Investments in infrastructure : Financing waste management solutions

Countries around the world will continue to develop and their populations continue to increase their standards of living. Rising standards of living and consumption naturally lead to increased waste generation. In line with this trend, global waste production is expected to grow from 2.1 billion to 3.4 billion tonnes by 2050. Unfortunately, the World Bank estimates that already 33% of global waste is currently not managed in an environmentally sustainable way. If this is not addressed and corrected, it will inevitably lead to increased levels of pollution and disruption to natural ecosystems, with all the associated public health and environmental risks. The problem of mismanaged waste is particularly critical in the Global South. Waste generation in low-income countries is expected to triple by 2050, while growth rates are expected to double in comparison to high-income countries such as the USA and Europe. These projections expose the urgent need for the development of comprehensive waste management solutions in those regions to accommodate the growth in waste.

The international community has at least partly recognised the issue. The United Nations Human Rights Council declared a 'Universal right to a healthy environment' as a fundamental human right in 2021. This acknowledged the need to prioritise environmental health and sustainability for the benefit of current and future generations. The declaration highlights sound waste and resource management systems as essential in providing environmentally sound and hygienic areas for human living. European countries have been among the first to take steps towards implementing this declaration by focusing on sustainable city principles and circular economy structures that include ‘designing out’ waste and pollution within a larger policy push to better manage city waste. There is also a significant contribution to combatting climate change: For instance, a reduction in the amount of waste sent to landfills, where it can decompose and produce methane, provides a considerable and immediate cost-effective opportunity to mitigate global greenhouse gas emissions.

Sound waste and resource management not only improves the quality of life and environment but can also create economic opportunities. For example, as value chains become more circular, integrated waste and resource management systems can capitalise on secondary raw material revenues. To make these opportunities a reality requires investment in the infrastructure and services that can support the development of commercial ventures.

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There is strong momentum favouring the development of sound waste and resource management and, as mentioned above, the benefits and co-benefits are immense. Technology, experience and know-how are available and ready to be deployed for this purpose. In some places, funding and investors are also readily available. A crucial missing link is to match institutional requirements from financiers with the ability of local institutions to provide certified guarantees of project viability. Secondly, national and sub-national entities lack know-how on how to access funds. Effective networking between the waste management sector, public services companies and financial institutions provides a good solution to this issue by facilitating communication and providing tangible deliverables from local institutions to international financers.

The Scientific and Technical Committee of ISWA has brought forward a new ‘Financing Waste Management’ initiative to identify and assess the pathways and conditions we should acknowledge and disseminate within our sector in order to enable companies and governments to access affordable funding using different instruments and mechanisms, and to help financial institutions to understand ‘the other side’ and get practical insights into issues that face waste management business developers around the securing of bankability.

Currently, the project is working on a model for estimating the cost needed to bring sound waste management to a minimum required level globally. This signals the massive opportunities for financing entities in a sector that is crucial for quality of life and the living environment and offers many co-benefits.

Some of the project's future expected outcomes are to provide practical guidance on how to best scope projects, identify funding opportunities and develop the institutional capacities to offer bankability and financial sustainability. Additionally, the initiative aims to establish a platform for stakeholders to interact in a clustered and focused forum for finding opportunities to both finance projects and receive financing.

Financial institutions such as IFC foster mutual understanding with the sector and facilitate capacity building. In many emerging markets, while private sector participation is encouraged, the typical solid waste value chain consists of (i) waste collection and transport; and (ii) disposal at landfill, which often, is a dumpsite with inadequate or no sanitary solutions. Many existing solutions ignore the concept of recovery, re-cycle and re-use. Optimal (circular) waste solutions addressing distinct waste fractions are either absent or present at a low level. To address this market gap, IFC developed the Circularity Plus platform.

The IFC Circularity Plus platform (Circularity Plus) is designed to assist companies and select municipal utilities with investment and advisory solutions that accelerate the waste-to-value approach. This involves developing circular waste management solutions that are aligned with the Sustainable Development Goals.

Developing circular solutions is crucial to addressing the environmental challenges related to waste management, as well as the implementation gap that market players face.

IFC’s Circularity Plus platform aims to accelerate sustainable waste management solutions that benefit the environment by offering:

• Development of recycling and waste recovery business models that generate returns on investment, including assessing waste feedstock availability, product demand, and identifying expected costs and revenue streams.
• Regulatory framework assessment, including supporting clients to understand applicable regulatory frameworks in the development of circular solutions.
• Technical analysis, including enabling technology supplier selection, capital expenditure prioritisation, waste characterisation studies and technical performance review.
• Market intelligence: Providing country and market-specific knowledge on pricing, demand, contractual structures, product specifications and offtake options.

For more details on the platform and IFC’s work, visit the website.