Sunday 6 December 2009

Talking sense on recycling

My back-of-the-envelope calculation for Christchurch, back when we were paying $1.20 per black bag for garbage pick up but the city completely subsidized recycling, was that the city paid roughly twice as much per tonne for disposal of recycling after counting the money they made from on-selling the recycling bits that were of any value: the most conservative estimates I could make had regular trash costing about $42/tonne and recycling about $75/tonne; midpoint estimates were more like $31/tonne on landfill and $110/tonne on recycling (depending on how you want to allocated fixed costs across disposal types given how the City Council reports spending on refuse).

We've since moved to a bin system where we don't pay directly either for landfill or recycling, so the price disparity will likely have narrowed somewhat, mostly by increasing the amount by which the Council subsidizes landfill use from rates. I wouldn't say that paying for trash pickup from rates rather than paying per piece is inefficient: the best evidence suggests that the transactions costs of running a per-unit payment system outweigh any distortions caused by lump-sum pricing. But it will make recycling look relatively less costly.

Kevin Libin in the National Post lays out some hard facts on recycling.
“People say you can’t recycle too much. It turns out you can,” says Mr. Porter, president of the environmental consulting firm, the Waste Policy Center, near Washington, D.C. “If you spend enough money, you can recycle anything. That doesn’t mean you should.”

A 2003 study by Enviros Environmental Consultants UK found that “from a global warming perspective, there is limited environmental benefit to using recycled glass” but continuing with the exercise of recycling was “an important part of the UK meeting its overall glass recycling targets.” That is, so politicians could meet their set goals, even if there was no environmental point to it.


San Francisco’s Department of Waste recently calculated it paid $4,000 a tonne to recycle plastic bags. Its resale price for the recycled product? $32. “Nobody wants it. There’s no value. It doesn’t make sense,” says Joseph Gho, CEO of EPI Environmental Products Inc., a Vancouver manufacturer of biodegradable plastics. “Besides the financial, the economic cost, you’ve got the environmental cost” of recycling unwanted material. “The trucks running out there, burning fuel … you have to use energy, you’ve got CO2 emissions.”

That’s why curbside recycling requires, wherever it’s implemented, millions of tax dollars to stay afloat: the inputs required are greater than the savings. Even in New York City, where area land is some of the most expensive on the continent, it costs $240 to deal with a ton of recyclables, compared to the $130 a ton of landfills, says Angela Logomasini, Director of Risk and Environmental Policy at Washington, D.C.’s Competitive Enterprise Institute.


A 2000 study by the London-based environmental group Friends of the Earth found that collecting yard waste for recycling (ie, making mulch) emitted 264 more pounds of CO2 than burying it in a landfill. In 2002, two of Sweden’s leading environmental authorities argued that recycling’s benefits were usually undone by the resources required to collect and process it.


A study out of Washington’s Gonzaga University calculated that all the garbage produced by Americans over the next 1,000 years would fit into a landfill just 44 miles square and 100 feet deep—less than one-tenth of one-percent of American real estate.
I like the last bit. In my lecture on environmental economics, I note that if Christchurch went through a landfill the size of our current Kate Valley facility every year instead of every thirty years, and if we were building new landfills on prime irrigated dairy land instead of scrub wasteland, the cost of buying land for landfill would still be only about $2 per person per year. Absolutely trivial.

My students tell me that the stuff they hear in my Economics and Current Policy Issues course is ... somewhat different from what they hear in their management or accounting courses. I enjoy providing diversity.


  1. Those studies are old, very old, considering how far recycling technology has moved on since then, and how much more efficient the processes are. It looks like he's Googled some keywords and grabbed the first few studies that argued his points well.

    I could point you to three or four European recycling companies that manage to turn a great profit from collection and recycling, through audited processes that result in an end product rather than just taking it away and stockpiling. I know because I performed the green point audits for the companies, and saw their sites, their accounts and their processes. There's also a few councils that are starting to make a mint out of recycling - largely because they're doing it right, and have a holistic approach to environmental services. That is, recycling is integrated into general refuse collections, and general refuse collections are integrated into pest control, etc. I know because I worked for them.

    It's not because recycling is a dead end, or it's true that it's wasteful that certain areas come up with failures. It's a lack of investment or an unwillingness to build on investment - and that's one of the consequences of a state monopoly on waste services.

  2. The JEP piece I linked is from 2006; is that old now?

    Send me links to the places that are doing it right; I'd be keen to see.

    Recycling doesn't have to be a dead end. Lots of things, like metals, can be profitably recycled. Heck, I'd even be happy with a subsidy for recycling equal to the amount by which Councils subsidize landfill disposal. But mandating that things be recycled when it's more expensive to dispose of them by the recycling process than by landfill doesn't make much sense to me. I'd be keen to see how the Europeans are doing things.

  3. Recycling is the idea that everything is worth saving...except time.

  4. @Canada: overconsumption is only economically meaningful to the extent that there's a negative externality from some activity; a generalized theory of overconsumption is untenable on economic grounds. There's absolutely nothing wrong, economically speaking, with consuming lots of stuff. Prices incorporate scarcity.

    @Patri: excellent.

