Solid Waste Projects in Nepal: Unpacking Financial Pitfalls and Structural Vulnerabilities

 The primary financial and structural risks associated with solid waste projects often stem from weak operational models, inadequate revenue recovery, and physical infrastructure challenges common in rapidly urbanizing environments.

Primary Financial Risks

The major financial risks revolve around insufficient revenue generation and high operational costs, which undermine the financial viability of integrated solid waste management (ISWM) systems:

1. Revenue Shortfalls and Low Cost Recovery:
   • Actual vs. Theoretical Viability: In Madhyabindu Municipality, the actual Benefit-Cost Ratio (BCR) was significantly low (0.409), meaning current operations recovered less than half the costs, despite a theoretical BCR (0.978) suggesting near sustainability if optimized.
   • Inadequate Fee Collection: Inefficiencies in fee collection often affect service quality. Financial sustainability is undermined by weak fee collection and enforcement mechanisms. Birgunj Sub-Metropolitan City (BSMC) reported negligible revenue collection from SWM services in one fiscal year.
   • Failure to Monetize Resources: Projected revenue from the sale of recyclable materials and fines often falls short, contributing nothing in some cases, despite being part of the financial model. Expanding recycling markets is crucial for closing the revenue-cost gap.
2. High Operational Costs:
   • Costs related to solid waste management often make up a significant portion of municipal budgets, averaging 20% in low-income countries.
   • Transportation and Processing Costs: Municipalities spend significant portions of their budgets on collection and transportation, emphasizing the need for cost-effective strategies. In Madhyabindu, major expenditures were linked to recycling (26.50%), transportation (15.24%), and indirect administration (42.42%). Transporting large volumes of solid waste requires substantial resources (labor, equipment, and fuel), which increases capital and operational costs.
   • Staffing Costs: In BSMC, a large portion of the SWM expenditure was on salaries (65.2%) and allowances (23.8%).
3. Capital and Funding Risks:
   • Lack of Financing: Municipalities face challenges due to inadequate financing.
   • Financial Closure: For new projects utilizing models like Public-Private Partnerships (PPP), financial closure is a critical risk, requiring the developer to have all necessary and verifiable financial documents.
   • Initial Negative Cash Flow: For the Integrated Solid Waste Management Project in the Jeetpursimara package, the cash balance is projected to be negative in the initial years, necessitating capital injection by equity holders.
   • Economic Downturn: A threat to project viability is the lack of investment in infrastructure due to economic crisis.

Primary Structural and Operational Risks

Structural risks relate to the physical infrastructure, management capability, and public adoption necessary for the system to function effectively:

1. Inadequate Infrastructure and Capacity:
   • Limited Facilities: Challenges include limited infrastructure, inadequate transportation, and a lack of sanitary landfills. Many city governments lack the necessary budgets to construct modern disposal facilities like landfills.
   • Limited Landfill Lifespan: Landfills, particularly open dump sites common in developing countries, are often operating above capacity (e.g., Sisdol landfill). The lifespan of a sanitary landfill is highly dependent on the successful implementation of 3Rs (Reduce, Reuse, Recycle) activities. In a worst-case scenario where no 3Rs are implemented, the life of a planned landfill could be shortened significantly (e.g., from well over 20 years to 13–14 years).
   • Lack of Tools and Maintenance: Poor infrastructure is marked by insufficient equipment and irregular waste collection schedules. A replacement program for vehicles and equipment is necessary to prevent all critical collection functions from going out of service simultaneously.
2. Waste Segregation and Feedstock Reliability:
   • Low Segregation Rates: Inadequate segregation and reduction practices exist, especially among households. Low segregation rates are a common problem in cities of developing economies.
   • Operational Dependence: The success of the ISWM model is highly dependent on effective segregation at the source. For waste processing plants, a shortfall in the quantity of segregated waste ("feedstock") can lead to ineffective plant operation.
3. Environmental Hazards and Design Limitations:
   • Site Selection and Geotechnical Issues: Potential landfill sites may present geotechnical and hydrological limitations, such as being flood-prone or an inundation area during monsoon season, having a high groundwater table, and requiring extensive access road construction and poor sub-surface conditions.
   • Contamination Risks: Poorly managed solid waste threatens public health, water quality, and environmental aesthetics. A major structural risk is the potential for groundwater contamination due to the leakage of contaminated leachate from landfills. Untreated leachate in overfilled landfills contaminates nearby water sources, posing health risks (e.g., Sisdol landfill and Kolpu stream).
   • Banned Wastes: If laws and ordinances are not enforced, unwanted health care wastes and industrial and toxic wastes may reach the sanitary landfill, endangering public health.
4. Social and Institutional Barriers:
   • Community Opposition: Opposition by the local community regarding the sanitary landfill site is identified as a major risk, often stemming from a misunderstanding of how a sanitary landfill differs from an open dump.
   • Weak Enforcement: There is a general lack of enforcement of waste management laws, municipal ordinances, and regulations, including the imposition of fines and sanctions.
   • Operational Management: Risks include poor management, technical deficiency, and staff/labor issues such as worker strikes.