Taking Responsibility: On Introducing Waste Management Tariffs in Georgia

Ever wonder what happens to the waste you throw out, who is responsible for its disposal and how much it costs to get rid of it? Or, more importantly, who pays for it?

There are several stages to the system for it to be complete and sustainable. The waste management system includes proper disposal, collection, transportation, and placement in a landfill, including proper operation of the landfill, all of which have their associated costs which cover street-sweeping services, workers’ wages, transportation, equipment, fuel, rent, etc. International practice shows that this is usually covered as part of your regular monthly bills, just like electricity and water. In Georgia, however, this is, in the vast majority of cases, subsidized by the central government and does not yet include landfill operation costs. The existing waste tariff calculation system is somewhat outdated and based on the waste collection normative system which, in today’s reality, is far from accurate. In addition, tariffs, in most of the municipalities, do not consider the waste disposal (gate fee), and waste recycling fees are not included anywhere as yet. This naturally raises the question of sustainability, particularly when Georgia is set to move to a waste separation system and building landfills that comply with modern standards. Therefore, it is necessary to calculate the costs accurately. This requires a comprehensive methodology to project the potential tariffs for waste management. If the waste management system is self-sufficient, the funds can be easily allocated to other national priorities such as healthcare, infrastructure or education.

As per the National Waste Management Action Plan, the USAID WMTR program implemented by CENN has developed a methodology for the determination of waste tariffs in accordance with modern requirements, and proposed a cost recovery system that will ensure the sustainability of solid waste management systems at the Municipal level.

GEORGIA TODAY spoke with Kakhaber Kuchava, Chairman of the Environment and Natural Resources Committee at the Parliament of Georgia and find out more about the waste management tariffs system in Georgia.

What are the critical issues in the waste management sector and how are they related to tariffs?

Proper waste management is vital for building sustainable cities, but it remains a challenge for many countries, including Georgia. The absence of environmental monitoring and poor waste management has its implications on the environment and, consequently, on quality of life in general. Currently, the Environment Committee has an on-going committee inquiry solely concentrating on municipal waste management in Georgia. To ensure the participation of all relevant stakeholders in the process, the Environment Committee received written evidence and held public hearings, which allowed the Committee to identify a number of critical issues in waste management. More precisely, the key challenges were discussed, such as lack of tariffs and law enforcement in municipalities, waste recovery and disposal, the needs of municipalities and capacity building issues, and environmental education concentrating on waste management. To reap the environmental and economic benefits of the circular economy, the Environment Committee will issue a report which will set recommendations and deadlines for each relevant state agency which will allow an intensification of the much-needed policy reform process and help to step up action on the ground.

These issues are closely connected with tariffs, as efficient waste management is expensive and operating municipal service requires integrated systems that are efficient, sustainable, and socially supported. The progress is essential and possible if the respective public authorities take action, such as effective separate collection to guarantee high-quality recycling, efficient Extended Producer Responsibility schemes, and improved data quality.

Why are tariffs essential for waste management?

A socially acceptable tariff structure and an effective billing mechanism are of the utmost importance when designing tariff systems. Implementing financially sustainable and resource-efficient waste management is crucial. Subsidizing might be a temporary solution to the issue. However, it is not a long-term answer to the challenge. To that matter, the primary regulation to fill in the gaps related to the tariff system is “the polluter pays principle.” It is an economic principle through which external costs can be internalized. The principle is a way of allocating costs for pollution and it would seem fair that the polluter pays the costs for the pollution which he has contributed to.

Assessing and continuously tracking the full-service is essential for improving the efficiency of waste management. Tariffs in the waste management sector can directly address the failure to consider environmental impacts, enable lowest-cost solutions and provide an incentive for innovation. The “polluter pays” principle can thus serve as justification for a tariff for waste management.

What regulations are to be implemented to introduce a new tariff system and what gaps do they address?

The main regulation to fill in the gaps in the area of waste management is applying the “polluter pays” principle. This principle is fundamental in light of the Association Agreement. At present, in the frame of the on-going committee inquiry, the Committee is consulting on giving precise recommendations in order to ensure practical implementation of an appropriate and efficient tariff system.

How did the parliament / you become involved in the process of tariff systems?

During my public meetings in the municipalities, it became obvious that lack of proper waste management was one of main concerns for locals. To follow-up on the issue and obtain information from all relevant stakeholders, the Environment Committee initiated a Committee Inquiry which has been successful in extending parliamentary oversight functions and ensuring a thorough understanding of the challenges in the sector. This, in turn, will ensure the appropriate recommendations are issued and a tariff system that works in practice implemented.

How will you increase public awareness of the importance of waste management tariffs?

“One of the central issues addressed during the Committee Inquiry is environmental education concentrating on waste management. It is indisputable that in addition to appropriate legislation, strong technical support and adequate funding, a critical component in waste management is public awareness and participation in the decision-making process. Generally speaking, waste is the result of human activities, and everyone needs to have a proper understanding of waste management issues, without which the success of even the best-conceived waste management regulation becomes questionable. The Environment Committee as well as having an inquiry on the topic will closely cooperate with CSOs and public agencies, and has already started study visits at the Parliament of Georgia with the Environmental Education and Information Center to raise awareness on environmental matters.”

GEORGIA TODAY also met with Archil Lezhava USAID/CENN WMTR II program, Waste Tariff Policy Elaboration Team Leader to discuss the issue of tariffs in detail.

What is the methodology introduced by the USAID WMTR II program implemented by CENN?

The General Methodology for Establishing Tariffs and a Cost Recovery System in Georgia was developed by the USAID WMTR II program implemented by CENN in cooperation with an international expert. It is specially designed for modern Georgian reality that also includes a calculation tool that gives municipalities a way to calculate their tariff on an annual basis by using indicators such as street and public area cleaning; waste collection; gate fee as well as a waste recycling fee. It is based on the Full Cost Accounting (FCA) Method, the current international “best practice” or “modern method” for accounting in the solid waste management field. FCA is defined as a systematic approach for identifying, summing and reporting the actual revenue and costs of solid waste management. It takes into account past and future outlays, overhead (oversight and support service) costs, and operating costs. The methodology includes the breakdown of costs for Labor; Vehicles & Equipment Operating Expenses; Consumable Supplies; Rent or Lease Payments; Contract Services; Loan Repayments; Depreciation and/or Principal and Interest Payments/Capital Investments in addition to Unclassified Costs. It is based on principles that include: Legal Requirements; Cost Recovery; Financial Viability; Horizontal Equity; Vertical Equity and Poverty Alleviation; Administrative and Technical Feasibility; Polluter Pays Principle and Transparency.

Does the methodology introduced by USAID WMTR II meet the criteria to be utilized in the municipalities?

They meet every single criteria to be utilized in the municipalities. It was tested by the WMTR II team in 3 target regions of the program (Adjara A.R., Kakheti and Shida Kartli). As a result, local employees acquired knowledge how to use the calculating tool and the Kvareli Municipality adopted waste tariffs based on the methodology mentioned above. The WMTR II team is open to any municipality from its target regions to recalculate the tariffs if there is motivation and a will to utilize the modern methodology.

By Ketevan Kvaratskheliya

29 April 2019 12:40