Managing the environment in megacities: Business potential of industrial waste

MANAGING

THE ENVIRONMENT

IN MEGACITIES

Managingthe Environment in Megacities: BusinessPotentialof IndustrialWaste FRANCISCO

SZEKELY,

Professor of Environmental

The world’s population is living increasingly in megacities, where the inhabitants perceive their quality of life to be threatened by industrial waste. Francisco Szekely examines the new business opportunities which are arising for companies who, by embracing environmental management principles, decide to internalize their industrial waste. There are many examples of successful initiatives to solve environmental problems in cities - the ‘command and control’ approach of governments, industry initiatives such as recycling, community participation, and conservation and environmental protection by non-governmental organizations. The author concludes with an assessment of the

Management,

IMD, Lausanne

main factors in the success of such strategies and lists some important questions that still have not been answered as we approach the twenty-first century.

Introduction The world has become increasingly urban over the last forty years. Cities are an attractive place to live mainly because economic activity is more prevalent there. At the same time, large numbers of people are forced to migrate to the cities due to the lack of job opportunities and acute land tenure problems in rural areas. The result is that a world which in 1950 was only 25 per cent urban and 75 per cent rural has become, by 1990, 45 per cent urban and 55 per cent rural.’ Economic activity takes place more often in densely populated (urban) areas. One would expect that such economic activity would bring about affluence which, in turn, would provide the ideal conditions for creating an attractive and adequate environment for the people who live in large cities. However, the record of living conditions in megacities2 seems to prove the contrary. Diverse forms of pollution have increased, waste is accumulating and green areas are scarce. These deteriorating cities have, in turn, an effect on the environment. For example, it is estimated that less than 2 per cent of total urban sewage flows in Latin America is treated. Data on 24 rivers in Central and South America suggest that the situation in this region is even worse.3 Since the United Nations Conference on the Human Environment (Stockholm, June 1972), increasing attention has been given to the quality of our natural and social environment. One of the main issues of concern

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to environmentalists has been the deteriorating quality of life in urban settlements in general, and the decaying environment of megacities in particular. Environmental problems of megacities have captured the attention of politicians and decision makers alike mainly because of their political implications. Growing discontent about Lncreasingly deteriorating cities has prompted citizens groups and private organizations to raise their voices demanding regulatory action to improve the quality of iife at home. The demands range from the enforcement of stricter legislation to control pollution sources to the !ntroduction of new tax schemes to regulate industrial ,lctivities responsible for waste and emissions. Most environmentally oriented groups demand the application of the ‘Polluter Pays’ principle to any member of 4;ociety responsible for environmental degradation. The emphasis of the urban-environmental debate has been focused on assessing the size of the environmental f)roblems of megacities and in raising awareness of the present and future threats that these problems repre-ent. This is understandable since the health and ,*conomic effects derived from environmental degradation in megacities have become more significant and rnore obvious in the last 15 years. Additionally, information about the cause-effect relationships of :hese problems was not readily available. I’he agenda of environmental ills affecting megacities s endless. One issue in which the inhabitants of those (cities have shown particular concern is industrial waste. The reason is that people feel threatened by the notion hat they are exposed to any kind of industrial waste, t lr waste treatment facility and that such exposure might 1:amage their health. The issue here is not whether the ldustrial waste they are exposed to is indeed toxic, but ; leople’s perception of a nearby threat. People’s environi-.1ental concerns often translate into social pressures 1,Jhich in turn force politicians to act by regulating likely ‘lggressors. A good example of this is the recent and rather significant waste control government initiatives t :?at have been adopted in OECD countries in general, and in West and Central Europe in particular. Interestingly enough, however, some industries are finding that IIle new regulatory schemes might become new bus:iness opportunities for them. Examples of these include opportunities to: re-define their manufacturing ;ind logistic processes by optimizing resource use and I educing unnecessary wastes, increase economic effic ency by reusing and recycling some, or part of, their products, and make new businesses by having access to new emerging ‘green markets’. Y-his paper attempts to examine the new business opportunities which arise for companies which, by timbracing environmental management principles, clecide to internalize their industrial waste.

