Task 1: Consider the following information for the Ivy Landfill under Rivanna Solid Waste Authority (RSWA) provided in the table below:

ITEM	UNIT	$-VALUE
Reserves	$	9.5 million
Interest Rate	% per year	3.5
Tipping Fee	$ per ton	39.92
Revenue from recycling	$	1,711.5
Operating expenditures	$ per ton	15.89
Capital costs	$	1,728.2
Other capital cost	$	856.5

1. Which of the items in the table represent revenue streams, variable costs, and fixed costs? Shortly explain your answer.

2. At what quantity of Municipal Solid Waste (MSW) would RSWA break even given that the current operation can only operate until 60,000 tons? Show your work. Specifically what is the break-even point and how can one identify it?

3. What happens to total cost, revenue, and break-even point if the operating expenditures increase by 20%? Shortly explain your answer. (Hints: You do not need to make an exact calculation, just state the direction of change for total cost, revenue and break-even point and provide a line of argument.)

Task 2: Sustainability of the Ivy Landfill

1. How do you assess the sustainability of the Ivy landfill related to each sustainability dimensions.(Hints: For each sustainability dimension, rate the state of sustainability as high or low (or anything in between) and provide a line of argument for your assessments.)

2. Compare Ivy's sustainability (your answers in 2A) with the sustainability of the regional commercial landfills. Are the privately owned regional landfills more sustainable? Please discuss.

3. Based on your break-even analysis and looking at your sustainability comparison, should the Ivy landfill be kept open for the disposal of municipal solid waste from Charlottesville and the surrounding county? Or should the authority get out of the business of solid waste disposal altogether? Shortly explain your answer.

THE IVY LANDFILL

GBB Solid Waste Management Consultants made their presentation to the Rivanna Solid Waste Authority (RSWA) in February 1997. Under consideration were a number of options for the Ivy Landfill near Charlottesville, Virginia. Should the landfill be kept open for the disposal of municipal solid waste from Charlottesville and the surrounding county? Or should the authority get out of the business of solid waste disposal altogether?

The Ivy Landfill was originally opened in the late 1960s as a temporary site, pending the establishment of a permanent landfill. When local authorities were unable to agree on a permanent site, however. The landfill became the established location for the disposal of trash from Charlottesville and the surrounding Albemarle County.

The Ivy Landfill accepted a number of different types of waste, including Municipal Solid Waste (MSW), Construction and Demolition Debris, Vegetative Waste, Compostable Waste, and Ash. Because Ivy was an old landfill, many of the cells were unlined, meaning that leachate ("garbage juice") could leak into the groundwater and the surrounding streams. In addition, lax monitoring in the early years of the landfill meant that toxic substances (paints, solvents, etc) had been dumped at the site. At least 120,000 gallons of hazardous waste were dumped into unlined cells between 1968 and 1980. The groundwater beneath the landfill was severely contaminated - sometimes to levels that were many thousands of times greater than the standards laid down by the Environment Protection Agency (EPA). Worse, the streams surrounding the landfill fed the South Fork Rivanna Reservoir, which was a source of drinking water for the citizens of Charlottesville. Currently, most of the contamination was restricted to the landfill site, and there was no immediate risk to Charlottesville's drinking water. But by 1997 there was some evidence of contamination just off the site as well.

In 1991, the EPA has issued new standards for the solid waste landfills, including double-lined cells and superior leachate collection systems. Upgrading existing landfills to meet these standards was expensive, requiring significant capital expenditures. Private corporations constructed a number of regional landfills, complying with the new standards, in the anticipation that they could capture the revenues from the waste streams that would become available when older landfills (such as Ivy) closed down. These regional operations were many times larger than the fill at Ivy, and were more efficient because the cost of running a large landfill is not very different from the cost of running a smaller one. In 1993, however, the Virginia legislature passed House Bill 1205, which exempted over 100 existing municipal landfills from the new Federal standards. Ivy, and many other Virginia landfills, continued in operation under the old standards.

