Benchmark Lending

The Impact of Privatization of Solid Waste Collection and Transportation in Delhi: The Impact on the informal Recycling Sector

he Impact of Privatization of Solid Waste Collection and Transportation in Delhi: The Impact on the informal Recycling Sector

Background

Since the late 1990s, two important public interest litigations have been filed in the Supreme Court, the highest court in India. Both demand greater accountability from the municipality for cleaner cities. The first, B.L. Vadhera Vs the Union of India, resulted in several court orders, even personal appearances of senior officials in the Court and rules being created for Hospital Waste. The second case, Almitra Patel Vs. The Union of India, has resulted in rules being made for Municipal Solid Waste. The case was also focused on technology as a primary solution for a cleaner country.

Apart from their individual outcomes, both these cases resulted in great pressure on the municipal authorities to perform their tasks in a more efficient manner. The media keenly reported the proceedings and frequently mocked municipal inability to meet the courts’ and public’s exacting standards.

Continuous court pressure and frustrated attempts to clean the city was an important reason for the municipalities in Delhi to seek privatization as an opportunity to respond to the courts. Subhash Chopra, a vocal member of the Delhi Legislative Assembly has stated, “privatization of garbage collection and disposal will be for the city. The MCD has been a total failure on this count.”

Other Roads to Privatization

Another reason was the change in Delhi’s own position as the capital of an increasingly important player in the global economy. The Masterplan 2021 includes many new features that are geared towards international conferences, entertainment etc. The problem of waste handling and a filthy city remained an environmental and visual impediment to the new city. With legislation that encouraged investment in services and several developing countries seeking to privatize waste management, Delhi was encouraged to do so too, as part of its quest to be what is often described as a ‘world class city.”

Another important reason was Commonwealth Games, scheduled to be held in 2009 in Delhi. The leader of the Delhi Parliament described the need, “All these measures would enable Delhi to become a clean and neat city, which is the need of the hour in view of the fact that the Commonwealth Games are due to take place in 2010 and thousands of foreign tourists would be visiting Delhi. There is a need to give a complete facelift to the Municipal Solid Waste Management System in MCD.”

Hence, privatization of waste collection and transportation (hereby referred to as privatization) was not just a policy, but indicated a fundamental loss of confidence in the ability of the municipality to supply the city with essential services. The decision also indicated the perceived new needs of a rapidly changing Capital City.

This paper unpacks the interaction between the informal sector and the private waste contractors and the impact of privatization on the informal sector in Delhi. It uses the unfolding of privatization in Delhi and global experiences to understand the issue and to suggest how waste can be handled in an equitable manner.

Framing Privatization

There have been several ways by which governments across the world have approached privatization of services. The early ideas of privatization began in the late 1970s and 1980s, with governments like that of Margaret Thatcher in the UK and Ronald Reagan in the USA. In this context, privatization came to mean a shift in activities or functions from the state to the private sector as well as the shift of production of goods from the public to the private sector. Governments then began to stop directly producing services, but enacting legislation and the framework for these to be privately produced.

In this case, privatization has been ‘privatization by attrition,’ as the quality of services was seen to be allowed to run down and in need of urgent reinvigoration.

In India, privatization of solid waste handling has two components, from the municipal perspective. The first is related to transportation of the waste and the second to its appropriate disposal, recycling or use in waste to energy projects.

Privatization of waste handling in Delhi is currently limited to the MCD. It has been framed by officials here as a taking over of existing municipal systems for more efficient functioning. Hence, the waste contracts demand efficient collection from the dhalaos, transportation to the landfill and a stage wise segregation of the waste.

A few of the most significant clauses in the contract are as follows:

Article 5.15 : Sale/distribution of recyclable substances

The concessionaire shall be free to sell or otherwise dispose of recyclable substances and other materials recovered from the Municipal Solid Waste at such price and to such persons and using such marketing and selling arrangements and strategies as it may deem appropriate.

Article 5.19d : Endeavor to improve the ancillary conditions and infrastructure related to the project, including assistance to the project including assistance to informal recycling workers Article 5.19l. Be responsible for all the health, security, environment and safety aspects of the project at all times during the concession period. Article 5.19t :Endeavour to employ the informal Municipal Solid Waste collectors within the concession area to carry out the work of collection and segregation of MSW, in accordance with this agreement and applicable law. Article 6 : MCD Obligations : Give all assistance to the concessionaire to employ the existing informal Municipal Solid Waste collectors including rag pickers and assist the concessionaire in solving issues arising from the redeployment and employment of such waste collectors by the concessionaire

Therefore, the contract shows that the MCD is aware of the sector.

In the context of this discussion, the following aspects of the contract must be kept in mind:

The private contractor is paid for the waste collected by weight The ownership of the recyclable waste lies with the contracting company The private contractors have the right to manage the dhalaos as their own spaces , with rights to advertise on the walls and to fence off the waste dumped there Additional spaces to store the segregated dry waste will be allocated to the contractors during the 8 year contract period. The contractor is expected to segregate waste in a graded manner over time

Therefore, despite how it is framed in official discourse, privatization in Delhi is not a direct transfer of a set of services from the government to the private sector.  A new role, in keeping with evolving thinking by technical experts, and the changing nature of the city itself, was created for the private company. Both the collection and disposal services provided by the government and the segregation services by the informal sector, were handed over to the private contractor. Public assets of built land and space were also handed over as part of the contract.

II. Implementing Privatization

In order to implement the process, the IDFC (Infrastructure Development and Finance Corporation), was contracted to manage the process of privatization on a turnkey basis. A global tender was put out and bids sought. There were no detailed discussions or consultations with any other interest groups, except for an initial meeting prior to the writing of the bid. During this meeting, there was intense opposition by NGOs to the privatization on various counts. These included the in-build disincentive for waste generators to segregate, the marginalization of the informal recycling sector and the level of private involvement. The last point was based on whether the contractor should also be involved in collecting waste from the households or not. There was no further discussion.

Finally three companies were selected and their work was scheduled to begin in June 2005.

