Mexico Study

The US Department of Commerce did a study in Mexico about the feasibility of exporting Recycling equipment to Mexico.
This appears to be about 15 years old


The solid waste market in Mexico is perhaps the least developed environmental segment in Mexico, with a limited but expanding market for U.S. companies. According to SEDESOL, Mexico generates 84,200 metric tons per day of solid waste, out of which 83 percent is collected and 53 percent receives an adequate disposal. As shown in Table 6.1, the percentages are higher in large metropolitan areas and much lower in small cities and rural areas, where most garbage is deposited in open dumps.

The characteristics and composition of municipal solid waste in Mexico vary depending on the income and consumption patterns of the population. SEDESOL estimates that 42 percent of the waste generated in Mexico is organic waste, 16 percent is cardboard or paper, 7.4 percent is glass, 3 percent is metal, 2 percent is textile, and the remaining 29.6 percent represents other materials. Industrial solid waste streams are neither well documented nor classified in Mexico, and usually they are not treated apart from municipal waste.

Mexico City is the largest waste generator on a per capita basis, generating 1.37 kilograms per day (kg/d) per person. In the northern border region, waste generation is estimated at 0.98 kg/d per person. Those two areas have the best potential for waste recycling facilities.

Waste recycling is very limited in Mexico, with only about 8 percent of municipal waste recycled in large cities. The best metropolitan areas recycle up to 12 percent of their municipal waste. The most important impediment to developing an adequate municipal waste infrastructure in Mexico is financial. Municipal waste collection and disposal has historically been free, and, therefore, cities are always short of cash to fund new infrastructure. Some city governments have tried to charge for collection and disposal services, but those efforts have failed because of local protests. For example, when Puebla granted a concession to a private company that involved a fee for service, local residents began throwing their garbage in the streets rather than paying the fee.

The lack of adequate waste disposal infrastructure is creating a host of related pollution problems. Landfill pollutants are leaching into and compromising groundwater supplies. Landfill gases and landfill fires are releasing toxic pollutants into the air. In addition to those problems, uncontrolled access to dumps invites illegal dumping of hazardous wastes and puts at risk the health of the scavengers who work the landfills.

Several attributes of the solid waste management market hinder its development:

· The Mexican federal government plays a minimal role in managing solid waste. This responsibility rests almost completely at the municipal level.
· The predominance of labor unions and scavenger unions that oppose modernization impede efforts to collect and dispose of municipal solid waste.
· In Mexico, an environmental ethic is just emerging, and most Mexican households and businesses do not separate wastes, thereby increasing recycling costs.

Table 6.1 Solid Waste Collection and Disposal

Location Type	# of Locations	Population (millions)	Generation metric	Collection (percent)	Appropriate Disposal (percent)
Metropolitan Areas	7	31	37,400	95	85
Cities in the 100 Cities Program	126	31	28,600	80	43
Small Cities	267	29	11,600	70	6
Towns and Rural Areas	199,600	8	6,600	60	0
Total	200,000	99	84,200	305	134

Source: SEDESOL.

Despite those complex social and financial issues, progress is being made. Some municipalities now subcontract waste collection and disposal to private operators. The private sector also plays an increasingly important role in the transportation, reuse, and recycling of construction materials and other industrial waste that is not part of the regular municipal waste stream.

Regulatory Framework

The responsibility for providing municipal waste collection and disposal services remains at the municipal level. The federal government plays a regulatory role and provides technical support to those municipalities that request assistance for project development.

