Waste banks & Trading platforms

Make Waste a Valuable Resource

This article was originally published by the Worldwatch Institute Europe on March 28th, 2015


Waste is defined as all unwanted or unusable material, which is usually discarded by its owner. Waste that is discarded globally has many different destinations, from mere dumping to complex material recovery processes. How can waste be transformed from unwanted material into a valuable resource that can be bought and sold?

In 2013, 32% of EU’s municipal solid waste was sent to landfill, 27% was incinerated, 24% recycled, and 16% composted. These disposal methods have both positive and negative impacts to society and the environment, such as energy generation and air pollution.

Compared to most waste disposal methods, landfilling yields minimum benefits to the environment and to society, and could be replaced by more sustainable practices. The EU is already committed to banning landfilling of recyclable and biodegradable waste by 2025, as well as phasing out landfilling of all recoverable waste by 2030. To achieve this goal, waste that would otherwise go to a landfill should be traded for re-incorporation into the value chain through reusing, refurbishing and recycling practices.

Waste trade transfigures unwanted waste into a valuable resource that can be bought and sold in the free market. Trading waste is feasible because what some consider waste, others might consider an important resource. Clothes swapping initiatives are a concrete example of waste trade on local levels. At a global level, there is also waste trade potential that is already being explored for materials such as e-waste, which is quickly evolving due to technology diffusion worldwide. All this trade enables the transformation of linear production models to circular ones that minimizes waste generation, as illustrated in the Circular Economy model on the right.

A barrier to the expansion of waste trading is the lack of information about potential cost-effective trade opportunities. For instance, households often do not know the best way to dispose of their waste to foster recycling programs and profit from returned items. Similarly, industries do not always find the best destination for their waste, and settle for suboptimal alternatives, such as landfilling. To address the mismatch of information and foster positive economic gains from waste trading, some initiatives have been developed globally such as Waste Banks and Waste Trading Platforms.

Waste Banks

Household waste being weighed at a waste bank (“Bank Sampah”) in Indonesia.

Waste banks are physical places where people can exchange their waste for money. This collection mechanism is usually targeted at households, and it has similar functionalities as regular banks such as collecting, saving and earning money. Waste Banks are more common in developing countries, where waste collection is precarious, costly and the waste would otherwise be sent to open dumping sites, thus these banks foster cleaner neighborhoods.

By focusing on engaging local communities, waste banks are different from traditional waste cooperatives that require transactions with larger volumes of waste, and often diminish the profit of waste collectors by using a middleman who require being paid a percentage of the sales of waste materials. The installation of waste banks can be done cheaply; requiring only sheltered place, scales and basic sorting tools. This low cost has enabled the rapid spread of waste banks in Indonesia over the past decade, as presented below.

Indonesia: Trading Waste for Healthcare
Unilever Foundation promoted one of the first Waste Banks initiatives in Surabaya with the installation of 20 banks in 2004, as a way to clean the city. Initial initiatives across the country have become so successful that in June 2013, Indonesia had 1,195 waste banks in 58 districts and cities, employing 106,000 workers. It is estimated that by the end of 2015,about 5 % of the population will be served by 15,000 waste banks. Poorer residents seeking to increase their source of income run the waste banks for neighborhoods of around 1,000 residents.

Over the years, the initiatives have innovated by creating mobile waste banks that float across rivers, by allowing trade of waste for rice and for improved access to existing public healthcare programs.

The concept of a floating Waste Bank is creating alternative waste disposal to eliminate water pollution.

While Waste Banks provide a space for collecting materials at a household level, Trading Platforms help move these household materials and other industrial residues into appropriate industrial sectors that can utilize the waste by replacing naturally sourced raw materials.

Waste Trading Platforms

Waste trading platforms are information systems targeted at identifying market opportunities for companies to trade waste. Each participating company announces what type of product they want to sell or donate, and they have access to purchasing opportunities announced by other companies. The trading platforms must deal with many controversial regulations and ethical issues, such as exporting hazardous waste to less developed regions. Overall, these platforms tend to boost market competition for waste, which leads to increased amounts of waste traded, as well as to improved quality of the waste traded and in turn of the final products made from the waste as raw material. An example of a large-scale trading platform is Brazil’s Integrated Waste Bank System, discussed below.

Brazil: Integrating Multiple Waste Platforms

Over the past decades, Brazilian governmental institutions have established many industrial waste-trading platforms, both on a local and regional scale. Thus, companies interested in trading across regional boundaries had to sign up for each platform individually, but in 2009, the National Confederation of Industries (CNI) started developing the Integrated Waste Bank System (“Sistema Integrado de Bolsa de Resíduos”) to unify all the platforms into one nationwide online system. The companies still register and get support from the local offices, but now they have access to trade opportunities across the entire country. In 2014, over seven thousand businesses had access to data on opportunities for trading waste that can be used as raw materials.

Adapted from Wikipedia Commons

The examples above indicate that both Waste Banks and Waste Trading Platforms can yield many benefits, such as:

  • Increase the value of waste that would otherwise be discarded or sold cheaper.
  • Lower costs for the purchaser that would otherwise use other more expensive raw material.
  • Dispose less waste, since waste is reincorporated into the economy by becoming raw material.
  • Minimize environmental impacts due to less waste disposal and raw material extraction.

Waste Banks and Waste Trading Platforms are fundamental tools for fostering the transition to a Circular Economy at the local and national level by increasing resource efficiency. Circular Economy is an economic model analogous to nutrient cycles in nature. In the same way nature cycles nutrients back into systems, in Circular Economy every material has a purpose and nothing is wasted because resources are reduced, reused, refurbished and recycled. When waste is perceived as a resource rather than a burden, it becomes evident that the waste trade is one key to transitioning to a Circular Economy and a more sustainable world.

Read also:
At Baisikeli shop, both wheels and business model are circular
Zero Packaging Shops — An Alternative to Regular Supermarkets
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