Speeding Up the Circular Economy Transition in Latin America Through the Internet of Things

Waste management is one of the top priorities in Latin America. There is no one size fits all approach, but lessons that can be drawn from successful cases in and outside the region, write Manuel Albaladejo and Pía Alonso Ribas.

Manuel Albaladejo and Pía Alonso Ribas, 23 October 2020

A worker at a computer recycling company dismantles components on May 6, 2013 in Santiago.(Photo by MARTIN BERNETTI/AFP via Getty Images)

Waste management is one of the top priority areas for a just circular economy (CE) transition in Latin America. This is no surprise given that the World Bank estimates that the region will lead the developing world in waste generation per capita by 2050 with an average recycling rate of only 4.5 per cent – the lowest among developing regions.

Failed waste management systems in the region are the result of a range of factors including high urbanization rates, weak institutions, lack of a regulatory framework, limited public-private partnerships, information asymmetry between waste generators, collectors, transport companies, treatments plants and municipalities and overall low levels of environmental awareness among citizens.

Furthermore, the economic impact of the COVID-19 pandemic will further jeopardize the investment efforts of municipalities to providing better waste management services and infrastructure to the population.

While the circular economy aspires to a wasteless world, the truth is that, in the short run, efficient waste treatment should be at the heart of the circular economy agenda in Latin America.

In addition, with 145,000 tons a day of waste disposed in open dumpsites, the circular economy agenda in the region should prioritize the concept of ‘waste as a resource’ by bringing discarded materials back to industrial processes through reusing or recycling or as an input to generating bioenergy as a substitute to fossil fuels.

Projected waste generation by region, per capita

The World Bank (2018), 'What a Waste 2.0', http://datatopics.worldbank.or...

The circular economy meets the Internet of Things

There is no one-size-fits-all solution to the waste management system in Latin America, particularly considering the different waste streams and scale, for example from organic to hazardous industrial waste, as well as the role of the informal sector and the dissimilar needs of urban and rural settings.

However, there are lessons that can be drawn from successful cases in and outside the region. Most cases share something in common: they try to establish waste information systems for efficient decision-making and rely on the Internet of Things (IoT) technologies to generate, exchange and process large amounts of data.

The IoT refers to the interconnection of physical products, systems and processes – including sensors, software and appliances – that allow the exchange of information through the internet. As keeping products and materials in use requires constant tracking of waste flows, as well as timely and harmonized information sharing among all stakeholders, IoT technologies can act as a key enabler to speed up the circular economy transition.

Generating knowledge on the location, condition and availability of materials is at the core of smart waste management systems. For instance, sensor technologies, which are normally located in trash containers, can monitor waste type and condition in real time to optimize the entire waste collection process. In this way, trucks collect waste at the right time using the most efficient route, thereby reducing costs and avoiding unnecessary emissions and traffic jams.

This reverse operation ends up in specific waste stream treatment plants adding value by converting waste into second use cycle products. In addition, advanced analytics based on collected waste data can help municipalities better understand and fine-tune waste management practices as well as shed light on consumers´ behavioral patterns and education as well as information needs in the community.

Latin America’s move towards smart waste management systems

Over the last few years, Latin America has had several pilot initiatives for efficient waste management using IoT technologies. For example, Santiago de Chile has implemented the Bigbelly solar-powered compacting bins in its Metropolitan Park – one of the largest parks in South America. The smart bins collect data, assess metrics and sends notification when the bins are filled, thereby allowing for efficient collection routines.

Bigbelly's Distribution Partner in Chile, GreenCargo, has also worked hand-in-hand with the Parque Metropolitan Department of Cleanliness to achieve the best possible results. With Bigbelly´s smart bins, for example, the Parque Metropolitan's Department of Operations reduced their collection average during the high season from 20 times to 3.4 times per week (2016).

In addition in 2019, São Paulo launched an electronic waste management system called CTR-E (Control of Waste Transport-Electronic). Where São Paulo’s municipal departments and companies are required to provide accurate data related to the amount of waste generated in addition to logistics, treatment and disposal. With the help of IoT technology – software, smartphone apps, QR codes on containers, dumpsters and trucks – São Paulo’s public authorities and businesses are able to locate, integrate and share more than 100 different waste treatment solutions.

Indeed, according to the World Economic Forum, this new system is expected to reduce the shipment of waste to landfills by 18 per cent and save up to US$30 million annually as well as create opportunities for private waste management businesses.

The constant search of IoT-based solutions to waste problems in the region has also nurtured a new generation of tech firms such as Brazil´s New Hope EcoTech and Colombia’s VALOPES. New Hope Eco Tech has developed an online data system to track waste flows (e.g. type and volume) between informal street collectors, small recyclers, treatment plants and consumer goods manufacturers.

Collectors are paid for the waste they remove while other agents in the chain benefit from a reverse logistic certification that is sold to manufacturers. VALOPES is a startup focusing on the recovering value from industrial waste streams and unused material through cloud-based data management systems. Through the digitalization of the sector and the interconnectedness of companies and waste service providers, VALOPES states that waste management costs can be reduced by 35 per cent.

Challenges ahead

There is no doubt that speeding up the circular economy transition can be facilitated through the advancements of IoT technologies. Smart waste management systems, which combine circularity principles with tech-based solutions, will slowly but surely take center stage in the circular economy discourse in the years to come, and Latin America will not be an exception.

The push for smart city solutions in a highly dense urban region will make cities perfect hubs for pilot testing smart, sustainable and cost-efficient waste management systems. Yet there are several challenges ahead.

Conflicts between informal recyclers, municipalities and waste management companies remain a major issue particularly when establishing new, more advanced systems that rock the status-quo.

There might also be less sophisticated and more inclusive labour-intensive solutions to waste management that are more akin to the informal nature of the sector that may deter policymakers from automating systems.

Another challenge is the cost and scalability of smart waste management systems: implementing IoT-based solutions can be costly and need certain basic infrastructure, high connectivity and tech-savvy stakeholders.

There are pockets within the region, and within cities, that have such preconditions but it is unrealistic to think that smart waste management systems will be mainstreamed throughout Latin America within the next decade.

A final challenge is to do with regulation: a system that relies on reverse logistics to transform waste into a resource needs a normative framework that incentivizes the transition without creating further tax burdens to the productive sector. Internationally, trade rules do not need to hinder flows of products resulting from the circular economy (e.g. secondary raw materials).

Given Latin America´s current and future waste problems, policymakers need to embrace the circular economy to transform massive untreated waste streams into resources to spur income and jobs while reducing the environmental impact. IoT-based solutions to waste management will certainly speed up the transition, though the region faces significant challenges. Nevertheless, the increased number of pilots in Latin America that use IoT technologies to generate knowledge on waste location, condition and availability point that the future of waste management in the region is to go smart.