State and local officials apply their own regulations to the collection of solid waste and the construction and operation of landfills. Those regulations vary depending on the size of the city, local environmental policies, and monies available. At the federal level, only one current regulation and one proposed regulation deal with municipal landfills, as follows:
1. NOM-083-ECOL-1996. This regulation sets the conditions and characteristics for the sites where final disposal facilities can be built. It sets parameters as to the quality and characteristics of the soils, minimum distance to underground aquifers, and minimum distances from populated areas.
2. Proposed Regulation NOM-084-ECOL-1994. This proposed regulation sets the specifications for designing, constructing, operating, and monitoring a sanitary landfill. The regulation was published in June 1994 but has not yet been approved because of complaints from municipal authorities who believe that the standards outlined are too strict and costly to implement. The Fox administration will review all pending regulations and will likely cancel those facing stiff opposition or modify them in order to gain approval. INE believes that regulation NOM-084-ECOL-1994 is not likely to be approved but rather will be replaced by one that sets lower standards.

The federal government will work with state and municipal authorities to develop a comprehensive regulatory framework for municipal solid waste. This framework will be combined with a public education campaign to include information on waste separation and the dangers of dumping hazardous waste in municipal landfills. The effort will include developing regulations and public awareness campaigns to encourage the collection and disposal of batteries, the operation of recycling facilities, and the use of garbage trucks instead of open trucks. The plans also include developing regulations to control the leaching of polluted waters from landfills.

Sector Investments

Mexico needs additional landfill capacity for the 17,233 metric tons per day of municipal solid waste that is currently being deposited in open-air dumps or being illegally dumped. Existing collection infrastructure is similarly inadequate; most cities lack transfer stations or even trucks equipped with compactors.

Developing the necessary infrastructure to handle and appropriately dispose of Mexico’s municipal waste is estimated to require more than $1.7 billion of new investment. Currently, Mexico spends only about $200 million per year in this area.

With federal and local resources so limited, some municipalities are likely to look to the private sector to bring in additional capital. U.S. firms entering the solid waste market should be aware of the risks of this sector and whenever possible should seek payment warranties and look at the business from the recycling side rather than from fees collected from the municipal government. At present, according to SEDESOL, 15 cities have opted for private participation as a solution to their waste management problems: Agua Prieta, Sonora; Cancún, Quintana Roo; León, Guanajuato; Los Cabos, Baja California; Los Mochis, Sinaloa; Mérida, Yucatán; Monterrey, Nuevo León; Nuevo Laredo, Tamaulipas; Piedras Negras, Coahuila; Puebla, Puebla; Querétaro, Querétaro; Reynosa, Tamaulipas; Tijuana, Baja California; Tlalnepantla, México; and Torreón, Coahuila.

There is no standard model for private participation, and a number of arrangements exist, including the following:
• Integrated Concession. Under an integrated concession arrangement, the municipality contracts with a private company to manage the entire solid waste system, from collection and cleaning of the streets to final disposal in controlled landfills. Under such a scheme, the municipality pays a fixed fee to the concessionaire, which has to meet a set of requirements such as collecting domestic garbage three times a week, cleaning the streets every day, and disposing of the waste using transfer stations and landfills that comply with international standards. Parameters vary depending on the municipality or city, and the scheme is not common. It is most appropriate for areas able to support a high level of service.
• Fee Contracts. Fee contracts are the most common arrangement in Mexico, usually with different contractors being assigned to different parts of the city or being assigned to perform different services. The municipality pays the service supplier a fixed fee for the service provided. According to SEDESOL, collection fees range from between $14 to $23 per metric ton. For final disposal, fees vary from $5 to $15 per metric ton, depending on the quality and operational costs of the landfill.
  
  In addition to the market for waste collection, hauling, and disposal services, there is a small, but growing market to supply solid waste equipment to municipalities. In the past four years, over 30 sanitary landfills were built in Mexico using financial assistance from the federal government under a program called the 100 Cities Program. Although the program expired in 1999, financial assistance is now being provided to municipalities through BANOBRAS. BANOBRAS is administering a $400 million credit line provided by the Inter-American Development Bank for the strengthening of state and municipal entities. A portion of those funds is available to support solid waste efforts in the municipalities that were enrolled in the 100 Cities Program.
  
