Cash for Trash: Can Urban India Monetise Waste for Sustainable Development?

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India’s plastic pollution crisis has reached alarming proportions, with the nation contributing 9.3 million tonnes of plastic waste annually—20 percent of the global total. This deluge of waste not only clogs landfills and oceans but also directly undermines global Sustainable Development Goals (SDGs), threatening marine biodiversity (SDG 14), worsening climate change (SDG 13), and jeopardising public health (SDG 3). Rapid urbanisation and consumption patterns have transformed cities such as Mumbai, Delhi, and Bengaluru into epicentres of this crisis, where crumbling waste infrastructure struggles to keep pace with escalating demand. 

At the heart of the solution lie market-based mechanisms—innovative models that align economic incentives with ecological responsibility. From blended finance mobilising private capital for waste-to-energy plants in Pune to Meghalaya’s tourist-centric Deposit Refund Systems (DRS), these approaches leverage market forces to bridge funding gaps, incentivise recycling, and hold producers accountable. By transitioning to a circular economy, cities can transform plastic waste from a liability into a resource, advancing SDG 11 (Sustainable Cities) and SDG 12 (Responsible Consumption). 

Blended finance, green bonds, Extended Producer Responsibility (EPR), Pay-As-You-Throw (PAYT), and Deposit Refund Systems (DRS)—these approaches leverage market forces to bridge funding gaps, incentivise recycling, and hold producers accountable.

This article explores five such models—blended finance, green bonds, Extended Producer Responsibility (EPR), Pay-As-You-Throw (PAYT), and DRS—highlighting their successes in Indian cities, persistent challenges, and potential to redefine urban sustainability in the Global South.

Mandates to Markets: Five Ways Cities Can Make Plastic Pay

1. Blended Finance for Waste Management Infrastructure

Blended finance models, which combine public, private, and philanthropic funds, have shown promise in de-risking investments in waste infrastructure. Pune exemplifies this approach by collaborating with social enterprises and integrating community participation with corporate partnerships to enhance recycling rates. The city’s decentralised waste segregation and composting initiatives, supported by Swachh Bharat Mission-Urban (SBM-U) funding, have improved landfill diversion and resource recovery. Similarly, Bengaluru’s partnerships with tech-driven startups for waste-to-energy projects demonstrate how blended finance can scale circular solutions. However, despite successes, cities face hurdles in attracting private investors due to inconsistent policy enforcement and fragmented waste streams. For instance, Delhi’s Ghazipur landfill, a symbol of mismanagement, reflects the consequences of underfunded infrastructure and a lack of investor confidence.

2. Green Municipal Bonds

Green bonds, earmarked for environmental projects, are emerging as tools to fund sustainable infrastructure. While Pune and Ghaziabad have piloted such bonds, their potential remains underutilised. Projects in Mumbai, which include setting up Material Recovery Facilities (MRFs) and awareness campaigns, could benefit from green bond financing to expand operations. These bonds align with SDG 11 (Sustainable Cities) by channelling capital into recycling plants and waste-to-energy facilities. Nevertheless, India’s green bond market is nascent, with limited issuance due to regulatory complexities and low investor awareness. Additionally, municipal corporations often lack the technical expertise to design bankable projects, as seen in many stalled waste-to-energy initiatives.

3. Extended Producer Responsibility (EPR) Credits

EPR mandates hold producers accountable for post-consumer waste, creating markets for recycling credits. Hyderabad-based Recykal, a digital PRO (Producer Responsibility Organisation), has streamlined EPR compliance by connecting brands with recyclers through a cloud-based platform. Although this model has formalised waste collection, reduced leakage, and improved transparency, the compliance remains uneven, especially among small businesses. Informal waste pickers, who handle 60 percent of India’s plastic waste in some cities, often operate outside EPR frameworks, leading to exploitation and unsafe recycling practices.

4. Pay-As-You-Throw (PAYT) Schemes

PAYT schemes, which charge residents based on non-recyclable waste generated, incentivise source segregation. Through user fees and community education, Kerala’s pilot in Thiruvananthapuram reduced landfill dependency by up to 30 percent. Similarly, SBM-U’s focus on segregation at source in cities such as Indore has improved recycling rates, aligning with SDG 12 (Responsible Consumption). However, behavioural resistance and inadequate enforcement hinder scalability. In rural areas, open burning and dumping persist due to weak collection systems, as seen in Nagaland and Tripura, which have the lowest per capita waste processing rates.

