Study on Using Public-private Partnerships to Develop Management and
Recycling of Demolition Waste
Gang Chao 1, Deng-yue Li1, Mei-hua Qiu1
1
School of Business Administration, South China University of Technology, Guangzhou, China
gzhao@scut.edu.cn,lidengyue@gmail.com, 304765890@qq.com
Abstract - This paper analyzes a policy management tool
applied in construction and demolition （ C&D ） waste
recycling. With the rapid development of urbanization and
the construction industry, the C&D waste recycling becomes
a chronic problem in the urban management. After
introducing the basic features and advantages of the PPP
(Public-private partnerships), the paper investigate the
disposal and reclamation of C&D waste in Guangzhou City
and analyzes the feasibility of PPP applied in C&D waste
recycling from the aspect of policy, economy and technology.
Moreover, the study establishes the way of operation and
types of PPP. Hopefully, the paper can do well for the
reclamation of C&D waste.
Keywords - C&D Waste, PPP model, the reclamation of
C&D Waste
I. INTRODUCTION
In recent years, with the rapid development of the
construction industry, it will inevitably lead to the rapid
growth of construction and demolition （C&D） waste.
The data of the Ministry of Housing and Urban-Rural
Development shows that Construction area in 2007, 2008
and 2009 is 4.116 billion square meters, 47.32 million
square meters and 5.873 billion square meters [1].
The empirical data of abroad shows that about 20 to
40 kg of C&D waste will be generated every square
meter of housing area in the process of building
housing[2].Given the low level of construction
management, more C&D waste will be generated in China
than in developed country. About 500 to 600 kg of C&D
waste will be generated every square meter of housing
area in the process of construction [3]. Assuming that the
annual housing areas are all newly built, the total amount
of C&D waste generated throughout the country would be
close to 810 million tons in the past three years.
Assuming the annual area of demolished buildings
accounts for 10 percent of the total area of construction,
the total amount of C&D waste in the country would turn
to 1400 million tons in the past three years.
The fast growth of C&D waste has caused much
management pressure to the government departments in
cities. To government departments, the state and local
government have already attached great importance to the
C&D waste issue because of its urgency and seriousness.
But if just rely on the government; it cannot meet the need
of city development, neither in the money supply nor
operation efficiency. It is an inevitable requirement to
build C&D waste recycling marketing operation in a
commercialized manner. The private-owned enterprises in
construction disposal industry are providing social
services and achieving social benefit as well as winning
market and economic benefits.
II. REGULATION MEASURES OF C&D WASTE AND
EXISTING PROBLEMS IN GUANGZHOU
A The Status and Goals of Guangzhou C&D Waste
Recycling
With the rapid and sustained development of
National economy, the ever-increasing amount of solid
waste generation has created disposal problems for many
cities. According to the Guangzhou sanitation department
estimate, Guangzhou produces 20 million tons C&D
waste every year, and there are also about 40 million tons
C&D waste that have been stored up for 20 years, so the
total number of the C&D waste in Guangzhou would be
60 million tons.
<The Cantonese long-term plan for Comprehensive
utilization of resources >explicitly pointed out that we
should vigorously carry out the comprehensive utilization
of C&D waste
sorting technology, equipment
development and application, expanding method of
classification, reclamation, safe treatment , so as to
improve the rate of waste recycling .on the regional
distribution, The plan pointed out that the amount of
Utilization of C&D waste will be increased from 0 tons
in 2009 to 500 million tons in 2015, 10 million tons in
2020,in the direction and emphasis of the comprehensive
utilization of building materials resources[4].
B The major problems existing in the C&D waste
recycling in Guangzhou
Over the years, the way that Guangzhou city treats the
C&D waste basically follows the principle that "the one
who produces C&D waste is liable for disposal”. By
using the system of disposal permission and charging
,In recent years, the minimization and recycling of C&D
waste, issues have received increasing attention, but
because of too many historical debts ,unsound capital
investment system and the unsupported management and
supervision system, there are still a large number of
problems in the C&D waste disposal, and recycling
problem is more outstanding. Mainly in:
Firstly, with the rapid growth of construction waste,
Great pressure of waste disposal and outdated
technologies compared the refuse processing sites and
methods have not got relevant development. Currently
there are only two standard refuse processing plants in
Guangzhou city, one is in Huadu district with 6 million
cubic meters designed capacity; the other is in Luogang
district with 0.3 million cubic meters designed capacity[5].
Secondly, single financing channel and short of fund.
