Public Private Partnerships in the Dutch waste management sector : changes in waste governance in the transition towards a circular economy

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Master Thesis Political Science

International Relations

Transnational Politics of Sustainable Development

Public Private Partnerships in the Dutch Waste

Management Sector

Changes in Waste Governance in the Transition Towards a

Circular Economy

June 24th 2016

University of Amsterdam P.L. van Dongen LL.M Student number: 10102752 First Reader: Dr. L.W. Fransen Second Reader: Dr. R.J. Pistorius

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Abbreviations

BRBS ‘Branche Vereniging Breken en Sorteren’ (Association for

separating and sorting)

EC European Commission

EWH European Waste Hierarchy

EU European Union

FHG ‘Federatie voor Herwinning Grondstoffen’ (Federation for

the recovery of resources)

IenM Ministry of Infrastructure and Environment

MS Member State (of the European Union)

NVRD ‘Koninklijke Vereniging voor Afval- en

Reinigingsmanagement’ (Royal association for waste and purification management)

PPP Public Private Partnership

PPPP Public Private Policy Partnership

TNO ‘Nederlandse Organisatie voor

Toegepast-Natuurwetenschappelijk Onderzoek’ (Netherlands Organisation for Applied Scientific Research)

VA ‘Vereniging van Afvalbedrijven’ (Dutch Association of

Waste Management Actors)

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1. Introduction

Waste has for long been seen as rubbish, causing pollution and damage to society without any further value attached (Agwuoke 2013, p. 3). In Europa, the European Union (EU), started to change this with the introduction of its

first waste legislation in 1975.1_{This eventually has to transform waste from an}

environmental burden into a profitable and exploitable resource. From this moment on, waste management became a priority of the EU’s environmental policies and also part of a broader transformation from a linear into a circular economy (EC 2005a; EC 2005b). At the same time, the amount of waste continued to rise and the handling and processing of waste became increasingly complex (Hultman & Corvellec 2012, p. 2413; Zamen & Lehmann 2011, pp. 74-75). As a consequence of the EU’s legal structure, each individual Member State (MS) is responsible for the successful implementation of the EU’s environmental policies. However, this happens within a certain room of discretion on the instruments and domestic policies that are used.

It can be argued that a MS’ inability to properly manage waste and transform it into resources can be seen as a state’s failure to govern the efficient use of materials (Choongh & Grekos 2006, p. 463). When waste was solely seen as a burden, handling waste and all underlying policies were a public task. There was almost no private or commercial interest in waste. However, following the growing amount of waste regulations and prohibitions this interest started to awake. This had as a consequence that the private sector is increasingly involved in waste governance and as such is developing in the position to complement the government in executing its public responsibilities (Barkin 2015, pp. 130-135).

1

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In this research, it will be studied how this involvement leads to public private partnerships (PPPs). More specifically, it will be studied how this instrument is used in The Netherlands in redefining the role of waste in the transition towards the circular economy. Here after, the question to what extent this increasing involvement will also allow private waste management to effectuate changes in the way waste governance is organised will be answered. This will be done through a study on the roles and development of both the public and private sector.

It will turn out that both the public and private actors share an understanding on the role of waste in the circular economy (Chapter 7.1 – Analysis I). However, it will also become clear that the both actors seek to achieve different interests through the PPPs (Chapter 7.2 – Analysis II). The private sector plays an increasingly important role in terms of both knowledge providing and executive capacity. Besides that, the industry has an important role in waste innovations (Chapter 8.1 – Analysis III). However, the possibility and willingness to use these capacities is to a great extent connected to market interests and competition. Therefore, the sector pleas for both a national and European level playing field. While the public sector’s capability to design and execute programmes without involving the private sector is at the same time decreasing (Chapters 8.1 and 8.2 – Analysis III and IV). As the partnerships between the public and private sector become increasingly important, the government moves towards a more facilitative role. While this role will give the private sector an increasing amount of room to manoeuvre, waste governance will continue to retain a strict political connotation that will demand a role for the public sector. However, the role of the market is growing and of great significance for the pace of the circular transition (Chapter 8.3 – Analysis V).

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Prior to these analysis the first part of this research will be used to give an overview of the theoretical framework underneath the functioning and interests underneath PPPs (Chapters 2 to 5) and to explore the general developments within waste management (Chapter 6).

2. Research Framework

2.1. Waste in the Circular Economy

This Chapter will be used as a first exploration of the field on governance and the interplay between public and private actors. Besides that, it will be used to define some key concepts of this research. Thereafter, the research and underlying sub-questions will be introduced.

According to the EU, the main goal of its waste policies and regulations is to make the EU’s economy ‘circular’. This means that all resources that go into the economy will remain as long as possible inside it (EC 2016a). This is the opposite of a linear economy, in which products and resources follow ‘a path’ of different stages without the possibility to return to a previous stage. Therefore, waste needs to become something that has to be ‘managed’ (Hultman & Corvellec 2012, pp. 2414-2415). This has as a consequence that ‘waste’ will eventually cease to be waste and become a ‘secondary raw material’ (EC 2016b). Although there are clear indicators that the definition of waste and the underlying industry are in transition, the circle is not closed yet. Waste as an environmental problem is seen as a negative external effect of business and household activities. As it is traditionally the task of the government to keep society clean and to prevent risks for public health, proper waste management is part of the provision of collective goods (Hultman & Corvellec 2012, p. 2413; Zaman & Lehmann 2011, pp. 74-75; Steurer 2013, p. 5).

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Within this research, the private actors that will be studied operate in the waste management industry. These are the actors that are able to close the circle and make the economy circular (VA 2012, p. 3; EC 2012, pp. 15-16). These actors are referred to when a reference to ‘waste management actors’ or ‘the industry’ is made. The central government as legislator and the municipalities are to be seen as the ‘public side’ or ‘public actors’.

2.2. Waste has to be Governed

While the establishment of a circular economy is the EC’ goal and the transition of waste into a resource an important element of this process, this does not give a specific direction to how this process is ‘governed’. In other words, it does not say anything about the broader process of steering and regulation, nor on who should govern which elements of this process (Steurer 2013, p. 1).

