Cost-Benefit Analysis for Landfill
Operations and Regional Waste Management

Under the Bulgarian Resource Cities Program, the Bulgarian municipalities of Elhovo, Tundzha, and Bolyarovo partnered with two U.S. municipalities (the township of Johnston , Ohio , and the city of Albany , New York ) to focus on technical cooperation in solid waste management. The main goals of the partners project included:

Implementing separation of organic waste from household waste and composting to reduce the overall volume of solid waste entering landfills (see also the separate case study on the pilot composting program).

Developing cost-benefit analysis for the pilot composting projects to evaluate the con struc tion costs and benefits of a waste collection transfer and hauling station alternative.

The use of cost-benefit analysis to evaluate the costs of construction and operation of a new landfill at the village of Dobrich , municipality of Elhovo .

Developing an integrated waste management strategy that could serve as a regional model for the partner municipalities, and perhaps be transferable as a model for other BG regions with similar settlement and waste generation patterns.

The municipality of Elhovo s greatest environmental problems are the existence of an unregu lated solid waste landfill, the presence of a large number of illegal dumps, and the pollution of agricultural land with solid and other waste. The existing landfill has been in operation since 1976. Located only 450 meters to the west of the city, it has exhausted its capacity and does not comply with current national regulations.

All communities within the municipality of Tundzha , the villages in the municipality of Elhovo , and many of the communities in the municipality of Bolyarovo are currently excluded from the waste collection and disposal system. Because waste collection and disposal services are available only in the city of Elhovo , the waste in the other communities within the municipality is disposed of at illegal dumps. Organic waste accounts for almost 80 percent of the waste flow in these communities. To reduce the quantity of waste, it is necessary to separate household waste from organic waste. Organic waste can then be composted.

Cost-benefit analysis is a methodology for identifying and quantifying all costs and benefits of alternative courses of action, in order to determine which is the most worthwhile and finan cially feasible. Spreadsheets make this methodology easy to use. In this case study, the partners used cost-benefit analysis to identify all operating costs of the proposed Dobrich landfill, in order to prepare Elhovo for the true costs of operating such a facility before the municipality decides to proceed. The partners prepared a spreadsheet that itemized all the cost categories and the total operating costs that the municipality would have to finance if the construction is approved and financed by the national government.

The key participants in the analysis included environmental experts from the three Bulgarian municipalities, the U.S. experts, financial specialists, and other municipal employees.

The proposed construction of a new solid waste landfill at the village of Dobrich , municipality of Elhovo , required an analysis of funding needed to set up and operate a hauling and trans fer system to deliver the waste, collected from each village s compost containers or transfer station, to a landfill for disposal. The partners used the cost-benefit analysis methodology to identify four realistic alternatives and then systematically quantify and compare the costs of each alternative.

The analysis of the collection, transfer station and hauling options was based on cost estimates for vehicles, fuel, maintenance, containers, and transport services, should this activity be contracted out or privatized. The partners used legislative norms as a basis for the calculation of waste generated. The analysis established the following:

The use of a transfer station and 20 m³ hauling truck would cost 293,560 leva annually.

The use of a transfer station and 8 m³ hauling truck would cost 264,960 leva annually.

Hauling containers on a flatbed truck would cost 145,200 leva.

Dumping containers with a packer truck would cost 84,800 leva, due to lower transportation costs.

Based on this methodology, the partners identified a preferred alternative (dumping con tainers with a packer truck). They also noted that the combined revenues generated by the waste collection fees in Elhovo, Tundzha, and Bolyarovo are insufficient to fund waste collection and disposal activities.

The partners conducted a cost-benefit analysis for the proposed solid waste landfill at Dobrich to estimate the required waste collection fee increase that would be needed for ongoing operation of the facility once it is constructed. The partners used data from the existing landfill at Gorna Malina, Sofia Region, as a basis for the analysis because the Gorna Malina landfill is almost identical to the proposed one at Dobrich.

The calculations of operating costs included staff salaries and benefits, fuel and lubricants, equipment depreciation, external services and benefits, and landfill soil reclamation. The total annual operating costs were calculated at 103,488 leva. This amount did not include 50,000 leva annualized reclamation payment, 1,000 annualized operating permit payment, or 50,000 leva for lease of equipment. When these costs were added, the annual operating costs increased to 204,488 leva. Finally, two other amounts were added: the 120,000 leva currently paid by the municipality to the waste collection company, and the 90,000 leva portion of the waste collection fee revenue currently used to finance other activities.

Based on the above, it was established that the waste collection fees for the municipality of Elhovo would have to be increased by about 100 percent just to finance the operating costs of the new landfill.

March 2003: Selected villages with equipment available.

March 2003: Developed a written package of basic information.

April 2003: Placed individual solid waste containers at each composting site.

April 2003: Formed composting sites in the villages selected.

End-April 2003: Developed an information brochure.

End-May 2003: Printed and disseminated the brochure.

October 2003: Provided turning of composting piles.

Ongoing: Provide technical assistance and consultations, mainly via the Internet.

September 2003 April 2004: Apply the project evaluation methodology using cost-benefit analysis.

Based on the analysis, the partners decided to use packer trucks for future waste collection activities, as well as to increase the waste collection fee by 100 percent when the proposed landfill at Dobrich becomes operational. Elhovo intends to use some of the revenues gene rated by the municipalities of Tundzha and Bolyarovo to cover the operating costs of the new landfill. The cost of the packer truck system for transport and hauling to a disposal site could be split by the three municipalities based on the percentage of population served. Aside from being the lowest cost, this option provided the most flexibility. Since there are no fixed assets involved (i.e., transfer stations), the system can be tailored, by changing the daily collection routes, to work whether the disposal site for hauling is the existing landfill in Elhovo, the Dobrich landfill if it is built, or the landfill at Hadjidimitrovo.

The municipalities now have a waste management strategy that can be implemented in phases for all 54 villages within the study area. The system can be developed incrementally as more and more villages develop compost sites with waste containers for separated solid waste. The solid waste will be transported to an approved, environmentally safe landfill. Using the cost-benefit analysis, the partners considered the cost of building out the waste management system to include all of the villages in the study area. Realistic costs for setting up and operating a viable system were developed. The municipalities can now start a dialogue with Federal and European Union (EU) officials to identify any funding sources that can help with implementa tion of the system.

The municipal administration has improved its capacity to perform cost-benefit analysis and its project development knowledge and skills. The municipalities now have a waste manage ment strategy that can be implemented for all 54 villages within the study area. The potential benefits of the regional waste management strategy, if funding is committed and the system is implemented, include:

Prevention of groundwater contamination

Use of approved, environmentally safe landfills for waste disposal

Compliance with Bulgarian legislation regarding waste management and the environment

Compliance with EU guidelines for waste management planning and implementation.

For the municipalities of Elhovo, Tundzha, and Bolyarovo the project was a success: a cost-benefit analysis was conducted for the pilot composting program, development of an overall waste collection and disposal system, transfer station and hauling alternatives, and a new regional landfill. The analysis and the assis tance rendered by the U.S. partners improved municipal employees skills in conducting cost-benefit analyses and helped them understand the true costs of setting up and operating the waste management system.

Public education and enforcement will be needed to increase public participation in the pilot villages, expand the system over time to all the villages, and eliminate illegal dump sites. As the U.S. experts have experienced in their communities, change takes time, and public education must be an ongoing process. Enforcement will also be needed to prevent illegal dumping and to support the build-out of the waste management system throughout the three municipalities.