Should the market decide where the waste goes? Municipal bidding war between private landfills in Santiago de Chile

Abstract

Decentralisation and privatisation shaped infrastructure allocation in many developing countries that underwent structural readjustment policies. Chilean municipalities exemplify these trends: they were shaped under neoliberal policies imposed during the dictatorship led by Augusto Pinochet (1973-1990). The case of landfill siting and waste disposal contract allocation in the Santiago Metropolitan Area (SMA) illustrates this regime inspired by local government competition and privatisation. This research dives deep into the origins and dynamics of ‘competition in the market’ among three private landfills. It then proposes a transshipment optimisation model to assess monetary costs and greenhouse gass emissions from waste transfer to landfills in 42 municipalities. This methodology allows evaluating decentralisation and privatisation of landfill siting and disposal contract distribution in the SMA. Our model shows a potential reduction of 18.31 percent of the total monetary cost of transfer, disposal and treatment, 32 percent of monetary waste transfer costs, and 1.72 percent of green house gas generated by transfer, disposal and treatment. In conclusion, the existent market structure has not fully optimised origin–destination monetary and environmental costs, leaving significant room for improvement through coordination and development of more targeted forms of public–private partnerships.