Governments that are concerned about the state of landfills and the environmental impact of waste typically get a crash course in the waste management sector, and especially in the importance of introducing sustainable practices to the system. More and more, government officials’ education includes lessons on how to implement a public-private partnership (PPP).

As PPPs become accepted practice, investments in the waste sector have grown as governments attract private capital and technical expertise for the construction, operation, and management of waste projects. Most commonly, these projects include waste incineration, waste treatment, recycling, and energy from waste (EFW) projects.

A look back

Through a PPP, governments contract with private companies to construct, operate, and maintain waste facilities. PPP transactions have been widely applied in the delivery of waste treatment and EFW facilities in the past decade. Most of the volume generated between 2005 and 2013 was from public projects tendered as PPP concessions: a total of 68 deals in the waste sector, worth $17.3 billion.

Over the past decade, the countries with most active PPP market have been the U.K., Spain, Singapore, Australia, Poland, Italy, and France. In 2013 alone, the U.K. saw nine deals reaching financing close in the waste sector, including the construction of waste treatment plants and EFW facilities, with a total investment of $3 billion.

Europe’s investments in the waste sector, 2005-2013

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Below we can see the volume of global investments that financed waste projects (PPP and other) from 2005 to November 2013. In total, there were 105 projects with a total value of around $22.5 billion.

Global investments in the waste sector, by sources of funding (2005-2013)

global_investmentinwaste

Ebb and flow

The graph shows a wide fluctuation in waste market financing during the past decade. The onset of the global financial crisis produced a steep fall after 2007. It picked up again in 2010 when the global sentiment temporarily improved. Then it dropped again due to the protracted economic slowdown.

Although the volume in 2009 dipped at the peak of the financial crisis, the U.K. managed to close five waste PPP projects that year, including a long-delayed $1.1 billion Greater Manchester Waste PFI project. The largest privately financed deals over the same period were all U.K. projects: Staffordshire Waste PFI, Western Riverside EFW, and Greater Manchester Waste PFI valued over $1 billion each.

In 2013, a number of projects were able to secure financing despite the difficult economic conditions remaining in many countries. Looking ahead to the next year, however, it appears that deals that require substantial financial commitment may face delays.

Because of Europe’s long-term political and regulatory stability, there has been a clear legislative strategy for waste infrastructure.

Geography is destiny

Europe has been the most prominent region for private capital investments in the waste sector. Because of its long-term political and regulatory stability, there has been a clear legislative strategy for waste infrastructure, as well as mechanisms in place—such as PPP structures—to support private capital investments.

Continuing this trend, the U.K. has a considerable pipeline of waste projects that it hopes to develop in order to meet environmental targets set by the European Union by 2020.

Looking ahead globally, many countries in Asia, Latin America, and the Gulf region have been targeting private capital investments in the waste sector. These countries are especially important for the sector because they have fast-growing populations and labor mobility. These two factors prompt many to move from rural areas into cities. This in turn creates increased demand for infrastructure assets—including waste treatment and management—and the cycle of growth continues.

Global investments in the waste sector, by Country (2005-2013)

global_investmentinwaste_bycountry