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Proposing the use of blockchain to improve the solid waste management in small
municipalities

A.S.L. França, J. Amato Neto, R.F. Gonçalves, C.M.V.B. Almeida

PII: S0959-6526(19)33399-2
DOI: https://doi.org/10.1016/j.jclepro.2019.118529
Reference: JCLP 118529

To appear in: Journal of Cleaner Production

Received Date: 24 January 2019

Accepted Date: 20 September 2019

Please cite this article as: A.S.L. França, J. Amato Neto, R.F. Gonçalves, C.M.V.B. Almeida,
Proposing the use of blockchain to improve the solid waste management in small municipalities,
Journal of Cleaner Production (2019), https://doi.org/10.1016/j.jclepro.2019.118529

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© 2019 Published by Elsevier.

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Proposing the use of blockchain to improve the solid waste

management in small municipalities
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1. Introduction

The Internet brought an unimaginable evolution in the relationship between people and groups, in the supply of new
products and services and in new professions and markets, as well as the decline and death of old products, services,
professions and markets. Recently, digital coins, or crypto-coins, emerged as a both economic and social phenomenon
by introducing the concept of currency unrelated to governments or central banks. Bitcoin has emerged as a virtual
electronic currency that allows real-time transactions among people, without interferences of financial institutions.
According to Satoshi-Nakamoto's (2008), the technological architecture in block networks may help sustainability due
to its integrity, while Seyfang and Longhurst (2013) claim that using social currency may improve aspects related to
sustainability in communities. In this context, blockchain may also contribute to achieving some of the Sustainable
Developments Goals (SDGs, UN 2015), such as SDG1 (No Poverty) and SDG8 (Decent Work and Economic Growth)
among others.

Whatever the probabilities, it has become clear that the impulse towards the transition to sustainable development will
be transformed and empowered by the fast convergence of information technologies. In regard to the contribution to
SDG8, for example, Yunus (2008) defines social businesses as those in which profits cannot be distributed to investors
in amounts greater than those invested and should be reverted to the benefit of low-income populations within the
business itself. According to Comini (2016), social affairs refer to the improvement of the living conditions of the low-
income and minorities population in the formal market, improving the conditions of this population along with the
conservation of biodiversity. Systems using Blockchain can provide security, integrity, dispense of trust between parties,
dispensation of the intermediary guarantor of integrity and streamlining relationships between individuals and between
formal organizations. They may also lead to the social inclusion of low-income, marginalized or restricted-market
populations in the formal market (Lewis, 2015). Such social inclusion may occur as a result of Blockchain's architecture,
open and distributed, dispensing, in essence, the need for centralized authority, such as banks and note offices, real
estate registries, and so on.

This paper proposes an application of Blockchain digital architecture to improve the solid waste management in small
municipalities using as example a small Brazilian municipality, which had already created a social currency based on
cards - called Green Coin - to pay voluntary citizens the collection of urban solid waste. The suggested system uses
vouchers in the form of social crypto-coins, supported by Blockchain architecture, and because it is fully computerized,
has the potential to gain operational scale and be replicated in other municipalities in Brazil and other developing
countries. The proposed system aims to ensure the integrity of the information regarding fair remuneration of the
voluntary collecting citizens and the integrity of the public information throughout the process, which also ensures to
the public manager the transparency of the information filed in the system.
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This work has three fundamental objectives: 1) to display the use of blockchain as a viable technology for a solid waste
management system with the use of digital social currency; 2) to discuss the projected results of the implementation of
the system in relation to sustainability aspects, and 3) to highlight the potential contribution of blockchain to the
Sustainable Development Goals.

