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How Will a New Waste Management Law Affect Brazil?

After 20 years of legislative debate, Brazil last year passed its first national waste management law, a move that will affect the practices of nearly every business operating in the nation. What took the bill so long to pass? Is it the right legislation at the right time, and how can it be improved? How will the legislation affect companies operating in Brazil in 2011 and beyond?

Vander Giordano, managing director of Kroll in Brazil:

"Although a federal law on solid waste management was enacted last year, various states and municipalities in Brazil had already started developing policies to regulate the handling of certain types of waste. The new law, however, comes at a time when the environment is a hot global issue and will put more pressure on companies to invest in technologies and develop procedures to comply with the law. Likewise, companies can expect to see an increase in monitoring and auditing activities by the government. The law adds a new wrinkle to the traditional due diligence carried out on potential investments in Brazil. In addition to financial, legal and operational investigations, investors will now need to be more alert to comply with waste management procedures when acquiring companies subject to this law. If not, a buyer may be vulnerable to a number of risks and may inherit a liability that could jeopardize their investment. Kroll has already seen a few examples where, in the rush to close a deal, the investor failed to assess the acquisition's compliance readiness on waste management regulations and now may be facing some costly consequences."



PhD Sergio Guerreiro Ribeiro
President of the Waste-to-Energy Research and Technology Council in Brazil
English Portuguese Spanish

"A very advanced directive (2008/98/EC) of the European Parliament has one main objective minimizing 'the negative effects of the generation and management of waste on human health and the environment. Waste policy should also aim at reducing the use of resources, and favor the practical application of the waste hierarchy.' However, Brazil's national waste management policy, known as PNRS, has no less than 15 objectives that are quite difficult to implement. Organic waste in landfills generates methane, a greenhouse gas, and hard-to-treat leachate. Landfills are the last option in the European waste management hierarchy under energy recovery in high-efficiency facilities. But the Brazilian law, mistakenly, defines landfills as the environmentally 'adequate' solution, preventing the adoption of somewhat more expensive solutions, at least in the short time, but ones that are better for the environment. Article 30 of the PRNS 'aims to reduce the waste of resources and environmental damages.' But this is exactly what landfill disposal of untreated waste is all about. Therefore the law contradicts itself. Recycling in Brazil is not low. Data from the Brazilian Association of Public Cleaning and Special Waste Companies shows that clearly and it is well known that we are the world leaders in aluminum can recycling without any government interference. This is because most recycling is done by small groups of low income 'waste pickers' that make their living out of the waste by collecting recyclables before the municipality trucks. To improve the current situation, the law should regulate source separation with selective collection, but this implies new trucks and additional costs. But the PNRS is very shy on this. In summary, I believe that everything is going to stay the way it is if no corrections are made in the new Brazilian law that, after 20 years of debates, was born old."


Ronaldo Seroa da Motta, senior researcher at the Research Institute for Applied Economics (IPEA) and professor of environmental and regulation economics at IBMEC University in Rio de Janeiro:

"Waste collection in Brazil is almost universal but the country lags behind on waste disposition. Less than a half of total collected waste is not properly disposed of. Waste management is a municipal service and cities are facing serious budget constraints to cope with the increasing demand on these services that account, on national average, for around 5 percent of the their budget and applied charges cover only half of total costs. The new National Policy on Solid Waste enacted in August is an attempt to radically change the sector's regulatory framework. Following closely European experiences, the new policy introduces the reversal logistic that claims shared responsibility among producers, importers, sellers, consumers and municipalities in the life cycle of the products. These changes were discussed over two decades to accommodate concerns of the two major economic agents, private sector and autonomous collectors. Uncertainty on the system costs to be borne by the producers and sellers affect the former while the latter faced uncertainty on the potential reduction of their participation in the model. The new regulation adopts the instrument of 'sectoral agreement' in which burden sharing among stakeholders is compromised. To reduce uncertainty and asymmetry on information with transparency and participation, agreements can be designed voluntarily by the stakeholders themselves in accordance to policy and technical parameters. Public calls for agreements will take place if voluntary action fails to set them. The new policy also offers a great deal of financial and economic incentives. An inter-ministerial committee with civil society representatives will be responsible for approving both agreements and incentives. It is too early for results, but it seems that the new model still lacks governance means as, for example, a regulatory agency with high technical capability and an autonomous mandate to implement and supervise agreements and their articulation with incentives that will be crucial for the successful performance of this new paradigm in solid waste management in Brazil."


Text posted with permission of the Inter-American Dialogue (http://www.thedialogue.org/).





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