    I recycle, but I do so because I'm privately selfish: the recycle bin is much bigger than the trash bin, so as much as possible gets dumped in the bigger bin to save room for diapers in the smaller bin. I don't feel good about recycling: I know that most of the stuff that we send out for recycling costs the Council more than if they just put it in the landfill. But it's privately optimal, and who am I not to respond to incentives?

  5. Crampton, in theory, yes, scarcity would be reflected in prices, which would tend to discourage consumption. However, there's two problems here, first many of the externalities (i.e. real costs) are excluded from market prices, and second, the market doesn't have complete information.

    In the first case, prices for most products don't reflect carbon emissions, pollution, or other environmental damage. If they did, they market would probably take care of the problem to a large degree.

    Second, take oil for example. Recently several whistleblowers from the IEA have said that the IEA has been deliberately overestimating future oil supplies because they don't want to panic the markets. But if people think there's going to be an extra 20 million barrels a day in 20 years, they react accordingly. Prices can't incorporate scarcity if no one knows that a resource is becoming scare!

    Free markets aren't perfect, but if we are going to support them, we need to make sure that prices incorporate all externalities, and we have to make sure consumers are well informed. Otherwise prices are just as artificial as under a command economy.

    There's also some question whether economic growth can continue forever on a finite planet, especially in the face of peak oil.

  6. @Canada: A lack of carbon pricing doesn't lead to generalized overconsumption; rather, it leads to distortion towards too carbon heavy consumption: folks drive too much relative to watching movies. Absent comprehensive pigovean pollution taxes, it's tough to tell how one ought to reorient consumption, sure. But beyond carbon (with the case for that less certain than it was a month ago), are the other distortions really first order?

    I have a hard time believing the "generalized conspiracy to hide evidence of running out of oil" story. Why? Oil companies would have a pretty strong incentive to get accurate information out there as it would tend to push prices way up. It sounds like a conspiracy by the big oil companies to throw money away, and I'm not sure that they're all that into that.

    This planet may be finite in some resources, but resourcefulness is bounded only by the extent of the market.

  7. Crampton, as for oil, I don't think there's a conspiracy on either side. :) A lot of people were taking the position that the big run up to close to $150 a barrel was a conspiracy. Of course not, it was the market behaving correctly. Since the recession, prices have dropped off, obviously, as demand went down.

    The problem with understanding global oil supply is that many countries have state-run oil companies and are very secretive about their reserves and production rates (IEA actually counts oil tankers to try to estimate some of their data.) Very few organizations have the ability to collate all of this hard to get data on a global scale. The IEA was formed specifically to do this after the oil crisis in the seventies precisely because no one else had this data. They need to be as transparent as possible, otherwise what good are they? Also, remember the IEA is supposed to be independent of oil companies.

    Also, obviously oil isn't going to run out, at least not in the next hundred years. The issue with peak oil is the *rate* at which it can be extracted, and we seem to be at, or near this point.

  8. Independent, sure. But surely if a bunch of countries were much closer to tapped out than they're letting on, Shell and everybody else would be shouting it from the rooftops and would be massively cutting back current supply in anticipation of the big price hikes to come. If they're not, then either I'm missing something big, or Shell doesn't believe the forecasts.

  9. Best argument I've seen for sovereign overstatement is that where quotas are based on named reserves, then overstatement gets you more quota. If that were the case, we'd still expect oil companies elsewhere to be cutting back though: basic Hotelling argument that a few agents going nutty affects the location of production rather than the overall temporal allocation of resources.

  10. @Crampton

    Sorry, I can't access JSTOR anymore. I was referring to Libin's studies for his justifications, not your link, because I couldn't read it and had no fair comment.

    Here's a selection of former vendors of mine making big money in the area: (also present in North America and Australia)

    The answer to how the rest of Europe do it is one you might not like - it's illegal not to recycle in a lot of European countries, like Germany and the Netherlands. In Britain, Councils can be fined into the millions for non-performance in meeting landfill targets.

    When I first came here, I was moderately shocked at how, for want of a better word, backward the recycling system is. I was also shocked at the state of the water system, but that's another story.

    I'd guess the problem is largely down to geographical isolation combined with a relatively low population, which doesn't make it economically feasible to set up the type and scale of recycling plants you get in an area that has huge comparative population and legislative requirements to recycle.

    Someone's making money out of it though - enough to want to pin large investments on it. The larger the scale, the less it costs to produce each recycled unit. I know that people are pretty much convinced of the idea that a unit produced from recycled material costs less than a unit made from new materials. To what extent that's true, I'm not sure, but for private companies to put that much investment into the principle, it has to be true to a certain extent - or it has to be profitable, which equates to the same thing as true in this instance.

  11. Will check your folks out, but that there has to be a mandate to purchase it...

  12. You're right, and I was thinking about it, so I just want to add that only one of those companies processes domestic waste for the councils, aiding them to meet that target - that would be Veolia.

    B&M have very little involvement with the public sector, excepting that they consistently undercut the council on commercial waste collection and recycling. They do some collection services for councils, but they're for the commercial entities attached to the councils, which tend to be semi-autonomous, self-funded organisations.