2. Theoretical review

The discussion about the social and economic changes due to the emergence of blockchain technology is getting
increased attention in scientific literature. Blockchain has the potential to reorganize the way data is stored and
administer information, possibly leading to a reduced role of regulatory actors and intermediaries (Wright and De
Filippi, 2015). The decentralizing functionality may be used not only for crypto-currencies as bitcoins, but to register,
confirm, and transfer contracts and properties (Forte et al., 2015). For Forte et al. (2015), there is no unanimity in the
definition of the concept of intelligent contracts, but it is clear that these contracts follow predetermined rules that may
run automatically as events occur. For example, the event "shipment of goods X" automatically generates the issuance
of tax documents as well as the transfer of crypto coins from the buyer's virtual account to the seller's virtual account.
Decisive to the prospective of this technology is the notion of smart contracts that enable the automated allocation of
digital assets allowing contractual affairs to be routinely executed without the extra costs of supervising or
administration (Kiviat, 2015, p. 606). In this context, blockchain technology was assessed in regard to its
transformational potential for the music industry by O’Dair and Beaven (2017), who concluded that the technology does
appear to have the potential to transform the role of third parties and to make musicians’ careers more sustainable, but
widespread disintermediation may have been premature. However, these authors consent that blockchains facilitate
immediate royalties’ payments, and notably improve the transparency of the value chain. Although relationship rules
have always existed in contracts and other forms of organized and structured relationships, when using a smart contract
in conjunction with a blockchain system, system reliability becomes an unparalleled benefit (Forte at al, 2015).

Many combinations of blockchain technology have been explored and a huge potential in many application fields has
been foreseen, such as financial function, information security and medical health care (Larios-Hernández, 2017). Many
innovative studies have also been carried out on the application of blockchain technology to traditional and emerging
industries such as the chemical industry (Sikorski et al., 2017), the apparel industry (Fu et al., 2018), the renewable
energy systems (Hou et al., 2018), shared economy (Pazaitis et al., 2017) and electric vehicles (Sharma et al., 2017).
Bahga et al. (2016) proposed a decentralized platform for Industrial IoT (IIoT) using the blockchain technique to remove
intermediaries and construct a peer-to-peer network, and Christidis and Devetsikiotis (2016) examined the applications
of blockchains and smart contracts for IoT. Xia et al. (2017) proposed medical data sharing among cloud service
providers using blockchain. The cloud storage enables auditing, data background, and data control. The relevant case of
United Nations is worthy to be mentioned: the use of blockchain to deliver vouchers to Syrian refugees. In 2017 UN
has set up 10,000 vouchers for food, and in 2019 iver another 400,000 vouchers will be delivered (UN, 2017 and 2019).
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Companies have begun searching for techniques by which blockchain might severely transform some of their
fundamental operations, processes and procedures, from the way they improve efficiency (operational and
environmental) to the way they involve prospective customers. New approaches are also arising such as the Qtum
service, which links businesses blockchain and networks (Global Coin Report, 2018). Other organizations, in addition
to the one responsible for launching the Bitcoin currency (Ethereum Foundation, 2018), set out to launch Blockchain
architectures, each with specifics. The Ethereum Foundation stands out, which presents a system of integrated contract
automation ("smart contracts") to the chronological and distributed order generation system (Ethereum Foundation,
2018).
The success of blockchain technology may have remarkable implication for advances on environmental sustainability,
but the applications of the technology in this area are still incipient. Merlino and Sproģe (2017) advocated that with the
cumulative environmental challenges in constructing sustainable supply chains, procedures must change by the
introduction of new technologies, robotics, artificial intelligence, and the big data approach. Kshetri (2017) identified
and described the roles of blockchain in tracing the drivers of insecurity in supply chains related to IoT use and
investigated how blockchain assists IoT security. Recently, the relationship between blockchain and the concept of
Smart Cities has risen as a new way to facilitate the transition to sustainable development. Sharma and Park (2018)
proposed a hybrid network architecture for the smart city using blockchain technologies, and as a result of experimental
analysis the authors showed the effectiveness of the model and some limitations such as the deployment of edge nodes.
Considering that smart cities involve numerous aspects dependent on trustworthy data and sources, Brandão et al., 2019
claim that the implementation of Blockchain technologies may help with electronic governance, contracts, and data
collection, which may result in more secure and well-organized cities. Orecchini et al. (2019) consider the probability
to integrate the blockchain technology in the smart city evolutionary process in order to improve the environment and
mobility by introducing renewable energy sources traceability and by supplying information to promote awareness
regarding the environmental and energy sustainability.

There is still a lack in the scientific literature on the discussion on how blockchain technologies may contribute to the
SDGs, except for the article published by Kewell et al. (2017) who highlighted how blockchain solutions could be
implemented to achieve the sustainable development Agenda 2030 by facilitating to accomplish the UN’s (2015) SDGs.

