RESOURCE RECOVERY & REUSE SERIES 10 Testing the Implementation Potential of 10 Resource Recovery and Reuse Business Models FROM BASELINE SURVEYS TO FEASIBILITY STUDIES AND BUSINESS PLANS Miriam Otoo, Pay Drechsel, George Danso, Solomie Gebrezgabher, Krishna Rao and Ganesha Madurangi About the Resource Recovery and Reuse Series Resource Recovery and Reuse (RRR) is a subprogram of the CGIAR Research Program on Water, Land and Ecosystems (WLE) dedicated to applied research on the safe recovery of water, nutrients and energy from domestic and agro-industrial waste streams. This subprogram aims to create impact through different lines of action research, including (i) developing and testing scalable RRR business models, (ii) assessing and mitigating risks from RRR for public health and the environment, (iii) supporting public and private entities with innovative approaches for the safe reuse of wastewater and organic waste, and (iv) improving rural-urban linkages and resource allocations while minimizing the negative urban footprint on the peri-urban environment. This sub-program works closely with the World Health Organization (WHO), Food and Agriculture Organization of the United Nations (FAO), United Nations Environment Programme (UNEP), United Nations University (UNU), and many national and international partners across the globe. The RRR series of documents present summaries and reviews of the sub-program’s research and resulting application guidelines, targeting development experts and others in the research for development continuum. IN PARTNERSHIP WITH: Science with a human face RESOURCE RECOVERY & REUSE SERIES 10 Testing the Implementation Potential of Resource Recovery and Reuse Business Models FROM BASELINE SURVEYS TO FEASIBILITY STUDIES AND BUSINESS PLANS Miriam Otoo, Pay Drechsel, George Danso, Solomie Gebrezgabher, Krishna Rao and Ganesha Madurangi The authors Dr. Miriam Otoo is an international researcher and subtheme Otoo, M.; Drechsel, P.; Danso, G.; Gebrezgabher, S.; Rao, K.; leader for Resource Recovery, Water Quality and Health Madurangi, G. 2016. Testing the implementation potential of based at IWMI’s headquarters in Colombo, Sri Lanka. resource recovery and reuse business models: from baseline She is a trained agricultural economist, specializing in surveys to feasibility studies and business plans. Colombo, issues related to the economics of waste reuse, business Sri Lanka: International Water Management Institute (IWMI). model development in the waste reuse sector, business CGIAR Research Program on Water, Land and Ecosystems development and entrepreneurship, agricultural markets (WLE). 59p. (Resource Recovery and Reuse Series 10). doi: and productivity in developing countries. 10.5337/2016.206 Dr. Pay Drechsel is the principal researcher and theme / resource recovery / resource management / water reuse leader – Resource Recovery, Water Quality and Health. He is / business management / models / performance indexes / an environmental scientist and based at IWMI headquarters indicators / waste management / waste treatment / sanitation in Colombo, Sri Lanka. / subsidies / public sector / private sector / developing countries / economic analysis / investment / cost recovery Dr. George K. Danso is a resource economist with the / environmental impact assessment / public health / health Government of Alberta. His research focuses on the hazards / feasibility studies / decision making / socioeconomic application of economic instruments for achieving efficiency environment / risk analysis / legal aspects / institutions / and productivity in water use, safe resource recovery marketing policies / stakeholders / and reuse, regulatory impact analysis, strategic business development and food security, primarily using computable ISSN 2478-0510 general equilibrium modelling techniques, choice e-ISSN 2478-0529 experiments and microsimulation modelling. ISBN 978-92-9090-837-1 Dr. Solomie Gebrezgabher is an international researcher Copyright © 2016, CGIAR Research Program on Water, at IWMI’s regional West Africa office in Accra, Ghana. She Land and Ecosystems, International Water Management has an academic background in business economics Institute (IWMI). focusing on issues related to economic and environmental sustainability assessment and business model development Unless otherwise noted, you are free to copy, duplicate or in the waste reuse sector in developing countries. reproduce, and distribute, display, or transmit any part of this paper or portions thereof without permission, and to Mr. Krishna Rao is an international researcher based at make translations, adaptations or other derivative works IWMI’s headquarters in Colombo, Sri Lanka. His research under the following conditions: focuses on business model development in the waste reuse sector and enterprise development in developing countries. ATTRIBUTION. The work must be attributed but not in any way that suggests endorsement by WLE or the author(s). Ms. Ganesha Madurangi is a graduate student in economics at the University of Colombo, Sri Lanka. Her academic NON-COMMERCIAL. This work may not be used for background is in agricultural economics with a focus on commercial purposes. agricultural policies and agricultural markets in developing countries. SHARE ALIKE. If this work is altered, transformed, or built upon, the resulting work must be distributed only under the same or similar Creative Commons license to this one. Front cover photograph: Interviewing fecal sludge workers in Bangalore, India. Photo: Sharada Prasad CS on Flickr Editor: Robin Leslie Designer: Michael Dougherty ii Acknowledgements The authors would like to thank the following partners for their contribution towards the research conducted in relation to this publication: Dr. Mirko Winkler of the Swiss Tropical and Public Health Institute, Department of Epidemiology and Public Health, University of Basel, Switzerland; Mr. Lars Schoebitz of the Department of Sanitation, Water and Solid Waste for Development (SANDEC) of the Swiss Federal Institute of Aquatic Science and Technology (EAWAG), Switzerland; Dr. Luca Di Mario of the University of Cambridge, UK; Ms. Alexandra Evans of Loughborough University, UK; and Dr. Avinandan Taron of the Tata Institute of Social Sciences, India. Project This research study was initiated as part of the project entitled Resource recovery and reuse: From research to implementation. The methodology presented was tested and refined in a project supported by the Swiss Agency for Development and Cooperation (SDC), the International Fund for Agricultural Development (IFAD), and the CGIAR Research Program on Water, Land and Ecosystems (WLE). Donors This research study was funded by the following: Swiss Agency for Development and Cooperation Swiss Agency for Development (SDC) as part of its and Cooperation (SDC) Global Programme State Secretariat for Economic Aairs (SECO) Water Initiatives International Fund for Agricultural Development (IFAD) as part of its research program on water and rural development. iii CONTENTS List of Tables ...................................................................................................................................................vi List of Figures ................................................................................................................................................vii List of Boxes ..................................................................................................................................................vii Acronyms and Abbreviations ......................................................................................................................viii Summary .........................................................................................................................................................ix 1 Introduction .................................................................................................................................................1 2 Business Models for Resource Recovery and Reuse ..............................................................................1 2.1 The Business Model Concept ................................................................................................................1 2.2 Business Model Categorization .............................................................................................................2 3 Conceptual Framework for Analyzing the Implementation Potential of RRR Business Models ..........3 3.1 Prefeasibility Phase – Baseline Survey ...................................................................................................4 3.1.1 Objective ....................................................................................................................................4 3.1.2 Methods .....................................................................................................................................5 3.1.3 Anticipated Outputs ....................................................................................................................6 3.2 Feasibility Studies for Business Model Implementation...........................................................................6 3.2.1 Objective ....................................................................................................................................6 3.2.2 Methods .....................................................................................................................................7