Cooperatives and small-scale enterprises in solid waste re-use and recycling.

COOPERATIVES AND SMALL-SCALE ENTERPRISES IN SOLID WASTE RE-USE AND RECYCLING.

ENVIRONMENTAL POLICY AND INDUSTRIAL TECHNOLOGY.

TANIA MARTIN CRUZ

APRIL 2002

INTRODUCTION

Managing municipal solid waste is a major concern all over the world, but particularly in the cities of low-income countries which generate forty per cent of the world’s total. As population growth has continued the problem has threatened many municipalities. In low- income countries only around a third of waste is being collected, and of this, only a small portion, is properly disposed of. All this creates health and environmental problems.

All these points make informal activities an integral and important part of the existing solid waste management arrangements in low-income countries. In South-Asia the most common informal activities are recycling and primary collection of municipal wastes.

My assumption is that this informal sector is very important, not only does it contribute to alleviate waste management problems in low-income areas, but also it provides a more economical, technical and environmentally efficient service than large- scale businesses or the municipal service. It does not need large investment to be set up. The small enterprises and cooperatives use environmentally friendly techniques and apply indigenous knowledge in their operations. Such activities provide an important service and employment for large number of unskilled workers. To many disadvantaged groups, waste offers unique opportunities for creating jobs because it is labour intensive, needs little capital, can be sold for cash, is familiar and the process of waste recycling meets universal approval.

To support my assumption I have chosen the case-study of The Payatas in the Philippines, where

A NGO has been in charge of setting up a cooperative to carry out waste recycling activities and compost production. I have chosen this case-study because it reflects the advantages of the informal sector I want to stress and because The Philippines is one of the countries in Asia that needs immediate solutions for the problem of waste due to its increasing population, and its increase in amount of waste.

The conclusions indicate that small-scale enterprises and cooperatives are the better solutions but that external support is needed for their establishment and stability: a partnership between government and NGO’s can be an effective means of solving waste problems, promoting these informal activities in any community and sorting their disadvantages.

THE INFORMAL SECTOR IN SOLID WASTE RECYCLING

Waste management has increased in importance in the last few decades. Actually developing countries have to deal with enormous quantities of solid waste due to economic and social changes.

In the context of this paper waste is defined as any unwanted material intentionally thrown away for disposal. However, certain wastes may eventually become resources valuable to others once they are removed from the waste stream (Solid waste management in Asia, ).

However, there are several definitions, another one refers to: any refuse or waste material, including semi-solid sludge, produced from domestic, commercial or industrial premises or processes, including mining, agricultural operations and water treatment plants ( ).

Today urban areas of Asia produce about 760,000 tonnes of municipal solid waste per day. In 2025 this figure will increase to 1.8 million tonnes per day. Local governments in Asia currently spend about US$25 billion per year on urban solid waste management. This amount is used to collect more than 90 % of waste in high- income countries, between 50 to 80 % in middle- income countries and only 30 to 60 % in low income countries. In 2025 Asian governments should anticipate spending at least double this amount (Solid waste management in Asia). As they become more prosperous and the percentage of urban population increases the amount of solid waste produced is greater.

Urbanization and rising incomes, which lead to more use of resources and therefore more waste, are, then, the two most important trends that increase waste generation rates, for example, individuals living in Indian urban areas use nearly twice as many resources per capita than those living in a rural setting (Solid waste management in Asia).

Indonesia and Philippines, as well as part of China and India, are the Asian countries facing the greatest waste management challenge (Solid waste management in Asia). In these countries municipal governments are usually the responsible agency for solid collection and disposal but the magnitude of the problem is well beyond their ability to manage it.

The waste management service of these developing countries is not as efficient as it should be, only a little amount of the per capita GNP is spent on solid waste management and it is not carried out in a sustainable way, most of the waste is just collected and disposed in a landfill. It is often believed that every waste in developing countries is recycled automatically because of shortage of resources. The truth is that waste’s potential as a resource is under-utilised due to lack of technology and because without strict enforcement of environmental regulations disposal is often the cheaper option than the introduction of new technology (Asian and Pacific Centre for Transfer Of Technology, 1993: 5). Re-use and recycle as part of solid waste management is, then, in most of the cases, not integrated, it has not been seen as a profitable business by authorities.

