l2 - economics of recycling and waste (map26)

8/11/2019 L2 - Economics of Recycling and Waste (Map26)

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Economics of Waste and

RecyclingTietenberg, Ch. 9 on Recyclable

Resources (Ch.8 in older

editions)


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Recyclable resources

Initially when the resource is plentiful, norecycled material will be used

As the resource gets depleted and

extraction cost increase, recycled materialwill increasingly be used

As disposal costs increase recycled

materials will be used If consumers bear the disposal cost

recycled materials will be used


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Questions

What is the efficient amount of recycling?

Will the market result in the efficient

amount of recycling in the absence of

government intervention?

What about (in-built) shelf life of a

product?


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Divergence of private and social

costs

Marginal private cost of throwing a unit oftrash is small, smaller than the socialmarginal cost

The level of recycling is inefficiently small Marginal private cost and marginal social

cost of disposal diverge

If social costs of disposal are included inthe cost of disposal then level of recyclingwill be efficient (diagram)


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Life cycle analysis

Full environmental impact of a good frombirth as raw material till its death at landfill,incinerator

Component of social cost benefit analysis How to define impact boundary?

Example: disposable drink cup: paper

versus plastic The private cost to consumer is about the

same


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Towards measuring social cost

Paper cup

Made of renewable

resource, wood

Uses 36 times moreelectricity

Generates 580 times

more waste water Landfill: degrades,

emits methane, CO2

Plastic cup

Made of non-renewable

resource, oil,

emission of pentane

Recycles easier

Landfill: Does notdegrade


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Policies

littering

Taxes

Flat rate

Pay by volume Aims to reflect social cost of disposal

Amount of garbage decreases

Deposit refund schemes: refund is given when theproduct is returned

Aluminium cans (production cost much lower from recycled!) Waste oil

Germanys take back principle


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Product obsolescence

Functional Obsolescence (computers)

Fashion obsolescence (clothes)

Durability obsolescence: incentive to decrease

useful life of a product, in-built durability Discount rates study: implied discounts rates from

purchases of consumer durables are higher for lowincome consumers (higher than market interest rates)

Competition tends to increase durability Cars in US

In Germany regulations were enacted requiringproducts to be durable


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Waste Trade

Developing countries

Waste recovery is a

market driven

phenomena occurringwithout government

intervention

low per capita waste

Goods used longer

Developed countries Waste recovery due to

environmental concerns and

government support

More waste separated atsource

High per capita waste

the amount of business waste

is greater than household

waste

the City of New York exports

25,000 tons of trash a day to

other cities and states


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Informal recycling

In developing countries government-runrecycling programs are rare

Instead informal recycling

estimated 15 million people worldwide, trashpickers are about 1 percent of the global urbanpopulation (2% in Asian, LatAm cities)

Brazil claims 90% Al recycling rate due toinformal recycling; U.S. about 50% Al recycled

Need integration of informal recyclers into formalmunicipal waste services

Recognized as legal profession only in Brazil


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Informal recycling

Zabaleen garbage recyclers in Cairo

Individual or family groups

Micro-enterprises

City of Cairo decided to modernize waste collection

and privatized and sold waste collection to MNEs MNEs are required to recycle 20% of the waste (while zabaleen

recycled 80%)

Gov encouraged MNEs to hire zabaleen

MNEs Offer much lower wages to the zabaleen

Relocation of recycling activities of zabaleen to out-of-town;eviction from current homes that also had waste-processing onsite

Conflict between traditional recycling economy andmodern waste processing done by large corporations


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Wilson et al, Role of informal sector

recycling in waste management in

developing countries, Habitat International,

vol. 30, Dec. 2006

Waste and Want: A Social History of Trash

by Susan Strasser, Metropolitan books


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Please recycle!

l2 - economics of recycling and waste (map26)

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