The most notable amongst the private companies, Delhi Waste Management (DWM), is a consortium of transportation companies and financiers. What sets this company aside is that it was allocated what were perceived by the competing companies and the municipal workers as the most ‘lucrative’ zones. The others were allotted zones that were less developed, or older and therefore, with poorer infrastructure and with less influential residents.

Each contractor was to ensure that the waste in the dhalao (an intermediary transfer point, often like a room )  was segregated, the dhalao and its defined surroundings of 25 feet was clean and the waste was collected and transported at regular hours to the landfill. Each contractor was given a list of existing dhalaos to ease their work.

Prior to this, for over two years, the Delhi Government initiated the Bhagidari (literal meaning : partnership) scheme where middle and high income residential areas were trained to understand the importance of segregation of waste into dry and wet categories. This programme was well publicized and several hundred residents from the more affluent parts of Delhi were invited to attend these trainings. This does not seem to have been implemented, since the waste arrived at the bins in an unsegregated manner, despite a law that made it mandatory for waste generators to segregate. The task of the private company therefore was not impacted by the Bhagidari scheme, underlying the failure of the exercise. This failure also drove home the point that residents were unlikely segregate their waste and an external agency would have to continue to do so for them. Traditionally, the informal recycling sector has always segregated the waste and sold it in the chain for reprocessing.

A survey of the privatized areas undertaken in January 2006, preceded by a discussion with managers of DWM revealed that the company had sub-contracted each area to smaller players, who acted as labour providers. Using this model, each sub-contracted party would provide a fixed number of workers who would be called bin guides. They would be stationed at a dhalao or bin, cleaning the bins, segregating waste and helping load the compactors. Many of them would also live in the bins overnight, as they were unable to find inexpensive housing neaby. Few of them were waste pickers, but several were simply paid daily wagers. On an average, they were paid appx. 1/3rd of the minimum daily wages, or Rs. 1000 and had no social security. However the workers had informal access to dry waste, which was sold to a junk dealer and significantly supplemented the income.

This model was only viable in high income areas where there was adequate recyclable waste discarded. In lower income areas, the worker was forced to live off the payments and often, undertake responsibility for a cluster of bins, in order to optimize his earnings. This resulted in lower quality of work and poorer work conditions. It was also difficult to implement this in areas where large amounts of organic waste were produced. In South Delhi’s Dakshin Puri area, the waste from processing fruit and vegetables was so enormous that the workers were forced to stay out of the dhalaos  and work from a distance.

According to several media reports, the performance of DWM in handling waste has been poor, based on the quality of visual cleanliness. Other companies have received less flack and none of it is reported as yet in the media.

The NDMC is also now preparing to privatize the waste handling, on the same lines as the MCD.

Initial cost comparisons are known only informally and via discussions with the private operators. According to a former official of DWM,  the cost per truck to the company was only $ 40, which is significantly less than that of the MCD’s $. 140 or the NDMC’s $ 180 per truck. Greater efficiency and stricter monitoring is likely to be one cause for this significant drop, as are, possibly, different approaches to calculating the cost, which may hide some costs. A recent World Bank reportsuggests that this difference is an India wide phenomenon, and that the difference can be in the range of 20-40%. Comparing the costs of waste collection and transportation in 10 towns in the southern Indian state of Karnataka, the report shows the trend of cost reduction across the board. However, the Bank suggests that “One of the reasons for the relatively lower costs incurred by the contractor is quoted as differential wages, particularly when private contractors tend to pay lower than minimum wages to their sanitary workers.” The government, on the other hand, cannot indulge in such practices and therefore would incur much higher costs for the same labour performed by the same number of workers. It also pays social security to many of them.

Comparing these findings, it is likely that the privatization process is economically viable only at the cost of underpaying the workers.

III. The Impact on the Informal Sector Waste Recyclers

According to the former Municipal Commissioner of Delhi, Rakesh Mehta, the design of the privatization system was intentionally different from that of other cities in that the contract did not start at the doorstep of the generator. Instead, this space was left open for informal players, so that they could access the waste that they wanted. Another reason was also that this was likely to prove too complex for the private contractors themselves.

Despite this, a study of the contract signed with the private contractor reveals that the work of the informal sector, as it is being actually performed, has not been taken into account. Although their role has been acknowledged by various government bodies for well over a decade prior to privatization, it finally excludes them. This is likely to be for three reasons. Firstly, that the sector has not been well appreciated in the past to merit adequate inclusion. It is not on the radar of government bodies. Second, the working of the sector is poorly understood by those involved in designing the process and its inclusion is therefore unlikely to have a good fit, should it be undertaken. Thirdly, the vision of a city with an efficient system of privatized waste does not include wastepickers or other informal sector recyclers, since they are in contradiction to the idea of the modern and the ordered. A former Chairperson of the NDMC expressed the imagined city succinctly when he remarked, “I want our streets to look like Singapore.”

The following sections analyze the impact of privatization on the various levels of the informal sector.

Wastepickers

Many of the workers are not wastepickers, but other informal sector workers or wage labourers. This indicates a gradual displacement of the wastepickers from their work. It also indicates an artificially increasing competition for a limited resource. By itself, this fall out is clearly an undesirable one.

But there are several other ways by which the means of privatization is breaking down the waste picking system.

A recent survey showed that in such sites where a wastepicker was on duty, it was often to the exclusion of all other wastepickers. Usually, most wastepickers move from bin to bin at peak hours along a fixed territorial route which is shared by other wastepickers. Alternatively, a few wastepickers take over dhalaos, from where they mine the waste as it is thrown in. This is then their monopoly. Wastepickers find several ways to both collaborate and compete through unwritten codes of conduct and community and peer pressure. As a result, a complex and evolving system of resource sharing comes into play, resulting in one of the highest rates of recycling in the world. This informal system therefore plays out not as the tragedy of the commons but remarkably, the opposite of it.

