Armenia SWM Sector Assessment and Reform Plan Hrazdan Municipal Waste Management Analysis Report May 2024 © 2024 The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved. 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. 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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. Armenia SWM Sector Assessment and Reform Plan Hrazdan Municipal Waste Management Analysis Content 1. EXECUTIVE SUMMARY .................................................................................................................................. 4 2. INTRODUCTION ............................................................................................................................................ 7 3. HRAZDAN COMMUNITY ................................................................................................................................ 7 3.1 COMMUNITY PROFILE .............................................................................................................................................. 7 3.1.1 Population ...................................................................................................................................................... 7 3.1.2 Socio-economic profile ................................................................................................................................... 7 3.2 POLICY AND INSTITUTIONAL FRAMEWORK ................................................................................................................... 9 3.2.1 Policy framework ............................................................................................................................................ 9 3.2.2 Institutional set-up ......................................................................................................................................... 9 3.2.3 Relevant initiatives ....................................................................................................................................... 10 3.3 WASTE GENERATION AND COMPOSITION ................................................................................................................... 10 3.3.1 Current municipal waste generation ............................................................................................................ 10 3.3.2 Waste forecast.............................................................................................................................................. 11 3.3.3 Waste composition ....................................................................................................................................... 12 3.4 CURRENT WASTE MANAGEMENT OPERATIONS ............................................................................................................ 14 3.4.1 Waste collection ........................................................................................................................................... 14 3.4.2 Waste disposal.............................................................................................................................................. 15 3.5 CURRENT COSTS AND FINANCING ............................................................................................................................. 16 3.5.1 Current financing of waste management activities ..................................................................................... 16 3.5.2 Tariff structure for households and commercial sector ................................................................................ 17 3.5.3 Billing and revenue collection systems and rates ......................................................................................... 17 3.5.4 Cost recovery and cross-subsidization .......................................................................................................... 18 3.5.5 Affordability of tariffs ................................................................................................................................... 18 4. IMPROVED WASTE OPERATIONS AND COST IMPLICATIONS............................................................................19 4.1 IMPROVED WASTE OPERATIONS ............................................................................................................................... 19 4.1.1 Scenario 1. Improved waste collection ......................................................................................................... 20 4.1.2 Scenario 2. Source separation of dry recyclables ......................................................................................... 21 4.1.3 Scenario 3. Waste recovery system .............................................................................................................. 23 4.2 COST IMPLICATIONS ............................................................................................................................................... 24 5. CONCLUSIONS AND RECOMMENDATIONS ....................................................................................................25 List of Tables TABLE 1. SCENARIOS FOR IMPROVED WASTE MANAGEMENT .............................................................................................................. 4 TABLE 2. COST COMPARISON OF DIFFERENT SCENARIOS, IN USD/TON ................................................................................................. 5 TABLE 3. POPULATION OF HRAZDAN, 2011-2023 .......................................................................................................................... 7 TABLE 4. POPULATION OF HRAZDAN COMMUNITY, 2020-2022 ....................................................................................................... 7 TABLE 6. POPULATION FORECAST FOR HRAZDAN, 2024-2043 ........................................................................................................ 11 TABLE 7. ANNUAL WASTE FORECAST FOR HRAZDAN COMMUNITY, TONS ............................................................................................ 12 TABLE 8. WASTE COMPOSITION RESULTS, 2019 ............................................................................................................................ 12 TABLE 9. SUMMARY OF ACTUAL COSTS ON WASTE SERVICES, MILLION AMD ....................................................................................... 16 TABLE 10. SUMMARY OF ACTUAL REVENUE FROM WASTE FEE, MILLION AMD .................................................................................... 16 TABLE 11. 2024 MONTHLY WASTE FEES FOR HOUSEHOLDS AND LEGAL ENTITIES ................................................................................. 17 TABLE 12. PLANNED AND ACTUAL REVENUE FROM WASTE FEE, MILLION AMD ................................................................................... 