In this context, governance is seen as both a structure and a process. As a structure it points at ‘institutions and actor constellation’, or the systems used in policymaking and the actors involved. While the process addresses the coordination in which these actors engage in governing. This leads to the question ‘what’ is governed. The process of governance sees on the ‘social coordination’ of producing and implementing binding rules on society and on the provision of collective goods (Börzel & Risse 2010, p. 114). This second form of governance, as a process, will be studied in this research. Governance is then part of the broader question on how actors embed their interests within the waste industry. Besides that, it is connected with how the roles and interests of these actors change.

An important aspect of the cooperation between the actors is that ‘the economics of waste have changed’. Where companies had to pay to get rid of its waste, they can now sometimes sell waste (EC 2005b, p. 6). However, transforming the policies into practice requires ‘adequate investment from

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public and private sources’ at the same time (EC 2014, p. 64). Therefore, a fundamental question of governance is how actors handle new issues or developments that might cause tension between the different interests during this transformation.

The question is then how the input of other actors impacts governance. The influence of other actors can result in a ‘governance turn’ in which non-State actors emerge as co-providers of collective goods (Risse 2013, p. 426). This means that public actors are no longer able to steer society and the processes inside society ‘top-down’ in a system where these actors have ‘command and control’. In other words, the public actors will start to lack authority and expertise to decide on how collective goods are provided. This will result in ‘new forms of governance’ (Börzel & Risse 2010, p. 113). This gives other actors, of which the most important for this research are ‘market-based’ ones, the opportunity to get involved in the provision of collective goods (Börzel & Risse 2010, p. 115). Therefore, the interests of these actors also become part of this once top-down steered domain.

At the same time, public and private actors are increasingly seeking possibilities to cooperate or to intensify already existing joint-efforts. In their attempt to work together, the actors in a PPP “seek to meet the objective of each while, hopefully, performing better than each one acting alone.” (Linder & Rosenau 2000, pp. 5-6). A successful partnership will thus result in a combination of interests while it also increases the effect of each individual interest. When a partnership results in a broader strategic and policy framework, this will be seen as a PPP. Others coin this a PPPP, or Public Private Policy Partnership (Rosenau 2000). For the purpose of this research, the term partnership will be used flexibly and see on the role of interests pursued through partnerships.

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2.3. Societal and Academic Relevance

While a lot has been written on the functioning of partnerships, there has been less research on how the different interests of all the actors are embedded inside the PPPs and on how these interests are developing over time. A further study on this is interaction is needed in order to get a better understanding on how an actor’s specific interests can influence governance structures.

On the ‘private side’ of the waste management industry, actors are most often argued to ‘externalize’ environmental costs (Princen 2001). Or, in the wording of a respondent inside the sector in a Swedish research project, ‘it will never happen’ that big waste-management companies invest in decreasing the amount of waste (Hultman & Corvellec 2012, p. 2419). On the other hand, it is, according to the chairman of the Dutch Waste Association, important to look for the combination between profit and sustainability (VA 2016, p. 2). This is an on-going debate and therefore a reason to do further research on the role of private actors and the question whether this role is changing the governance of waste.

Secondly, the connection of PPPs with broader questions on governance is not often made. Research on this connection is needed to explore current trends in the implementation of European governance within all the individual MSs. This question is connected to a broader study on governance and the role of the private sector in governing public affairs.

Lastly, from a societal perspective, this study is needed to research the developments within the waste industry more specifically. Since waste stands at the end of the linear economy, waste management is fundamental in bending the linear economy into a circular economy. Therefore, this study will help to understand why certain changes are made.

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2.4. Research Question

The focus of this research will be on how the involvement of private actors in partnerships with the government affects the governance of waste. Private interests seem not directly coherent with the interests of the government. This can have consequences for the organisation and effectuation of waste governance. While the EU, through its MSs, at the same time tries to design waste governance in such a way that waste will eventually cease to exist (TNO 2013; VANG 2014). Therefore this research will be used to answer the following question:

“How does the involvement of private waste management actors in public private partnerships effectuate changes in waste governance in the transition to a circular economy?”

This question will be answered through the following sub-questions in the empirical part of this research. These sub-questions are divided into two parts. The first part sees primarily on the concept of waste and the interests the different actors seek to achieve through its involvement in waste management. This part is of a more observing nature. The second part will be used to research how this takes place in current practice and how the field

is developing towards its end-goal: the circular economy.

First of all, it has to become clear how the different actors see the process of redefining waste within the current transition. This overview is needed to get a grip on the broader framework in which the waste-PPPs function (Chapter 7.1 – Analysis I). The second question that will be studied sees on what the involved actors pursue as their own interests within the PPPs. This will be used to map the different interests a partnership needs to comprise (Chapter 7.2 – Analysis II).

In the second part, the third question will be used to take a look at who of the stakeholders takes a leading role in the cooperation and whether this first move is also a consequence of a specific interest of this stakeholder

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(Chapter 8.1 – Analysis III). This is followed by an analysis on how both the public and private actors perceive the role of the other actor during the transition (Chapter 8.2 – Analysis IV). The last question will address how the stakeholders themselves see governance develop. This sub-question will be used to look into the question whether what is perceived as ‘public’ can transit into a ‘private responsibility’ (Chapter 8.3 – Analysis V).

The sub-question combined will answer the research question of this study on the role of private actors in the development in the governance of the waste industry. Besides that, it will allow to make a contribution to the broader research on the functioning of PPP and the general theory on possible changes in the role of the government in facilitating collective goods. Chapter 4 will be used to explain how this will be done, however, prior to that the next Chapter will be used to elaborate more extensively on the theoretical framework.

3. Theoretical Framework

3.1. Governance and Governance Turns

The previous Chapter briefly mentioned how new forms of governance can change the role of the government. A State can loose its monopoly, authority, or leading role as governing actor (Cutler 2002, p. 23; Barkin 2015, p. 135). This will then have impact on how public interests are represented and achieved (Börzel & Risse 2010, p. 113; Linder & Rosenau 2000, pp. 2-3; Risse 2013, p. 426).