The development of modern economy and urbanization
demands urban infrastructure to go ahead of the rest, the
growth rate for investment is higher than that of national
income growth and cannot meet the demand for urban
infrastructure construction if totally relied on government
current income. Recycling utilization of construction
waste is a capital-intensive industry. According to
ZhuYing (2003) 's study on C&D waste concrete
recycling project, it will takes billions of RMB to build up
a recycled concrete plant with production capacity of
400,000 tons[6].
To accomplish the above goal, it needs to construct a
variety of waste disposal facilities for about 5 million
annual disposal capacities from 2010 to 2015, which
amounts for 1.3 billion RMB.
C&D waste recycling has always been taken
as
public welfare undertaking, almost rely on government
investment. However, based on statistics, although the
problem of construction waste becomes more prominent,
government’s responding investment tends to decrease.
(Table I).The gap between investments and demand
continues to expand, result in the restriction the effective
implementation of government regulation functions, which
is also a very important reason for the deferred
advancement in the recycling utilization project of waste.
TABLE I: AMOUNT OF THE GOVERNMENT INVESTMENT IN C&D
WASTE DISPOSAL IN GUANGZHOU
Year
2005
2006
2007
2008
2009
fixed assets investment
in
Construction
of
public
facilities
(million)
2325685
2225403
2117075
1956711
4170016
C&D
waste
investment
(million)
The proportion
(million)
40932
34889
14070
20114
19690
1.76%
1.57%
0.66%
1.03%
0.47%
Thirdly, charging method is difficult to encourage
recycling
Urban Solid Waste Management was adopted in
1995, which requested the garbage producing departments
pay for the disposal fee, aiming to reduce garbage
generation from the stem. This cannot stop garbage
producing from the stem, as for most of trash producing
enterprise; it does not have much impact on them to pay
the disposal fee. In comparison with reclamation of
construction waste, it costs less in short term and the law
does not cover the question of waste recycling utilization.
The level of charging standard is low in our country, on
the one hand, it is difficult to urge enterprise to reduce
emission of waste actively by charging them; on the other
hand, fund subsidized to enterprise for waste recycling is
limited.
Fourthly, both the current rate of multipurpose
utilization and the recycling rate in Guangzhou are low.
Due to fewer companies are specialized in trash
reclamation treatment in Guangzhou, the leveler of
scientification and the standardization is quite low, making
it difficult to form scale economy
and handle larger
volumes of C&D waste.
Most of recycling methods of C&D waste are single
with simple treatment and low rate of resource use. The
proportion of disposal of C&D waste is
only about
40%.It is mostly used in three connections and one
leveling projects and newly built buildings. To sum up, the
recycling of C&D waste is still at the initial stage, and a
large number of C&D waste is not included in the unified
management system. As the consumptive field capacity of
C&D waste is also getting smaller and smaller. Many
depressions have been filled or planned land has been
developed, this kind of means is hard to be carried on.
III THE CHARACTERISTICS OF PPP AND THE WAY
TO SOLVER THE PROBLEM OF RECYCLING C&D
WASTE
A The meaning and characteristics of PPP model
Public-private partnership denotes a sophisticated
interface between public authorities and private sector
undertakings which aims at delivering infrastructure
projects, as well as public services. According to the EU
institutions, the term public-private partnership refers to
“forms of cooperation between public authorities and the
world of business which aims to ensure the funding,
construction, renovation, management or maintenance of
an infrastructure or the provision of a service” [7].
The United Nations followed and embraced the
concept, denying public private partnerships as ‘innovative
methods used by the public sector to contract with the
private sector, who brings their capital and their ability to
deliver projects on time and to budget, while the public
sector retains the responsibility to provide these services to
the public in a way that benefits the public and delivers
economic development and an improvement in the quality
of life’ [8].
As a policy management tool, PPP has been widely
used in the areas that processing the characteristics of
public goods, and of private goods. There are many public
services programs supply in the form of PPP, which is
funded by the government and produced
by private
sector. For example, in the USA, there are 339 PPP
programs of garbage collection, 143 PPP programs of
garbage disposal and 67 PPP programs of water treatment
[9]
.
Chinese Urban infrastructure projects are beginning to
use the PPP mode. The first program which successfully
used PPP was the main venue of the 29th Olympic Games,
which is also called "Bird's Nest" project. In 3.5 billion
Yuan of total investment of the project, the government
funded 58% , by investing only 2.03 billion Yuan on the
construction of the project, so greatly reduced the financial
burden, on the other hand. Commonwealth of CITIC
Group funded 42%, and got a 30- year franchise through
investment of 1.47 billion Yuan [10].
With the rapid development of Chinese economy in
recent years, more and more private capital began to focus
on urban infrastructure construction investment. The PPP
model is undoubtedly the ideal model of choice of private
capital participation in urban infrastructure construction
and private capital to participate in urban infrastructure
construction.