By breaking the existing system and replacing it with ‘bin guides,’ waste is no longer able to be shared amongst a vast community of the poor. It is instead monopolized via an individual. Moreover, by hiring persons who are inherently entrepreneurial, the incentive to seek out waste to segregate and sell is killed, as a new debilitating dependency is fostered. Many such people are stuck, because refusing an underpaying job may result in job loss or a lost opportunity to leverage better terms of work.

The poor typically harness their social capital to get through difficult times. Systems such as the one described above are likely to break up this social capital because they rupture the basis on acting like a community and instead, seek to create a new ‘professional’ individual outside this system. This considerably weakens the individual and the community, which is seen to provide valuable services where the state/government fails or is unable to.

The model above is indicative of the many problems with this form of privatization. The system of contracting to the lowest bidder has a ripple effect at the dhalao level, where underpayment to workers becomes the only economically viable form of functioning. Sub-contracting places priorities on cleanliness, but does not lay safety standards for workers. Moreover, it continues to operate along the same degraded quality of work, involving standing in waste, and exposes the worker to the same hazards as previously.

In some areas, a quid pro quo system appears to have been established. A site visit to a small dhalao in Delhi’s elite Gulmohar Park Area suggested that in smaller and more discreetly located bins, a wastepicker may access the waste in return for helping with loading the compactors. In other parts of Delhi, municipal workers were seen at the bin sites supervising wastepickers who were loading waste into receptacles installed for the purpose. A discussion with the workers indicated that their role was both unclear at that point as well as in transition. In the meantime, they were still responsible for overseeing the waste handling by the private operator. Given that on site cleanliness was linked with efficient supervision, the officials continue to use existing linkages of coercion to carry out the task at hand.

The ownership of space-the dhalaos and bins-has also negatively impacted wastepickers. Earlier, they would segregate their waste in these dhalaos, as the only available space to undertake such work. Now, DWM  does not allow this and has therefore taken away the only ‘work space’ available to such persons. The decision to take away public spaces and make such assets available exclusively to a single private player therefore disincentivizes recycling.

A newer trend is that of DWM beginning to make rightful claims on the recyclable waste. A clash between the black letter legal owners and the customary legal owners is inevitable. Recent documentation shows that the contractors usually intimidate, abuse, harass and even beat wastepickers who attempt to ‘break into’ a newly privatized space to carry out their work. In a more recent series of events, wastepickers who were simultaneously engaged in collecting waste from the doorstep to access the recyclables also found themselves disallowed from entering bins for segregation and even disposal of waste that is depleted of it recyclables.

It would therefore seem that by not explicitly defining the rights and role of the wastepickers, and by not clearly identifying them as legitimate players in the process of waste management, they are perceived as a category without rights.

Junk Dealers

In the recycling hierarchy, junk dealers buy waste from the waste picker and itinerant buyers, further segregate it and sell it ahead to specialized dealers or directly to reprocessing factories. In this, they are dependant on the materials flow from the wastepickers.

The previous section showed that privatization, as it is unfolding in Delhi, has begun to fracture the wastepickers’ work and access to recyclables. This clearly impacts the junk dealers as well. According to DWM officials, their own short term plan is to sell the waste directly to the reprocessing factories. In the medium term, they hope to recycle it themselves.

Unless they begin to expand and compete for other, alternative sources of waste, junk dealers are likely to be badly hit by privatization, as they cannot even be hired, unlike some of the wastepickers.

Reprocessors

Reprocessors are unlikely to be impacted by privatization significantly, as they will receive most of  the waste they require. Even recycling operations will not absorb the entire amount generated. Much of it is likely to be in an aggregated form, from a single source, thereby making it only marginally harder for them to negotiate prices. Within this group, the smaller,  semi-legal or ‘illegal’ factories may face greater uncertainty about supplies and the sector will require to upgrade itself.

It is clear that the current form of privatization is fracturing the informal recycling sector. Waste, which was till now a public good, handled by the government as part of its public duty, has been transferred to the private sector. There has been no public discussion about giving off public assets in this case.  Moreover, along with this, the dhalaos, which were similar to common public spaces in that they were manned on behalf of the public by government agencies, have been privatized and the waste contained therein fenced off. The ramifications of this have been described in this section  already, but further include:

An lowering of incentives to pick out the lowest grade recyclables. Once ownership is removed, wastepickers as employee will no longer feel compelled to mine the waste of its least lucrative recyclables. This will result in more residual recyclables reaching the landfill and an increase, not decrease in the space required for landfills in a city. The cost of new landfills is mounting, with an estimate budgetary requirement of $ 2 billion in the next 10 years. An associated concern with reduced recycling rates is the problem of sustainable use of resources. Currently, wastepickers are estimated to pick up between 15% to 59% of the total waste generated in Delhi. This waste is segregated into several categories along the chain, before it is accepted by any reprocessor. The schedule set for the private operator, on the other hand, demands 20% segregation only in the 8th year of operation. Prior to that, and even during this period, the operator is paid by the weight that is delivered at the landfill. This creates a disincentive to segregated. Seen in the light of Article 5.15, giving the operator rights over the recyclables, the contract ‘creates competing interests between the private operator and the wastepicker.’

Table 1 : Segregation Requirements from Private Operators

Year of operation Months from COD Segregation benchmark Applicable penalty

for corresponding month for corresponding month

(in % terms) (in % terms)

Year 1                     1-12                                    0                                         -

Year 2                     13-24                                  5                                       15%

Year 3                     26-36                                  10                                     15%

Year 4                     37-48                                  12                                     15%

Year 5                     49-60                                  15                                     15%

Year 7                     60-72                                  18                                     15%

Year 6                     73-84                                  20                                     15%

Year 8 onwards      85 onwards                         20                                     15%

Source : Contract signed between the MCD and Private Operator, 2005

Waste recyclers, particularly at the lower levels of the chain, are characteristically poorly educated, earning less than 2 dollars a day, and self employed. Recycling is one of the few occupations open to them, where they provide themselves with employment and contribute essential services to the city. They typically do not have the access to resources that allow them upward mobility, and are particularly vulnerable. A system that does not take them into consideration is likely to increase urban poverty and place greater stress on the recyclers. The impacts of this can be felt by the entire family; Reduced parental income amongst the poor require children to contribute to the family income, differential priorities for children’s education come into play, increase the pressure of work on women, reduce available nutrition, reduced expenses for medical care and differentiated access within the family to health care, the breaking up of social capital and the consequences of that. This in turn violates the objectives of the Millennium Development Goals, to which India is also committed Waste, which is a mixture of discards, is no longer able to lend itself to a developmental, social role but becomes a purely commercial object

IV. The Global Experience

It is useful to examine comparable global experience and to determine to what extent the experiences have been similar. In general, the three regions about which the most information is available are Africa, East Asia and Latin America.