Scholars observe these changes in particular when actors can gain economic benefits from regulatory standards (Risse 2013, p. 441). Due to the big amount of public goods that have to be provided, the government can no longer be in control of providing all these goods. This has as a consequence that choices on how the budgets are spent have to be made

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(Stiglitz & Wallsten 1999, p. 52; Kamieniecki et al. 2000, p. 113). This forces the government to move from ‘inputs’ to ‘outcomes’. Meaning that the public actors can still lay down what has to happen (‘the outcome)’, but becomes limited in putting its own resources (‘the input’) towards achieving it (Daniels & Trebilcock 2000, p. 98).

However, this will have as an effect that new interests are brought into the domain that was governed top-down before. Thereafter, a ‘hybrid that is neither fully private nor fully public’ can be constituted (Sassen 2002, p. 91). The private agendas of these actors become present ‘inside’ the public domain (idem, pp. 91-92). Once these agendas are brought inside, they become also part of the negotiation on how the collective goods are provided (idem, p. 93).

The interaction between the public actors and the now included private commercial actors will change (Gulbrandsen 2014, p. 74). When different types of actors become active in governing elements of public life, this will eventually result in the fragmentation and diversification of governance. The question is what this means for the direction in which a certain policy field is moving, and how or whether the State can still steer this field into a certain direction (Steurer 2013, p. 16; Hanegraaff 2015, p. 83).

3.2. ‘The Shadow of Hierarchy’ and ‘The Logic of Consequences’

As effect of these changes, there is a broader set of actors that bear responsibility for the provision of public goods. These actors are however not ‘in the same business’ as States (Ruggie 2004, pp. 500-501). The arguments that will follow are based on rational choice theory. This theoretical angle is chosen on the basis of the assumption that the interests of the private sector are in its core centred on the goal to remain profitable. Therefore it is assumed that all forms of cooperation and partnership will be accepted or

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rejected depended on how the involved private actor out of self-interest believes that its business can at a minimum be continued, but preferably be expanded (Snidal 2013, pp. 87-90).

The private actors are assumed to stand in ‘a shadow of hierarchy’. This shadow “generates important incentives for cooperation for non-state actors.” (Börzel & Risse 2010, pp. 113-114). The negotiations between the public and private side will therefore take place underneath ‘the Damocles sword’ in the form of binding legislation that can force actors to act in coherence with the State’s desired outcomes (Schmitter & Streeck 1985, p. 131; Biersteker & Hall 2002, p. 213).

This contradicts with how private actors are argued to prefer forms of self-regulation to state regulation. This will grant them more flexibility and influence in pursuing its interest in profit maximization and the opening of new markets (Daniels & Trebilcock 2000, p. 98; Reijniers 1994, p. 137). Therefore, the level of investment is also connected to the possible returns (Stiglitz & Wallsten 1999, p. 53; Rosenau 2000, p. 219; Mazzucato 2015, p. 41). Developments and investments are from this point of view part of the ‘market strategy’ of these actors. Where ‘[i]t is human nature (…) to seek to increase demand for whatever one is providing.” (Linder & Rosenau 2000, p. 5). Therefore, it is also possible to see a partnership with public actors as a cooperation ‘without a sense of obligation or duty’ (Cutler 2002, p. 27).

At the same time, the shadow “reduces the incentive for actors to renege on their voluntary commitment.” (Börzel & Risse 2010, p. 116). Opportunistic behaviour of the non-State actors can be constrained when the outcomes of the negotiations are balanced with what the government regards as ‘the common good’. When the State is well able to effectuate top-down governance and control, there is a strong shadow of hierarchy. Non-State actors are then expected to have a strong incentive to cooperate with

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public actors. Since this gives them a better opportunity to steer the outcomes of the negotiations in beneficiary.

On the public side, the incentive to cooperate with the private sector is likely to occur especially when the government is less able to set standards. States are in general assumed to seek to increase its ‘problem-solving capacity’. Therefore, the loss of governance authority has to come at the benefit of the ability to solve societal problems (idem, p. 117). It is likely that the ‘cooperation curve’ will intersect somewhere in the middle. This will enable non-State actors to complement the problem-solving capacity of the public actors. While these actors will also be able to pursue its own private interests.

It can be said that while private actors can fulfil public tasks both more effectively and with better quality, they also remain on a leash. However, it is also evident that States need non-State actors to solve societal problems. Especially when top-down governance turns out to be, or become, insufficient. ‘The logic of consequences’ offers a theoretical outcome to this synthesis. It is assumed that the private actors, once involved, can manoeuvre its own underlying interests within its task to help the public sector gain problem-solving capacity (Börzel & Risse 2010, pp. 115-116). This logic is a consequence of the assumption that as a result of the interaction between actors with different interests, the outcome will constitute a solution that contains as much of the interests as possible (Hahn & Stavins 1991, p. 5).

When an actor is unable to include its own interests within a cooperation, this actor is not expected to be part of the outcome at all (March & Olson 1998, p. 956). Once fully agreed upon the mode of governance, a PPP can become ‘self-enforcing’. Meaning that governmental involvement will be very limited or absent (Schäferhoff et al. 2009, p. 457; Andonova 2006, p. 1). This has to be seen as the outcome of the shadow of

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hierarchy. The next Chapter will be used to describe what the consequences of the shadow of hierarchy can mean for public private partnerships.

3.3. The Purposes of a Partnership

Besides the focus on how governments try to expand its problem-solving capacity, it can also be observed that the ‘ideologies of governance’ have moved from the State as a planner, into the direction of the State as a facilitator empowering markets (Linder & Rosenau 2000, p. 1). This facilitative task falls in line with the movement from the State towards a more outcome-oriented role.

