Highlights

The World Bank Group has increasingly recognized and advocated for waste hierarchy and circular economy approaches for municipal solid waste management (MSWM). The 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 sustainability goals.

Bank Group support does not consistently provide for some elements essential to integrated waste management, including revising policies, planning for cost recovery, involving the private sector, incorporating behavioral factors, and considering waste pickers.

The Bank Group addresses the growing waste management problem in low-income countries (LICs) infrequently. Less than half of Systematic Country Diagnostics in LICs diagnose MSWM issues, and there is no reference to MSWM in International Finance Corporation (IFC) strategies or diagnostics in LICs, except for two cases. LICs received less than 2 percent of World Bank lending and no investments from IFC.

The Bank Group has had limited collaboration in support of MSWM. References to the complementary roles that the World Bank and IFC can play in a coherent approach to improving MSWM are absent from most Country Partnership Frameworks, Country Private Sector Diagnostics, and IFC country strategies. MSWM has been a very difficult sector for the Multilateral Investment Guarantee Agency to enter because of several constraints related mainly to a lack of bankable projects seeking guarantees and the capacity limitations of municipalities as counterparts.

This chapter assesses the relevance and coherence of the Bank Group’s approach to MSWM. Relevance was assessed by examining the Bank Group’s approach to supporting clients with MSWM in line with waste hierarchy and circular economy approaches, as appropriate to client needs and stage of sector development. Coherence was assessed by examining collaboration among the World Bank, IFC, and MIGA. Specific methods to assess the relevance of the Bank Group’s approach to MSWM included a targeted literature review; interviews with Bank Group staff and key country-based stakeholders; a review of data and analysis from the World Bank’s flagship analytical products, including What a Waste 2.0; and reviews and analysis of Systematic Country Diagnostics (SCDs), Country Private Sector Diagnostics (CPSDs), Country Partnership Frameworks (CPFs), IFC country strategies, ASA, and lending.

Portfolio

This evaluation covers all World Bank, IFC, and MIGA support for MSWM during the period FY10–20. There were 117 World Bank investment and policy lending operations approved or ongoing during FY10–20, implemented in 55 countries (table 2.1). Of those operations, 82 were closed, and IEG evaluated 68. These operations individually supported some or all activities along the waste chain, which covers collection, transport, treatment, and disposal of municipal solid waste, in addition to policy and institutional development. IEG identified 122 World Bank analytical products covering 40 countries. There were 13 IFC investments in 7 countries, of which IEG evaluated 1. There were 26 IFC advisory services in 19 countries, of which 14 were closed, and IEG evaluated 9. IFC investments were mainly for waste-to-energy conversion from landfill gas recovery, except for one landfill investment and three investments for e-waste recycling and composting. Most IFC advisory services were for public-private partnership (PPP) transactions that supported waste-to-energy facilities and sanitary landfills. The rest were a mix of concessions, acquisitions, and lines of credit for MSWM services as part of urban services. MIGA has one recent active guarantee for a new sanitary landfill that was issued along with advisory services (table 2.1).

Source: Independent Evaluation Group.

Note: ASA = advisory services and analytics; FY = fiscal year; IFC = International Finance Corporation; MIGA = Multilateral Investment Guarantee Agency; n.a. = not applicable.a World Bank ASA are not rated.

Relevance

The Bank Group has recently focused on the waste hierarchy and circular economy approaches. World Bank knowledge products before 2020, though important, did not explicitly adopt waste hierarchy and circular economy approaches.1 However, the Bank Group (2021) 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. According to the plan, the World Bank will support cities to promote these approaches, and IFC will help strengthen MSWM capacity for service delivery in areas where infrastructure is limited or relies heavily on the informal sector and will promote sustainable resource recovery solutions. The growing problem of marine plastic pollution—and the need to use waste hierarchy and circular economy approaches to address it—was discussed during the World Bank–IMF Spring Meetings (2018, 2019) and was the subject of other events focused on the East Asia and Pacific Region involving environment ministers (of Cambodia, Indonesia, and Vietnam), a private sector leader in plastic production, and a leading plastic recycling entrepreneur.2 The coronavirus pandemic has also highlighted the need to ensure the sound management and proper disposal of medical-related plastics and waste, including hospital waste, masks, and single-use containers.