In Central Africa, unlike in Egypt and South Africa, there are little informal waste recycling activities. This is because of the low level of industrialization, particularly of the recycling sector. Where factories exist, they are able to reprocess the waste of several countries, leaving little scope and viability for other units.

However, in Egypt, privatization has resulted in a loss of livelihoods for the Zabaleen, or the traditional waste handlers. Estimates are that in 1997, the Zabaleen handled one third of Cairo’s waste, which was almost 3000 tons. Of this, 85% was recycled directly through the Zabaleen’s self-owned and operated micro-enterprises that were constantly upgraded.Despite this, officials did not wish to include them in their privatization plans as their work was considered unhygienic and the new private investors seemed to be a better prospect for Cairo.

When privatization began here in the early years of 2000, it included waste collection from the doorsteps. The Zabaleen were additionally impacted as many of them earned by pelletizing plastics.  Loss of access to waste plastics resulted in an additional loss of income.

Some estimates put the number of job losses at 75,000. After a period of being displaced, and an international campaign, the Zabaleen were able to regain some lost ground by being involved in the waste collection. Researchers have concluded that their inclusion was related to the fact that implementing the contract became impossible without the help of the Zabaleen and their skill sets. Moreover, in Egypt, the privatization companies used mechanical means to collect waste, which was unviable in the old city with narrow roads. It was here that the Zabaleen with donkey carts were able to help the companies to fulfill their legal obligations.

Currently, several, but not all the Zabaleen have been able to regain their former work, but they claim to earn less than they used to. Additionally, local NGOs say that while they were organized, after prolonged negotiation, to work on a more equal footing with the traditional middlemen, Wahiya previously, they have now been re-hired as workers under the same middlemen. The picture is unclear, as others assert that they are now free of the Wahiya, who, ironically, paid them more than the private companies currently do. Private contractors now claim , “ It is our strategy to employ the local Zabaleen. We want to avoid conflict and this satisfies the social component of our contract.”  On their part, the Zableen have constantly emphasized that their earnings are not based on payment as much as access to the recyclables. The companies have therefore turned a blind eye to the fact that the Zabaleen now additionally take the waste and are not characteristic employees.

In Tanzania’s Dar-es-Salaam, the impulse to privatize was driven by the poor impression of that country. The privatization of waste was undertaken in collaboration with UN HABITAT and was deemed a resounding success, because of the noticeable cleanliness. The scale of privatization was unique. Rather than foreign companies, it was the local community based organizations and small local businesses that were facilitated to provide waste collection services from households. The savings by the municipal bodies was used for road construction and maintenance.

We do not have any known information about the informal sector operations here prior to this. Based on the available information, this kind of privatization is noteworthy because it built upon existing structures. After this phase, as larger players entered the scene, the scenario may have been altered. In sharp contrast, in Kenya, an Italian company, Jacorossi International, was invited to take over waste management amidst wide spread protests.

In Accra, Ghana, researchers point out that privatization has achieved nothing that a revitalized private sector could not have done, had it complied by the country’s laws and enforced existing regulation. Instead, the authors point out, the privatization effort is “structured to benefit private interests by excluding the public.”

In Columbia, local initiatives have borne results. The results of organized waste recyclers are already visible. Across the country, 10,000 wastepicker families have formed 118 cooperatives that are allowing them to bring in over 300,000 tons of recycled materials into the market. The strength of the groups lie in their ability to federate under the National Association of Recyclers, which helps them to enhance their business activities through capacity building and credit. They also offer waste handling services to various institutions. Although privatization has been challenging for the sector, they have been able to negotiate for niche work, such as fees based service provision. More recently, in 2003, under Decree 1713, part 1505, wastepickers have been included and their rights to participate in solid waste management plans , at the development and follow up stages, has been made formal. n Argentina, a Zero Waste Decree makes it mandatory for private waste handlers to provide facilities for the informal sector to segregate and store recyclable waste. In this case, the wastepicking sector has consciously not pushed for a strict implementation of the rule, since many of them see themselves in the work only temporarily, due to economic hardships.

A common experience in several countries has been that of formal sector workers organizing against privatization, for fear of job losses. From Singapore to Pakistan, reports show that agitating workers are able to negotiate with the government to retain their employment, often even scaring them to delay privatization. In Singapore, one of the suggested ways to handle the fallout was to set up a fund for displaced workers. In Pakistan, workers were forced to take to the streets. From this, it becomes clear that formal sector workers, already in the formal realm, are able to organize themselves to protest more effectively. It is therefore critical that the informal sector also be organized.

Based on these experiences, it is clear that:

Waste recyclers must be organized if they are to negotiate in the event of privatization The access to waste is a critical part of any waste recyclers work. Being employed is more a means than a desired end Where the informal sector activity is already very low, the impact of privatization will not be easy to discern

V. Conclusions and Recommendations

The analysis in the preceding sections makes it clear that it is economically and socially desirable to include the informal recycling sector in any waste management initiative. The errors, experiences and the studies detailed previously throw light on the possible ways by which this can be done.

This author believes that privatization of waste is inevitable in the developing world, because of the overriding trust that policymakers and multilateral donors globally have in this path. As cities become more global and require competing for visibility, funds, investments, expertise and drawing in economic prosperity, many more city planners and policy makers will be under pressure to take this path of seemingly, the least resistance. Much of the citizenry and the media sees privatization as a good step and has created a demand for this market driven form of services.

