Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis Report May 2024 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis © 2024 The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved. This activity was funded by the City Climate Finance Gap Fund, a Multi-Donor Trust Fund with support from the Governments of Germany and Luxembourg. This work is a product of The World Bank. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy, completeness, or currency of the data included in this work and does not assume responsibility for any errors, omissions, or discrepancies in the information, or liability with respect to the use of or failure to use the information, methods, processes, or conclusions set forth. The boundaries, colors, denominations, links/footnotes and other information shown in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. The citation of works authored by others does not mean the World Bank endorses the views expressed by those authors or the content of their works. Nothing herein shall constitute or be construed or considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved. Rights and Permissions The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. Attribution—Please cite the work as follows: “World Bank. 2024. Armenia SWM Sector Assessment and Reform Plan. © World Bank.” Any queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. Cover photo: Authors. Further permission required for reuse. 2 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis Content 1. EXECUTIVE SUMMARY .................................................................................................................................. 5 2. INTRODUCTION ............................................................................................................................................ 8 3. CITY OF YEREVAN.......................................................................................................................................... 8 3.1 CITY PROFILE .......................................................................................................................................................... 8 3.1.1 Population ...................................................................................................................................................... 8 3.1.2 Socio-economic profile ................................................................................................................................... 8 3.2 POLICY AND INSTITUTIONAL FRAMEWORK ................................................................................................................. 12 3.2.1 Policy framework .......................................................................................................................................... 12 3.2.2 Institutional set-up ....................................................................................................................................... 13 3.2.3 Relevant initiatives ....................................................................................................................................... 14 3.3 DEMAND ANALYSIS ................................................................................................................................................ 15 3.3.1 Current municipal waste generation ............................................................................................................ 15 3.3.2 Waste forecast.............................................................................................................................................. 15 3.3.3 Waste composition ....................................................................................................................................... 16 3.4 CURRENT WASTE MANAGEMENT OPERATIONS ............................................................................................................ 18 3.4.1 Waste collection ........................................................................................................................................... 18 3.4.2 Source separation and recycling .................................................................................................................. 20 3.4.3 Waste disposal.............................................................................................................................................. 22 3.5 CURRENT COSTS AND FINANCING ............................................................................................................................. 23 3.5.1 Current financing of waste management activities ..................................................................................... 23 3.5.2 Tariff structure for households and commercial sector ................................................................................ 24 3.5.3 Billing and revenue collection systems and rates ......................................................................................... 25 3.5.4 Cost recovery and cross-subsidization .......................................................................................................... 26 3.5.5 Affordability of tariffs ................................................................................................................................... 26 4. IMPROVED WASTE OPERATIONS AND COST IMPLICATIONS............................................................................27 4.1 IMPROVED WASTE OPERATIONS ............................................................................................................................... 27 4.1.1 Scenario 1. Improved waste disposal ........................................................................................................... 28 4.1.2 Scenario 2. Source separation of dry recyclables ......................................................................................... 29 4.1.3 Scenario 3. Waste recovery system .............................................................................................................. 30 4.2 COST IMPLICATIONS ............................................................................................................................................... 32 5. CONCLUSIONS AND RECOMMENDATIONS ....................................................................................................32 List of Tables TABLE 1. SCENARIOS FOR IMPROVED WASTE MANAGEMENT .............................................................................................................. 6 TABLE 2. COST COMPARISON OF DIFFERENT SCENARIOS, IN USD/TON ................................................................................................. 7 TABLE 1. POPULATION OF YEREVAN, 2011-2023 ........................................................................................................................... 8 TABLE 2. MONTHLY EXPENDITURE PER CAPITA, AMD ..................................................................................................................... 10 TABLE 3. ANNUAL UNEMPLOYMENT ............................................................................................................................................ 10 TABLE 4. AVERAGE NOMINAL MONTHLY SALARIES, AMD ................................................................................................................ 10 TABLE 5. NUMBER OF FAMILIES RECEIVING FAMILY AND SOCIAL BENEFITS ........................................................................................... 10 TABLE 6. REPORTED AMOUNTS OF WASTE DISPOSED BY YEREVAN COMMUNITY................................................................................... 15 TABLE 7. POPULATION FORECAST FOR YEREVAN, 2024-2043 ......................................................................................................... 15 TABLE 8. ANNUAL WASTE FORECAST FOR THE CITY OF YEREVAN, TONS ............................................................................................... 16 TABLE 9. WASTE COMPOSITION RESULTS IN YEREVAN, 2016 ........................................................................................................... 17 TABLE 10. WASTE COLLECTION FLEET IN YEREVAN, 2024 ............................................................................................................... 18 TABLE 11. QUANTITY OF RECYCLABLES COLLECTED IN 2023 AND CURRENT PRICES FOR RECYCLABLES ....................................................... 21 TABLE 12. SUMMARY OF ACTUAL COSTS ON WASTE SERVICES, MILLION AMD ..................................................................................... 23 TABLE 13. WASTE CLEANING AND COLLECTION OPERATING COSTS STRUCTURE , THOUSAND AMD .......................................................... 24 3 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis TABLE 14. SUMMARY OF ACTUAL REVENUE FROM WASTE FEE, MILLION AMD .................................................................................... 24 TABLE 15. 2024 MONTHLY WASTE FEES FOR HOUSEHOLDS AND LEGAL ENTITIES ................................................................................. 24 TABLE 16. PLANNED AND ACTUAL REVENUE FROM WASTE FEE, MILLION AMD ................................................................................... 25 TABLE 17. YEREVAN WASTE SERVICE COST RECOVERY, MILLION AMD ................................................................................................ 26 TABLE 18. AVERAGE MONTHLY PER CAPITA INCOME AND EXPENDITURES , 2011 AND 2021 ................................................................... 26 TABLE 20. SCENARIOS FOR IMPROVED WASTE MANAGEMENT .......................................................................................................... 27 TABLE 21. MAIN PARAMETERS OF SCENARIO 1, WASTE DISPOSAL ..................................................................................................... 28 TABLE 22. MAIN PARAMETERS OF THE SOURCE SEPARATION AND SORTING SYSTEM, 2025 .................................................................... 29 TABLE 25. MAIN PARAMETERS OF WASTE DISPOSAL, SCENARIO 3 ..................................................................................................... 31 TABLE 26. MAIN PARAMETERS OF MBT OPERATION ...................................................................................................................... 31 TABLE 27. QUANTITIES OF WASTE RECOVERED AND LANDFILLED, 2025 ............................................................................................. 32 TABLE 28. COST COMPARISON OF DIFFERENT SCENARIOS, IN USD/TON ............................................................................................. 32 List of Figures FIGURE 1. REVENUES FROM SALE OF RECYCLABLES AND OPEX OF SOURCE SEPARATION SYSTEM, 2020-2022, MILLION AMD ...................... 5 FIGURE 2. GDP OF ARMENIA AND YEREVAN, MILLION AMD ............................................................................................................ 9 FIGURE 3. GDP PER CAPITA, YEREVAN AND MARZES, AMD .............................................................................................................. 9 FIGURE 4. EXPENDITURES BY QUINTILE GROUPS, YEREVAN, 2021..................................................................................................... 10 FIGURE 5. ACTUAL REVENUE STRUCTURE, ADMINISTRATIVE BUDGET IN 2023, YEREVAN, MILLION AMD ................................................. 11 FIGURE 6. ACTUAL EXPENDITURES OF YEREVAN ADMINISTRATIVE BUDGET IN 2023, MILLION AMD ........................................................ 