J Mater Cycles Waste Manag (2014) 16:108114

DOI 10.1007/s10163-013-0148-3

ORIGINAL ARTICLE

Costbenefit analysis of waste reduction in developing countries:

a simulation
Ricardo Diaz Suehiro Otoma

Received: 6 February 2012 / Accepted: 28 May 2013 / Published online: 20 June 2013
Springer Japan 2013

Abstract Waste reduction activities such as recycling,

composting, and pig feeding in Peru and other developing
countries are mainly informal but already reduce about
15 % of waste generation. Although much research on
informal recycling in Latin America recommends partnership with current waste pickers, there is a lack of
methodologies on how to systematize these activities. This
paper proposes a mathematical model that calculates yields
and costs of separate waste collection, and analyzes and
measures the effect of improvements such as source separation by residents and location of recycling and composting centers. The analysis finds that the largest effect
comes from source separation. In this case, separate collection yield can be increased from the current 30 kg/waste
picker/day to about 200 kg/waste picker/day, and the cost
can be reduced from 110 US$/t to 20 US$/t. These changes
affect the profitability of the recycling and composting
business. The environmental and social effects of these
improvements are also discussed.
Keywords Waste reduction  Collection  Recycling 
Composting

R. Diaz (&)
Graduate School of International Environmental Engineering,
University of Kitakyushu, Yahata-nishi ku,
Honjo-higashi 2-2-9-301, Kitakyushu 807-0815, Japan
e-mail: rdiazb@yahoo.com
S. Otoma
Graduate School of International Environmental Engineering,
University of Kitakyushu, 1-1 Hibikino, Rm#205,
Wakamatsu ku, Kitakyushu 808-0135, Japan
e-mail: otoma@kitakyu-u.ac.jp

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Introduction
According to the Peruvian Ministry of the Environment
(MINAM) [1], the generation of municipal solid waste has
increased considerably. The total amount per capita
changed from 0.70 to 1.08 kg/inhabitant/day between
2001 and 2007, and the trend is still a growth of about
4 % per year in many cities. Although phasing out
dumpsites is a priority in national policy, it becomes
increasingly difficult for local governments to find land
for new landfills while current dumpsites are near to
collapse.
This situation increases the importance of waste
reduction activities within solid waste management
strategies, although most of these activities are informal.
Current municipal programs on recycling and composting represent only 0.48 and 0.27 % of national waste
generation, respectively. On the other hand, informal
recycling (waste pickers, itinerant buyers, and others)
produces a reduction of 12.9 %, and informal pig feeding
contributes with 2.6 %. Recyclable materials (paper,
glass, plastic, and metals) are picked along the streets,
just before waste is collected, and from open dumps.
Food waste for pig feeding is collected from restaurants
and hotels [2].
Current informal activities, if improved and promoted,
can become the basis for the introduction of larger and
more sustainable waste reduction systems. Consequently,
this paper contributes to the literature on solid waste
management in two senses: one by proposing a methodology to simulate and analyze separate collection, and the
second by presenting a more complete picture of the
recycling and composting business, identifying cooperation
risks that affect collection.

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Literature review
The literature on informal recycling in developing countries has mainly focused on qualitative aspects such as
collective action, partnerships, and stakeholders involvement [35]. In Latin American countries such as Peru [6]
and Colombia [7], scholars describe the current situation of
waste pickers and their struggles to be recognized and
included within urban solid waste management systems.
More quantitative data come from Gomes and Nobrega
[8], who present the costbenefit analysis of a separate
collection project in Brazil, Yepes et al. [9], who analyze
the times incurred in the daily activities of waste picking,
and the MINAM [2], which presents a selection of municipal recycling programs with formalization of waste
pickers in Peru. While all these studies identify the elimination of scavenging and digging in waste bags as the
major improvements, none of them estimates the effects on
yields and costs (see Table 1).
Regarding the estimation of costs, Ishikawa [11] presents the Grid City Model, which is designed for the
context of recycling operations in Japanese cities. There,
recyclables are taken by residents themselves to designed
collection points. In this paper, we develop a model where
there are no such collection points: recyclables are collected door-to-door by informal collectors using manpushed vehicles (barrows or tricycles). However, these two
models can be utilized in combination when there are two
phases of collection: the first phase, when collectors take
recyclables from residents to intermediate recycling centers
or waste shops, which corresponds to our case study; and
the second phase, when recyclables are transported from
recycling centers to industries, where Ishikawas model is

applicable. In Peruvian cities, recyclables are initially taken

to intermediate centers from where they are sold to formal
and informal recycling companies, while other part is
exported [2].

