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Wellington “waste catchment” trial: An investigation into a new model for waste monitoring

1 Introduction

2 Identifying the Wellington waste catchment

3 Waste facilities in Wellington region

4 Analysis of landfill data 2003–2005

5 MfE source surveys

6 Effect of pricing on landfill tonnages

7 Evaluation of the waste catchment model

Appendix 1 – Special wastes – by landfill

Appendix 2 – Letter to waste operators

6 Effect of pricing on landfill tonnages

A secondary objective of the project has been to use the accumulated data from the landfills to assess the effect of gate charges, and specifically changes in gate charges on waste flows in the Wellington catchment. The following sections examine this issue in detail by examining waste flows on four occasions when gate charges were changed.

It is important to take into account that only changes to the “advertised” gate charges for casual customers are being examined. Landfills customarily give substantial discounts on the advertised gate charge to important customers, and the extent and timing of the changes to these charges is not known.

6.1 Increase in gate charges at Northern and Southern landfills – April 2003

The gate charges for general waste at Northern and Southern landfills, owned by Wellington City Council, were both raised on 1 April 2003. The following table sets out the gate charges and the waste flows into those facilities for periods before and after the charges were increased. Data for Spicer landfill are also included, as, due to its close proximity to Northern landfill, its waste flows were also likely to be affected.

Table 6.1 – Effects of changes in gate charges at Northern and Southern landfills

The data that have been used for the analysis of Northern and Southern cover six-month periods, and the change in gate charges occurred in the middle of that period. Therefore, the January–June data include three months at the old gate charge and three months at the new gate charge and the effect of the increase in gate charges is not as evident as it might be if a month-by-month analysis had been done.

Following the increase in gate charges, waste entering Southern landfill (excluding cover material/cleanfill and special waste) decreased. The decrease is matched closely by increases in similar waste streams at Northern and Spicer. If tonnages at Southern in the three months after the increase in gate charges were equivalent to the average of the next six months, Southern would have experienced approximately a 30% decrease in waste. During this period, the gate charge at Silverstream was $55.00/tonne, and its waste flows were unaltered.

6.2 Increase in gate charges at Silverstream landfill – July 2005

In July 2005, Hutt City Council increased the gate charge at Silverstream and Wainuiomata landfills from $55.00/tonne to $68.00/tonne. The monthly tonnages for Silverstream landfill in 2005 are shown in the figure below for the “commercial” and “domestic” waste streams. These are terms used in Hutt City Council’s analysis of landfill data, and are not used in necessarily the same manner as elsewhere in this report.

Figure 6.1 – Tonnages at Silverstream landfill – 2005

The data do not show any decrease in landfill tonnages after the increase in the gate charge on 1 July 2005. This is likely due to the Silverstream gate charge, even after the increase, still being marginally lower than other landfills in the catchment at the time.

6.3 Decrease in gate charges at Southern landfill – 1 July 2006

On 1 July 2006, Southern landfill lowered its gate charge from $101/tonne to $78/tonne. At this time, the gate charge at Silverstream landfill remained constant at $68/tonne. The MfE source survey was undertaken from Wednesday, 28 June to Tuesday, 4 July. During the three week-days prior to Southern landfill lowering its gate charge, 11.0%, by weight, of all waste that was weighed by the weighbridge (i.e. all loads other than unweighed vehicles) originated in Wellington. On the two weekdays after Southern had lowered its gate charge, 5.6% of all waste that was weighed by the weighbridge originated in Wellington.

Although the sample size is small, this could indicate that a proportion of vehicles transporting waste originating in Wellington no longer disposed of it at Silverstream after the significant price differential between Southern and Silverstream landfills had been removed. The possibility must also be considered, however, that the decrease in waste from Wellington is related to weekly fluctuations in waste flows.

6.4 Increase in gate charges at Northern landfill – September 2004

From the period April 2003 until September 2004, Northern and Spicer landfill, which are geographically in close proximity, had similar gate charges. The gate charge per tonne at Northern landfill was $50.00/tonne and Spicer $52.00/tonne. On 1 September 2004, the gate charge at Northern was raised from $50.00/tonne to $71.70/tonne. On 11 October 2004, the gate charge at Spicer was raised to $70.00/tonne.

The figure below, adapted from a figure supplied by Eddy Klaasen, of Porirua City Council, illustrates the effect of the price change by Northern landfill during the six week period until Spicer raised its charge.

While the tonnage of residential waste remained relatively unchanged, the general waste tonnage at Spicer increased 66% during the short period where there was a marked differential in gate charges. The tonnage dropped again when Spicer increased its gate charge to the same level, but was still 47% higher than the pre-September period. After the Christmas holiday season, the Spicer tonnage dropped again, and the average for the first six months of 2005 was only 12% above the pre-September period.

6.5 MfE source survey at Spicer landfill – 2006

The MfE source survey at Spicer landfill was undertaken from 19–25 June 2006. At this time, the gate charge at Southern landfill, in Wellington City, was $101/tonne and at Spicer landfill, in Porirua City, was $70/tonne. The source survey produced the results in the table below (also presented as Table 5.4)

Table 6.2 – Results of source survey at Spicer landfill

A significant proportion of all of the waste streams disposed of at Spicer landfill have been generated in Wellington City. While transport issues for the waste carriers, such as travel times and the distance between the generator and the landfill, are likely a factor, the pricing differential is also likely to be an incentive for waste disposal at Spicer. As the gate charge at Southern was lowered in July 2006 to $78/tonne, another source survey may show that waste flows have changed.

Discussion

It is to be expected that the waste disposal market reacts to changes in pricing structure at landfills. This is shown most clearly by the sudden increase in waste being disposed of at Spicer landfill for the short period in September 2004 when there was close to a $20/tonne differential between the gate charges at Spicer and Northern. The market’s reaction to gate charges is also shown by the decrease in tonnages of general waste to Southern landfill after the increase in gate charges at Southern in April 2003.

Given the distances between the landfills in the region, however, it is not expected that substantial changes in waste flows would result without considerable differential in gate charges. The sharp increase in waste being disposed of at Spicer landfill (presumably waste that would otherwise have been disposed of at Northern landfill) in 2004 is largely due to its proximity to Northern landfill.

It would be expected that the “general” waste market would be most inclined to shift to follow changes in gate charges. The unweighed vehicle sector is generally less well-informed about pricing issues, and is likely to use a disposal facility based on its convenience, rather than the cost. The cleanfill sector, for the most part, pays disposal rates that are markedly lower than the gate charge, and would have less financial incentive to change disposal facilities than the “general” waste market.

During the MfE source survey at Spicer landfill, the 388 vehicles, mainly trucks, carrying waste classified as “general” had an average load weight of 2.6 tonnes. For the short period when there was a $20/tonne price differential between Northern and Spicer, a vehicle carrying the average load of waste would have saved $52 by disposing of the load at Spicer. This is assuming that the full gate charge was being paid.

A saving of this magnitude must be balanced against the extra distance travelled, the extra time involved, and, for commercial waste operators, the disruption to normal collection schedules. One confidential estimate puts the total cost of running a large waste vehicle at approximately $5/km. At that cost, a $52 saving in the landfill gate charge would be offset by travelling only an extra 10 kilometres.

While the waste disposal market will doubtlessly react to large differentials in gate charges, for large commercial operators any changes to disposal pathways will be based on economic calculations involving the extra costs involved. The effect of gate charges may be greatest for small waste operators, for whom travelling extra distances may be considered worthwhile.

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