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Transitioning to a Circular Economy


Municipal solid waste—waste generated mainly from residential and commercial sources—has emerged as one of the most pressing challenges across the world, with growing public health, environmental, social, and economic costs. By 2050, fast-growing large- and medium-size cities will nearly double the waste generation in lower-middle-income countries and upper-middle-income countries. Low-income countries (LICs), where most waste is disposed of in open dumps, are on a trajectory to triple their municipal solid waste generation by 2050. Historically, the causes and effects of municipal solid waste were considered local or regional. However, with increasing volumes and changing waste composition, municipal solid waste has become a global challenge.

Municipal solid waste management (MSWM) is at the core of Sustainable Development Goal (SDG) 11 for sustainable cities and SDG 12 for reducing waste (among other SDGs) and of efforts to achieve green, resilient, and inclusive development. SDG 11 for sustainable cities addresses it directly by targeting service delivery for waste management, and SDG 12 for reducing waste generation addresses it through prevention, reduction, recycling, and reuse. Other SDGs address waste to energy, informal workers’ welfare and employment, climate action, and marine plastic pollution.

The waste hierarchy and the circular economy are sustainable alternatives to the traditional linear (take-make-dispose) economic model. The traditional economic model approaches the waste value chain as a linear sequence in which resources are extracted from the environment (take), manufactured into goods (make), and discarded when they are no longer needed or wanted (dispose). The waste hierarchy approach lays out a more nuanced but still linear set of disposal options and establishes a ranking among them from most to least preferable. Waste prevention and reuse are the most preferred options, followed by recycling, then recovery (for example, composting and waste to energy); waste disposal through landfills should be the very last resort. The circular economy approach closes the loop in relation to extraction, manufacturing, and disposal by advocating for designing products to reduce waste, using products and materials for as long as possible, and recycling materials from end-of-life products back into the economy.

An integrated approach is required to help clients move in the direction of the waste hierarchy and a circular economy. An integrated approach avoids focusing only on disposal. Instead, it includes attention to all stages of the waste hierarchy and circular economy: designing for reusability, minimizing consumption, increasing reuse, repurposing end-of-life products, encouraging recycling, maximizing recovery, and practicing sanitary disposal. It also includes consideration of the interlinked areas of policies, institutions, capacity, and planning in central, provincial, and local governments; improved infrastructure, access, and service delivery; cost recovery for ensuring financial sustainability; awareness and behavior change; the integration of the private sector and informal actors, including waste pickers; and gender considerations.

The costs of inaction to improve solid waste management are unsustainable. At the local level, inadequate MSWM reduces quality of life through environmental, social, and health consequences that affect impoverished people disproportionately. Globally, it contributes to climate change and growing plastic pollution. Solid waste management generated an estimated 1.6 billion metric tons of carbon dioxide–equivalent greenhouse gas emissions in 2016, about 5 percent of global emissions (Kaza et al. 2018). Damages caused by plastics to the marine environment are estimated at $13 billion per year, and more than $75 billion when considering the total natural capital cost of plastics used in consumer goods. Local effects are harder to quantify, but one study estimated that the environmental costs of MSWM in a single city (Shanghai, China) amounted to $171 million in 2018 alone (Liu et al. 2021).

Integrated and improved MSWM would lead to global and local environmental, health, social, and economic benefits. Globally, integrated and improved MSWM would reduce marine plastic pollution and greenhouse gas emissions. Locally, it would reduce soil and water contamination and improve air quality, improving public health. It would also enhance the welfare and livelihood security of informal waste pickers—the millions of people worldwide who make a living by collecting, recycling, and selling reusable waste. Furthermore, it would create jobs in the sector, improve land values, and have an enabling effect on other industries (such as tourism).

