EPA-R2-72-012                      _  .       .  . D  .   ..   c  .
        in,0                       Environmental Protection Series
August  1972
Urban

Solid  Waste  Management

ECONOMIC CASE STUDY
                                  National Environmental Research Center
                                  Office of Research and Monitoring
                                  U.S. Environmental Protection Agency
                                  Cincinnati, Ohio  45268

-------
                                              8975

                                     EPA-R2-72-012
                                       August 1972
Urban Solid Waste Management
           ECONOMIC CASE STUDY
               Robert M. Clark
        Office of  Program Coordination
     National Environmental Research Center
            Cincinnati, Ohio  45268
             Program Element 1D2065

     NATIONAL ENVIRONMENTAL RESEARCH CENTER
        OFFICE OF RESEARCH AND MONITORING
      U.S. ENVIRONMENTAL PROTECTION  AGENCY
             CINCINNATI, OHIO 45268

-------
              REVIEW NOTICE





     This report has been reviewed at the



National Environmental Research Center,



Cincinnati, and approved for publication.



Mention of trade names or commercial prod-



ucts does not constitute endorsement or



recommendation for use.
                   11

-------
                ABSTRACT

     Although about $4,500,000,000 per
year is spent publicly and privately on
solid waste management, little has been
written about the operational and eco-
nomic problems affecting specific commu-
nities.  To provide some insight into
local problems, a case-study approach
was used to examine a sample midwestern
city (approximately 500,000 population)
with solid waste management problems
similar to most other medium-to-large
urban communities.
     Changes in the productivity of solid
waste collection crews brought about by
substituting capital for labor are studied,
     The economic effects of solid waste
management costs on residents are analyzed
by comparing solid waste costs with dis-
posable income.
                   iii

-------
                FOREWORD
     To find, through research, the means
to protect, preserve, and improve our en-
vironment, we need a focus that accents
the interplay among the components of our
physical environment—the air, water, and
land.  The missions of the National Envir-
onmental Research Centers—in Cincinnati,
Ohio; Research Triangle Park, North Carolina;
and Corvallis, Oregon—provide this focus.
The research and monitoring activities at
these Centers reflect multidisciplinary
approaches to environmental problems; they
provide for the study of the effects of
environmental contamination on man and
the ecological cycle and the search for
systems that prevent contamination and re-
cover valuable resources.

     Man and the air, water, and land that
surrounds him must be protected from the
multiple adverse effects of pesticides,
radiation, noise, and other forms of pol-
lution as well as poor management of solid
waste.  These separate pollution problems
can receive interrelated solutions through
the framework of our research programs—
programs directed to one goal, a clean
livable environment.

     This publication of the National En-
vironmental Research Center, Cincinnati,
reports on work related to the economic
analysis of urban solid waste management
systems.  Substitution of capital for labor
in solid waste collection and the economic
effects of solid waste management costs on
residents are studied.
                    ANDREW W. BREIDENBACH, Ph.D.
                  Director, National Environmental
                     Research Center, Cincinnati
                   v

-------
                URBAN SOLID WASTE MANAGEMENT:
                     ECONOMIC CASE STUDY
                             By
                      Robert M. Clark
                        Introduction

     Solid waste management is usually considered to be divided
into two major areas:  (1) collection, including storage, trans-
fer, and transport; and (2) disposal, including any accompanying
treatment.  Annually, about $4,500,000,000 is  spent publicly and
privately on solid waste management.  Of the $1,700,000,000 spent
publicly for municipal solid waste management, 80% is attributed
to the collection activity (1).  Although these figures reflect
the national effort, they reveal  little about  operational and
economic problems that might affect a specific community.  To
provide some insight into local problems, a case-study approach
was used to examine a medium-sized midwestern  city that faces
operational and fiscal problems similar to most other medium-
to-large urban communities.  This city is also an inner-city,
part of a Standard Metropolitan Statistical Area (SMSA) of
over a million people.