Short Review of the Main Environmental Issues Related to Megacities The Emergence and Evolution of Megacities In 1950, greater Buenos Aires was the only city in the developing countries with a population over 4 million, whereas in the industrialized countries there were several. By 1975, there were 17 cities of such size in developing countries compared with only 13 in industrialized societies. By 1980, the figures were 22 and 16, and by 1991, there were 32 such cities in the developing world. Projecting this trend suggests that by the year 2000 there will be about 90 cities with more than 4 million people: 61 in the developing and 25 in the industrialized countries respectively.4 Many of the cities which have experienced the fastest growth in population are the product of changes brought about by the breakdown of colonial empires and the formation of independent governments since World War II. Their growth reflected the need to build the institutions for the new nations, including government and financial institutions, and legal and educational systems. Big cities have also grown from the need to optimize economies of scale in infrastructure development. This process has particular importance in developing countries where, due to limited economic resources, any infrastructure development is optimized and concentrated. For example, Mexico City which only had a population of 3 million in 1950, experienced a significant economic take-off which demanded the rapid development of an infrastructure. As a result, financial, industrial and government activities grew at unprecedented rates. In 1990, the Mexico City Metropolitan Area (MCMA), with less than 1.1 per cent of the national territory was the place where: 34 per cent of the Gross National Product was generated, 22.3 per cent of the country’s population lived, 30,000 industries and commercial companies functioned, 2.5 million automobiles circulated, and 12 thousand tonnes of waste were produced per day. In addition to this, MCMA generated 17 per cent of the country’s air emissions, and 50.7 per cent of its solid waste.5 There are many examples of Western cities which grew at rates comparable to most of the Third World’s fastestgrowing cities, and these have shown that it is possible for governments to deal with rapid city growth. For example, the population of Los Angeles-Long Beach urban agglomeration (13.8 million in 1989) has grown more rapidly than Calcutta since 1990 and the population of Tokyo Metropolitan Area (12 million in 1990) has, in recent decades, grown on a scale comparable with Mexico City and Sao Paolo. While there are serious environmental probiems in both Los Angeles and

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they do not compare City, and Sao Paolo.

IN MEGACITIES

with those

of Calcutta,

If the United Nations projections prove correct, the proportion of population in urban settlements by the year 2000 will be over 50 per cent of the whole world. This would mean that the total urban population will have doubled between 1975 and 2000 and people living in urban settlements in developing countries will be twice as numerous as those living in developed regions.

Environmental Issues Related to Megacities: Problems and Opportunities When referring to the environment of urban areas, one has to address not only problems but opportunities. Table 1 lists some of the main environmental issues, problems and opportunities, associated with the quality of the environment in megacities. It can be seen that most environmental problems are not the direct result of large numbers of people but rather the consequence of modern society’s adoption of a development model built on the inefficient use of raw materials and energy. Table 1 also includes some of the vehicles for urban environmental management which are further discussed in a later section.

Table 1

Main environmental

I. Main environmental

-

issues of megacities

problems

High population density. Different types of pollution (air, water, soil, noise, waste, visual) Traffic congestion Competing use for scarce resources (mainly land, water and energy) Lack of green areas Social marginalization: poverty Unbalanced inflow and outflow of materials6 Deficient institutional and legal infrastructure

II. Main environmental

for urban environmental

management

Government authorities Industry Financial institutions Community organizations Self-help programmes Participation of NGOs* * Non-Governmental

On the other hand, megacities of developing nations suffer from the environmental problems derived from different forms of poverty, and often from conditions derived from chronic poverty. Examples of these problems include lack of safe drinking water and inadequate sewage waste disposal facilities, increasing growth of squatter settlements, overcrowded housing, and deficient transportation. Furthermore, the environmental issues of megacities in developing countries are also different in nature; their intensity and characteristics reflect the degree of economic development of the country where they are located. The environmental issues of Bombay, Lagos, Shanghai, and Sao Paolo are totally different since these cities have different resource bases and operate within different socio-economic structures. Despite the differences in environmental problems, megacities in both developed and developing countries have generally observed a change from fast economic growth and suburban expansion to decreasing growth rates, due to the increase in social and operating costs - mainly energy and waste treatment costs which have generally risen in the last decade.

opportunities

Recycling waste (household and industrial) Energy conservation Water recovery Creation of landscapes Job creation Emergence of new community jobs and services Development of endogenous community businesses Development of low-cost housing and low-energyconsumption technologies Vehicles

It is also important to assert, at the outset of any analysis that the which addresses the environment, environmental issues of industrialized and developing societies are different. They derive from different causes and respond to different social and economic characteristics and contexts. On the one hand, the quality of life of megacities in industrialized countries has generally decreased due mainly to the environmental problems derived from economic affluence. For example: over-production and over-consumption have generated large amounts of urban and industrial waste, increased air pollution, traffic congestion and noise, and created a heavy dependence on energy consumption which has made megacities economically unattractive due to increasing fuel costs. Waste disposal has become an important problem because of increasing sales of consumer goods with extravagant packaging.

