As in any real estate development project, what matters is location, location, and location.

By Daniel P. Duffy

The following is the first of a series of three articles that will examine the costs involved in each stage of a generic landfill’s lifetime, show how to do pro forma statements for profit and loss, analyze the tax and financial aspects of each stage of operation (e.g., how much to set aside annually in a sinking fund to allow for post-closure monitoring and maintenance), and illustrate the unique profitability of landfill operations given a certain minimum market share.

This first article looks at the proposed landfill’s market and potential for waste receipt, as well as the site investigation, engineering, design, and permitting costs.

The second article will examine the cost of construction for site facilities and for each landfill cell. Additionally, the operating cost and disposal volume of each overlapping cell will be described to show how cash flow will change over the operating life of the landfill.

The last article will look at the costs of landfill capping and closure, installation of gas management systems, and post-closure care and maintenance costs (and how to plan ahead for each).

The first landfill location is the geometric layout of the landfill within the property. The landfill geometry should maximize the most disposal volume per acre of landfill footprint. The second landfill location avoids those areas or setbacks that either constrain or preclude landfill construction. The third landfill location is the regional location of the proposed landfill with its population and disposal rates determining potential market share.

Landfill Profitability
The two basic rules of landfill profitability are volume equals earnings and area equals costs. Landfills are unique among industrial or construction operations in having relatively high upfront capital costs and relatively low unit operating costs (as measured in dollars per ton of waste received). This means that after a relatively high break-even point, landfill operations become very profitable as operating costs drop to literally pennies on the ton.

A landfill’s capital costs are directly related to the installation of lined and capped areas. For large landfills, all other capital costs (weighing systems, office trailers, maintenance buildings, security fencing, access roads, etc.) are incidental by comparison. To offset these capital costs, the maximum amount of waste volume must be placed within the landfill’s lined area. The most efficient area footprint for maximizing volume is a square landfill. For example, a square landfill with dimensions of 1,000 by 1,000 feet can have a maximum height of waste of 250 feet (with final slope of 25%, or 4 horizontal to 1 vertical).

This 25% grade is a standard established by regulations and ensures stability against mass slope failure. Access roadway earthen berms are usually tacked onto the final grades to allow for vehicle movement. These are individually designed to be stable under anticipated traffic loads. Another option is the stepped slope where the final grades are cut back into the landfill at regular height intervals. The cutbacks are usually used as access roads and are the same width. The purpose of this design is to reduce potential mass failure weight, making the slopes even more stable. However, this configuration results in a loss of potential disposal volume. To compensate for this loss, many states allow steeper than 25% slopes (up to 33% slopes) between the benches, provided the design includes a thorough analysis of all types of localized and mass slope failure.

A rectangular landfill with the same footprint area having dimensions of 500 by 2,000 feet can have a maximum waste height of only 125 feet (as determined by the smaller dimension). Both have the same lined areas and capital cost, but the second has only half the potential waste disposal volume and associated earnings.

But landfills rarely reach a peak. Typically a minimum flat area of about 4 acres is left at the top to allow enough elbow room to choreograph equipment and trucks during final closure. “Flat” indicates a minimum sloped area of at least 2% grade (1 foot vertical to 50 feet horizontal). Again assuming a square footprint, this flat area would measure approximately 400 by 400 feet. With a flat area at the top, the volume of the landfill above the existing ground surface is determined by the formula for the volume of a truncated pyramid: V = (H / 3) * (B1 + B2 + sqrt [B1* B2]) * (1/27), where V = volume (cubic yards), B1 = area of the landfill footprint (square feet), B2 = area of the contour elevation lines (square feet), and H = landfill height above existing ground surface (feet).

The maximum allowable height of a landfill is usually limited by local ordinance. Depending on the landfill’s location, the local government will set limits on how high it can go to minimize the landfill’s visual impact on its surroundings. Isolated landfills, or those located in terrain that is already hilly, will tend to be higher than those close to communities or on flat terrain. If no local or state regulation mandates a maximum height of the landfill, its height will be indirectly limited by the effects of the waste loading on the landfill’s structural elements or underlying hydrogeology. A mass of waste that results in the crushing of leachate collection pipes at the bottom of the landfill or that results in severe foundation settlement under the landfill would not be allowed.

