Armenia Waste Sector Reform Plan May 2024 Armenia SWM Sector Assessment and Reform Plan Sector Assessment Report © 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. 2 Armenia Waste Sector Reform Plan Contents EXECUTIVE SUMMARY.......................................................................................................................................................... 5 1. INTRODUCTION ........................................................................................................................................................... 9 2. CONTEXT FOR REFORM ............................................................................................................................................... 9 2.1 CEPA .................................................................................................................................................................... 9 2.2 OVERARCHING PROBLEMS ....................................................................................................................................... 10 3. SITUATION ANALYSIS.................................................................................................................................................. 11 3.1 WASTE GENERATION .............................................................................................................................................. 11 3.2 LEGAL AND POLICY FRAMEWORK ............................................................................................................................... 12 3.3 INSTITUTIONAL FRAMEWORK.................................................................................................................................... 13 3.4 WASTE MANAGEMENT OPERATIONS .......................................................................................................................... 14 3.5 COSTS AND FINANCING ........................................................................................................................................... 15 4. OBJECTIVE OF THE REFORM PLAN ............................................................................................................................ 17 5. KEY CONSIDERATIONS AND PRINCIPLES .................................................................................................................... 18 6. REFORM PLAN ........................................................................................................................................................... 19 6.1 SHORT-TERM REFORM STEPS AND MILESTONES ............................................................................................................ 19 6.2 MEDIUM-TERM REFORM STEPS AND MILESTONES......................................................................................................... 26 6.3 TIMELINE ............................................................................................................................................................. 29 List of Tables TABLE 1. WASTE MANAGEMENT PROVISIONS OF CEPA .................................................................................................................... 9 TABLE 2. WASTE FORECAST, 2024-2043, IN TONS ....................................................................................................................... 11 TABLE 3. TIMELINE OF SHORT-TERM STEPS ................................................................................................................................... 29 TABLE 4. MEDIUM-TERM REFORM STEPS AND ACTIVITIES ................................................................................................................ 30 List of Figures FIGURE 1. PREDOMINANT TYPE OF WASTE COLLECTION EQUIPMENT IN USE ........................................................................................ 14 FIGURE 2. CURRENT DUMPSITES................................................................................................................................................. 15 FIGURE 3. MONTHLY ACTUAL WASTE CLEANING AND COLLECTION COSTS AND REVENUE FROM WASTE FEES , PER CAPITA, BY MARZES, 2022 ... 16 List of abbreviations CDW Construction and demolition waste CEPA Comprehensive and Enhanced Partnership Agreement EBRD European Bank for Reconstruction and Development EPR Extended Producer Responsibility EU European Union GDP Gross domestic product LoW Law on Waste (2004) MBT Mechanical biological treatment ME Ministry of Environment MoF Ministry of Finance MTAI Ministry of Territorial Administration and Infrastructure RA Republic of Armenia 3 Armenia Waste Sector Reform Plan 4 Armenia Waste Sector Reform Plan Executive summary Context for reform This Waste Sector Reform Plan is intended to support Armenia in developing a road map for its solid waste management sector in order to improve and expand waste management services. This sector reform plan should be read in conjunction with the solid waste sector assessment that was undertaken as part of the World Bank’s overall technical assistance, as the two documents are closely interlinked. The main driver for sector reforms is the Comprehensive and Enhanced Partnership Agreement (CEPA), signed between the European Union (EU) and the Republic of Armenia (RA) in 2017, which includes provisions and commitments that the RA needs to undertake to gradually approximate its legislation to the respective legislation of the EU within agreed timeframes. Armenia has made some progress in improving solid waste management (SWM) in recent years, but major improvements are still needed. Waste collection service is nearing universal coverage of the population, and significant number of unauthorized waste disposal sites have been closed over the past few years. Yet in many respects, the waste sector in Armenia is in need of major improvements in order to attain internationally recognized standards and good practices. Armenia’s solid waste sector faces challenges in three overarching areas: (i) Legal framework and institutional arrangements, (ii) Solid waste operations and service delivery – particularly in relation to waste disposal, and (iii) Financing and cost recovery. This Sector Reform Plan outlines the specific challenges in each area and identifies corresponding actions to address these challenges. The key binding constraints that hinder the development of the solid waste management sector in Armenia are mainly institutional and financial in nature. If these are properly addressed, then the necessary investments and operational improvements are more likely to be achieved. The institutional constraints relate mainly to gaps in the existing legislation, fragmented institutional roles, and the need for strengthened technical capacities at all levels. Financial constraints fundamentally relate to the lack of cost recovery in the sector, with the polluter-pays principle yet to be put in place. Doing so would require revising existing waste fees and introducing extended producer responsibility (EPR) schemes. A fundamental aspect that would need further consideration is to strengthen accountability and ensure that the right incentives are in place. This would help to close the gap between what is established in the legal and regulatory framework for the solid waste sector, as well as in relevant sectoral strategies and plans, and the realization of actual changes on the ground with improved solid waste infrastructure, operations and service delivery. The success of planned interventions would not be realistic or sustainable without strong enforcement. Legal Framework and Institutional Arrangements Gaps in the existing legal framework. The main gaps in the present legal framework are related to: recognition of the waste management hierarchy; application of the polluter-pays principle; implementation of extended producer responsibility (EPR); and waste disposal. Lack of regional planning. Several waste management zones are envisioned for the whole country. Regional waste management plans, which are essential if regional waste management facilities are to be identified and invested-in for each waste zone, are not yet available. Insufficient scope of existing communal waste management plans . Existing communal waste management plans are generally focused on waste collection schemes. New local waste management plans are needed, which would reflect the requirements set out in the National Strategy and include elements as outlined in the Guidelines for development of local waste management plans. 5 Armenia Waste Sector Reform Plan Fragmentation of institutional responsibilities for waste management. There is inconsistency in the current assignment of responsibilities. According to the Law on Waste (LoW) of 2004, the Ministry of Environment is the state authorized body in the field of waste management, while the Law on Waste Collection and Sanitary Cleaning (2011) designates the Ministry of Territorial Administration and Infrastructure as the state authorized body in the field of municipal solid waste management. In the EU member states, a single line ministry is typically assigned with the responsibility to develop policies, draft legislation, and oversee waste management in the country. Data management and reporting. Apart from unreliability of data on waste quantities, the main problem with data management and reporting is that too many institutions are involved in data collection and distribution. There is a lack of coherence in the processing, analysis, distribution, and publication of data, due to lack of protocols for data exchange. Thus, waste sector governance is lacking the necessary data for timely, evidence-based decision-making. Solid Waste Operations and Service Delivery Serious deficiencies in waste disposal. At present, 100% of municipal waste is disposed of in dumpsites with little control over the types of waste disposed. None of the disposal sites are engineered facilities, and are all lacking environmental protection measures. Inefficient waste collection. The efficiency of waste collection is generally low in Armenia, due to the predominant use of inefficient equipment. A notable exception is Yerevan, where several years ago the city switched to 1.1 m3 wheeled containers and large capacity rear-loading trucks, which is in accordance with accepted international standards. Other cities, like Gyumri and Vanadzor, are gradually transitioning towards the same system. Lack of formally organized waste recycling and recovery system . Source separation is only a sporadic activity in the country and mainly donor-driven. The