This has as a consequence that non-State actors become part of the “centers of social, economic, and political activity.” (Cooley 2010, p. 240). The central concepts underneath this ideology of governance are, efficiency and effectiveness, but also rational decision-making (Kamieniecki et al. 2000, p. 113). The increasingly complex nature of societal problems and the methods needed to solve them open the door for specialised actors (Linder & Rosenau 2000, p. 10). By stimulating private investments in specialised industries, the quality can be increased while the costs on the public side are lowered simultaneously (Linder 2000, pp. 19-20; Linder & Rosenau 2000, pp. 96-97). Research suggests public savings between 30 and 50 per cent when public private constructions are used (Rosenau 2000. p. 220).

By empowering market actors and by giving them incentives to take a share in providing public goods, the door is also opened for competition between private actors. As a consequence there is an increased amount of choice that is argued to stimulate innovation (Linder & Rosenau 2000, p. 4; Daniels & Trebilcock 2000, p. 98). Besides that, environmental risks no longer come only at responsibility of the State (Rosenau 2000, p. 219). Therefore, a partnership will not only be established to share goals, but also to share

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responsibilities (Schäferhoff et al. 2009, p. 453). This shows how different interests can be combined in a partnership.

The establishment of a PPP can, from a public perspective, be seen as a vehicle to achieve different goals. All these interests will have different effects in terms of governance. While different purposes can be distinguished, this will be brought back to two different possibilities in this research (Linder 2000, pp. 25-32).

First of all, a partnership can be a tool to achieve management reforms. By including private actors and its business characteristics inside the public domain, the public sector can try to ‘become more entrepreneurial and flexible’. Through the pressure of competition, new innovations can be instigated and the government can become more creative in its own problem-solving capacity. A PPP is in this case used to learn from the private sector (Linder 2000, pp. 26-27).

A second possibility can be found in the use of a partnership to convert a problem from a public one into a private one. Or ‘to commercialize a problem to bait the marketplace’ in order “to perform government’s tasks for less money.” (idem, p. 27). The public sector is then not looking for its own reform, but is reconstituting the nature of a problem. One of the consequences of this commercialization is that solving the problem will occur in less transparent ways (idem, pp. 27-28; Rosenau 2000, p. 219). This can also implicate the possibility to distinguish how short-term and long-term interests influence the private actor’s methods. A lack of transparency might have negative consequences for the problem-solving of the public actor (Reijniers 1994, p. 138). At the same time, only a part of the risks is shifted to the market. Since the purpose of the partnership will keep its public nature, while the used resources become mixed (Linder 2000, p. 30).

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In theory it remains possible to reconsider the governance turn from input to outcome at all times (Biersteker & Hall 2000, p. 213). However, all types of partnership that include a form of responsibility, risk, or knowledge sharing result de facto in a situation of power sharing that can alter public-private relationships (Ghere 1996, pp. 599-600). In other words, once a partnership it established, it cannot easily be withdrawn or made undone.

At the private side partnerships are not just seen as a learning school for the government. Neither does the sector lend itself as an instance that simply seeks to complement the public side through its own strengths. Therefore, one can ask with what purpose a partnership exists when the government fulfils a public policy function better ‘in terms of lower costs and improved quality’. At the same time, “[w]hen the private sector yields better quality at lower costs without untoward externalities, this should be the preferred organizational form.” (Rosenau 2000, p. 219).

This can lead to the situation in which there is little ‘close cooperation’ between the public and private actors, while they remain important for each other. An example is the health sector, where partnerships to a great extent mean that the government pays and monitors, while the private actors provide health care (idem, p. 219). Through this type of partnership, the private sector can continue to develop itself as long as the public sector does not intervene. Which will not happen as long as the public actors remain satisfied. This has as a consequence that while it would seem that the different interests of the public and private actors would cause tension this does not necessarily have to be the case within the partnership.

The empirical part of this research will be used to further look into how the different interests of the actors can be combined. Besides that, it will also be used to research how new issues emerge within a partnership are dealt with in order to avoid tensions. However, prior to the empirical Chapter of

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this research there will first be a theoretical assessment of the research question. In order to make this more effective the next Chapter will first be used to elaborate on the methodological basis of this study.

4. Methodology

4.1. Research Elements

The focus of this research lies on the role of private waste management actors and its ability to effectuate changes in waste governance. This makes this study relevant in terms of the possibility of private actors to combine its interests with public interests. The findings of this research can be used to contribute to the broader theory on PPPs and governance. This makes the general group of private actors the unit of analysis, while this group as a whole is part of the broader population of all different sort of PPPs. The EU waste management industry will function as the case within this broader framework of actors and partnerships.

However, this research sees specifically on the Dutch waste industry as part of the EU’s broader ambitions. There is a lot of difference between each MS with regard to domestic policies and means of implementation of EU waste law (EC 2015a). As not all MSs can be covered in this research, the focus lies on the Netherlands. This makes the Dutch situation the single case that will be studied within the broader case. A single case study allows for observing a complex causal relationship into detail (Gerring 2001, p. 215; Landmann 2008, p. 90).

This does not mean that the findings of a single case study can directly be generalized into theory (Landmann 2008, p. 87). The Dutch case is chosen based on the argument that it can be seen as a crucial case for European waste management and the future thereof (Gerring 2001, pp. 219-220).

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First of all, the Dutch sector recycled 78% of its total waste, while 19% was burnt and 3% was landfilled in 2010 (Rijkswaterstaat 2013, p. 35). As landfilling waste is the ‘least preferred option for dealing with waste’, the EU as a whole still landfilled 29% of its waste in 2012, making the Netherlands rank second (EC 2015b, p. 28). Besides that, the Netherlands ranks fourth in recycling its household waste, which includes waste from small businesses and institutions (idem, p. 29). In other words, other MSs can use the Dutch situation and its underlying policies to increase its own position and recycling rate. Therefore, an in-depth analysis of the causal mechanisms inside the Dutch waste-management sector can be used as an example for other MSs and to steer the EU as a whole further into the direction that was chosen in the 1970s.

Within the Dutch-case there are different stakeholders inside the PPPs that can be seen as cases-within the case (Vennesson 2008). Since the actions of these stakeholders will eventually result in causal and constitute relations and thus in the establishment or absence of a partnership (idem, p. 224). These links are then used to make inferences on the theoretical assumptions on the changes in governance.