The Bank Group is playing a convening role in addressing marine plastic pollution through the PROBLUE initiative. PROBLUE is an umbrella trust–funded program that supports the sustainable and integrated development of marine and coastal resources in healthy oceans.3 It is currently supporting the Regional Marine Plastics Framework and Action Plan for East Asia and Pacific, the region with the largest incidence of marine plastic pollution. Linked to this initiative, the World Bank in June 2021 approved a $430 million China Plastic Waste Reduction Project that has learning potential for other countries. PROBLUE is pursuing analytical work, pilot activities, and public-private platforms in Cambodia, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam.

Bank Group Diagnostics and Strategies across Country Income Groups

The Bank Group’s country diagnostics, partnership frameworks, and strategies cover MSWM issues less in LICs than in other country income groups. Although SCDs often refer to MSWM as a development challenge for UMICs and HICs, such diagnoses occur far less for LICs. Less than half (42 percent) of SCDs in LICs diagnose MSWM issues (figure 2.1), even though most LICs face fast-growing municipal solid waste issues, as documented in the World Bank’s analytical products (for example, Kaza et al. 2018). By contrast, 75 percent and 79 percent of SCDs diagnose MSWM challenges in HICs and UMICs, respectively. More than half (54 percent, 20 of 37) of IFC’s country strategies and one-third (7 of 21) of its CPSDs (all of which had been developed since 2018) refer to MSWM issues. Encouragingly, 80 percent of those relate to LMICs. Only 2 country strategies for LICs, Haiti and Rwanda, mention MSWM issues. However, the overall number of these IFC documents is low for LICs: 5 country strategies and 4 CPSDs.

Figure 2.1. Municipal Solid Waste Management in SCDs and CPFs by Country Income Group (Approved and Ongoing, FY10–20)

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Figure 2.1. Municipal Solid Waste Management in SCDs and CPFs by Country Income Group (Approved and Ongoing, FY10–20)

Source: Independent Evaluation Group.

Note: The percentages shown in the figure refer to the share of countries in one category that are also in the next. For example, of the 6 LICs with follow-up CPFs, 2 (33 percent) have MSWM work programs. CPF = Country Partnership Framework; FY = fiscal year; HIC = high-income country; LIC = low-income country; LMIC = lower-middle-income country; MSWM = municipal solid waste management; SCD = Systematic Country Diagnostic; UMIC = upper-middle-income country.

IFC CPSDs do not cover the constraints that inadequate MSWM may be posing for wider private sector activity. High levels of mismanaged solid waste may pose sector-specific and economy-wide constraints that hold back private sector development (including for such sectors as retail, tourism, housing development, and manufacturing). However, CPSDs rarely discuss these links between MSWM and private sector development.

LICs receive a very small share of World Bank and IFC investments and ASA. Only 1.5 percent of World Bank lending for MSWM during 2010–20 was directed to LICs (to only two countries). IFC had no investments in the sector for LICs. Of the 122 World Bank analytical products, only 6 were directed exclusively toward LICs (table 2.2).

Source: Independent Evaluation Group.

Note: FY = fiscal year; HIC = high-income country; IFC = International Finance Corporation; LIC = low-income country; LMIC = lower-middle-income country; UMIC = upper-middle-income country.

The low World Bank lending to LICs can be attributed mainly to their limited borrowing ability and competing priorities in these countries. Discussions with World Bank staff and country counterparts indicate that there is a limited political constituency in LICs for raising MSWM as an issue, despite their fast-growing municipal solid waste problem. Client governments lack awareness of waste issues, strategies for managing the sector, appropriate policies, relevant regulations, and institutional capacity (Guerrero, Maas, and Hogland 2013). Higher-income households make private provision for municipal solid waste services, whereas the majority of impoverished people are left to fend for themselves. Although these conditions foster an environment for open dumping and low willingness to pay for services that limits the feasibility of financial support for MSWM initiatives, there may be unexplored opportunities (box 2.1). In any case, there is no clear reason for the low coverage of LICs in World Bank ASA.

IFC’s investments in MSWM are subject to the same constraints as in most other sectors. 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 private sector solutions particularly difficult to implement (box 2.2).