This evaluation assesses how well the World Bank Group has supported client countries to manage municipal solid waste using an integrated approach to advance development and sustainability goals. It covers all World Bank and International Finance Corporation (IFC) MSWM-related activities during fiscal years (FY)10–20. It answers three main evaluation questions:

  • How relevant is the Bank Group’s approach and engagement in meeting client country needs, considering the latest evidence and thinking on MSWM practices and country context and readiness?
  • How effective have Bank Group engagements been in delivering improved MSWM for clients?
  • How coherent has Bank Group engagement been in collaboration among the World Bank, IFC, and MIGA, and collaboration and partnerships with other actors to support better outcomes for client needs in MSWM?

Relevance and Coherence

The Bank Group has increasingly recognized and advocated for waste hierarchy and circular economy approaches for MSWM. The newly launched World Bank Group Climate Change Action Plan 2021–2025, for example, sets out a goal of pursuing integrated waste management and circular economy approaches to help countries and cities advance climate, development, and broader sustainability goals.

Although the Bank Group lends less for MSWM than for any other urban service, it is by far the leader among multilateral development banks in providing finance and knowledge on solid waste management. During FY10–20, the Bank Group provided about $3 billion to client countries for MSWM, one-tenth the amount it provided for water supply and sanitation. The Inter-American Development Bank is the next leading multilateral development bank in this area, with $708 million lent between 2005 and 2020. More recent data (from the Asian Development Bank, the African Development Bank, the European Bank for Reconstruction and Development, and the Inter-American Development Bank) show that other multilateral banks’ lending for MSWM during 2010–20 varied between 0.5 percent and 6.1 percent of their overall lending for all urban services. Regarding knowledge, the Bank Group produced two flagship reports on MSWM (What a Waste and What a Waste 2.0) and conducts technical certification courses on solid waste management for policy makers and MSWM professionals.

Bank Group support for MSWM does not consistently cover several elements that are essential for moving toward integrated waste management. Elements that are essential to integrated waste management include revising policies, planning for cost recovery, involving the private sector, incorporating behavioral factors, and considering waste pickers. The Bank Group often supports the provision of infrastructure and services that are expected to increase MSWM coverage and improve service delivery. However, more is needed to achieve an integrated approach. Sixty-five percent of relevant Country Partnership Frameworks discussed the need to update MSWM policy and regulations, but World Bank projects included these elements in only 22 percent of the countries. Although insufficient attention to cost recovery often undermines the delivery of MSWM services, just over one-third of country strategies and lending addressed this issue. More than half of Country Partnership Frameworks referred to the need for private sector participation in MSWM, but only 27 percent of countries include operations to incentivize it. Efforts to raise awareness and effect behavior change are critical for achieving inclusive and sustainable solid waste management, but there is a lack of analytical work addressing these issues, and they are addressed in less than half of the relevant country programs. Finally, even though informal waste pickers are critical to the MSWM sector’s functioning, very few Bank Group projects engaged with them beyond complying with do-no-harm safeguard provisions.

The Bank Group is doing little to address the growing waste management problem in LICs. Less than half of Systematic Country Diagnostics for LICs diagnose MSWM issues, despite the fast-growing municipal solid waste problem in these countries that the World Bank’s analytical work has highlighted. With two exceptions (Haiti and Rwanda), there is no reference to MSWM in IFC strategies or diagnostics in LICs. Between FY10 and FY20, LICs received less than 2 percent of World Bank lending for MSWM and no investments from IFC. Of the 122 instances of relevant World Bank analytical work, only 6 covered LICs. The key challenges limiting support in LICs include governments’ lack of awareness of the major problems caused by solid waste; lack of a clear strategy for the sector; and lack of appropriate policies, regulations, and institutional capacity. These conditions lead to widespread open dumping and people’s low willingness to pay for solid waste services, which further limits sustainable MSWM initiatives.

There has been limited Bank Group collaboration in support of MSWM. References to the complementary roles that the World Bank and IFC can play in a coherent approach for improved MSWM are absent from most Country Partnership Frameworks, IFC Country Private Sector Diagnostics, and IFC country strategies. MIGA has found it very difficult to enter the MSWM sector because of several constraints, mainly the lack of clear government counterparts, municipalities’ low creditworthiness, and municipal borrowing generally restricted to local currency, which MIGA is not suited to support.

