Financial Comparison of Incineration and Landfill Projects in Canada

How everyday generated waste is managed has become a crucial part of municipal management. In many parts of the world, waste generation is reaching unprecedented levels as population and urbanization increases. How to manage municipal solid waste is even more of a problem in a country like Canada which ranks second in per capita waste generation, only behind the United States. Residual municipal solid waste mostly goes either directly to landfill or to the incineration plant. These waste management practices have generated debates from various perspectives. Most available literature scrutinize the competing waste management practices from economic, sustainability, and environmental perspectives. This thesis aims to compare these competing waste management practices in Canada as business from the perspective of a private investor. It employs a cash-based benefit-cost analysis to analyze the financial return to the owner. It also analyzes the projects from the perspective of the bank that will be approached for an investment loan. The landfill project returned an NPV of C$ 23.62 million to the project owner while the incineration project resulted in a negative NPV, causing a loss of C$141.1 million below the prevailing 8% discount rate. Also, with the banker’s analysis of both projects, the bank will be reluctant to give a loan to the incineration project due to the negative NPV return and inability to repay its debt unlike the landfill project. Keywords: financial analysis, waste management, landfill, incineration