So assuming a hypothetical landfill with a top flat area of almost 4 acres (400 by 400 feet, or 160,000 square feet), final grades of 25% and a maximum height of 100 feet, its footprint area would be 1,440,000 square feet (1,200 by 1,200 feet). Its volume above the existing ground surface would be calculated as follows: V = (100 / 3) * (1,440,000 + 160,000 + 480,000) * (1/27); V = (100 / 3) * (2,080,000) * (1/27); V = 2,568,000 cubic yards (approximate).

A similar computation is done to determine the volume of the landfill below existing grades. The maximum allowable depth of a landfill is usually determined by hydrogeological considerations such as the need to maintain a minimum vertical isolation distance between the landfill’s liner and the highest recorded groundwater level. Also, the sideslopes of the excavation performed to establish the grades of the landfill’s liner system are no steeper than 33% (1 vertical to 3 horizontal). Using the above example, and assuming a maximum depth of 33 feet, the flat landfill bottom would have an area of 1,000 by 1,000 feet, or 1,000,000 square feet. Like the top of the landfill, the bottom is not truly flat but has a shallow grade (to promote leachate collection) of 1% or 2%. Its volume below the existing ground surface would be calculated as follows: V = (33 / 3) * (1,440,000 + 1,000,000 + 1,200,000) * (1/27); V = (33 / 3) * (3,640,000) * (1/27); V = 1,483,000 cubic yards (approximate).

Total landfill volume would be 4,051,000 cubic yards. For purposes of planning, the landfill capacity should be rounded to an even 4 million cubic yards. Given the limits of surveying accuracy (even with GPS), greater accuracy on this scale is neither possible nor necessary.

The landfill’s footprint is a little over 33 acres. Of these acres, approximately 29.33 are 25% final grades. Being sloped, these have a surface area 1.03 times greater than the flat footprint area, or 30.2 acres. Final surface grades needing cap and cover are therefore approximately 1 acre greater than the footprint, or 34.0 acres. The bottom of the landfill includes approximately 10.1 acres at 33% grades. These slopes have a surface area 1.05 times greater than the flat footprint area, or 10.6 acres. The bottom grades needing a liner and leachate system are therefore approximately 0.5 acre greater than the footprint, or 33.5 acres. Total acres of landfill construction (cap and liner) are 67.5 acres, giving a ratio of volume to area of almost 60,000 cubic yards per constructed acre. This number is the primary metric in determining a landfill’s profitability.

Landfill Location
Subtitle D of the Resource Conservation and Recovery Act details the regulations governing the siting, construction, operation, and closure of municipal solid waste landfills. There are six areas defined by Subtitle D where the construction of a landfill is effectively precluded: near airports, in floodplains, in wetlands, on fault lines, within seismic impact zones, and over unstable areas.

No landfill or portion of a landfill can be located within 5,000 feet of an airport runway servicing propeller-driven aircraft or within 10,000 feet of a runway servicing turbojet aircraft. As landfills attract birds and other vectors, the setback is designed to minimize the potential for bird strike on aircraft. Though it is possible to do a demonstration study that purports to show that the potential for bird strike is insignificant for a location near an airfield, it is very unlikely that a regulatory agency will approve any such demonstration given the grave risks involved. Practically speaking, no property near an airfield should be considered for landfill development.

No landfill or portion of a landfill can be located within the limits of a floodplain resulting from a 100-year storm event. These limits are usually defined by flood insurance rate maps published by FEMA. It is possible that infringement on a floodplain will not result in significant restriction of floodway flow rates and reduction in temporary water storage, or that the flood will not cause significant erosion and washout of landfill waste; however, regulatory agencies are very cautious about allowing such construction, which would require significant (and expensive) armor rock protection of the landfill’s outboard slopes.

