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This paper discusses the reduction of government activity through the participation of the private sector in service delivery. The paper poses the questions of whether and how to involve the formal private sector in the provision of municipal solid waste services. Private sector participation is a possible opportunity - not a panacea. In situations in which existing service delivery is either too costly or inadequate, private sector participation should be examined as a means of enhancing efficiency (and thus lowering costs) and mobilizing private investment (and thus expanding the resources available for urban infrastructure and equipment). To decide whether to have private sector participation, many factors need to be analyzed, such as cost recovery, efficiency, public accountability, management, finance, economies of scale, legislation, institutions, and cost. Cost factors in particular should be analyzed separately for the different components of solid waste service - collection, cleansing, disposal, and transfer. Methods of private sector participation most common to solid waste management are contracting, concession, franchise, and open competition. These options are discussed with particular emphasis given to the roles and responsibilities of local government in each case. The suitability of each of these methods may also vary for collection, cleansing, disposal and transfer services. The paper summarizes decision making criteria for whether to have private sector participation in delivery of solid waste management services. Furthermore, it recommends steps for proceeding beyond the discussion of issues and privatization approaches and moving toward field studies that will support decision-making in a specific city and, where justified, lead to phased involvement of the private sector.

Publisher: World Bank

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