Value Dynamics

At its core, the dynamics of value creation, addition, capturing, realizing and transferring, articulate a narrative where waste is managed either to prevent value losses or to generate economic, environmental, and societal benefits.

Value Creation

Value creation in waste management encompasses the comprehensive benefits derived from effectively managing waste, which include risk control and resource recovery. The net value generated by a waste management strategy is a function of the economic advantage achieved after deducting all pertinent costs from the combined revenues of waste management services and the sale of resources recovered from waste. Costs represent the resources involved in executing a strategy, while revenues indicate the total value of the outcomes achieved.

Net Value Creation = (Waste Management Value + Recovered Resources Value) - Input Value

• Net Value Creation → Represents the overall value created by a waste management strategy. It's the economic benefit realized after accounting for all associated costs.
• Waste Management Value → Value created through services that mitigate waste risks that could harm the environment, people or economic resources.
• Recovered Resources Value → Value created in the form of materials or energy recovered from waste.
• Input Value → The value of all costs associated with implementing and operating the waste management strategy. These include operational, capital, maintenance, and any other relevant expenses.

While value creation measures the extent to which a strategy enhances societal or market value, this measurement reflects the aggregate benefit and does not necessarily indicate the value as perceived by the strategy's provider. Value creation quantifies the total added value, but it does not attribute this value to any particular entity or stakeholder.

Value Addition

In waste management, a prevalent assumption is that as waste has the potential to be transformed into resources, then waste must be considered a resource in itself. This perspective, however, overlooks a critical aspect: waste has an intrinsic negative value, not because it has no potential, but because risks outweigh it. In addition, its transformation is the mechanism by which value is added, not extracted. While it is true that waste can indeed be transformed into something of value, such value does not inherently reside in waste itself, but is created through the processes and efforts that transform it.

Present Value + Added Value = Final Value

• Present value: the immediate, practical utility of something. In the case of waste, its effective value is negative.
• Added value: the value incorporated to waste through transformation processes. It involves the efforts, technology, and investment required to turn waste into something useful.
• Final value: this is the value of the outputs that result from transforming waste, represented by the market prices of the resources that could result from such processes.

In light of this, it becomes clear that waste itself is not inherently valuable. In its raw form, waste is a liability, having a negative value due to the costs and risks associated with its management. However, with the right processes, technology, and human input, waste can be transformed into valuable resources. This transformation is where the real value lies. Waste management should therefore focus on the elements that enable the creation of value from waste, such as people, technology, infrastructure, and capital, and not treat waste as the valuable element per se.

Value Capturing

Value capturing in waste management delineates an organization's capability to secure a portion of the created value. While value creation involves generating goods or services that are worth more than their input costs, providing tangible benefits to customers, value capturing focuses on the retention of a portion of this created value.

There are two scenarios where value is not effectively captured: one, where value is simply not created, making capture impossible; and two, where value is created but then transferred to another entity without being captured by the provider.

1. Exclusive Risk Control. These strategies deliver a single value proposition centered around minimizing risks for waste generators, primarily driven by compliance needs. Value capture in this context is largely through service fees from generators. The pricing strategy ensures the service's economic justification, yet it's constrained by the competitive alternatives available.
2. Recovery Inclusion. These strategies extend a dual value proposition, combining risk control for waste generators with recovery for producers. Captured value is significantly influenced by whether these recovery activities are recognized as part of waste management services within legal and regulatory frameworks. Entities primarily focused on selling recovered resources find their value capture potential limited if their activities are not acknowledged as contributing to risk control.

Value Transactions

Goods and services differ in how they store and transfer economic value. Goods are items, whether physical or digital, that individuals or entities can purchase and own, with their value embedded in their functionality. Services are actions or activities provided by one party to another, valued for the beneficial outcomes they produce rather than ownership. In waste management, this distinction underlines the difference between its services:

• The value in waste management services comes from the benefits of preventing harm and maintaining safety. Clients pay for a guarantee of safety assurance rather than for a physical item. There may be a certificate or legal documentation, but the value is not in the item but in the conditions of the service.
• The value in recovery is in the tangible resources obtained from adding value to waste—materials or energy that have utility and can be owned. Here, the transaction involves transferring ownership of these resources to the buyer, who then can benefit from their use. Goods, unlike services, are their own value vessels.

These definitions are crucial for understanding the economic transactions within waste management, as they clarify the mechanism by which value is provided to clients in each case: either the compliance that waste management provides or the physical commodities produced by recovery.

Impacts & Effects

Value realization in waste management is a critical phase where the potential benefits of waste management strategies or the detriments due to risks are concretely experienced. The key distinction lies in the orientation of value realization: production seeks to actively create and capitalize on opportunities for positive value, while risk management aims to nullify or minimize potential negatives. This phase marks the transition from theoretical or projected outcomes to tangible impacts, highlighting the effectiveness of waste management practices.

Impact Type	Benefit	Harm
Projection	Potential	Risks
Value Chain Objective	Maximization	Minimization
Value Flow	From goods and services to consumers	Net loss from people and the environment
Description	When benefits are realized by consumers, value is subtracted from goods, or perceived after services are provided. The lives of consumers are positively impacted through the extracted value.	When harm is materialized by people or the environment, value is subtracted from them, as their lives or the environment’s properties are deteriorated or negatively impacted.

The realization of created value within waste management services can be encapsulated by examining how different stakeholders experience the benefits of risk control and recovery:

1. Risk control services provide value primarily to waste generators by ensuring compliance with regulatory standards and internal policies. The realization of this value comes through the achievement of safety standards and the avoidance of legal or financial penalties. This stems from the avoided harms to people and the environment.
2. The value in recovery is embedded within the resources themselves, transformed from waste into usable materials or energy. This value is ultimately realized by end-users or consumers of the products or services that incorporate these recovered resources.