Value of Managing Solid Waste
Attributes
Medium: Land
Country: Philippines
Analytical Framework(s): Contingent Valuation
Unit(s): Marginal WTP
Study Date: 2004
Publication Date: 2005
Major Result(s)
| Resource/Environmental Good | PHP (2004) |
PHP (2014)1 |
USD (2014)2 |
|---|---|---|---|
| Marginal WTP per household per month | 17.00 | 25.41 | 0.57 |
| Marginal WTP per business establishment per month | 4.00 | 5.98 | 0.13 |
About the Inflation Adjustment: Prices in Philippines (PHP) changed by 49.45% from 2004 to 2014 (aggregated from annual CPI data), so the study values were multiplied by 1.49 to express them in 2014 prices. The study values could be expressed in any desired year (for example, to 2025) by following the same inflation calculation and being sensitive to directional (forward/backward) aggregations using your own CPI/inflation data.
Study Note: Using a participatory approach, this study looks at how a local government in the Philippines might organize and finance solid waste management to meet strict new national targets. Using a choice modeling approach, the researchers were able to see how people and companies value the attributes of various waste management services and how much they would be willing to pay for them. The attributes included frequency of waste collection and the methods used to take away the garbage.
Study Details
Summary: The study revealed that the people of Tuba ranked solid waste management as the number one environmental problem but they were not willing to pay a high price to help address this problem. They were willing to pay user fees that could cover only about 22 to 35 percent of the costs of ECOSWAM services. Households were willing to pay an additional PhP 17 (USD 0.30) per month above the base case (the option that meets the minimum requirements of RA 9003), for the option wherein their waste is collected twice a week. This is roughly equivalent to three-fourths of a kilo of rice. Business establishments were willing to pay an additional PhP 4 (USD 0.08) per sack of waste or PhP 17 (USD 0.30) per month above the base case, for their waste to be collected twice a week and a similar amount for their waste to be collected by the municipal workers with a garbage truck. This amounts to about 1.2 liters of gasoline that they were willing to forego in order to pay for ECOSWAM services. The study recommends that the Tuba municipal government adopt the option with the lowest funding gap, the lowest maintenance and operating costs and the highest cost recovery. This is scenario 1, characterized by once a week collection of residual waste by municipal workers with a garbage truck. Even with user fees, this option will still cost the Tuba municipal government at least PhP 2 million yearly for maintenance and operating expenses. This implies that the Tuba municipal government will have to slice off as much as 25 percent from its development fund to provide these services. If no user fees are collected, it will have to spend about 40 percent of its development fund or 15 percent of its total budget for these services. It will then have to make trade-offs between ECOSWAM services and other social services such as education, health and basic infrastructure. The study recommends that local governments seriously consider charging user fees to finance, even, partially, the costs of ECOSWAM services. For economic efficiency, it recommends that neighboring local governments form a cluster for joint ECOSWAM services, that the national government provide matching grants to local governments and tap greater public-private sector participation in ecological solid waste management. It also suggests that policy makers revisit RA 9003 and related laws in order to allow the phased compliance of local governments to this law.
Site Characteristics: The Philippines' Republic Act (RA) 9003 or the Ecological Solid Waste Management (ECOSWAM) Act mandates local government units (LGUs) to formulate and implement their ECOSWAM plans. This law sets very ambitious goals, and their achievement will be a major challenge for all sectors of the society. It bans the use of open dumps and requires all LGUs to use only sanitary landfills by year 2006. Compliance with the law implies that the Philippines will need to spend an additional PhP 150 billion (USD 3 billion) for the next 10 years. Many local governments are in a dilemma on how to fund these services. Hence, this study assisted the Tuba municipal government in Benguet province, to examine how to finance the costs of ECOSWAM services through garbage or user fees. It also provided inputs for Tuba's ECOSWAM plan. This EEPSEA study is the first one in the Philippines that used the choice modeling method of contingent valuation to examine the demand for ECOSWAM services in a suburban, rapidly urbanizing area.
Comments: The researchers used the stated preference (SP) approach. The SP analysis has its roots in conjoint analysis where individual judgments of multi-attribute stimuli are represented. The particular type of conjoint analysis used here is the experimental analysis of choice. This particular approach parallels the Random Utility Model (RUM) structure that is common in referendum contingent valuation (CV) models and in discrete-choice travel-cost models.