2.1. Social Currency

According to Gómez and Demmler (2018), money is a social creation, being the most accepted means of payment,
having evolved considerably through the ages. It allows the satisfaction of desires and needs that would otherwise be
difficult to meet. However, it presents difficulties, especially in relation to the issue of social inequality in the distribution
of income and the limitation of people's purchasing power, excluding "segments of the population that are not provided
with any access to financial services or money in general, due to for instance circumstances of crisis and poor economic
performance of the country or even inefficiencies in the financial system itself". As a result, other means of exchange
have emerged, complementing the functions of the original and official currencies. Gómez and Demmler (2018) claim
that these new concepts are grounded on the private sector initiatives (e.g. the cryptocurrencies), the social economy
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(social currencies) and the public sector with the local or national government programs (e.g. the Petro as the
cryptocurrency of Venezuela). According to Della Peruta and Torre (2015), complementary currencies are being
developed all over the world, both in material format and in virtual form covering several functions, which aim to foster
development of local economies, and reducing social exclusion.

The theme of the complementary currencies is very broad. According to Martignioni (2012), there were more than 5000
complementary currencies in the world in 2012. Among those, there were different focuses of the complementary
currencies application, such as the business relations between companies and people or between companies and
companies. Martignioni (2012) also observed the existence of these currencies with social, environmental, educational,
employability, and cultural objectives. Joachain and Klopfert (2012) explained that the use of complementary currencies
was a trend in Europe. In Belgium, for example, there were references to the use of such currencies in households,
through the creation of systems that provide greater efficiency in energy consumption. Gómez and Dini (2016) pointed
out that in Argentina the use of specific currencies in the provinces occurred due to the difficulties faced by the country
with its national currency in the years 2000. It is possible to observe the numerous possibilities of use of complementary
currencies in parallel to national and official currencies which are an integral part of the national monetary system.

Finally, it is necessary to emphasize the research of Seyfang and Longhurst (2013), who presented a systematic review
of currencies in the international community as an initiative for assist sustainable development. Their research revealed
a diverse range of existing community currencies, but all of them achieving new, economically sustainable goals, notably
building communities and creating social capital, boosting local economies, valuing marginalized work, and enabling
collaborative consumption. reducing the environmental impacts of current lifestyles.

3. Research method

The research is based on Design Science Research (DSR), consisting of the development of an information system to
show how to solve the challenge of integrity and quality assurance of information in a business model, according to
research structure adopted by Xu (2011) and Van Aken (2005). The choice of this method is justified because this
research aims to analyze and understand the way innovative technology works. Design Science Research (DSR) applies
to situations where there is no concrete case. Hence the construction of model, simulation, prototype or product, that
allows the understanding and the explanation on how things should be. Although of more recent use than other more
traditional scientific methods, Design Science Research has proved to be a sufficiently robust tool to face contemporary
technological complexity and contemporary business models that bring new paradigms (VAN AKEN, 2005).

In this work, the information system uses Blockchain in the municipality under study for solid waste management, with
the use of social currency. For Hevner et al. (2004), the DSR applied to the Information Systems project seeks to extend
the boundary of the existing one, both at an organizational and human level, creating anew system, through innovative
artifacts (such as models, prototypes, algorithms, or any other element created).
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The following six steps related to DSR were applied to Information Systems, as defined by March and Storey (2008):
(1) identification and clear description of a relevant IT organizational problem; (2) demonstration that there are no
adequate solutions in the existing IT knowledge base; (3) development and presentation of a new IT artifact (constructs,
models, methods or instances) that addresses the problem; (4) evaluation of the IT artifacts, allowing to evaluate their
usefulness. Steps 5 and 6 are adapted, since the original proposal seeks to evaluate the results in relation to the system
itself and here we intend to evaluate the potential outcomes of the proposed model. Specifically, the description of the
system currently in use, called the "manual system", the constraints and limitations presented by it and the description
of the blockchain-based development system, with an artifact representative of the logical system model and graphic
interface prototypes are described.