12 FIGURE 7. 2023 ACTUAL CAPITAL EXPENDITURES, MILLION AMD ..................................................................................................... 12 FIGURE 8. ORGANOGRAM OF YEREVAN COMMUNITY ..................................................................................................................... 14 FIGURE 9. RESULTS FROM WASTE COMPOSITION IN YEREVAN, 2016 AND 2019.................................................................................. 17 FIGURE 10. CONTAINERS CURRENTLY IN USE IN YEREVAN ................................................................................................................ 18 FIGURE 11. TRUCKS CURRENTLY IN USE IN YEREVAN ....................................................................................................................... 19 FIGURE 12.CONTAINERS FOR SOURCE SEPARATION ......................................................................................................................... 20 FIGURE 13. RECYCLED WASTE, 2020-2022 ................................................................................................................................. 21 FIGURE 14. REVENUES FROM SALE OF RECYCLABLES AND OPEX OF SOURCE SEPARATION SYSTEM, 2020-2022, MILLION AMD .................. 21 FIGURE 15. NEW CONTAINERS FOR SEPARATE WASTE COLLECTION ..................................................................................................... 22 FIGURE 16. NUBARASHEN DISPOSAL SITE ..................................................................................................................................... 23 List of abbreviations ACE/AUA Acopian Center for the Environment at the American University in Armenia CDW Construction and demolition waste CEPA Comprehensive and Enhanced Partnership Agreement CII Waste commercial/institutional/non-process industrial sources CPI Consumer price index EBRD European Bank for Reconstruction and Development EPR Extended Producer Responsibility EU European Union GDP Gross domestic product GEP Greening and Environmental Protection Enterprise MBT Mechanical biological treatment MRF Material recovery facility MSWM Municipal Solid Waste Management MTPEF Medium-Term Public Expenditure Framework RDF Refuse derived fuel RA Republic of Armenia SWM Solid Waste Management YWCSC Yerevan waste collection and sanitary cleaning 4 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis 1. Executive summary Waste generation and composition In 2024, quantities of municipal waste exceed 350,000 tons a year. Due to the projected slow increase of population and the expected increase of population income, the quantities of municipal waste are expected to increase by more than 18% in 2043, to reach about 420,000 tonnes a year. Organic waste is the predominant fraction – about 57%, while recyclables are estimated to be about 25% of the total waste. Current waste operations Waste collection. Waste collection service coverage in Yerevan is 100%. The waste collection fleet consists of 42 trucks and there are around 10,500 waste containers of 1.1 m3 capacity installed within the city. Waste collection is performed by a communal enterprise, established in 2019. Waste collection costs amounted to about 27 USD/ton (about 10,900 AMD/ton) in 2022, which shows efficiency of waste collection service, given the size and density of the urban population. Waste disposal. The current waste disposal site does not meet any engineering standards and is unsuitable from an environmental point of view. It is the largest dumpsite in Armenia and its uncontrolled operations pose significant environmental and health risks. The EBRD-funded project for construction of new landfill and closure of existing ones was approved in 2016. The next efforts of the city in improving the waste management system are expected to be directed towards the establishment of a sanitary landfill. Source separation and recycling. In 2020, the Community of Yerevan initiated a source separation program by establishing 135 points for separate collection of dry recyclables. These collection points will be increased to 300 in 2024, which is about 10% of the total need for complete coverage of the population of the city with separate waste collection points. The diagram below shows the costs for source separation and revenues from the sale of recyclables in the period 2020-2022. Revenue and OPEX of source separation system, million AMD 140 120 100 116 108 80 60 69 40 20 41 27 13 0 2020 2021 2022 Revenue OPEX Figure 1. Revenues from sale of recyclables and OPEX of source separation system, 2020-2022, million AMD At present, revenue from the sale of recyclables could cover only about 35% of the operating costs. The expansion of the source separation system could be conducted either through continuing subsidizing the activity, or through the implementation of Extended Producer Responsibility (EPR) mechanism, which is expected to enter into force in the upcoming years. Costs and financing 5 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis Current waste fees are low and hinder service development. Waste service costs grow annually without change in the scope and quality of the service as salaries grow with economic growth and fuel prices rise. Keeping the level of waste fees unchanged for years provides false signals to users, undermines the importance of the service and its development towards waste recovery and prevention. Adequate budgeting for investment. Communal waste management plan with adequate budgeting for investment and replacement of depreciated equipment (containers and trucks) needs to be the base of budgeting of service costs. When the community provides the waste collection service, investments in waste collection equipment is covered by the capital part of the communal budget. In this way, the equipment cost is not considered as part of the cost to be annually recovered from service fees. Depreciation costs of the waste collection equipment should be included in budgeting of service cost as a first step towards full cost recognition and sustainable waste service. Cost of landfill disposal is ignored . The Comprehensive and Enhanced Partnership Agreement (CEPA) includes provision for full recognition of the landfill cost. It is provision for implementation towards 2024. The EU Council Directive 1999/31/EC, requires measures to be taken to ensure that all of the costs involved in the setting up and operation of a landfill site, including as far as possible the cost of the financial security or its equivalent referred to the estimated costs of the closure and after-care of the site for a period of at least 30 years to be covered by the price that is charged by the landfill operator. Polluter pays principle. Establishment of a full cost recovery mechanism in accordance with the polluter pays principle (PPP) and extended producer responsibility (EPR) is another CEPA provision to be achieved towards 2027. Polluter pays principle requires costs of pollution inflicted on the natural environment to be borne by those who cause it. Waste generators should pay the full cost waste collection, sanitary disposal and landfill rehabilitation, within affordability limitations. In general, separate waste collection and recycling increase waste management costs and EPR schemes are introduced to cover the costs not recovered by the sale of recyclables. Improved waste operations Three different scenarios of an improved waste management system are analyzed in Section 4 of the Report. It should be noted that the analysis constitutes a high-level prefeasibility type assessment and is based on certain assumptions, related to both costs and potential revenue, which have to be verified with more in- depth analysis before investment decisions are taken. Table 1. Scenarios for improved waste management Waste management Scenario 1 Scenario 2 Scenario 3 component Waste disposal Establishment of sanitary Establishment of sanitary Establishment of sanitary landfill landfill landfill Source separation of Source separation of dry Source separation of dry recyclables - recyclables in 3-container recyclables in 3-container system system Sorting of source Sorting of source Sorting of source - separated recyclables separated recyclables separated recyclables Treatment of mixed Establishment of municipal waste mechanical biological - - treatment (MBT) plant for treatment of mixed municipal waste The table below shows the discounted total annual costs (in USD per ton of waste) for collection, source separation, sorting, treatment and disposal of the three options for system optimization. Grant financing of assets has not been considered. 6 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis Table 2. Cost comparison of different scenarios, in USD/ton Components Option 1 Option 2 Option 3 Waste collection 27.7 26.3 26.3 Separate waste collection 0.0 8.5 8.5 Sorting facilities 0.0 5.2 5.2 MBT 0.0 0.0 32.5 Landfills 12.8 12.8 6.1 Sub-total costs 40.5 52.8 78.6 Revenue from recycling 0.0 -6.9 -9.2 Total costs 40.5 45.9 69.4 Affordable service cost, USD/ton 70.7 70.7 70.7 As seen from the table above, Scenarios 1 and 2 are well within the threshold of affordable service cost. It should be noted that if EPR schemes are in place, in Scenarios 2 and 3, the cost for separate waste collection and sorting would be covered by the EPR schemes and not the communities. In that case, the overall costs of Scenario 2 become identical to the overall costs of Scenario 1. This is the effect that is expected EPR to have on financing the recycling costs of municipal waste. Еven the most expensive option – Scenario 3 – would be within the estimated affordable service cost threshold. Scenario 3 would lead to a very high rate of waste recovery – about 64% - which means that only about 36% of the pre-treated municipal waste will be landfilled. Landfill costs would be negligible under this scenario, due to the reduced quantities of waste for landfill and the diversion of biodegradable waste from landfill, which would significantly reduce the landfill treatment costs. Waste management priorities in the short term . Establishment of sanitary landfill and expansion of the source separation system are the most expedient option in the short-term for Yerevan. From one side, this scenario would resolve the most pressing waste management issue for the community – waste disposal. From another side, further expanding of the source separation system would lead to multiple benefits; significant reduction of quantities of municipal waste to be landfilled, preserving these quantities of waste as resources for the local economy, and sizable job creation. Once the EPR schemes are in place, the recycling costs would no longer be covered by the Community, but by the EPR organization(s). This scenario would lead to waste management costs of about 46 USD/ton, or about 18,600 AMD/ton, which is well within the defined affordable service cost (70.7 USD/ton). In terms of waste charges, implementation of this scenario would mean setting-up the waste fee to 400 AMD/person/month, if the principle of polluter pays principle is observed. Waste management priorities in the medium term. The large quantities of waste generated by the city and the overall favorable socio-economic situation justify the establishment of integrated waste management system which includes a large-scale waste treatment facility. Both full-scale source separation and waste recovery systems would lead to a very high rate of waste recovery – about 64%. This