affecting human health, the ecosystem, the coral reefs that are essential for stability of the islands, the
water quality and fishing, the quality of island life, and the tourism industry, to say nothing of the
international image of the Maldives.
In the absence of known costs, and in a period where many choices have yet to be made, some
assumptions were necessary to create and test the model and standardisation process for the user pays
framework. Thus it is assumed that island processing will develop as long as is less expensive and more
effective than sending the waste to the Regional Waste Management Centre. The model suggests that
vastly improved island waste management is affordable.
Estimating the cost of lifting the waste from the island was not in the scope of this assignment. Still,
there should also be considerable room for users contributing to the costs of regional activities, as long as
the system respects global norms for percent of household income to be used to finance waste
management. In the UN-Habitat research (Habitat 2010) this is generally between 0.7 and 2% of family
income. In the EU where modal incomes are much higher, financing programs for waste management set this cap at 0.5%. Affordability norms are critical to the legitimacy of the user pays system, suggesting the
need for a legal norm or regulation for a maximum of 1-2 % of family income for any financial
obligations for island + regional waste management services.
This has an additional benefit of keeping investment ambitions modest; the research quoted above also
shows that in middle-income countries, formal waste management operations tend to be overcapitalised
and under-performing. An affordability cap would function to encourage restraint in the level of capital
investments – which again contributes to affordability and sustainability.
1.4 Institutions and policies
The institutional analyses is built on the key institutional functions of the World Bank’s Strategic Planning
Guide (Wilson, Tormin and Whiteman 2002) are the policy maker, the regulator, the planner, the client,
the operator and the fee collector or budget holder. Of these, the latter three are relevant to the island
based institutional models and none are clear cut. From our analyses the Island Office (IO) emerges as
the preferred alternative for the role of client, safeguarding the quality of service. and collecting fees.
Alternative candidates for client include a higher level of administration such as the Atoll Office or the
Province Office could take up these roles, or the Public Utility Company.
The role of the operator of the newly implemented systems could be taken up by the current private
service providers, enterprises in the island business community, the Women’s Development Committees,
local NGOs, CBOs, service clubs, or new private entrepreneurs entering the market. The agreements in
place could be any variety of Public Private Partnerships ranging from service contracts to joint ventures
to a client-owned company, as long as the scope and purpose of the agreements are clear. It is important
that the system stimulates and rewards self-provisioning, and recognises and supports waste management
operations that are already functional . Building on these is the best path to affordable, successful and
sustainable improvement and functioning cost recovery.
The User Pays Framework was developed in a policy context in the making. At the time of writing the
Maldives had a very comprehensive, clearly defined policy with all the core good practice principles of
waste management in place, for example the waste management hierarchy, the proximity principle, and
the polluter pays principle. Privatisation policies had already resulted in privatising of public utility
services and setting up the Waste Management Corporation. However the waste management framework
law was still in the draft version focusing almost entirely on permitting of waste management activities.
At the same time the government had just started the process of decentralizing and regionalising key
governance functions. In this level of dynamism, was only feasible because of the autonomous
management of waste on the islands by the communities.
2 Introduction
This report is the medium of transfer of the User Pays Framework for Island Waste Management in the
North Province in the Maldives from the consulting team, consisting of WASTE, Gouda, the
Netherlands, Green Partners, Cluj-Napoca, Romania, and Live & Learn Environmental Education, Male’
the Maldives, to the client, the Project Management Unit (PMU) of the Maldives Environmental
Management Programme (MEMP) and the Maldives Environmental Protection Agency (EPA). The
moment of transfer is critical, because sustainable and effective implementation of the User Pays
Framework (‘Framework’) is in the hands of Maldives authorities, and is not up to the consultants.
If the user pays framework is to succeed, responsible waste practices and waste minimisation must be
embedded at the community and business level. Such institutional development needs to occur in parallel
with private sector recycling capacity and mechanisms to minimise waste imports, while gradually putting
in place mechanisms and incentives that increase the responsibility of waste producers, importers and
consumers. A long term waste collection and disposal system will need to be supported by strong source
separation and waste minimisation in order to achieve financial sustainability. This requires substantial
assistance with community mobilisation, small scale infrastructure development, robust waste planning at
island, regional and national levels, and ongoing community awareness initiatives. This must go hand in
hand with developing broader policy initiatives in areas such as extended producer responsibility. The imperative is to protect and enhance the environment that the country relies upon for its well being and
economic future. |