3.1. Blockchain technology Fundamentals

Computers around the world, all connected together in peer-to-peer mode, process the algorithm of constitution of a
new block. The one that will be part of the new block, in chronological order, is the computer that solves a new
mathematical problem before all the others, which is called proof of work. The validation will be audited by the other
computers in the network. The reward to the computer that first solves the problem is a predetermined number of
Bitcoinsk (SATOSHI-NAKAMOTO, 2008).

The name Blockchain is given to the network of blocks with point-to-point structure, which was popularized after the
emergence of the Bitcoin crypto-coin. Fig. 1 illustrates the formation of a new block in the blockchain. The solution is
composed of digital signatures in distributed point-to-point networks, without the use of databases or central computers.
Each new transaction creates an unique identity (named hash) and various transactions from anywhere on the planet are
compacted in a new block, forming a network. Each new block receives a unique Identification (ID), including all
previous transactions with their own unique identities. Thus, the Bitcoin Blockchain is created (ASTE, TASCA and DI
MATTEO, 2017). The authors highlight the typical characteristics of Blockchain, which led to its use in several other
business applications.
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Fig. 1. Generation of a new block, containing transaction T. The hash includes the identification of parts A and B and
transaction data.

3.2. Description of the current system of municipal solid waste management

In Brazil, solid waste management is regulated by Federal Law 12035 of 2010 (MMA, 2018), which defines municipal,
domestic, industrial solid waste, etc., as well as the responsibilities of the Union, States and Municipalities. A survey
performed by the Ministry of Environment in 2015 (MMA, 2018) on cities with and without solid waste management
showed that among 2,325 Brazilian municipalities surveyed, only 42% declared to have integrated solid waste
management plans. Municipalities with a declared plan totaled 107 million inhabitants, while the onesthat did not declare
the plan totaled 97 million. This study considers the daily generation of waste around 1.04 kg / person, per day (MMA,
2018).

In 2017, a solid waste management system was implemented in a small municipality in the State of São Paulo. The
initiative was innovative in terms of structure and aimed to improve the life conditions of the city, involving the low-
income population. The municipal solid waste management system was managed by the Health Department of the
Municipality,with the help of the Education Sector and the Environment Department of the Municipality.
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The current system works as follows: low-income households select their solid household waste (plastic, cardboard and
aluminum), take it to City Hall collection point and exchange it by the so-called Green Coins at market prices (plastic
cards representing monetary values), which are used in local registered traders (bakeries, supermarkets, drugstores,
grocery store) to buy products. Accredited store owners weekly report the exchanged amounts to the City Hall and
receive the correspondent value in currency (Reais). The Municipality sells the waste to recycling companies, which
completing the cycle.

This system provides complementary earnings to low-income families as well as stimulates the local economy through
the circulation of green money, but up till now, a little more than 3% of the population is involved. Another benefit
relates to the new perception of the young people and children, who become aware of the benefits of the correct use of
solid waste, contributing to a cleaner city.

According to the municipal managers, the system motivates and makes young people and children aware of the adoption
of an ecologically correct behavior. From the environmental point of view, the benefits of the system range from training
and motivation of people, encouraging the policy of recycling solid domestic waste, reducing solid waste in landfills,
reducing waste in land, vacant lots, backyards and roads. Furthermore, according to the public administrators, the system
contributes to the improvement of the municipal health indexes, with the reduction of the amount of garbage deposited
in the municipal landfill and with the potential reduction of occurrences of Dengue, Zika and Chikungunya diseases.
Another improvement in health is related to accidents with venomous animals.

The main limitation of the current "manual" system is the use of plastic cards, printed in local print shops, without
integrity assurance and fraud protection, due to the costs associated with anti-fraud security items.

4. Proposing the use of blockchains technology to improve the solid waste management

The proposed system adopts Ethereum's Blockchain public network architecture and cloud computing environment,
providing greater system security as it is protected from local risk situations such as data loss, power outage, attempts
to gain access and other typical problems. For Park and Park (2017), such a combination of technology use (Blockchain
in a cloud computing environment) increases the overall security of the system due to the combination of security
features inherent in each one. The new system can be used from mobile phones or personal computers, through the input
screen shown in Figure 2. Citizens who do not have mobile phones or even computers can receive the QR Code printed
for their own use.
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Figure 2: Input screen format. Adapted from technical project documentation.