Organizations

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Industrial Waste in Megacities Meeting the waste disposal needs of the world’s megacities is likely to remain one of the most critical and difficult tasks of present society. This is particularly important since at least 50 per cent of the world’s population will be living in cities by the year 2000.

Basic Concepts about Waste There are different types and quantities of liquid and solid waste which are generated by human activities. Examples of solid waste include: municipal waste (mainly household waste), industrial waste, hazardous and specific wastes, and other types of waste (such as waste from energy production, agricultural production, mining, construction debris). Nuclear waste is considered a ‘special’ type of waste which arises in various stages of the nuclear fuel cycle.7 The hazardous and MANAGEMENT

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-:;pecific waste category comprises a wide variety of :;ubstances. About 50 per cent of them are chemicals. 1n OECD Europe, for example, hazardous waste refers mainly to: solvents (6-7.5 per cent of the total), waste l’aint (4-5 per cent), waste containing heavy metals (+-lo per cent), acids (30-40 per cent), and oily wastes ( 17--20 per cent).x Most of the regulatory efforts to deal ivith waste have been focused on municipal, industrial (Including hazardous) and nuclear wastes because of their potential impacts on man’s health and the environment. Agricultural, energy and mining wastes seem to be less regulated. :+lost megacities

today are concerned

with their ability

to treat and prevent waste. The environmental perform; nw concerning waste generation can be characterized ~IIterms of: (1) waste intensity of consumption patterns, ; nd (2) waste intensity of industrial production. In both c.rses the environmental problems posed by waste can be diminished by programmes of waste prevention, ncycling and recovery. The disposal of high-level radioactive wastes remains a problem for which long term policies need to be implemented.

Why has Waste become a Problem? b!!aste has become

a problem

mainly for three reasons:

( I) the amount of waste modern society generates i creasing very rapidly, (2) the waste produced

is is 1coming more toxic, and (3) the economic and social i .lplications of waste treatment have become nearly L nmanageable.

l-he Amounts ‘1?e amount of waste r suit

of the

generated in megacities is a direct consumption patterns adopted by its

inhabitants and by the amounts derived from industrial production. In 1990, as Figure 1 shows, there were 2 billion tonnes of waste, and 1,430 million tonnes of industrial waste (including 300 million of toxic waste). Although the exact quantities of industrial waste generated in every country are mainly unknown, it is very important to notice that the generation of waste is increasing extremely rapidly. It has been estimated that OECD countries as a whole produced about 1,000 million tonnes of industrial waste annually in the early 198Os, 1,300 million tonnes/year in the mid-1980s, and 1,500 million tonnes in 1990 (see Table 2).” Table 2 indicates that from the three main different types of solid waste in OECD countries, industrial waste represents the main problem in terms of volume. From total waste statistics in the late 198Os, industrial waste represented 66 per cent of the waste while municipal and hazardous and special wastes represented 19.5 and 14 per cent of the total, respectively. The consumption patterns of people and industry in different areas and countries of the OECD vary considerably. Thus, waste generation also varies considerably in these regions and countries. From Table 2 it is possible to observe that at the end of the 198Os, the average quantity of municipal waste per capita in the OECD countries was 513 Kgslannum. However, this figure includes serious variations within OECD countries, for example: the equivalent figure for OECD Europe was 350 Kgsicapita (325 Kgsicapita in Germany, 302 Kgsicapita in France, and 263 Kgslcapita in Italy) whereas in the US and Japan the equivalent figures were 864 Kgsicapita and 392 Kgslcapita respectively. Industrial waste in OECD countries was about 1,748 Kgslcapita. However, significant differences also existed within the OECD area. OECD Europe generated

.MUNICIPAL

AND INDUSTRIAL

WASTE -

LATE 1980s

OECD Europe 19%

:::::::::::::

;i;;;:;;;;:;; ::::::::::i:: ::::::::::::: :::::::::::::

.................. ..................

3ECD Europe ;j;;;;i;;ii;;iiii; .................. .................. .................. 32%

USA & Canada 54%

USA & Canada 57%

OECD Pacific 23% OECD Pacific 14%

Municipal Waste 420,000,000 tonnes Source:

OECD -

Figure 1 EI;I!Ol)EAN

Industrial

Waste

1,430,000,000tonnes

I he State of the Environment

1991

Industrial waste is three times larger than municipal waste in OECD countries MANAGEMENT