17 TABLE 13. AVERAGE MONTHLY PER CAPITA INCOME AND EXPENDITURES , 2011 AND 2021, AMD ......................................................... 19 TABLE 9. SCENARIOS FOR IMPROVED WASTE MANAGEMENT ............................................................................................................ 19 TABLE 10. MAIN PARAMETERS OF SCENARIO 1 ............................................................................................................................. 20 TABLE 11. MAIN PARAMETERS OF THE SOURCE SEPARATION AND SORTING SYSTEM, 2025 .................................................................... 22 TABLE 12. MAIN PARAMETERS OF MBT OPERATION ...................................................................................................................... 24 2 Armenia SWM Sector Assessment and Reform Plan Hrazdan Municipal Waste Management Analysis TABLE 13. COST COMPARISON OF DIFFERENT SCENARIOS, IN USD/TON ............................................................................................. 24 List of Figures FIGURE 1. 2023 ADMINISTRATIVE BUDGET REVENUE, 2023, MILLION AMD ....................................................................................... 8 FIGURE 2. 2023 ADMINISTRATIVE BUDGET EXPENDITURES. MILLION AMD ......................................................................................... 8 FIGURE 3. CAPITAL BUDGET EXPENDITURES, 2022 AND 2023, MIN AMD ........................................................................................... 9 FIGURE 4. ORGANOGRAM OF HRAZDAN COMMUNITY.................................................................................................................... 10 FIGURE 5. ESTIMATED POTENTIAL FOR WASTE RECYCLING AND RECOVERY, TONS .................................................................................. 13 FIGURE 6. ESTIMATE OF QUANTITIES OF DRY RECYCLABLE WASTE....................................................................................................... 14 FIGURE 7. CONTAINERS CURRENTLY IN USE IN HRAZDAN ................................................................................................................. 14 FIGURE 8. TRUCKS CURRENTLY IN USE IN HRAZDAN ........................................................................................................................ 15 FIGURE 9. HRAZDAN CURRENT DISPOSAL SITE ............................................................................................................................... 15 FIGURE 10. HRAZDAN NEW LANDFILL .......................................................................................................................................... 16 FIGURE 11. 2023 COSTS AND REVENUE STRUCTURE, MILLION AMD ................................................................................................ 18 FIGURE 12. MOBILE SORTING LINE ............................................................................................................................................. 22 List of abbreviations ACE/AUA Acopian Center for the Environment at the American University in Armenia CEPA Comprehensive and Enhanced Partnership Agreement EBRD European Bank for Reconstruction and Development EPR Extended Producer Responsibility EU European Union GDP Gross domestic product MBT Mechanical biological treatment MRF Material recovery facility MTPEF Medium-Term Public Expenditure Framework RDF Refuse derived fuel RA Republic of Armenia SWM Solid Waste Management 3 Armenia SWM Sector Assessment and Reform Plan Hrazdan Municipal Waste Management Analysis 1. Executive summary Waste generation and composition In 2024, quantities of municipal waste generated in Hrazdan Community are expected to exceed 12,000 tons a year. The quantities of municipal waste are forecast to increase by more than 8% at the end of the planning period (2043), to reach about 13,200 ton a year, in tandem with increasing income levels. Organic waste is the predominant fraction – about 61%, while recyclables are estimated to be about 21% of the total waste. Current waste operations Waste collection. The current waste collection service in Hrazdan Community is not provided in an efficient manner. Inefficiency is a result of several factors. Containers which are in use are outdated, without wheels, heavier than modern designs and require more time for servicing. The waste collection fleet is outdated with lower compaction than contemporary standards. Chutes are still in use in most blocks of flats, which is inappropriate from both technical efficiency and public health points of view. To increase the efficiency of waste collection, waste collection in the community can be organized with wheeled 1.1 m3 containers and rear-loading trucks with high compaction rate. Reportedly, the Community administration does not invest in waste collection equipment (trucks, waste bins), because it is expected that the waste collection would be arranged by the communities-owned company ‘Kotayk and Gegharkunik Municipal Solid Waste Management’ LTD. Waste disposal. The currently used dumpsite does not meet the established environmental standards. However, the new regional sanitary landfill is expected to become operational soon. Following the commencement of the new landfill, the existing dumpsite should be closed. Source separation and recycling. Hrazdan Community has not started a source separation system of dry recyclables yet. Costs and financing Current waste service costs are relatively high, although restricted to waste collection, due to the use of inefficient and depreciated waste collection equipment. Current waste fees are low. Waste fees have not been changed for years. Their current level is below the average values of the range defined in 2011 and even revenue from legal entities does not cover their share of overall costs. Waste fee collection rate is low and decreasing. Planned revenue is less that the potential revenue and actual revenue from waste fees decreased in 2023, covering only 1/3 of the operating costs. The rest of the costs are covered by other communal revenue including state subsidy. Polluter pays principle is a CEPA commitment that could be implemented under the existing affordability limits in the community. Political will is needed to set and collect full cost recovery waste fees for the legal entities and gradually increasing affordable fees for the population. 