The new system works according to the following logical model: (i) the voluntary citizen sells his solid waste to the
collecting agent of the City Hall; (ii) the citizen receives, in his virtual wallet, the amount of Green Coins equivalent to
the materials market prices in currency; (iii) in possession of the Green Coins, the citizen purchases goods in the
accredited trade; and (iv) the trader exchanges the Green Coins of his virtual wallet every two weeks at the City Hall's
finance office for the equivalent in currency. All the transactions will take place virtually, with no possibility of errors
or fraud. Fig. 3 shows the prototypes of the collector identification interfaces and discard registration.
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Fig. 3. Prototype of the interface of identification of the collector (QR Code) and balance of green coins and prototype
of the interface of register of discard, to credit coins to the collector. Adapted from technical project documentation.

The system is composed of two distinct environments: (a) the WEB environment perceived by users (volunteer citizens,
city collectors, merchants and city hall finance secretaries), and (b) the Blockchain Public environment of Ethereum,
not perceived by users, but which guarantees the integrity of the system (Figure 4).
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Fig. 4. The Blockchain Public environment of Ethereum. Adapted from technical project documentation.

The transactions performed in the WEB environment are sent to the Blockchain environment to validate the blocks
created, following the typical protocols of this environment. Transactions are immutable and registered in a public
environment, and can be tracked individually. The personal identity of those involved remains unknown known, but
transactions are recorded with their public keys. There is no possibility of fraud, due to the characteristics of traceability
and immutability of the blockchain.

5. Discussion

For public administrators, the advantages of the use of social crypto-currencies supported by Blockchain are clear, since
it brings innovation in the standards of negotiation between collectors and local commerce, as well as the reliability and
trustworthiness in the monetary transactions. However, it is worthy to highlight the extent to which this apparently
simple application is relevant in its contribution to the SDGs. This discussion carries out a matching exercise to
determine the relationship between the proposed blockchain technology and the SDG targets, and show that blockchain
applied to waste practices, potentially, can contribute directly or indirectly to achieving a significant number of SDG
targets (Table 1).

Table 1. Matching the potential outcomes from the blockchain technology application to solid waste management with
some of the SDGs.
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SDGs Description Direct contribution Indirect contribution

Ends poverty in all its forms provides complementary earnings

everywhere to low-income families

Ensures healthy lives and potential reduction of occurrences

promotes wellbeing for all of Dengue, Zika and
at all ages Chikungunya diseases
Ensures inclusive and
equitable quality education motivation and training of
and promotes lifelong people, encouraging recycling
learning opportunities for solid domestic waste
all
Promotes sustained,
inclusive and sustainable local economy may be affected by a
economic growth, full and growing and relevant trade based on
productive employment, recovered solid waste
and decent work for all
Builds resilient
infrastructure, promotes
May be expanded for use in other
inclusive and sustainable
types of waste
industrialization, and fosters
innovation
becomes an opportunity for social
inclusion as it can lead to financial
Reduces inequality within
services and money circulation to those
and among countries
who do not have access to banks
(LEWIS, 2015),
reduction of the amount of garbage
Makes cities and human
deposited in the municipal landfill,
settlements inclusive, safe,
reducing waste in land, vacant lots,
resilient and sustainable
backyards and roads.
motivates and makes young
Ensures sustainable
people and children aware of the
consumption and
adoption of an ecologically
production patterns
correct behavior
Strengthens the means of
implementation and
results should attract neighboring May be expanded to promote
revitalizes the global
municipalities circular economy
partnership for sustainable
development

The strongest relationships exist between the proposed system and the targets of SDG 8 (Decent Work and Economic
Growth), SDG 10 (Reduced Inequalities), SDG 11 (Sustainable Cities and Communities), and SDG 17 (Partnerships for
the goals). Synergies that can be created among several of the SDG targets were not explored, but there are certainly
various potential trade-offs between targets for decent work, human health and municipal waste assisted by the
blockchain technology that are worthy of further studies necessary to determine the consequences of applying to apply
blockchain technology to solid municipal waste in the SDG context.