Landfills cannot be constructed in or near wetlands because they might reduce water quality, jeopardize the existence of endangered species, degrade or reduce the wetland, impact fish and wildlife, or threaten a catastrophic release or toxic discharge from the landfill. Any landfill operator would have to show the regulatory agency that such degradation is not possible. State and federal agencies are extremely protective of wetlands and typically will require an absolute standard of assurance. Furthermore, every acre of wetlands lost to landfill construction has to be mitigated (new wetlands constructed to replace the destroyed wetlands), often at a ratio of 5 new acres to 1 destroyed acre. Like properties containing floodplains, properties with wetlands can still be used for landfill development, but such properties will have the extent of landfill construction severely constrained.

Potentially unstable geological conditions (fault lines, karsts topography, and seismic impact zones) are to be avoided by landfill developers. No landfill can be located within 200 feet of a fault line that has experienced movement in recent (Holocene) time. A fault zone 400 feet wide effectively precludes most landfill construction. Seismic impact zones are those areas with a 10% or greater probability that the maximum horizontal acceleration in lithified earth material, expressed as a percentage of the earth’s gravitational pull (g), will exceed 0.10 g in 250 years. Landfills in seismic zones must be redesigned to withstand potential seismic forces (flattened slopes with expensive loss of disposal volume, or expensive reinforced construction). Though the regulations only forbid landfills directly over unstable, cavernous terrain, the potential effects of such terrain extend far beyond their boundaries. A relatively small cavern that develops into a sinkhole as a result of landfill disposal overburden may shift earth hundreds of feet away. Trying to accurately predict the potential extent of such damage is almost impossible.

So of the forbidden areas, only airports completely negate a property’s landfill development potential. Floodplains, wetlands, and unstable geology will severely restrain landfill development over a large portion of a property. These would then require either the expensive purchase of property that can’t be developed or an even more expensive capital cost for engineering and construction to mitigate their potential for damaging the landfill. The ideal landfill location, from a cost-minimization point of view, would avoid all of these restricted areas.

Potential Market-Area Share
A landfill’s potential market area is typically limited to the county it is located in and the ring of counties immediately adjacent to the landfill’s county. Additional sources of waste include long-haul waste from transfer stations outside of the landfill’s immediate market area, river-barged waste if the landfill is adjacent to a navigable river, and rail haul waste if the landfill is adjacent to an active rail spur. For the purpose of this hypothetical analysis, the landfill’s market will be conservatively limited to its county and adjacent counties.

Also for the purposes of this analysis, the hypothetical landfill described above will be located in a county (county A) with seven surrounding counties (counties B through H), eight counties total. The counties are a mix of urban and rural areas with varying populations and population growth rates (see Table 1).

Table 1.

According to the EPA, the average American throws away 4.5 pounds of municipal solid waste each day. Urban counties tend to have higher rates of recycling and incineration than rural counties. Urban areas on average landfill 60% of their waste, while rural counties tend to landfill approximately 70%. These factors determine the total daily average waste disposal for the market area (see Table 2).

Table 2.

Though landfill profits are directly related to tons received at the gate, landfill operations are based on cubic yards of airspace utilized for disposal. For planning purposes, the compacted, in-place density of waste should be about 0.55 tons per cubic yard (40 pounds per cubic foot). Using this conversion factor allows us to estimate annual airspace utilization and plan the operational lifetime of the proposed landfill (see Table 3).

Table 3.

The hypothetical landfill described above with a disposal volume of 4 million cubic yards represents approximately three years’ worth of disposal capacity of the entire market area. At a volume-to-area ratio of 60,000 cubic yards per acre, the proposed landfill (on average) will require the construction of 22 acres per year. Assuming the landfill captures only 10% of the market share, it will operate for 30 years constructing 2 to 3 acres per year of lined area.

Now that the total market and its growth rate have been established, the local competition can be examined. Sometimes a landfill will publish its data on amount of tonnage received, but often this information is proprietary. All that is typically published is the maximum allowed tonnage as mandated by the landfill’s operating permit. What is usually easier to get is tipping fees. Table 4 summarizes what is known about the hypothetical landfill’s competition.

Table 4.

The projections in Table 4 estimate a total annual waste disposal market of approximately $29 million per year at an average tipping fee of approximately $40 per ton.