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Table 2

IN MEGACITIES

Waste

Countrvheaion

Generated Municipal

1980s waste

industrial

3,300c

Japan

48,300

312,000

France

17,000

50,000

3,000

Germanyb

20,200

61,400

6,000

Italy

17,300

UK

1 7,700d

50,000

4,500 278,000 -

North

America

225,000

821,000

Pacific

60,000

333,000

OECD

Europe

Eastern Rest

Europe

136,000

272,000

24,000

420,000 -

1,430,000

303,000

520,000

19,000

of World

World

-

whereas

3,040 and 2,536 K&capita

16,000

180,000

338,000

2,100,000

a Definitions about waste vary between b Includes West Germany only ’ 1980 d England and Wales only e Secretariat estimates Source:

3,800

43,700

OECD

waste

275,000 -

760,000

OECD

countries

OECD. The State of the Environmenf Paris, 1991.

the US and Japan generated respectively (see Table 2).

The Toxicity

Table 3 Hazardous countries

Country

Although all wastes can be toxic, hazardous wastes seem to represent the most serious toxic threat. Hazardous wastes are estimated today as 338 million tonnes per annum world-wide.‘0 From this, one country, the US generates about 81.3 per cent of the total toxic waste (275 million tonnes/annum). OECD Europe generates 24 million tonnes/annum, or the equivalent of 7.1 per cent of the world total. Small quantities of hazardous waste, such as the one generated by hospitals and laboratories in the entire OECD area amounted to 350,000 tonnes/annum in 1986, (mainly motor oils, batteries, paints, glues, and medicines). However, it is important to notice that the amount of small quantities of hazardous waste generated by small businesses has been estimated as between 3 to 20 million tonnes/annum for the US and about 0.5 to 1 million tonnes for OECD Europe. Regarding waste coming from the agricultural sector, for each square kilometre of cultivated land, plant protection accounts for some 25 Kgs of hazardous waste from the products themselves and a further 80 Kgs in the form of packaging.”

and Social Implications

The cost of waste treatment is significant. In the OECD area the average cost of disposing of hazardous waste is around US$50-60 per tonne. However, for certain types of hazardous wastes the costs can be extremely high. For example, the disposal of waste containing PCBs (polychlorinated biphenyls), such as electric transformers, can cost up to $3,000 to $4,000 tonne. For the entire OECD region the annual cost of treating hazardous waste is $1.2 billion. 298

Hazardous

208,800

usa

The Economic

waste

61 ,OOOe

16,400

Canada

332 Kgsicapita,

(in 1000 tonne+’

EUROPEAN

waste is still exported

Exports of Hazardous Tons

Canada USA Austria Denmark France Germany*

by OECD

Waste, late 80s % of total OECD countries

101,000 127,000

3.0 -

65,000

24.0

9,000

8.0

43,000 1,058,OOO

1.4 18.0

Netherlands

189,000

13.0

Switzerland

108,000

27.0

* former West Germany only Source: OECD - The State of the Environment 7997 There are many social issues which are making waste disposal difficult. The main one is that people do not want to see or be near to waste facilities. Thus, the usual practice in megacities has been to systematically collect, transport and bury waste in municipal landfills. Today, waste is disposed of in landfills in most OECD countries. Seventy per cent of waste is disposed of in this way in the EEC, whereas 60 per cent and 38 per cent is disposed of similarly in the US and Japan, respectively.” Incineration has been after the landfill, the next most usual way of disposing of municipal waste. However, controls on air pollution due to waste incinerators were tightened up considerably in the late 1970s and early 1980s. Incinerators also produce solid waste which may have a significant effect in the economic analysis of some incineration processes. Industrial waste is either buried in landfills, kept in storage tanks, or dumped at sea. Stringent international MANAGEMENT

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MANAGING THE ENVIRONMENT IN MEGACITIES -environmental regulations have made it more and more difficult to dump waste at sea leaving the landfills to still play a major role.

from 187 million tonnes of waste burned in Europe amounted to 17 million barrels of oil equivalent.

In the early 1980s the NIMBY (‘not in my back yard’) idea spread throughout Europe making it almost imposs ble for authorities and industry alike to build new incinerators. This prompted many countries to start e Iporting waste. Table 3 indicates the recorded exports oi hazardous waste. In 1983 a large scale of West-East movement of hazardous wastes took place. Between 2110,000 and 300,000 tonnes of potentially hazardous Maste went from West to East Europe. However, this situation is changing radically after the adoption of the B rse’lConvention, a new treaty to limit and control internltional transport and disposal of hazardous waste, Mhich came into effect in April, 1992. The trend to e:\port waste has begun to diminish considerably.13 C~bserve in Table 3 that countries like Ireland, Finland alld Germany depended heavily on the possibility of e:,porting their hazardous wastes. These countries are fFt:ecl now with the challenge of reducing their h .Izardous wastes by producing less of them.

