The Economics of Recycling

0:00Lee Jacobson's enthusiasm about recycling just flies in the face of the task that she's up against. When the markets crashed last year, Auburn University out here, their waste disposal needs fell on hard times. The company out of Atlanta that had been taking co-mingled trash, Okay, that's this plastic and paper and glass all together, without any charge, said, no longer. No, this was no Georgia-Alabama feud, we've got those, but this wasn't one of them. Simple economics prevailed.

0:47China's demand had slumped. The entire market for recycled materials went nearly to zero. When the market disappears, companies can no longer provide dumpsters. They can't any longer take waste at no charge, and they can't carry that waste to a transfer center over here in Opalaca, saving this university $20 a ton for doing so. So six months ago, Lee Jacobson and others representing the city of Auburn, Opalaca and in Lee County secured an annual Alabama recycling grant for $120,000 and $120,139. AU got $40,895 of that. The funds have come from an imposed extra $1 per drop-off fee or tipping fee at the landfill dumping sites all around the state.

1:52Sixty buildings have now gotten new bins, labels, signs and posters. Single collections of cardboard mixed with paper and plastic bottles and metal cans are underway. Residential areas have been the first to come online with this new project. But everything collected in these new bins still needs to be separated If the enterprise ever hopes to get paid for having collected it. So if you look out these windows with the blinds up right over there across the street on the east side of Donoghue, you will see Lee's workspace.

2:38Peek into the parking lot, look at the bins, see the people manually separating cardboard and cans from bottles. It's a small staff, they've got a big goal. Bundled cardboard last month fetched $17.50 a ton. Steel and aluminum cans can generally get 10 cents a pound. Plastic bottles earn one penny per pound. A great deal of human labor is going into this recycling project, and it has a price Lee optimistically thinks that this can work. Economically, the university should stop these recycling efforts and let the waste be hauled to a landfill.

3:32Those landfills can always be mined in the future when there are actual markets for such materials. The company that holds the university's contract for hauling waste away is Waste Management. They do not recycle. They own their own landfill over here in Salem. The charge for dumping waste there, or tipping, is $21.75 a ton. AU does already landfill a great amount of waste. They should landfill all of it. Ten years ago, when open dumps were closed in the state, private companies began filling that need.

4:17Waste management is today the largest landfilled operator in the country with 281 landfills. Now, if they're the largest with 281 landfills, does that sound like enough landfills in the whole country to you? And is it? Isn't that one of the three things absolutely everybody knows about recycling? And everybody knows when we talk trash? Number one, we know we're running out of landfill space. Number two, we know we're saving resources and protecting the environment by recycling.

5:05Number Three, we know that no one would recycle if they weren't forced to. Well, let's look at these things that we think we know. Are they real or are they rubbish? One, are we running out of landfill space? Two events created the perfect garbage storm back in the late 1980s. One barge and one bureaucrat created this one overhyped myth. The garbage barge was the Mobro 4000. The bureaucrat was J. Winston Porter. Mobro 4000 gained infamous celebrity status by spending two months and 6,000 miles scouring the Atlantic coast and the Gulf of Mexico, Looking, presumably, for landfill space as if nonexistent.

6:06The physical availability of landfill space was not the issue. But you would not have guessed that from the hysteria that the media whipped up about this. J. Winston Porter became a star that season at the Environmental Protection Agency, the EPA, by writing Agenda for Action, which Porter proclaimed recycling is absolutely vital because America is running out of landfill space. What Porter thought he knew simply was not. So the EPA had noticed that the number of landfills was dropping. The EPA had failed to notice that the The capacity of each landfill had grown larger and larger.

6:58The sizes were larger. Total landfill capacity was not disappearing, it was rising. The EPA also underestimated the prospects for condition, for newer capacity. Obviously, and as usual, the real landfill problem is not a landfill problem at all. is a political problem. Fears about the effects of landfills on the local environment have led to the rise of the Not in My Backyard or NIMBY syndrome, which has made permitting facilities difficult. Actual landfill capacity is not running out. Today 1,654 landfills take care of 54% of all the solid waste in the country.

7:50One third of them are privately owned. The largest landfill is in Doug French's old hometown, Las Vegas, and it received 3.8 million tons during 2007 at fees that ranged between the national average of $24 a ton to $70 a ton. Landfills are no longer any threat to our environment or public health. State-of-the-art Part landfills with redundant clay and plastic liners and leachate collection systems have now replaced all of our previously unsafe dumps. More and more landfills are producing pipeline quality natural gas.