introduction of Extended Producer Responsibility (EPR) would play a major role in setting up source separation schemes and increase recycling rates significantly. The experience of Yerevan and Gyumri communities shows that other communities could already start introducing separate collection of recyclables at smaller scale while keeping the respective costs at affordable levels. Lack of biowaste management system . Combined, food and green waste comprise 50-60% of the total municipal waste in the country. Although constituting the largest percentage of municipal waste, at present neither green waste nor food waste are subject to any treatment. Lack of designated areas for disposal of construction and demolition waste (CDW) . Since communal waste disposal sites are generally open dumpsites, CDW usually ends up mixed with municipal waste. CDW contains hazardous materials, like asbestos, which poses significant environmental and health risks. Financing and Cost Recovery Insufficient cost recovery. Revenue from waste fees covers 70% of waste collection operating costs, while the remaining costs are subsidized from other sources of communal revenue, including state subsidy. The polluter-pays principle is not observed yet, and as a result waste management costs are not attributed to waste producers and holders. Current waste fees are inadequate and require service subsidization . Waste tariff ceilings were established with adoption of the Law on Waste Collection and Sanitary Cleaning in 2011 and have not been revised since. In 2022, the average household fees across all Marzes were still within the range of 50-200 AMD. Given officially reported cumulative inflation for the period 2011-2023 of 44%, there has been a very significant erosion in the real value of waste fees. Subsidizing waste services deprives communities of the opportunity to use their limited budgetary resources to develop and sustain other important communal infrastructure and services. 6 Armenia Waste Sector Reform Plan Improved waste services can be affordable and financially sustainable . The average waste fees from households represent 30% of the ceiling established in 2011 in the Law on Waste Collection and Sanitary Cleaning. There is ample room to increase waste fees while remaining within the affordability level, defined as 1% of actual household expenditures. Targeted support to vulnerable groups as should be maintained. Gradual increases in waste fees could secure the funds required for enhanced waste services, without reliance on other sources of communal revenue. The overall financing gap is significant. In 2022, the total municipal waste management costs in Armenia amounted to 13.5 billion AMD, or 33.7 million USD. Assuming 707,000 tons of municipal waste were generated that year, this means that the cost per ton managed was 48 USD/ton. Given average collection and transfer costs for middle income economies of 50 USD/ton, and the cost of sanitary landfill disposal is of at least 20 USD/ton, the annual financing gap in Armenia for solid waste operations is around 22 USD/ton, or 15.5 million USD annually. In terms of capital investment needs, an overall estimate of the minimum aggregate investment amount needed would be in the range of 115-145 million USD. This includes 65-80 million USD for new sanitary landfills. Waste diversion and achieving circular economy objectives through other treatment options would incur additional capital investment that is not estimated here (the city-level reports for Yerevan, Gyumri and Hrazdan provide detailed scenarios including costing for various options). Closure of all dumpsites in the country could cost in the range of 30-40 million USD, while replacement of waste collection equipment for improved efficiency would cost 20-25 million USD. Forecasted Waste Generation This Reform Plan takes into account forecasts of future waste generation. In 2024, the total quantity of municipal waste generated in Armenia is estimated to be more than 720,000 tons. At the end of the next 20- year period, the quantities of waste are expected to increase by 12.8% compared to 2024, to reach about 820,000 tons a year, resulting in an average waste generation rate of 280 kg/person/year. Objective of the Reform Plan This Reform Plan acknowledges the commitments of Armenia, as part of the CEPA. In doing so, changes are needed in the institutional framework and in the financing of the waste management services. Therefore, the Reform Plan sets the following objective: to put in place the necessary framework conditions (legal, institutional, financial) to improve the municipal waste management sector and safeguard public health and the environment. Key Considerations • Changes in the waste management system are to be made progressively. The Reform Plan below outlines improvement measures that can be introduced incrementally to allow the waste sector in Armenia to develop and progress sustainably. Full waste collection coverage and safe waste disposal are considered the backbone of any waste management system and should be in place before the system is developed further for increased recycling and waste recovery. • Financing of waste management services . For sustainability purposes, the financing of waste services should be done on the basis of full cost recovery, through user charges. Subsidies do not create sustainable waste management systems in the long-run. • Full lifecycle costing of landfills. As envisaged in the CEPA, a full costing mechanism needs to be established for landfills. This costing mechanism should ensure that all costs involved in the setting up and operation of a landfill site, including the estimated costs for closure and after-care, are included in the gate fee charged by the landfill operator. The gate fee should be charged per tonne of waste disposed. 7 Armenia Waste Sector Reform Plan • Source separation and recycling. Source separation and recycling of municipal waste always comes at a cost. The experience of Yerevan Community is evidential for this. Globally, the best available practice is related to introduction of Extended Producer Responsibility (EPR) schemes, which oblige producers and importers of certain materials to cover the cost of collection and recycling. Key Principles • Polluter-pays principle. In accordance with this principle, the costs of waste management, including for the necessary infrastructure and its operation, shall be borne by the original waste producer or by the current or previous waste holders. Waste tariffs/fees should account for the full cost of the services, in relation to waste quantities generated. • Cost recovery. Cost recovery means that all financial costs related to waste management services should be covered by revenues from user charges. Adherence to this principle safeguards sustainability of the services provided. • Affordability of services. Affordability is interpreted as the price that customers can afford to pay without jeopardizing their ability to meet other basic needs. The ceiling payment for waste management services is internationally accepted as 1% of average household income. Reform plan The sequencing of steps is divided into short- and medium-term. The short-term steps have the time horizon of 2024-2027, while medium-term steps are envisaged to be implemented between 2028-2031. The different legal, institutional, technical, and financial aspects of waste management are usually closely interrelated. Therefore, the steps below outline the general direction for reforms and should not be viewed as strictly sequential. Step Activity Implementation by 2024-2027 Improve the • Amendments to the law on waste • ME existing legal • Adopt a Government Decision on waste landfill construction • MTAI framework • Repeal the waste tariffs ceilings set in the Law on Waste Collection • MTAI with MoF and Sanitary Cleaning Improve waste • Update the national Municipal Waste Management Strategy • MTAI management • Develop regional waste management plans • Marzes with MTAI planning • Conduct a national waste composition survey • MTAI • Prepare a national strategy for reducing the amount of • MTAI biodegradable municipal waste going to landfill Achieve cost • Adopt an instruction to budgetary organizations on accounting for • MTAI with MoF recovery of depreciation of tangible assets used for service provision current • Adopt methodological guidance on determination of waste fees in operations line with the polluter-pays principle • Adopt a regulation on financial security for landfill closure and remediation • Revise and increase the environmental tax on dumpsites • Develop a national financing framework for priority investments in MSWM sector Improve waste • Establish regional sanitary landfills for municipal waste • MTAI and Marzes disposal • Develop a comprehensive plan for dumpsite closures Improve • Streamline licensing and permitting, and data management • ME institutional • Channel adequate financial resources and technical assistance to • MTAI arrangements waste management projects, systematically 2028-2031 8 Armenia Waste Sector Reform Plan Step Activity Implementation by Introduce EPR • Introduce EPR schemes for different waste categories • ME and other schemes for relevant parts of different waste RA government categories Introduction of • Establish a biowaste management system • MTAI waste recycling • Establish a system for management of construction and demolition and recovery waste (CDW) Implementation of this reform plan would also offer significant climate co-benefits for Armenia. Given the significant global warming impact of methane emissions, the most significant benefit for climate change mitigation would arise from investments in improved waste disposal, specifically sanitary landfills with landfill gas management. Detailed analysis of the case of Gyumri estimates a cumulative reduction of almost 429,000 tons of CO2 equivalent over 15 years, with a marginal abatement cost of $36 per ton of CO2e, for example. 