Financial Aid for EnvironmentallyOriented Companies

New Business Opportunities derived from Waste Management Tile need to conserve, protect, and clean up the environment in megacities has resulted in the emergence of a significant number of new industries and businesses. The need for urban environmental management has also brought about new employment opportunities. A new environmental industry, recycling activities, and new services to treat waste and water and to save energy emerged, providing pollution prevention and c,ontrol processes, products and equipment. They h‘rve a large market. Other companies are becoming much more efficient and cost-effective by introducing environmental management principles. For example, m
Direct financial aid is often given by governments to companies which adopt pollution control technologies, giving preference notably to clean technologies over end-of-line systems. This is the practice, for example, adopted by some agencies Financieres de Bassin in France and the Ministry of the Environment in Norway. Financial aid can very much affect the technological response of industry: in Norway, financial aid for the paper and pulp industry has been devised so as to encourage new production processes and the adoption of new systems for the minimisation of waste.15 Governments are also introducing special financial aid programmes for Research and Development on new processes or products by assisting given industrial projects. In France, for instance, The Ministry of the Environment’s ‘Mission Technologies Propres’ (Clean Technologies Unit) distributes financial aid to industries for R&D in non-polluting, more efficient and energy and raw-material-saving technologies. The Netherlands launched a special aid programme for clean technologies in 1975. In certain industrial sectors like the automobile industry in Germany and France, the government provides 50 per cent or more of the finance for largescale research programmes on energy conservation and pollution control.

Recovery, Recycling and Waste Prevention Waste is not always an unwanted product. A waste product can be converted into a profitable operation. There are essentially three possibilities to what we can do with waste products once they have finished their life cycle: repair them and reuse them, re-consume them for another use, and recycle them back into the production cycle. Any of these alternatives gives to waste an interesting economic value. Recycling has been one of the most popular answers proposed by governments and advocated by pressure groups. In many cases recycling is a ‘sound’ ecological solution to waste. But not always.” However, present trends in national legislation seem to indicate that we will see more of industrial waste recycling in Europe than we have seen before. The case of Germany is a good example of this. Public awareness about the environment in Germany has resulted in very high efficiency in the collection and recycling of waste especially in: lead batteries (95%), glass (50%), used paper (50%), and tin-plate packaging (40%). Germany has been the only country in the world that has been able to reduce the quantity of household waste during the 1980~.‘~ The data on the quantity of substances recycled from industrial waste in OECD countries is very scattered.

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In the US about 2 million tonnes of hazardous wastes were recycled in the early 198Os, whereas in the Netherlands, in addition to the chemical residues recycled on the production site itself, more than 220,000 tonnes of wastes are recycled elsewhere each year including 44,000 tonnes that are exported, 40,000 tonnes of scrap metal, 50,000 tonnes of acids and chemical basis and 130,000 tonnes of organic wastes. As far as solvent wastes are concerned in EEC countries, a survey in 1986 showed that 3.13 million tonnes were produced, 474,000 of which (about 15%) were recycled.‘R

Solutions to Environmental Problems in Megacities Despite the overwhelming rate at which the environmental conditions of megacities have deteriorated, important innovations and solution approaches have been successfully introduced to improve the quality of life in them.

Government-led Solutions: the ‘Command and Control’ Approach The ‘command and control’ approach is a strategy of environmental management by which government authorities legislate the use of natural resources and then make sure that those laws are implemented. With time, however, it has become apparent that the public sector alone has been unable to efficiently apply this strategy, since there are so many environmental aggressors, and because people respond better to incentives than to threats. Governments found out that they could not cope alone with the enormous needs and problems of the inhabitants of megacities. The success of a command and control approach will therefore depend on the ability of governments to strengthen their strategy by attracting other members of society to assist in the development and implementation of the proposed policies and laws. The ‘command and control’ approach is also successful in the regulation of waste materials. In October 1991, Japan adopted a law aimed at encouraging recycling. The initiative urges manufacturers to use more recycled and recyclable materials, and produce products that are easily recyclable. The new law specifically targets washing machines, TV sets, refrigerators and air conditioners, which together accounted for 80 per cent of the 62,000 tonnes of domestic appliances thrown away in Japan in 1989.19 A number of new small enterprises are now emerging in Japan with reused and recycled product schemes. The ‘command and control’ approach is also successful in minimizing the use of environmentally controversial materials. The case of the regulation of paint materials in Los Angeles is an illustration. In the South Coast Air Basin of the USA, which includes the Los Angeles Metropolitan Area, the use of coatings accounts for 292 tonnes per day of volatile organic compounds (VOC), 300