4.2. Research Objects

The actors that will be studied are divided over the public and private sector. On the public side, the most relevant actor is the Dutch ministerial department of Infrastructure and the Environment (‘Ministerie van Infrastructuur en Milieu’ (IenM)). This ministry is responsible for “improving quality of life, access and mobility in a clean, safe and sustainable

environment.”2_{This also means that the Ministry is responsible for most of}

the general policy decisions with regard to waste management.

2

See the website of the Ministery through: https://www.government.nl/ministries/ministry-of-infrastructure-and-the-environment (accessed 26-05-16).

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On the side of the private waste management actors, a broader group is targeted. First of all, the actors handling waste themselves. In this group data is collected through a relatively big and a relatively small actor. The big actor, the Van Gansewinkel Group is with 4.352 one of the biggest waste

employers and a market leader in the Benelux.3_{The role of smaller actors in}

the sector will be studied by looking at Renes, a family business with a total

of 45 employees.4_{While both companies are in the same business, its}

structures and capabilities are different. Both perspectives have to be taken in to account in order to get a representative view of the sector.

Besides that, the role of the sector will be analysed through its two biggest branch and advocacy networks. On the one hand the Dutch Waste Association (‘Vereniging van Afvalbedrijven’ (VA)), who represents the Dutch

and international interests of more than 50 waste management actors.5_On

the other hand the Royal Dutch NVRD (‘Koninklijke Verenging voor Afval- en Reinigingsmanagement’ (NVRD)). This association is “the largest national waste management association of the Netherlands (…) [and] unites municipalities responsible for waste management and management of the public space, and the municipal waste management companies in the

Netherlands.”6

The third group of studied actors stands a little further from the heath.

As consultancy firms EY7_{and PwC}8_{advise both the public and the private}

actors in finding, developing, analysing, and implementing business cases. As such, these firms have a broad view of the market and the developments

3

See the Van Gansewinkel Group’s website through:

https://www.vangansewinkel.nl/groep/over-ons/organisatie (accessed 26-05-16).

4

See Renes’ website on more company specifics through: https://www.renes.nl/over/ (accessed 26-05-16).

5

See the website of the VA through: http://www.wastematters.eu/about-dwma.html (accessed 26-05-16).

6

See the website of the NVRD through: http://www.nvrd.nl/english (accessed 26-05-16).

7

Visit the website of EY through: http://www.ey.com/GL/en/Home (accessed 26-05-16).

8

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therein. Next to these consultancies, a third advocate is found in De Groene Zaak. This is a Dutch based ‘sustainable business association’, representing over 200 different companies that seek to transform “our current economic

order to a sustainable and circular one as fast as possible.”9_{While De Groene}

Zaak is currently not representing any of the waste management actors, it poses a clear insight in the development of business cases and the role of the government in the current transition.

4.3. Generalizability

In terms of generalizability, the Dutch case can be used by other MSs to adapt its own policies on the connection between public and private actors. When it turns out that the different stakeholders inside the studied case are able to craft well functioning partnerships, this can be beneficial for other States as well. The same logic can be applied with regard to the broader theory on governance. This research gives an insight in how the public and private interests that are pursued can effectuate changes in waste governance. Therefore, the presence of these interests says something about possible governance turns into the direction of ‘governance without government’. However, it has to be taken into account that the given explanations are to be seen in the light of the waste-PPPs and thus cannot be fully detached from this case (Beach & Pedersen 2013, p. 13).

4.4. Methods and Research Process

This single case study offers the possibility to study how different causal mechanisms function inside waste-PPPs. This will be done by using process tracing techniques. These are designed to study the relevant and verifiable links between causes and subsequent effects. By tracing the processes underneath PPPs it can be observed how the actors and their underlying

9

Visit the website of De Groene Zaak through: http://degroenezaak.com/about-us/ (accessed 26-05-16).

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interests interact (George & Bennett 2005, p. 206). Or, in a more abstract wording, how does the presence and involvement of Actor X (public or private actor) contribute to Y (the form of waste governance) as an outcome? Therefore, empirical section of this study has to be seen as a ‘case-centric’ form of process tracing (Beach & Pedersen 2013, p. 12). This allows tracing case-specific data on the actions of the involved actors in order to build a better explanation of what happens in the field. The nature of the research will be inductive in the form of a ‘bottom-up type of analysis’ (idem, pp. 19-20). This makes that the empirical findings stand loose from the contemporary theory. The findings can then be used to contribute to the further development of theory on PPPs and governance in which the case

specifics can be better integrated(George & Bennett 2005, p. 206).

The analysis of the partnership types and governance perspectives will be done through the EAR-instrument (Arts & Verschuren 1999). This instrument is based on three different pillars. The first one is the ‘ego-perception’ (E). This perception and additional analysis is based on how the involved actors themselves see its influence in the establishment of a partnership. While the ‘alter-perception’ (A), as second pillar, is used to look at how this actor perceives the role of the other actors involved in the process. The third pillar is the terrain of the researcher, who does a ‘validity check’ and weighs the perspectives of both the ego- and alter-perceptions (idem, pp. 416-417).

4.5. Data Gathering, Validity and Reliability

The involved actors own perception is the most real when asked directly. Therefore, the first two pillars of the EAR-instrument will be to a great extent based on data gathered through semi-structured interviews with all the actors that have been mentioned in Chapter 4.2 (see also Appendix A). The purpose is to unravel what the actors are currently doing and why they are

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doing this, while also leaving enough room for the interviewee to tell their own story. It can turn out that the interviewed actors will overestimate its role in the process, or that particular interests are presented as more important than other ones. Therefore, their answers will be checked with what can be found in the available documents and by comparing the answers with the answers of the other interviewees. All interviews have been conducted in Dutch, therefore, all quotes are translation of the author.