Data and methodology

Waste generation and composition
Waste distribution along the streets in residential areas of
Peruvian cities is about 0.62 t/km [12, 13] and has a
composition of 18 % recyclables (paper, glass, plastic,
and metals), 60 % organic waste, and 22 % non-recoverable waste [2]. Our case study is the district of Chiclayo,
in the north of Peru, that, in the year 2010, had a population of 360,330 inhabitants, with a density of 7,330
inhabitants/km2 and waste generation per capita of
0.62 kg/capita/day. The area of the district is 50.4 km2
and the total length of streets is 371 km, giving a ratio of
7.36 km of streets/km2.
In this simulation, we consider that waste is uniformly
distributed along the streets with a lineal distribution of
0.12 t/km for recyclables and 0.25 t/km for organic waste
that can be recovered.
We use the parameter of lineal distribution of waste (t/
km) because our case study is based on curbside (door-todoor) collection; consequently, operation variables (times,
yields, and costs) can be calculated with this parameter
directly. The alternative parameter of waste generation per
square km (t/km2) is useful when collection is done
through collection points (each of them covering a defined
area), such as in the case of Japanese cities.

Table 1 Research on waste picking in Latin American cities

Research

City

Source
separation

kg/collector/
day

US$/ta

Vehicle

Income/
collector/
day

Suggestions for improvement

Gomes and
Nobrega [8]

Joao Pessoa
(pilot
project),
Brazil
Medellin,
Colombia

Yes

75

70

Barrows

USD$
3.0

(1) Organization of recycling centers,

(2) reduction of middle men,
(3) implementation of pilot projects

No

6070

Bags,
barrows,
tricycles

USD$
26

(1) Reduction of digging and scavenging,

(2) agreements with neighborhoods and
companies, (3) improvement of vehicles

MINAM [2],
Ruz Ros et al.
[6]

Average
(Peru)

No

20

120

Bags,
barrows,
tricycles

USD$
2.5

(1) Source separation, (2) agreements with

neighborhoods and companies

MINAM [2]

Pilot
municipal
projects
(Peru)

Yes

40560

80120

Tricycles

USD$
1.56

(1) Implementation of pilot projects in other

Peruvian cities

Yepes et al. [9],

University of
Antioquia [10]

Price of recyclables paid to waste pickers

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Fig. 1 Diagram of movements

of separate waste collection.
One round trip consists of
traveling between collection
zones and recycling centers or
depots

Separate collection

number of vehicles, and collection cost are estimated using

the following equations:

Our model analyzes curbside separate collection. A diagram showing the operations of separate collection is
presented in Fig. 1, where B is the travel distance in a
collection zone and D0 is the distance between the recycling or composting center and that collection zone.

CColl K P NV  K  NV  P

Estimation of yields
We consider that there are two main speeds during separate collection. The first is speed to transit along the
streets and is given by the speed of smooth curbside
collection (approximately 3 km/h). Additionally, there is
the speed to load up the vehicle, which is given by the
activities of scavenging, digging in the bags, and loading
the waste. Yields are then estimated considering how
much waste a waste picker can gather in a period of
8.5 h.
Yepes et al. [9] measured that a waste picker takes 6 out
of 8.2 h in gathering 70 kg of recyclables. Then, the unitary time to load up his/her barrow [tu* in Eq. (3)] is 6 h/
70 kg or 86 h/t. In Peru, where the average yield is only
20 kg/waste picker/day, the time for loading up is
approximately 300 h/t.
Another factor contributing to yield is the percentage of
waste bags that are available at the moment of separate
collection. We label this parameter as residents
participation.

Time:1r

2
3

Time:1r  Ts
4

Lz
Wz
B
W
, in t/km, is the distribution of waste along
Wz
Lz
the streets in the collection zone Z
5


Wz
W

Ceiling

N Ceiling

Ts
Time:1r


N
NV Ceiling
Nmax

Nmax

6

7
8

where Ceiling (x) denotes the minimum integer which is

not smaller than x and:
CColl
K
P
K*
P*

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B 2D
tu tL
v

tu W  tu

Estimation of costs
Collection cost is estimated considering man-pushed
vehicles (barrows or 1 m3 tricycles), with collectors (waste
pickers) earning 3 US$/day (in Peru, the minimum wage is
about 6.5 US$/day) and working 8.5 h a day. There is only
one collector per vehicle. Variables such as round trips,

NV
Time.1r
B
D0
Ts

Cost of separate collection (US$/day)

