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Latin America’s Trash Brims with Hidden Cash

Mac Margolis

(Bloomberg Opinion) -- Late one evening last week, my phone lit up. “Gather all our jars and bottles and fill them up,” my wife messaged me. “If we wait until the contaminated water comes, it’ll be too late.” Ok, so I confess was skeptical. I live in Rio de Janeiro, an excitable town where emergency lurks in every WhatsApp group and Twitter feed.This was different, as I soon found. Tales of tainted water spreading through the city’s pipes were multiplying. Hundreds of people had reportedly fallen sick from drinking the dark, fetid stuff. In two weeks, more than 60 Rio neighborhoods were blighted, triggering a run on emergency rooms, bottled water and conspiracy theories. “I suspect sabotage,” Rio state governor Wilson Witzel said.

Political hubris was the more likely culprit. For years, state and local authorities grooming the city ahead of international events such as the 2014 World Cup and the 2016 Olympic games had heralded transformative public works that either fell short or never happened. Half a decade on, raw sewage and untreated solid waste flow unchecked into the streams feeding the municipal reservoir, giving rise to toxic algae blooms in the potable water source for nine million people. Brazil’s second largest metropolis ranks 51st in water quality nationwide, down 12 places from 2018. Fewer than 37% of households are connected to sewage mains, prompting the state attorney’s office to file suit against state authorities.

Forget, for a moment, the conflagration in the Amazon rain forest. Rio’s blighted tap water is a reminder that, for much of Latin America, the environmental monster in the room is mismanaged urban waste. Organic or solid, domestic or industrial, human refuse chokes city streets and fouls urban waterways.

The emergency this time was in Rio, but it might have been in Lima, Santiago, Buenos Aires or Bogotá. Latin America is the world’s most urbanized region, with 83% of South Americans living in cities. As cities go, so goes trash.  By 2025, Latin America’s projected 567 million city dwellers are expected to throw out 671,000 tons of trash a day, a 25% increase. “The Latin American middle classes have grown and are consuming more and more,” said Marcos Alegre, Peru’s former vice minister for environmental management. “Waste per capita is growing as never before.”

Fortunately, where there’s waste, there’s also opportunity. Latin Americans, belatedly, seem to be catching on. In January 2018, China, once the world’s dumpster, banned imports of most plastics and cardboard. Environmental degradation was one reason, but mostly the move was calculated to wean Chinese industry from imported scrap and jump-start domestic recycling. It also helped to wean Latin America from the world’s biggest scrap buyer. Nothing like losing the world’s janitor to goose greener sensibilities and start a global drive to repurpose trash.

A 2018 UN study showed that Colombia, Ecuador, Panama and Peru shipped 60,000 tons of used plastic a year to China, compared with just 11,000 tons to the U.S. Not coincidentally, all these countries have extremely low recycling rates. Now China’s new import restrictions may send refuse the other way.

Argentina took the lead in the Americas: Late last year, outgoing President Mauricio Macri issued a ruling to facilitate imports of plastic scrap that will feed a nascent recycling hub. It was a bold plan: Argentina, like most of its neighbors, has a dismal record in managing its refuse. Green groups howled that Argentina would become the next China, the country flooded with low-grade plastic that would only end up in the incinerator. With Macri voted out of office for failing to revive the economy, incoming President Alberto Fernandez is expected to revoke the decree.

Argentina’s false start is a caveat for willful technocrats banking on innovation without a political pact or safeguards. “The decree was a promising example of what could be a policy of sustainable management,” said former Argentine secretary for innovation and sustainability Prem Zalzman. “But first we need to establish a social consensus while also ensuring that good monitoring and enforcement are in place to avoid importing dangerous materials.”

Latin Americans neglect recycling at their own peril. The region has a laudable 94% average collection rate for household and industrial garbage. Yet a third of the haul ends up in open dumpsites, exposing 170 million to contamination, pests and disease. Only about 10% of collected waste gets recycled region wide, and much of the rest goes up in smoke. “For every four tons of toxic waste you burn, you get a ton of toxic ash,” said Melissa MacEwen, who heads the energy, environment and resources department at Chatham House.

The way forward is a mix of smarter government, environmental education and partnerships with the private sector. A number of initiatives are under way. In Guayaquil, Ecuador, mass transit users can deposit their used plastic bottles in a vending machine for about two cents each, redeemable for bus fare. Since the 1980’s, Curitiba, one of Brazil’s greenest cities, has swapped food for garbage to keep the streets clean. One Argentine town has even experimented with behavioral incentives – pep talks and inspirational messages – to encourage residents to sort household trash for recycling.

