This study examines the domestic solid waste management system in the LATAM region, using the city of Guayaquil in Ecuador as a case study. Through the life cycle assessment (LCA) methodology, the study compares domestic and external recycling processes, evaluating their effects on global warming potential, fossil resource scarcity, and terrestrial ecotoxicity. The results reveal that increasing recycling rates significantly reduces environmental impacts, with domestic recycling offering slightly higher environmental benefits than external options. A demographic analysis using machine learning techniques identifies distinct patterns of waste generation across different population clusters, highlighting the need for tailored waste management strategies. The study also emphasizes the importance of accurate local data and the integration of recycling initiatives with market realities, particularly in the light of policies mandating recycled content in products like PET bottles. A sensitivity analysis of the waste recovery indicator (WRI) demonstrates the potential for substantial environmental and economic benefits with higher recycling rates. The findings suggest that, to advance towards a circular economy, Latin American cities like Guayaquil must enhance their recycling infrastructure, refine waste management policies, and focus on demographic-specific strategies. This research contributes to the broader understanding of sustainable waste management in developing regions, offering insights for future policy and infrastructure development.