would also significantly increase the life of the sanitary landfill. The waste management costs are expected to be about 69 USD/ton (after revenue), or about 28,200 AMD/ton. In terms of waste charges, implementation of an integrated waste management system (sanitary landfill, source separation of recyclables and sorting at material recovery facility, and mechanical biological treatment of residual waste) would mean setting-up the waste fee to 610 AMD/person/month, if the principle of polluter pays principle is observed. Although affordable, this option would require an increase of waste management tariff above the legally established threshold of 400 AMD/person/month. This will necessitate either amendments in the national legal framework, or sizable public subsidization of the waste services. The recommended scenario in Yerevan could be implemented through a set of actions that include: preparing and implementing investments for the rollout of city-wide source separation, constructing a materials recovery facility and a new sanitary landfill, closing existing dumpsites, and moving towards full cost accounting and cost recovery by improving the budgeting system and revising the waste fees. 7 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis 2. Introduction The present report presents an analysis of the waste management system of Yerevan. It investigates the quantities of municipal waste generated and makes a projection what would be the waste generation in the next 20-year period of time. It also provides a description of the solid waste management (SWM) system in place in terms of operations, infrastructure and facilities in place, institutional arrangements, currents costs incurred and financing of the waste management system. Besides, this Report tries to provide a critical overview of the municipal waste management sector in Yerevan and outline specific areas for improvement. Four different scenarios of an improved waste management system are analyzed in the report. The analysis points to potential efficiency gains that could be achieved and presents the cost implications of improved waste operations. The Report concludes with recommendations about the steps that could be undertaken by the city to improve the overall performance of the waste management system in the short- and medium-terms. The exchange rate used in the Report is AMD 406 = USD 1. 3. City of Yerevan 3.1 City profile 3.1.1 Population Yerevan is the capital and largest city in Armenia. It has special administrative status, along with the other 10 Marzes1 in the country. It is the only settlement in the country which witnessed an increase of its population in the last 20 years. The table below presents the population of Yerevan for the period 2011-2023. For the period of 2011-2023, the population of the city increased by about 3%. Table 3. Population of Yerevan, 2011-2023 City 2011 2020 2021 2022 2023 Yerevan 1,060,100 1,084,000 1,091,700 1,092,800 1,098,900 Source: Statistical Committee of RA 3.1.2 Socio-economic profile Yerevan is the largest economical center of the RA. In 2021, the city generated 57% of the national GDP2. 1 Marz is the Armenian for an administrative province 2 Statistical data in the chapter is from “Yerevan City Of The Republic Of Armenia In Figures 2018-2022”, 2023, Armstat 8 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis GDP Armenia and Yerevan 8,000,000 7,000,000 6,000,000 million AMD 5,000,000 4,000,000 58% 57% 3,000,000 60% 2,000,000 1,000,000 0 2019 2020 2021 Armenia 6,543,322 6,181,903 6,991,778 Yerevan 3,820,049 3,703,091 4,014,379 Figure 2. GDP of Armenia and Yerevan, million AMD In 2022, the city’s share of national output in key sectors was as follows: • industry 34.8%, • construction 43.3%, • services 86.1% Industrial activity in Yerevan is diversified including chemicals, primary metals and steel products, machinery, rubber products, plastics, rugs and carpets, textiles, clothing and footwear, jewellery, wood products and furniture, building materials and stone-processing, alcoholic beverages, mineral water, dairy product and processed food. The diagram below summarises data on GDP per capita for Yerevan and the 10 Marzes of RA. GDP per capita, Yerevan and Marzes 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 AMD 2,000,000 2020 1,500,000 2021 1,000,000 Average 2021 500,000 0 Figure 3. GDP per capita, Yerevan and Marzes3, AMD The average monthly income per capita in Yerevan in 2021 was 95,939 AMD, which was 26% higher than the average for the country. The table below summarises monthly average expenditures per capita in Yerevan 3 High GDP per capita in Syuniq region is due to its mining industry, mostly for export. 9 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis and Armenia, with average annual nominal growth in Yerevan 2019-2021 of 6.9% (compared to average annual consumer price index (CPI) growth for the period 5.9%): Table 4. Monthly expenditure per capita, AMD Monthly expenditure per capita, AMD 2019 2020 2021 National average 47,324 51,907 49,999 Yerevan 59,986 64,568 68,569 The graph below shows differentiation in monthly per capita expenditures by quintile groups: Monthly expenditures by quintile groups, 2021 120,000 105,288 100,000 80,000 68,569 AMD 60,000 54,623 40,000 40,631 30,608 20,000 18,817 0 I II III IV V By quintile groups Average Figure 4. Expenditures by quintile groups, Yerevan, 2021 Statistical data for the period 2020-2022 shows a higher unemployment rate in Yerevan than the average for the country. The data also shows continuous decreasing trend in unemployment: Table 5. Annual unemployment Unemployment rate 2020 2021 2022 National 18.2% 15.5% 13.5% Yerevan 23.6% 21.6% 16.5% The table below presents the growth of nominal salaries for the country and for Yerevan, higher than the CPI growth and corresponding to decrease of unemployment: Table 6. Average nominal monthly salaries, AMD Nominal wages/salaries, AMD % increase from the previous year 2020 2021 2022 2021 / 2020 2022/ 2021 Armenia 189,716 204,048 235,576 7.6% 15.5% Yerevan 208,044 224,815 266,164 8.1% 18.4% Statistical data shows low share of population receiving social support in Yerevan and the number of people in vulnerable groups is continuously decreasing: Table 7. Number of families receiving family and social benefits 2018 2019 2020 2021 2022 Armenia 92,564 86,197 86,927 82,328 72,748 Yerevan 14,574 13,695 13,832 12,638 10,804 In 2022, families receiving benefits represented approximately 3% of the population of the city. 10 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis Communal budget revenue and expenditures Data on implementation of 2023 communal budget is from the official website of the community. Total revenues amounted to 114,830 Million AMD, total expenditure to 111,166 million AMD resulting in 3,664 million surplus. Revenues include revenue of the administrative part of the budget 113, 494 million, of which 3, 118 million from the reserve fund are transferred to capital budget, thus total revenue to capital budget amounted to 4,454 million AMD4. The revenue structure of the administrative part is presented in the following figure: Other own revenue, 4,711, 4% Taxes and fees, Local services including waste, 27,797, 25% 17,227, 15% State budget for State subsidies, delegated powers, 21,304, 19% 42,456, 37% Figure 5. Actual revenue structure, administrative budget in 2023, Yerevan, million AMD Revenue from waste fees amount to 3,937.5 million AMD or 3.5% of the revenue of the administrative budget. Total expenditure of 111,166 million AMD includes 97,012 million administrative expenditures and 14154 million capital expenditures. The structure of the administrative expenditures is presented in the following graph: 4Direct revenue to capital budget 1,335 million AMD + 3,118million AMD transfer from administrative part (reserve fund). 11 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis ADMINISTRATIVE BUDGET EXPENDITURES, MILLION AMD Health and social, General public Reser fund , 1,875, 1,995, 2% services, 10,775, 11% 2% Education, 34,649, 36% Economic services, mainly transport, 26,232, 27% Waste services, 7,105, 7% Culture, 5,464, 6% Residential and housing, Other environmental 4,178, 4% services, 4,740, 5% Figure 6. Actual expenditures of Yerevan administrative budget in 2023, million AMD The structure of capital expenditures is presented in the following graph: 1,813 860 Economic services, Health, social, civil protection mainly electricity 6% 13% 1,226 General public services 9% 4,815 314 Housing Waste service 34% 2% 1,418 Other environmental services 10% 1,830 1,878 Education Culture 13% 13% Figure 7. 2023 actual capital expenditures, million AMD 3.2 Policy and institutional framework 3.2.1 Policy framework The Community of Yerevan is currently developing an integrated 5-year waste management plan, which is expected to be finalized in the middle of 2024. Below, details are provided from some of the key policy documents of the community. 12 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis Yerevan 2024 Development Program One of the development priorities set for 2024 is the continuous improvement of the quality of waste collection and sanitary cleaning services. This is also one of the two measures outlined in the Program. The other one is implementation of the Yerevan Solid Waste Management Project, which envisages establishment of a new landfill and closure of the two existing communal dumpsites. Yerevan Green City Action Plan, 2017 Yerevan Green City Action Plan sets the following strategic objectives related to waste management, by 2030: • 100% of MSW as well as other waste generated will be managed in appropriate waste disposal or waste treatment facilities and in accordance with EU standards. • More than 99% of producers of MSW and other waste will pay an appropriate obligatory fee for its collection and disposal. • Recycling rate for MSW will be more than 30%, for other waste streams it will be more than 60%. • The revenue from the integrated sorting and recycling system will account for recovery of more than 20% of MSW management costs. In terms of development of infrastructure and planning, some of the key measures include: • Construction of a new sanitary landfill and closure of Nubarashen and Ajapnyak dumpsites. • Construction of a recycling facility through public-private partnership. • Pilot project for composting of biodegradable waste. • Development of 10-year MSW plan. 3.2.2 Institutional set-up Two departments within the institutional structure of Yerevan city deal with waste management – Nature Protection Department and Communal Services Department. The Nature Protection Department is the communal policy-planning body. Besides, it is also responsible for: • Participating in the development of state environmental programs. • Development of environmental-related programs, concepts, and measures. • Implementing the measures envisaged by the respective environmental state programs on the territory of Yerevan. • Coordinates and supervises the greening plans of Yerevan. The main functions related to waste management of the Communal Services Department are the following: • Organizes waste collection in the territory of the city. • Controls the work performed by waste collection operators in the administrative territory of Yerevan. • Monitors the implementation of contractual obligations of Erebuni Cleaning LLC, which operates the Nubarashen landfill on a lease basis. • Provides assistance to state hygienic and anti-epidemic services in performing waste