The solid waste management (SWM) system is in a transitional phase in developing economies, and local municipalities and waste management companies are stepping toward integrating a waste treatment approach in the scheme of waste handling. However, there is an urgent need to explore cost-effective techniques, models, and potential revenue streams to sustain the state-run waste sector self-sufficiently. The proposed SWM model aims to support the local waste sector in Islamabad, the capital city of Pakistan, with 100% service area coverage to attain environmental and economic sustainability by defining dedicated waste collection streams to ensure quality material recovery under a cost-effective approach and modality. The innovative approach is applied to allocate the tonnage to various streams as per the city's current land use plan. The estimated /cost of the cleanliness services will be USD13.1 million per annum with an estimated per ton cost of USD 23. The establishment of the proposed material recovery facility (MRF) will process about 500 t/d of waste to produce 45 t/d compost and recover 130 t/d of recyclables. The environmentally friendly model saves 2.4 million tons of CO2‒eq/month from composting and recycling. The average economic potential from MRF and debris-crushing plants, including environmental benefit value, is calculated as USD 3.97 million annually. Recovery of services fee (70%) for various collection streams based on city land use and socio-economic conditions will generate revenue of USD 7.33 million annually. The total revenue will be USD 11.31 million (86% of total annual expenditures) to track the sector's self-sufficiency. To successfully reach the Sustainable Development Goals (SDGs) and Nationally Determined Contributions (NDCs), engaging the private sector from environmentally advanced economies to collaborate in the waste sector to enhance local technical capabilities is recommended.