Assuming that the proposed landfill is located in county A (as a replacement for the old, existing landfill), truck routes ensure that it will get the bulk of the waste in counties B and C, and it gets 10% of the waste in counties D through H, then it can expect an annual disposal rate of approximately 200,000 tpy. At an average tipping fee of $40, its projected annual gross revenues would be $8,000,000. These revenues can be expected to increase at roughly the same rate as the market area’s population, approximately 4.5% per year.

At 200,000 tpy, the landfill will utilize approximately 363,000 cubic yards of airspace per year. With a total capacity of 4 million cubic yards, its projected operational lifetime would be 11 years.

Site Investigation and Hydrogeological Studies
Instead of directly purchasing a property for landfill development, the landfill operator typically buys an option to purchase the property at a given price at a later date. Prior to final purchase, a thorough investigation of the site’s hydrogeology is performed. This investigation is often more important to the state regulatory agency than the subsequent engineering design and permit application. The cost of a purchase option can vary wildly depending on the location and inherent value of the land, anywhere from $10 to $1,000 per acre. Furthermore, the property to be purchased may be larger than what is required for landfill development, including areas where the landfill location regulations preclude landfill development.

The state regulations will mandate the format and contents of the hydrogeological investigation. These include (at minimum)

• determination of background groundwater quality;
• site map showing existing wells, properties’ soil borings, bodies of water, wetlands, surface drainage features, and regional topography;
• observation well records and soil borings to identify and locate local aquifers;
• groundwater elevation map showing stabilized water-level readings and groundwater flow directions;
• evaluation of site soils and earth materials including soil classifications, strength characteristics, in-place densities, and location of bedrock; and
• a series of geological cross-sections illustrating the site’s hydrogeology.

The number, location, and spacing of exploratory borings and the number, location, and spacing of monitoring wells are usually arrived at by negotiations with the state regulatory agency. These “negotiations” often take the form of multiple cycles of hydrogeological investigation plan submittal and regulatory review and comment, followed by resubmittal. As a result, the cost of a hydrogeological study can also vary widely. The plan writing itself typically costs less than $100,000, but the physical site investigation may bring the total cost up to $500,000. Each plan and review iteration (which may require additional fieldwork) could add more than $100,000 per resubmittal.

As a follow-up to the site investigation study, the landfill operator will need to prepare and submit a series of site monitoring plans for air, dust, surface water, landfill gas, and especially groundwater. The plans will detail the location frequency and methodology for each type of sample and describe testing procedures and statistical methods used for analyzing the test results. Again, the cost of these plans could be measured in hundred-thousands of dollars and be subject to multiple submittal-review-revision cycles.

Engineering Design and Permitting
Someone once said that “those who love both sausage and the law should not watch either one being made.” Though not nearly as bad, the permitting process can be similar.

The elements of landfill engineering design are simple and straightforward. Each state has basic standards for construction that have to meet the minimum requirements of the federal Subtitle D regulations. These standards dictate the overall dimensions of the landfill’s components. Some states require 5 feet of clay in the liner; others require only 3 feet. Some require a double liner and matching double-layered leachate collection system, while others allow landfills to get by with only a single liner and leachate system.

The style, contents, and format of the design presentation itself are often spelled out in a state’s waste regulations. Other states allow the engineer to present the design in any format he or she pleases, provided it is coherent and includes all of the information required by the regulations. Either way, a landfill permit design contains five categories of documents: plan drawings, detail drawings, engineering computations, material and construction specifications, and supporting documentation. Each engineering design permit submittal will typically cost between $100,000 and $200,000. As with the other submittals, this is subject to multiple cycles of review and revision—even if the engineering is accurate, complete, and well thought-out.

Summary: Time and Money
Not to put too fine a point on it, the process of landfill development and permitting can be very expensive and time-consuming. A good rule of thumb is five years from conception to the first day of operations with costs (even before actual construction) of well over $1,000,000.

Daniel P. Duffy, P.E., is an environmental engineer in Cincinnati, OH.

MSW - May/June 2005