However, the need for increasing recycling and re- use is obvious, indiscriminate dumping of waste and widespread littering have become serious environmental problems. Despite the scale of the problem the solutions are simple. Most of what people perceive as wastes are in fact valuable resources and can be re-used and recycled. The potential for expanding these activities exists. Actually a world scale, some 500 million tonnes of waste is recycled each year at a value of US$100 milliards, providing 1.5 million jobs. Paper, glass and metal are notable for their recyclable qualities (G. Roberts, 1996:35).

The recovery of materials from waste and their use as raw materials have always been practised in East Asia and Pacific region, the difference is that nowadays it has been understood by some groups as a mean to make work and enterprises from gathering, trading and reprocessing wasted materials. An informal sector has, then, been created, composed of cooperatives and small-scale enterprises and based on lucrative and altruist incentives. The dismal performance of the public authorities has brought its empowerment and in the last few decades they have played a significant role in waste management. They are not the only ones that have become a supplement to the official service: community-based projects have been as well created and carried out by people within communities willing to have a better management of their wastes. Their role, however, has been the collection and disposal of solid waste and, in some cases, recycling as integral part of the service. Nevertheless I am going to focus my paper on these enterprises whose work is focused on recycling and re-use of solid waste.

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The debate about these enterprises in waste recovery and recycling refers to their ability to contribute to an effective solid waste management in low-income areas. I would support the arguments for its important contribution. In my opinion, this informal sector has been playing an important role in solid waste management. While there have been little official recognition in most of the cases, they have busied themselves in the areas of waste collection, recycling and re-use of waste materials. Apart from the direct contribution to at least in some way addressing this massive problem, these workers, in turn, have been ...

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To corroborate my assumption I will analyse a case-study: the Payatas cooperative, placed in The Philippines, and their economical, social and technical implications. But first I propose to explore the origin of these small-scale enterprises and cooperatives in solid waste recycle and re-use.

The impetus for forming cooperatives came from NGO’s working with waste pickers in Latin- America who had been displaced from dump picking by the authorities. Many people lost their means of living by their exclusion from dumps so these alternative employments were created. They were supported not only by NGO’s but also by the government and local stakeholders, particularly industries .Once established they were dealing first with clean materials available in industries and that were not being recycled, later the cooperatives were expanded to door-to-door buying of sourced-separated recyclables from homes and shop. As they were more organised and efficient than the individual itinerant waste buyers, cooperatives have been able to find a niche in recovery networks (Solid waste management: sound practices for cities in developing countries, ).

Actually they have had success not only in Latin-America but also in Asia. They usually achieve stability in cities characterised by the scarcity and the expense of raw materials and where there is an inefficient recovery system. Their success is easily understandable: they could contribute to resolving solid waste management, particularly in low-income areas; they can also facilitate upgrading the status, earning and working conditions for waste pickers and recyclers and support employment generation and poverty alleviation; they provide a more environmentally friendly service than municipal services do and are more economically viable.

It is important to notice the major role of women: many of them have been engaged in waste recycling and Microenterprises activities, the LSE research reveals that women are primarily responsible for waste work within the household, they sort and sell recyclable materials and that they are the key to controlling access to waste in households (People, livelihoods and garbage in South Asia, ).

The next case study will be useful to illustrate cooperatives’ function within the community and their economic, technical, political and social impact. The case-study I have chosen is a very famous one located in Quezon City, Philippines. As it has been said, solid waste is one of the most pressing environmental problems in Philippines, the average collection is only about 40% and the most common disposal system is open dumping and burning. Although local government units had intensified their efforts to make collection more efficient, they are not enough so cooperatives and small-scale enterprises act as a supplement to the official service, (Experiences in innovative solid waste management in The Philippines, ).

The Payatas represents a densely populated and poor Barangay. Official figures are based on the registered voting population, which is currently 32,000 living in the 3,019 hectares.