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which react under sunlight with nitrogen dioxide to form ozone. Computer modelling shows that, to meet US Federal ozone standards, VOC emissions must be reduced by almost 90 per cent. The South Coast Air Quality Management District (SCAQMD) has developed a 20-year clean air plan that seeks reductions in emissions from virtually all sources of pollution. The group’s long-term goal is to develop new types of coatings that produce no pollution and have minimal impact on the environment. Developing cleaner paints and coatings is one of industry’s environmental challenges of the 90s. coating manufacturers who develop Ultimately, products needed to clean up urban pollution and protect the ozone layer will maintain, and even increase, their market share .” Three significant initiatives that governments have undertaken recently to control waste and promote recycling include: (1) The German Packaging Ordinance, (2) The UK’s adoption of recycling targets, and (3) The French programme ‘Retour’. The German Packaging Ordinance (GPO), adopted in July, 1991, and implemented according to three schedules (December 1st 1991, April lst, 1992, and January lst, 1993) demands that manufacturers collect and recycle the packaging material they sell with their products. The intention of the ordinance is good - to reduce waste generation, but the instrument has many loop-holes. Companies do not have any legal means of ensuring that consumers bring the packaging back to the producer. Also, companies operating outside Germany might find it difficult to recycle according to German technologies and prices. This means that the Ordinance can easily introduce new non-tariff barriers to trade for foreign companies. At the time when the Germany Ministry of the Environment was discussing the introduction of the GPO, industry gathered together and proposed a ‘Green Point’ system by which industries may place a green dot on their products if the products use packaging that can be recovered or recycled and if the industry undertakes to collect the used packaging at the point of sale or at specific drop-off points. The UK has recently adopted a target of recycling 25 per cent of all household waste by the turn of the century.21 However, how this target will be achieved is not yet clear. The Government is considering the establishment of ‘recycling credits’ and the design of market mechanisms to encourage recycling. The Government also wants to make recycling an integral part of each local authority’s waste management strategy, and has instructed the Waste Collection Authorities (WCA) to prepare recycling plans. The problem for the WCAs, however, is that they are realizing that collect schemes are too expensive. The key to make any waste management and recycling programme costeffective is to implement energy recovery, where the cost of reclamation outweighs the economic value of the recovered material. Unfortunately, this is not always MANAGEMENT

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MANAGING THE ENVIRONMENT IN MEGACITIES -possible. But the real key issue in achieving the proposed 25 per cent recycling target seems to be waste minimization. The French Government initiated on April 16th, 1992, a new voluntary waste recycling programme launched b\, the French Agency for the Environment and Energy Conservation (ADEME). The programme consists in creating a mark, ‘Retour’, a black square with a pink bmtomerang, which will be awarded by ADEME to industries that offer, as a condition of a product’s sale, ttj recover from consumers the waste originating from their goods. The French system will resemble the ‘green pslint’ German system, except that the French mark will bf? awarded to companies and not to products. This programme has been undertaken in anticipation of new EC legislation on waste disposal and recovery.”

Industrial Initiatives Ir dustry has started recently to become more actively involved in the environmental debate, and specially in view of the activities to organize the United Nations C.mference on Environment and Development (UNCED) (Rio de Janeiro, Brazil, June 3rd-14th, 1992). A,cording to an industry lobby group, there are three basic mechanisms that can be used to move business to internalize environmental costs of pollution or to limit the damage to the environment: (1) Command and ccntrol, (2) Self-regulation, and economic instruments. From these mechanisms industry seems to favour ‘selfregulation’, which refers to initiatives by corporations or sectors of industry to regulate themselves through standards, monitoring, pollution reduction targets, and the like.23 From the industrial point of view, not everything can be achieved by regulation. For example, it seems better to shape behaviour through economic incentives, such as taxes on energy consumption and clean water, in-tead of on employment and the creation of wealth. Dow Chemical, one of the world’s leading chemical m,+nufacturers with 1990 sales of $19.7 billion and operation in 32 countries established since the 196Os, a ‘W’asle Reduction Always Pays’ programme (WRAP). Tie Dow approach emphasizes that ‘the best solution to environmental problems is not to produce them in the first place’. This conviction led to the establishment of a yield improvement programme that analyzed the company’s manufacturing processes, looking for ways to ma.ximize resource use efficiency by using fewer raw materials, and less energy per unit of product. Thus, less waste was generated.24 Re.ycling Industry is committed to invest significant amounts of money and time in waste minimization and waste recycling programmes. For example, in Japan the bottle manufacturers have launched a joint effort to recall their products and alleviate the waste problems of Japanese mrgacities. The Japanese PET Bottle Association has