In several cases, privatization has come to mean the right to exclude others. Proponents of this argue that if this is not the case, the tragedy of the commons will kick in. We have seen that that the contrary holds true in the case of Delhi. The fencing-off of common resources and transferring of public property into private hands is indicative of poor policy making. The informal waste recycling sector is also a private player, offering important environmental services to the city. It is therefore important to see its work as already operating in the private sector and therefore, follow similar policies to promote it.

Against this backdrop, privatization needs to be reconsidered in fundamental ways. It should not be seen as a solution to a dirty city, or a formula held exclusively in the private sector. Rather, it must be viewed as one of many possible solutions to specific aspects of the waste management cycle. One of the important aspects is developing disposal facilities, a section not discussed in this paper, but one that requires large investments and technical know-how.

Nor should privatization be privileged over other indigenous forms of waste handling, whether they be waste recycling through the informal sector or community based innovations. Instead, it should be clearly accepted that complete corporatized privatization will result in more asymmetrical outcomes. It should be clear that the informal recycling sector is also providing private services to the city and should be viewed as such.

A central shift in understanding must inform policy on privatization. Currently, waste management companies involved in privatization are typically accountable in highly quantitative terms, such as the amount of waste collected, the response time to complaints and the fleet efficiency. However, in a developing country, in whose cities almost 1% of the population is dependant on waste recycling for a living, this must be dovetailed into all practices. As previously explained, the sector is based on a complex system of cooperation and competition, which is still not entirely understood and which itself seems to be constantly evolving. Therefore, instead of trying to de-construct this sector, it is more practical to follow guidelines that are likely to encourage it to develop and incentivize its participation in the process, instead of alienating it.

Clearly, then, the social efficiency of privatization must be considered too. Not doing this fractures the social fabric, particularly amongst the poor and the most vulnerable, leading to irreparable losses of social capital and of their increased vulnerability, and in theory at least, increasing the burden on the government. This is the single most important lesson learnt from the Indian and International experiences of privatization of waste services.

Some recommendations that flow from this conclusion are described below :

The central site of conflict is the ownership of recyclable, or dry waste. In both the Indian cases as well as the international case of Egypt, it is clear that access to waste, not payment for working at site, remains central to the wastepickers. Hence, any contract must necessarily include a clause specifying that right over recyclable waste belongs to the wastepickers first. Access to waste for wastepickers is the backbone of any policy made for waste in India Global experiences show that privatization must not begin even at the dhalao level, and must be restricted to transportation. Bids should be for the transportation and dumping sector, and not prior to that. A lesson should be drawn from the decision of the MCD not to enter the household level for privatization. This is an example to follow. Some wastepickers work at the landfills. Although this is unsafe work, privatization should include their rights over waste that reaches here. In the medium term, the wastepickers and their organizations should examine other, safer ways to earn through recycling activities Any plan for solid waste management in India must necessarily be informed by an understanding and an appreciation of the informal recycling sector. This implies designing systems that can strengthen an existing system and ride on it. In this case,  the bid should have included a section on including the sector and allow the bidders to suggest how they would want to do this, after helping them to understand the issue. Understanding the sector must be made a part of the bidding process, just as several other aspects are explained and clarified. It is critical not to leave the bidders without this understanding on their own The informal sector must be treated as a tightly knitted chain, and one that must not be fragmented, if the city is to reap the benefits it offers. Hence, the chain should not be tampered with or be modified to become ‘modern’ except where consensual use of newer technologies or new design can be offered, though not imposed. The case of Egypt, where plastic is recycled by the Zabaleen, is a case in point. In order to be able to participate gainfully in a shifting city, waste recyclers must organize themselves as a tangible, legal entity that can enter into contracts and negotiations on behalf of its members. It is often difficult for policymakers to find ways of including a sector that exists through individual or family enterprise, but without any defined collective organization and indeed, it is beyond the imagination of defined structures to work with these Taking a cue from the policies in place in Columbia, such recyclers’ organizations should be recognized and be privileged through the cycle of waste handling. Studies have shown that allowing the sector to work legitimately significantly impacts their poverty levels and improve their work conditions. One commonly observed trend in community level waste management is that of local resources, such as volunteer time, subsiding the lives of waste recyclers and detailed networks, creating innovative kinds of social security for workers in the urban context. Instead of overriding those, privatization should let them be and not attempt to meddle with them for homogeneity. A study of Churchill County, in the United States, calculated that privatization of waste handling could result in 279 less jobs, reduction in county household income by $36.171 million, 14,735 hours of voluntary time, and $ 85,233 in charitable donations. These unaccounted for costs are only in the developed world. They are likely to even higher in the developing world and should be left undisturbed The MDGs (Millennium Development Goals) should be mainstreamed into waste handling, because of the opportunity this provides in tackling poverty through micro enterprises, individual enterprise and demonstrated low capital and running costs.

If there is to be privatization of solid waste management services, it must be designed to be equitable for everyone. It can offer answers for urban poverty and the increasing urban environmental problems we face. If urban policy makers are to use this for the optimal benefit of a city, then privatization should be seen  as a means of enabling the urban poor, not disempowering them. This requires a paradigm shift and visionary leadership, but there are rudimentary examples to build up from.

References

Jha, Ajay. Removal, Disposal of Waste Must be Privatized . Gulf News. November 26 1999

Jha, Lalit, K. Govt.-MCD tiff leads to garbage problem. The Hindu. Oct 7, 2004

Starr, Paul. “The Meaning of Privatization.” Yale Law and Policy Review. 1988

Contract between MCD and Private Operator, signed in 2005. Original copy denied, current copy informally obtained

The survey was undertaken by the author of this paper, as part of an exploratory research survey of the post privatization scenario for a film

Chintan Environmental Research and Action Group. Unpublished Survey. Delhi.  2006

The pronoun ‘he’ has been used because there were no women seen in this scheme

Hindustan Times. August 27, 2006

Personal discussions with Mr. Satyavir Chauhan, DWM. June 2006.Delhi

The World Bank. Improving Management of Municipal Solid Waste in India : Overview and Challenges. May 2006

Bhargava, Vishal and Chaturvedi, Bharati, film, 60 kilos. Delhi February 2006

Personal Discussion with B.P. Misra, Chairperson, NDMC. May 2001. Delhi.

