Financing Solid Waste Management in Israel
January 10, 2011
Jerusalem
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| Gilad Erdan, Minister of Environmental Protection, opens the Lab session with an introduction of the current challenges Israel faces in improving solid waste management. |
Each year, Israel generates millions of tons of waste. Given the scarcity of land and resources, the ever-growing challenge in solid waste management is coming to a head. The current landfill system is unsustainable, the overall recycling rate is less than 25 percent and efforts to change the status quo have proven ineffective to date.
Over the past two years, the Ministry of Environmental Protection has led a concentrated effort to initiate the "solid waste revolution" in Israel, attempting to convert a troubling environmental nuisance into a valuable asset through recycling and waste-to-energy plants. New legislation, such as the packaging law and the landfill levy, has been taken up by the Knesset. Once approved, these new regulations will generate income, creating a pool of funds for building transfer stations, treatment plants and additional infrastructure for the separation of waste at the source. Nonetheless, the revenues from these new fees are insufficient to meet the financial needs for solid waste mitigation.
Improving solid waste management requires a systematic approach to encourage cooperation from all market players. Unfortunately, there has yet to be a fully coordinated effort to approach the issue from both economic and technological perspectives. Although the new legislation defined potential sources of revenue, there are still many questions that need to be addressed in order to effectively leverage governmental funds with private capital.
The Milken Institute, in partnership with the Ministry of Environmental Protection and with support from the Richard and Rhoda Goldman Fund, convened a Financial Innovations Lab to tackle this important issue. Its goal was to identify and consolidate various sources of capital, fully leveraging public and private funds to scale up solid waste solutions. The session brought together a diverse group of scientists, financial practitioners, governmental officials, foundation executives, and technology experts to design potential models.
Participants heard presentations on specific programs in Europe, Asia and the United States, then debated which models could be best adapted to Israel. The approaches most likely to be effective in Israel include revolving loan funds, bond banks, and pilot grants using private-public partnerships and possible bank syndications for project finance.
The Ministry has already begun promoting the ideas from the Lab to ensure that these solutions are quickly operational. Legislative language was changed to enable greater flexibility in the use of government revenues, such as loans or equity, in structured financial solutions as opposed to relying solely upon grant formulas.
For more information, contact Caitlin MacLean, manager of Financial Innovations Labs, at cmaclean@milkeninstitute.org.
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