collection enforcement and control. The current institutional set-up is presented in the figure below: 13 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis Figure 8. Organogram of Yerevan Community In 2019, the Community of Yerevan established a Communal Unitary Enterprise, ‘Yerevan Waste Collection and Sanitary Cleaning’ (YWCSC), responsible for waste collection, street cleaning and snow removal operations within the administrative boundaries of Yerevan city. Being established as a not-for-profit, the enterprise cannot generate profit. Prior to 2019, waste collection service had been contracted to private operators. The main reason for switching to a communal enterprise was reportedly an overall dissatisfaction with the service provided by the private operators. The communal enterprise reports to the Community Council, while its daily operations are supervised by the Communal Services Department. In 2020, the Community of Yerevan also established another communal non-commercial organization, ‘Greening and Environmental Protection’ (GEP), responsible for landscaping activities, but also for source separation of dry recyclables and bio-waste composting. Although it is established as a non-commercial organization, it is allowed to engage in business operations. The GEP’s scope of operation in relation to waste management includes: • establishing recyclables reception facilities, installation of separate waste collection bins, temporary storage of recyclables. • reception of hazardous waste, temporary storage and transfer to licensed hazardous waste treatment entities. • collection of bulky waste from residents for further treatment or landfilling • sales of recyclables for the further recycling or reuse. This communal enterprise reports to the Community Council, while its daily operations are supervised by the Nature Protection Department. 3.2.3 Relevant initiatives Yerevan Solid Waste Management Project 5 The project is financed by the European Bank for Reconstruction and Development (EBRD) and was approved in 2016. The feasibility study envisages construction of a new sanitary landfill on an area of 29 hectares adjacent to the existing landfill of Nubarashen. The project also includes closing of the existing disposal sites of Nubarashen and Ajapnyak, and acquisition of landfill equipment. The capacity of the new landfill is designed for 8.8 million m3 of waste, with estimated lifetime of about 28 years of operation. 5 https://sudipyerevan.am/en/waste-management/ 14 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis In 2016, the overall investment project was estimated to cost EUR 26 million. Financing comprises of a loan of EUR 8 million from the European Investment Bank, EUR 8 million loan from EBRD, a grant from the EU Neighbourhood Investment Facility in the amount of EUR 8 million to support priority investments in solid waste management, and EUR 2 million grant from Eastern European Energy Efficiency and Environment Partnership. Tender procedures for construction were announced over last few years, but these turned out to be unsuccessful. It is not entirely clear when the next tender will be announced. 3.3 Demand analysis 3.3.1 Current municipal waste generation Nubarashen disposal site is not equipped with weighbridge and the waste is not weighed. According to officials from Yerevan Community, about 1,000-1,300 tonnes of municipal waste are disposed on a daily basis. The table below shows the reported amounts of waste disposed by Yerevan Community for the period 2020- 2022. Table 8. Reported amounts of waste disposed by Yerevan Community Marz 2020 2021 2022 Yerevan 413,750 318,175 347,300 Source: Statistical Committee of RA Based on the quantities assumed to be disposed in 2022, it can be estimated that the waste generation rate was 317 kg/capita/year, or 0.87 kg/capita/day. The Municipal Solid Waste Management 2021-2023 Strategy and Roadmap also assumed that the waste generation rate in Yerevan was 0.9 kg/capita/day. Given the lack of empirical data on the actual generated quantities, the above waste generation rates will be used for projecting the waste quantities in Yerevan. Within the framework of Advisory Study on the Municipal Solid Waste Management in Yerevan 6 the consultants estimated that 24% of the municipal waste was attributed to the commercial and institutional sectors. No other studies in the country have analyzed the percentage of commercial waste from the total waste generated. 3.3.2 Waste forecast 3.3.2.1 Population forecast The population forecast is developed based on the tendency established for the city of Yerevan for the period of 2011-2023. These dynamics are used to make a projection of the population for the next 20-year period. The table below shows the population forecast for the period of 2024-2043. Table 9. Population forecast for Yerevan, 2024-2043 Region 2024 2030 2035 2043 City of Yerevan 1,102,119 1,111,832 1,121,630 1,134,830 Source: own elaboration 6Advisory Study on the Development of the Solid Waste Management System in the City of Yerevan through Private Sector Participation, the World Bank, 2008 15 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis According to the forecast, at the end of the 20-year period, the population of Yerevan will have increased by about 3%. 3.3.2.2 Economic growth The Medium-Term Public Expenditure Framework (MTPEF) of the RA envisages GDP growth of 7% for the period of 2024-2026. The MTPEF outlines the main expenditure directions and priorities of the Government during the next three years and lays a basis for drafting the next year’s Annual Budget. Despite the strong economic growth experienced in 2022-2023, due predominantly to influx of migrants, businesses, and increased capital following Russia's invasion of Ukraine, the World Bank has projected that growth will ease and stabilize at the rate of 4.3% in the next two years7. For the purposes of developing a waste forecast, the projection of the World Bank is used, being more conservative. Growth of municipal waste is assumed to be 0.2% per 1% income growth, according to correlation of waste and income levels drawn in the papers of the World Bank8. At annual income growth of 4.3%, annual waste generation growth of 0.86% is assumed. 3.3.2.3 Waste forecast Waste generation is dependent on two main factors: population and economic growth. The following assumptions are used for developing the waste forecast. • 2023 is the base year; • Population dynamics as established by the Statistical Committee of the RA for the period 2012-2023 and presented in section 3.3.2.1; • GDP per capita is assumed to increase by 4.3% annually until 2035 and by 3% after that; the same percentages are applied to the increase of population income; • Increase of waste generation is defined as 0.2 % of each percent income increase in accordance with the correlation by the World Bank; • The current waste generation rate for the city is defined as 0.9 kg/cap/day or 323 kg/cap/year9 . The table below presents the projected quantities of waste for the next 20-year period. Table 10. Annual waste forecast for the city of Yerevan, tons City 2024 2030 2035 2043 Yerevan 355,711 377,765 396,740 421,086 As seen from the table above, the quantities of municipal waste are expected to increase by more than 18% at the end of the planning period. 3.3.3 Waste composition In 2015, a waste composition survey was conducted within the framework of ‘ Qualitative Analysis of Municipal Solid Waste in Armenia, Croatia, Cyprus, F.Y.R.O.M. and Ukraine – Methodology and Results’ 7 https://www.worldbank.org/en/country/armenia/overview#3 8 Sandra Cointreau, Urban papers 2, July 2006 Occupational and Environmental Health Issues of Solid Waste Management, table 3, p. 8 9 The rate was established for the city of Vanadzor within the framework “Feasibility Study for Integrated Solid Waste Management Vanadzor, Armenia” Project 16 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis Project. The survey consisted of taking 9 samples from different residential areas in Yerevan. The samples were taken between 24-28 November 2015. The most recent waste composition survey in the city of Yerevan was conducted in 2019. The survey was conducted within the framework of a larger Waste Quantity and Composition Study in the Republic of Armenia10. Three samples were taken between 24-28 November 2015 covering different types of housing in the city, including commercial objects. The methodology included sorting of municipal solid waste into 22 waste fractions. The diagram below shows the results of the two surveys. Waste composition in Yerevan City 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% Biowaste 57.6% 50.7% Paper&cardboard 7.0% 8.9% Plastics 11.4% 17.3% Glass 3.2% 5.5% Metal 3.5% 2.5% Textile 2.7% 5.6% Other 14.5% 9.7% 2016 survey 2019 survey Figure 9. Results from waste composition in Yerevan, 2016 and 2019 The most significant differences between the two studies are related to plastics and organic waste. Although the survey in 2019 was more recent, more samples were analyzed during the survey of 2016 and for the purposes of this report the results of this survey will be considered as more representative. The average results for Yerevan from the 2016 survey are presented in the table below, along with the respective quantities of the different waste types. Table 11. Waste composition results in Yerevan, 2016 Waste type Percentage Tons Biowaste (garden and kitchen) 57.0% 202,755 Paper 2.7% 9,675 Carton 4.0% 14,051 Tetrapak 0.3% 1,209 Glass 3.2% 11,383 PET 2.1% 7,470 PE film 5.1% 18,284 Other Plastics (PS, PP, PVC, HDPE) 4.2% 15,082 Ferrous Material 3.2% 11,383 10LL Bolagen. (2020). The RA Waste Quantity and Composition Study. Yerevan: AUA Acopian Center for the Environment and AUA Manoogian-Simone Research Fund, American University of Armenia. 