Capital cost (US$/day)
Personnel cost (US$/day)
Capital cost of an individual vehicle (1 US$/
vehicle/day)
Daily income of collectors (3 US$/collector/
day)
Number of vehicles
Time spent in one round trip (h/trip)
Travel distance in a collection zone (km/trip)
Distance to recycling/composting center (km/
trip)
Effective operation time per day (h/day)

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v
tu
tu*
tL
Wz
Lz
W
N
Nmax

111

Average speed to transit along the street (km/h)

Time spent in loading up the vehicle (h/trip)
Unitary time to load up the vehicle (h/t)
Time spent at the recycling center (h/trip)
Amount of waste in collection zone Z (t/day)
Total length in collection zone Z (km)
Collected waste (t/trip); the capacity of a vehicle
is 200 kg
Number of round trips (trips/day)
Maximum number of round trips per vehicle
(trips/vehicle/day)

Composting and recycling plants

The costs of composting plants vary according to the
composting method, size, local economy, climate, and
other factors. Plants with capacity on the order of 1 t/day
have investment and operation costs ranging from 10 to 40
US$/t [1417]. Analogously, the costs of recycling vary
with the level of mechanization and size. The average cost
for recycling plants in this study is 15 US$/t [16].

Results
Separate collection: simulation cases

Separate collection of organic waste

We simulate four cases: (a) no cooperation, (b) some

cooperation, and (c.1), (c.2) good cooperation. The level of
cooperation refers to cooperation among waste pickers,
cooperation with residents (through source separation and
collection schedule), and cooperation with the municipality
(through the location of recycling centers). Table 2 presents the main parameters considered in each case.
Separate collection of recyclables
Equations (1) to (8) are applied to estimate yields and costs
in every case. Figures 2 and 3 show the results of the
simulation.
We notice that yields increase (and costs decrease) due
to: (i) increase of residents participation (availability of
waste bags) and (ii) improvement of unitary time to load up
the vehicle (tu*), which changes from 170 to 30 h/t.
Table 2 Parameters of separate
collection

Case

Additionally, there is an improvement due to shorter distances to the recycling center, but considering that collectors make only one round trip per day, this improvement is
marginal.
Finally, when the collection frequency is changed to
once per week, the distribution of waste along the streets (t/
km) increases; however, the time to load up the vehicle still
predominates over transit and preparation times and there
is almost no variation in yields and costs.
At a unitary loading time of 30 h/t, collectors use up 6 h
in loading up a vehicle with a 200-kg capacity. This means
that they can only make one round trip per day (for a
time constraint Ts of 8.5 h/day) and explains the fact that
costs cannot be lower than 20 US$/t, even for weekly
collection.
In recycling programs in Peruvian cities, digging in the
bags and scavenging are eliminated, but under the new
system, collectors have to knock on the doors of residents,
receive bags with recyclables, verify them, and even weigh
them. As a consequence, the total loading time remains
lengthy. We estimate that, if collectors were able to make
two round trips per day, the average collection cost would
decrease to 10 US$/t. However, this situation would be
possible only if residents put recyclables in designated
places or along the streets in advance.

Figures 4 and 5 show the results of the simulation. The

yields and costs are similar to the collection of recyclables
because, as already pointed out, the time to load up the
vehicle predominates.
Costbenefit analysis of recycling and composting
Table 3 presents a summarized costbenefit analysis of the
recycling and composting business. In both cases, net
income increases with residents participation and
improvement of the time to load up the vehicle. The No
cooperation case refers to 50 % of residents participation
and no source separation (170 h/t of unitary loading up
time), while Good cooperation represents 80 % of residents participation and source separation (30 h/t of unitary
loading up time).

Source
separation

Distance to recycling/
composting center

Frequency

Unitary time to load

up the vehicle (h/t)

(a) No cooperation

No

2 km

Every day

170

(b) Some cooperation

Some

2 km

Every day

100

(c) Good cooperation

Yes

(c.1) 2 km

Every day

30

(c.2) 1 km

Every day

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Fig. 2 Separate collection of

recyclable waste: yields (kg/
collector/day). Waste collected
increases with separation at
source (cases c.1 and c.2), waste
bags available according to a
collection schedule, and shorter
distance to the recycling center
(case c.2)

Fig. 3 Separate collection of

recyclable waste: costs (US$/t).
Costs decrease with separation
at source (cases c.1 and c.2),
waste bags available according
to a collection schedule, and
shorter distance to the recycling
center (case c.2)

Considering that recyclables have a higher market price,

the recycling business appears attractive, even for low
levels of cooperation. However, when there is no cooperation, waste pickers must reduce their income and recycling plants must be rudimentary in order to match market
prices. In the case of composting, two reasons contribute to
negative net income: (i) conversion factor of organic waste
to compost and (ii) lower market price of compost.
Finally, Table 3 shows the number of collectors (waste
pickers) that participate in separate collection in each case
for a middle-sized city in Peru. As a consequence of the
increase in productivity, some collectors will have to be
transferred to other occupations, for instance, to operating
recycling and composting plants. The next section discusses these results in detail.