Out of the need to triangulate, both the Ego- and Alter-perception will also be reconstructed through a policy document analysis. In analysing these documents the focus will be on how the cooperation is crafted and defined. However, policy is something different than reality. That a government seeks to achieve something does not automatically mean that 1) it can be achieved, and 2) that it can be done in the way they want to do it. Therefore these policy documents also have to be supported by other public documents and/or the interviews. The used policy and strategic exist of different publications of the organisations of the interviewed actors. Amongst these publications are year- and strategic reports, but also more explanatory documents on developments in the industry. These documents are complemented by the agreements and deals that have been made between the actors. Besides this, the evaluations of the Dutch National Waste Management Plan (‘Landelijk Afvalbeheerplan’ (LAP)) have been used. With regard to the EU, a combination of legal and explanatory documents has been used (see Bibliography). All the used policy documents are written in Dutch, therefore, all quotes are translation of the author.

The reliability of this research lies in the ability to allow other researchers to get the same results. As the interviews have been guided by a prepared list of questions everybody is able to interview the interviewees. Everybody can also get access to the public documents. The information that

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is taken out of these documents and the interviews, however, depends on what a researcher deems important and is therefore a personal choice and an interpretation. Personal bias has to be prevented by working in a structured way in which as much as possible interests and actions are identified and categorised per analysis and sub-question.

5. When Theory meets Practice

Before Chapters 7 and 8 will be used to give an in-depth analysis of the function and developments in waste management, this Chapter will be used to link the discussed theory with the empirics. Because of the inductive nature of this research, this Chapter is written after the data has been collected. The purpose is to pave the way for broader conclusions of this research (Chapter 9). The inductive design allows introducing these observations independently from what might be expected on the basis of the theory that has been discussed so far.

The empirics make clear that all involved actors share the understanding of the changing role of waste. Besides the understanding, the actors also share the belief that the transition from a linear to a circular economy is a shared undertaking (Analysis I – Chapter 7.1). This already indicates that the role of the State as provider of collective goods is changing. Instead there is an observable trend towards the creation of what can be seen as a hybrid. Following the theoretical framework, this will have as a consequence that the interests of the private actors will also become more important in the decision-making process and thus the development of waste governance.

This development is connected to rational choice and therefore ‘the shadow of hierarchy’ and ‘the logic of consequences’. The private sector argues that the start of its involvement is connected to the development of a

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legal framework that prohibited certain practices – like landfilling and straightforward incineration. These prohibitions are an example of how the government, steered by the EU, imposed top-down governance. By demanding certain standards, the market got encouraged to get involved in the market. Before that happened, the sector argues that there was simply no real interest. Therefore, the strength of the shadow is of relevance for the involvement of private actors (Analysis I – Chapter 7.1 and Analysis II – Chapter 7.2).

At the same time, following the logic of consequences, the private sector puts a lot of effort in requiring expert knowledge. This has as a consequence that the sector claims a certain role. This role is also recognised by the government. First of all, the private sector is increasingly used to complement the knowledge of public actors. This results in a more ‘open communication’ with the government (Analysis III – Chapter 8.1). Secondly, legal documents recognize the role of the industry in the development of knowledge and innovation (Analysis IV – Chapter 8.2). Therefore, the private actors slowly grow into the role of not only executive actors, but also in the role of policy advisors. As such, its influence is growing on two sides of waste governance.

Besides this, the government indicates that the governmental capacity to design extensive programmes is lacking. Next to that, there is a limited capacity to execute what has been designed, due to a decreasing amount of human resources, budgetary constrains, and political will. Therefore, the government shifts its focus to steering processes and the identification of chances (Analysis IV – Chapter 8.2). This is in line with the theoretical move away from ‘input’ to ‘outcomes’.

This strengthens the position of the private sector in the negotiations in the shadow of hierarchy. Besides that, it indicates that its gained influence

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is not only temporarily given but is part of a turn in governance. The different and over time demarcated tasks make a return to the old situation practically impossible. Therefore, the empirics do not point at the establishment of partnerships with as purpose to eventually reclaim the authority. The theoretical approach of partnerships as part of a management reform seems implausible for this case.

While the current developments do not limit the ability of the government to regulate, it will in terms of knowledge become more dependent on the private sector. However, the specialised knowledge of these actors cannot be delinked from the interests connected to the possession of this knowledge. Following the ‘logic of consequences’, the willingness to invest and innovate is by all private actors connected to market demands. Secondly, to the companies’ own financial position, and lastly to the possibility to compete with others on sustainability within an equal market. The private side is in general, while recognizing the importance, not directly balancing the societal interests against its financial position. Therefore, market mechanisms and strategies are connected to the possibility to make use of the available knowledge (Analysis II – Chapter 7.2).

This makes that the sector’s plea for more and stricter European regulation has to be seen in the light of the sector’s position within the negotiations. The actors see these regulations as a prerequisite for the successful transition of the sector towards the circular economy. These regulations have to see especially on the creation of a level playing field to stimulate market competition. Therefore, the presence of these regulations form an important part of the existence of incentives to work towards achieving the shared goal. This is motivated by the argument that flexible or multi-interpretable regulations will result in the distortion of the market. As such, the threat of stricter regulations is thus no reason for the private sector

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to cooperate with the government. The opposite seems to be the case, as long as the sector is able to secure its competitive interests it pleas for even more and stricter regulations. This is also the reason why the sector will not agree on stricter regulations that only target the Dutch sector. The sector wishes to see the Netherlands as a frontrunner, but only as far as European legislation goes (Analysis IV – Chapter 8.2).

The observed developments give an indication on the purpose of the partnerships in waste management. The government sees itself develop as a more facilitative guardian of the sector. This implies that the partnerships are not designed in order to become more entrepreneurial and flexible as an organisation. This also makes clear that the government takes a positive stance on the changes in waste governance. This – new – facilitative role of the government includes a positive stance on agreements that can function independently of governmental interference. Both the government and the industry look favourable upon such agreements and expect that the use of these constructions will increase (Analysis V – Chapter 8.3). The successful establishment of partnerships will then allow the government to use its resources in other fields – such as climate governance and the protection of biodiversity.

