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  • The Solution Revolution

    September 27, 2013 Editor 0

    By William D. Eggers & Paul Macmillan

    New Currencies in Action: A Solution to Developing-World Waste Management

    Selling investors on a radically new approach to waste disposal, one
    that serves impoverished regions where garbage heaps are common, is
    no easy feat. It’s a messy business, rife with health and environmental
    risks. Obtaining the necessary resources to transform waste disposal,
    then, requires the utmost resourcefulness. The currencies of reputation,
    social outcomes, and credit trading can become partial substitutes
    for capital, creating a basis for relationships and transactions that
    launch the new model.

    No one knows this better than social entrepreneur Parag Gupta,
    who is using every variety of currency at his disposal to turn India’s
    trash into a social treasure, improving public health and the economy
    in the process. While working with top social entrepreneurs at the
    Schwab Foundation and the World Economic Forum, Gupta noticed
    something conspicuously missing from most social enterprises: scale.
    The deep-rooted challenges they address affect millions, yet most enterprises
    served only a handful of communities. Aside from microfinance, few solutions were being replicated across countries. Gupta
    began seeking to combine a common social issue with a business
    model designed from the outset to be scalable. Extensive due diligence
    pointed to one big issue facing the least developed countries: trash.
    “When one looked at solid waste management as a whole, it was
    a tremendous issue that had to be dealt with, both in terms of the
    health and environmental issues locally but also with regards to climate
    change,” says Gupta.

    Gupta chose to test his innovative business model, Waste Ventures,
    in India, where governments and contractors collect only half of the
    forty million tons of garbage its cities produce each year. The rest falls
    to an informal economy of 1.5 million rag pickers, who collect and
    sift the trash and sell anything remotely reusable, down to reasonably
    fresh bits of food. A 2010 estimate indicated that 15 million people
    around the world depended on waste picking for their livelihoods.

    Waste picking provides some income to those who desperately
    need it and subsidizes cities that pay nothing for the service. But it’s a
    brutal way to make a living. Pickers spend their days sorting through
    garbage in massive landfills that reek of methane. The workers make
    about $1.50 a day, barely enough for food and water. Many youths
    forget their empty stomachs and empty lives by inhaling shoe polish
    or turpentine. Their parents have life expectancies of forty-five.
    Often, the pickers’ only direct interaction with government takes the
    form of brutal police beatings. And despite the cruel efficiency of the
    system, much of India’s trash still doesn’t get cleaned up.

    As Gupta researched waste management organizations, in collaboration
    with the Wharton and Harvard business schools, he was
    surprised to see hardly any focus on end-to-end solutions for waste
    removal. Some organizations had scaled composting, others recycling,
    and most focused on the human rights of the pickers, but few
    did more than one thing really well. Organizational nearsightedness
    was keeping profits low and prospects for scaling even lower. Gupta
    started Waste Ventures to change that.

    Social Outcomes as Start-Up Capital

    Waste Ventures used start-up capital from foundations, social-impact
    investors, and the Swedish International Development Agency to
    help pickers form waste management corporations that, with the right
    training, can use technology and best practices to harvest as much
    value as possible from trash. Rather than scrambling over dangerous
    garbage heaps, pickers collect refuse daily from households in a practice
    that improves both safety and the ability to compost and recycle.
    This model allows Waste Ventures to deliver social improvements in
    the picker’s livelihoods and health, the environment, and the municipal
    sanitation system all at once.

    The enterprise holds itself accountable to, and measures progress
    against, specific targets: triple a waste picker’s daily earnings, cut waste
    accumulation by 80 percent, and reduce greenhouse gases that would
    otherwise be released. Tracking these social outcomes is essential because,
    says Gupta, “it’s linked to our financial well-being as a business.”
    Such measures of success point to a sector-wide shift toward
    safe, inclusive, and profitable waste management. For many impact
    investors, that progress is well worth the investment.

    Reputational Advantage

    By Gupta’s own account, he could not shape this sector-wide shift on
    his own. Breaking into unfamiliar territory as a brand-new social enterprise
    would have been significantly more challenging without the
    extensive network Gupta had established long before founding Waste
    Ventures. His reputation offered a currency of its own, opening doors
    to new partnerships, mentors, and experts in the field.

    In India, it quickly became apparent that acting in isolation would
    be the quickest path to failure. Instead, Waste Ventures built corporations
    based on existing groups of pickers, often formed by local
    NGOs. These NGOs also proved to be critical allies in engaging
    communities and keeping a trained eye out for corruption, a rampant
    problem in India. For Gupta, the time invested in understanding
    the local environment and building critical relationships is inherently
    productive. It builds trust and paves the way for future agreements
    essential to scaling.

    Credits for the Environment and the Bottom Line

    The Waste Ventures approach offers more-immediate dividends as
    well. Pooling compost made pickers eligible for carbon credits, opening
    new income streams. Now, besides selling recyclables, wastepicker
    corporations can offer composted biofertilizer and carbon
    credits. When combined with the $1 monthly fees charged to households
    for daily trash collection, Waste Ventures’ corporations are four
    times more profitable than alternative methods for waste collection in
    the region.

    The environmental effects are also dramatically better, reducing
    methane gas—a greenhouse gas twenty-three times more harmful
    than carbon dioxide—which otherwise festers in towering trash
    heaps. Worker life expectancy, as forecasted according to sick days
    and reported disease incidence, continues to improve, as does workers’
    pay, which has already doubled and is on target to triple

    Beyond Measuring Expenditures

    Throughout this chapter, we have shown how the solution economy
    engenders new ways to measure public value. Public data can be harvested
    and shaped into products that create real value. The time and
    talent that citizens bring to public challenges offer tangible benefits
    that can be measured and even traded. Social entrepreneurs are addressing
    stubborn problems sustainably and are building enterprises
    that create tangible value at the bottom of the pyramid. Even the biggest
    corporations have discovered the advantage of reputation that
    comes from public acts of goodwill. Benefits once vaguely viewed as
    valuable now carry increasingly quantifiable, shareable worth.
    In this multidimensional environment, government is no longer
    the sole issuer of currency. Dollars, euros, and yen may dominate
    global capital markets, but a growing number of exchanges, to
    be discussed in chapter 5, spur wider adoption of these new currencies,
    encouraging citizens to transact in the resources at their disposal.
    A greater diversity of contributions means that more needs are met
    than whatever money—and big funders like government—alone can
    supply.

    Go to Source

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    Categories: Social Innovation

    Tags: improving public health, Municipal solid waste, schwab foundation, social entrepreneurs, solid waste management

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