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 4 Armenia SWM Sector Assessment and Reform Plan Hrazdan Municipal Waste Management Analysis Waste management Scenario 1 Scenario 2 Scenario 3 component Waste collection Upgrade of the existing Upgrade of the existing Upgrade of the existing waste collection system waste collection system waste collection system Waste disposal Use of the regional landfill Use of the regional landfill Use of the regional 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 regional 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. Table 2. Cost comparison of different scenarios, in USD/ton Components Scenario 1 Scenario 2 Scenario 3 Waste collection 29.2 29.2 27.4 Separate waste collection 0.0 9.1 9.1 Sorting facility 0.0 8.4 8.4 MBT 0.0 0.0 42.9 Landfill 15.0 14.3 7.5 Sub-total costs 44.2 61.0 95.3 Revenue from recycling 0.0 -6.0 -7.5 Total costs 44.2 55.0 87.8 Affordable service cost, USD/ton 66.5 66.5 66.5 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. Scenario 3 clearly indicates that at present, the affordability limit does not allow for extensive treatment technologies to be deployed, due to high investment and operating costs. Waste management priorities in the short term . Implementation of Scenario 1 (upgrade of waste collection system and use of the sanitary landfill) seems the most expedient option in the short-term for Hrazdan Community. Scenario 1 shows that an upgrade of the current waste collection system could significantly reduce the waste management costs. The combined waste collection and waste disposal (new sanitary landfill) costs would be within the defined limit of affordable service costs. This is also the most affordable option for the community. Implementation of this scenario would increase the waste management costs to about 44 USD/ton, or about 18,000 AMD/ton. In terms of waste charges, implementation of this scenario would mean establishment of a waste fee of 340 AMD/person/month, if the principle of polluter pays principle is observed. Waste management priorities in the medium term. Following the optimization of the waste collection system and the use of the regional landfill, the next step for Hrazdan Community would be to introduce source separation system for dry recyclable materials. Packaging waste, which is a substantial part of the recyclable 5 Armenia SWM Sector Assessment and Reform Plan Hrazdan Municipal Waste Management Analysis waste, is usually managed through the EPR mechanism. At present, an EPR legislation is under development, which would regulate the management of the specific waste streams, 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. Therefore, it would make sense for Hrazdan Community to wait for the EPR schemes to become operational, before investing in a source separation system. However, if the community decides to implement the full-scale system, this may result in an increase of waste management costs to about 55 USD/ton, or about 22,300 AMD/ton, which is within the affordable limit of waste services. In terms of waste charges, implementation of this scenario would mean setting-up the waste fee to 425 AMD/person/month, if the principle of polluter pays principle is observed. Although affordable, this option (scenario 2) 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 Hrazdan could be implemented through a set of actions that include: preparing and adopting a communal waste management plan, making investments in improved containers and trucks for more efficient waste collection, closing the existing dumpsite, and moving towards full cost accounting and cost recovery by improving the budgeting system and revising waste fees. 6 Armenia SWM Sector Assessment and Reform Plan Hrazdan Municipal Waste Management Analysis 2. Introduction The present report presents an analysis of the waste management system of Hrazdan Community. 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 Hrazdan Community and outline specific areas for improvement. Three 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 community 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. Hrazdan Community 3.1 Community profile 3.1.1 Population Hrazdan is the seventh largest city in Armenia with population of about 40,000 residents. The Community includes also four rural settlements – Lernanist, Jrarat, Solak and Qaghsi. The table below presents the population of Hrazdan for the period 2011-2023. For the period of 2011-2023, the population of the city remained fairly constant and decreased by about 4%. Table 3. Population of Hrazdan, 2011-2023 City 2011 2020 2021 2022 2023 Hrazdan 41,900 40,000 39,900 39,900 40,100 Source: Statistical Committee of RA For rural settlements data is available for permanent residents for the period 2020-2022. The table below presents the total permanent population of Hrazdan Community. Table 4. Population of Hrazdan Community, 2020-2022 City 2020 2021 2022 Hrazdan 40,000 39,900 39,900 Lernanist 2,944 2,927 2,980 Jrarat 517 491 514 Solak 2,446 2,439 2,066 Qaghsi 2,535 2,541 2,629 Total 48,342 48,298 48,289 The last three censuses (2001, 2011 and 2022) showed that the population of the rural communities decreased by 3%, or by 0.14% per year. This dynamic is used for the population forecast (section 3.3.2.1). 3.1.2 Socio-economic profile 7 Armenia SWM Sector Assessment and Reform Plan Hrazdan Municipal Waste Management Analysis Hrazdan is the administrative center of Kotayk Marz of the Republic of Armenia. Hrazdan received the status of a city in 1959. The city is located 40 km northeast of Yerevan, at an altitude of 1600-1750 m above sea level. The total administrative area of the city is 15,344 ha. Hrazdan community used to be an industrially developed center. Now, most of the industrial enterprises are not operating, or if they still are they are not at full capacity. There are 144 enterprises operating within the city, including a cement plant, which is one of the largest cement producers in Transcaucasia. The industry provides around 3,000 jobs. The SMEs in Hrazdan are represented by shopping facilities, baker’s shops, catering. There are no hotels in Hrazdan. The city of Hrazdan has 302 multi-apartment buildings. There are also 3,600 private houses within the administrative area of Hrazdan city. Hrazdan community’s budget in 2023 saw total revenues in the amount of 2,836 million AMD of which 2,202 million to the administrative budget and 634 million to the capital part of the budget. Sources of administrative budget revenue are shown on the following graph: Administrative Budget Revenue, Million AMD Income from services, incl. waste fee, 391, 18% Taxes and fees, 610, 28% State subsidy, 1,201, 54% Figure 1. 2023 Administrative budget revenue, 2023, million AMD In 2023, revenue from waste fee amounts to 74 million AMD. Total expenditures amounted to 2,866 million AMD of which 1,834 million AMD administrative budget expenditures and 1,032 million capital expenditures. The structure of 2023 administrative budget expenditure is shown in the following graph: Administrative Budget Expenditures, Million AMD General services, 407, 22% Education, 762, 42% Economic services, 100, 5% Waste management, 339, 18% Culture, 104, 6% Housing and utilities, 123, 7% Figure 2. 