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Privatization of Waste and Recycling Services

 

NWRA POSITION

NWRA supports the privatization of waste and recycling collection services at all levels of government when proposed. As is the case with many industries, the private sector can help reduce costs and improve efficiency while freeing governmental entities from the responsibility of having to maintain their own removal, disposal, and recycling services.

 

BACKGROUND

Many municipalities still provide waste and recycling collection services to their single-family households. However, the private sector has become the preferred choice for a majority of American communities by offering lower costs and more dependable service.

The private sector successfully manages most of America’s discarded material. They not only handle the collection of waste, recyclables, and compostables, but also the operation of transfer stations, materials recycling facilities, composting facilities for yard and food wastes, and disposal facilities.

The reasons for privatizing are simple – governments achieve cost savings, receive better risk protection, have a better safety record, see faster adoption of more efficient technologies, and incur less debt. 

Private companies have the economies of scale to spread investment, environmental protection, and procurement costs across multiple contracts and facilities. The private partner in a government contract typically assumes primary responsibility for general liability and environmental compliance. Financial guarantees and insurance coverage requirements are also standard contractual mechanisms that minimize governmental risks. When it comes to recycling, the private sector has more experience and ability at assuming and managing the commodity market risk than government officials. 

The private sector’s desire to improve services, lower costs, and increase safety often result in the adoption of new technologies such as alternative fuel vehicles, single stream collection of recyclables, new truck technologies, or computer systems to track and more efficiently manage the collection fleet. The private sector has better access to capital than many municipalities to improve or replace equipment and the ability to deploy assets such as collection trucks to maximize route efficiencies. 

In addition, the private sector is more likely to use incentive plans for workers and managers to obtain high performance levels while maintaining employee safety and also encouraging personal responsibility for maintaining their equipment. As a result, vehicle downtime for private companies is estimated to be far lower than for public operations.

 

TALKING POINTS

  • The private sector can help reduce costs and improve efficiency while freeing municipalities from the responsibility of having to maintain their own removal and disposal services.
  • This in turn allows governments to focus their limited resources on core services such as recycling education, first-responders, education, and infrastructure.
  • Governments are likely to benefit from privatization through better protection from market risks, better safety records, faster adoption of more efficient technologies, and less debt.
  • When a municipality seeks to outsource its solid waste services, the bidding process encourages competition among the private waste sector, which in turn encourages fair pricing and good service.

 

Updated January 2019.