-------
     The Division of Waste Collection in our example administers the collec-
tion and disposal of solid waste for the entire city.  The collection pro-
gram includes:  (1) Weekly collection of normal household and bulky waste
from all residential dwellings; (2) collection of solid waste as needed
from schools, hospitals, and public institutions; (3) collection of
commercial solid waste; (4) collection of dead animals from streets,
private property, and laboratories; and (5) emergency collection as re-
quested.  The disposal program includes:  (1) Incineration of normal house-
hold wastes collected by city forces or delivered to one of the incinerators
by private haulers; and (2) maintenance of dumps for disposal of incinerator
residue and bulky waste collected by city forces or delivered to one of
the dumps by private haulers.  Both of these services are restricted to
concerns located within city limits.
     Migration to the suburbs has caused a net reduction in the city's
1960 population from 500,000 to its present 450,000.  The traditional once-
weekly, rear-of-the-house collection was changed to curbside collection in
May 1969 because of a strike and a resulting wage increase; it was resumed
in 1970 with passage of an increased city income tax.
     Although the population decreased, generation of normal household
solid waste increased during the last 10 yr; in 1960, 160,000 tons of
household waste were collected and in 1969, 187,000 tons (Fig. 1).  Waste
characteristics have changed also.  There has been a trend toward lighter
and bulkier waste that results in a volume increase per ton and causes an
increased workload in the disposal program.  The decrease in collection
of bulky waste, such as bedsprings and appliances, from 119,788 cu yd in

-------
   190
   180
u.
o
a
z


3
O
    170
    150
      T
                       10
3
JS
                                  u>
   FIG. 1.-NORMAL HOUSEHOLD SOLID WASTE  COLLECTED

-------
1960 to 18,836 cu yd in 1969 results primarily from a city policy that
encourages residents to handle their own bulky waste.
                   FINANCING OF SOLID WASTE MANAGEMENT

     The city's financial problems are typical of many other municipali-
ties (2).  Each year the superintendent of the Waste Collection Division
submits a new expense budget for salaries, supplies and materials, and
equipment operation for the coming year based on workloads and performance
over the past 5 yr.  The budget committee of the city decides how much
tax money various divisions will be allowed, and the superintendent of
waste collection then projects his division's workload for the next year.
     The city purchases all vehicular equipment from a separate budget,
with each department competing for priority of need.  Because the need
for fire engines was believed more critical than the need for packer trucks,
some waste collection load packers are 10 and 11 yr old although they
supposedly operate on a 7-yr replacement cycle.
     Unforeseen expenses, e.g., an incinerator chimney that must be relined
or a new electric crane that must be purchased, require separate requests
to city council for funds from the capital improvement fund.  These are
also approved on a priority of need basis.
     For major capital expenditures, such as construction of an incinerator,
a voter-approved bond issue is required.  Because this community has regu-
larly defeated special bond issues, the waste collection superintendent
has not attempted to submit an issue for the needed $4,000,000 incinerator.

-------
      The Division of Waste Collection,  then,  derives  its  funds from an
 annual  budget obtained from taxes,  a special  vehicular equipment budget,
 a capital  improvement fund for all  city departments,  and  special  bond
 issues.   This lack of adequate financing has  led to a study  of user
 charges  for collection service and  a completely  new,  pay-as-you-go  pro-
 gram to  make solid waste  management completely self-supporting.

                             ECONOMIC ANALYSIS
      To  define some of the operational  problems  facing the city  and to
 assess some  of the economic  effects  of  solid waste  management, the  col-
 lection  services  for household  solid waste from  1960  to 1969 have been
 analyzed.  The economic and  operational  figures  used  for  the analysis
 are  taken  from annual  reports  prepared  by the city's Waste Collection
 Division.
 Solid Waste  Management Costs
     Between  1960  and  1969,  the total quantity of normal  household  solid
waste generated by  the city's  residents has increased  by  approximately
 17%  (Fig.  1)  and  the annual  per capita  solid waste  collection cost  has
also risen continuously (Fig. 2), from $4.25 in  1960 to $5.30 by 1969.
Disposal costs rose  from $1.10 to approximately $1.90  per capita during
the same period.   Total costs for solid waste management, including
overhead, increased from $5.75 to $7.50 per capita, or a total  increase
of over 30%.
     Not included in these costs are the city's  incinerators, which are
paid for by property taxes.  If an average cost of $3,000,000 per

-------
8
7
o
^^ ^^
o
0













CM
10








MHH



K>
en












s








•^••H



IO
(0
0)












CD
CD
O>












CO
CD












GO
0>





mmm






0)
^0
O)

























o
CO
0)












