The Impact of Waste Management on Economy: Comparative Analysis of South Korea and India

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Introduction

The rise in environmental issues has led to the field of environmental economics which deals with the relationship between the economy and environment becoming extremely important. India as a country generates 62 million tons of municipal solid waste (MSW) each year. (Wikipedia contributors,2019, October 16). However, only about 30% of the waste collected is actually treated (Livemint, Mar 1, 2018). South Korea has one of the most efficient waste management systems in the world, even after having 5 times the per capita generation of MSW than India. In this paper, I look at the decoupling link between the economy and environment of South Korea and whether the policies implemented by its government have been more successful than that of the Indian government.

Literature Review

There have been multiple attempts made to gauge the impact that consumption of natural resources and the waste that is generated has on the economy. Natural resources are the essential inputs of production, the scarcity of which can very harmfully impact the economy of any country. Hence, India cannot afford to ignore effective usage of its natural resources if it doesn’t want to jeopardize its developmental plans (OECD, material resources, productivity and the environment). In this paper, the authors show that India faces the problem of rapid population growth, urbanization and increased demand while simultaneously facing immense pollution. However, the paper doesn’t draw any comparative with an Asian country facing similar issues that has been able to deal with it.

The Volume-Based Waste Fee System aims at reducing household wastes by introducing economic incentive system in waste disposal. (Kim et al., 2012) The government levies a waste collection fee based on the volume of waste discharged (Kim et al., 2012). The waste generation per capita following the implementation of the Volume-based Waste Fee System has been reduced to a level equivalent to the developed world, and the amount of recyclable waste collected has doubled (Kim et al., 2012). In this paper, the authors determine the impact it has had on the environment of South Korea which has been largely positive. It was implemented in 1995 in South Korea. However, this paper doesn’t take into account the effect that it has on the economy of the country.

Theoretical Background

In order to estimate the impact that an effective waste management can have on the GDP of a country, it is imperative to introduce a few key concepts and variables. Resource productivity is the effectiveness with which an economy is able to convert the resources it extracts into monetary gain.

The ratio of domestic extraction to domestic material consumption indicates the dependence of the physical economy on domestic raw material supply (Weisz et al., 2006). Decoupling is a type of economy in which the economy is able to grow without increasing the pressure on the environment. In this paper, we plot the data available for different years in terms of material productivity and material consumption in order to find out whether the economy is able to grow without putting substantial pressure on the environment.

Objective of the Paper

Waste management in South Korea is based on the model of waste generation reduction and recycling and its Volume-Based Fee System is one of the key policies that it has taken. While subsidiary policies have also been taken in the further years, this is the most large-scale policy taken by the government, hence for the sake of the paper it will be assumed to be the sole policy. India’s waste management system has largely focused on segregation and collection that is largely undertaken by the municipals of the respective states (DTE Staff, ‘Rewind 2018: How India dealt with its waste’, 2019). The objective of this paper hence becomes to compare the monetary fine to traditional waste management systems.

Research Question and Hypotheses

The question of this paper is to understand the effectiveness of South Koreas waste management system in terms of material productivity, if it was successful or not and whether it is a viable option for India to follow.

Data and Methodology

This is a quantitative research paper and it is a descriptive correlation design. The data has been collected from reliable secondary sources. The data has been formulated into tables and converted into scatter plots using excel. The data has been collected for the decade of 2007-2017 as further data wasn’t available.

Domestic Material Consumption (DMC) is based on the Economy-Wide Material Flow Accounts (EW-MFA) which includes compilations of the overall material inputs into national economy, the changes of material stock within the economy and the material outputs to other economies or to the environment and covers all solid, gaseous, and liquid materials, except water and air (Eurostat, ‘Your key to European statistics’, 2019). The indicator is defined as the total amount of material directly used in an economy (Eurostat, ‘Your key to European statistics’, 2019).

The domestic material consumption has increased from 4.425 in 2007 to 5.53 in 2017. The material productivity has increased from 0.817 in 2007 to 1.14 in 2017. Per capita consumption of materials in India is still low compared to the rest of the world. With an average of 4.2 tons per capita, India ranked 151 out of 193 countries in the world in 2009, consuming less than half of the global average of around 10 tons. In comparison, in the same year, average resource consumption per capita in OECD countries was about 15.7 tons, while it was around 3.5 tons in the least developed countries (Dittrich, 2012). But it is important to keep in mind that due to the large population that India has, its materials consumed in absolute terms is a huge amount, which is why it is in this country to generate the most municipal solid waste at 150,000 tons per day.

For South Korea, the domestic material productivity has increased from 1.718 in 2007 to 3.207 in 2017, which is a rise of approximately 1.5 tons per capita, while the material consumption has fallen from 16.194 in 2007 to 11.291 in 2017, which is a decrease of approx. of 5 tons/capita.

Result Analysis

As we can see from the above data, the decreasing trend in the DMC can be taken as a positive sign that Korea is well on its way to decoupling its economy while India still has a long way to go as its DMC is still increasing. India’s increase in material productivity has also not seen a substantial increase as it’s just a meagre 0.323 rise which means that there is urgent need of a revamp of India’s approach to waste management and its usage of natural resources.

Conclusion

Due to the large population that India has and taking into consideration that it is a fast economy, in order to achieve efficient waste management, it is important to firstly, reduce the overall material consumption and secondly to increase the productivity of its resources.as seen from the south Korean case, putting a monetary fine on waste generated acts as an incentive for consumers as well as producers to either reduce their consumption or to more efficiently use the available resources. It is only then that India’s economy can move to decoupling. Hence India needs to move away from focusing on collection of waste to incentivizing its citizens to reduce waste.

References

Your key to European statistics. (n.d.). Retrieved October 20, 2019, from https://ec.europa.eu/eurostat/web/products-datasets/product?code=t2020_rl110&lang=en.
Waste management in India. In Wikipedia, the Free Encyclopedia. Retrieved 00:00, October 20, 2019, from https://en.wikipedia.org/w/index.php?title=Waste_management_in_India&oldid=921641492.
Rewind 2018: How India dealt with its waste. (2019, January 3). Retrieved October 20, 2019, from https://www.downtoearth.org.in/news/waste/rewind-2018-how-india-dealt-with-its-waste-62620.
Weisz, H., Krausmann, F., Amann, C., Eisenmenger, N., Erb, K., Hubacek, K., & Fischer Kowalski, M. (2006). The physical economy of the European Union: Cross-country comparison and determinants of material consumption. Ecological Economics, 58(4), 676- 698.
OECD (2019), Material consumption (indicator). doi: 10.1787/84971620-en (Accessed on 20 October 2019).
Kwang, K. (2012),”Volume based waste fee system in Korea”, Korea Environment Institute (KEI).

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