B The Theoretical Feasibility of Using the PPP Model to
Solve the Problem of Recycling C&D Waste
As for welfare, C&D waste management is considered
as public goods with strong external nature to be served by
government, this cognition is based on shallow analysis on
the attribute of public goods. Christine Kessides（1993）
Summarized the characteristics of solid waste treatment
industry (See table II), after analyzing factors as follows:
the competitive level, exclusive degree, sunk degree of
production, economies scale, cooperation requirements
and externality [11].
It is observed that waste disposal industry is not
exclusive on consumption, and there is certain
competiveness with supply, waste transportation and
resource recycling, which are not consistent with the
nature of public goods and the properties of pure public
goods [12].
TABLE II CHARACTERISTICS OF THE SOLID WASTE DISPOSAL
manner
Gathering
Transpor-ttion
landfill
treatment
incinerati
on
resource
recovery
Essential
character of
service
Compe
Exclusi
titive
ve
extent
extent
On The Producer Side
Median
high
median
high
low
high
Extent of
Cooperati
on
requireme
nt
Median
high
low
Median
high
high
median
high
High
high
high
high
low
low
Econom
ic scale
Externa
lity
public
health,
Land
pollutio
n,
water
pollutio
n
C Policy Basis for the Application of PPP Model In The
Resolution Of C&D Waste Recycling Problem
In June, 2002, The State Planning Commission,
Ministry of Finance, Ministry of Construction, State
Environmental Protection Administration jointly issued a
notice <on the implementation of municipal solid waste
disposal fees to promote the waste disposal industry>,
fully implemented C&D waste disposal fees .It is also
puts forward that waste disposal company should
introduce competition mechanisms by carrying out the
separating government administration from enterprise
management[13].
Through public bidding, qualified enterprises are
chosen to response for garbage disposal and demand city
construction administrative supervision department to
establish market admission system, In February 2005, the
state council has announced
<certain opinions on
encouraging, supporting and instructing the individual
private and other non-public sectors >.For the first time
the government explicitly allowed private capital to enter
the monopoly areas of electricity, telecommunications,
railway, civil aviation, etc. As well as supporting private
capital to actively participate in the investment,
construction and operation of municipal utilities and
infrastructure, encouraging non-public enterprises to
participate in property relations and business model's
reform of municipal utility enterprises and institutions.
The issue of “new 36” breaks the monopoly of the
industry, extend to inside open, it also encourages and
guides private investment to participate in public welfare
undertakings and infrastructure projects. Besides, it solves
the dynamic problem of civilian capital admittance.
Promulgation of the "new 36" has great strategic and
economic significance [14].
D Analysis of the Technical Feasibility of C&D Waste
Recycling
C&D waste recycling technology includes recycled
aggregate technology; regeneration block technology
recycled concrete technology. Among them, building
block technology is the most mature which has reached the
commercial level and used in the big light commercial
center of Handan City, the National Business Center and
other projects [10]; Although regeneration aggregate and
recycled concrete technology has not reached to
commercial degree, yet it has already entered the
promotion stage for typical project demonstration,
belonging to relatively mature technology. Technological
maturity of main garbage regenerated technologies is
showed in table III.
TABLE III: DEVELOPMENT STATUS OF SOLID RENEWABLE TECHNOLOGY
skill type
Solid waste
utilization
Recycled
Aggregate
Technological maturity and development stage
Commercialize
Research and
Pilot
stage
development stage
demonstrati
on stage
Regeneratio
n block
recycled
Concrete
muck
coal gangue
Scrap metal
recycling
IV PPP OPERATION MODE OF C&D WASTE
RECYCLING PROJECT
A. Organization Structure of the PPP Model
Combined with the nature of the C&D waste disposal
industry, the organization settings of the PPP mode is
shown in Fig. 1.
Consulting
company
Project committee
bid
Insurance
contract
Consulting
contract
Concession
Agreement
Agreement
Option
PPP Project Company
Agreement
E Analysis of economic feasibility of C&D waste
recycling
There are several raw materials needed in daily
production of C&D waste recycling: C&D waste, Cement,
coal ash and so on. The condition for raw material
supplying market is like below [15]:
1)Construction waste can be coordinated by the
Guangzhou municipal government , all
(a certain
percentage) of
C&D waste after classification will
transported to the construction of waste disposal station by
the joint venture company's fleet.
2) Cement. Mainly used in the production of light
weight block, well-supplied by the markets, so can be
bought on the market. We should develop appropriate
standards and determine the supply unit and is in abundant
supply. It should be purchased from the market by setting
up certain standards to ensure stable supplying firms.