1. Introduction Waste management is a challenging sector to govern. The sector involves the day-to-day delivery of services that are vital to protecting public health and the environment. Regular and reliable waste management services underpin quality of life in communities, and contributes to Armenia’s attractiveness as a place to live, work and invest in. Significant progress has been made in Armenia in recent years, with collection service nearing universal coverage of the population. A significant number of unauthorized waste disposal sites have been closed over the past few years. Still, in many areas, the waste sector in Armenia is not performing well enough when compared to the best international standards. This Waste Sector Reform Plan is intended to support Armenia in developing a road map for its solid waste management sector and to improve, expand and make waste management services more sustainable. The main driver for sector reforms is the Comprehensive and Enhanced Partnership Agreement (CEPA), signed between the European Union (EU) and the Republic of Armenia (RA) in 2017. Section 2 of this report provides an overview of the provisions and commitments that the RA undertakes to implement. Section 3 provides an overview of the existing situation with municipal waste management in the country, while Section 4 identifies the main objective of the Reform Plan. Section 5 lists some key considerations and principles in waste management. Section 6 presents the short- and medium-term steps for reforms and milestones. 2. Context for reform 2.1 CEPA In November 2017, a CEPA was signed between the EU and the RA. The CEPA entered into force on 1 March 2021. The Agreement provides a framework for the EU and Armenia to work together in a wide range of areas, including environment and waste management. Regarding the latter one, the table below presents the commitments that the Republic of Armenia undertakes to gradually approximate its legislation to the respective legislation of the EU within agreed timeframes. Table 1. Waste management provisions of CEPA 9 Armenia Waste Sector Reform Plan EU legislation Approximation area Timeframe* Directive 2008/98/EC Adoption of national legislation and designation of competent 4 years on waste authority/ies Preparation of waste management plans in line with the five-step waste hierarchy and of waste prevention programmes Establishment of a permitting system for establishments/undertakings carrying out disposal or recovery operations, with specific obligations for the management of hazardous wastes Establishment of a register of waste collection and transport establishments and undertakings Establishment of full cost recovery mechanism in accordance with the 6 years polluter pays principle and extended producer responsibility principle Directive 1999/31/ЕС Adoption of national legislation and designation of competent 3 years on the landfill of waste authority/ies Classification of landfill sites Preparation of a national strategy reducing the amount of biodegradable municipal waste going to landfill Establishment of an application and permit system and of waste acceptance procedures Establishment of control and monitoring procedures in the operation phase of landfills and of closure and after-care procedures for landfills to be disaffected Establishment of a costing mechanism Establishment of conditioning plans for existing landfill sites 6 years Ensuring the relevant waste is subject to treatment before landfilling *Note: following the entry into force of CEPA In addition, CEPA envisages certain approximation measures related to environmental governance, like: establishment of rules and procedures aimed at preventing and remedying damage to the environment based on the polluter-pays principle. The Road Map and Action Plan for CEPA implementation, adopted in 2019 1 under Chapter 5 “Environment” contains requirements to approximate the national legislation and regulations with the following EU Acquis: • Directive 2008/98/EC of the European Parliament and of the Council of 19 November 2008 on waste and repealing certain Directives, • Council Directive 1999/31/EC of 26 April 1999 on the landfill of waste. The Five-Year Action Program (2021-2026) of the Government of RA envisages full implementation of the provisions of the CEPA by 2026. Approximation of the national legislation to the respective legislation of the EU would set new environmental standards and norms which would ultimately trigger transformation of the waste management sector. 2.2 Overarching problems The main overarching problems with the current provision of waste management services can be summarized as follows: 1 Decision N 666-L 10 Armenia Waste Sector Reform Plan • Legal framework. There are gaps in the current legislation which prevent the development of the waste and resource management sector. The main gaps are related to: adherence to the waste management hierarchy; implementation of the polluter pays principle; implementation of extended producer responsibility; and waste disposal. • Waste disposal. At present, 100% of the municipal waste is disposed of on dumpsites with little control over the types of waste disposed. Very few of these dumpsites are permitted for accepting municipal waste. None of the disposal sites are engineered facilities and lack any environmental protection measures. • Cost recovery. Revenue from waste tariff fees covers 70% of current waste collection operating costs, the rest is subsidized from other sources of communal revenue, including state subsidy. Cleaning costs are financed from other revenue of the communal budget. Investment is secured by other communal budget revenue, including state subsidy and by grants. The polluter-pays principle is not introduced yet, and as a result waste management costs are not attributed to waste producers and in relation to waste quantities. 3. Situation analysis 3.1 Waste generation Waste projections have been developed as a basis for estimating the future investment needs and costs. 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 are presented in section Error! Reference source not found. • 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 • Waste generation rates are defined for different size of settlements as: o 0.88 kg/cap/day or 320 kg/cap/year for Yerevan City in the base year o 0.75 kg/cap/day or 274 kg/cap/year for cities with population above 40,000 residents (Gyumri, Vanadzor, Echmiadzin, Abovyan, Hrasdan and Kapan) o 0.6 kg/cap/day or 219 kg/cap/year for all towns with population less than 40,000 residents o 0.4 kg/cap/day or 146 kg/cap/year for rural areas The table below present the projected quantities of municipal waste for the next 20-year period. Table 2. Waste forecast, 2024-2043, in tons Marz 2024 2030 2035 2043 Yerevan city 355,711 377,765 396,740 421,086 Aragatsotn 36,304 37,559 38,538 39,501 Ararat 43,478 45,593 47,314 49,383 Armavir 47,927 50,408 52,440 54,958 Gegharkunik 38,417 39,750 40,800 41,861 Lori 44,072 43,952 43,740 42,691 Kotayk 52,189 54,872 57,066 59,768 Shirak 49,523 49,827 49,953 49,334 Syunik 28,619 29,359 29,913 30,317 Tavush 21,186 21,506 21,720 21,706 Vayots Dzor 8,149 8,165 8,158 8,016 11 Armenia Waste Sector Reform Plan Marz 2024 2030 2035 2043 Total 725,576 758,754 786,382 818,621 Source: own elaboration At the end of the 20-year period the quantities of waste are expected to increase by 12.8%, compared to 2024. 3.2 Legal and policy framework The Law on Waste2 (LoW) was adopted in 2004, prior to the adoption of the EU Waste Framework Directive in 2008. The key principles missing in the Law on Waste are related to waste hierarchy, polluter pays principle and extended producer responsibility. The waste management hierarchy provides instructive guidance on the relative importance of different waste management methods. Currently, all the collected municipal waste goes to landfill, which is at the base of the hierarchy. There are no mechanisms in place to promote, encourage, or incentivize waste management practices to move upwards in the hierarchy. Waste disposal tax set at only 60 AMD/tonne (0.15 USD/tonne) does not play role in stimulating recycling and recovery of waste. Stimulating the diversion of waste from landfill into reuse, recycling or recovery is an important strategic priority which needs to be underpinned by legislation. The polluter-pays principle is not observed yet, and as a result waste management costs are not fairly attributed across waste producers and holders. Waste fees do not yet account for the full cost of the services. Landfill gate fees, for instance, are either non-existent, or set too low to cover the full operational costs or include provisions for closure and post-closure care. Producers of products do not bear financial and organizational responsibility for the management of the waste stage of a product’s life cycle. Additional legal provisions are needed to underpin application of the polluter pays principle. Sustainable operation of sanitary landfills requires a costing mechanism3 to ensure that all the costs involved in the setting up (design, permitting, construction) and operation of a landfill site, including financial security4 for closure and after-care costs for a period of at least 30 years to be covered by the landfill operator gate fee for the disposal of any type of waste. Landfills are developed in cells5, each of 5-7 years operational capacity, and funds for cell closure and final landfill closure and 30 year after care and rehabilitation has to be defined and paid by waste generator per tonne of waste from the start of its operation. Application of polluter pays principle may be limited by affordability constraints. Public services affordability policy and adoption of affordability ceilings are defined, which may justify temporary subsidization. Current level of waste fees represent 30% of the affordability ceiling defined as 1% household expenditures. Fees should cover at least the operating costs and future replacement cost of assets and equipment if initial investment is provided as grant and grow with incomes growth to reach full cost recovery. Lack of full cost recovery is a barrier to private sector participation, which would otherwise be interested in investing in waste services and infrastructure. 2 The RA Law on Waste № HO-159-N (2004) 3 Landfill Directive, art.10 4 Art. 8(a)(iv) adequate provisions, by way of a financial security or any other equivalent, on the basis of modalities to be decided by the state, has been or will be made by the applicant prior to the commencement of disposal operations to ensure that the obligations (including after-care provisions) arising under the permit issued under the provisions of this Directive are discharged and that the closure procedures required by Article 13 are followed. This security or its equivalent shall be kept as long as required by maintenance and after-care operation of the site in accordance with Article 13(d). 5Cells are much more stable and easier to cap than open landfill spaces, making the space faster and more affordable to reclaim. In addition development by cells contributes to decrease of leachate and leachate treatment costs. 