Privatization of Waste 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.