123

Discussion
The simulation and costbenefit analysis presented in this
paper indicate that separate collection costs in residential
areas can be as large as plant costs and, on the whole, the
level of cooperation among waste pickers, residents, and
the municipality affect business profitability.
Additionally, we observe that recycling has a much
greater margin than composting. With good cooperation,
the recycling business is very attractive and the incomes of
collectors (waste pickers) can improve and even reach the
minimum wage (complete formalization).
In the case of composting, the net income is always
negative (net cost), and only when there is good cooperation, this net cost can be lower than the alternative

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Fig. 4 Separate collection of

organic waste: yields (kg/
collector/day). Waste collected
increases with separation at
source (cases c.1 and c.2), waste
bags available according to a
collection schedule, and shorter
distance to the recycling center
(case c.2)

Fig. 5 Separate collection of

organic waste: costs (US$/t).
Costs decrease with separation
at source (cases c.1 and c.2),
waste bags available according
to a collection schedule, and
shorter distance to the recycling
center (case c.2)

municipal cost of collection, transportation, and landfilling

of about 30 US$/t [15, 16]. Therefore, one option to reduce
cooperation risks and overall costs of composting is to
locate composting plants next to city markets, parks, or
clusters of restaurants and hotels, and, once there, serve
nearby residential areas as an additional role. This is the
strategy adopted in Surabaya, Indonesia, where, in addition,
baskets are provided to residents for composting at home [14].
Another key measure to the profitability of composting is to
give compost equivalent tax incentives or subsidies compared
to those given to conventional fertilizers.
Reducing the distance to recycling and composting
centers adds a marginal improvement to yields and costs.
However, these centers have two important roles:

(i) receiving a surplus of waste pickers that results from

productivity improvement in collection and (ii) contributing to create a more transparent market for recyclables and
compost, since they can provide better information on the
available quantities and prices.

Conclusions
1.

Research on composting and recycling almost neglects

separate collection and focuses on composting and
recycling plants. However, the simulation presented in
this paper shows that the costs of separate collection in
residential areas with low levels of cooperation can be

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J Mater Cycles Waste Manag (2014) 16:108114

Table 3 Costbenefit analysis of recycling and composting

Parameters

Recycling

Composting

Case

No cooperation

Good cooperation

No cooperation

Good cooperation

t/km/day

0.06

0.10

0.13

0.20

Discarded waste (to landfill)

10 %

10 %

Conversion factor (waste-to-material)

100 %

25 %

Parameters per ton that enters into the plant

Collection cost (US$/t)

115.0

22.2

110.0

21.0

Plant cost (US$/t)

15.0

15.0

20.0

20.0

Discarded waste to landfill (US$/t)

Total cost (US$/t)

2.48
132.5

2.48
39.7

2.48
132.5

2.48
43.5

Market price (US$/t)

130.0

87.2

Expected income (US$/t)

117.0

19.6

Net expected income

-15.5

77.3

-112.9

Yield (kg/collector/day)

36

204.9

36.9

214.0

Number of collectors (waste pickers)a

630

178

1,240

342

-23.9

Case study is the district of Chiclayo in Peru: 46 t/day of recyclables and 92 t/day of organic waste that can be recovered [12, 13]

2.

3.

much larger than the costs at recycling and composting

plants.
Waste reduction in developing countries coexists with
poverty and unemployment. If some waste pickers are
formalized, new waste pickers will appear. Additionally, if recyclables are separated and put along the
streets, they will probably disappear. Therefore, cooperation with residents must be achieved in terms of
quality of separation and also collection schedules.
Intensive educational campaigns, door-to-door explanations, and some economic incentives are then
needed in order to engage residents in these activities,
in which municipalities must play also an active role.
Better analytical methodologies will contribute to
systematize waste reduction activities and to design
better policy. For instance, subsidies or grants can be
given to separate collection and waste reduction
projects, provided that they demonstrate sustainability
and good strategies to manage cooperation and other
risks of the business. In this way, private entrepreneurship is stimulated as part of a comprehensive solid
waste management strategy.

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