12 Armenia Waste Sector Reform Plan Nowadays, extended producer responsibility (EPR) is applied globally to manage waste from different product types. EPR requires producers who put products on the market to assume responsibility for their products beyond their useful life and in particular for their end-of-life treatment and recovery. The rationale behind this is that, when faced with the obligation to collect and treat their products at the post-consumption phase, producers will have the economic incentive to reconsider their products’ design, which make products management much more resource efficient in the long run. Minimum requirement for extended producer responsibility schemes is to ensure that the financial contributions paid by producer with extended producer responsibility obligations cover the costs of separate collection of waste and its subsequent transport and treatment6. Following their establishment, EPR schemes would become important investors in assets and infrastructure. Once fully implemented, the EPR systems would cover the full costs of separate collection, sorting and recovery of special waste streams, including packaging and packaging waste. This would significantly reduce the financial burden on public budgets. Significant technical assistance has been provided to the Government of RA in the last few years for the establishment of enabling framework for EPR. Although the process of developing the enabling framework in Armenia is in an advanced stage, it has to be noted that usually it takes time and significant efforts from all key stakeholders to develop comprehensive EPR schemes . In the absence of EPR schemes, source separation and recycling activities lag behind and considerable amount of municipal waste (resources) end up in dumpsites. Biowaste is not covered by legal provisions . The existing legal framework misses to address the management of the most significant waste stream in terms of weight - biowaste. Data and reporting. The Law on Waste does not explicitly require the waste management operators to report on collected and landfilled municipal solid waste. Such a requirement exists for waste recovery operators, but not for waste collection and disposal operators. Reports on collected and disposed waste are submitted only by communities, which however are usually based on rough estimates. Lack of regional planning. The country will be divided into several waste management zones. A role for regional waste management plans, which are essential if regional waste management facilities are to be identified and invested-in, is currently missing. In the absence of regional integrated waste management plans it is difficult to forecast the upcoming needs for collection, recovery and disposal services and infrastructure. Communities have no basis on which to take strategic decisions on the elements of the integrated waste management service that make sense to be shared with neighboring communities, and as a result investment in the sector stagnates. Insufficient scope of the existing communal waste management plans. Existing communal waste management plans are generally waste collection schemes. New local waste management plans are needed, which would reflect the requirements set out in the National Strategy and include elements as outlined in the Guidelines for development of local waste management plans. 3.3 Institutional framework Fragmentation of responsibilities for waste management . Waste management policy making is a function assigned to several authorities – the Government, Ministry of Environment (ME), and Ministry of Territorial Administration and Infrastructure (MTAI). Confusion arises from the fact that, according to the LoW, ME is the state authorized body in the field of waste management, while the Law on Waste Collection and Sanitary 6 EU Waste Framework Directive, art 8a 13 Armenia Waste Sector Reform Plan Cleaning (2011) designates the MTAI as the state authorized body in the field of municipal waste management services. In the EU member states, a single line ministry is typically assigned with the responsibility to develop policies, draft legislation, and oversee waste management in the country. Data management and reporting. Apart from unreliability of data on waste quantities, the main problem with data management and reporting is that too many institutions are involved in data collection and distribution. This makes decision making and waste governance complicated. 3.4 Waste management operations Inefficient waste collection. The efficiency of current waste collection is low due to several reasons. Firstly, containers which are predominantly in use are outdated, without wheels and lids, heavier than modern designs and as a result need more time for lifting and maintenance. Whilst the investment cost of the locally produced containers is low, their use injects inefficiencies into the operation and maintenance of the waste management system. Secondly, municipal waste is collected with rather aged and outdated vehicles. Side waste loader KO 413 Typical 0.65 m3 containers for curbside waste collection Figure 1. Predominant type of waste collection equipment in use Small part of the collection vehicles in use are fitted with compaction. In rural areas, most often open dump trucks are in use which necessitate manual loading of the waste. Thirdly, chute system in multi-apartment buildings is still in use. Chutes are inappropriate system from both public health and operational point of view. Exception to the rule is Yerevan, where several years ago the city switched to 1.1 m3 wheeled containers and large capacity rear-loading trucks, which is in accordance with the accepted international standards. Other cities, like Gyumri and Vanadzor, are gradually transitioning towards the same system. Environmentally unsound waste disposal . Apart from Hrazdan new sanitary landfill (not in operation yet), all other disposal sites in the country are basically open dumpsites, which are inappropriate from environmental point of view. About 300 dumpsites are still in use in the country. The sites do not meet any modern standards of waste disposal. Lacking control mechanisms, dumpsites cannot ensure that hazardous industrial and healthcare wastes are not disposed along with municipal waste. Current operational practices are not in accordance with recently adopted higher standards for waste disposal 7. 7RA Government Decision №27-N "On approval of the minimum standards for the operation, remediation and closure of existing and acting landfills in the territory of the Republic of Armenia" dated 04/01/2024 14 Armenia Waste Sector Reform Plan Arjut disposal site Nubarashen disposal site Figure 2. Current dumpsites Lack of formally organized waste recycling and recovery system . Source separation is only a sporadic activity in the country and mainly donor-driven. There are sufficient recycling capacities, particularly for glass and paper and cardboard. However, apart from privately organized recycling activities, there is a lack of formally organized recycling services integrated with other communal waste management services. In the lack of community organized systems, the informal sector is actively involved in recycling activities in the country, primarily in the separation of recyclable materials. Separation takes place mainly on the disposal sites, but also from the street containers for mixed municipal waste. Lack of biowaste management system . Combined, food and green waste comprise of 50-60% of the total municipal waste in the country. Although being the largest percentage of municipal waste, at present neither green waste nor food waste are subject to any treatment. Lack of designated areas for disposal of construction and demolition waste (CDW) . Generally, communities have no designated sites for disposal of CDW. Citizens dispose CDW either near the containers for household waste or in random areas polluting the environment. Since communal waste disposal sites are generally open dumpsites, CDW often ends up mixed with municipal waste. 3.5 Costs and financing Current waste fees are inadequate and require service cost subsidization. Waste fees ranges/ceilings for different users for waste collection and disposal were established with adoption of the Law on Waste Collection and Sanitary Cleaning in 2011 and have not been revised since. In 2022, the average residential fees were still within the range of 50-200 AMD, less than the average of the fee range set in the law - 50-400 AMD. On the other hand, officially reported cumulative inflation for the period 2011-2023 was 44%, salaries grow above inflation, with real economic growth, resulting in a significant erosion in the real value of waste fees. Facing financial constraints to pay private operators’ prices that include depreciation, financial cost of investment, profit and VAT, communities have started to provide cleaning of public areas and waste collection as a communal activity8. Thus, waste service operating costs are funded from the administrative part of the communal budgets (12.5 billion AMD in 2022 in total) and investments - from capital part of the budgets (965 million AMD in 2022). Costs are not budgeted separately to cost centers on cleaning and waste collection. On the assumption that 2/3 of the operating costs relate to waste collection and 1/3 – to sanitary cleaning9 the 8 Reportedly, another reason was dissatisfaction with the services provided 9 A Report on Waste Governance In Armenia, page 78, first paragraph : 63%- 37%. The report does not mention disposal cost. 15 Armenia Waste Sector Reform Plan average monthly operating cost for waste collection is 235 AMD per capita10. Cleaning costs are covered by other communal budget revenue. Total revenue from waste fees is 6 billion AMD in 2022, with average monthly payment of 170 AMD per capita, or 120 AMD per person from households 11.Actual monthly operating costs per capita and revenue from fees by Marzes and Yerevan are presented in the following graph: Monthly actual costs and revenue per capita 450 400 350 300 AMD 250 200 150 100 50 0 Monthly cleaning costs/cap Monthly collection cost/cap Monthly per capita fee Figure 3. Monthly actual waste cleaning and collection costs and revenue from waste fees, per capita, by Marzes, 2022 Waste collection operating costs are covered only in Yerevan. Subsidizing waste service limits the opportunity to develop and sustain other important communal infrastructures and services. Asset depreciation cost is not component of current service costing. Depreciation costs of