The Payatas dump site, in Quezon City, has been the city’s solid waste disposal for over twenty years and it is the main dumping ground for garbage. It has provided home and livelihood to about 4000 waste picker families who have long consider solid waste as a resource to be covered. The Vincentian Missionaries Social Development Foundation Inc. began to organise waste pickers working in Payatas in 1993, extracting from the waste recyclable materials such as glass, paper, metal, rubber, bones, wood, cardboard and textiles. The objective was to achieve greater bargaining power on issues affecting them.

According to the Vicentian Missionaries (1999:57), the programme included:

Buy station of recyclables that they would control.
Health centre and health care facilities to respond to waste picking related accidents and illness.
Public market to obtain affordable basic goods.
Training centres to enhance vocational and organisational skills: seminars, workshops, training courses and so on.
Alternative livelihood.
Security land tenure.

A NGO related to environmental and urban poor issues was involved in setting up a community-based materials recovery centre, harnessing the waste picking and recycling skills of waste pickers and microenterpreneurs and supplementing them with environmentally friendly technology for solid waste processing and composting.

Their work was to sell the recyclable materials to small entrepreneurs who sort, clean and bundle them, transport and resell them to factories where they were recycled. In short their function was the recycling and sale of economically valuable waste materials and to compost the organic waste in order to sell it. They were designed to be an economically efficient and environmentally beneficial component of the urban waste management system. Because the technique used was based in indigenous knowledge and it used relatively inexpensive materials it is an easily replicable process.

The service costs and financing were the following (Carcellar, 1997:5):

Equipment: US$ 26,700. Grant.
Administration: US$ 23,000 per year. Grant.
Training: US$ 11,500 per year. Grant.
Loan fund: US$ 230,000. Grant and local saving.

The results show that this cooperative is serving several functions in society. It has captured value from materials that until recently were considered to be waste; it is an example of appropriate technology for labour surplus economies, it provides opportunities for employment generation. It also provides environmental benefits using environmentally sound waste management and helps the municipal government through avoided waste disposal and waste transport costs: most of the recyclable materials are removed by waste pickers before the waste is collected so space is saved at the final disposal site and the costs of transporting waste to the final dumping are reduced. Finally, they contribute to the efficiency of the formal sector by providing raw materials from recovered waste at comparatively low prices.

The organisation was fully recognised by government agencies and was supported by donors.

The Foundation was working in partnership with other organisations which had an important function within the Payatas Environmental Development Project: the Philippines Partnership of Support Service Organisation which addresses the social marketing and networking needs of the project; Green Forum Philippines which provides technical assistance and advocacy for ecological consciousness; and the UN volunteers-South East Asia Regional Programme which extend support for research and documentation. WASTECON prepared the feasibility study and provides technical advice and the Philippine Enterprise Development Foundation provides micro-enterprise management and development training.

The Foundation itself played the role of catalyst, problem-solver, process-helper and resource-linker, working to also achieve waste pickers objectives: Acquisition of legal status, uplifting of their public image and recognition of their work, increase in their bargaining power, participation in local decision-making processes, increase in productivity and value added to their products and development of an appropriate technology for solid waste management. The Foundation was carrying out an efficient social work, increasing as well the self reliance of the community, especially among their poorest members (Vicentian Missionaries, 1998:58).

From an economic point of view the project was accompanied by a micro-enterprise promotion programme which involved financial services, including generated credit and saving facilities, enterprise development and business consultancy, especially to micro enterprises engaged in the collection, recycling and re-use of recovered waste materials. The financing scheme has also integrated major changes, particularly concerning loan windows for non- productive purposes in addition to the business loan window, these changes consider social welfare, health, housing and educational investments. All the arguments given above suggest that the project has helped them to be more economically active. The community financing system has yielded an overall 97% rate of return and has maintained cash flow. They have demonstrated that also the poor is able to service their loans and that they are able to collectively generate enough internal funds to meet their financial needs

From a political point of view the enterprise performs a key role in solid waste management that has been defined in the waste pickers’ Federation that represent the basic decision-making and legal body of the association, in charge to negotiate directly with support agencies and to identify their needs.