The Bank Group could convene other developmental institutions to raise MSWM’s profile in client countries, given its leading global financial and knowledge role. Discussions with Asian Development Bank staff suggest that there is strong interest in observing the Bank Group’s course toward MSWM. International MSWM experts advising the evaluation see scope for the World Bank to expand its convening role, given its reach, experience, and solid waste management portfolio, which is the most diversified among any of the multilateral lending institutions. Presently, the Bank Group is playing a convening role in addressing marine plastic pollution through the PROBLUE initiative—an umbrella trust–funded program that supports the sustainable and integrated development of marine and coastal resources in healthy oceans—and advocates for improved MSWM under the World Bank Group Climate Change Action Plan 2021–2025.


World Bank support for basic municipal solid waste infrastructure and service delivery—the main Bank Group activity on municipal solid waste—has been generally effective. The leading activities in the World Bank’s MSWM lending support focus on infrastructure and service delivery. Within infrastructure, the emphasis has been on closing uncontrolled dumpsites and building large sanitary landfills, with less consideration for transfer stations and waste collection and separation. The Bank Group has carried out infrastructure activities as planned in most MSWM-related projects. In the evaluated portfolio, clients closed about 137 dumpsites, built 40 sanitary landfills, and constructed 112 transfer stations. Targets for access and service delivery have mostly been met. One example is Mozambique’s municipal support program, which extended waste collection services to 43 suburban neighborhoods covering about 900,000 residents, exceeding the target.

However, financial unsustainability limits the effectiveness of infrastructure and services projects. The effectiveness of the World Bank’s work on MSWM is undermined by relatively less attention to and low achievement of measures to recover costs and ensure the overall financial sustainability of MSWM operations. The World Bank addressed the issue of cost recovery and improved financial sustainability in 25 closed and evaluated projects, which yielded positive results in just 14 cases. Lessons can be learned from some LICs and lower-middle-income countries and economies (such as Mozambique, Vietnam, and West Bank and Gaza) that had positive experiences in which 70–90 percent or more of solid waste providers’ costs were recovered from user fees. However, several other countries had less success in meeting cost recovery targets, even at project completion.

Very few projects tracked the environmental, health, social, or economic outcomes of MSWM activities. Only 6–15 percent of projects in the portfolio set out to capture environmental, health, social, or economic outcomes linked to MSWM activities. Of those projects, many either did not report on outcomes or reported that the intended outcomes were not achieved because of delays or implementation challenges with the MSWM activities. Local governments and regulatory agencies are ultimately responsible for measuring these impact areas, and this measurement may require more specialized and expensive interventions than are provided currently.

MSWM can make significant contributions to countries’ environmental, social, and economic goals. Doing so depends on articulating and capturing higher-order impacts. Good practice examples in the MSWM portfolio show how investments in MSWM can contribute to reducing greenhouse gas emissions and pollution. For example, a project in Tunisia helped the client equip seven landfills with gas treatment systems, earning about $3.5 million from selling certified emission reduction. In China, one project provided new solid waste disposal capacity of about 2,000 tons per day, including the treatment of highly contaminating leachate at the landfill sites. Other examples show how focusing attention on job creation can enhance the economic security and working conditions for lower-income urban populations, including youth, and for those living in fragile and conflict-affected situations. In Côte d’Ivoire, for example, the Emergency Urban Infrastructure Emergency Recovery Loan (2008–14) provided 7,000 people with permanent jobs as waste collectors.

Factors of Effectiveness

Four factors have strong, often limiting, influences on the effectiveness of the Bank Group’s MSWM support. The four factors are (i) the nature of World Bank support in terms of continuity, coverage, and coherence; (ii) government commitment to ensuring the financial sustainability of municipal solid waste services; (iii) local governments’ accountability for providing adequate and sustainable services; and (iv) land availability and the phenomenon known as “not in my backyard,” or NIMBY (the generalized opposition of neighboring populations and local governments to siting landfills [or other infrastructure] within their jurisdictions).