the waste collection equipment is to be included in service cost budgeting as a first step towards full cost recognition and sustainable waste service. A legal provision for amortization of fixed communal assets used for communal service provision is required to allow depreciation costs will be reflected in the accounting system and correct assessment of actual costs of public services and activities. Current waste costs do not include waste disposal cost. Dumping is to be ceased after development of regional sanitary landfills. Landfill operators are to be paid a gate fee, including a provision for closure and 30 years after care, per tonne of waste delivered. Leachate treatment and compaction costs are the main sanitary landfill cost components. Failure to provide sufficient funds for proper sanitary landfill operation will lead to environmental pollution, early landfill capacity depletion and ruin expensive infrastructure. Grants for waste service investments. Grants for initial investments will speed up construction of sanitary landfills. Future landfill cell construction and closure cost should be covered by landfill gate fees and incorporated in the waste fees to secure financial sustainability of new facilities. Grants for waste collection equipment should be provided to small and poor communities, distant from regional landfills. Cost budgeting considers existent service. Communal waste management plans for targeted development, with identified investment needs and operating costs need to be the base of service cost budgeting. Dumpsite closure costs. As soon as sanitary landfills are constructed, dumpsites in the respective regions are to be closed. In general, state budget finances closure of bigger dumpsites, small dumps are cleaned at the expense of communal budgets. 10 12.5 billion AMD/2,961,400/12=235 AMD per capita monthly 11 30% of the revenue is from legal entities, 70% from households, according Waste Governance Report in Armenia. 70% *170 AMD = 119 AMD. 16 Armenia Waste Sector Reform Plan Polluter pays. Polluter pays principle implies cost recovery in proportion to waste generated. Legal entities and especially larger waste generators should pay the full cost in relation to waste quantities – volumes and frequency of containers served. Affordability may restrict application of the polluter-pays principle. Widespread criterion for affordability ceiling for waste services for upper-middle income economies as Armenia is 1% of the disposable income. Alternative ceiling could be 1% of actual expenditure, the latter being lower. The current fees represent 30% and less of the affordability level, defined as 1% of the average expenditures. There is ample room to increase the level of waste fees even within the range of values defined in the Law on waste collection and sanitary cleaning and maintain service affordability. Continuous growth of waste fees could secure the funds required for enhanced waste service, without reliance on other communal revenue. Affordability limits apply only to residential waste producers. Legal entities should be able to pay for the full- cost recovery fee. Fees should cover at least full collection costs and the operating costs and future replacement and closure cost of sanitary landfills assuming initial investment in landfills is provided as grant. Targeted support to vulnerable groups should be maintained. Overall financing gap. In 2022, the total municipal waste management costs in Armenia amounted to 13.5 billion AMD, or 33.7 million USD. On the assumption that about 707,000 tons of municipal waste were generated that year, this means that the cost per ton managed was 48 USD/ton. An estimate12 of the World Bank of the average collection and transfer costs for middle income economies is 50 USD/ton, while the cost of sanitary landfill disposal is estimated13 to be at least 20 USD/ton. This means that the annual financing gap in Armenia for solid waste operations could be estimated to be around 22 USD/ton, or 15.5 million USD annually. In terms of capital investment needs, an overall estimate of the minimum aggregate investment amount needed would be in the range of 115-145 million USD. This includes 65-80 million USD for new sanitary landfills with an aggregate disposal capacity of approximately 10 years of waste, assuming waste generation of around 700,000 tons a year. This figure does not account for waste diversion through other treatment options, which would incur additional capital investment that is not estimated here. The actual number of landfills is yet to be determined and may range between 5 and 8, which would be in addition to the new Hrazdan landfill that is about to begin operating. Closure of all dumpsites in the country could cost in the range of 30-40 million USD. This is based on an average cost of closure and remediation of 300,000 USD per hectare, assuming an area of 100-125 hectares in aggregate. Replacement of waste collection equipment for improved efficiency would cost 20-25 million USD; this range of estimates is based around a midpoint estimate of 100 trucks costing an average of 180,000 USD each, and 12,500 containers costing 365 USD each. 4. Objective of the Reform Plan This Reform Plan acknowledges the commitments of Armenia, as part of the CEPA, to gradually approximate its legislation to the waste management legislation of the EU. In doing so, changes will also occur in the institutional framework and in the financing of the waste management services. Therefore, the Reform Plan sets the following objective: to put in place the necessary framework conditions (legal, institutional, financial) to improve the municipal waste management sector and safeguard public health and the environment. 12 Municipal Solid Waste Cost Calculation Technical Guidelines for Low- and Middle-Income Countries, the World Bank, 2024, table 9, p.30 13 What a Waste 2.0: A Global Snapshot of Solid Waste Management to 2050, the World Bank, 2018, table 5.2, p. 104 17 Armenia Waste Sector Reform Plan 5. Key considerations and principles Changes in the waste management system are to be made progressively. Improvements in any waste management system should be introduced gradually. The Reform Plan below outlines improvement measures that can be introduced incrementally to allow the waste sector in Armenia to develop and progress sustainably. Full waste collection coverage and safe waste disposal are considered the backbone of any waste management system and should be in place before the system is developed further into recycling and waste recovery. Financing of waste management services . For sustainability purposes, the financing of waste services should be done on the basis of full cost recovery, through user charges. Subsidies do not create sustainable waste management systems in the long-run. Subsidies are needed for households living under the poverty line and may also be needed for the introduction of new technologies and practices (e.g. operation of new sanitary landfills) as a transitional period. Full lifecycle costing of landfills. As envisaged in the CEPA, a full costing mechanism needs to be established for landfills. This costing mechanism should ensure that all costs involved in the setting up and operation of a landfill site, including the estimated costs for closure and after-care of the site for a period of at least 30 years, are included in the gate fee charged by the landfill operator. This mechanism should apply to all new and future sanitary landfills. Once sanitary landfills are established, all dumpsites in the Marzes would need to be closed as soon as possible, otherwise communities would continue to use the old dumpsites instead of the new landfills, putting at risk the financial, operational, and environmental sustainability of the new infrastructure. Source separation and recycling. Source separation and recycling of municipal waste always comes at a cost. The experience of Yerevan Community is evidential for this. Globally, the best available practice is related to introduction of Extended Producer Responsibility (EPR) schemes, which oblige producers and importers of certain materials to cover the cost of their collection and recycling. EPR schemes would become important investors in assets and infrastructure covering the full costs of separate collection, sorting and recovery of special waste streams, including packaging and packaging waste. This would significantly reduce the financial burden on public budgets. Although the process of developing the enabling framework in Armenia is in an advanced stage, it has to be noted that usually it takes time and significant efforts from all key stakeholders to develop comprehensive EPR schemes. Until EPR schemes are established, communities are free to set up source separation systems, but they will have to be ready to absorb the costs of this activity. Further advancement of source separation in Armenia, including the introduction of EPR schemes, would need to take into account the potential effects on informal waste pickers and their livelihoods, and incorporate actions to ensure that their interests and well-being are protected. Climate change mitigation and co-benefits. Given the significant global warming impact of methane emissions, the most significant benefit for climate change mitigation would arise from investments in improved waste disposal, specifically sanitary landfills with landfill gas management. For example, detailed analysis using the case of Gyumri estimates a cumulative reduction of almost 429,000 tons of CO2 equivalent over 15 years, with a marginal abatement cost of $36 per ton of CO2e. Key principles in municipal waste management Polluter-pays principle. Polluter pays principle requires costs of pollution inflicted on the natural environment to be borne by those who cause it. In accordance with the polluter-pays principle, the costs of waste management, including for the necessary infrastructure and its operation, shall be borne by the original waste producer or by the producer/distributer of the product from which the waste came in 18 Armenia Waste Sector Reform Plan proportion to waste quantities Payment per kg or tonne of waste is the most objective, transparent, and environmentally justified approach14. Cost recovery. Cost recovery means that all financial costs related to waste management services should be covered by revenues from user charges. Adherence to this principle safeguards sustainability of the services provided. Affordability of services. Affordability is interpreted as the price that customers can afford to pay without jeopardizing their ability to meet other basic needs. The adoption of affordability ceilings is useful for determining the tariff of public services, since it gives an objective assessment of adequate level of payment. The ceiling payment for waste management services is internationally accepted as 1-1.5% of the average household income. 