The Complicated Economics of Recycling: Why the Notion of "Free Recycling" Is a Myth

In the natural world, there is no need for a concerted recycling effort. There is no such thing as an end-product, as everything – from fallen trees to corpses to the ash after a forest fire – can be processed and used as the basis for new life. In the human world, however, most of our products either have no end-of-life use or are packaged with non-organic materials.

With Americans producing more than 18 billion cubic feet of municipal solid waste per year, and with only 35 percent of that waste being recycled, we are at risk of running out of landfill space in which to dispose of our trash. As the population continues to expand, and with recycling rates having reached a plateau, the demand for more disposal space will skyrocket in the years to come. The technical understanding already exists to make products more recyclable and recycling more efficient; the will to follow through is what is missing. The reason for this largely comes down to economics.

This article will discuss what makes recycling such an economically complicated issue, and whether recycling makes enough economic sense to be a solution to the solid waste proliferation problem.

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The Economics of Recycling

As with most environmental initiatives, the greatest obstacle to mass adoption of recycling has been one of economic practicality. While the sustainability equation is complicated, it can be boiled down to a simple statement: in order to be economically viable, the cost to use post-secondary materials cannot be greater than the cost to use newly sourced materials. In other words, the cost to incorporate recycled paper into a toilet tissue producer’s material stream cannot exceed the cost to grow, cut down, transport, mill, and process new tree stock.

While this threshold of viability doesn’t seem difficult to reach, as post-consumer product is more processed than raw stock, there is a multitude of complicating factors. One is the issue of scale[FC1] : in order for a recycled material to be reclaimed economically, it must be collected in large quantities. This material must be transported, sorted, bundled, and processed at a cost that is less than what the post-consumer stock fetches on the open market, which will always be less than the cost of equivalent new materials. If the recycling process costs more than what the material will bring in financially, the material is not recycled.

Most materials are capable of being recycled with the right reclamation process. The problem is that the cost to create and operate separate processing lines outpaces the profitability of recycling those materials. Without the ability to satisfy a profit motive, those materials end up in dumps. This was once the case for all end-of-life tires: because vulcanized rubber was exceptionally expensive to reverse, and because post-consumer vulcanized rubber degraded the performance of new tires, tires that were past their life cycle ended up in landfills. New devulcanization technologies and new uses for reclaimed rubber, however, have helped to reduce the number of tires disposed of this way.

Another complicating factor is a lack of education. If asked, the average consumer would not be able to differentiate between different types of plastic, state which types their local recycler accepts, or list what extraordinary conditions (i.e. food waste, chemical contamination, sorting with other recyclables, etc.) would cause those recyclables to be rejected. Due to this lack of knowledge, the average consumer will throw all plastic waste either in the trash or in the recycling bin indiscriminately, without considering whether it is actually recyclable. This creates an additional financial burden for the recycler, who must devote staff hours to sorting out and rejecting containers of the wrong type.

Finally, the technical understanding necessary to process recyclables more cheaply may exist, but may not be readily available. There are no guidelines dictating what equipment every recycler should have. Large recyclers can often take anything recyclable, while a community served by a smaller recycler may only have the option of recycling paper, aluminum, and #1/#2 plastics.

Combined, these circumstances create little to no profit margin to entice and sustain recyclers. With curbside recycled material prices dropping in response to the global economic climate, and with the growing contamination rate of the end-products offered for recycling, the situation is delicate indeed for the nation’s municipal solid waste processors, and for the nation as a whole.

Making Recycling Profitable

There are ways, however, to tip the scales in favor of recycling. One is to make recycling compulsory. The threat of fines can motivate people to not only recycle, but to learn how to properly sort and prepare their recyclables. This strategy requires a public-private partnership with the goal of improving recycling rates, a controversial arrangement that can be seen as a form of social engineering.

“Despite skepticism from cynics around the country, the people of Seattle overwhelmingly support food waste recycling,” former Seattle mayor Ed Murray wrote in an op-ed for Time. “And they are putting their commitment to composting into action. By year’s end, we will have recycled 11,000 additional tons of organic material—the equivalent of 220 rail cars—that otherwise would go to a landfill.”

While the idea of forcing residents to haul recycling bins out to the curb with their trash is likely to lose a few votes, it is an essential step towards ensuring the integrity of the material stream. This strategy, however, must be coupled with a sincere effort to educate residents on how to recycle and how to prevent contamination.

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“Yes, we recycle because it speaks to our community’s values to protect the environment. But by cutting in half the volume of all trash going to the landfill—Seattle recycles over 400,000 tons a year—we reap another green benefit: Our city has saved $200 million in landfill costs over the past 15 years. Seattle’s approach to recycling might not be right for every city, but it works for us."

The reality of recycling is that – to make it work – we must understand and master its economics. The notion of “free” recycling must be abandoned; recycling is an expensive proposition, but it is necessary to the health of the environment. We must be willing to acknowledge and pay the price of solid waste reduction if we are serious about solving the landfill space crisis.