Privatization of garbage collection at the householder level as a means of encouraging greater diversion of waste to recycling

by Doug Anderson

published in the February 2001 issue of Municipal World

Over the last ten to fifteen years, we have watched as senior levels of government and regulatory agencies have dismantled the monopolies that used to dominate the phone, gas and electrical power industries, always in the name of less government, greater consumer choice and efficiency.

In roughly the same period, most large municipal governments have bounced back and forth from one garbage crisis to another.
I am surprised that nobody has made the connection that garbage collection could benefit from the same approach. Indeed, providing individual choice and charging accordingly would make the system work much better and achieve much higher diversions from conventional landfill.
Everybody accepts that recycling is the answer to our garbage problems; but diversion rates have been stagnant for several years in the 30 – 50 per cent range depending on how much the individual municipality was prepared to spend on promotion and on collecting marginal recyclables. Current diversion rates are a very long way from the 90 – 95 per cent that most experts agree can be recycled.
There are several ways, like incentives and penalties, which have been tried to get recycling rates higher, but none of them adequately address the real problem.
The huge albatross of municipal recycling programs is that some of us do it, and some of us don’t. Since we all pay the same municipal taxes, the only reason any of us recycle is a sense of civic duty, and some of us have a lot more of that than others. I periodically take stuff to Durham Region’s waste transfer station which has recycling bins for wood, metals, drywall – even old computers – in addition to the usual bluebox items. In spite of this capability, I regularly see people dumping hundreds of pounds of mixed recyclables into the general garbage bins rather than expend a little extra energy to sort it and deposit it in the appropriate bin. They just can’t be bothered.
Even though some of us are ready and willing to recycle 100 per cent, governments have an obligation to treat everybody more or less equally, including those who won’t recycle at all.
A few municipalities have recognized this problem and have abandoned curbside recycling in favour of massive sorting plants. While this has allowed them to achieve much higher rates of diversion, the cost is more than most municipalities want to spend.
The better approach is for municipalities to get out of curbside garbage collection altogether. Instead, they should legislate minimum standards of garbage collection and storage (many such standards concerning odour and vermin are already in place), and leave it to private companies to contract with individual homeowners for the collection of their garbage.

Those who produce large amounts of unsorted garbage could expect to be charged more than those who produce less and are willing to sort it thoroughly.
One of the issues that came up with amalgamation in Toronto was that the individual municipalities were providing different service levels with some areas getting twice a week pick up. Amalgamation required uniformity; but under a privatized set up, you could have garbage pickup every day if you were willing to pay for it. Or you could even have garbage picked up from the rear of your property as a few of Toronto’s ritzier neighbourhoods did. If there is money to be made in providing a choice and people are prepared to pay the price, then private enterprise will do it.
At the leaner end of the spectrum would be the dedicated environmentalists like those that pioneered recycling in the late 60’s and early 70’s. They started all this with recycling co-operatives which coaxed the paper, glass, and aluminum industries to buy the materials they collected. In its origins, recycling was based on individual initiative and it will be re-energized if such initiative is rewarded. Those who are willing to sort everything, and transport it themselves to a central depot, can even expect to get paid for their trouble.
Coupled with this would be a significant tax reduction since the municipality is no longer collecting their garbage.
The losers would be those who, by their own choice, pay through the nose, pound by pound, for the pickup of their unsorted garbage.
Money talks, and if people have to pay according to the amount and type of their garbage, then the overall effect would be a huge financial incentive to reduce waste, make better choices in packaging, and recycle as much as possible. Given such an incentive, most people would recycle a lot more.
Unlike the deregulation of the phone, gas and electricity markets, where the product options were not well differentiated in the public mind, garbage has diversity written all over it. While competition in utilities has been almost purely on price, competition in garbage collection would be on a range of service levels and the prices that correspond to them.
On the leading edge, I can see a re-emergence of recycling co-operatives, most probably with municipalities providing small tracts of public land for collection depots. These co-ops would once again push the boundaries – seeking new and better markets for a wider range of materials, but this time with the full support and legislative co-operation of municipal governments.
There is an obvious argument against privatized garbage collection, and that is the apparent loss of efficiency. Quite clearly, having several companies collecting garbage on a single street is not as efficient as only one. Garbage contractors will also have to employ sales people who need to be paid salaries or commissions. Overall, privatization may well cost more, but the extra cost will be borne by those who produce the most garbage, and that carries a built-in incentive to produce less.
The result will be less garbage and more efficient use of recyclable resources, and by that measure private collection will be more efficient.
There are, of course, those citizens who will prefer to just sit on their hands and do nothing. They will keep taking their garbage to the curb once a week as if nothing ever changed. Municipalities will have to deal with this on at least a temporary basis. As with the other utilities that have been privatized, the easiest approach is to allow/encourage people to opt out from the standard carrier. If a taxpayer provides proof of an acceptable garbage collection contract or membership in a recycling co-op or some other appropriate arrangement (just like you have to show proof of insurance when you renew your driver’s license), then they would be exempted from garbage taxation. If no such proof was provided, then the municipality would assign their garbage collection to a municipal contractor and add the charge to their tax bill. These laggards would be paying a lot more than at present and hence would be under increased pressure to find a cheaper arrangement, i.e. one that produced less garbage or recycled more. As more and more people opted out, the municipal garbage rate would increase and within a few years, relatively few households would be included in it.
Using this model, a municipality would let the market drive the privatization process. The first companies into the market would be those that could save people the most money by collecting only thoroughly sorted garbage. A pretty good place to start when your overall objective is to increase recycling levels.
As part of this privatization process, municipalities would have to set up standards to govern garbage collection contractors and co-ops, and a process for licensing them. Part of such licensing might well be a requirement to recycle a specified percentage of what they collect. This would ensure that everybody shares in the cost of recycling and also ensures that the overall diversion from landfill keeps increasing. What happens to the non-recycled portion would likely be left to individual contractors to make their own best arrangements, subject, of course, to all existing and future environmental regulations.
Privatizing garbage collection would also help push apartments towards recycling. If apartment owners have to sign contracts with garbage contractors who are required to recycle, say fifty per cent, they are going to pass the charges, one way or another, on to their tenants. Landlords and tenants would have a strong incentive to find recycling arrangements which would cost them both a lot less money.
Privatization of garbage collection just makes sense – far more sense than deregulating electricity which nobody seems to really understand anyway. We discard things every day. Garbage is something we all understand at a gut level. Under privatization, the choices would be clear and understandable, and carry a clear financial incentive to observe the three R’s.
From a political point of view, it takes the whole garbage issue and its staggering environmental implications off the table and turns it into a purely regulatory matter.

Doug Anderson is the publisher of Durham Business News, a regional business newspaper serving the Regional Municipality of Durham (just east of Toronto). He has been writing for many years on local business, municipal and environmental issues.