Integration of Waste Hierarchy and Circular Economy Principles in Country Strategies and Operations

The Bank Group has yet to sufficiently integrate waste hierarchy and circular economy principles into its support to client countries. Thirty-eight percent of countries in the World Bank MSWM portfolio (21 of 55) articulated waste hierarchy or circular economy aims in their SCDs or CPFs. However, only 20 percent of the countries (11 of 55) focused explicitly on waste hierarchy elements (reduction, reuse, recycling, and recovery) in their lending portfolios. The China Ningbo Municipal Solid Waste Minimization and Recycling Project (box 2.3) is a best practice example of operationalizing waste hierarchy principles.

Relevance of the Bank Group’s Support for Pillar 1 (Policies and Institutions)

A majority of Bank Group CPFs highlight needs for support with policies, regulations, and institutions, but fewer countries received such support. To improve MSWM, it is often important to formulate policy, update regulations, and develop institutions along the entire waste value chain, from collection to disposal. Such activities may be necessary for addressing waste hierarchy elements; incentivizing behavior change among waste generators, policy makers, and local government officials; and integrating informal waste pickers. These needs were highlighted in about 65 percent of the countries with CPFs, but only 22–36 percent of those countries received relevant lending assistance. This gap may arise partially because client countries are at different stages of readiness to absorb and implement new or enhanced policies and institutional development. Policies and institutional mechanisms from some countries may not be readily transferable to others without being substantially adapted to local contexts. There was a better balance between the extent to which planning issues were raised in countries with CPFs (42 percent), and the share of those countries with follow-up on planning issues in their lending programs was larger (table 2.3).

Source: Independent Evaluation Group.

Note: CPF = Country Partnership Framework; MSWM = municipal solid waste management.

Relevance of the Bank Group’s Support for Pillar 2 (Infrastructure, Access, and Service Delivery)

Among MSWM issues, CPFs and lending support paid the most attention to infrastructure for access and service delivery. Improved MSWM infrastructure needs were cited for two-thirds of countries with CPFs, and a similar proportion received lending support. Likewise, the need for enhanced access and service delivery was also cited for almost two-thirds of countries with CPFs and addressed in more than half of them. The most common infrastructure activities were closing informal dumpsites and rehabilitating sanitary landfills or building new ones. There was relatively less emphasis on infrastructure related to collection, separation, recycling, and recovery. Service delivery involved improved waste collection systems and expanding the reach of existing formal waste management systems to additional households and commercial enterprises.

However, support for infrastructure and service delivery was not sufficiently accompanied by provisions for financial sustainability. The issue of cost recovery was raised in only about one-third of countries with CPFs. Although more than half of the CPFs refer to the need for private sector participation, only 27 percent of World Bank projects included any efforts to incentivize private sector participation. Moreover, these were generally on a limited scale, relating mainly to earlier stages of the waste chain, especially waste collection and transport (table 2.4).

Source: Independent Evaluation Group.

Note: CPF = Country Partnership Framework; MSWM = municipal solid waste management.

The World Bank’s ASA and CPFs addressed awareness and behavior change infrequently, but they received greater attention in its projects. Awareness and behavior change issues were raised for only 15 percent of countries with CPFs and in only 6 of 122 ASA products. However, these issues were addressed in 44 percent of the countries in the World Bank’s lending portfolio. The efforts in the lending portfolio focused mainly on households and had widely varying coverage.

There have been relatively few efforts to address the informal sector’s role and gender considerations. These considerations do not feature prominently in the World Bank’s ASA, CPFs, or country lending programs or as part of the design and implementation of relevant operations. In many developing countries, especially LICs, informal waste pickers may provide a large share of solid waste collection, contributing to public benefits and recycling rates. However, very few projects engage with informal waste pickers beyond complying with do-no-harm safeguard provisions. Gender-related issues specific to MSWM were addressed infrequently in MSWM operations. The inattention to gender is particularly concerning because participation by women and children is high in the informal sector and requires focused attention to address specific challenges. Women’s participation in processing and in recycling factories is also often unregulated, posing health and safety issues. In addition to these occupational challenges, women in the waste sector must deal with competing demands from domestic and child rearing responsibilities, as in several other sectors.