17 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis Waste type Percentage Tons Aluminum 0.3% 1,067 Textile 2.7% 9,604 Leather - Elastic 0.3% 1,067 Wood 0.6% 2,134 Diapers/ Sanitary 4.4% 15,651 Fine materials <10mm 5.8% 20,631 Inert 4.0% 14,264 Total 100% 355,711 3.4 Current waste management operations 3.4.1 Waste collection Between 2014 and 2019, waste collection was performed by a private operator. Dissatisfaction with the overall quality of the service led to establishment of a communal enterprise in 2019, which took over the waste collection and street cleaning service. Waste collection service coverage in Yerevan is 100%. There are around 10,500 waste containers of 1,100- liter capacity installed within the city. Around 90% of those are plastic waste containers and 10% are metal ones. According to the waste collection operator, preference is given to plastic containers, since they are easy to repair, while metal containers are damaged easier when loaded onto the waste collection trucks. Figure 10. Containers currently in use in Yerevan Containers are installed without preliminary planning or an assessment. In fact, containers are placed in areas “suitable for it” providing that there are no complaints from residents. The number of containers at each collection point is determined based on their filling up rate. If containers are quickly filled up with waste, an additional container is added. The YWCSC has staff in each administrative district of the city, who are in charge of monitoring and supervision of the waste collection services. In terms of frequency, waste collection is done once per day for containers installed in the shared compound areas of multi-apartment buildings, and twice a day for containers installed on the streets. The waste collection fleet consists of 42 trucks. The communal enterprise was established in 2019, therefore all collection trucks are fairly new. Still, trucks in use require frequent maintenance. The useful life of KAMAZ trucks purchased in 2019 is reportedly 5 years, so the majority of these vehicles should be due for replacement next year. The table below presents the type of trucks presently in use. Table 12. Waste collection fleet in Yerevan, 2024 18 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis Make Total Capacity, m3 Permissible tonnage, kg МАЗ- 5904C2-010 4 17 7500 КАМАЗ КО-440В 23 16 7200 КАМАЗ КО-427-72 4 18.5 8200 ГАЗ МК-1541-14 11 8.2 1520 All trucks in use are rear loading, equipped with compaction. Yerevan Community has signed a contract for supply of 6 new Sinotruk Howo waste trucks (two 12 m3 capacity; and four 18 m3 capacity). The trucks will become operational by the end of 2024. The pictures below show the type of trucks in use in Yerevan. Figure 11. Trucks currently in use in Yerevan Each waste collection truck is serviced by one driver and two loaders. There are around 100 drivers and 200 waste loaders employed by the YWCSC, working in 2 shifts. The communal enterprise has plans to increase the number of drivers to 130 to ensure that around 50 drivers are available for each shift, taking into considerations holidays and sick leave. All waste collection containers and trucks are owned by the Community. Maintenance of the vehicles and containers is mostly outsourced. Legal entities pay waste charges as per the fees set by the Community Council. Legal entities use the same containers as those placed for households, which are served by the YWCSC. However, some legal entities opt to use their own containers, stored at their premises. These containers are served by a private company “Maqrutyun” LLC. The same company also provides waste collection services to single family houses, which have opted for using personal bins, instead of common containers. The cost of service is around AMD 5,000 per month per household and the waste collection frequency is every other day. Until recently, the main waste collection problem was the chutes in multi-apartment buildings. However, all the waste chutes in multi-apartment buildings have recently been closed and are no longer in use. 19 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis Collection of construction and demolition waste (CDW) is done by a private company selected by Yerevan community through an open tender. Producers of construction and demolition waste pay the community as per set fees (500 AMD per m3; or 1800 AMD per ton). The reason to use a private operator is that the YWCSC lacks vehicles for collection of construction and demolition waste. In the past, CDW used to be disposed at Ajapnyak disposal site, which was closed in 2018. CDW waste is disposed at the specially designated area 11. The area is an old stone mining site with a size of about 10 ha and is located in Spandaryan industrial hub (Ajapnyak administrative district). The management of bulky waste is not regulated. The usual practice is that bulky waste is left next to the containers for mixed household waste. There are several private companies and individual entrepreneurs providing bulky waste collection services, for which residents directly pay the private entity. 3.4.2 Source separation and recycling In 2020, the Community of Yerevan initiated a source separation program by establishing 135 points for separate collection of dry recyclables. The system consisted of 3 containers (1 blue container of 1,100 liter for plastics; 1 yellow container of 1,100 liter for paper and cardboard; 1 black container of 240 liter for glass). Metal packaging was not collected, reportedly due to lack of market for it. As already mentioned, a separate communal enterprise was established to deal with source separated materials - ‘Greening and Environmental Protection’. The enterprise had 12 trucks for its operations. About 40-50 workers are involved in separate waste collection. Figure 12.Containers for source separation In 2020, about 330 tons of recyclables were collected and sold to recycling companies. This quantity increased to about 690 tons in 202212. Recycled waste, tons, 2020-2022 800 700 49 54 38 600 30 500 400 300 8 0 577 600 200 325 100 0 2020 2021 2022 paper & cardboard plastic glass 11 Designated with decree of Yerevan Mayor No 2391-A dated 30.06.2016. 12 Assessment, Waste Segregation and Recycling Programme by Yerevan Municipality, 2020-2022, prepared within the framework of ‘Capital Cities Collaborating on Common Challenges in Hazardous Waste Management - Yerevan, Warsaw, Tirana’ Project, funded by the EU, April 2023 20 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis Figure 13. Recycled waste, 2020-202213 In 2022, the source separated recyclables comprised 0.19% of the total generated municipal waste quantities. The separately collected paper/cardboard and glass are delivered directly to different recycling companies, selected each year through an open tender. Sorting plant for separately collected recyclables is not established yet. The overall impression is that the quality of source separated materials is high. The waste sorting of plastic waste is done manually at the Yerevan communal greenhouse facility. In the period 2020-2022, the source separation system was not self-sustainable. Operating costs exceeded considerably the revenue from sale of recyclables. However, as seen from the figure below, with the increase of quantities of collected recyclables, the percentage of cost recovery increased too. In 2020, the cost recovery was at 19%, while in 2022, the percentage increased to 35%14. Revenue and OPEX of source separation system, million AMD 140 120 100 116 108 80 60 69 40 20 41 27 13 0 2020 2021 2022 Revenue OPEX Figure 14. Revenues from sale of recyclables and OPEX of source separation system, 2020-2022, million AMD15 The situation in 2023 remained the same. Costs of separate waste collection were around 110 million AMD (270 thousand USD), while the revenue from sale of recyclables was about 35% of costs. Currently, there are 141 source separation points established in the city. The table below presents the quantity of recyclables collected in 2023 and current prices for recyclables. Table 13. Quantity of recyclables collected in 2023 and current prices for recyclables Waste type Annual quantities delivered to The price of recyclables sold per kg, recycling companies in 2023 VAT included Paper and cardboard 600 tons 40-65 AMD Glass 30 tons 29 AMD Plastic: 30 tons - Polyethylene terephthalate (PET) 70 AMD - Polypropylene (PP) 150 AMD - Polyethylene (PE) 50 AMD The source separation system also covers more than 200 businesses. 13 Ibid. 14 Ibid. 15 Ibid. 21 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis In early 2024, Community of Yerevan received a donation of 930 new containers for separate collection of waste. The donation was made within the framework of an EU-funded project – ‘Capital Cities Collaborating on Common Challenges in Hazardous Waste Management - Yerevan, Warsaw, Tirana’. With the new containers, the number of source separation points will increase to 300, which will be able to cover about 10% of the population. The system will be expanded to cover source separation of metals and metal packaging (red container). Also, instead of the currently used black bin (240 l) for glass collection, new green containers of 1,100 l capacity and bottom emptying were supplied. The donation also included 2 crane loading trucks for servicing the new containers for glass. With the increase of quantities of separately collected recyclables, the revenue is likely to increase the cost recovery of the source separation. It is, however, unlikely to lead to full cost recovery. The analysis in section 4.1.2 shows that revenue from the sale of recyclables cover about 70% of the total costs for source separation and sorting of recyclables. Besides, the expansion of the source separation system will proportionally lead to increase of the residual waste in the containers for separate collection, which will require sorting of Figure 15. New containers for separate waste collection separately collected recyclables prior to their sale Source: https://www.ecolur.org/en/news/waste/15354/ to recyclers. Beside the formally organized source separation system, the informal sector is also active in recycling activities. Groups of informal waste pickers reside at Nubarashen disposal site where all kinds of recyclable materials (including batteries, accumulators and waste from electric and electronic equipment) are segregated and sold to recycling companies. Apart from source separation of dry recyclables, GEP is involved also in composting of green waste, which is collected through its landscaping activities. Composting is done on a rather small scale and for the purposes of its own plant production. 3.4.3 Waste disposal The collected municipal solid waste is disposed at Nubarashen communal dumpsite. It was established in 1950s, but was never permitted as a waste disposal site. Currently it occupies an area of about 50 ha and is the largest dumpsite in Armenia. It is operated by a private operator ‘Erebuni Maqrutyun’ LLC. The community is the owner of the dumpsite. A lease agreement was signed between Yerevan Community and the operator in 2004, whereby the operator pays annual lease fee to the community. This is a somewhat peculiar arrangement, having in mind that landfill operation is normally a next cost activity. 22 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis Nubarashen disposal site Location of Nubarashen disposal site Figure 16. Nubarashen disposal site In terms of infrastructure, there is no weighbridge installed and incoming trucks are not registered or monitored. That is why quantities of waste disposed on a yearly basis can be only roughly estimated. The site has no baseline sealing. Sporadically the generated leachate is covered with earth material. Reportedly, besides municipal waste, industrial wastes are disposed too. In 2009, within the framework of the agreement signed with the Yerevan Community and the Japanese "Shimitsu" corporation, a landfill gas collection and flaring project was implemented in the Nubarashen landfill. In the framework of the project, in an area of about 8 hectares, landfill gas collection system was installed. Collected gas is flared. The project envisaged landfill gas to be collected for a period of 16 years. The landfill operator does not charge a gate fee for waste disposed by YWCSC. The legal entities pay waste charges as per the fees set by the Community Council – either AMD 3,000 per m3, or AMD 10,000 per ton of waste. Another dumpsite was in operation for many years in Ajapnyak district, which was formerly a gravel stone mine. In 2016, it was designated as a disposal site for construction and demolition waste. However, in 2018 access to the site was closed, due to irregularities in operations and public protests. Since then, construction and demolition waste is being disposed in different locations around the city. A new communal company has already been established – ‘Yerevan New Landfill’ CJSC – which will be responsible for the operation of the new landfill, once constructed. 