Advance the 'circular economy' to save teachers’ jobs from the waste bin

Waste is cost. It’s resources that should have been used but weren’t. That concept is at the heart of the “Circular Economy” at its most broad definition, which my firm Spring Lane Capital embraces; that across energy, food, water and waste, smart companies and communities look to reduce their waste by turning their waste products into something valuable.

Right now, the COVID-19 crisis is hitting state budgets hard. As a result, many states and municipalities are having to make tough cuts to infrastructure repair, education, and other vital services.

Educators have warned that 275,000 teachers’ jobs might be cut across the U.S. Moody’s has warned that state and local governments might total 4 million job cuts when all is said and done. New York state has said that it may have to cut $8 billion in aid to local governments. More than 700 cities have shelved plans for spending on repairs and critical infrastructure.

However, prioritizing the Circular Economy can help right now.

All cities and states provide resource services: They promise to provide residents with drinking water, with waste services, and with reliable energy, among other such services. But their ability to fulfill those promises is under threat by these reduced tax revenues in a COVID economy. And yet, they can’t put a halt to clean drinking water, or hauling away trash. So they’re looking to reduce costs wherever else they can, resulting in painful cuts to education budgets and other vital human services.

It doesn’t have to be this way. Instead, many local government leaders are discovering that there’s a new crop of upstart Circular Economy service providers who can help lower their spending while still providing those resource services. Service providers often base their offerings on localized infrastructure; for example, distributed industrial wastewater treatment, rather than a new municipal wastewater treatment plant.

Service providers utilizing circular economy solutions, such as composting organic waste rather than landfilling it. And providers who offer to save the local government’s dollars from day one, by using their own projects and third-party capital to offer these services.

This avoids the city or state having to build the projects themselves, which would require a big capital outlay at a time when such dollars are scarce, or issuing bonds when their ratings are already under pressure.

There are two ways that these service providers can help. One way is simply replacing infrastructure capital expenditures with circular economy services. Instead of building out new drinking water treatment and distribution capacity, for example, it can be more cost-effective to incentivize local food and beverage processing facilities to sign long-term service contracts with providers of solutions for treating, re-using and recycling their wastewater onsite. The industrial customer is also happy, because it saves them money at the same time.

The other way is to engage these Circular Economy service providers directly, to provide circular economy services that would otherwise become budget-cut victims. New York City, for instance, decided to suspend their curbside compost collections because of COVID-affected budgets. But meanwhile other towns like Durham, NC and Indian River, FL are finding that outsourcing their composting programs to providers like Atlas Organics (a Spring Lane Capital portfolio company) can help them preserve those programs while saving money.

Localized Circular Economy, sustainable solutions can help keep state and local government budgets sustainable. Through better use of their wastewater and trash, cities can prevent having to send vital human services programs to the dustbin.

Right now is a valuable time for such local government leaders to look into such cost-saving opportunities, either as direct customers themselves, or by providing incentives for their local businesses to adopt these services.