Long-term, well-sequenced, and coherent engagement across the evaluation pillars improves MSWM. Extended, well-sequenced, and coherent country engagement that includes support for key policy reforms and investment has been effective in helping countries build an integrated approach to MSWM incrementally. Thus, improved MSWM is more likely to be achieved when MSWM is at the core of a project rather than included as a small project component. The evaluation found few examples of country engagements with MSWM at the core, mainly in upper-middle-income countries.

Governments’ inability to ensure sustainable financing is a constraint on providing adequate MSWM services. This inability can arise at any layer of government (national, provincial, or local), mainly because of lack of political commitment or competing demands for public financing. Several World Bank projects included components for ensuring the financial sustainability of MSWM services through arrangements for improved cost recovery via user fees or tariffs, sometimes supplemented by earmarked municipal revenues or budget transfers from provincial or central governments. In some cases, the expected results were not achieved at project completion. Even where favorable results were achieved, the improvements were often not sustained. IFC’s assistance depends on various elements, such as maturity of markets, sound legal and regulatory frameworks, and the creditworthiness of clients (such as municipalities and private companies). All those are generally lacking in LICs, especially for MSWM, and their absence makes financially sustainable private sector solutions particularly difficult to implement.

Local governments’ lack of accountability for providing adequate and sustainable MSWM services is also a constraint on effectiveness. Accountability for adequate and affordable MSWM services can be undermined by lack of transparency and vested interests in existing arrangements for service provision of solid waste collection and transport. Improved monitoring of MSWM services, including through internet and cell phone–based systems (that are becoming more readily available and affordable), and the involvement of beneficiaries and civil society can help put greater pressure on service providers and policy makers to improve service delivery and tackle wider constraints.

Finally, the ability to acquire land for solid waste infrastructure is a systematic constraint across the portfolio. The constraint is partially attributable to the not-in-my-backyard phenomenon. A lack of reliable land administration, inadequate urban planning, and poorly functioning land markets in rapidly urbanizing countries greatly complicate the consolidation of land parcels at a reasonable cost to enable siting large-scale public infrastructure such as landfills and transfer stations.


This evaluation identifies three areas in which the World Bank can enhance its relevance and effectiveness when supporting countries with MSWM.

Recommendation 1. To achieve more sustainable and scalable outcomes in municipal waste management, Bank Group technical and financial support to clients should give clear priority to the adoption and implementation of waste hierarchy practices, in line with client needs and capabilities for MSWM. To achieve this, the Bank Group’s support could build on proven good practice from its own experience in addressing the entire waste value chain (collection, transport, recycling, recovery, and disposal) in an integrated, phased, and incremental manner tailored to client needs and capabilities. This would require greater collaboration among the World Bank, IFC, and MIGA in supporting governments with promoting financial sustainability and accountability in service provision, updating policies and regulations, incentivizing private sector participation, increasing awareness and behavioral change, and integrating waste pickers into MSWM processes.

Recommendation 2. To support the LICs where municipal solid waste is growing most rapidly, the Bank Group should identify constraints on demand and investments and leverage external partnerships to implement context-specific MSWM solutions. To achieve this, the Bank Group could increase its advisory services and analytics in LICs and foster external partnerships to find context-specific solutions appropriate to the prevailing policy and service delivery gaps. This would entail, for example, systematically closing illegal dumps, ensuring that the regulatory framework is clear and predictable, and providing incentives to reduce the growth rate of waste generation and increase recycling, with a view to support LICs to “leapfrog” (move forward rapidly through the adoption of modern systems without going through intermediary steps) to the extent possible.

Recommendation 3. To bring prominence to and spur action on the global municipal solid waste agenda, the Bank Group should take up a clear leadership position, collaborating and convening with developmental partners. The Bank Group could leverage its leading role in financing and knowledge for MSWM by building on and scaling up current partnerships to improve municipal solid waste practices in the context of the climate change action plan and in specific areas, such as addressing riverine and marine plastic pollution through PROBLUE.