2023 Administrative budget expenditures. Million AMD Administrative budget expenditures increased in 2023 by 7% in comparison to 2022, keeping the same structure. 8 Armenia SWM Sector Assessment and Reform Plan Hrazdan Municipal Waste Management Analysis The structure of 2023 and 2022 capital budget expenditures is shown on the following graph: Capital budget expenditures, million AMD 1,600 1,400 105 1,200 60 275 1,000 52 800 600 735 933 400 200 21 224 0 2022 2023 Economic services Housing and utilities Education Other Figure 3. Capital budget expenditures, 2022 and 2023, min AMD Main investments in 2022 were in road transport (economic services), water supply and lighting (housing and utilities), in 2023 – in kindergartens and road transport. The Hrazdan multi-settlement community includes the town of Hrazdan (which is the administrative center of Kotayk province) and 4 rural settlements – Lernanist, Jrarat, Solak, and Qaghsi. The administrative area of Solak village is 3,842 ha. The distance between Solak and Hrazdan is 14 km. Solak’s population is engaged in animal husbandry, vegetable growing, and cultivation of grain crops. Qaghsi is located 3 km from Hrazdan city at an altitude of 1700-1750 m above sea level. Lernanist is located 7 km away from Hrazdan. The settlement is one of the largest in the region with more than 550 households. Jrarat is located 9 km away from Hrazdan city at an altitude of 1745 m above sea level. 3.2 Policy and institutional framework 3.2.1 Policy framework Hrazdan Community Development Program 2022-2026 does not contain any provisions about waste management on the territory of the community, apart from reference to the EBRD-financed Kotayk and Gegharkunik Solid Waste Management Project. The Community does not have a waste management plan. 3.2.2 Institutional set-up One department within the institutional structure of Hrazdan Community deals with waste management – Division of Communal Services, Condominiums and Transport. It is responsible for planning the waste management activities on the territory of the community. Waste collection is provided by the “Municipal services, waste collection and sanitary cleaning”, a community non-commercial organization, established in 2016. The current institutional set-up is presented in the figure below: 9 Armenia SWM Sector Assessment and Reform Plan Hrazdan Municipal Waste Management Analysis Figure 4. Organogram of Hrazdan Community The “Municipal services, waste collection and sanitary cleaning” organization is responsible for the waste disposal too. It is supervised in its activity by the Division of Communal Services, Condominiums and Transport and reports to the Community Council. The Division of Revenues, Registry and Collection is responsible for the collection of waste fees. 3.2.3 Relevant initiatives Kotayk and Gegharkunik Solid Waste Management Project The project was financed by the EBRD. The project covers 12 municipalities (and adjacent rural settlements) from two Marzes – Kotayk and Gegharkunik1. The project includes construction of a sanitary landfill in accordance with the EU Landfill Directive near the town of Hrazdan, construction of 2 transfer stations, and upgrade of the waste collection system. A municipality-owned company will be established (‘Kotayk and Gegharkunik Municipal Solid Waste Management’ LTD), which will become a landfill operator, and potentially will tender waste collection services to private operators. The total budget of the project is EUR 11 million, of which EUR 5.5 million is a loan from EBRD and EUR 5.5 million is a grant from the EU Neighbourhood Investment Facility. The investment component of the project was finalized in 2023. Corporate development of the publicly owned company is forthcoming. 3.3 Waste generation and composition 3.3.1 Current municipal waste generation Hrazdan disposal site is not equipped with weighbridge and the waste is not weighed. According to officials from Hrazdan Community, about 60 m3 of waste, or about 13 tons, are delivered to the municipal dumpsite on a daily basis. Multiplying these quantities by 365 days means that annual quantities of waste generated by Hrazdan Community amount to 4,745 tons, which is unrealistically low. This means that the average waste generation in the community is 0.27 kg/capita/day, which is very low. 1 Four additional communities are expected to be included - Garni, Jrvezh, Akunk and Arzni 10 Armenia SWM Sector Assessment and Reform Plan Hrazdan Municipal Waste Management Analysis The Statistical Committee of RA does not have published data on the quantities of municipal waste generated or disposed of by Hrazdan Community. 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 Hrazdan for the period of 2011-2023 and the tendency established for the rural settlements between the two censuses of 2001 and 2022. These dynamics are used to make a projection of the population of the community for the next 20-year period. The table below shows the population forecast for the period of 2024-2043. Table 5. Population forecast for Hrazdan, 2024-2043 Settlement 2024 2030 2035 2043 Hrazdan 39,965 39,163 38,507 37,481 Lernanist 2,976 2,950 2,929 2,895 Jrarat 513 509 505 499 Solak 2,063 2,045 2,030 2,007 Qaghsi 2,625 2,603 2,584 2,554 Total 48,142 47,270 46,555 45,436 Source: own elaboration According to the forecast, at the end of the 20-year period, the population of Hrazdan Community will have decreased by about 5.4%. 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 years2. 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 Bank3. 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 2https://www.worldbank.org/en/country/armenia/overview#3 3Sandra Cointreau, Urban papers 2, July 2006 Occupational and Environmental Health Issues of Solid Waste Management, table 3, p. 8 11 Armenia SWM Sector Assessment and Reform Plan Hrazdan Municipal Waste Management Analysis • Population dynamics as established by the Statistical Committee of the RA for the period 2011-2023 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 0.75 kg/cap/day or 274 kg/cap/year4 • The current waste generation rate for rural settlements is defined as 0.4 kg/cap/day or 147 kg/cap/year5 The table below presents the projected quantities of waste generated by Hrazdan Community for the next 20-year period. Table 6. Annual waste forecast for Hrazdan Community, tons Settlement 2024 2030 2035 2043 Hrazdan 11,034 11,383 11,652 11,897 Lernanist 438 457 473 490 Jrarat 76 79 82 85 Solak 304 317 328 340 Qaghsi 387 403 417 432 Total 12,239 12,640 12,951 13,244 As seen from the table above, the quantities of municipal waste are expected to increase by more than 8% at the end of the planning period. 