In addition, as the country’s great effort in the
prohibition of the use of clay brick, Modern architectural
wall materials providing great opportunity of development
and the broad market space for new building materials
such as baking-free brick. According to the Guangzhou
planning, the proportion of recycled products procurement
by Guangzhou municipal government should be increased
year by year. The rate of recycled products procurement
by government agencies should rise up to 30% by the year
2015.
Apparently, recycling products of C&D waste is
competitive in policy and product performance, with
capacious market prospect.
bidGovernment
Insurance
company
Loan
Agreement
Private
Connotative
Investor
s
contract
Deign
Design
contract
units
Construction
units
Supply
Contract
Financial
financial
institutions
institutions
Purchase
Contract
Management
contract
Suppliers
Suppliers
Operators
Users
Fig.1. the Organization Settings of the PPP Mode
B. Operating Program of the C&D Waste Disposal
Station
There are three major income sources in the operation
stage of waste disposal station, they are as follow:
Firstly, it will charge the construction companies for
waste management.<Guangzhou solid waste pollution
prevention plan (2005-2015)> clearly pointed out that, it
is a general principle for either polluters or users to pay the
management fee in pollution as well as in solid waste
pollution prevention and treatment..It is the foundation for
marketization for either polluters or users to pay the
management fee. Government, waste management
company, all related experts need to participate in the
consultation of the waste management costs ,the joint
venture company can reported program first, providing
reasons to grasp the initiative in pricing, at last the price is
reviewed by the pricing team formed by governments
and experts.
Secondly, charge government the service fee or
subsidy by contract. The costs and administrative transfer
have substantial distinction. It is confirmed by measured
garbage discharge quantity, the cost of collection,
transportation and treatment of per ton garbage, the
environmental protection.
V CONCLUSION
In summary, industrial development of C&D waste
recycling is the inevitable future of urban development,
application of PPP mode to solve the Guangzhou
construction waste resources. It is a practical program of
solving the problems
of inadequate investment,
backward technology and low recycling rate. The
government should further promote the construction
waste recycling industry and public-private partnership
process so as to enhance the level of construction waste
resources.
REFERENCES
[1]Xuexin Liu (2009) "The Risk of Infrastructure industries’
market-oriented reforms”. Science Press Beijing, China
[2]Lauritzen, Erik K., "Economic and environmental benefits of
recycling waste from the construction and demolition of
buildings," UNEP Industry and Environment, April-June
1994.
[3]Kai-an LU. “The status and comprehensive utilization of
C&D waste”. Building materials industry information.vol.
6, pp. 15-16, 2005
[4]The Economic Infomation Commission of Guangdong
Province,
“The Cantonese long-term plan for Comprehensive
utilization of resources “,2010,7
[5]CHEN guo,”Dumping of construction waste would get A fine
of 30 million”, Guangdong Construction News ，
http://www.ycwb.com/ePaper/gdjsb/html/201109/09/content_1207360.htm,
[6]LiYa Wang."PPP in foreign infrastructure investment and
Enlightenment”. Hainan financing,Vol. 11, pp .31—
35,2003
[7]United Nations, “Guidebook on promoting Good Governance
in Public Private Partnerships”, United Nations Economic
Commission for Europe, ECE/CECI/4, 2008
[8] Saves.ES “Privatization the public sector How to Shrink
Government Chatham”，N.J Chatham Holse Publishers，
1982.
[9]PeiJian Ge,"PPP: principle, technology and its application in
China". The state-owned asset management.Vol. 11, pp 4648, 2002
[10]Guizhi Li, Xiaojun Liu,"PPP: the mode of Private capital
participation in the construction of urban infrastructure”
Chinese market,Vol. 5, 42-42, 2007
[11]Christine Kessides.. Institutional options for the provision of
infrastructure. World Bank. Washington，D.C.USA, 1993
[12]Zou
Xin,
study on using publicPrivate Partnerships to develop the provision of constructio
n and demolition waste disposal services, Master’s degree
thesis. Chongqing University, 2008
[13]The State Planning Commission, Ministry of Finance,
Ministry of Construction, State Environmental Protection
Administrationon“ the implementation of municipal solid
waste disposal fees
to promote the waste disposal
industry”，2002
[14] The state,”Several opinions of The State Council
on
encouraging and guiding the healthy development of
private investment”，2010，5
[15]Youlan Chen."Project Risk Management for the Urba
n infrastructure projects based on Public-Private Partn
ership Financing Mode” Master’s degree thesis. Centr
al South University, <http://www.csu.edu.cn/>Oct,20
06