Coherence

There has been limited Bank Group collaboration in support of MSWM, despite the need for it expressed in several IFC CPSDs and country strategies. IFC’s CPSDs and country strategies indicate that World Bank involvement is crucial to enhancing the enabling environment for MSWM development. One role the World Bank can play is to support enhancing regulatory and legal aspects of the MSWM sector in client countries (and their enforcement). Another is to develop revenue models for private sector participation during implementation of MSWM projects. Sovereign-guaranteed resources also need to be leveraged to promote private sector participation. In a couple of cases where this has occurred or is under way (the Arab Republic of Egypt and West Bank and Gaza), project teams’ initiative played a large role (see chapter 3).

IFC investments are more likely where the MSWM policy and regulatory environment is mature and core infrastructure is in place. IFC looks to the World Bank to take the lead in supporting client countries to create an enabling environment for private sector investment in MSWM. The issue of landfills is an example. Constructing new landfills usually involves closing old dumpsites that can carry legacy contamination issues. Local governments’ lack of commitment to dealing with these legacy issues can stall new landfill development, with little leverage for IFC in these matters.

IFC’s engagement in MSWM is mostly in waste to energy. IFC’s investments and advisory services focus mostly on recovery, especially activities that seek to convert waste to energy. IFC has faced challenges in expanding its range of activities because of insufficient scale, unfavorable legal and regulatory frameworks for private participation in MSWM, uncertain contractual arrangements, and uncertainties in land acquisition. China is the only country where IFC has financed activities in addition to waste to energy, such as treatment of restaurant and commercial waste, anaerobic digestion, and recycling. Even these have been on a modest scale.

A lack of bankable projects seeking guarantees constrains MIGA’s participation. MIGA can participate in the MSWM sector through two avenues. One is to participate in PPP transactions and provide political risk insurance. The other is to provide guarantees protecting commercial lenders from nonhonoring of financial obligations by central governments and municipalities regarding their solid waste management projects. MIGA has been proactively trying to originate projects in the MSWM sector in partnership with international sponsors. However, MSWM has been a very difficult sector for MIGA to enter. One constraint is that municipalities typically borrow in local currency, whereas MIGA can support transactions in local currency only when they meet certain criteria. Another is that many municipalities lack capacity to design and implement MSWM projects, which often have complex revenue and fee structures, with multiple contracts and payment sources and without uniform tariff structures. Finally, less than 20 percent of the 500 largest municipalities in developing countries are deemed creditworthy in their local context, limiting MIGA’s potential to find suitable counterparts.4 The Belgrade Waste-to-Energy Project in Serbia, which was the result of long-term IFC upstream engagement with the city government, is an exception. It is groundbreaking because it addressed many of the typical constraints of MSWM projects, including the tariff and revenue structures, and the project’s bankability was enhanced to such a level that development finance institutions besides IFC and MIGA felt comfortable to provide financing.

The World Bank Group’s Role among Multilateral Development Banks and Private Investment

The World Bank is by far the leading source of lending and knowledge on solid waste management. The Bank Group’s lending of about $3 billion for MSWM during FY10–20 far exceeds that of most other multilateral development banks, after accounting for geographical coverage. The Inter-American Development Bank is next with $708 million for 2005–20. An assessment of recent donor assistance (from the Asian Development Bank, the African Development Bank, the European Bank for Reconstruction and Development, and the Inter-American Development Bank) shows that their financing for MSWM activities varied between 0.5 and 6.1 percent of all urban sector commitments during 2010–20, compared with about 10 percent for the Bank Group (appendix F). Regarding knowledge, the Bank Group produced two flagship reports on the state of and approaches to MSWM worldwide—What a Waste and What a Waste 2.0—and has been conducting technical certification courses on MSWM for professionals and policy makers worldwide.

Multilateral development banks are seeking to expand their support for MSWM, and sector experts see a convening role for the Bank Group. Discussions with staff of the Asian Development Bank suggest that they are looking for ways to raise the priority for MSWM within client countries and their own organizations. Both institutions are interested in observing the Bank Group’s course toward MSWM. International MSWM experts see a convening role for the Bank Group, which has the largest reach, greatest experience, and most diversified solid waste management portfolio among any of the multilateral lending or development institutions. Experts also point to the lack of an international coordination and advocacy mechanism for MSWM (unlike for energy, transport, and water supply and sanitation). An assessment of marine plastic pollution—an important component of municipal solid waste—by a leading international expert finds that the absence of a unifying voice and leadership in this area is blocking coordinated action (Fletcher 2021).