3.3.3 Waste composition The most recent waste composition survey of the city of Hrazdan was conducted in 2019. The survey was conducted within the framework of a larger Waste Quantity and Composition Study in the Republic of Armenia6. Three samples were taken in Hrazdan between June 29 and July 2 from block of flats, individual houses and commercial objects. The methodology included sorting of municipal solid waste into 22 waste fractions. The average results for Hrazdan Community are presented in the table below, along with the respective quantities of the different waste types. Table 7. Waste composition results, 2019 Waste type Percent Ton Kitchen waste 51.4% 6,330 Garden waste 8.9% 1,095 Other biodegradable 0.7% 90 Newspaper and print 0.4% 51 Corrugated cardboard 1.8% 219 Paper packages 1.4% 176 Other paper 0.8% 99 4 The rate was established for the city of Vanadzor within the framework “Feasibility Study for Integrated Solid Waste Management Vanadzor, Armenia” Project 5 As assumed in the national Municipal Solid Waste Management 2021-2023 Strategy and a Roadmap 6 LL 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. 12 Armenia SWM Sector Assessment and Reform Plan Hrazdan Municipal Waste Management Analysis Waste type Percent Ton Soft plastics packaging 7.7% 953 Styrofoam 0.2% 19 Dense plastics 2.0% 240 Other plastics 1.3% 159 Glass packaging 3.0% 372 Other glass 0.9% 113 Metal packaging 0.5% 64 Other metals 0.8% 101 All other inorganics 4.9% 605 Hazardous waste 1.2% 148 WEEE items 0.3% 34 Wood 0.4% 51 Textiles 5.6% 687 Sanitary 4.3% 531 Other 1.4% 169 Total 100% 12,306 Applying the results from the Waste Quantity and Composition Study, the figure below shows the potential for waste recycling and recovery. Potential for recycling and recovery, Hrazdan, ton 687 1,487 6% 2,566 12% 21% 7,566 61% Dry recyclables Biowaste Textile Other Figure 5. Estimated potential for waste recycling and recovery, tons Тhe largest quantities are those of biowaste (about 7,500 t/y), followed by the quantities of dry recyclables (more than 2,500 t/y). The quantities which have insignificant recycling and recovery value (categorized as ‘other’) are about 12% of the total municipal waste. Regarding the dry recyclable waste, the figure below shows the quantities of packaging waste in the total dry recyclable quantities. 13 Armenia SWM Sector Assessment and Reform Plan Hrazdan Municipal Waste Management Analysis Dry recyclable waste, ton Packaging 395 953 372 64 Total 545 1,371 485 165 0 500 1,000 1,500 2,000 2,500 3,000 Paper and cardboard Plastic Glass Metal Figure 6. Estimate of quantities of dry recyclable waste About 1,800 tonnes are the estimated annual quantities of packaging waste, which is about 70% of the total dry recyclable waste, and slightly above 14% of the total quantities of municipal waste generated in Hrazdan Community. 3.4 Current waste management operations 3.4.1 Waste collection The waste collection from multi-apartment buildings as well as administrative areas of Hrazdan town is provided through 0.7 and 0.9 m3 metal waste bins and waste chutes. The waste collection from rural settlements and single-family houses areas is provided through door-to-door waste collection. There are about 300 waste bins available, from which 280 waste bins are installed (145 0.9 m3 and 135 0.7 m3). There are 122 multi-apartment buildings having 222 waste chutes and bunkers. Figure 7. Containers currently in use in Hrazdan Commercial establishments use both their own bins and bins placed by the Community administration. Waste collection frequency is the following: • Waste bins are served once a day • City center area is served twice a day • Chutes/bunkers are served once in 3 days • Single family houses in Hrazdan and rural settlements are served once a week The following side loading trucks are used for waste collection: 14 Armenia SWM Sector Assessment and Reform Plan Hrazdan Municipal Waste Management Analysis • ZIL КО-440-4D, produced in 2006 • ZIL KO 413, produced in 1974 • KAMAZ KO 440-7, produced in 2016 • MAZ КО 440-8, produced in 2018 Besides, there are also 5 dump trucks used for waste collection from the waste chutes/bunkers as well as from the single-family houses and rural areas. The pictures below show the type of trucks in use in Hrazdan. Figure 8. Trucks currently in use in Hrazdan The Community administration does not invest in waste collection equipment (trucks, waste bins), since it is expected that the waste collection would be arranged by the communities-owned company ‘Kotayk and Gegharkunik Municipal Solid Waste Management’ LTD, established to operate the Hrazdan regional landfill and to provide solid waste management services in general. However, until now the modalities of cooperation between the company and the communities have not been arranged. Separate waste collection is not provided. Individual waste pickers are present in separating recyclable materials. Collection of construction and demolition waste and bulky waste is not provided either. The waste generators ensure removal of construction and demolition waste and bulky waste by themselves. 3.4.2 Waste disposal The current dumpsite occupies an area of 5 ha. It is located about 6 km south of the city. The current dumpsite is used not only by the settlements of Hrazdan Community, but also by Tsaghkadzor Community, which is located 5 km northwest of Hrazdan. Figure 9. Hrazdan current disposal site 15 Armenia SWM Sector Assessment and Reform Plan Hrazdan Municipal Waste Management Analysis Like all disposal sites in Armenia, Hrazdan dumpsite is not an engineered facility. The dumpsite is not fenced and does not have fire protection equipment installed on the site. In terms of any operation on the site, a bulldozer is used for profiling of the disposal area. Construction and demolition waste is also disposed of on the dumpsite. The main dumpsite is not the only one on the territory of the community. There are number of sporadic dumpsites adjacent to or even within Hrazdan community area, especially within the industrial area of the city. In 2023, a regional landfill was constructed. Hrazdan regional landfill was constructed on the area of the communal dumpsite. Location of Hrazdan old dumpsite and new landfill Hrazdan regional landfill Figure 10. Hrazdan new landfill The regional landfill is expected to become operational by the end of 2024. 