Pay-as-you-throw (PAYT)
Pay-as-you-throw (PAYT)
Ideas for Change

Pay-as-you-throw (PAYT)


Laura Del Vecchio


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A business model in which users are charged according to the amount of waste they produce, incentivizing reduction, and the separation of waste.
A business model in which users are charged according to the amount of waste they produce, incentivizing reduction, and the separation of waste.

Managing Solid Waste: A Challenge

From 2012 to 2020, the approximately 1.3 billion metric tons of Global Municipal Solid Waste grew to about 2.01 billion, and it is estimated that overall waste generation will expand to 3.4 billion metric tons by 2050. According to recent research performed in late December 2019 by author Thornton Matheson, municipal solid waste (MSW) is mainly generated by developing countries, and more than half of solid waste is produced by low-income nations. However, developed nations are responsible for generating twice as much waste per capita. To aggregate more anxieties to these staggering numbers, The World Bank estimates that only 13.5% of today's waste is recycled and roughly 5.5% is composted.

Current economic models accustomed the global population to believe that systematic disposal of goods is free from costs, and consumption habits only added weight to the misconception that once something is considered discarded, consumers only need a plastic bag and a container to get rid of it. Also supported by the lack of public policies that aim to decrease the amount of solid waste, most industries took advantage of this model and kept generating inorganic waste in the form of, for instance, packaging made of plastic and paper.

The collection, recycling, management, and disposal of discarded goods employ various resources, such as fuel, land, and labor. There is no such thing as a 'free of disposal' system. For instance, the environmental costs of methane and carbon emissions often lack transparency on their total average measurements, and fines to charge improper waste disposal are not enforced or unexistent in some countries.

Current global waste management expenditures account for around 0.5% of GDP, but this figure does not display the total amount of social costs in waste generation. In developed countries, their waste collection rates are considerably high, but their waste reduction and recycling programs are narrowly supported. In developing nations, a considerable percentage of waste goes uncollected, and the portion of collected trash is inadequately disposed of, sometimes exposing contamination to some targeted groups of the population that depend highly on informal sources of income based on waste collection and recycling. In Brazil, on the other hand, 90% of Brazilian MSW is recycled by catadores, which is Portuguese for 'waste pickers;' low-income workers that recycle, collect, sort, process, and commercialize waste within an informal economic framework. This model contributes to reducing poverty, incrementing household income, and preserving resources in general. However, as an important drawback, even if reporting promising outcomes in economic, environmental, and social terms, according to the International Labor Office, these workers have repeatedly informed international authorities and journalists of meager working conditions and an absence of occupational safety and health (OSH) programs.

As opposed to the majority of developed countries, where the recycling process requires considerable amounts of governmental subsidies, in developing countries, municipal solid waste management (MSWM) has a positive value that makes it a profitable activity especially for vulnerable communities. Actually, despite the fact that developing countries account for more than half of the world's solid waste production, their public expenditure on waste processing stands for about one-tenth of the $400 billion spent worldwide. This is partly because of lower labor costs that render waste collection and disposal more affordable, which subsequently leads to inadequate waste collection and disposal.

Currently, MSWM has no standard rule as each country has its own way of consuming products and processing the waste they produce. As for low-income nations, it is of utmost importance to support the safe processing of organic and inorganic materials. For higher-income countries, a shift in consumption and production habits needs to be established to reduce an ever-growing movement of discarding inorganic materials. These challenges are far from being anticipated but some technological solutions are being implemented to halt future consequences.

Pay-as-you-throw (PAYT) is an emerging business model that comprises several technologies which are arising as promising tools to improve waste collection, increase recycling practices, as well as generating economic value from it. In the following section, we provide a comprehensive overview of the emerging technologies involved in pushing this model forward, and later, an analysis of the implications of PAYT in economic, social, and environmental terms.

PAYT Overview

As previously stated, all steps included in the processing, collection, recycling, disposal, and waste management require plenty of resources. To respond to the economical demands, governments normally apply a tax-based system, where citizens and companies contribute on periodic governmental taxes to the MSWM service. As opposed to this model, Pay-as-you-throw (PAYT) proposes a partial, full-unit or variable rate pricing where citizens contribute to the overall cost of MSWM services on the actual waste they produce instead of a fixed fee in the form of municipal taxes —in which most citizens are unaware of paying for this service.

The implementation of this model occurs slightly differently depending on local factors. In some cases, municipalities are responsible for distributing a maximum number of waste bags or local containers per household or neighborhood. In the case users need additional bags and containers, both are available for purchase or rent in authorized selling units. The waste collection process is paid by municipalities through property taxes. In other models, users can pay for all the garbage they produce through a tagging system that enables citizens to attach pre-paid tokens to the waste bags or containers. In this system, users normally have access to an individual card mounted on Active RFID-Tag associated with specific containers in street-side collection centers. The user associated with the Active RFID Tag is allowed to access the containers, and it is charged depending on the weight of the disposed waste. Similar to these technologies, some innovative systems are employing mobile devices equipped with Near Field Communication (NFC) or Bluetooth Low Energy (BLE) to access the containers and register the disposed waste. In this system, both NFC and BLE, as well as RFID-based Card or Magnetic Identity Key require direct contact between the identification device and the waste container, in which the payment is automatically processed through an identification system linked to a Crowd Platform. Even though most mobile devices are already powered with these technologies, some countries report that many communities do not have access to smartphones equipped with these specific technologies, thus being a considerable drawback.

