Potential of user charges for cost recovery of solid waste management services: a case study of Indore municipal corporation

Abstract

Urbanization in India is increasing at a rapid race and as per Census 2011, 31.16% of India‟s population resides in urban areas and it is expected that about 40% of population will urbanize till 2030 which makes about 600 million people. Solid Waste Management is invariably the single most essential service that an ULB undertakes and as per CBCB, at an average 450grams/capita/day present rate of waste generation, Indian ULBs would be producing 11,95,000 tons of waste per day by 2050. Abiding by the MSW Rules, 200 to ensure 100% waste collection and scientific disposal has been a task for cities and studies suggest that about 40-50% of waste is collected while disposal is only about 1%. But the expenditure patterns of local bodies reveal that about 25-50% of their total expenditure is on SWM while cost recovery to manage these services is less than 50% of the Operations & Maintenance cost. The government has been committing large investments in urban reforms for infrastructural improvements and about Rs. 62,000 crores are being provided under the ambitious Swatch Bharat Mission, such investments demand that not only the provisioning of services improve but also that they become self-sufficient and are sustainable. The High Powered Economic Committee Report, 2011 suggest that these services should be separately charges and concept of user charges rationally imposed as to recover O&M cost, debt servicing and depreciation towards the services highlighting the need of corporatization of service delivery institutions and asks urban planning to become dynamic and flexible to face the fast changing realities. This research study intends to assess the systems‟ performance and develop mechanism to fully utilize the potential of user charges ensuring viability, sustainability of the services. The current status of services is studied in detail, as with this methods the phenomenon of cost recovery for services and dependence on user charges is studied. The rationale for users charges is established, identifying that for this to become success, an analysis of willingness to pay is must and hence factors affecting the users‟ willingness to pay for present services and pricing simulation for betterment in services are explored. The cost recovery mechanisms are to be studied and developed with respect to Potential of User Charges for Cost Recovery of SWM Services relationship between the service provider (ULB) and the user using new paradigm for the assessment like Willingness to pay and Pay-As-You-Throw techniques for identified system improvement measures. Thus, the operations and maintenance costs are to be recovered, users‟ charges have to play just, fair role in it and it is established that people who generate more, pay less and people who generate less, end up paying more. The thesis thus will be helpful for urban local bodies to cater for factors that influence willingness to pay and also the measures that increase the willingness to pay by changing the mechanism to be reflecting more of the ground realities.