6. Reform plan The sequencing of steps is divided into short- and medium-term. The short-term steps have the time horizon of 2024-2027, while mid-terms steps are envisaged to be implemented between 2028-2031. The different legal, institutional, technical, and financial aspects of waste management are usually closely interrelated. Therefore, the steps below outline the general direction for reforms and should not be viewed as strictly sequential. Section 6.3 outlines the envisaged implementation timeline of all steps and activities. 6.1 Short-term reform steps and milestones The short-term reform steps include the following: • Improve the existing legal framework • Improve waste management planning • Achieve cost recovery of current operations • Improve waste disposal • Improve institutional arrangements Step 1: Improve the existing legal framework Step 1.1 Amendments to the law on waste. Waste management is a dynamic process which requires regular amendments to the regulatory framework. CEPA envisages adoption of national legislation approximating the provisions in the Directive 2008/98/EC on waste in the national legislation. The present Law on Waste was adopted in 2004 and, naturally, there are significant gaps which need to be addressed. With the elaboration of new EPR legislation, new amendments will need to be made to the LoW, which are currently under preparation and consultations by the Ministry of Environment. The following key provisions need to be included in the amended primary waste management legislative act: Waste hierarchy The law should establish that the following waste hierarchy shall apply as a priority order in waste management: (a) prevention; (b) preparing for re-use; (c) recycling; (d) other recovery, e.g. energy recovery; and (e) disposal. 14This approach is recommended for sanitary landfills gate fees as well, only after closure of dumpsites in the region served by sanitary landfill and after introduction of control on illegal dumping. 19 Armenia Waste Sector Reform Plan Designation of competent authority for waste management The amended law should streamline the responsibilities among institutions, particularly related to policy making and planning, and designate a ministry which would be primarily responsible for waste management in the country. This will eliminate unclarities and overlaps in terms of responsibilities and will help ensure transparency and accountability as good governance demands oversight of decision- making processes. It is important that the designated ministry assumes also the role of technical regulator and by developing waste management guides, related to landfill management, waste collection and transfer, specifications on equipment procurement, etc. Polluter-pays principle As already mentioned, polluter pays principle requires costs of pollution inflicted on the natural environment to be borne by those who cause it. The inclusion of this provision in the amended law on waste would enable communities to set tariffs in a way that (in the initial period) waste collection becomes a self-sustained service and not dependent on subsidy from communal and national budgets. Extended producer responsibility Since EPR would be regulated by a separate law, certain provisions in the Law on Waste need to be included too, like new definitions; provisions for licensing of waste recovery activities; purpose for the introduction of EPR, etc. Definitions New definitions need to be included, like: ‘waste’, ‘waste holder’, ‘re-use’, ‘preparing for re-use’, ‘recycling’, ‘recovery’, etc. Licensing and permitting The amended law should include provisions stipulating that any establishment or undertaking intending to carry out waste management activities obtain a permit from the competent authority. Economic instruments Article 59 of the Law on Waste envisages the use of economic instruments for financing of the waste management activities. However, the law does not establish the legal basis for variety of economic instruments that may be introduced by the Government. The amended law on waste should make provisions that economic instruments 15 should be used to provide incentives for the application of the waste hierarchy, such as: • Dumpsite tax, to reflect cost of environmental damage, defined per number of residents in communities, annually increased up to the cost of a sanitary landfill, reflected in the waste fee. The purpose of the tax is to discourage dumping, to generate revenue for closure of dumpsites, to gradually increase waste fees to a level sufficient to cover the cost of a sanitary landfill. • Charges and restrictions for the landfilling (and incineration) of waste which incentivize waste prevention and recycling, as mid- and long-term measures to keep landfilling the least preferred waste management option. • ‘Pay-as-you-throw’ schemes that charge waste producers on the basis of the actual amount of waste generated and provide incentives for separation at source of recyclable waste and for reduction of mixed waste. • Fiscal incentives to promote the uptake of products and materials that are prepared for re-use or recycled, for donation of products, in particular food; deposit-refund schemes and other measures to encourage efficient collection of used products and materials. 15Full list of economic incentives is provided in ANNEX IVa of Waste framework Directive, https://eur-lex.europa.eu/legal- content/EN/TXT/?uri=CELEX%3A02008L0098-20240218 20 Armenia Waste Sector Reform Plan • Sustainable public procurement to encourage better waste management and the use of recycled products and materials. Other provisions • Introduction of a requirement for pre-treatment of waste prior to landfill; stipulating a date from which onwards landfills should not accept untreated waste. • Conditions for waste which has undergone a recycling or other recovery operation is considered to have ceased to be waste. Thus amended, the Law on Waste will give a clear signal to all key stakeholders and society on the directions for an overall improvement of the waste management sector. Step 1.2 Adoption of a RA Government Decision on waste landfill construction . Led by the Ministry of Territorial Administration and Infrastructure, such a decision should transpose requirements set out in Directive 1999/31/EC on the landfill of waste, such as: • Classification of landfill sites. • Location of the landfill (distance to residential areas, existence of groundwaters, geological and hydrogeological conditions, etc.). • Water control and leachate management (control of precipitation and surface waters, leachate collection, etc.). • Protection of soil and water (geological barrier, bottom liner, top liner, etc.). • Landfill gas control (control over accumulated landfill gas, treatment of landfill gas, etc.). • Costing mechanism, ensuring that all of the costs involved in the setting up and operation of a landfill site, including the estimated costs of the closure and after-care of the site for a period of at least 30 years shall be covered by the price to be charged by the landfill operator for non-hazardous waste disposal. Step 1.3 Repeal the waste tariff ceilings set in the Law on Waste Collection and Sanitary Cleaning. Article 14 of the Law on Waste Collection and Sanitary Cleaning needs to be repealed. The waste tariff ceilings were established with the law in 2011 and have not been revised since. At the same time, the officially reported cumulative inflation for the period 2011-2023 was 44%, resulting in a very significant erosion in the real value of waste fees. In 2022, the affordable tariff was already in the range of 530-550 AMD/person/month. Timeline Q4 2024 – Q3 2025 Milestones • Amendments to the Law on Waste adopted • RA Government Decision on waste landfill construction adopted • Waste tariff ceilings repealed Estimated budget Not applicable The process of elaboration of new EPR legislation is currently supported by the Acopian Center for the Environment at the American University in Armenia. Additional technical assistance is not foreseen. Step 2: Improve waste management planning Step 2.1 Update the national Municipal Waste Management Strategy. To fulfil the provisions of CEPA, the national strategy needs to include a waste prevention program too. Moreover, it needs to provide clearer vision for improvement of the national waste management system for a longer period – at least 6-7 years. This will provide the basis for development of regional and local waste management plans, both of which should have the same planning horizon as the national strategy. Ideally, the update of the national Municipal Waste Management Strategy could follow the elaboration of the scoping study which would identify the waste management zones in the country, for which the MTAI is responsible. 