From a technical point of view, the purpose of the new system is to provide gains of scale through the process
computerization, together with the guarantee of information integrity and authenticity of the currency in use, in the form
of crypto-coins, which is ensured by the architecture Blockchain. With the introduction of the new System, scheduled
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for February 2019, the projection of results for the year is a 15-fold increase in the amount of municipal solid waste to
be recycled rather than continue to be taken to the city's landfill. By 2020, the goal is to double the growth of 2019,
reaching 90% of the families of the municipality, directly or indirectly. Moving from 3% of the population to 90% of
the population in two years is a daring yet possible goal.In addition to the health, environmental and financial benefits
for the citizens, it should be mentioned that this new economic wealth should be, in the year 2020, equivalent to one-
third of the annual collection of municipal taxes, according to official budgetary data of the municipality.

As a natural consequence of the success of the new system, it is expected that there will be pressure from neighboring
municipalities, as the news about the benefits of the use of the Green Coin with Blockchain will certainly exceed the
limits of the city. It should be noted that a sustainable local system will be created: health, environment, financial
inclusion and local economy equally affected. How a virtuous ecosystem will be formed is something to be observed.

Specifically, the use of this architecture should: (a) ensure the integrity of the system information, protecting citizen-
volunteers, waste collectors, traders, and the municipality. This benefit will be a consequence of the fact that there will
be no printed cards circulating around the city, without the danger of fraud or loss and without the need for daily cash
closing, as is customary in commercial businesses and public agencies dealing with monetary values; (b) support the
operational scale gain of the process in order to significantly increase the amount of solid waste that will no longer be
dumped in the current landfill with its recycling and consequent improvements in the municipality's sustainability; (c)
generate reliable and auditable data in the accounting of results obtained and performance indicators of the new system.
Such statistics will certainly be a reference for the use of the system in other municipalities, which observe with great
interest what exists in the small city where the card-based system is functioning, and where the new system, based on
blockchain, is being prepared to function; (d) allow replication of the model to other larger municipalities. As already
mentioned, there is an unknown potential in relation to the pressure from within the municipality, since the citizens of
neighboring municipalities must be attracted to the Green Coin system, further increasing the potential for greater local
economic wealth.

6. Conclusions

The use of Blockchain technology makes the feedback loops preconized by Circular Economy, Industrial Ecology and
Cleaner Production faster and trustable as we are able to increasingly track products, their operation, and make waste
accessible to close the production cycles. By re-organizing and monitoring the current models of solid waste
management, Blockchain technologies may help to decouple economic development from the consumption of non-
renewable resources. Savings of non-renewables and the increase the municipal economic wealth are consequence of
the recovered materials of through the improved solid waste management system. The (re)cycling of materials within
the municipality assists decreasing the pressure on the environment (MacArthur, 2019), and the recycled solid waste
may be transformed in raw materials for different production chains.
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As can be inferred from the characteristics of the blockchain architecture and according to the perception of the
municipal managers involved, the new system should bring the following results:

a) guarantee of data integrity and circulating green coins, since the new system, based in crypto-coins, will prevent any
attempt of fraud, losses and errors regarding the way of receiving / exchanging / paying items with virtual green coins,
which will replace the current card system;

b) possibility of a relevant expansion of the scope of the system currently restricted to 3% of the population. According
to the city hall, the new system will be open to the general population, overcoming security issues and other difficulties
in managing the current system;

c) relevant improvements in the aspects of sustainability already mentioned: health, education, social inclusion,
environment and economy of the municipality;

d) possibility of expansion to neighboring municipalities, independently of their size;

e) potential of use of the new system in other public locations and also in closed condominiums, cooperatives of solid
waste collectors, neighborhood groups etc.

f) possibility of expansion for other uses: industrial or agricultural wastes.

Continuity of research involves testing and deploying the system in real operating environment. Indicators for
socioeconomic and environmental aspects should also be developed to allow for an accurate assessment of the
improvements achieved. Finally, the model is expected to replicate to other municipalities in Brazil and other interested
countries.

Acknowledgments

The authors would like to express their gratitude to the Comissão de Pesquisa do PRO/Poli/USP andtotheVice-Reitoria
de Pós-graduação da UniversidadePaulista (UNIP) (Vice-rectory of Post Graduation of Paulista University) for the
valuable support provided. Special thanks to the Mayor and to the Secretary of Health, representing all the public agents
involved in the system, as well as to the technicians and specialists of the start-up company working in the development
of the new system.
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