^~
CO












CM
0)












ro
CO
en












CD













CD












00
CO
en












0)
CD
en

























o
en












CO
en












CM
CD
en












K)
CD
en



«M








CO












IO
(0
en












(O
en


•^H









(0
en












00
CO
CD

M^M










CO
en














COLLECTION
           DISPOSAL



FIG. 2.—ANNUAL SOLID WASTE COSTS
TOTAL

-------
incinerator, a financing and ownership cost of 6%, and a design life of
20 yr is assumed, a reasonable annual per capita cost for one incinerator
would be $0.50.  During the period of analysis, the number of incinerators
in operation increased from three to four and the cost increased from
$1.50 to $2.00 per capita.  Because the current disposal system is
operating over capacity, city management wishes to construct another
incinerator adequate to meet current demands, at a cost of $4,000,000.
     Although the cost for managing solid waste for each person increased
during the study period, the cost for collecting each ton of solid waste
fluctuated.  The change in the direct labor and equipment costs (the two
main components of the per ton costs) explains these differences.  In
1960, the direct labor cost for collection was $6.75 per ton; by 1967,  it
had risen to $9.50 per ton (Fig. 3).  For 1968 and 1969, however, this
unit cost decreased to $8.75 per ton.  Dollars expended per ton for equip-
ment remained relatively constant.  The different patterns followed by
the per capita versus the per ton cost figures may best be explained by
examining the productivity of the city's collection crews.
Collection Crew Productivity
     To measure the collection crew productivity in a given year, the
total combustible solid waste collected was divided by the number of
man-years expended in the collection effort (Fig. 4).  Productivity rose
from 590 tons per man-year in 1960 to 675 tons per man-year by 1968.
In 1969, because backyard collection was stopped and crew sizes were
reduced correspondingly, productivity was approximately 800 tons per
man-year.

-------
IO
9
8
g 7
1- 6
0
O
z 5
O
i 4
8 3
2
1
n
H*
-
-
•
•
.

-
-
-
.











§
















P^"^^






CD
















—






CM
(0
0)




—






10
(0
en























i























CO
0)














—








CD
CO
en























(0
0)














— ~








00
(D
O)














HIBBM








O)
(O
O)










i Ni»| ^^^ •'• •> r^n
8 ^ | S S sE I | |

DIRECT  LABOR COST
DIRECT  EQUIPMENT  COST
 FIG.  3.—DIRECT LABOR AND EQUIPMENT COST FOR SOLID WASTE COLLECTION

-------
    9OO-
    800
5   700
IU
    600
P
    500
             8

CM
                                           0>
       FIG. 4.—PRODUCTIVITY FOR  COLLECTION CREWS

-------
     Another factor that exerted a major impact in increasing productivity
was the continuing purchase of larger vehicles.  In 1965, approximately
8% of the city's fleet was made up of 16-cu-yd packer vehicles and the
remaining 92% was smaller than this size.  By 1969, nearly 44% of the
city's fleet was made up of 16-cu-yd packer vehicles.  Replacing small
vehicles with larger vehicles reduced the number of truckloads of solid
waste collected.  In 1966, when 16-cu-yd packer vehicles made up 20% of
the total fleet, 65,304 truckloads of waste were collected.  By 1969, when
16-cu-yd packer vehicles made up 44% of the total  fleet, 60,960 truckloads
of waste were collected.  In a 4-yr period, even with increased waste
production, over 4,000 fewer truckloads were collected because of the
truck replacement schedule.  According to the city's annual report, "This
decrease is the result of replacement of 13- and 15-cu-yd packers with
new 16-cu-yd load packers."  An obvious corollary to this statement is
that the increase in the number of 16-cu-yd load packers has correspondingly
increased the productivity of the collection crews.
     Another way to examine productivity and its effect on solid waste
collection costs is to compare the change in productivity with changes
in labor, equipment, and total solid waste management costs.  All of these
costs were calculated as dollars per man-year of effort.  The percent
change from 1960 in labor cost and productivity values was calculated
(Fig. 5).  For the years between 1960 and 1967, the slope of the produc-
tivity curve was less than the slope of the labor cost curve.  Corre-
spondingly, direct labor cost per ton rose during this same time span.
After 1967, the slope of the productivity curve was greater than the slope
                                    10

-------
o
o:
u.
    90
    80
     70
60
ID
i?   50
I
0   40
 W   Ttf\
 o   30
 a:
 UJ
 a.
     20
      10