Chintan Environmental Research and Action Group. Unpublished Survey.  2006 Delhi.

Ghosh et al. A Partnership for a Decarbonized Energy Future. World Affairs : The Journal of International Issues. Volume Ten, Number One, Spring 2006.

The survey was undertaken by the author of this paper, as part of an exploratory research survey of the post privatization scenario for a film

Bhargava, Vishal and Chaturvedi, Bharati, film, 60 kilos. Delhi February 2006s

Email from S.A. Rizwee et al, Chintan Environmental Research and Action Group. December 2006

Personal discussions with Mr. Satyavir Chauhan, DWM. June 2006.Delhi

Fahmi, Wael Sala. “ The Impact of privatization of solid waste management on the Zabaleen garbage collectors of Cairo.” Environment and Urbanization. Vol 17. No. 2. October 2005

Iskander, Laila. Presentation at ASMARE Conference, Belo Horizonte. August 2006

Wael Sala. “ The Impact of privatization of solid waste management on the Zabaleen garbage collectors of Cairo.” Environment and Urbanization. Vol 17. No. 2. October 2005

Iskander, Laila. Presentation at 5th Festival of Lixo and Cidadania. Belo Horizonte. August 23, 2006

Pan African News Agency (PANA). UN-HABITAT Policies work miracles for Dar es Salaam June 23. 2004

Demanya, B.K. Remapping Garbage : The privatization of waste management in Accra, Ghana. MA Dissertation, Queen’s University, 2001. Canada

Medina, Martin. Supporting Scavenger co-ops. Biocycle. Vol 38, Issue 6. June 1997

Padilla, Nohora and Grisalez, Ruiz Silvio, National Association of Recyclers. Presentation at 5th Festival of Lixo and Cidadania. Belo Horizonte. August 23, 2006

Yap, Sonny. Set up a venture fund for displaced workers The Straight Times. August 25, 2001. Singapore

The Pakistan Newswire. Sanitary workers kick off protest against privatization. February 16, 2006.  Karachi

Rose, Carol. The Comedy of the Commons : Custom, Commerce and Inherently Public Property. The University of Chicago Law Review. Volume 53. Issue 3. Summer 1986

Medina, Martin. Presentation at CWG International Conference on MDGs and Waste. Calcutta. 2006

Burkley, et al. Impacts of Privatization : Use of Multimodal Survey. Social Science Journal. Volume 43, Issue 4. October 2006

Asian Stocks Rally as Japan, U.S. Pledge Action; Yen Weakens

Asian Stocks Rally as Japan, U.S. Pledge Action; Yen Weakens
Asian stocks rose the most in five weeks and the yen weakened as the Bank of Japan expanded credit support for banks and Federal Reserve Chairman Ben S. Bernanke pledged measures to spur economic growth.

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Cost Per Action: Your Ultimate Marketing Guide

Cost Per Action or CPA, also known as Pay Per Action or PPA, is now a current pricing trend in online advertising and marketing. With this pricing model, online advertisers are only required to pay for every action or conversion made on their ads in the internet such as product purchases, registration and submission of forms. This pricing model is a preferred method of the companies advertising certain goods and services as they get to make payments only when specific actions or conversions are made. Through this, they are also saved from the indiscriminate paying or spending of money on terms or advertisements which do not gain profits in the online market.

For website publishers, however, they take the risk of advertising as the commissions that they will receive will solely be based on the company’s creative websites and offers. And unlike the Cost Per Click (CPC) model, CPA does not lend itself to deals on every click so they have to wait until actions are made through their websites.

Website publishers and marketers who still opt for Cost Per Action model are offered with several deals. Nonstandard offers are available to marketers with considerable amount of excess inventory. Those websites which feature incentive programs could also offer CPA models on several types of leads. There is also the most widespread or extensive kind of conversion-contingent pricing which is the so-called affiliate marketing. Through this deal, advertisers establish what actions should be done and how much they would be paying for each action.  

For any interested publishers who choose this kind of pricing, there are certain guidelines to be followed on how to apportion the advertising risk or how to proportionally charge companies or advertisers. The most possible and simplest equation that could be given for this is:
X/ 1000 * CPM + Z (pricing benchmark, where X stands for the number of impressions to be sold)

X* 1.25=Y (expected conversion yield)

Z/Y= target cost per click

To simply put, a site publisher could multiply the number of intended impression size and multiply it by 1.25% which is the estimated percentage of actions/ conversions per ad campaign. Doing this would lead to the expected click yield that would reveal the price impression of each click. There are also a number of sites who offer premium from 15 to up to 50% to any performance-based deals. This depends on the size of the buy and the number of successful returns in every action.

The drawback in this Cost Per Action model is that most publishers do not have blow-by-blow information of the transactions made by their visitors or audience so they cannot assume that the number of actions given by the advertisers is indeed equivalent to the actual conversions made.

To solve this pricing problem, publishers are advised to make sure that they have a way of monitoring the actual performance or conversions made in their website. And, they also need to be really committed in tracking their audiences and understanding their performances to maximize the advertising potential of their website.

Small Business Reports- Determine How Enterprises Are Performing In The Market

Small business reports are feedback that is given periodically to help determine how enterprises are performing in the market. They act as the benchmark for measuring what ought to be improved as well as what operational tactics ought to be dropped if they are seen not to be working anymore. The reports target sole proprietorship, limited liabilities, partnerships, general business corporations as well as transmission and utility companies.

The data contained in the reports includes information on employment and revenue, depending on the type and employment type of the enterprise. The very crucial data contained in the reports touches on credit markets, and clearly shows how the interest rates have been operating during that period of time. This information helps an enterprise determine whether they have been borrowing at favourable interest rates and what can be done in future.