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. The total costs of the waste service, including cleaning, are summarized in the following table. Table 8. Summary of actual costs on waste services, million AMD Cost item 2022 2023 Administrative budget cost 319 339 Capital budget expenditures 2.6 14.5 Source: Reports on execution of 2022 and 2023 budgets Waste fee is envisaged by law to cover waste collection and disposal costs, while cleaning costs are covered from other communal budget revenue. On the assumption that 1/3 of the costs relate to cleaning and 2/3 to waste collection7, the table below summarizes collection costs and revenue from waste fees: Table 9. Summary of the actual revenue from waste fee, million AMD 7 Waste Governance in Armenia, report 2020 Acopian Center for the Environment, page 78 16 Armenia SWM Sector Assessment and Reform Plan Hrazdan Municipal Waste Management Analysis Revenue 2022 2023 Collection cost (2/3 of service cost) 213 226 Actual revenue from waste fee 90 74 Cost recovery, % 43% 33% Source: Reports on communal budget execution Comparing 2023 to 2022, MSW costs increased by 6%, while the actual revenue from waste fees decreased by 18%, leading to further dependence on subsidies. 3.5.2 Tariff structure for households and commercial sector Waste charges for 2024 are set through a decree of Community Council No 189-N dated 7.12.2023 and presented in the following table. Table 10. 2024 Monthly waste fees for households and legal entities Households/legal entities Hrazdan tariff Range in Law Household, per registered resident8 200 AMD 50-400 Trade and public catering 50 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 15 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 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 alternative option was available in the Law on waste and sanitary cleaning, however that clause was repealed with law amendments of 13.04.23 HO-137-N. The waste fees both for the population and for legal entities are set at a level lower than the average of the range defined in the Law. 3.5.3 Billing and revenue collection systems and rates The table below shows the planned and the actual revenue from waste fees: Table 11. Planned and actual revenue from waste fee, million AMD Revenue from waste fees, million AMD 2022 2023 Planned revenue 90 97 Actual revenue 90.4 74.3 Collection rate 100% 77% Source: Reports on communal budget execution Planned revenue is lower than the potential revenue from residents alone. If permanent population data from Kotayk region's annual statistical handbook data is considered, which is lower than Census 2022 data, the potential revenue from households alone should be 116 million AMD 9. 8 Residents’ fees did not change in the period 2021-2024 9 https://armstat.am/am/?nid=422, 48286 * 200* 12= 116 MAMD 17 Armenia SWM Sector Assessment and Reform Plan Hrazdan Municipal Waste Management Analysis It is also to be noted that the fee collection decreased in 2023. 3.5.4 Cost recovery and cross-subsidization According to the data provided by the community, revenue from waste fees from legal entities amounts to 19.5 million AMD in 2023. On the assumption that legal entities generate 9.5% of the waste10, and this is their share of costs, the following graph represents the structure of the cost and corresponding revenue from waste fees from legal entities and residents: Structure of collection cost and revenue from waste fee, 2023 250.0 200.0 Million AMD 150.0 204 100.0 50.0 55 21.4 19.5 0.0 Costs Revenue Legal entites Residents Figure 11. 2023 Costs and revenue structure, million AMD Therefore, payments from legal entities do not cover their share of current costs. Payments from households cover 27% of their share of costs. Dividing the waste collection cost in 2023 by the waste generated in the community, estimated as 12,240t, the waste collection unit cost was 18,446 AMD/t or 46 $/t, which is indicative of the inefficiency of the current collection system. Use of 1.1 m3 wheeled containers and 16m3 compaction tracks would cost 30 $/t including asset depreciation. 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 and 2023 reports 11: 10 10% in the town and 5% in villages is estimated to be waste from legal entities. 11 https://armstat.am/file/article/poverty_2012e_3.pdf , for 2022 - https://armstat.am/en/?nid=82&id=2617 18 Armenia SWM Sector Assessment and Reform Plan Hrazdan Municipal Waste Management Analysis Table 12. Average monthly per capita income and expenditures, 2011 and 2021, AMD Urban areas Rural areas Urban areas Rural areas 2011 2011 2022 2022 Average monthly per capita income 38,451 - 79,341 65,837 Average monthly per capita consumption 35,041 28,059 57,081 45,907 Source: The Statistical Committee of RA Data for 2011 is included for 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. As Kotayk Marz salaries are equal to the average for the country, it may be assumed that average urban and rural data for the country is relevant to Hrazdan community. Applying the affordability criterion of 1% of expenditures, monthly per capita payment of 571 AMD for urban area and 459 AMD for villages can be defined as the affordability threshold for 2022. 200 AMD represents 35% of 2022 affordability threshold for urban areas and 44% for rural areas, and as seen above, while expenditures increase annually, on average by 4.5%. Therefore, a doubling of current waste fees would be affordable for both urban and rural areas, while also remaining the current legally defined limits. 4. Improved waste operations and cost implications This section analyzes how an improved waste management system in Hrazdan 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. All scenarios take into consideration the constructed new sanitary landfill near Hrazdan, which is expected to become operational by the end of 2024. The three scenarios are the following: Table 13. Scenarios for improved waste management Waste management Scenario 1 Scenario 2 Scenario 3 component Waste collection Upgrade of the existing Upgrade of the existing Upgrade of the existing waste collection system waste collection system waste collection system Waste disposal Use of the regional landfill Use of the regional landfill Use of the regional 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 regional municipal waste mechanical biological - - treatment (MBT) plant for treatment of mixed municipal waste 19 Armenia SWM Sector Assessment and Reform Plan Hrazdan Municipal Waste Management Analysis 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. 