      0
                                              LABOR COST
    -10
              (O
                CM
                <0
                0)
K)
(0
O)
                                 <0
in

u>
CD
                    FIG.  5. —PRODUCTIVITY AND LABOR COST

-------
of the labor curve and the direct labor cost per ton decreased.   As equip-
ment expenditures increased, productivity tended to increase (Fig.  6).
For total solid waste management costs, as for labor costs,  the  cost per
ton tends to decrease when the slope of the change in productivity  curve
exceeds the slope of the change in cost curve (Fig. 7).   This  analysis
indicates that when the change in productivity exceeds the change in cost,
the cost per ton for solid waste collected will  decrease.
     An examination of the ratio of direct labor cost  to direct equipment
cost reveals that, for the period of analysis, capital was substituted
for labor and that when the ratio of labor to capital is decreased, pro-
ductivity is increased  (Fig.  8) .
          SOLID WASTE MANAGEMENT COST VERSUS DISPOSABLE INCOME

     The economic effects of the increase in cost of solid waste manage-
ment can be examined by comparing it with the corresponding increase in
effective buying income (Fig. 9) (3).  Disposable income for the 10-yr
period of analysis increased by 39.7%.  If an average household  of  3.5
people is assumed, the synthesized cost per household for solid  waste
management, including estimated capital cost, increased from $25.38 to
$32.90 per year, or 29.6%.  If the estimated cost for a new incinerator
was included, the cost per household would have been $34.65, or  36.6%.
Between 1967 and 1969, disposable income increased by 9.3% and the  actual
total cost of solid waste management increased by 17.2%.
     In the 10-yr analysis period, the amount of disposable income  in-
creased more than the amount expended for solid waste management.  In the
                                  12

-------
    90
o
to
o
a:
LJ
o
z
<
I
o
UJ
o
or
UJ
a.
 80




 70




 60




 50




 40




 30




 20




 10




 0




-10
                                       EQUIPMENT COST-
             <0
             O)
                   M
                     (O
                     o>
(0
a
                                                        0)
              FIG. 6.—PRODUCTIVITY AND EQUIPMENT COST

-------
    90-
O
(0
o
or
u.
X
o
111
o
QL
UJ
Q.
    80 -
     70
60
in
o   50
z
     40
30
     20
     10
                                             TOTAL COST-
    -10
              (0
              o>
                    CM
                      IO
                      (0
                      0)
0>
in
u>
o>
            (0
CD
(0
CT>
                                                                0)
                  FIG. 7.— PRODUCTIVITY AND TOTAL COST

-------
&H
88
m
LU O
QC LU

5 H


O |r

OQ
QC
            7



           0
                   CD
                   a*
CO
0)
<\J
(0
0)
IO
(0
0)
CO
0)
in
(0
O)
(0
(0
0)
N-
(D
0)
00
(0
0)

-------
       10,000
o
_J
o
D
O
X

cc
L1J
a.
        9,000
        8,000
O  <
O  -I

—  o
e?  °   7,ooo
D
CD
LU
o
LU
        6,000
                       i
                          (M
                              IO
                                               0>
0)
<0
0)
      FIG. 9.—EFFECTIVE BUYING INCOME  PER HOUSEHOLD

-------
last 5 yr, however, the increase in solid waste management cost is nearly
double the increase in disposable income.  Part of this increase in cost
is attributable to demands by municipal employees for greater wages.  When
higher wages are granted without increased productivity, the unit cost
for service increases.  Even though more money is available for city
services, the cost to supply each unit of service is increasing faster
than the available money supply.  The citizen, having more disposable
income, wants more services at an inflated rate.  This forces the cost
of solid waste management to increase faster than money available to pay
for the service, and the result is an increase in the tax percentage
assessed against the citizen.
     It is interesting to compare Fig. 1, Normal Household Waste Collected,
with Fig. £, Effective Buying Income Per Household.  Although there is
not sufficient data for a rigorous analysis, the increases 1n solid waste
collected appear to correspond very roughly to increases in disposable
income over the same period.