21 Armenia Waste Sector Reform Plan Timeline Q4 2024 – Q3 2025 Milestones Updated national Municipal Waste Management Strategy Estimated budget USD 200,000 Step 2.2 Development of regional waste management plans . Since the long-term national strategy envisages regionalization of waste disposal, regional authorities and communities will have to develop regional waste management plans to reflect the agreed services to be provided on a regional basis. Some of the regional plans could build on the Solid Waste Management Concepts for Shirak, Lori and Syunik Marzes, developed and approved in 2017, while invalidated by a Government Decision in 2021. Timeline Q4 2025 – Q3 2026 Milestones Developed regional waste management plans Estimated budget USD 100,000 per plan Step 2.3 Conducting a national waste composition survey . Although several waste composition surveys have been conducted over the years, none of them have been representative for the whole country. This was due either to the limited scope of the surveys or to the methodology used. This national survey coordinated by MTAI could use the approach of Baseline-study for Recycling of Household Solid Waste in Armenia (2009- 2011)16, taking 4-season samples from representative settlements, and the methodology used by the Waste Quantity and Composition Study in the Republic of Armenia17, analyzing the waste composition into 22 waste categories. Results from the survey will inform all subsequent planning initiatives. Results from the survey will also inform the next activity - preparation of a national strategy for reducing the amount of biodegradable municipal waste going to landfill. Timeline Q1 2025 – Q4 2025 Milestones Conducted national waste composition survey Estimated budget USD 75,000 Step 2.4 Preparation of a national strategy for reducing the amount of biodegradable municipal waste going to landfill. In accordance with the CEPA provisions, a national strategy reducing the amount of biodegradable municipal waste going to landfill needs to be developed, which can be coordinated by MTAI. The strategy must outline the measures envisaged and timeline for phased reduction of biodegradable waste going to landfill, not exceeding 35% of the quantities established for the baseline year. Based on the results from the national waste composition survey, the strategy would be able to identify the quantities of waste suitable for home composting, centralized composting and any other suitable biowaste recycling and recovery technology. Based on the waste management zoning of the country, the strategy would also identify the overall capacity of biowaste treatment facilities needed in the country to satisfy the requirement for reducing the amount of biodegradable municipal waste going to landfill. Results of the strategy would inform Step 7 - introduction of waste recycling and recovery, establishment of biowaste management system. Timeline Q1 2026 – Q4 2026 16Project, funded by the Federal Environmental Agency of Germany 17LL Bolagen. (2020). The Republic of Armenia Waste Quantity and Composition Study. Yerevan: AUA Acopian Center for the Environment and AUA Manoogian-Simone Research Fund, American University of Armenia. 22 Armenia Waste Sector Reform Plan Milestones National strategy for reducing the amount of biodegradable municipal waste going to landfill Estimated budget USD 200,000 Step 3: Achieve waste service cost recovery Currently, a major part of waste collection costs is subsidized from other sources of communal budget’s revenue, including state subsidy. This prevents communities from developing and sustaining other important communal services. Achieving cost recovery of current operations should be supported by adoption of the polluter-pays principle and improved waste management planning, as part of the recommended amendments to the law on waste. Step 3.1 Adopt instruction to budgetary organisations on accounting for depreciation of tangible assets used for service provision. Since communities are the main waste collection service provider and not the private sector, accounting for assets depreciation (trucks, other equipment, containers) is a prerequisite to full costing of the service. The instruction should include consideration of the scope of assets to be depreciated, amortization policy, methods of depreciation, and procedures related to transition accounting for depreciation of existing assets and inclusion of asset depreciation in service costing. Activities • Adoption of Instruction to budgetary organisations on accounting for depreciation of assets used for service provision Timeline Q4 2024 – Q1 2025 Milestones • Instruction of Ministry of Finance on accounting for depreciation of tangible assets used for service provision Estimated budget Not applicable 3.2 Adoption of national guidance on determination of waste fees. Such a methodological guidance is already in preparation by the Ministry of Territorial Administration and Infrastructure. The main principles of polluter-pays and full cost recovery are considered. Planning of full necessary costs in relation to cost centers, provision for reflection of costing mechanism for sanitary landfills, initial cost allocation to service users, residents and legal entities according to waste quantities, defined in mass, and final waste fees determination with volume-based fees for large legal entities are among the major steps to be considered. Activities • Development of methodological guidance on determination of waste fees Timeline Q4 2024 – Q2 2025 Milestones • Methodological guidance on determination of waste fees Estimated budget Not applicable Step 3.3 Adoption of a regulation on financial security for landfill closure and remediation, A component of the costing mechanism for the sanitary landfills is the financial security for intermediate cell closure and final landfill closure and 30 years of after careThe financial security envisaged in the Landfill Directive is similar to the guarantee defined in the Strategy for development of the mining sector till 2035 of Armenia for reclamation of lands disturbed during mining. International Accounting Standard 16 Property Plant and Equipment and IAS 37 Provisions, Contingent Liabilities and Contingent Assets provide a guidance on accounting for environmental cleanup and land rehabilitation. Cell and landfill closure plans need to be developed and costed and closure cost per tonne of waste landfilled is to be defined. Determination of the size of the financial security, the way it is to be collected, protection of the funds accumulated, and the way funds are accessed for intermediary and final closure and 30 years after closure monitoring, need to be established. 23 Armenia Waste Sector Reform Plan Activities • Adoption of Regulation on financial security for landfill closure and remediation Timeline Q4 2024 – Q3 2025 Milestones • Regulation on financial security for landfill closure and remediation Estimated budget Not applicable Step 3.4 Increase environmental tax on dumpsites. Dumpsite tax is justified as it is to reflect cost of environmental damage. The current level of dumpsites tax is very low. Communities that do not use sanitary landfills should pay an annually increasing tax for using dumpsites per number of residents. Incorporation of the tax in the waste fee will generate revenue for closure of dumpsites, and allow for gradually increasing the waste fees to a level sufficient to cover the cost of a sanitary landfill. Activities • Revise the approach to environmental tax on dumpsites Timeline Q4 2024 – Q3 2025 Milestones • Adopted measures on gradually increasing environmental tax on dumpsites Estimated budget Not applicable Step 3.5 Develop a national financing framework for investment in MSWM sector. Substantial investment needs related to regional landfills and waste collection equipment requires well thought and targeted state support to the service. Investment needs are substantial and are defined in national programme framework - construction of sanitary landfills, closure of dumpsites, development of recycling and recovery facilities and in local management plans - for equipment for waste collection including separate waste collection, etc. Financing mix as combination of grants and loans, national and international funding sources are to be considered taking into consideration the territorial differences in unit costs and incomes, as well as ultimate cost recovery by revenue from waste fees, economic instruments and general taxes. Activities • Develop national financing framework for MSWM sector Timeline Q4 2024 – Q4 2025 Milestones • National financing framework for investment in MSWM Estimated budget Not applicable Step 4: Improve waste disposal Step 4.1 Establish regional sanitary landfills . The most pressing issue in terms of waste management is the status of waste disposal in the country. Current dumpsites need to be closed and sanitary landfills to be established. However, meeting the highest environmental standards makes the sanitary landfills expensive facilities, which cannot be sustained by individual communities. New landfills would have to be established on a regional basis and serve several communities (as is the case of Hrazdan landfill intended to serve both Kotayk and Gegharkunik Marzes), to allow for economies of scale and reduction of net costs. Zoning of the country into waste management zones is currently conducted by the Ministry of Territorial Administration and Infrastructure, supported by EBRD. Feasibility studies would be needed to establish the exact locations of these sanitary landfills and their capacities. Activities • Update of feasibility studies for Lori and Shirak Marzes • Update of the SWM concept for Syunik Marz 24 Armenia Waste Sector Reform Plan • Development of feasibility studies for Aragatsotn, Ararat, Armavir, Tavush, and Vayots Dzor Marzes Timeline of TA Q4 2024 – Q3 2025 Timeline Q2 2026 – Q4 2027 Milestones • Feasibility studies • Constructed landfills Estimated budget of TA USD 2.5 million Estimated budget of works USD 70-100 million (based on the results of the waste management zoning) Zoning of the country into waste management zones is currently conducted by the Ministry of Territorial Administration and Infrastructure, supported by EBRD. In terms of additional technical assistance, feasibility studies would be needed to establish the exact locations of these sanitary landfills and their capacities. Feasibility studies for Lori and Shirak Marzes have already been developed and potential sites for the regional landfills have been identified. Depending on the results of the waste management zoning, these could be updated, as could the SWM concept for Syunik Marz (2017). Construction of new sanitary landfills is not necessarily dependent on adoption of new legislation. The only requirement towards planning and construction works would be that the landfills should be established in accordance with the requirements of the EU Directive 1999/31/ЕС on the landfill of waste. Step 4.2 Develop a plan for closure of all dumpsites. Parallel to the construction of new sanitary landfills, dumpsites would need to be closed. The development of the Plan, coordinated by MTAI, could use a programmatic approach with setting up targets, timelines, financing mechanism etc. Based on the quantities and types of waste disposed, the Plan could also detail the type of closure and rehabilitation measures needed along with costing of the measures. To support the implementation of the plan, a requirement for dumpsites to obtain a temporary permit could be introduced. Use of economic instruments, like disposal tax and gate fees, could be another measure which would discourage the use of certain dumpsites, thus reducing their number. A beneficiary of the tax could be an Environmental Fund (refer to Step 5.2). Timeline Q1 2025 – Q4 2025 Milestones Developed Dumpsite Closure Plan Estimated budget Not applicable Step 5: Improve institutional arrangements 5.1 Streamline licensing and permitting, and data management . To streamline the licensing and permitting as well as data management it would be pertinent that a separate body is established dealing with these aspects. This body could be responsible for the following functions: • Licensing and permitting. In this way, decisions on which waste management facilities are granted permits, and the conditions included in these permits, are separated from policy making, planning, and funding decisions. This separation is healthy in the context of the waste recovery and disposal sector, where there is a real risk of pollution incidents occurring in case of poor or non-compliant management. • Data collection and management. The entity could act as the national body for waste data collection and processing and responsible for the establishment and maintenance of waste management database and for compilation of reports on waste. 