the price of carbon credit and the discount factor,
since there is limited data, a triangular distribution was assumed.
5 Results
5.1 Results of Environmental
Assessment
The overall GHG emissions from composting
and transporting of 470 ton/day of MSW in 45
decentralized compost plants are shown in
Fig. 5. GHG emissions from transporting and
dumping MSW are negative, representing GHG
emission savings from the decentralized composting business model. The savings are mainly
from avoided dumping of MSW. Under the
decentralized composting scenario, the highest
GHG impact is from the process of composting
MSW. Other processes such as transport of
inorganic fraction to dumpsite and compost to
end users did not contribute significantly to the
total environmental impacts of the compost
business.
5.2 Results of Economic Assessment
The total quantity of compost produced from 45
small scale compost plants is 24,030 ton/year
(Table 5). The total investment cost is USD 5.09
million. Assuming a discount rate of 12% and
useful life of 15 years, the business model
resulted in a mean NPV of USD 4.38 million and
ROI of 29% and BCR of 1.96 indicating that the
business model is financially viable. Moving
from the financial results to including the environmental impacts, the incremental benefit from
carbon credit increases NPV by 30%.
5.3 Simulation Results
Simulation results provide the expected values
for each of the valuation criteria, estimates of the
criteria variability and the probability of economic success. The risk analysis showed a mean
NPV of USD 4.32 million with variability from
USD −14.86 million to USD 22.27 million (90%
confidence interval) when only direct benefits
and costs are taken into account (Table 6). The
mean BCR is 2.91 but could be as high as 14
under an optimistic scenario and as low as −7
under a pessimistic scenario. When environmental benefits and costs were taken into
account, the business model performed better and
resulted in a mean NPV of USD 6.36 million and
a BCR of 3.26. The risk analysis showed that the
most important variable with a significant effect
on NPV values is the price of compost followed
by the production cost and investment cost.
The simulation model provides a clear understanding of the variability and the probability
distribution of the valuation criterion. Figure 6
shows the probability density function of NPVs
when direct and indirect benefits and costs are
taken into account. The probability of a negative
NPV when only direct benefits and costs are
taken into account is 33% and this decreases to
(44)
(0.34)
15
0.08
0.04
(50)
(40)
(30)
(20)
(10)
-
10
20
MSW open
dumping
MSW
transportation
Composting MSW Trnasportation of
inorganic
Transportation of
compost
GHG emissions (1000 ton CO2eq/year)
Fig. 5 GHG emissions and
saving from decentralized
compost business model
34
S. Gebrezgabher et al.
since there is limited data, a triangular distribution was assumed.
5 Results
5.1 Results of Environmental
Assessment
The overall GHG emissions from composting
and transporting of 470 ton/day of MSW in 45
decentralized compost plants are shown in
Fig. 5. GHG emissions from transporting and
dumping MSW are negative, representing GHG
emission savings from the decentralized composting business model. The savings are mainly
from avoided dumping of MSW. Under the
decentralized composting scenario, the highest
GHG impact is from the process of composting
MSW. Other processes such as transport of
inorganic fraction to dumpsite and compost to
end users did not contribute significantly to the
total environmental impacts of the compost
business.
5.2 Results of Economic Assessment
The total quantity of compost produced from 45
small scale compost plants is 24,030 ton/year
(Table 5). The total investment cost is USD 5.09
million. Assuming a discount rate of 12% and
useful life of 15 years, the business model
resulted in a mean NPV of USD 4.38 million and
ROI of 29% and BCR of 1.96 indicating that the
business model is financially viable. Moving
from the financial results to including the environmental impacts, the incremental benefit from
carbon credit increases NPV by 30%.
5.3 Simulation Results
Simulation results provide the expected values
for each of the valuation criteria, estimates of the
criteria variability and the probability of economic success. The risk analysis showed a mean
NPV of USD 4.32 million with variability from
USD −14.86 million to USD 22.27 million (90%
confidence interval) when only direct benefits
and costs are taken into account (Table 6). The
mean BCR is 2.91 but could be as high as 14
under an optimistic scenario and as low as −7
under a pessimistic scenario. When environmental benefits and costs were taken into
account, the business model performed better and
resulted in a mean NPV of USD 6.36 million and
a BCR of 3.26. The risk analysis showed that the
most important variable with a significant effect
on NPV values is the price of compost followed
by the production cost and investment cost.
The simulation model provides a clear understanding of the variability and the probability
distribution of the valuation criterion. Figure 6
shows the probability density function of NPVs
when direct and indirect benefits and costs are
taken into account. The probability of a negative
NPV when only direct benefits and costs are
taken into account is 33% and this decreases to
(44)
(0.34)
15
0.08
0.04
(50)
(40)
(30)
(20)
(10)
-
10
20
MSW open
dumping
MSW
transportation
Composting MSW Trnasportation of
inorganic
Transportation of
compost
GHG emissions (1000 ton CO2eq/year)
Fig. 5 GHG emissions and
saving from decentralized
compost business model
34
S. Gebrezgabher et al.