                         SUMMARY AND CONCLUSIONS

     It should be recognized that economic factors alone cannot govern the
provision of adequate solid waste management.   The health and welfare of
the population being served are the prime considerations.  It should also
be recognized, however, that given the population's well being as a major
constraint, economic factors affecting solid waste management must be
considered.  Economic factors have become more important since the balance
between revenues and expenditures for most large cities has become precarious,
                                   17

-------
     The steadily increasing per capita costs for solid waste management
during the last 10 yr have resulted primarily from an increase in per
capita waste generation and in labor wage rates.  Much of this increase
in labor costs is reflected by the general  inflationary trend in the
economy.  In recent years the tendency toward collective bargaining has
had a substantial effect on the wage rates  for individuals employed in
local solid waste management functions.  Both of these trends taken
together no doubt explain the general increase in labor wage rates.  It
is interesting to note in Fig. 1 that the solid waste collected varied
considerably over the period of analysis.  It dropped from 160,000 tons
in 1960 to 155,000 tons in 1963, approximately 3%, and increased to nearly
187,000 tons in 1969, approximately 20.6%.   The sharpest increase, 9.U,
occurred from 1967 to 1968.  Although these changes are difficult to
explain, they seem to coincide with some of the population shifts within
the example city.  In the early 1960's, there was a general  trend for
families to move into suburban areas outside of the city limits.  As these
areas began to reach saturation, there was  a rapid expansion of the un-
developed areas within the city boundaries.  These population movements
combined with an increase in per capita generation of solid waste might
explain the apparent anomalies in Fig. 1.
     The decrease in costs per ton for direct labor in solid waste col-
lection in the last 3 yr has caused a general decrease in total  cost per
ton for solid waste management.  In the first 2 yr of this 3-yr period,
labor costs per ton decreased primarily because of increased productivity
caused by the purchase of larger vehicles.   In 1969,  elimination ^f
                                   18

-------
backyard service coupled with a large investment in 16-cu-yd packer
vehicles caused an increase in productivity from approximately 670 tons
per man-year to nearly 820 tons per man-year.   The bulk of this increase
is attributable to the elimination of backyard service.
     The author is currently working with a large midwestern city having
a population of 750,000.  The city is following the investment and operating
pattern which this analysis points out as most desirable.   Backyard service
has been eliminated, larger vehicles are being purchased,  and transfer
stations are being built, and the city is planning on experimenting with
one-man collection systems.  All of the actions taken by the city manage-
ment have been consistent with the goal of substituting capital for labor.
The result of this effort, to date, has been to reduce the annual operating
and vehicle investment budget from $14,700,000 to $10,200,000.  The ultimate
objective is the reduction of the annual budget by another $3,000,000.
     Rising labor costs and increasing per capita solid waste generation
make decreases in per capita solid waste management costs  appear improbable.
Increases in per ton costs for solid waste management can  be minimized,
however, and in some cases, reductions can be made by increasing collection
crew productivity.  To minimize the economic effect on the householder,
the increases in per capita cost for solid waste management should be
kept equal to or less than increases in disposable income.
     Under the constraints of current practices in solid waste management,
the possible increases in productivity are limited.  Service can be re-
duced only to levels at which public health is not jeopardized.  Substi-
tuting capital for labor can be accomplished only to the point of having
                                   19

-------
a one-man crew In a truck so large it can no longer navigate the streets
efficiently.
     Once the limits of service reductions and substitution of capital
for labor have been achieved, effective solid waste management systems
can only be maintained with basic changes—changes  in technology involving
heavy investments in capital to achieve partial or  complete automation  of
solid waste collection.  Otherwise, the cost of solid waste management
will ultimately place an intolerable burden on the  individual  being served.
                                  20

-------
                          APPENDIX.-REFERENCES
1.   Black, R. J., et a!., "The National Solid Waste Survey; An Interim
     Report," U.S. Department of Health, Education, and Welfare,
     Cincinnati, Ohio, 1968, p. 49.

2.   Clark, R. M., and Toftner, R. 0., "Financing Municipal Solid Waste
     Management Systems," Journal of the Sanitary Engineering Division*
     ASCE, Vol. 96, No. SA4, Proc. Paper 7449, August 1970, pp. 885-89$.

3.   "Sales Management's Surveys of Buying Power," Sales Management.
     Vol. 98, No. 12, June 10, 1967, pp. 1, 3, 5 . . . 15.
                                   21
                                   **          *u«KMDrTnMiR«nnua- 7>9-M«/ioot

-------