Following this line of developments, the actual processing of waste and transformation into a resource, is less seen as a governmental responsibility. However, the physical collection of waste an important task. This does not mean that the market is not involved in this process. Private market actors are also able to execute this task increasingly efficient. But, a ‘political duty of care’ limits an absolute shift from the public to the private sphere (Analysis IV – Chapter 8.2). This duty stands loose from the market incentives and strategies that have been discussed this far. This has as a

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consequence that a complete shift from ‘governance by government’ towards ‘governance without government’ seems like a bridge too far.

However, also this more ‘political side’ of waste management is changing. As a consequence of the innovation in recycling capacity more waste streams become profitable. Where first only materials as glass, textile, and paper had positive business cases, this list is growing. Nevertheless, municipalities often keep these positive waste streams within own hands in order to compensate for the negative streams. Here the same argument and logic as in the early stages of the entire waste sector applies: no private involvement without a positive business case (Analysis V – Chapter 8.3). Therefore, it can be expected that once the total sum of waste becomes positive, there will be more private interests and subsequent involvement. These waste streams will be seen as beneficial resources rather then ‘problems’. This will then mean that within the legal structures that enable this positive business, political responsibilities will also be embedded. The role of the government can then move further towards supervision. The private actors on the other hand will continue to compete with each other on price, efficiency, and effectivity.

These roles, interests, and initiatives taken together make it seem like partnerships function in order to reconstruct the nature of the problem. However, the transition of the linear economy towards a circular one has also to be seen as a transition from waste as a problem towards waste as a resource. In other words, the transition is meant to convert a problem into a solution. This is in particular illustrated by how local governments wish to keep the initiative as long as there are still negative waste streams.

Therefore, the possibility of private waste management actors to effectuate changes in waste governance is linked to on the one hand its willingness to innovate. While this willingness is at the same time directly

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linked to both market mechanisms and the possibility to draft mutual beneficial agreements with the government that can include as much waste streams as possible.

The case specific conditions that can hinder and stimulate this process will be studied in the analysis. Prior to that, the next Chapter will be used to give a short overview of both the European and Dutch legal situations that lies underneath waste management.

6. Waste in its Political Context

6.1. Waste Management in the European Union

While this study contains a single case study of the Dutch waste-management sector, it is important to know how the Dutch situation is connected to a wider EU policy framework. This Chapter will be used to place the actions, interests, and developments of the public and private actors within a factual context.

The EU’s initial waste policy had its focus on specific environmental risks and slowly moved towards a broader framework. The EU’s policies are designed to keep the planet within its ‘ecological limits’ through sustainable resource management, innovation, and the circular economy (EC 2014, p. 13). This started between 1970 and 1980 by targeting waste problems that directly threatened human health and the environment. Three Directives that were made in this period stand still at the basis of the EU’s current policy.

These are the Waste Framework Directive10_{, the Hazardous Waste Directive}11_,

and lastly the Shipment Waste Regulation12_{. The first versions of these}

Directives did not specify any ‘environmental emission parameters’. Therefore, landfilling and the straightforward incineration of waste remained 10 Directive 75/442/EEC. 11 Directive 78/319/EEC. 12 Regulation (EEC) 259/93.

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the main method (EC 2005b, p. 8). From 1996 onwards, permit systems to

tackle pollution13_{, and to limit landfilling}14_{and incineration}15_{were introduced.}

Besides that, there is a broad set of Directives that focus on specific ‘waste

streams’ – like PCBs16_{and electric and electronic equipment}17_.18

While this legal overview has no direct consequences for the private actors within this research, it does affect the public actors. These Directives are important tools that have to be implemented (EC 2005b, p. 10). These standards are designed to reduce the environmental impacts of waste and have thus also consequences for the private sector. Implementation of the policies and subsequent Directives and Regulations is the ‘top priority’ of the whole framework (EC 2014, p. 53)

All policies fit inside the European Waste Hierarchy (EWH) as a long-term strategy. By constantly revising the Waste Framework Directive and by designing Environmental Actions Plans the EU aims “to achieve much higher levels of recycling and to minimise the extraction of additional natural resources.” (EC 2010, p. 2; EC 2014). This aim fits inside a hierarchy in the form of a reversed pyramid. In this pyramid (fig. 1), disposal stands at the bottom and prevention at the top. The goal is to move from the disposal of waste (red) into the direction of prevention (green). The width of the stages of the pyramid shows the relative amount of waste that has to be placed within each stage.

13

Directive on Integrated Pollution Prevention and Control, Directive 96/61/EC.

14

Landfill Directive, Directive 99/31/EC.

15

Waste Incineration Directive, Directive 2000/76/EC.

16

Directive 96/59/EC.

17

Directive 2002/95EC.

18

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Fig. (1). The EU Waste Hierarchy (EWH). The goal is to fully move from disposal towards

prevention. This makes the other processes in between interim solution (EC 2010, p. 5).

The EC is clear about the need to tap ‘into the full potential of existing environmental technology’ to end the negative effects of waste on society. Besides that, the need to ensure ‘the continuous development and uptake by industry of the best available techniques and emerging innovations’ is also recognised (EC 2014, p. 18). It is the responsibility of each individual MS to design its domestic structure to implement these policies and regulations (EC 2012, p. 7, 68-70). However, the MSs also need to raise enough investments in order to continue to innovate (EC 2014, pp. 64-65). Therefore, the EU is seeking to establish ‘public private initiatives for eco-innovation’ within the MSs (EC 2014, p. 66). The next Chapter will be used to place the Dutch situation and its underlying policies and initiatives in context in order to effectuate the EU’s ambitions.

Prevention

Preparing for re-use

Recycling

Other recovery

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6.2. Waste Management in the Netherlands

The Netherlands is, together with Austria, Belgium, and Germany, a frontrunner in the useful application and recycling of waste (CE Delft 2014, p. 50). Currently, the LAP is the leading legal document on waste management. This document is to a great extend written to guide the implementation of EU policy and legislation (IenM 2014b, pp. 16; 22-24).

