Uncontrolled landfills or dumpsites often contaminate surface water, ground water and / or soil and emit large quantities of greenhouse gases (mainly methane) as well as air pollutants such as acids, carbon particles or dioxins due to open burning. To mitigate these environmental impacts, the first step should be the eradication of dumpsites and their replacement with sanitary landfills. However, it's important to emphasize that this solution, while necessary, is part of a linear waste management approach and not the circular economy. Landfills should be considered only as a last resort after all efforts towards reduction, reuse, substitution, and recycling have been maximized. Landfills are essential end of life facilities designed to manage and contain residual waste safely. They should be designed with a focus on environmental protection and public health. Despite their necessity, they represent a linear approach to waste management, where the primary objective is containment rather than resource recovery. Proper waste segregation and management are critical to optimal landfill operation, but the overarching goal should always be to minimize the amount of waste that reaches landfills by prioritizing higher-order strategies in the waste hierarchy, such as reduction and recycling.

Costs and revenue model

Landfills have high initial capex investment due to cost of land acquisition and preparation. Operational expenses comprise landfill maintenance, leachate treatment, gas collection. Landfills also require ongoing long-term monitoring and care cost post-closure.

Revenues usually include gate fees or government subsidies. It's important to recognize that the efficacy of the revenue model, particularly gate fees, is contingent on a robust enforcement mechanism. Without effective enforcement, there's a risk that users may opt to dispose of waste in unauthorized locations to avoid paying the gate fees. This reality highlights the need for a well-established and enforceable waste management framework to ensure that landfills operate effectively and sustainably.

Another possible revenue stream can be from carbon credits such as from the installation of landfill gas capture infrastructure or composting of organic waste. For example, several landfill gas capture projects in Brazil were partially financed by selling emissions reductions through the World Bank's Carbon Partnership Facility (World Bank 2014, 2018).

Governments are usually the primary funders of landfills due to their essential public good character.

In developing countries considerable multilateral government funding and official development finance has been deployed to fund landfills as they are essential waste management infrastructure. The funding is often channelled through as a sovereign loan, with the sovereign government acting as a guarantor for the investment. The large transaction size is in line with DFI / MDB investment strategy as they aim to deploy their funding while minimizing transaction costs.

If gate fees are high enough, private sector entities may invest in landfill development and operation, often through public-private partnerships (PPPs). Such investment could be attractive for capital providers with long-term investment horizon who are looking for steady cashflows. According to World Bank data, about 35% of the management, concession and other PPP contacts which involve the operation of a fixed asset such as a landfill, last 10 years or longer (World Bank, 2018).

Other enabling conditions

• Clear PPP frameworks and contractually-based transaction structure: The sanitary landfill business model lends itself well to PPP schemes. Creating robust regulations and clear contractual relationship frameworks can make landfills particularly attractive to investors especially those looking for long-term investments.

• Large scale investment: Aggregation allows for large scale investment size which is in line with the mandate of development finance institutions looking to deploy funding while reducing transaction costs.

• Profit enhancing tools: The addition of profit enhancing mechanisms such as carbon credits from the collection and utilization of landfill gas, can provide further investment return upsides.

• Capital intensive sector: Sanitary landfills require high upfront capital investment to finance the initial land acquisition and related infrastructure. In addition investment in landfill require extensive project preparation due to the sensitive nature of the infrastructure

• Revenue generation: Revenue generation is linked to waste generation which is dependent on local economic projections

• Long-term investment: Landfills require long-term financial commitments for maintenance and post-closure care. This extended investment timeline may not be aligned with most investors investor cycles

• Risks and liability: Landfill present inherent risks related to potential environmental liabilities, and post-closure costs. Investors may shy away due to these risk uncertainties.