EX POST EVALUATION OF INVESTMENT PROJECTS CO-FINANCED BY THE EUROPEAN REGIONAL DEVELOPMENT FUND (ERDF) OR COHESION FUND (CF) IN THE PERIOD 1994-1999 INTEGRATED SOLID WASTE MANAGEMENT IN NORTHERN LISBON PREPARED BY: BLOMEYER & SANZ, GUADALAJARA IN PARTNERSHIP WITH CSIL, CENTRE FOR INDUSTRIAL STUDIES, MILAN PREPARED FOR: EUROPEAN COMMISSION DIRECTORATE-GENERAL REGIONAL POLICY POLICY DEVELOPMENT EVALUATION MILAN, SEPTEMBER 5, 2012 This report is part of a study carried out by a Team selected by the Evaluation Unit, DG Regional Policy, European Commission, through a call for tenders by open procedure no 2010.CE.16.B.AT.036. The consortium selected comprises CSIL – Centre for Industrial Studies (lead partner – Milan) and DKM Economic Consultants (Dublin). The Core Team comprises: - Scientific Director: Massimo Florio, CSIL and University of Milan; - Project Coordinators: Silvia Vignetti and Julie Pellegrin, CSIL; - External experts: Ginés de Rus (University of Las Palmas, Spain), Per-Olov Johansson (Stockholm School of Economics, Sweden) and Eduardo Ley (World Bank, Washington, D.C.); - Senior experts: Ugo Finzi, Mario Genco, Annette Hughes and Marcello Martinez; - Task managers: John Lawlor, Julie Pellegrin and Davide Sartori; - Project analysts: Emanuela Sirtori, Gelsomina Catalano and Rory Mc Monagle. A network of country experts provides the geographical coverage for the field analysis: Roland Blomeyer, Fernando Santos (Blomeyer and Sanz – Guadalajara), Andrea Moroni (CSIL – Milano), Antonis Moussios, Panos Liveris (Eurotec - Thessaloniki), Marta Sánchez-Borràs, Mateu Turró (CENIT – Barcelona), Ernestine Woelger (DKM – Dublin). The authors of this report are Roland Blomeyer, Fernando Santos and Antonio Sanz from Blomeyer & Sanz and Emanuela Sirtori from CSIL. The authors of the CBA Analysis are John Lawlor and Rory Mc Monagle from DKM Economic Consultants. The authors are grateful for the very helpful comments from the EC staff and particularly to Veronica Gaffey, José-Luís Calvo de Celis and Kai Stryczynski. They also express their gratitude to all stakeholders who agreed to respond to the team’s questions and contributed to the realisation of the case study. The authors are responsible for any remaining errors or omissions. Quotation is authorised as long as the source is acknowledged. Cover: Valorsul plant of urban solid waste treatment. Source: Valorsul.. TABLE OF CONTENTS EXECUTIVE SUMMARY ....................................................................................................................... 1 1 PROJECT DESCRIPTION ............................................................................................................... 7 1.1 KEY FEATURES OF THE INFRASTRUCTURE AND SERVICE DELIVERED............................................................... 7 1.2 TARGET POPULATION ...................................................................................................................... 11 1.3 SERVICE DELIVERY .......................................................................................................................... 14 1.4 CURRENT PERFORMANCE ................................................................................................................. 17 2 ORIGIN AND HISTORY ............................................................................................................... 23 2.1 CONTEXT AND LEGISLATIVE FRAMEWORK IN THE ENVIRONMENTAL SECTOR ................................................ 23 2.2 MSW TREATMENT PRIOR TO THE IMPLEMENTATION OF THE VALORSUL PROJECT ........................................ 27 2.3 ESTABLISHMENT OF VALORSUL AND PROJECT IMPLEMENTATION .............................................................. 29 2.4 SUBSEQUENT DEVELOPMENTS .......................................................................................................... 33 2.5 KEY STAKEHOLDERS AND MANAGEMENT STRUCTURES ............................................................................ 36 3 LONG-TERM DEVELOPMENT EFFECTS ........................................................................................ 39 3.1 KEY FINDINGS ................................................................................................................................ 39 3.2 DIRECT ECONOMIC GROWTH ............................................................................................................ 42 3.3 ENDOGENOUS DYNAMICS ................................................................................................................ 47 3.4 TERRITORIAL COHESION ................................................................................................................... 48 3.5 ENVIRONMENTAL EFFECTS ............................................................................................................... 