Lesson #1: Innovation requires flexibility. Reflections from Circular Action Director, Thierry Sanders on the first few months of the project, and turning things on their head.
‘Trickle down economics’ doesn’t work. It may have been a term commonly heard by economics students born before 1980. But even in 2022 in Saigon, Vietnam this outdated economic theory when applied to waste collection, does not work. It works as poorly at helping the lower classes, as it does with tax breaks for billionaires which were meant to create more jobs.
Due to various local factors, our initial proposal to provide bottom-up subsidies to waste pickers who collect used beverage cartons, was replaced instead by a top-down subsidy to the aggregators who deliver beverage cartons to recyclers. An aggregator buys recyclable materials, then bales (compresses) them for the last truck ride to the recycler. So, over the last three months our pilot project ran that way.
The aggregator, already a well capitalised business, with trucks, warehouses and a baler, doesn’t really feel the benefit of a subsidy paid per KG of beverage cartons baled and delivered to the recycler. They don’t feel the incentive to go out and look for more cartons, and they don’t fairly share the subsidy upstream with collection centres and waste pickers.
This lesson, now better understood by all involved, has been learnt, and now the project has pivoted and this approach has now been replaced with a bottom-up approach.
The ice-cream seller method
Driving a small truck through a neighbourhood with narrow streets and many waste pickers at a fixed time every day, and announcing our arrival with a loudspeaker, has turned the project around. Most importantly we also have a more attractive buying price. Our beverage carton truck driver is now offering an attractive 3500 Dong (Euro 0.14) per KG for flattened cartons or 2500 dong (Euro 0.10) for un-flattened cartons. The price difference is big enough to see many waste pickers stamping their bags of milk cartons flat. This flattening allows us to carry twice the weight of milk cartons per truck load of 250kg.
To test this bottom up approach, we have rented our own truck, and knowing the subsidy that the aggregators get, we now get paid 4500 dong (Eur 0.18) per kg from the Aggregator. Enough to cover the cost of truck rental, but not to pay for our staff.
Our experiment started with pickups of 60-80 kg per truck per day, but over a period of two weeks grew to 200-300 kg per load. Now that waste pickers trust us, see a predictable price and schedule, they are now also making an effort to collect more cartons. To monitor the locations, the volumes and to pay the incentive we use our KOLEKT app.
Once we scale this up over the next year, to 40 collection trucks, we will use the KOLEKT app to pay out extra subsidies and incentives to waste pickers. The goal is 3000 tonnes of cartons in Saigon alone, it can be done. We will use top-down purchase contracts to secure demand and bottom up subsidy payments to secure supply.