The Effects of Subsidies on MSW Treatment Companies: Financial Performance and Policy Implications

Eleonora Santos,Inês Lisboa

doi:10.3390/su14053076

Abstract

Companies that provide public services usually receive subsidies from municipalities as compensation for replacing the latter in their functions as public service providers. However, the managers of those companies are not always interested in maintaining an economically sustainable company, as this implies turning off the tap on exploration subsidies. This article investigates the effect of subsidies on the financial performance of municipal solid waste collection and treatment companies for 2016–2020 and across NUTS II regions. The accounting data of 680 companies retrieved from the SABI database, make it possible to assess the economic sustainability of the companies through financial ratios and operational data. The results show that the financial structure and management of companies in the Centro, Lisbon, and the Azores allowed to take advantage of exploration subsidies to achieve economic sustainability. In the remaining regions these subsidies proved to be ineffective. These results have implications for managers and policy makers insofar as it sheds a light on the conditions under which subsidies contribute to the economical sustainability of companies in the sector.

Highlights

The growing trend of urbanization has contributed to an exponential growth in the generation of urban solid waste (MSW) [1]
Concerns about the economic, social and environmental impacts of waste generation must be integrated into waste management plans, which range from the initial stages of waste collection to the final phase of reducing the mass of solid waste, passing through the careful selection of waste disposal technology [5]
With regard to the remaining ratios that serve as a basis for evaluating corporate performance, we found that, in just over half of the cases, companies without subsidies present better financial performance than companies with subsidies, suggesting that companies with subsidies are not using them in the best way to improve their economic sustainability

Summary

Introduction

The growing trend of urbanization has contributed to an exponential growth in the generation of urban solid waste (MSW) [1]. The existence of different regulations and the increasing awareness of consumers regarding the ecological impacts of waste disposal in landfills have pushed the waste management industry towards a more sustainable approach [4]. In this context, strategies to ensure environmental sustainability include addressing the circularity of materials, minimizing waste. Concerns about the economic, social and environmental impacts of waste generation must be integrated into waste management plans, which range from the initial stages of waste collection to the final phase of reducing the mass of solid waste, passing through the careful selection of waste disposal technology [5].

Objectives

Methods

Results

Discussion

Conclusion