How the world's trash problem presents profit opportunity
The skyrocketing growth of solid municipal waste worldwide may have a silver lining: new opportunities for waste management businesses.
The volume of municipal solid waste is projected to double by 2025, growing from 1.3 billion tons a year to 2.6 billion tons, according to research from the Worldwatch Institute.
Most of that growth is happening in developing countries, said study author Gary Gardner.
"The upward trend is at the global level," Gardner said. "Solid waste is the kind of problem that in the past people didn't want to pay attention to. Now people are starting to pay attention to it because it's become a very big deal."
The growth of municipal solid waste can be traced to rising incomes and people moving out of rural areas and into crowded cities, he said.
"There's been a huge explosion in growth of cities and income," Gardner said. "Prosperity is coming to some countries and with that comes consumption and urban waste."
While the rapid expansion of municipal solid waste opens new business opportunities for solid waste companies, capitalizing on them is no cakewalk.
James Thompson, Jr, president of Waste Business Journal, said U.S.-based waste businesses interested in working in developing countries must deal with everything from different regulatory schemes to bad infrastructure.
Many developed countries also have waste management companies that are at least partially owned or operated by local governments.
"It becomes complicated when you have political restraints on how you do business," said Thompson, adding that despite the challenges, the payoff could be big.
"The benefits could be many-fold, not the least of which is the rapidly growing need for these services and the potential for growth, especially compared to a relatively stagnant U.S. market," he said.
Companies could also potentially receive help from international organizations, Thompson said.
"Companies could get funding from the World Bank or the IMF especially since proper waste management involves protection of human health and the environment," he said.
Currently, many developing countries are hiring engineers or joining in partnership with established waste companies from developed nations.
How other businesses can benefit
Businesses not affiliated with waste handling can also benefit from the growth of solid municipal waste.
"There are business opportunities in a number of areas," Gardner said. "Looking at the production end, for example, companies can make goods that are easier to recycle."
For example, he said, business can put bar codes on big ticket items, like cars, that can be used to track the carbon footprint of a product, and waste-to-energy systems can help capture additional solid waste.
"I'm not super keen on them, they are only a little bit better than landfills, but at least you get some re-use," he said.
Among developing countries, China is especially active in trying to combat its solid waste problem, according to Gardner.
The writing on the Chinese wall
"They can read the writing on the wall," he said. "They have 1.5 billion people whose wages are rising and they are facing a tidal wave of waste, so they're really trying to make sure they have a handle on the waste issue."
One example of that effort is the partnership between Waste Management (NYSE: WM), and Shanghai Chengtou Holding. In 2010 the partnership announced a plan to provide waste-to-energy services throughout China.
Other developing countries are very much concerned about municipal solid waste, Gardner said. But money is a hindrance to those countries tackling the problem. "Not much is being done, but it's because of lack of funds and not because of lack of interest," he said.
Experts say new technology is emerging that can help reduce the amount of solid waste, including plasma gasification, which converts organic waste into a fuel gas. Pyrolysis, and anaerobic digestion are also increasingly being used, primarily in Europe.
Roughly a quarter of the world's garbage is diverted to recycling, composting, or digestion, the study shows.
Although the United States leads the world in municipal solid waste output at some 621,000 tons per day, output has actually leveled off, or declined in some areas.
The study defined solid waste as organic material, paper, plastic, glass, metals, and other refuse collected by municipal authorities.
Brazil, China, India, and Mexico are all in the top list of municipal solid waste generators. Gardner said these developing countries are increasingly spending money trying to tackle the problem, Gardner said.
The study excluded sewage, industrial waste, or construction and demolition waste generated by cities. Rural waste was also not counted.
Image of landfill by kanvag courtesy of Shutterstock