5. Deposit Refund Systems (DRS)

Meghalaya’s Green Deposit Scheme, a DRS model, requires tourists to pay an INR100 refundable deposit for plastic items carried into eco-sensitive zones like Nongriat’s living root bridges. The initiative, managed by village councils, has substantially reduced littering and empowered local communities as environmental stewards. At the same time, remote areas face logistical hurdles, such as limited refill stations and QR-code tracking systems, with peak tourist seasons straining enforcement capacity, as seen in Shillong’s overcrowded sites.

Beyond the Bin: The Tech and Treaties of Plastic Waste

While market-based instruments and behavioural nudges offer powerful levers, scaling plastic waste solutions requires deeper technological innovation and stronger multilateral coordination. Emerging technologies—such as Artificial Intelligence (AI)-enabled waste sorting, blockchain for tracking Extended Producer Responsibility (EPR) credits, and chemical recycling—can vastly enhance efficiency and transparency across the waste value chain. Organisations such as Blue Planet and India’s Lucro Plastecycle are already leveraging innovations to upcycle multilayered plastic and integrate informal waste pickers into digitised logistics platforms. However, their impact remains limited without supportive ecosystems—access to patient capital, policy synchronisation, and skilled manpower.

From AI-powered segregation units in smart cities to cross-border recycling partnerships under the Basel Convention, India’s journey towards a circular plastic economy hinges on technological ambition and global solidarity.

International partnerships offer a vital opportunity to bridge these gaps. The United Nations (UN) Environment Assembly adopted Resolution 5/14 in 2022, which set negotiations for an international legally binding treaty on plastic pollution in motion, underscoring the urgency of a unified response. After countries failed to agree on the rules in South Korea in December 2024, a series of preparatory regional dialogues are underway as nations prepare for the sixth and potentially conclusive round of negotiations at INC-5.2 in August 2025—with expectations high for a treaty that covers the full lifecycle of plastics—right from production to disposal.

As a key stakeholder in these negotiations, India has proposed the creation of a dedicated global fund to support developing countries in implementing plastic mitigation strategies. Such a fund could mirror the climate finance mechanisms under the Montreal Protocol, enabling low- and middle-income nations to access technology, build infrastructure, and scale innovations such as DRS or EPR frameworks. More critically, COP30 in Brazil could solidify the link between plastics and climate, especially considering that over 99 percent of plastics are derived from fossil fuels, making plastic reduction a key lever in emissions mitigation. At these forums, India's leadership in community-based waste models and digital tracking of EPR credits can serve as valuable case studies for global south cooperation.

As the world grapples with the ‘polycrisis’ of climate, waste, and public health, aligning national efforts with global momentum will be key.

Meanwhile, Indian cities, already active in climate alliances such as C40 and the International Council for Local Environmental Initiatives (ICLEI), must align their waste strategies with their Nationally Determined Contributions (NDCs). Integrated planning, where climate and waste targets are harmonised, will be essential to access green climate finance and unlock synergies. As the world grapples with the ‘polycrisis’ of climate, waste, and public health, aligning national efforts with global momentum will be key.

From AI-powered segregation units in smart cities to cross-border recycling partnerships under the Basel Convention, India's journey towards a circular plastic economy hinges on technological ambition and global solidarity. Ultimately, by combining domestic innovations with international momentum, India has the potential to curb its own plastic tide and set a precedent for the Global South in building sustainable, resilient urban futures.

Soumya Bhowmick is a Fellow and Lead, World Economies and Sustainability at the Centre for New Economic Diplomacy (CNED) at the Observer Research Foundation.

Abhiir Bhalla is a youth environmentalist and a sustainability consultant.

• Climate, Food and Environment
• Sustainable Development
• Climate Change
• India
• municipal solid waste management
• municipal solid waste management in india
• municipal solid waste management projects
• municipal waste
• solid waste management
• urban local bodies
• world environment day
• world environment day 2025

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