MUNICIPAL SOLID WASTE: REVERSE LOGISTICS PERFORMANCE DETERMINES OPPORTUNITY COST OF BULK TIPPING

Abstract

The opportunity cost concept refers to quantifying the opportunities lost upon choosing one investment option over a more economical alternative. The present study applies the concept to the process of choosing the best investment option for managing municipal solid waste. In a case study in Brazil, the options on the table are bulk collection and tipping versus reverse logistics with selective collection and sale of recovered components. The use of relative monetary values renders the results general and applicable in other scenarios. The bulk tipping option represents the reference cost of 100. The research postulates a linear relation between the opportunity cost of bulk tipping (y) and the efficiency of reverse logistics operations (x). Zero efficiency means bulk collection and tipping of all waste. Full efficiency means capture of all recyclable items, which in the case study amount to 80% of waste. Various intermediate points confirm the relationship that takes the form y=0.968x. The result shows that opportunity cost is dynamic in as much as changes of technologies and administrative procedures move it along that line. It also illustrates to municipal administrations the immediate economic effect of implementation and stepwise improvement of reverse logistics.