From an environmental viewpoint the organisation exhibit self-learned skills as well as innovative indigenous technology for solid waste management. The cooperative was also benefited by the background of informal sector workers. Some even run small-scale dumping operations in their back yards covering the entire cycle of collection: segregation, characterisation, retailing of the swills, deliveries to recycling plant and dumping waste of waste. The programme has also facilitated the setting up of a handmade paper recycling project.

The environmental consequences of recycling are obvious: less waste oil, water, paper, plastics…equally important is the fact of the reduction of the demand for virgin materials, so fewer trees have to be cut or minerals mined. The environmental benefits are also clear: less pollution, less greenhouse gas emissions and so on.

Due to the recent introduction of the project it has been impossible to have specific figures of the work of the cooperative in term of amount of solid waste recovered, people involved or data about the reduction of waste collection and disposal costs and so on. However, the efficiency of this informal sector may be demonstrated, the details and data of other projects carried out in The Philippines corroborate it.

One of the case-studies also refers to the creation of a recycling programme by forming cooperatives of itinerant waste buyers and middle dealers in Metro Manila by the NGO Metro Manila Council of Women Balikatan Movement. Providing them loans, helping them with the marketing of waste and exploring opportunities for more recycling, now 200,000 households out of a total 1.5 million in the city are serviced with a weekly collection of paper, plastics, bottles, cans, metals, car parts and batteries. A total of 572 middle dealers and 2000 itinerant waste buyers and employees have joined the cooperatives. The NGO has negotiated soft term loans for the recycler cooperatives and established their relationships with the large industries consuming and recycling waste materials (Community-Based solid waste management in Metro Manila, ).

Other case-study involves the adoption of an ecological-sound waste management system in Bustos thanks to the campaign to raise the people’s awareness on the importance and interaction between health and the environment. The idea here was more altruist than lucrative. The project involved women’s organisations, the Youth, NGO’s and civic and religious groups, the results were: The construction of backyard compost pits; the construction of storage bins where recyclables and reusable materials are stored by each household; the construction of storage centre where recyclable and reusable materials collected by waste pickers are stored prior to selling them to junk dealers; maintenance of cleanliness in yards and the street; the greening of their respective areas and motivating others to join (Experiences in innovative solid waste management in The Philippines, ).

Now the efficiency and work of these cooperatives have been discussed I propose to examine their advantages and prove their efficiency against municipal solid waste management and against large- scale business in solid waste recovery.

According to UNEP (Sound practices for cities), the advantages of these cooperatives are the following:

They have more negotiating leverage with the intermediary or receiving industry than individual leadership has, so their profits tend to be higher.
As part of an organisation, workers receive better training and are more aware that how solid waste management should be in order to be environmentally friendly and avoid health hazards.
They can obtain benefits and operating loans routinely, (The itinerant buyers are usually dependent on a client- patron relationship with a particular dealer).
Displaced pickers who have joined the cooperatives are doing an acceptable job under much better conditions.
The materials they sell to industry are much cleaner which reduces the further cleaning, and consequence pollution, required by the recycling factories.

Moreover, where these cooperatives are multiplying, cities are reviving the traditions of separating and selling recyclables.

From my point of view they are more economically and environmentally viable than municipal managed source separation and recovery:

The administrative costs are less than municipal management. The people who work in these enterprises are members of poor families with little or no formal schooling; they are often illegal immigrants from rural areas or foreign countries that have been working as waste pickers at dump sites.
They can enhance waste reduction for a whole city and then adverse environmental impact can be reduced: for example, as they use human powered or semi-motorized front-loaded carts they are cheaper and less polluting than municipal trucks.
They use indigenous knowledge and more environmentally friendly techniques than municipal ones.

In most developing countries government has not established effective waste management and programs that take into account country-specific problems do not have the capacity to adequately develop and implement standards, regulation and charge systems. To be as effective as the informal sector they need to strengthen strategies in terms of human resources, organisational structure and financial resources ( Bernstein, 1993:25).

