Appendix C: FCA Landfill Model - Description of Costs not included in the Model

1 Site selection costs

Site selection for a new landfill can be a long and involved process, which requires identifying suitable siting criteria, considering a number of possible locations, a number of stages of site investigation and elimination, and extensive consultation.

A comprehensive site selection process is likely to include the following steps:

desk-top study to identify possible sites
inspection of possible sites
various stages of site elimination based on investigations
consultation
preliminary assessments of effects on the environment of short-listed sites
final site selection.

The costs of a landfill site selection process can be substantial. However, a comprehensive site selection process based on sound scientific and engineering principles and involving extensive consultation can reduce the time and cost involved in the resource consent application process.

The site selection process may involve research on a number of potential sites, and that may not create an asset. Normally TLAs or private sector landfill developers consider these costs as general expenditure. In some cases (for example, regional approaches) they may ultimately be included in the final indicated base cost of disposal. For simplicity, only the costs of research and investigations that can be attributed directly to the site finally chosen are included in the FCA model.

2 Environmental and community-related costs

There are environmental and community issues relating to landfills that are not direct or indirect financial costs paid by the waste manager. These relate to externalities that occur on a local, national or global scale.

Externalities are costs (or benefits) that are borne by (or accrue to) society in general and which in the past have not generally been accounted for in decisions relating to landfills. They may influence perceptions and decision-making, and therefore require consideration. This guide includes only the financial costs associated with externalities paid by the local authority waste manager. Externalities are identified so that they can be taken into account during the decision-making process.

All landfill sites have the potential to create adverse effects on the environment through:

discharges to land, groundwater, surface water and air
effects on local ecology
community effects.

A wide range of factors contribute to externalities as a result of landfills, including the composition of the waste stream, and the:

size
physical characteristics
age
location
design and operation standards

at the landfill site.

New Zealand does not have explicit national standards for the design, construction and operation of landfills (although these may be implemented in future along with other elements of an overall national waste minimisation strategy). Landfill design and operation, while often undertaken in accordance with the CAE Landfill Guidelines and accepted current practice, depends on the specific site characteristics, and local and regional environmental and community standards or values.

In order to obtain consents under the RMA from the relevant consenting authority, a landfill must be designed, engineered and monitored to ensure that it will not have significant adverse effects on the surrounding environment. During the resource consent application process it must be demonstrated how the potential effects of a specific site can be avoided, remedied or mitigated.

Because legislation requires waste managers to avoid, remedy or mitigate some effects, some externalities are internalised (taken into account) in the financial costs of landfill development, operation and aftercare through the resource consent process.

The calculation of the cost to society of all externalities associated with landfills is beyond the scope of this guide. However, some externalities are detailed here because they can have a significant effect on the decision-making process and therefore need to be considered by local authority waste managers.

Discharges to land, groundwater, surface water and air

Landfills are designed and operated to avoid, remedy or mitigate actual and potential effects on the environment. The final decision on the design, operation and monitoring requirements rests with the appropriate consenting authority or the Environment Court.

The cost relating to the effects on the environment of a landfill is considered to be accounted for in the costs of siting, resource consent applications, design, operation and monitoring, as these are the costs relating to the avoidance of actual and potential effects.

Effects on local ecology

Discharges into the environment can have adverse effects on local terrestrial and aquatic plants and animals. These effects are considered to be accounted for in the costs of siting, resource consent applications, design, operation and monitoring, as these are the costs relating to the avoidance of actual and potential effects.

Community effects

Siting and developing a landfill can have a number of adverse effects on the local community. In general, people do not like having a landfill sited near to them. The community effects are created by a number of factors including:

the effects of landfilling practices
the potential for or perception of a drop in land values
community disruption.

The effects of landfilling practices

Historically, landfill sites have not been well sited or operated, which has resulted in adverse effects on site neighbours. Examples are:

increased traffic volumes and vehicle sizes
mud on roads
visual effects due to poor siting and screening
litter
noise
odour
dust
vectors and vermin (birds, flies and rats)
health effects
landfill gas (LFG).

Drop in land values

Residents may feel that having a landfill close to them will adversely affect their property values. This issue is very site-specific and, depending on the circumstances, has been demonstrated as being highly variable - from a temporary, short-term reduction in value to a long-term, permanent reduction in property values, where significant impacts or visual amenity loss have occurred.

Community disruption

The proposal to site a landfill invariably results in objection from the local community. This can lead to a significant amount of community disruption during the siting and consenting process.

Siting procedures ensure that the most appropriate site is selected for a landfill, and a comprehensive public consultation programme can go a long way towards educating the public on the effects of modern landfills and reduce the potential for widespread opposition and community disruption. However, a degree of community disruption can be expected during the siting and consenting processes.

Cost of community effects

Community effects are partly taken account of in landfill siting, community consultation and resource consent procedures. The costs associated with these activities are included in the full costing model. These costs, however, may not take account of all issues.

One approach, which is adopted overseas, and has been used in New Zealand for some new large landfill sites, is the payment of 'host fees' to the local community affected by the landfill, for appropriate community projects, such as a community hall. Host fees, where they apply, need to be included as a cost in the FCA model.

Opportunity cost of land

Land used for development of a landfill is not available for other uses until such time as the landfill is closed and rehabilitated. Even then the range of potential uses is limited by the potential for adverse effects on people and the environment. The value of the net benefit forgone by the community in using the land for a landfill, rather than for some alternative use, is the 'opportunity cost' of that land.

However, the value of land when used as a landfill may be higher than for the existing or alternative land uses, in which case opportunity cost does not apply. For this reason, and the fact that the waste manager incurs no cost, community opportunity cost is not included in the FCA model.

3 Cost of financial assurances

A financial assurance (see Appendix D), or environmental bond, is a financial provision for the remediation of an environmental accident if a landfill operator goes bankrupt or walks away from the site. It makes money immediately available to a regulatory authority to undertake remedial measures.

Where local authority waste managers are required to provide an environmental bond, this can take the form of a bank guarantee. The annual cost of maintaining a bank guarantee generally ranges from 1% to 3% of the value of the bond. If a bond is required, the cost of its provision is included in the FCA model.

The costs of making provision for a form of financial assurance, other than provision of a bond, should also be included, if required.

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