48 3.6 INSTITUTIONAL QUALITY .................................................................................................................. 52 3.7 SOCIAL HAPPINESS .......................................................................................................................... 53 4 DETERMINANTS OF PROJECT OUTCOMES .................................................................................. 57 4.1 KEY FINDINGS ............................................................................................................................... 57 4.2 APPROPRIATENESS TO THE CONTEXT .................................................................................................. 58 4.3 PROJECT DESIGN ............................................................................................................................ 59 4.4 FORECASTING CAPACITY .................................................................................................................. 61 4.5 PROJECT GOVERNANCE .................................................................................................................... 62 4.6 MANAGERIAL RESPONSE .................................................................................................................. 64 4.7 THE ROLE OF THE EU INSTITUTIONS ................................................................................................... 65 5 CONCLUSIONS ........................................................................................................................... 67 ANNEX I. METHODOLOGY OF EVALUATION .................................................................................. 71 ANNEX II. COST-BENEFIT ANALYSIS ............................................................................................... 77 ANNEX III. LIST OF INTERVIEWEES ................................................................................................ 103 ANNEX IV. REFERENCES ............................................................................................................... 105 LIST OF ABBREVIATIONS AD Anaerobic Digestion CBA Cost-Benefit Analysis CF Cohesion Fund CH4 Methane CO2 Carbon Dioxide CSR Corporate Social Responsibility EBCR Economic Benefit-Cost ratio EC European Commission EDP Energias de Portugal EGF Empresa Geral de Fomento EIB European Investment Bank ENPV Economic Net Present Value ERDF European Regional Development Fund ERR Economic Rate of Return ERSAR Regulatory Authority for Water and Waste Services (Entidade Reguladora dos Serviços de Águas e Resíduos) EU European Union EUR Euro FBCR Financial Benefit-Cost ratio FNPV Financial Net Present Value FRR Financial Rate of Return GDP Gross Domestic Product GHG Greenhouse gases GWh Giga-Watt-hour IFDR Financial Institute for Regional Development (Instituto Financeiro para o Desenvolvimento Regional) INE National Institute of Statistics IRAR Regulatory Institute of water and waste IRR Internal Rate of Return ISO International Organization for Standardisation kg Kilogramme km Kilometre m Metre MBT Mechanical biological treatment MRF Materials Recovery Facility MSW Municipal Solid Waste MSW Municipal Solid Waste MW Mega-Watt MWh Mega-Watt-hour NGO Non-Governmental Organization NPV Net Present Value NUTS Nomenclature of Territorial Statistical Units NYMBY Not in my backyard OECD Organisation for Economic Co-operation and Development OHSAS Occupational Health and Safety Assessment Series PERSU National Strategic Plan for Municipal Solid Waste (Plan Estatal de Resíduos Sólidos Urbanos) S.A. Public Limited Company (Sociedade Anonima) t Tonnes Tj TeraJoules VAT Value Added Tax WtE Waste to Energy EXECUTIVE SUMMARY This case study analyses the development of the Integrated Waste Management System in the metropolitan area of Northern Lisbon, implemented by the public company Valorsul ( .). The report evaluates (ex-post) the long term performance of such a system. Further details on the methodology are described in the box below and, more extensively, in Annex I. OVERALL APPROACH AND METHODOLOGY The Conceptual Framework delivered in the First Intermediate Report has been developed from the evaluation questions included in the ToR3, and further specified and organised in accordance with the study team’s understanding. In particular, the Team identified three relevant dimensions of analysis: a) The object of the evaluation (the ‘WHAT’): this relates to the typologies of long‐term contributions that can be observed. Starting from the typologies identified in the ToR (socio‐economic development and quality of life) the Team developed the following classification of long‐term effects: ‘Economic development’ (including effects on GDP growth and endogenous dynamics)