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 collection The first scenario envisages the following operations: • Upgrade of the current waste collection system in Hrazdan Community by switching entirely to rear- loading trucks and 1.1 m3 wheeled containers • Use of the newly constructed regional landfill near Hrazdan This scenario envisages that the existing waste collection system, based on stationary 0.7 and 0.9 m3 containers and side-loading trucks, will be upgraded by switching entirely to rear-loading trucks and 1.1 m3 wheeled containers. It also assumes that all chutes in the city will be closed. The table below presents the main parameters of the waste collection system. Table 14. Main parameters of Scenario 1 Component Unit Value Containers needed № 275 Containers reserve % 5% Trucks to be purchased № 3 Capacity of trucks m3 16 Waste in trucks ton 6.48 Collection frequency days/year 365 CAPEX containers USD 100,258 CAPEX trucks USD 540,000 OPEX USD/year 268,000 Cost per ton collected USD/ton 27.4 Cost per ton disposed USD/ton 15 About 275 wheeled containers (1.1 m3) and 3 trucks would suffice to collect the municipal waste from the entire community. As seen in section 3.5, in 2022, the waste management costs, which were in fact predominantly waste collection costs, were AMD 18,280/ton, or USD 45/ton. Switching entirely to 1.1 m3 wheeled containers and rear-loading trucks with better compaction ratio is expected to reduce waste collection costs to about AMD 11,100/ton, or about USD 27/ton12. The main gains come from: 12 These are not discounted values. 20 Armenia SWM Sector Assessment and Reform Plan Hrazdan Municipal Waste Management Analysis (i) reduced time for servicing a single container; (ii) larger capacity of the wheeled containers compared to the existing ones (0.7 and 0.9 m3); and (iii) higher compaction rate of the rear-loading trucks. The new landfill costs are assumed to be about 15 USD/ton, or about 6,100 AMD/ton. 4.1.2 Scenario 2. Source separation of dry recyclables The second scenario envisages the following operations: • Upgrade of the current waste collection system in Hrazdan by switching entirely to rear-loading trucks and 1.1 m3 wheeled containers (like scenarios 1) • Use of the newly constructed regional landfill near Hrazdan (like scenario 1) • Introduction of source separation of dry recyclable materials • Establishment of material recovery facility (MRF) for source separated recyclables The source separation will cover only the population of Hrazdan city. Source separation would not be extended to the rural settlements due to low density of population and high costs respectively. 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. Moreover, broken glass in the ‘dry’ bin poses serious concerns about health risks for sorters at the MRF. Selection of the most appropriate system should be made at a feasibility assessment stage. For the purposes of scenario modelling, the assumption is that source separation will be based on a 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. 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 900 tons a year, which would represent close to 40% of the total recyclable waste and about 8% 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 8% 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. 21 Armenia SWM Sector Assessment and Reform Plan Hrazdan Municipal Waste Management Analysis The MRF will process only materials collected in the containers for separate collection. The quantities of source separated materials are too small to justify the establishment of standard material recovery facility (MRF), equipped with screens and automated separators. Instead, the small sorting facility would include the following: • Housed mechanical hall of 150 m2 • Containerized administrative building • Mobile sorting line with up to 6 working places • Vertical baler • Mobile equipment (fork-lift and sweeping machine) An illustrative photo of the mobile sorting line is shown in the figure below. Figure 12. Mobile sorting line The main parameters of this scenario that includes source separation and sorting are presented in the table below. Table 15. Main parameters of the source separation and sorting system, 2025 Parameter Unit Value Source separation Containers for plastic and metal № 97 Containers for paper/cardboard № 97 Containers for glass № 97 Trucks needed № 1.0 Capacity of truck m3 16 CAPEX containers USD 133,600 CAPEX trucks USD 180,000 Total OPEX USD/year 65,104 Total costs USD/year 102,190 Collected plastic ton 575 Collected metal ton 46 Collected paper ton 73 Collected cardboard ton 49 Collected glass ton 160 Cost per ton collected USD/ton 89 MRF Total capacity of MRF ton 2,000 Number of shifts № 1 22 Armenia SWM Sector Assessment and Reform Plan Hrazdan Municipal Waste Management Analysis Parameter Unit Value Staff employed № 6 Total CAPEX USD 322,441 Total OPEX USD/year 57,143 Total cost USD/year 81,347 Cost per ton sorted USD/ton 71.2 Revenues from sale of recyclables Revenues from sale of recyclables USD/year 73,593 Costs after revenue Cost per ton collected and sorted USD/ton 121.7 Cost per ton generated USD/ton 12.8 The overall recycling costs are estimated at about 120 USD per ton of source separated recyclables, or about 49,000 AMD/ton. The overall costs of Scenario 2, including upgraded waste collection and disposal services, are estimated at 44 USD per ton of generated municipal waste, or about 18,000 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. However, the quantities of waste generated by Hrazdan Community alone are very small to economically justify the establishment of a waste treatment facility only for the community. In fact, preliminary estimates have been made regarding the costs of establishing an advanced waste treatment facility only for Hrazdan Community. The estimates show that the expected costs of waste treatment would be in the range of 180 USD/ton, or 74,000 AMD/ton, which is quite significantly above the affordability limit. That is why, Scenario 3 envisages establishment of mechanical biological treatment (MBT) plan to serve the entire Marzes of Kotayk and Gegharkunik, in order to have sufficient scale. Scenario 3 builds on scenario 2 and envisages the following operations: • Upgrade of the current waste collection system in Hrazdan by switching entirely to rear-loading trucks and 1.1 m3 wheeled containers (like scenarios 1 and 2) • Use of the newly constructed regional landfill near Hrazdan (like scenario 1 and 2) • Introduction of source separation of dry recyclable materials and establishment of a MRF for source separated recyclables (like scenario 2) • Establishment of MBT plant for mixed municipal waste for the entire Kotayk and Gegharkunik Marzes with production of compost-like output and refuse derived fuel (RDF) The MBT plant will receive the entire mixed collected municipal waste from Kotayk and Gegharkunik Marzes. 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 23 Armenia SWM Sector Assessment and Reform Plan Hrazdan Municipal Waste Management Analysis The table below presents the main parameters of the MBT system. Table 16. Main parameters of MBT operation Parameter Unit Value Total capacity of MRF ton 100,000 Staff employed № 27 recyclables recovered % 3% losses during treatment % 42% RDF produced % 16% Waste landfilled % 39% Total CAPEX USD 32,800,000 Total OPEX USD/year 2,621,625 Total costs USD/year 4,462,378 Cost per ton treated before revenue USD/ton 45 Revenue from sale of recyclables USD/year 170,000 Net cost per ton treated after revenue USD/ton 43 The estimated cost per ton treated would be about AMD 17,400, or about USD 43 (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 estimated cost per ton landfilled would be about AMD 3,000, or about USD 7.5. 