25 Armenia Waste Sector Reform Plan Internationally, it is a common practice to have an Environment Protection Agency, dealing with licensing, permitting and data management. Such institutional arrangements ensure the separation of key waste management functions. Timeline Q1 2027 – Q4 2027 Milestones Functions related to licensing, permitting and data management are streamlined Estimated budget Not applicable 5.2 Channel adequate financial resources and technical assistance to waste management projects . A systematic approach can be taken to ensure that sufficient finance resources, technical assistance and capacity building support for projects is available. Such an approach would establish clear objectives and transparent criteria for provision of support to project proponents (at subnational levels of government), in alignment with existing strategies and plans. Technical assistance can be provided for project preparation, followed by financial support for project implementation once projects are fully prepared. Capacity building support can be provided on technical and operational aspects, as well as for monitoring and reporting. In many countries, the functions described above are often performed through the mechanism of an environmental fund. Environmental funds are typically designed to support environmental protection policy and initiatives, and rely on public funding sources, such as taxes, fees, or levies. In Armenia, an Environmental Protection Fund already exists within the structure of the ME. However, this Fund is established only for the purposes of mineral extraction industry. Regardless of the actual mechanism and structure chosen, one source of funding would be the existing environmental taxes for waste disposal that currently go to the national budget without being earmarked for any specific purpose. Timeline Q1 2027 – Q4 2027 Milestones Financial resources and technical assistance for waste management projects are channeled systematically Estimated budget Not applicable 6.2 Medium-term reform steps and milestones Once full waste collection coverage and safe waste disposal are established, operations can move up in the waste hierarchy and the sector to develop further into recycling and waste recovery. Medium term reform steps include the following: • Introduce EPR schemes for different waste categories • Introduction of waste recycling and recovery Step 6: Introduce EPR schemes for different waste categories Separate law on EPR and secondary legislation are under development. Once the legal framework is agreed among the key stakeholders and established, implementation of EPR schemes should follow. The law on EPR would establish the deadline for producers to register. It has already been noted that usually it takes time and significant efforts from all key stakeholders to develop comprehensive EPR schemes. Therefore, the process of adoption of comprehensive legislation on EPR and the actual establishment of the EPR schemes is expected to take several years. One of the key requirements towards EPR schemes would be that the financial contributions paid by producers are able to cover the net costs of separate collection of waste, transport and sorting at material 26 Armenia Waste Sector Reform Plan recovery facilities. Communities should be legally obliged to cooperate with EPR schemes in the setting up systems for separate collection of packaging waste. The effect of EPR schemes on the overall waste management in the country would be profound. About 143,000 tonnes are the estimated annual quantities of packaging waste, which is about 71% of the total dry recyclable waste, and close to 20% of the total quantities of municipal waste generated in Armenia18. Investing in source separation of packaging waste, and special waste streams too, by the EPR schemes would reduce significantly the financial burden on public budgets. Other benefits include extending the life of landfills and preserving valuable resources in the economy of Armenia. Timeline Q1 2024 – Q4 2028 Milestones • EPR law and secondary legislation adopted • EPR schemes in place Estimated budget Not applicable Step 7: Introduction of waste recycling and recovery 7.1 Establishment of biowaste management system . This measure will implement one of the CEPA provisions for pre-treatment of waste prior to landfilling. Not as pressing an issue as waste disposal, Armenia’s integrated waste management system should include treatment and recovery of biowaste. The biowaste management system should include recycling of green waste as well as recovery of food waste. While recycling/composting of green waste works as both centralized and decentralized solutions, recovery of food waste will be economically justifiable only as a centralized solution and should be incorporated in the future regional waste management plans. A number of well-established technologies are available for recovery of food waste. Mechanical biological treatment (MBT) is the most conventional method for treatment of municipal waste. It offers the possibility to extract recyclables, produce refuse-derived fuel and stabilize the organic fractions prior to disposal. Anaerobic digestion offers a higher recovery rate, including energy potential for production and sale of heat and/or electricity, but is more expensive technology than MBT and depends on (ideally) source separated throughput. It is advisable that investments in treatment facilities are made only after regional landfills are established and functioning and old dumpsites are closed. Keeping old dumpsites open would jeopardize the waste treatment system because waste would continue to be brought to the dumpsites. Timeline Q1 2030 – Q4 2031 Milestones • Established biowaste treatment facilities Estimated budget USD 100-200 million (based on the results of the waste management zoning) Selection of the most suitable technology for each regional waste treatment system should be based on feasibility studies, for which technical assistance will be needed. The feasibility studies will establish also the location and the capacity of each waste recovery facility. 7.2 Establishment of CDW management system . Although not a municipal waste stream, when CDW is not managed properly it often becomes part of the waste collection system (without being part of the waste fee) 18 LL Bolagen. (2020) 27 Armenia Waste Sector Reform Plan and/or ends up in communal waste disposal sites. Following the construction of regional landfills and improvement of waste collection systems, communities will have to put in place systems for collection and recycling of CDW. Examples from other countries show that economic efficiency dictates that CDW should be managed on a regional basis, with recycling facilities located near the largest waste generators and designated storage sites for smaller communities. Activities • Prepare national CDW management plan • Update of the SWM concept for Syunik Marz Timeline Q1 2030 – Q4 2030 Milestones • National CDW management plan • Constructed recycling facilities for CDW Estimated budget USD 18 million (assumed 11 recycling facilities to be established) In the beginning a national CDW management plan should be developed, for which technical assistance will be needed. The plan will establish the quantities of CDW generated by respective Marzes, the location of recycling facilities and their capacity. The plan will assess options for the use of centralized/stationary equipment versus mobile recycling equipment which could be transported to the designated storage sites in smaller communities. 28 Armenia Waste Sector Reform Plan 6.3 Timeline Table 3. Timeline of short-term steps Step/activity Timeline 2024 2025 2026 2027 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1. Improve the existing legal framework 1.1 Amendments to the law on waste 1.2 Adopt Government Decision on waste landfill construction 1.3 Repeal the waste tariffs ceilings set in the Law on Waste Collection and Sanitary Cleaning 2. Improve waste management planning 2.1 Update the national Municipal Waste Management Strategy 2.2 Development of regional waste management plans 2.3 Conducting a national waste composition survey 2.4 Preparation of a national strategy for reducing the amount of biodegradable municipal waste going to landfill 3. Achieve cost recovery of current operations 3.1 Adopt instruction to budgetary organizations on accounting for depreciation of tangible assets used for service provision 3.2 Adoption of national guidance on determination of waste fees 3.3 Adoption of regulation on financial security for landfill closure and remediation 3.4 Revise and increase environmental tax on dumpsites 3.5 Developed national financing framework for priority investments in MSWM 4. Improve waste disposal 4.1 Establish regional sanitary landfills 4.2 Develop Dumpsite Closure Plan 5. Improve institutional arrangements 5.1 Streamline licensing and permitting, and data management 29 Armenia Waste Sector Reform Plan Step/activity Timeline 2024 2025 2026 2027 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 5.2 Channel adequate financial resources and technical assistance to waste management projects 6. Introduce EPR schemes for different waste categories 6.1 Adopt new EPR legislation 6.2 Put EPR schemes in place Table 4. Medium-term reform steps and activities Step/activity Timeline 2028 2029 2030 2031 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 6. Introduce EPR schemes for different waste categories 6.3 Adopt new EPR legislation 6.4 Put EPR schemes in place 7. Introduction of waste recycling and recovery 7.1 Establishment of biowaste management system 7.2 Establishment of CDW management system 30 Armenia Waste Sector Reform Plan 31