Cleaner cities also call for some conceptual recycling. Urban waste collection and disposal are costly, and although most people agree that burden should be shared, they are often loath to shell out for the service they believe general taxes ought to cover. In Argentina, the fees and tariffs residents pay for collection cover only 18% of total expenditures. Such shortfalls, naturally, jeopardize collection, proper disposal and recycling. Hence it’s no mystery that aside from major metropolises like Buenos Aires, Santiago and Sao Paulo, “there is no infrastructure for waste treatment and recovery,” the United Nations Environment Program concluded in a recent study.Greening up waste management is a job for many partners. Governments must invest in collection, transport and treatment. Residents must help foot the bill. The legion of freelance trash pickers who serve the public good on the cheap by scouring the streets for scrap should be invited into the formal economy and allowed to do their job in safety. None of this will work, however, unless the private sector pitches in and gets creative.  

To that end, policymakers are calling on companies to join in a pact to keep discarded materials from dirtying the streets and atmosphere. The result is what international waste wonks call the Extended Producer Agreement, whereby businesses shoulder the responsibility for handling and recycling the used goods they sell. That’s key to building “the circular economy,” greenspeak for the notion that nothing goes to waste that can be re-purposed. After all, one person’s trash is another’s merchandise. With the right scavenging technology, there’s a treasure trove in precious metals to be recovered in discarded mobile phones and other electronics— a  potential boon to Latin America, where electrical and electronic equipment waste grew 70% from 2009 to 2018, compared with 55% globally.

Uruguay and Chile pioneered such pacts for recovering lead batteries and non-returnable containers. Costa Rica requires companies and distributors to take responsibility for their products from factory to reprocessing centers. In Colombia, consumer goods must be made with traceable components, a key to curbing potentially hazardous waste like pesticide containers, tires, light bulbs and medication. Ecuadoran companies must submit waste management plans to regulators.

Such arrangements turn on the circular economy’s bet that responsible waste management will not just spare companies punitive costs but also stimulate sustainability and competition for customers through greener products. “We have to drastically reduce the volume and variety of waste packaging,” said MacEwen. “It’s harder to recycle a colored plastic bottle than a clear one. More than recycling, that means product design is the way to go.” Manufacturers may be reluctant to retool, she allows.

Another market frontier is tapping organic waste for energy. No other region squanders as much food as Latin America. Organic waste, including sewage, may not be the biggest contributor to climate-baking greenhouse gases, but it is a huge source of methane, 28 times more potent for trapping heat than carbon dioxide. Better than a third of Peru’s methane emissions can be traced to landfill burning.

Now this waste is fouling the skies and waters. It could light up homes and power industries. Argentina’s Environmental Complex Norte III converts 16,000 tons of daily solid waste from greater Buenos Aires into enough energy for 25,000 homes. By transforming instead of burning waste, the plant also avoids releasing more than 1 billion tons of carbon emissions a year. Generating biogas from organic waste is still incipient in the region, with around 20 plants in eight Latin American countries. Yet with landfills aplenty and regional energy demand growing by more than 3% a year, analysts reckon far more waste will have to be turned into energy.

Latin America’s aspiring middle class needs the juice, preferably without the collateral environmental damage or political double-talk. More than 90% of consumers in seven South American countries demanded corporate sustainability, compared with 81% globally, and 85% said they would change their buying habits (compared with 73% of their global peers) to ease their environmental footprint, according to a recent Nielsen survey. Water pollution and shortages, polluted air and excessive waste packaging lead the list of worries for regional consumers.

They’ll get no argument from water-challenged Brazilians. This week pediatricians in Rio de Janeiro counseled parents to avoid bathing young children in the swill dripping out of their taps. My friend David says he won’t even let the dog drink it. Latin Americans know they need to clean up their act, lest the potential blessings of the circular economy go down with the crud in the drain.

To contact the author of this story: Mac Margolis at mmargolis14@bloomberg.net

To contact the editor responsible for this story: James Gibney at jgibney5@bloomberg.net

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Mac Margolis is a Bloomberg Opinion columnist covering Latin and South America. He was a reporter for Newsweek and is the author of “The Last New World: The Conquest of the Amazon Frontier.”

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