the WTP for a principal SWM service ranges between 1-3% of household income, while the WTP for an SWM service improvement ranges between 0.1-0.9% of household income.

# **3. The Context**

# 3.1 SWM Service in China

Along with fast economic development, the quantity of municipal solid waste generation is increasing rapidly in China. With an annual average increase rate of 3.7%, the per capital municipal solid waste generation<sup>8</sup> in China has reached 1 kilogram per day per person in 2002 (Huang et al., 2006). World Bank (2005) indicates that China has surpassed the U.S. in 2004 and became the world’s largest municipal solid waste (MSW) generator. In 2004, the urban areas of China generated about 190 million tons of MSW. Considering China’s relatively low level of per capita GDP and that over 56% of population still live in rural areas, the projected future MSW generation in 2030 for this country will be up to 480 million tons (World Bank, 2005). No country has ever experienced such a large and rapid increase in waste generation.

Along with the rapid increase in municipal solid waste generation is significant improvement in the waste management sector in China. The treatment and disposal of municipal solid waste was only started in the 1980s. By 1990, the total disposal rate of municipal solid waste was lower than 2%, but the quantity of disposed municipal solid waste has increased continuously since then. In 2007, the ratio of the disposed municipal solid waste reached 62% of the total quantity collected and transported.<sup>9</sup> Landfill is the main disposal method for municipal solid waste in China; in 2007, over 80% of the disposed municipal solid waste was land filled, about 15% was incinerated, and about 2.6% was composted (China Statistic Yearbook, 2008).

Even though the pace of China’s solid waste management improvement is significant, China has been unable to keep up with the growing demand for waste service coverage, the environmental requirement for safe disposal systems, and the rationalization of costeffectiveness in service delivery (World Bank, 2005). Most of its landfill sites do not satisfy the national pollution control standard (Huang et al., 2006). There is also obvious regional disparity in municipal solid waste treatment capacities. The municipal solid waste disposal ratio varies significantly between the well-developed eastern coastal provinces, such as Beijing (95.73%), Jiangsu (86.7%) and Zhejiang (87.4%), and those less developed areas located in the inland, such as Heilongjiang (22.97%) and Gansu (26.32%).<sup>10</sup> There are even more difficulties in providing residential solid waste management service in rural areas in China. Ye and Qin (2008) indicate that ―the majority of local authorities at the township and the village level fail to provide the (solid waste treatment) services for their constituencies‖, and this is ―particularly true after the rural tax reform, which resulted in all rural direct taxes and fees being removed in the early 2000s to lower tax burdens on farmers.‖ They estimated that in 2005 alone, 280 million tons of garbage was produced in rural China,

> 8 Most Chinese municipal solid waste generation data is presented in three categories; municipal, industrial, and hazardous waste. ―Municipal waste‖ usually includes residential, institutional, commercial, street cleaning, and non-process waste from industries. In some cases, construction and demolition waste is also included and can dramatically skew the generation rate, especially in times of high economic growth and related construction activity. (World Bank 2005)

> 9 China’s official statistics only account the collected and transported municipal solid waste, but not the total quantity generated. Clearly some municipal solid waste are not collected and transported, therefore are missing from this statistical indicator. (Huang et al., 2006).

> 10 The data are calculated by the authors according to the statistics available in China Statistic Yearbook, 2008.

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