8:35Waste management plans to turn 60 of their waste sites into energy facilities by 2012. The new plants will capture methane gas from decomposing landfill waste, generating more than 700 megawatts of electricity, enough to power 700,000 homes. The end use of most landfills is parkland. Holding all of America's garbage for the next 100 years requires a space 255 feet deep or high and ten miles on the side, all of them. Two, are we saving resources and protecting the environment by recycling?

9:26We want to be. What are the cost in energy and material resources to recycling as opposed to landfill disposal? Which method of handling solid waste uses the least amount of resources as valued by the market? As government budgets tighten and the cost of being green rubs against the reality of rising taxes, recycling coordinators like Lee Jacobson increasingly will be under fire to justify their programs as cost-effective alternatives to waste disposal methods like landfilling. I don't think she'll be able to do it, but it should be easier for Lee at the university than it will be for her counterpart in the city of Auburn or any city that funds curbside recycling like Seattle or San Francisco.

10:23Curbside recycling is substantially more costly, and it uses far more resources than a program in which disposal is combined with a voluntary drop-off buyback option. Overall, curbside recycling cost runs between 35% and 55% higher than other recycling costs. First, recycling itself costs more than three times more resources than does land filling. The largest U.S. organization dedicated to recycling just found out how difficult this chosen path can be.

11:08The final death knell for the National Recycling Coalition, NRC, appeared to ring earlier this The NRC ceased operations and terminated all staff members at the close of business on September 4. They had tried to merge with Keep America Beautiful, but that had failed. NRC is now trying to avoid bankruptcy by reorganization. Even though there are half a million dollars in debt, they think, Association. Even though there are half a million dollars in debt, they think, well, if we can cobble together a business plan, maybe we can make this work. But what is their business plan? They're looking to the Kerry Boxer bill on clean energy to include some nice subsidies for recycling.

12:01So the market knows this is a losing proposition, but these players are trying to get taxpayers to fund their enterprises. The Solid Waste Association of North America found in the six communities involved in one particular study that all but one of the curbside recycling programs, and absolutely all of the composting programs and waste to energy incinerators, increased the cost of waste disposal. Indeed, the price for recycling often tends to soar far higher than the combined cost of manufacturing from raw materials and virgin sources and dumping rubbish into landfills. To recycle waste is to use twice the energy and create twice the pollution from factories, trucks and by-products.

12:55Recycled newspapers have to be de-inked first. That creates a sludge that has to be disposed of. Recycling more newspapers will not save trees. Trees are grown especially to be a crop to become paper. The amount of new growth every year that occurs in forest in the world exceeds by a factor of 20. The amount of wood and paper that is consumed by the world every year. Wherever private property rights to forest are well defined and enforced, forests are stable and growing. Glass is made from silica dioxide. What's that? That's beach sand.

13:44That's the most abundant mineral in the crust of the earth. Plastic is derived from petroleum byproducts after fuel is harvested from the raw material. Recycling paper, glass and plastic is usually not justified compared to the virgin prices of these materials. The best way to measure the scarcity of a natural resource, such as tree or sand or oil, is to use the market prices of those resources. If the price of a resource is going up over time, and it's not just because it's being pushed up there by inflation, then the resource is getting scarcer.

14:30But if the price of those resources is dropping, then it's becoming more plentiful. Indeed, since 1845, the average price of raw materials has fallen roughly 80% after adjusting for inflation. This is a paradox. This paradox of we will have more by using more is explained by the use of the most important resource out there, the human mind. Human Ingenuity makes natural resources increasingly available through prices, innovation and substitution. Bureaucrats, however, appear to occupy a place at the far and opposite end from human ingenuity.

15:20Their interfaces and interferences in markets do damage. Just two examples will illustrate what I mean by that. One is about a light with a dark side, and the other example requires that you either clean your plate or become a composter. Our Congress in 2007 banned incandescent bulbs, not exactly a market action. The phase out of incandescent light is to begin with the 100 watt bulb in 2012 and end in 2014 with the 40 watt bulb. By 2020, bulbs must be 70% more efficient than they are today. While a standard 100 watt bulb cost $1.24, the spiral compact fluorescent light CFL bulb 100 watt was $4.97.

16:18Advocates argue that the CFL will last longer and use less energy. The packaging claims here say that after six years of using that, I will have saved $74 in energy. Thereby, in the year 2007 alone, under this edict, some 397 million compact fluorescent light bulbs were placed onto the market. Their debut is counted as a success. However, the recycling of these spent CFLs has been an abject failure. Well, already, Gracious introduced in 2007 and they've already failed by 2009. They're in the landfills. That doesn't sound like they got six years worth of use out of those.

