1. Executive summary

1.1 Introduction

The Out and About Recycling and Litter Initiative (the Initiative) is being investigated by the Ministry for the Environment (MfE) as a possible nationwide project to encourage recycling behaviour in the wider community and to provide recycling facilities to tourists and visitors.

It is driven by the need for a broad and coherent campaign promoting appropriate recycling behaviour by people at home (as with local kerbside recycling schemes) and also in the public arena, when they are 'out and about'. The project incorporates a variety of stakeholders, including central and local government, recycling operators, retailers, packaging producers, brand owners and advertising representatives.

A pilot trial of the Initiative has been operating at the Botany Town Centre in East Auckland for almost a year, providing some useful benchmark data on recyclables yields, operating costs and advertising revenues.

A business feasibility study for the Initiative is now required to establish whether a sustainable business model exists to increase recycling behaviour amongst the general public and also to provide convenient recycling facilities for tourists and visitors.

1.2 Key requirements

The key requirements to be addressed in respect of the Initiative are as follows:

Establishing and understanding the full costs of recycling, including any tangible and intangible costs and benefits, relative to key stakeholders.
Understanding the requirements and perspectives of key stakeholders and how these competing requirements can be balanced to ensure the outcomes of the Initiative are achieved optimally. A key consideration will be the views of recycling companies who collect the recyclable materials and deliver them for further processing. Much of the New Zealand recycling market comprises small, private operators who fulfil this function. Given the current poor profitability within this component of the recycling industry, this will be a significant issue in terms of the range of materials that may be collected, especially outside of the main urban centres.
Quantifying the likely revenue generated from this project, including benefits to all parties. In order to determine this, Cranleigh will model the key drivers of the recycling industry, including potential revenue sources (materials and advertising), costs of recovery, property costs and other significant factors. It is important that MfE recognise that the business model will vary substantially depending upon spatial distribution of Out and About bins within New Zealand.
Understanding the short and long term timeframes for implementing any changes. The most significant issue will be to find and secure a number of suitable sites. The most practical way to achieve this promptly will be to work alongside organisations that operate from multiple sites, such as supermarkets and petroleum companies.

1.3 Conclusions

Based on the research Cranleigh has undertaken, it has been determined that the Initiative should be commercially sustainable on either a Limited Roll Out or National basis, although a Limited Roll Out scenario presents increased risk to the Initiative's investors. Under prevailing market conditions either option should return a profit, though the National Roll Out option is significantly more profitable.

Key conceptual drivers for the Out and About Initiative include improving the public perception and acceptance of recycling; reducing litter in public places and waste going to landfills and the satisfaction of stakeholder needs.

Significant commercial drivers for the Initiative include market demand for outdoor/ambient advertising in recycling bins; availability and cost of suitable bin locations; recyclables volumes and their respective market prices; and collection and operating costs.

Potential risk factors for the Initiative include restrictions on site tenure, vandalism of bins, lack of demand from advertisers, management/operational issues, strong competition in the advertising sector, and changes in legislation which adversely affect the Initiative's success.

Key commercial sensitivities for the Initiative include advertising revenue generated by the bins and advertising occupancy rates. Fluctuations in these factors significantly influence the Initiative's overall profitability, particularly in the case of the Limited Roll Out scenario.

The most financially viable and effective approach would be a National Roll Out over three years, involving 2,000 bins. This model, which generates substantial economies of scale, reduces the Initiative's vulnerability to possible declines in advertising revenue and/or reduced advertising occupancy rates on bins. An investment of $4 million would be required to successfully implement a nationwide scheme.

Advertising on litter and recycling bins is a proven commercial concept internationally and an established subset of the 'street furniture' sector of outdoor advertising. A variety of companies, including JC Decaux (the world's second-largest outdoor advertising firm), operate a successful business model which generates attractive profitability from on-bin advertising sales.

Many international companies offer bins free of charge to local authorities and busy commercial sites, as rapid payback on their investment is generated from advertising commissions. There are no apparent reasons why this should not also be the case in New Zealand.

It is important to note, however, that the success of the Initiative in New Zealand is dependent upon the buy-in of advertising agencies and advertisers. It is essential that substantial advertising contracts be put in place before the Initiative is rolled out.

1.4 Next steps

To progress from here, the following steps could be undertaken with a view to rolling out the Initiative:

Convene a meeting or meetings with stakeholders to determine their level of interest. This would be followed by the formation of a small steering group of those wishing to participate actively in the Initiative.
Determine the most suitable bin design(s). This may be an existing product from an international supplier or an original design incorporating elements discussed in this report to produce a tailored solution for the Initiative and suited to New Zealand conditions.
If an original design is chosen, obtain quotes from manufacturers to identify the best-value option. If an overseas model is chosen identify whether direct importing or licensed local manufacture will be more cost effective.
Undertake a nationwide geospatial (GIS) modelling exercise, to identify optimum bin placement sites, taking into account factors such as:
- areas of highest foot traffic in both public and private space, such as shopping malls, public transport depots and main streets
- key tourist sites, tour bus stops and travel routes
- areas with high levels of packaged product consumption, such as public food courts, student cafeterias, etc
- places with seasonally high levels of foot traffic and consumption, such as holiday camp sites and popular beaches.

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