  Currently, landfills of several large cities are reaching full capacity. According to SEDESOL, Mexico City’s largest landfill, Santa Catarina, is reaching full capacity and needs to be replaced. The Mexico City government believes that the landfill has further capacity and will continue to operate it for at least another four years. Plans for the new landfill are at an early stage. Thus, an opportunity exists for consultants who specialize in analyzing soils to define a possible location for the new facility. In the mid term, construction of the landfill will represent opportunities not only for engineering firms that specialize in building this type of infrastructure, but also for firms that would develop recycling units surrounding the landfill. The local government believes that closing the Santa Catarina landfill will be a unique opportunity for creating recycling infrastructure and avoiding problems with scavengers.
  
  Other cities with opportunities for landfill construction and related studies include Veracruz, where the state government is planning the construction of five controlled landfills to serve the state’s largest cities. The government of the state of León is planning to grant concession for the construction and operation of a new landfill. Both Guadalajara and Querétaro are in the early stages of designing and building new landfills. (See also Appendix A.)
  
  Waste-to-Energy Pilot Project
  
  Waste-to-energy projects are new to Mexico, with only one project operating under such a scheme. That project is a small power plant located next to the wastewater treatment plant in Monterrey. The facility generates electricity using the gases expelled by the sludge of the Monterrey wastewater treatment plant.
  
  The Sistema Metropolitano de Procesamiento de Desechos Sólidos (SIMEPRODESO, Metropolitan System of Processing Solid Waste) is developing a new initiative. SIMEPRODESO is the entity in the state of Nuevo León responsible for the landfill serving the city of Monterrey and its surrounding municipalities. SIMEPRODESO is in the process of tendering a gas-to-energy project, which has also received support from the Global Environmental Fund. The SIMEPRODESO waste-to-energy project is a pilot project that, if successful, could be repeated in other cities in Mexico, particularly Mexico City and Guadalajara. The U.S. Trade and Development Agency partially funded a study to determine the project’s feasibility.
  
  The Border Area
  
  NADBank plays an important role in financing municipal infrastructure projects on Mexico’s northern border. It currently has three solid waste projects in the pipeline, which have already received their BECC certification and are candidates for NADBank funding: (1) a solid waste collection and disposal project in Agua Prieta, Sonora; (2) a similar project in Puerto Peñasco, Sonora; and (3) a project to develop a paper recycling facility in Cinco Manantiales, Coahuila. In addition, BECC has four projects that are currently under Step 1 evaluation: (1) a project to construct a solid waste facility in Santa Ana, Sonora; (2) a solid waste transfer station and municipal landfill project in Mexicali, Baja California; (3) a comprehensive solid waste project in Magdalena, Sonora; and (4) a project to close a municipal open landfill in Agua Prieta, Sonora. A summary of these projects and contact information are available on NADBANK’s Web page at www.nadbank.org.
  
  In late 2000, the BECC’s board of directors voted to expand BECC’s mandate to certify a wider range of project types and areas. The new areas include recycling projects, pilot projects, municipal planning projects, and projects to develop hazardous waste infrastructure. This new BECC initiative should increase both the number of projects in the pipeline and new market opportunities.
  
  Best Prospects
  
  U.S. equipment dominates the municipal waste market for imported products in Mexico, and the quality of American equipment is well accepted among municipal authorities. The number of private companies offering waste collection and disposal services in Mexico is limited because it is a relatively new market. U.S. firms entering this market will not have many foreign competitors; however, local competitors compete well on price. U.S. companies entering the market are advised to consider partnering with local companies with previous experience in providing services to municipal or state governments.
  
  The market for municipal waste treatment and disposal equipment will continue to be limited to those projects funded by BANOBRAS and NADBank and to opportunities spread among the larger Mexican municipalities.
  
  U.S. firms should track the evolution of regulatory reform that the Fox government will propose for municipal waste. The approval and implementation of several regulations, especially those that set parameters for the construction of controlled landfills, could spur the solid waste management market.