17:07But despite CFL disposal bans in states like Maine and despite continuing statewide education efforts and a free CFL recycling program there, households throw the used bulbs into the trash that does end up in the landfills. Well, what's the problem with that? Landfills, as we've learned, have the space and they have the appetite for our waste. Well, the problem is the potential public and environmental health effect of the collective release of the small amount of mercury in each discarded CFL. For example, using the mean amount of 5 milligrams per CFL, the total amount of mercury contained in that 2007 shipment of CFLs alone was 4,376 pounds.

18:01There's no mention on GE's packaging that this bulb contains mercury, and there isn't any special precaution that you have to take when the bulb breaks. Notice, however, that Mercury Free is already a selling point to the producers of the new LED technology accent bulbs. Now, they're called accent because they don't give off enough light to read by. But they're cute and comforting. And these makers and producers of this packaging, at least, have experienced a CFL bulb before because they say, you will get a warm, nice light, which is something you will not get from a CFL.

18:53In June of this year, Maine did adopt the nation's first law that required the CFL bulb manufacturers to share the cost, cost is going to go up, but how can savings result? How can I save over six years seventy-four dollars? The costs are going to go up, and what a boondoggle it is to think that I've got this health hazard instead. Well, bringing new depth and meaning to the word boondoggle, San Francisco had a new mandatory recycling ordinance last month. All residences, all restaurants, and all businesses must not Not only just recycle, but must compost too.

19:45It's a green bin and you'll like the color of it. They found out that 36% of their landfills waste was compostable, but that happens to be the very ingredient that made the landfill valuable in future years as an energy source because it would compost. Collecting your food scraps, your plant trimmings, your soiled paper, and I do mean toilet paper. Your soiled paper and other compostables is considered necessary by San Franciscans to fight global warming. That was an issue I talked about last year. Let's get both a green cart and a green pamphlet called Stop Trashing the Planet.

20:37And you will face a $100 fine if you're caught having your paper with food scraps on it. I don't know about pizza plates. Businesses will face a fine of $500 because, of course, they can afford to, and really bad actors will be fined $1,000. The stated goal is to get to zero waste. Now when the goal is zero waste, I think people in San Francisco will say, well what the heck am I paying for garbage pickup for? Obviously San Francisco believes we've run out of landfill space and obviously they don't Don't have any vision to see the energy plants that landfills can become and are becoming.

21:29Recycling is a manufacturing process. Don't think that it will save resources or save pollution. The US Office of Technology Assessment has said that it is usually not clear whether Another secondary manufacturing such as recycling produces less pollution per ton of material process than primary manufacturing does. Well, if it's not clear to the people who are pushing it on us, I'd say it's not clear. Manufacturing paper, glass and plastic from recycled materials uses appreciably more energy and Water and Produces as Much or More Air Pollution.

22:15Takes twice as many trucks. Just imagine, instead of 400 trucks in L.A., I've got 800 trucks now cruising the curbs. That's a little bit of pollution, air pollution. Will only the people who are forced to recycle, is that true? Lord, recycling is at least the world's second oldest profession. They were called scavengers or rag pickers. Anything that is of value is recycled now. Anything of value is recycled now. You just wonder what needs to be recycled. You recycle the thing that somebody is knocking on your door are begging to buy from you. Silver, metal, that's why aluminum cans, you'll find not even 1% of that in any landfill, everybody's been collecting cans and making money off of that.

23:18If it is worthy of being recycled, you are already being paid for it. Henry Haslett and Ludwig von Mises do speak to recycling. In Economics in One Lesson, Haslett teaches us that mandatory recycling considers only short-term benefits for a few people, politicians, public relations consultants, environmental organizations, and waste handling corporations. Instead of looking at the longer-term effects for whole groups of people, the negative consequences of this short-sighted, short-term special interest group look is going to be a huge squandering of human resources, your brain power, your innovation.

24:16And in conclusion, Mises also teaches us what to expect. In his great work, Human Action, he does not say to us that recycling is a bad belief. Never would say that. He shows by example that mandatory coerced recycling is an inappropriate means of caring about the environment. It's an inappropriate means. Waste is inescapable. That's the second law of thermodynamics. Waste is inescapable. Austrian economics leaves it to every person to decide whether your belief, what you think you know, whether it's so or not, what you think you know, that your belief is more important than the avoidance of the inevitable economic consequences of forest recycling policies, wasted natural resources when we don't have any to waste, and wasted human resources, which is the most valuable of all the resources.