3.5 Current costs and financing 3.5.1 Current financing of waste management activities The legal framework does not require separate budgeting by cost centers and the total costs of the waste service, including cleaning, are summarized in the following table16. Table 14. Summary of actual costs on waste services, million AMD 16Reports on budget execution, https://www.e-draft.am/ru/projects/6876/about; https://www.yerevan.am/uploads/media/default/0002/18/fbddbf82cadcc9f9f68277cfb0644e02a94f4c16.pdf, Data is presented only according to aggregate data from reports on budget execution, as more detailed data available on websites does not correspond to the planned or actual cost as presented in the official reports. 23 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis Cost item 2022 2023 Administrative budget cost including: 7,070 7,104 • Payments related to new landfill project17 2,278 2,176 • Service cost (excluding payments related to new landfill) 4,792 4,928 Capital budget expenditures related to waste management 295 314 The plan for 2024 envisages growth of the service cost to 5.3 billion AMD. The structure of the costs for waste collection and sanitary cleaning is presented in the following table: Table 15. Waste cleaning and collection operating costs structure, thousand AMD Cost components, thousand AMD Value Share Remuneration and bonuses 3,167,456 69% Fuel, other vehicle cost 987,762 22% Maintenance 151,146 3% other costs18 286,260 6% Total operating cost 4,592,625 100% Source: Annex 6 of Communal budget plan for 2023 Service costs also include costs for collection of construction waste, approximately 335 million AMD. Communal budget plans for 2022 and 2023 do not envisage landfill disposal costs. Waste fee is envisaged by law to cover waste collection and disposal costs, while cleaning costs are covered from other communal budget revenue. The actual revenue from waste fees is as follows: Table 16. Summary of actual revenue from waste fee, million AMD Revenue 2021 2022 2023 Actual revenue from waste fee 3,471.9 3,658.3 3,937.5 Source: Reports on communal budget execution19 MSW costs in the period 2022-2023 increased by 3%, while the actual revenue from waste fee in 2022 and 2023 increased by 5% and 7.6% respectively. 3.5.2 Tariff structure for households and commercial sector Yerevan waste charges for 2024 are set through a decree of Yerevan Community Council No 43-N dated 26.12.202320, together with other local fees. Waste tariffs for 2024, point 22 of the Decree, are presented in the following table. Table 17. 2024 Monthly waste fees for households and legal entities Households/legal entities Yerevan tariff Range in Law Household, per registered resident 200 AMD 50-400 17 Payments for 2022 are included as per plan, as there are no details in the report on budget execution. Payment for 2023, is defined by the amount with which the administrative budget plan was revised from 5,029,9 to 7,205,9 million AMD or 2,176 million AMD. Payments related to the new landfill project are covered by state subsidy. 18 Insurance, clothing, other special purposes items. Other costs do not include depreciation costs. 19 Reports on budget execution - https://www.yerevan.am/hy/archive-documents-of-2021/, https://www.yerevan.am/hy/elders-decisions/archive/2022/4/?page=1, https://www.e- draft.am/ru/projects/6876/about 20 https://www.arlis.am/DocumentView.aspx?docID=188149 24 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis Households/legal entities Yerevan tariff Range in Law Trade and public catering 70 AMD per m2 50-100 Hotels and rest houses, transport stations (railway stations, airports) 30 AMD per m2 20-50 Administrative, financial institutions, communications, health care 18 AMD per m2 15-20 Schools, cultural centers, religious, worship, civil defense 4 AMD per m2 3-15 Military facilities 8 AMD per m2 3-15 Production, industrial, agricultural buildings (including parking lot) – 8 AMD per m2 5-15 According to point 22 4) of the Decree: Alternatively, the waste charges for legal entities with premises 1000+ square meters can be set as follows: • by volume of waste: 3,000 AMD per cubic meter, or • by mass of waste: 10,000 AMD per ton. It is to be noted that the above option was available in the Law on waste and sanitary cleaning, however that clause was repealed on 13.04.23 HO-137-N. Possible reason for repealing the clause could be that the upper limit of the household waste fee might be higher than the tariff set for legal entities, whether defined by mass21 or by volume. According to point 22 5) of the Decree, the waste disposal fee at the communal landfills is as follows: • by volume of waste: 3,000 AMD per cubic meter, or • by mass of waste: 10,000 AMD per ton. It is to be noted that if 22 4) and 5) are applied, the whole fee would cover only waste disposal. The waste fees both for the population and for legal entities (beside the administrative and financial category) are set at a level lower than the average of the range defined in the Law. The charges for collection and transport of construction and bulky waste generated by legal entities22, as well as the cost of permission issued to legal entities for own transport of construction and bulky waste is as follows: • 500 AMD per m3, • 1,800 AMD per ton. 3.5.3 Billing and revenue collection systems and rates The table below shows the planned and the actual revenue from waste fees: Table 18. Planned and actual revenue from waste fee, million AMD Revenue from waste fees, million AMD 2022 2023 Planned revenue 3,741 4,128 Actual revenue 3,658 3,937 Collection rate 98% 95% Source: Reports on communal budget execution Budget plans envisaged increase of revenue from waste fee by 10%, actual revenue increased by 7%. 21 If tariff for population is set as 400 AMD, and on assumption of 0.9 kg per day per person household waste generation or 330 kg per year, then households pay 400*12=4800 AMD/0.33 t = 14,545 AMD/t 22 Means the fee for service provided by Yerevan community. 25 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis 3.5.4 Cost recovery and cross-subsidization In Armenia waste costs are not budgeted per cost centers, i.e. cleaning, collection, treatment, disposal. On the other hand, in principle the waste fee aims to recover collection and disposal cost, while cleaning is assumed to be covered by other communal budget cost. The data in the table below is calculated under the assumption that 80% of the waste management costs refer to collection and 20% to cleaning 23. Table 19. Yerevan waste service cost recovery, million AMD Actual costs and revenue 2022 2023 Collection costs (80% of operating service costs) 3,834 3,943 Revenue from waste fees 3,658 3,937 Cost recovery 95% 100% The published budget execution reports do not provide the breakdown of revenue received from waste fees paid by legal entities and households. However, using 2022 Census data, and the monthly fee and collection rate of 98%, as defined above, it can be calculated that actual revenue from households amounted to 2,470 million AMD in 2022. This means that 68% of the collection costs were covered by revenue from household fees, while households are assumed to generate 76% of the total municipal waste24. Therefore, there was some cross-subsidisation of the operating cost of service from legal entities. However, taking into account that current costs included only operating costs for collection and not disposal, fees for legal entities are still way below the full-service cost recovery level. Dividing the waste collection cost in 2023 by the waste generated by Yerevan city (estimated as 355,700 tons), the waste collection unit cost, including separate waste collection to the degree provided, was 11,085 AMD/t, or 27.7 USD/t. 3.5.5 Affordability of tariffs Affordability is the price that customers can afford to pay without jeopardizing their ability to meet other basic needs. Affordability is mainly the ability to pay, which is assessed by analysis of statistical data. The adoption of affordability thresholds is useful for determining the tariff of public services, since it gives an objective assessment of adequate level of payment. Widespread criterion for affordability threshold for waste services for upper-middle income economies is 1% of the disposable income or 1% of actual expenditure, the latter one being lower. The Statistical Committee of RA (Armstat) publishes annually a statistical and analytical report “Social Snapshot and Poverty in Armenia”. The table below shows data on income and expenditure, based on data from the Armstat 2012 report25 and from “Yerevan City of The Republic of Armenia In Figures, 2023”, again published by Armstat: Table 20. Average monthly per capita income and expenditures, 2011 and 2021 Yerevan Urban Urban areas Yerevan areas 2011 2011 2021 2021 Average monthly per capita income 38,451 n.a. 81,467 95,939 23 In general, for Armenia is assumed that 2/3 of the waste management costs refer to collection and disposal and 1/3 – to cleaning. 2022 and 2023 communal budget plan do not envisage landfill disposal costs. 24 Estimates by the Advisory Study on the Municipal Solid Waste Management in Yerevan (2009) 25 https://armstat.am/file/article/poverty_2012e_3.pdf , for 2011 Yerevan data - https://armstat.am/am/?nid=439 26 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis Yerevan Urban Urban areas Yerevan areas Average monthly per capita consumption 35,041 42,189 56,540 68,569 Source: The Statistical Committee of RA Data for 2011 is included as comparison, as waste fee ranges were defined in the Law on waste collection and sanitary cleaning (2011) and have not been changed since. Incomes and expenditures increased substantially for the period. Applying the affordability criterion of 1% of expenditures, monthly per capita payment of 686 AMD can be defined as affordability threshold for 2021. 200 AMD represents 29% of 2021 affordability threshold, and as seen above, expenditures increase annually, in average by 5%. Therefore, the level of tariffs defined in 2011 in the Law on waste and sanitary cleaning is very low compared to the affordability threshold in 2021. 4. Improved waste operations and cost implications This section analyzes how an improved waste management system in Yerevan could look like and what would be the cost implications of such a system considering the established affordability threshold of waste services. 4.1 Improved waste operations Three different scenarios of an improved waste management system are analyzed in this section. The three scenarios are the following: Table 21. Scenarios for improved waste management Waste management Scenario 1 Scenario 2 Scenario 3 component Waste disposal Establishment of sanitary Establishment of sanitary Establishment of sanitary landfill landfill landfill Source separation of Source separation of dry Source separation of dry recyclables - recyclables in 3-container recyclables in 3-container system system Sorting of source Sorting of source Sorting of source - separated recyclables separated recyclables separated recyclables Treatment of mixed Establishment of municipal waste mechanical biological - - treatment (MBT) plant for treatment of mixed municipal waste Improved waste collection is not considered in the above scenarios due to the following factors: • The existing waste collection system is based on 1.1 m3 wheeled containers and large capacity rear- loading trucks, which is in accordance with the accepted international standards. • Waste collection costs amounted to about 27 USD/ton in 2022, which shows efficiency of waste collection service, given the size and density of the urban population. Still, it should be noted that further efficiency could be achieved by standardizing the waste collection fleet and gradually replacing the current vehicles with new ones, which have higher compaction rate and longer operational life. Standardization of the fleet would also reduce maintenance costs. 