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, 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. 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 17. Cost comparison of different scenarios, in USD/ton Components Scenario 1 Scenario 2 Scenario 3 Waste collection 29.2 29.2 27.4 Separate waste collection 0.0 9.1 9.1 Sorting facility 0.0 8.4 8.4 MBT 0.0 0.0 42.9 Landfill 15.0 14.3 7.5 Sub-total costs 44.2 61.0 95.3 Revenue from recycling 0.0 -6.0 -7.5 Total costs 44.2 55.0 87.8 Affordable service cost, USD/ton 66.5 66.5 66.5 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 24 Armenia SWM Sector Assessment and Reform Plan Hrazdan Municipal Waste Management Analysis 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. The most expensive option – Scenario 3 – would be well above the estimated affordable service cost threshold. Scenario 3 would lead to a very high rate of waste recovery – about 61% - which means that only about 39% 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 Hrazdan Community would fund the investment of the waste management infrastructure and equipment needed from its own sources. Lastly, scenarios 1 and 2 are related to Hrazdan Community alone, while scenario 3 envisages regional approach to waste treatment. This is because, like the waste disposal, sufficient scale needs to be reached, otherwise the costs for Hrazdan Community become too high and not affordable. 5. Conclusions and recommendations Waste collection. The current waste collection service in Hrazdan Community is not provided in an efficient manner. Inefficiency is a result of several factors. Containers which are in use are outdated, without wheels, heavier than modern designs and require more time for servicing. Their capacity (0.7 m 3) is lower than the ones used in Yerevan (1.1 m3) and partly in Gyumri and Vanadzor. Waste collection fleet is outdated with lower compaction than contemporary standards. Chutes are still in use in most blocks of flats, which is inappropriate from both technical efficiency and public health point of view. To increase the efficiency of waste collection, waste collection in the community can be organized with wheeled 1.1 m3 containers and rear-loading trucks with high compaction rate. Waste disposal. The currently used dumpsite does not meet the established environmental standards. However, the new regional sanitary landfill is expected to become operational soon. Following the commencement of the new landfill, the existing dumpsite should be closed. Current waste service costs are relatively high, although restricted to waste collection only, due to the use of inefficient and depreciated waste collection equipment. Current waste fees are low. Waste fees have not been changed for years. Their current level is below the average values of the range defined in 2011 and even revenue from legal entities does not cover their share of overall costs. Waste fee collection rate is low and decreasing. Planned revenue is less than the potential revenue while the actual revenue from waste fees decreased in 2023. Two thirds of the costs are covered by other communal revenue including state subsidy. Polluter pays principle, which is a CEPA commitment, could be implemented under the existing affordability restrictions in the community. Political will is needed to set and collect full cost recovery waste fees for the legal entities and gradually increasing affordable fees for the population. 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 upgrade of the current waste collection system could significantly reduce the waste management costs. 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 44 USD/ton, or about 18,000 25 Armenia SWM Sector Assessment and Reform Plan Hrazdan Municipal Waste Management Analysis AMD/ton. In terms of waste charges, implementation of this scenario would mean establishment of waste fee of 340 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. Therefore, it would make sense for Hrazdan Community to wait for the EPR schemes to become operational, before investing in a source separation system. However, if the community decides to implement the full- scale system, this may result in an increase of waste management costs to about 55 USD/ton, or about 22,300 AMD/ton. In terms of waste charges, implementation of this scenario would mean setting-up the waste fee to 425 AMD/person/month, if the principle of polluter pays principle is observed. Although affordable, this option (scenario 2) 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. • Scenario 3 clearly indicates that at present, the affordability threshold does not allow for extensive treatment technologies to be deployed, due to high investment and operating costs. However, the apparent direction of the waste management sector in the country is towards regionalization of the waste services. All communities and settlements in Kotayk and Gegharkunik Marzes, including Hrazdan Community, will benefit from such regionalization, due to economies of scale. From the financial point of view, the services could be provided at more affordable cost if sufficient scale is achieved. Therefore, at a certain point in time, a waste management system as outlined in Scenario 3, could be established for the entire Kotayk and Gegharkunik Marzes. In terms of waste charges, implementation of this scenario would mean establishment of waste fee of 680 AMD/person/month, if the polluter pays principle is observed. Like scenario 2, 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 1 (upgrade of waste collection system and use of the sanitary landfill) seems the most expedient option in the short-term for Hrazdan Community. This is also the most affordable option for the community. The recommended scenario in Hrazdan could be implemented through the following actions: • Prepare a Communal Waste Management Plan in accordance with the Guidelines for Local Municipal Waste Management • Implement separate budgeting for waste collection and landfill disposal, in line with annual waste management plans and including waste collection equipment asset depreciation in service cost • Set the level of 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 • Replace the existing stationary 0.7 m3 containers with wheeled 1.1 m3 containers • Replace the existing side-loading trucks with rear-loading ones • Close the existing dumpsite of Hrazdan. 26 Armenia SWM Sector Assessment and Reform Plan Hrazdan Municipal Waste Management Analysis 27