The rates vary depending on the region, the financial position of the enterprise and the value of the assets it holds. Towards the end of the credit market report, the average figure is also reflected. The rates are normally a reflection of commercial loans given by both domestic and foreign lenders; large and small alike. This does not include the independent finance companies.

In the report, there are key terms that need to be clearly understood. One of them is ‘Longest Maturity’ which refers to the interval between rate adjustments among the lending institutions mentioned in the report. The longer this interval is, the better for small businesses because they get a longer period to do their planning. Lowest rates are more likely to be offered by foreign banks, while small domestic banks usually have the highest. A prepayment penalty is a fee that lenders charge if you choose to repay the loan earlier than the agreed upon scheduled repayment time.

Bank of China Posts First-Half Profit of $7.65 Billion, Will Skip Dividend

Bank of China Posts First-Half Profit of $7.65 Billion, Will Skip Dividend
Bank of China Ltd. , the nation’s third-largest lender by market value, said first-half profit gained 27 percent, aided by rising demand for loans and financial services.

Read more on Bloomberg

Dean Kirkland – Fed Focusing on Real-Estate Recession as FOMC Meets

Dean Kirkland
Aug. 10 (Bloomberg) — The collapse in commercial real estate is preventing Federal Reserve Chairman Ben S. Bernanke from declaring the economy and financial markets are healed.

Property values have fallen 35 percent since October 2007, according to Moody’s Investors Service. That’s making it tough for owners to refinance almost $165 billion of mortgages for skyscrapers, shopping malls and hotels this year, pressuring companies such as Maguire Properties Inc., the largest office landlord in downtown Los Angeles, to put buildings up for sale.

The industry is likely to be high on the agenda when Bernanke and his colleagues sit down in Washington tomorrow for the Federal Open Market Committee meeting on monetary policy. Lawmakers including Barney Frank and Carolyn Maloney are pushing the central bank to extend an aid program designed to restore the flow of credit.

If nonresidential real estate remains in the doldrums, the Fed may be forced to leave emergency-lending programs in place and keep its benchmark interest rate close to zero for longer than some investors expect, given positive signs elsewhere in the economy.

Commercial property is “certainly going to be a significant drag” on growth, said Dean Maki, a former Fed researcher who is now chief U.S. economist in New York at Barclays Capital Inc., the investment-banking division of London-based Barclays Plc. “The bigger risk from it would be if it causes unexpected losses to financial firms that lead to another financial crisis.”

‘Close Attention’

The Fed is “paying very close attention,” Bernanke, 55, told the Senate Banking Committee on July 22, the second of two days of semiannual monetary-policy testimony before the House and Senate. “As the recession’s gotten worse in the last six months or so, we’re seeing increased vacancy, declining rents, falling prices, and so, more pressure on commercial real estate.”

The pressure may be easing in other areas of the economy. Gross domestic product shrank at a better-than-forecast 1 percent annual pace in the second quarter after a 6.4 percent drop the prior three months, and residential housing starts rose unexpectedly by 3.6 percent in June as construction of single- family dwellings jumped by the most since 2004, according to data from the Commerce Department.

Employers cut fewer workers than anticipated last month as the jobless rate fell to 9.4 percent from 9.5 percent in June — the first decline since April 2008, based on Labor Department figures.

‘Danger Zone’

Amid such glimmers of improvement, commercial real estate is a “particular danger zone,” said Janet Yellen, president of the Federal Reserve Bank of San Francisco, in a July 28 speech in Coeur d’Alene, Idaho. The market may be “under stress for some considerable period of time,” William Dudley, chief of the New York Fed bank, said the following day in New York.

Nonresidential construction may decline as much as 9 percent this year and another 5 percent in 2010, predicts Kenneth Simonson, chief economist at Associated General Contractors of America, an Arlington, Virginia, trade group whose members include Essen, Germany-based Hochtief AG’s Turner Construction Co. in New York, one of the largest U.S. builders. In the second quarter, it accounted for 3.6 percent, or $509 billion, of U.S. gross domestic product on an annual basis, down from 4.3 percent in the final three months of 2008.

A dozen lawmakers questioned Bernanke on the topic during his July testimony. Some asked about extending the Term Asset- Backed Securities Loan Facility, the emergency program the Fed began in March to restart the market for securities backed by auto, credit-card and education loans. The central bank expanded the facility in June to cover as much as $100 billion in loans to support commercial mortgage-backed securities.

One-Year Extension

Forty-one House members — including Frank, 69, a Massachusetts Democrat who chairs the Financial Services Committee, and Maloney, 61, a New York Democrat who heads the Joint Economic Committee — signed a July 31 letter seeking a one-year extension through December 2010 and asking for a decision by mid-August.

Fed policy makers will prolong the program if they judge financial markets are still “some distance from normal operation,” Bernanke said during his July 22 testimony. “We will certainly be monitoring the situation.”

The Fed likely will change the end date — just not right away, said former central-bank Governor Lyle Gramley.

Market Developments

“They’re probably going to want to wait a while to see how markets develop,” said Gramley, 82, now senior economic adviser with Soleil Securities Corp., a New York-based investment- research firm.

A six-month continuance is more likely than the one year industry officials want, said former Fed Governor Laurence Meyer, Washington-based vice chairman with consultant Macroeconomic Advisers LLC of St. Louis.

That would still be useful and “provide more of a runway” for the TALF to be effective, said Jeffrey DeBoer, president of the Real Estate Roundtable, a Washington group representing 16 trade associations and property owners including New York-based Vornado Realty Trust, the third-largest U.S. real-estate- investment trust by market value.

Any sales of mortgage-backed bonds would be the first new issues in the $700 billion U.S. market for commercial-mortgage- backed securities since it was shut down by the credit freeze in 2008.

About $3 billion are in the pipeline, and the success of these sales may foster as much as $25 billion in total deals in the next six months, said Kenneth Rosen, who runs a $310 million hedge fund in real-estate securities and heads the University of California’s Fisher Center for Real Estate and Urban Economics in Berkeley.