In addition, there are other emergent schemes that allow each household to choose the size of the container they rent and pay accordingly, based on each disposal. This model works on a variable trash fee based on the volume of the container and the total number of collection programs provided. The volume of waste is registered through an Active RFID Tag that is attached to the waste container and is later read by the collection trucks. Instead of relying on single-user equipment (e.g., RFID-based Card), no dedicated device is needed from the user, thus decreasing the costs required for its implementation. Some developments in this model are being employed to guarantee more reliability and quicker reading time. A prominent example is the Ultra High-RFID Tags, which allows for higher reading distance and an improved identification process.

In terms of container design and development, many are equipped with a camera or in the collection truck to keep track of the waste volume. A state-of-art example is Machine Vision Waste Sorting containers equipped with machine vision, that can read the fill-level in real-time. As soon as the waste reaches capacity, the container triggers a compaction mechanism that automatically compresses the trash, increasing the bin's capacity. The smart waste containers are connected to a municipal network, providing information they collect through wireless transmission.

PAYT provides a direct link between waste-generating behavior and cost, as well as incentivizing recycling. The overall purpose of introducing PAYT models into MSWM services is to establish a waste hierarchy process by, firstly, enforcing citizens to reduce and re-use waste at source through economic taxation, and subsequently, stimulate general awareness of the importance of recycling and thus, increase recycling rates and avoid landfill.

In the following sections, we disclose the implications based on local factors and the expected challenges this technology may face in the years to come.

PAYT Implications

PAYT services are widely used with different types of applications depending on local laws and broad specificities ranging from public adoption, currently available tools, and labor resources. In the EU, the European Waste Directive enforced the transition to PAYT strategies in 2008, indicating in a report released in 2012 that 17 Member States subscribed to the PAYT waste management model, but only three were able to set PAYT programs in all their municipalities so far. Depending on the country and the municipalities adhering to the program, different responses were documented. In Spain, for instance, Puig-Ventosa, Ph.D. at ENT Environment and Management, reports that different to other European countries, PAYT applications were very limited. While in nations such as Sweden and the Czech Republic the application of PAYT schemes described increasing recycling rates in MSWM, currently in Spain, only five districts could successfully implement such schemes for household waste, while the prominent applications are reserved for commercial activities where waste is more carefully disposed of. According to Puig-Ventosa, despite the restrained adoption of PAYT models in Spain, "[...] several factors suggest that this concept will spread and become more common in the future, as it has elsewhere in Europe. One indicator is the rapid spread of municipalities with door-to-door separate waste collection systems, from none in 2000 to more than 100 today (most of them in the region of Catalonia). Another indicator is that some regions already encourage separate collection of commercial waste, also by means of doorstep collection systems. In these cases, variable-rate billing could easily be adopted."

South Korea, a country that, back in 1995, recycled only 2% of its food waste, is now recycling a total amount of 95% thanks to their implemented PAYT system. In 2013, the government decided to introduce a mandatory food waste recycling program where each household would receive biodegradable bags featuring Magnetic Identity Cards and a scale at the bottom, helping citizens to measure and record their waste at each collection date. Then, monthly data is collected and transmitted, serving as the basis for charging fees to specific homes.

In Canada, considerable higher recycling rates were registered, but also an emphasis on establishing standardized metrics to evaluate the country's divergences on PAYT schemes was noted by experts. This was mainly due to ongoing debates of whether PAYT can effectively help improve the efficiency of waste recycling and collection practices or if it merely works as a patch to the current waste management problem. In 2010, researchers Allers and Hoeben in their study Effects of Unit-Based Garbage Pricing: A Differences-in-Differences Approach, remarked that alongside the implementation of PAYT schemes there was an increase in illegal waste dumping, thus spoiling MSWM services cost-efficiency while decreasing environmental benefits.

Future Perspectives

This prompts crucial questions of the consequences of implementing PAYT schemes that cross-cut different dimensions including social acceptance and adoption, as well as other economic activities that depend on informal waste collection. For instance —as previously stated while describing the Brazilian case of 'waste pickers'—, workers relying on waste collection and recycling will see their household income affected if no legal framework is put in place to include these communities in the transition from the current MSWM system to PAYT schemes. It is of foremost importance to consider all implied socioeconomic factors that might reflect deeply on equality of access to this service.

In addition to the development of local policies that take into account all players involved in MSWM, educational programs are critical to influencing the implementation of PAYT. Besides helping to change the citizens' behavior and improving recycling and composting in urban areas, training and education initiatives hold the possibility of increasing general awareness regarding food waste and, consequently, encouraging people to consume less and buy only necessities instead of following a compulsive consumption pattern. By pairing this model with gamification tools to ease the adoption of such a scheme, it could improve transparency by gleaning waste disposal insights from households, neighborhoods, and towns. In the future, this business model could even evolve into currency in the blockchain, or implemented into a bigger Social Credit System, in which citizens receive points to be exchanged for public services, such as public transportation passes.

Finally, ongoing research about PAYT models is mainly focused on specific case studies, policies, and impact analysis from various perspectives. For a smooth implementation and better-integrated approach, it is of ultimate matter to combine both emerging technologies mentioned in this case study with economic and organizational systems to finally reach positive outcomes in economic (decreasing service costs), environmental (reducing waste and boosting recycling practices), and social (enabling increased citizen participation) terms.

4 topics
Adapting to Climate Change
Anti-Corruption & Standards of Integrity
Employment and Labour Markets
Green Economy
8 SDGs
01 No Poverty
03 Good Health and Well-Being
08 Decent Work and Economic Growth
09 Industry, innovation and infrastructure
10 Reduce inequalities
11 Sustainable Cities and Communities
13 Climate Action
12 Responsible Consumption and Production

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