Epsilon Archive for Student Projects

Abstract

The marginal socio-economic condition of many people, lack of cooperative culture and cultural aversion towards waste, absence of well-defined enforcement mechanism to effectively coerce the population, restricted public service funding, high rate of population growth and the resulting ever increasing waste production are some of the major challenges faced by most developing countries, including Ethiopia, in an effort to implement effective and efficient municipal solid waste management (MSWM).
Koshe/Repi, an old landfill in Addis Ababa, Ethiopia, is considered to be a huge opportunity in terms of material recovery and energy production. In fact, by adopting Enhanced Landfill Mining (ELFM) as approach for handling the cumulated waste, considerable net economic benefits may be attached to energy production (Waste-to-Energy, WtE) and materials recovery (Waste-to-Material, WtM). In line with this, the thesis produces a preliminary decision making model for Koshe/Repi ELFM project by considering the time evolution of predicted CO2 emission reduction and landfill gas recovery. To achieve this objective, we take a real option perspective and use the binomial method for assessing the economic profitability of the project. Empirically, the model is supported by data from Addis Ababa city municipality, community development research and Ethiopian electric power corporation (EEPCo).
Results of the model reveals that, the percentage (or share), α, of total revenue from emission reduction to be reimbursed to a private firm, is crucial in attracting investments to Koshe/Repi ELFM project. Moreover, for a specific share value (e.g. 16%), where the net present value (NPV) is negative ($–0.18 million), the low annual volatility of electricity price (15%) is high enough to offset the negative NPV. As a result, the project is worth to invest for share value between 15% and 17% included, even though the NPV is negative. Finally, this study call for further investigation focusing on the estimation of determinant exogenous parameters such as annual volatility, carbon credit, investment and operation costs, salvage value and penalty cost.