Signs of Improvement

The market is showing some signs of life: The Bloomberg REIT Office Property Index of 14 companies, while down 56 percent from its February 2007 peak, has gained 41 percent in the past six months. Also, the yield gap, or spread, on top- ranked commercial mortgage-backed bonds relative to U.S. Treasuries is about 4.49 percentage points compared with 8 percentage points at the start of May, according to Barclays data.

The Fed’s efforts to revive credit may be overpowered by continuing job losses, even as the pace of those losses slows. U.S. employers eliminated 247,000 workers from payrolls last month, according to an Aug. 7 Labor Department report, bringing the cumulative reduction to about 6.7 million since the start in December 2007 of the worst contraction since the Great Depression.

‘Negative Fundamental’

“Demand for commercial space comes from employment and the income generated by that employment,” said University of Pennsylvania Professor Joseph Gyourko, director of the Wharton School’s Samuel Zell and Robert Lurie Real Estate Center in Philadelphia. Mounting job losses are a “really significant negative fundamental,” signaling that “conditions are going to be tough for the industry for a while,” he said.

That may spill over into mounting losses at some banks. Forty-seven percent of loans at the 7,000-plus smaller U.S. lenders are in commercial real estate, compared with 17 percent for the biggest banks, according to New York-based Goldman Sachs Group Inc.

Regions Financial Corp., the Birmingham, Alabama, lender that accepted $3.5 billion in U.S. rescue funds, had $36.9 billion in nonresidential real-estate and construction loans at the end of the second quarter, 38 percent of its overall total. Regions posted a net loss for the period of $188 million compared with a profit of $206.3 million a year earlier as more developers and home builders fell behind on payments.

Third Straight Loss

Salt Lake City-based Zions Bancorporation, which operates in 10 Western states, reported its third straight quarterly loss July 20 on a surge in commercial-property defaults. Thirty-five percent of its loans for the period were in nonresidential real estate and construction, and its provision for loan losses rose to $762.7 million from $297.6 million in the first quarter.

One developer based in U.S. Representative Walt Minnick’s district is in a bind because a lower appraisal means he can’t renew the full amount of a $10 million, three-year loan he took out for a recent project, the first-term Democrat from Idaho said in an interview last week. The person may be forced into bankruptcy, said Minnick, 66, without identifying the developer.

“That is a microcosm of what is happening to commercial property” everywhere, he said. “It’s the next shoe to drop.”

Relinquish Control

Maguire bought 24 properties and 11 development sites for $2.88 billion in 2007 from New York-based Blackstone Group LP, the world’s largest private-equity company. Later that year, credit markets froze, blocking the Los Angeles-based company’s efforts to refinance its mortgages. Now Maguire may relinquish control of seven Southern California buildings with $1.06 billion of debt, the company said today, adding it’s not planning on filing for bankruptcy.

New York-based Brookfield Properties Corp. faces a $1.8 billion debt maturity in October 2011 arising from the 2006 purchase of Trizec Properties Inc., which made it the second- biggest owner of U.S. office buildings by square footage. Brookfield has said it expects to refinance some of its obligations and sell buildings to cover the rest.

Commercial real estate remains “an important downside risk,” said Gramley, a Fed governor from 1980 to 1985. “I don’t think it’s going to be a blockbuster negative, but it’s one additional reason why this recovery is going to be of modest dimensions.”

To contact the reporter on this story: Scott Lanman in Washington at slanman@bloomberg.net.

Prime Rate and Why It Is Important

Also called the prime loan rate, this is a percentage of interest charged in the nation’s banking system. The rate is used by various lending institutions to mark the minimum pricing for a range of short-term loan packages. This includes retail banks and credit unions. The rate is made out to be consistent in order to offer an unrivalled competitiveness in the market as well as function profitably. Consistency also gives the consumer’s a regular platform from which to do comparison for the products.

Investors and other experts refer to the U.S. prime rate any time they talk about the W.S.J prime rate or prefix the same with national, Fed or the U.S. The rate is therefore quoted as listed in the W.S.J print edition for the Eastern sea board. The national prime rate is a harmonized value and although one may be referring to the value as that of a specific state, it is actually this one and the same value.

Originally determination of the prime rate rallied 30 of the nation’s banks, albeit the large ones. The rate was updated once 23 of these had altered their interest rates. The Journal would proceed and publish a new value in light of the alterations. Since 2008 only 10 banks have been committed to the polling and the prime rate is now based on the determination of this value. With the alteration of the rate of at least 7 of this, the value is updated.

Consumer loans as well as commercial products are pitted against the prime rate as the base of determination of their value by the lenders. This is where the margin is added in light of the risk that the loan is going to cover. Other products like the Certificate of Deposit are priced by looking up the prime loan rate since they are dependent on time as a variable.

This rate, however important it is, only serves as an index but is not to be strictly adhered to as it is not essentially a law. Therefore it is quite normal to find an interest rate that is below the prime rate. These loans are nonetheless offered as incentive to customers with a certain qualification as a way of generating business. With good collateral the customer is also very well entitled to such a loan. This is the case in equity loans and auto loans among others.

The prime rate value is an invariable mark from which the base interest rate for the American financial market is referenced. This benchmark also known as the Federal Funds Target Rate is set by the Federal Reserve whose individual members form a committee also known as the FOMC.

This group meets after every six weeks and votes on the alterations to the Fed Funds Target Rate. This rate does in fact influence the WSJ prime rate and once voted upon the market feels its real time effects.  The U.S prime rate has been worked out by adding the numeral 3 to the announced FFTR since Q2 1994.

The committee has the responsibility to keep inflation in check and maintain stability even as the economy makes its way through the growth curve. Thus they are the people responsible for ensuring that the U.S has a sustainable job market.

Student, auto and equity loans are all set depending on the national prime rate, thus there is always a likelihood of change in any of these products rates with the alteration of the overall rate. Changes in this rate also determine any variable-rate on our credit accounts and any adjustable-rate mortgages that you may have.