27 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis Revenues are assumed from the sale of recyclables in scenarios 2 and 3. However, it should be noted that markets for recyclables are highly volatile and sometimes prices could be low or even markets for certain materials may not be available (e.g. the recent situation with metal wastes in Armenia). Moreover, these scenarios assume a high rate of household participation in the source separation, which usually takes time for societies to develop such a level of compliance. These scenarios also assume that the informal sector would not be competing with the formally organized system and may as well be integrated in the separate collection and sorting activities. Lastly, it should be noted that the private sector is much more flexible when it comes to market fluctuations and sale of recyclable than public bodies and utilities. The following selling prices (without VAT) of materials are used for calculating the possible revenue: plastics - 56 AMD/kg; paper – 52AMD/kg; cardboard – 32 AMD/kg; glass and metal – 23 AMD/kg. 4.1.1 Scenario 1. Improved waste disposal This scenario envisages significant upgrade of the waste disposal situation in Yerevan by establishing an engineered sanitary landfill, as envisaged by the Yerevan Solid Waste Management Project. The landfill should meet the highest requirements in terms of environmental protection, including base sealing, landfill gas collection, and leachate collection and treatment. Basically, the envisaged landfill would meet the requirements of the EU Landfill Directive26. The main parameters of the improved waste disposal system are presented in the table below as well as the total operating costs (not discounted). Table 22. Main parameters of Scenario 1, waste disposal Parameter Unit Value Capacity of 1st cell ton 1,815,822 Lifetime of cell 1 years 5 Total capacity of landfill ton 7,795,648 Period of operation years 20 Staff employed № 37 Landfill equipment USD 2,774,000 Total CAPEX USD 18,400,00027 Total OPEX USD/year 1,676,503 Total costs USD/year 4,196,966 Cost per ton disposed USD/ton 11.7 The estimated cost per ton landfilled would be about AMD 4,800, or about USD 12. The estimated investment costs include not only the initial construction costs, but also cost for development of three additional cells, expansion of leachate and gas collection systems, and closure of cells which would take place immediately after commissioning of the new cells. The operating costs include staff costs, maintenance costs, consumables (energy, fuel, etc.), leachate and gas treatment costs, administrative costs, and insurances. Expectedly, improved waste disposal operations bring additional waste management costs, compared to the current system, which incurs costs only for sporadic use of earth material and a bulldozer. In terms of operating costs, the most significant part of the OPEX is attributed to fuel, followed by staff costs, maintenance and leachate treatment. 26Council Directive 1999/31/EC of 26 April 1999 on the landfill of waste 27These are the estimated costs for the initial development of the landfill. Subsequent development of new cells and auxiliary infrastructure, and closure of depleted cells is estimated to cost about 31,800,000 USD. 28 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis 4.1.2 Scenario 2. Source separation of dry recyclables The second scenario envisages the following operations: • Upgrade of the waste disposal system by establishing an engineered landfill (like scenario 1). • Expansion of source separation of dry recyclable materials to cover the entire Yerevan city. • Establishment of a material recovery facility (MRF) for source separated recyclables. The source separation will cover the entire population of the city. Source separation will be based on 3- container system: 1 container for paper/cardboard; 1 container for plastic and metal; and 1 container for glass. The envisaged containers would have capacity of 1100 liters. This system is based on the one already established in Yerevan. There are a variety of options. The different collection methods result in different quantities and quality of collected materials. For instance, a 2-container system with ‘dry’ bin for comingled recyclables and ‘wet’ bin for residual waste usually is less expensive. However, the dry/wet system often results in higher contamination in the dry bin. Selection of the most appropriate system should be made at a feasibility assessment stage. The MRF will process only materials collected in the containers for separate collection. In designing the source separation system, the following assumptions are used: • 25% of paper and cardboard will be captured by the separate collection system, and • 40% of tetrapak, glass, plastics and metals will be collected by the separate collection system The above assumptions are based on experience from other countries. Cardboard is predominantly generated by commercial establishments, which tend to have their own arrangements with paper and cardboard recyclers. In this scenario, the quantity of source separated materials obtained is estimated to be about 32,600 tons a year, which would represent more than 36% of total recyclable waste and about 9% of total generated waste. It should be noted that these are rather conservative assumptions and relate only to the initial period of system implementation. With the increase of public awareness and participation, quantities of separately collected recyclable materials will increase respectively. The quantities of municipal waste to be disposed by landfilling would be reduced to the extent that these same quantities are collected through source separation. Although about 9% of the total municipal waste would be source separated, the costs for improved waste disposal cannot be expected to be reduced significantly. This is because there are certain fixed investment and operating costs that do not depend on landfill capacity. For the purposes of the present analysis, it is assumed that the landfill cost would be reduced by 5% compared to Scenario 1. The main parameters of this scenario that includes source separation and sorting are presented in the table below. Table 23. Main parameters of the source separation and sorting system, 2025 Parameter Unit Value Source separation Containers for plastic and metal № 3363 Containers for paper/cardboard № 3363 Containers for glass № 3363 Trucks needed № 19 Capacity of trucks for paper/cardboard m 3 16 Capacity of trucks for plastic/metal m 3 16 Capacity of trucks for glass m3 10 CAPEX containers USD 4,637,543 29 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis Parameter Unit Value CAPEX trucks USD 3,150,000 Total OPEX USD/year 1,828,162 Total costs USD/year 2,805,669 Collected plastic ton 16,523 Collected metal ton 5,037 Collected paper ton 2,447 Collected cardboard ton 4,043 Collected glass ton 4,606 Cost per ton collected USD/ton 68 MRF Total capacity of MRF ton 50,000 Number of shifts № 2 Staff employed № 85 Total CAPEX USD 5,644,465 Total OPEX USD/year 1,151,486 Total cost USD/year 1,565,521 Cost per ton sorted USD/ton 37.7 Revenues from sale of recyclables Revenues from sale of recyclables USD/year 2,481,028 Costs after revenue Cost per ton collected and sorted USD/ton 57.9 Cost per ton generated USD/ton 6.4 The overall recycling costs are estimated at about 58 USD per ton of source separated recyclables, or about 23,500 AMD/ton. The overall costs of Scenario 2, after revenue from sale of recyclables, are estimated at 45 USD per ton of generated municipal waste, or 18,200 AMD/ton. 4.1.3 Scenario 3. Waste recovery system In November 2017, a Comprehensive and Enhanced Partnership Agreement (CEPA) was signed between the European Union (EU) and the Republic of Armenia (RA). The CEPA entered into force on 1 March 2021. One of the main provisions of CEPA is ensuring that the municipal waste is subject to treatment before landfilling. Scenario 3 envisages fulfillment of this provision. The entire municipal waste generated by the city of Yerevan would be subject to treatment before landfilling. Scenario 3 builds on scenario 2 and envisages the following operations: • Preserving the current waste collection system in Yerevan • Upgrade of the waste disposal system by establishing an engineered landfill with a significantly lower capacity, compared to scenarios 1 and 2, due to reduced waste quantities following intensive treatment • Introduction of source separation of dry recyclable materials and establishment of a MRF for source separated recyclables (like scenario 2) • Establishment of mechanical biological treatment (MBT) of mixed municipal waste with production of refuse derived fuel (RDF) The table below presents the main parameters of the improved waste disposal system. 30 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis Table 24. Main parameters of waste disposal, Scenario 3 Parameter Unit Value Capacity of 1st cell ton 656,175 Lifetime of cell 1 years 5 Total capacity of landfill ton 2,817,078 Period of operation years 20 Staff employed № 20 Landfill equipment USD 1,407,000 Total CAPEX USD 8,072,314 Total OPEX USD/year 890,976 Cost per ton disposed USD/ton 5.8 The estimated cost per ton landfilled would be about AMD 2,400, or about USD 6. The costs for waste disposal are significantly lower than the cost in scenarios 1 and 2. This is due not only to the reduced quantities for landfilling (lower investment costs, lower staff costs), but also to the fact that the waste destined for disposal would have been pre-treated in the MBT installation and stabilized. Consequently, costs for leachate treatment and gas collection would be negligible compared to scenarios 1 and 2. The MBT plant will receive the entire mixed collected municipal waste. The following operations will take place at the MBT: • Sorting of biodegradable fraction (using drum screen) for subsequent decomposition and production of compost-like output • Sorting of mixed waste for extraction of dry recyclable materials • Subsequent sorting and extraction of materials suitable for production of RDF • Transport of residual fraction to landfill The table below presents the main parameters of the MBT system. Table 25. Main parameters of MBT operation Parameter Unit Value Total capacity of MRF ton 310,000 Staff employed № 86 recyclables recovered % 6% losses during treatment % 42% RDF produced % 16% Waste landfilled % 37% Total CAPEX USD 51,500,000 Total OPEX USD/year 5,400,000 Total costs USD/year 8,300,000 Cost per ton treated before revenue USD/ton 27 Revenue from sale of recyclables USD/year 900,000 Net cost per ton treated after revenue USD/ton 24.0 The estimated cost per ton treated would be about AMD 9,700, or about USD 24 (after revenue). Utilization of RDF is assumed to be cost-neutral activity. Sale of RDF is largely dependent on the calorific value of the RDF as well as on the internal energy market. In some countries the RDF producer pays cement industries for the uptake of the material; in other countries the sale of RDF is a revenue-generating activity. The table below shows the quantities of municipal waste recycled, recovered and landfilled as a result of implementation of Scenario 3. 