decided to build a 5,000 tonnes per year PET recycling plant in the Kanto district near Tokyo. The association will also build plants in Osaka and Nagoya in the near future. Although incineration was originally the preferred solution for PET bottles, Japanese demand for PET resin reached 126,000 tonnes in 1991, vs. 116,000 tonnes in 1990. Japanese soft drink makes have formed a Study Group for Recycling PET Bottles for Beverages and is working with the PET Bottle Association.” In Brazil, Brahma, the leading beer and draft beer producer with an annual operating profit of $100 million, is launching a national campaign to encourage the recycling of aluminium cans and one-way glass bottles. Brahma is investing $1 million in the production, advertisement and implementation of the project, which will first operate in the schools of Rio de Janeiro and Sao Paolo States. The company will also accept its competitors’ packaging in the recycling campaign. According to Brahma, which consumes 42,000 cans per month, the lack of recycling increased can costs; a can purchased in the US for 8 cents costs 14 cents in Brazil. The price of the aluminium can represents 60 per cent of the cost of the final product while the one-way bottle represents only 25 per cent of the total cost of the drink. Brahma will benefit if IATAS, the Brazilian subsidiary of Reynolds International, the sole producer of aluminium cans in Brazil, starts using recycled aluminium in production and decreases the price of the product. Brahma plans to extend the campaign to other Brazilian cities.26

Community Participation After recognizing that the management of the environmental problems of megacities was a task that government alone could not carry out, self-help programmes and community development initiatives were introduced. Their most significant beneficiaries were the low-income inhabitants of megacities. National policies paid more attention to equity in access to employment, shelter, and basic resources; the use of indigenous materials in buildings; energy conservation, transportation and land-use problems; and rehabilitation and upgrading of older structures. Citizen participation increased in decision making about human settlements, with the encouragement of governments. In some cases, the national emphasis on development policy shifted from maximizing economic growth to improving the quality of life for the poorest. Getting consumers to participate and establish markets for recovered materials are the keys to successful recycling programmes. Municipalities can require consumers to segregate their recyclables for pick-up, permit others to retrieve the valuable components, or encourage a central processing plant to sort the refuse. Consumers may alternatively be advised to return selected items to the place of purchase or take them to collection or redemption centres. Community-based upgrading and housing programmes

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also have the additional benefit of providing employment for informal enterprises. For example, the production of building materials has been a crucial element in the success of self-help programmes. The role of international financing institutions, like the World Bank, in encouraging self-help projects is of paramount importance for this type of scheme.

(4)

(5)

(6)

Initiatives originated by Individuals The role of the non-governmental organizations in conserving and protecting the environment has proved to be very successful. For example, Friends of Hope is a group of Tokyo citizens trying to help clean up their neighbourhood. Each month, captains choose the cleanup locations, details of which are sent to members via postcards. The group has 26 members, all women, chaired by Sachi Mori, and it is occasionally boosted by help from one-time attenders.27 In Brazil, organizations like Amigas da Terra, and Pro-vita, have succeeded in getting local participation in the solution of specific environmental problems in the city of Rio de Janeiro. In Mexico, a group of intellectuals, under the name of ‘Grupo de 10s Cien’ (Group of the one hundred), has become a kind of ‘environmental consciousness’ of Mexican society.

A Few Questions to be Answered As we approach the end of the twentieth century, trends indicate that more people will be moving to megacities and economic growth will keep rising in those settlements. Thus, it seems timely to ask a few questions: 1.

2.

3.

The lnfomal Sector Scavenging is a contribution of the informal sector to waste management. In Mexico City, the dump sites support at least 10,000 families. Scavengers in Orange County, California, bid each week for the right to salvage from one of the four county landfills.** This type of activity, however, is not a recommended manner of managing waste because of the low living standards and health risks associated with it.

4.

What we have learned: Main Factors of Success, a Few Questions to be Answered

7.

After examining some of the main environmental issues in megacities and the important role that industry plays in minimizing waste, as well as the new business opportunities that have started to emerge for industries which are participating in preventing and solving environmental problems of large cities, a number of preliminary conclusions can be reached. Main Factors of Success At least six important lessons can be drawn from our experience in applying solution approaches to the environmental management of megacities: (1) (2) (3)

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Waste management is an opportunity, not a burden. Industrial waste minimization generates profits and reduces adverse environmental impacts. The responsibility of managing megacities must be shared by different sectors of society. Industry is a sector that can significantly contribute to minimize and control waste. EUROPEAN

The promotion and use of materials derived from waste recycling and the development of waste minimization systems and manufacturing processes are increasingly realistic for profitable business. Partnerships with environmental groups and local communities are essential for successful waste management programmes. Environmental management and economic performance go together.

