Jane S. Shaw
The Concise Encyclopedia of Economics


by Jane S. Shaw
About the Author
Recycling is the process of converting waste products into reusable materials. It differs from reuse, which simply means using a product again. According to the Environmental Protection Agency, about 13 percent of the nation's solid waste (that is, the waste that is normally handled through garbage collection systems) is recycled. This compares with 14 percent that is incinerated and 73 percent that goes into landfills.

Recycling is appealing because it seems to offer a way to simultaneously reduce the amount of waste disposed in landfills and to save natural resources. During the late eighties, as environmental concerns grew, public opinion focused on recycling as a key way to protect the environment. The EPA proposed increasing the percentage of recycled solid waste from 13 percent to 25 percent by 1992. Producers of plastics such as polystyrene, which traditionally has not been recycled in large quantities, set about doing so, and many companies began touting their use of recycled paper as a way to improve their image with consumers.

Recycling, however, is not always economically efficient or even environmentally helpful. The popular emphasis on recycling stems partly from two misconceptions: the view that landfills and incinerators are "bad," and the assumption that the nation is running out of landfill space. William Rathje, a University of Arizona archaeologist who specializes in studying garbage, says that landfills can be safely sited and designed, and there is still plenty of room for them in the United States, except for parts of the Northeast. Engineers have learned to avoid putting landfills in places that come into contact with water, such as sites on rivers and in wetlands, and have designed monitoring programs to ensure that any leakage is caught before it causes harm.

As for space for landfills, in the late eighties the state of New York commissioned a study of potential landfill sites. It found that two hundred square miles were available—a small part of the whole state, but still room for quite a few landfills. Community opposition to siting landfills (known as the "Not-in-my-backyard" syndrome) seems to have abated in recent years, too, as landfill operators learned that paying fees to communities would encourage acceptance. For example, Waste Age magazine reports that Charles City County, Virginia, will receive more than $1 million a year from the builder of a landfill, while a company in Madison, Wisconsin, expects to pay $6 million over twelve years for the right to build a landfill. Payments include the costs of guaranteeing the property values of all homeowners within a specified distance of the site, of rebuilding roads, and of operating a nearby park.

The Economics of Recycling

In the absence of government regulation, the economics of each material determines how much of it is recycled. For example, about 55 percent of all aluminum cans are recycled. This relatively high percentage reflects the fact that recycling aluminum is often cheaper than producing new aluminum. Recycling aluminum cans requires less than 10 percent of the energy required to produce aluminum from bauxite. The recycling of cans has grown along with the penetration of aluminum into the beverage can market. In 1964 only 2 percent of beverage cans were made of aluminum; by 1974 the share was nearly 40 percent, and by 1990 it was about 95 percent. In 1968 Reynolds Metals Company started a pilot can-recycling center. The chief motivation was to respond to public concerns about litter, reflected in proposed and actual laws requiring deposits on beverage containers. But it was the rapid rise in energy prices during the seventies, plus fears of energy cutoffs, that made recycling economically attractive.

Paper and cardboard, the largest components of municipal solid waste, are also extensively recycled. Because cardboard can be made from a wide variety of used paper, the costs of separating different kinds of paper are low, and because many places (such as grocery stores) use large quantities of corrugated boxes, collection can be efficient. As a result 45 percent of all corrugated boxes were recycled in 1988.

In contrast, the high costs of collecting and separating plastics have limited their recycling. People have not shown a willingness to clean and separate their discarded plastic. In fact, a study by the Plastics Recycling Foundation concluded that voluntary drop-off or buy-back centers will not bring in enough plastics to make nationwide recycling economically viable. Also, different plastic resins cannot be mixed together and reprocessed. (To deal with this problem, the plastics packaging industry has developed symbols for marking different kinds of resins, a step that could lower the costs in the future.) In spite of the limitations, 20 percent of plastic soft drink bottles are now recycled.

Ironically, recycling does not eliminate environmental worries. Take newspapers, for example. First, recycled newspapers must be de-inked, often with chemicals, creating a sludge. Even if the sludge is harmless, it too must be disposed of, probably in a landfill. Second, recycling more newspapers will not necessarily preserve trees, because many trees are grown specifically to be made into paper. A study prepared for the environmental think tank Resources for the Future estimates that if paper recycling reaches 40 percent (compared with the present 30 percent), demand for virgin paper will fall by about 7 percent, and "some lands now being used to grow trees will be put to other uses," according to economist A. Clark Wiseman. The impact would not be large, but it is the opposite of what most people expect. Finally, curbside recycling programs usually require more trucks that use more energy and create more pollution.

Deterrents to Recycling

A major deterrent to recycling is that the prices of local garbage disposal rarely reflect the actual cost of disposal. Most collection systems are controlled or owned by governments, which assess a flat sum for garbage collection, sometimes as part of municipal taxes. The trash collector picks up whatever waste people leave at the curb, and people are not rewarded for discarding only a small amount or penalized for discarding a lot. Thus, they have no incentive to reduce their waste. In contrast, privately owned systems, operating without municipal price regulation, would have to accurately price garbage disposal to stay profitable. Accurate pricing—that is, high prices for people who generate more waste—would encourage people to reduce their waste.

Unfortunately, recycling has not taken the form of privatization or freeing up of municipal controls. Instead, more and more local governments have mandated curbside separation. A few cities, such as Seattle, have, however, experimented with charging for each trash can that has to be picked up. This has led 70 percent of Seattle residents to cut down on their waste. Such "per-can" charges provide an inducement to reduce waste, whether through recycling or other means. And it means that those who choose not to reduce their waste pay the full cost of the burden they place on the collection system.

Recycling is not a panacea for environmental problems. Instead, it is only one of several means for disposing of waste. It is widely used where the economics are favorable. Where they are not, government regulations may override the economics, but only by requiring actions, such as curbside recycling, that people will not do voluntarily. A fairer way to encourage recycling is to price the costs of disposal accurately.

About the Author

Jane S. Shaw is a senior associate at the Political Economy Research Center in Bozeman, Montana. She was formerly associate economics editor with Business Week.

Further Reading

Katz, Marvin G. "YIMBYism Is Coming, But..." Waste Age, January 1990, 40-41.

Rathje, William L. "Rubbish!" The Atlantic Monthly, December 1989, 99-109.

Scarlett, Lynn. "Make Your Environment Dirtier—Recycle." The Wall Street Journal, January 14, 1991, A14.

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