The LAP is broad in its scope and provides central, provincial, and municipal governments with a framework for waste prevention and collection (idem, p. 26). This framework is built around a waste hierarchy that is a little more specific than the European one. This is done to make a further distinction between incineration and landfilling as means to dispose waste – with incineration as the lesser of two evils. The hierarchy functions as ‘point of reference’ when issuing permits (IenM 2014b, pp. 52-53). This means that businesses can be compared and compete in the light of the hierarchy.

Another fundamental part of the context in which the Dutch actors have to operare is the ‘chain approach’ of the government. This means that the goal is to limit the environmental impact of products as early in the product chain as possible. In other words, the end-of-waste status, where waste will be disposed, has to be as small as possible (IenM 2014b, pp. 67-68). Leading to an absolute limitation of the amount of waste, and its impact in all stages of the product chain (idem, p. 91).

Besides that, there has been a decoupling between waste and economic growth in the Netherlands in 2000 (idem, p. 126). Therefore, the government and the sector need to work on initiatives that will be economical beneficial, while at the same time limiting the amount of waste. This goal can also be found in specific agreements between the waste sector and the public sector. These will be further discussed in the analyses. The common denominator of all these programmes is that they are used to make

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the EU’s policies operative (IenM & VA 2015, p. 1). Therefore, all Dutch policies can be traced back to the broader European strategies.

7. Analysis Part I: Concepts and Interests

7.1. Analysis I – How is Waste Perceived?

The background Chapter on the development of waste regulations can be used to get a better understanding of the context in which waste as a concept is developing. Throughout the analysis of this Chapter it will become clear that both the public and private actors agree on how the concept of waste is changing. This does have as a consequence that both actors can also cooperate on the further development of the field. However, it has to be kept in mind that waste as a concept is something different than waste as part of a business interest – to which Analysis II (Chapter 7.2) will be devoted.

7.1.1. Waste Becomes a Resource

The current understanding of waste is rooted in the assumption that waste is no longer only an environmental problem, but also ‘a resource to be exploited’. First, waste was placed on top of the list negativities that had ‘to be strictly controlled and disposed of as cheaply as possible’. Nowadays the negative effects of waste follow behind the risks of climate change and the loss of biodiversity (EC 2005b, p. 6). According to the VA this is also seen in the Netherlands. Until approximately 25 years ago, waste was collected and processed for the lowest cost possible (Interview VA; Interview PwC).

This paradigm is changing into the direction that waste becomes a resource, instead of a burden (TNO 2013, p. 64; IenM 2014b, p. 9). The government is supported in this attempt by the industry. The chairman of the VA, declares that “[w]aste has changed from a problem into a part of the solution in a short period of time.” Recognizing that rethinking waste is a

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fundamental aspect of not only the circular economy, but also of resource and climate policies (VA 2016, p. 5). Therefore, the organisation argues against attempts to process waste at the lowest costs when these measures will negatively affect the environment (VA 2007, p. 3; VA 2010, p. 1). Also the smaller actors in the industry believe that this paradigm shift has to be used to make a ‘statement’ within the market and the industry in general (Interview Renes).

Waste is thus more seen as a resource and part of policies and initiatives on product design and product handling (EC 2005b, p. 19). Or, in the wording of the VA, ‘waste has to be seen explicitly as a resource’ (VA 2011, p. 4). The association even wants to change the dictionary: “The year 2020. The word ‘waste’ is old-fashioned. A dictionary provides as a synonym: ‘raw material’.” (idem, p. 24). Van Gansewinkel argues that the sector is crucial for the transition towards the circular economy (in VA 2012, p. 4). Also the NVRD is convinced that the future of the sector depends on the increasing value of waste (NVRD 2011, p. 4). However, the sector also needs to ‘learn’ how to position itself within this market (VA 2011, p. 25).

This has as a consequence that the industry will have to make new and different decisions. In other words, the actors need to change its business models. They also will have to invest in order to ‘transform’ its core business from ‘waste’ into ‘resources’ (Van Gansewinkel 2014, p. 8; 10). This transformation is broadly visible within the sector. According to interviewed employee of Van Gansewinkel, the circular economy is already embedded inside the core business of the company. As the company tries “to close the loop every time, for every waste stream.” (Interview Van Gansewinkel).

7.1.2. A Shared Burden

Also Renes sees itself transform from a waste management actor into a resource provider. However, the presence of specialist partners throughout

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the production chain is a prerequisite, “whether these are active in the paper, plastic, or lumber industry.” (Interview Renes). This does not automatically mean that the willingness of the waste industry also guarantees the success of the transition. The following statement of the interviewed Van Gansewinkel-employee is clear in that regard:

“You can see that many companies have limited interests in recycling. Why? Because of the nugatory value of raw materials. The oil price stands low. So, it is beneficial to create new plastic out of oil. While we want that recycled materials are being used. But this is costly. So you will see a turn when the oil price rises again. (…) We try to keep the circular economy running, but are undermined in the process. (…) Recycled materials are good, but they have a price tag.”

This is also recognized by the NVRD, which argues that the success of the circular economy depends on ‘the oil price, scarcity of resources, and the growth of the world population’ (Interview NVRD).

This means that the transition of the waste market is not entirely within the hands of the waste sector. It cannot be seen in isolation from product and resource policy (EC 2005b, p. 20). This is motivated by the thought that all ‘chains’ of a products lifecycle are connected to each other. Only then, it is believed that it is possible to climb the waste hierarchy and to close product cycles (VA 2010, p. 4). According to the VA, this transition process will take more than one decade. In the words of the VA interviewee:

“We actually stand at the beginning. What we have already done in the Netherlands can be seen as a huge accomplishment. By moving from a landfilling-society (…) into a recycling society. (…) But we are not a circular economy. You will only establish a circular economy once you take measures in the beginning of the circle. Where the producing companies stand.” (Interview VA).

As it seems that both the public and private actors agree on the new role of waste, the VA pleas to recognize waste management as an industrial sector (VA 2010, p. 1, 4; VA 2011, p. 3). While waste was first primarily a burden and a treat to society, it is now seen as an important secondary raw