31 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis Table 26. Quantities of waste recovered and landfilled, 2025 Activity Quantity, tons Percent from total Source separated 32,656 9% Sorted recyclables at MBT 19,938 6% RDF produced 47,916 13% Losses during treatment 129,285 36% Landfilled 130,027 36% Total 359,821 100% 4.2 Cost implications The table below shows the discounted total annual costs for collection, source separation, sorting, treatment and disposal of the three options for system optimization. Depreciation of assets, operational and maintenance costs are included in the total costs too. The landfill costs include also future development of the landfill, cells closure, and post-closure aftercare. The table also includes the expected revenues from recycling (presented as negative values/costs) as well as the estimated affordable service cost threshold. Table 27. Cost comparison of different scenarios, in USD/ton Components Scenario 1 Scenario 2 Scenario 3 Waste collection 27.7 26.3 26.3 Separate waste collection 0.0 8.5 8.5 Sorting facility 0.0 5.2 5.2 MBT 0.0 0.0 32.5 Landfill 12.8 12.8 6.1 Sub-total costs 40.5 52.8 78.6 Revenue from recycling 0.0 -6.9 -9.2 Total costs 40.5 45.9 69.4 Affordable service cost, USD/ton 70.7 70.7 70.7 As seen from the table above, Scenarios 1 and 2 are well within the threshold of affordable service cost. It should be noted that if EPR schemes are in place, in Scenarios 2 and 3, the cost for separate waste collection and sorting would be covered by the EPR schemes and not the communities. In that case, the overall costs of Scenario 2 become identical to the overall costs of Scenario 1. This is the effect that is expected EPR to have on financing the recycling costs of municipal waste. Еven the most expensive option – Scenario 3 – would be within the estimated affordable service cost threshold. Scenario 3 would lead to a very high rate of waste recovery – about 64% - which means that only about 36% of the pre-treated municipal waste will be landfilled. As mentioned above, landfill costs would be negligible, due to the reduced quantities of waste for landfill and the diversion of biodegradable waste from landfill, which would significantly reduce the landfill treatment costs. It should be also noted that in all three scenarios grant financing of assets has not been considered. Presented costs envisage that the Community of Yerevan would secure the financing of the waste management infrastructure and equipment needed from its own sources. 5. Conclusions and recommendations Waste collection. The current waste collection service in Yerevan is provided in an efficient manner. It is based on large rear-loading trucks and 1,100-liter wheeled containers which is the typical configuration in the EU countries too. Further efficiency could be achieved by standardizing the waste collection fleet and gradually replacing the current vehicles with new ones produced, which, although more expensive, have higher 32 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis compaction rate and longer operational life. Standardization of the fleet would also reduce the maintenance costs. Waste disposal. The waste disposal, however, has not changed much since the 1950s, when the current dumpsite started being used for waste disposal. The disposal site does not meet any engineering standards and is unsuitable from an environmental point of view. It is the largest dumpsite in Armenia and its uncontrolled operations pose significant environmental and health risks. The EBRD-funded project for construction of new landfill and closure of the existing ones was approved in 2016. Implementation of this project becomes of crucial importance to the city to significantly improve the waste services provided to its citizens. Source separation and recycling. In 2020, the Community of Yerevan initiated a source separation program by establishing 135 points for separate collection of dry recyclables. These collection points will be increased to 300 in 2024, which is still far from complete coverage of the population of the city with separate waste collection points. At present, revenue from the sale of recyclables could cover only about 35% of the operating costs. The expansion of the source separation system could be conducted either through continuing subsidising the activity, or through the implementation of Extended Producer Responsibility (EPR) mechanism, which is expected to become in force in the upcoming years. Service cost budgeting and financing. Current waste collection operating costs, as estimated, are recovered from waste fees. Waste fee collection rate is high, close to 100%. Service cost budgeting for 2022, 2023 and 2024 does not show provision for landfill disposal cost, or for payment to the landfill operator. Fees for 2024 include waste fee option that is repealed with 2023 amendments of Law on waste collection and sanitary cleaning. The Decree on local fees (2024) introduces waste disposal landfill fee equal to the total size of the waste fee for legal entities (the repealed clause). Investments are funded by the capital part of the budget (other communal revenue, including state subsidy), and are not reflected in the annual service costs as depreciation cost. Full cost determination requires a costing mechanism that reflects assets depreciation as well as recognition of landfill full cost including landfill closure and remediation. CEPA commitments include full recognition of landfill cost, and implementation of polluter pays principle – i.e. establishment of a full cost recovery mechanism in accordance with the polluter pays principle and extended producer responsibility. Waste fee levels for 2024 are below the average values defined in 2011 in Law on waste collection and sanitary cleaning. Substantial development of the waste management system is possible and could be financially sustainable within the affordable waste fee levels. Scenarios for improved operations . Section 4 outlined several possible scenarios for improved waste management operations, based on different level of ambition. The main conclusions from the analysis of the different scenarios are the following: • Scenario 1 shows that an overhaul of the current disposal system can be sustained by the revenues from waste charges, and not being dependent on subsidy. The combined waste collection and waste disposal (new sanitary landfill) costs would be within the defined threshold of affordable service costs. Implementation of this scenario would increase the waste management costs to about 40 USD/ton, or about 16,200 AMD/ton. In terms of waste charges, implementation of this scenario would mean establishment of waste fee of 350 AMD/person/month, if the principle of polluter pays principle is observed. • Scenario 2 involves the introduction of full-scale source separation and recycling system of all dry recyclables from the entire population of the city. Packaging waste, which is a substantial part of the recyclable waste, is typically managed through the EPR mechanism. At present, an EPR legislation is under development, which would regulate the management of the specific waste stream, including packaging and packaging waste, imposing responsibility on the producers and importers of packaging materials to cover the costs of their subsequent source separation and recycling. However, implementation of EPR schemes is a long process. It takes time and significant efforts from all key 33 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis stakeholders to develop comprehensive EPR schemes. Therefore, it would make sense for the Community of Yerevan to further invest in scaling up the existing source separation system. Scaling up the source separation system would require investing in a MRF for sorting of the source separated materials too. If the community decides to implement the full-scale system, this would result in an increase of waste management costs to about 46 USD/ton, or about 18,600 AMD/ton, which is well within the defined affordable service cost (70.7 USD/ton). In terms of waste charges, implementation of this scenario would mean setting-up the waste fee to 400 AMD/person/month, if the principle of polluter pays principle is observed. • Scenario 3 is clearly the most ambitious option and involves treatment of entire municipal waste prior to disposal. Even if the implementation of this scenario requires a significant investment in waste treatment facilities (landfill, MRF and MBT) – more than 65 million USD – this option is still within the affordable service costs threshold, which means that the scenario could be implemented without jeopardizing the sustainability of waste operations. The waste management costs are estimated at about 69 USD/ton (after revenue), or about 28,200 AMD/ton. In terms of waste charges, implementation of this scenario would mean setting-up the waste fee to 610 AMD/person/month, if the principle of polluter pays principle is observed . It should be noted that the overall waste management costs could be lowered if the source separation and sorting of municipal waste is implemented through EPR schemes and not financed by the community. Given all considerations described above, pursuing the implementation of Scenario 2 (establishment of sanitary landfill and expansion of source separation of dry recyclable materials to cover the entire Yerevan city) seems the most expedient option in the short-term for Yerevan. From one side, this scenario would resolve the most pressing waste management issue for the community – waste disposal. From another side, further expanding of the source separation system would lead to multiple benefits; significant reduction of quantities of municipal waste to be landfilled, preserving these quantities of waste as resources for the local economy, and sizable job creation. Once the EPR schemes are in place, the recycling costs would no longer be covered by the Community, but by the EPR organization(s). The large quantities of waste generated by the city and the overall favorable socio-economic situation justify the establishment of integrated waste management system which includes a large-scale waste treatment facility. Although affordable, this option (scenario 3) would require an increase of waste management tariff above the legally established ceiling of 400 AMD/person/month. This will necessitate either amendments in the national legal framework, or sizable public subsidization of the waste services. The recommended scenario in Yerevan could be implemented through the following actions: • Implement separate budgeting for waste collection, source separation and landfill disposal, in line with annual waste management plans and including waste collection equipment asset depreciation in service cost; • Revise waste fees for residents and legal entities to move towards full cost recovery, with due consideration for affordability including for disadvantaged groups; • Prepare technical specifications for required equipment; • Procure equipment (containers and trucks) for implementation of a separate waste collection system on a city-wide scale; • Prepare a feasibility study and detailed design for establishment of a materials recovery facility; • Procure works for establishment of the materials recovery facility; • Update the detailed design for a new sanitary landfill and obtain all necessary permits; • Procure works for construction of the new sanitary landfill; • Prepare and implement the operational plan for the new landfill; • Close the existing dumpsite(s) once the new landfill is operational. 34 Armenia SWM Sector Assessment and Reform Plan Yerevan Municipal Waste Management Analysis 35