Compared with big business they are also more competitive (UNEP, 1994: 4-8):

The kind of assistance required is not costly compared to big business governed by factors such as availability of land, energy, trends in the market, costs of transportation… all these points can decrease the price of waste materials, which is a disincentive. A small-scale enterprise used to be located within the community where it works, close to the source generation and they do not have to be worried about land that used to be provided by the local authorities or energy because they use cheap and environmental techniques.
In big industries the waste cannot be used beyond a certain proportion of the virgin raw materials unless the process, as well as the product is modified, which, at the same time can increase the costs of the process.

However, the advantages of big companies have to be taken into account: they have easy access to credit facilities, unlike cooperatives which operate with limited funds so their production capacity is lower compared to big business. The cooperatives and small enterprises also lack organisational aspects and business skills, however, it is compensate by the fact that the innovative and indigenous techniques used are usually more appropriated to the local conditions where they operate and more sustainable, for example technologies for small-scale composting of organic waste have the capability to be better than the ones in large-scale composting plants, higher production costs and poor quality compost is the proof. On the other hand there is lower level of awareness of health hazards among the workers in these small enterprises, the worker conditions, even if they are better than the one waste pickers deal with, are severe, they do not have the adequate equipment that large-scale enterprises can have (UNEP, 1998:4-8).

In order to face the disadvantages and to set up the cooperatives and small enterprises, external support is needed to be successful. This support can come from a NGO, as it has been shown with the case-study or from the local or national authorities. From the government the support may be required to provide better facilities to segregate waste disposal and by providing financial support to improve the working conditions of waste retrievers and reducing the health risk to which they are exposed.

From these arguments I would consider the promotion of solid waste recycling small-enterprises and cooperatives against big companies due to their more viable performance and adaptability.

The requirements for these programmes setting, processing and stability are defined by Waste Consultants ( ): to initiate the work through pilot programmes that are able to be implemented with the resources the organisation has; make it as inexpensive as possible and tune the programme to the potential of the market.

To make their contribution effective the following constraints should also be considered ( ):

Legitimisation and contractual commitments: municipal and national recognition is very important, as much as transparency in their commitments.
Capital finance and costs recovery: for instance, strengthen micro finance institutions, seek alternatives to develop support systems, recognise the role of the donors but focus in start-up capacity building and entrepreneurs skills, to use charges and so on.
Capacity building in technical skills: for example, encourage information exchange and associations.
Citizen responsibility and public cooperation: promote source segregation, awareness campaign, environmental education…
Enabling the environment for scaling-up operations: Integrate solid waste recovery in municipal solid waste management.

To conclude the need for an efficient solid waste management calls for an integration of this informal sector on resource recovery with the municipal service, it would be: collection and separation of recyclables, transport of recyclable wastes to stations or recycling centres, distribution of recyclable wastes and final disposal of residual wastes(UNEP, 1994: 4-10).

However, the integration is seen by the authorities as an increase in costs and they do not take into account that it can increase refuse collection but decrease landfill disposal costs and transport costs. The industry can be a beneficiary of this process, using recycled materials can decrease the costs on raw materials.

CONCLUSION

All the arguments given above demonstrate that small-scale sector has a great potential to be effective, although some key challenges need to be addressed (Carcellar, 1997:5):

Institutionalisation of people’s organisation: it needs more promotion. An efficient urban solid waste management service should be comprised of appropriate combinations of public, private and community involvement. It may need governmental support to increase the efficiency and effectiveness of recycling operations.
Technically the cooperatives and small-scale enterprises must concentrate on product development and occupational health practices.
The financial challenge refers to the capacity of achieve financing of capital-intensive investments.

However, the facts are clears: they are an important part of solid waste management. The informal sector involved in solid waste collection and recovery has helped to achieve environmental goals, contribute to economic and social goals by providing opportunities to earn a living and helping municipal service by reducing collection costs.

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Cooperatives and small-scale enterprises in solid waste re-use and recycling.

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