The Rivanna Solid Waste Authority, which operated the Ivy Landfill, was formed in 1990 as a political subdivision of the State of Virginia. Its mandate was to handle solid waste disposal and recycling activities for Charlottesville and Albemarle county in the best interests of the city and county. The RSWA was therefore ultimately answerable to City and County officials. RSWA's revenues came almost entirely from landfill tipping fees - the fees paid by those who disposed of material at the landfill. In Charlottesville itself, the City collected household waste and disposed of it at the landfill. Households paid a fee by the bag for this service. Businesses in the city and the county typically had contracts with private haulers who transported their trash to the landfill. In Albemarle county, groups of residents likewise typically had contracts with the private haulers. The RSWA possessed no taxing powers and received no subsidies from the City or County. It received a small amount of revenue from the sale of recyclable materials collected in its recycling programs.

The profit from the landfill's operations was used to finance educational and recycling programs, and to finance capital expenditures, such as the construction of new solid waste cells. In addition, the RSWA needed funds for maintenance of waste cells that were currently closed or would be closed in the future. The contamination at the site meant that the RSWA would ultimately have to confront substantial remediation and clean-up costs at the site. The RSWA sought to maintain a post-closure fund of at least $7.5 million.

The contamination at the site had also led to substantial pressure for the closure of the landfill by residents of nearby farms and private homes. Partly in response to this pressure, a Citizens' Task Force had been appointed to consider the problems surrounding solid waste disposal in the region, and had made a number of recommendations in the fall of 1996. The Task Force advocated that any future cells built at Ivy should be "Subtitle D" cells that satisfied EPA recommendations. They also recommended that the RSWA pursue an aggressive recycling program to reduce the waste stream. They argued, however, that closure of the landfill to municipal solid waste would present financial problems for the Authority:

"The $38 tip fee for the Ivy Landfill covers not only the cost of land filling, but also the costs of monitoring, site improvements, gas and leachate collection, projected costs for closing the cell (capping, landscaping), remediation of problems in the future .... The actual cost of disposal at Ivy Landfill currently is about $20/ton. A loss of the remaining $18/ton would necessitate finding $2-3 million per year to cover the costs of current RSWA recycling efforts and post-closure activities."

As the Task Force noted, the tipping fee at the landfill for MSW currently stood at $38 per ton. In the past, the RSWA had shown a healthy operating profit. Recent months had brought bad news for the Authority, however. As a consequence of House Bill 1205, the regional commercial landfills had found themselves with considerable excess capacity, and were competing aggressively for business. Even though these landfills were located in other counties, a number of private trash haulers had found that the low tipping fees more than offset the extra cost of transporting waste. As a consequence, the MSW waste stream into the Ivy Landfill had fallen sharply. In 1996, about 110,000 tons of waste had come into the landfill, but in 1997, only 67,200 tons had arrived at the site. The fall was almost entirely due to a reduction in the waste stream from Albemarle County: the waste stream from the county fell by more than 50%, whereas the waste stream from Charlottesville fell only slightly. The University of Virginia, which had been sending about 4,000 tons annually to the landfill, had also started making use of other landfills.

Current projections suggested a total of about 64,600 tons of MSW would come to the Ivy Landfill in 1998, and 59,500 tons in 1999. Charlottesville and the surrounding area were undergoing sustained economic expansion, however, and so the region was expected to generate increasing quantities of waste. After 1999, therefore, the waste stream into the Ivy Landfill was expected to stabilise, and then to recommence growth in subsequent years.

There was of course uncertainty about the figure of 59,500 tons. It was possible that the waste stream would stabilise below that point, depending on the success of the RSWA's recycling efforts and also on the extent to which other landfills continued to capture the business from Ivy. Fortunately for the RSWA, it could at least be confident that it would continue to receive the household waste stream from the City of Charlottesville.