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August 2007

Private versus public waste collection debate continues

by Irwin Rapoport Write the Author

Everett Bass, Waste Management

The issue of whether solid waste and recycling collection should be handled by public employees or private firms has been and continues to be debated.

Both options have their merits and shortfalls and judging by the interest in choosing one or the other, or finding that correct formula of melding both options, the debate is far from over.

As states, municipalities and counties are taking a greater interest in recycling and reducing landfill costs, maximizing taxpayers resources is becoming a critical issue.

In New York City (NYC), unionized municipal workers collect residential solid waste and recyclables, while the private companies are responsible for the commercial, industrial and institutional collection.

“It’s efficient,” says Robert Lange, the director of NYC’s Department of Sanitation’s Bureau of Waste Prevention, Reuse & Recycling. “Unfortunately there is no simple answer to which is better – private or public – because it depends on the union environment that you have in your city, the politics in your city and how cooperative the local municipal unions are about productivity initiatives during contract talks.

“Our agency has productivity targets every year and we work with the union around all union negotiations to make sure that those targets are part and parcel of all contract talks,” he adds. “As long as you have that kind of atmosphere, there is no reason why the public service can’t be just as competitive as private. You can sometimes save money in going over to the private sector, but there are sacrifices that have to be made to do so. Politicians for example lose the flexibility of marshalling resources to meet other than basic service needs in a particular area.”

Lange notes that several administrations have studied the possibility of having private contractors handle residential collection.

“It has basically been demonstrated that while there may be some small savings to be accomplished by privatizing,” he says, “in the area of service delivery and flexibility of allocating resources, there are sacrifices to be made as well as a result of privatization.”

In NYC, all recycling sorting operations are privatized. The city is paid for paper it delivers, while it pays to have metal, glass and plastics processed - offset by the value of the commodities, which is calculated monthly.

While the commercial sector negotiates trash and recycling collection with private carters, these carters are obliged to follow city regulations in terms of providing service, which includes certain basic recycling services and collecting targeted materials.

“That’s one of the things we’ll be looking at in our Commercial Recycling Study – whether the system, as currently constructed, works efficiently and promotes increased commercial recycling,” says Lange. “Basically in NYC the emphasis is upon the free market and enhancing competition. The Business Integrity Commission overseas the private sector to ensure that there is no collusion in bidding; collusion between individual contractors to make sure that one stop is their possession and not another’s; and that businesses are getting the most competitive service delivery price possible. But while open competition is clearly a good thing and something to be promoted, competition alone is not necessarily a good thing either.”

When asked about San Francisco’s service delivery vs. NYC’s, he stresses that Norcal, the City of San Francisco’s private firm that oversees all solid waste and recycling operations for the city, could not exist in NYC based on different indigenous economic and municipal philosophies.

“In NYC the close relationship that Norcal has with the City of San Francisco, developed over decades and generations, would be perceived to be inappropriate in nature and detrimental to open free market competition,” says Lange. “Norcal is a direct result of a city evolving politically and economically in a particular way over a long period of time, a public private partnership that appears to be beneficial for both parties. Given the history of solid waste and politics in NYC, it is unlikely that such a relationship, which here would be perceived as monopolistic, would be free to develop as it has there nor ultimately accepted as it has clearly been in San Francisco.”

Due to the hardiness of the free market principle, it is essential for the DSNY to ensure that private firms meet city requirements.

“The free market system is a very good system for delivering services at competitive prices, but not necessarily to meet certain kinds of social and policy ends,” says Lange. “In order to meet those non-financial goals, you have to have government intervention through regulation.”

Waste Management, Inc. (WM), the largest private provider of solid waste and recycling collection and recycling sorting operations in the United States, can provide complete services for a municipality or county, as well as work with existing municipal services.

“We see them taking a look at their overall solid waste plans and overall budgetary requirements to see if it is cost effective to develop a partnership with a private solid waste or environmental services provider,” says Everett Bass, WM’s vice president for Community Relations and Public Sector Services.

He notes that while there are many models that can be followed, a popular formula is for municipalities and counties to collect trash and recyclables and to bring them to a private sorting center. Other options have 20 to 80 percent of trash collection handled by private firms.

“It just depends on that city and what they are comfortable with,” says Bass.

WM handles all solid waste collection and recycling collection operations for the City of Fort Worth, Texas, as well as for several other cities, including partnerships with many cities across the country.

Many states, counties and cities are now establishing landfill diversion goals and setting minimums that must be followed by all sectors. A program can either be developed by the jurisdictional authority or by going to a firm such as WM, which has already developed systems to meet various targets, a choice that could lead to savings in terms of developing the plan and securing the manpower and equipment to implement it.

Bass says that there was a big push for recycling programs in the late 1980s and early 1990s, which saw the establishment of many programs.

“In 2007 you see another wave of strong initiatives directed towards keeping more waste out of landfills and more emphasis on us being much greener in our approach to what we do in the environmental services industry,” he says.

Landfill gas-to-energy and waste-to-energy projects are examples of the greener approach to solid waste management.

WM recycling services handles the basic commodities and should a jurisdiction wish to expand that list, has the ability to do so based on a commonly agreed to plan. Reducing the amount of e-waste going into the waste stream is now becoming a top priority in many areas.

“There are certain states like California, Minnesota and a few others that are more pro-active when it comes to recycling and recycling activities,” says Bass. “As a company, we want to respond to the needs and desires of all our current and potential customers. In many cities we have the infrastructure in place to facilitate those activities.”

WM has a recycling arm (WM Recycle America) of the company that processes and sells the recyclable materials.

To ensure that the jurisdictions and companies are able to update their contracts with WM, the company meets annually with them in order to expand services and to attain legislative requirements.

“We approach each city on an individual basis,” says Bass. “When it comes to cost, a lot of that is determined in terms of how far the material will be transported and is there a market in the vicinity. A lot of components have to be looked at to determine whether this is a workable partnership.”

He adds that jurisdictions which have contracted out nearly all or 100 percent of their services to WM did so based on a determination that there was a cost saving. In addition to the cost of staff, having the capital budget to acquire and maintain equipment is a key factor.

Contracts for solid waste collection with WM generally range between 3 and 10 years, with 5 being the average. On the disposal side, they may run longer than 10 years.

“Typically when you sign a contract, it has specifics so that you hopefully get it right the first time,” says Bass. “We need to make both parties equally satisfied with these contracts.”

Bass also noted that should a municipality reduce its participation in collection services, WM hires local employees to do the work.

As manager for public affairs at WM Recycle America, Richard Abramowitz notes that his firm has participated in many pilot projects at the local level to improve recycling rates and services.

“We believe it is more cost efficient for a private company to operate recycling sorting centers because you have economies of scale by bringing in multiple communities to participate in the program,” he says.

A successful recycling program requires public education and participation. WM, which has been offering recycling services since the mid-1980s, can also provide that service to jurisdictions.

“It’s important that the education gets done,” says Abramowitz. “We have the experience and the models to initiate such campaigns.