5.

6.

How can environmental strategies reconcile conflicts of interest in individual and specific strategies? How can the private sector effectively participate in solving the environmental problems and in optimizing the environmental opportunities of megacities? What type of market signals would be more effective in order to reflect the true environmental costs of using resources? If an energy tax is introduced in megacities to discourage the irrational use of resources, what should be its size? Should energy resources be taxed according to availability as well as their potential contribution (carbon content) to global warming? How much of the megacities’ growth is due to natural increase and how much to the increasing impoverishment of rural areas? How can society determine the sustainable capacity of megacities? What type of market mechanisms must be introduced in order to encourage people to relocate outside the megacities?

These and other questions must be answered by policy makers, and by society in general, in order to increase the chances of finding successful solutions to the megacities’ environmental problems.

Notes United Nations Development Programme. Human Development Report 1991. U.N. New York, May, 1991. Megacities are defined as settlements with one million or more inhabitants. World Resources Institute. World Resources. 1990-91. Oxford University Press. New York, 1990. Holdgate, M.W. et al. The World Environment 1972-1982. Chapter 9. Human Settlements. Tycooly International, Dublin, 1982. 5. Sources: World Bank (1991); Fundacion Universo Veintiuno, 1990; CONADE, 1988; INEGI, 1991. 6. Megacities frequently face a problem of improper inflow and outflow of resources. For example, in Hong Kong every day the city needs to bring in 6,000 tonnes of food, 11,000 tonnes of liquid fuel, 9,300 tonnes of raw materials MANAGEMENT

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---and about 1 million tonnes of fresh water. On the same basis 8,100 tonnes of products are exported each day, together with 820,O~ tonnes of liquid sewage and 2,850 tonnes of refuse. For example: uranium mining, uranium mills, fuel enrichment, reactor operation, and spent-fuel reprocessing. A specific type of hazardous waste is the one generated by educational establishments, the medical world, research laboratories, tradesmen, and farmers. OECD. The State of the Environment. Paris, 1991. Note. These statistics, provided by the United Nations, include amounts which have been recorded and reported by governments. At the moment there is no certainty that these statistics properly reflect the amounts of hazardous waste generated in Eastern European countries. Source: IJNEP. Saving Our Planet. Challenges and Hopes. Nairobi, May, 1991. OECD. The State of the ~~~~~ru~~e~f. op cit. OECD. The State of the Environment. op cit. IJnited Nations. Basel Convention on Control of i’ransboundary Movemetzts of Hazardous Wastes and fheir ~?~s~~sa~. Basel, Switzerland, March, 1989. Elkington, J., and Shopley, J., Cleaning Up: US Waste Management Technology. WRI. March 1989. Washington. OECD. Environmental Policy and Technical Change. Paris, 7985. In some instances the ecological impact of recycling certain products or materials could be larger than that of manufacturing the product again. Swiss, A., German Survey. Too high a price? in f:nvironment Risk. April, 1992. London. OECD. The State uf the ~n~?~r~n~ffenf. op. cit. Eiditor. ‘Recycling prodded as waste mounts’. NikkeiWeekly. Nov. 1991. Lentd, J.M., Cleaner Paints Critical to South Coast Air Quality. Modern Puinfs and Coatings journal. Vol. 81, Number 10. October 1991. USA. Recycling Plans. UK Local Authorities Formulate Strategies. Warmer Bulletin. May 1992. London. New Programme to Award ‘Retour’ Mark to Firms Engaging in Waste Recovery. l~fe~ufional Environment ~~e~rf~r, May 6, 1992. Schmidheiny, S., with the Business Council for Sustainable Development. Changing Course. MIT Press. May, 1992. Schmidheiny, S., with the Business Council for Sustainable Development. Mana~ng Cleaner Production, Changing Course. op. cit.

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Construction of PET-Bottle Recycling Plant on Schedule. fapan Chemical Week. June 27, 1991. Tokyo. 26. Brahma lanca campanha para estimular a reciclagem de vidro e aluminio. South-American Business information November 6, 1991. 27. Walker, J., Multinational Volunteer Corps Struggles with Tokyo Trash. fapan Times Weekly. International Edition. Vol. 31, Number 19, May, 1991. 28. Johnson, S., Around the Country, Resource Rec$itig. ]anua@February, 1986. 25.

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