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This comprehensive, Michigan specific review of the economics and politics of solid waste management analyzes recycling, incineration, landfilling, and composting. Michigan should manage its solid waste stream by relying upon market mechanisms and avoiding imposing statewide mandates. Includes an analysis of solid waste legislation and certain local government waste management initiatives. 98 pages.
America, we are told, has become a "throw-away" society and unless something is done to correct this problem, we may all be "Buried Alive," [1] with "Tons and Tons of Trash and No Place to put It." [2] Short of drastic action, "Garbage dumps will cover the country coast to coast and garbage trucks will stop in everybody's backyard." [3]
Is there really a solid waste problem (no one calls it garbage, it's now "solid waste") in the sense that we have something on our hands that either should never have been there in the first place, or being there we now find we can't get rid of? Or is the present sound of alarm little more than one more opportunity for the exercise of journalistic hyperbole, if not political opportunism?
If there is such a thing as a "solid waste problem," is it a problem in all regions of the country or just in some regions of the country? Is it a problem in all parts of Michigan in the same way it may be a problem in, say, the northeastern quadrant of the United States? Is it a problem only in some parts of Michigan and not in others?
This study is aimed at seeing Municipal Solid Waste (MSW) as a technical economic problem which can be solved without resort to the use of "good guy"/ "bad guy" terminology. We will argue that solid waste can be managed in an environmentally acceptable way through the natural interplay of market forces. Furthermore, this study will argue that resort to specific ad hoc government mandates for one type of material over another, or one type of waste management technique over another, could very well be counterproductive.
Americans do generate a lot of garbage. After all, we are a wealthy people and wealthy people buy, use, and dispose of a lot of materials. According to a 1988 study prepared for the U.S. Environmental Protection Agency, American families produced 2.7 pounds of trash per person per day in 1960. By 1987 this figure had increased to 3.5 pounds per day and is projected to increase by an additional 20 percent by the year 2000. [4]
By contrast, we are told, Japanese citizens produce only 76 percent of the amount of garbage produced per person in the U.S.; France produces only 60 percent of the U.S. level; and West Germany only 40 percent. [5]
Do these data and comparisons really mean that America is a "throw away society?" To say that we are is to make a moral judgment – i.e., there is something morally wrong with a "throw away society." However, even though the amount of garbage estimated to be thrown away per person per day increased 29.6 percent between 1960 and 1987, real inflation-adjusted per-capita disposable income, which measures the average capacity of every American to consume goods, increased 135 percent over the same period. In addition, the percentage of all Americans between the ages of 16 and 65 gainfully employed (i.e., the "work force participation rate") rose from 56.1 percent to 61.5 percent – an all-time high. [6]
Taken together, these data are an indication of a robust economy in which more and more people are working outside the home. If anything, the relatively small increase in the amount of trash discarded compared to the increase in disposable income and employment may allow one to conclude that while we do generate a lot of trash, we do not deserve the negative moral judgment which attaches to the term "throw away society."
These reports also tell us that about 85 percent of the American solid waste stream is disposed of in landfills, 10 percent is recycled/reused, and five percent is burned. By contrast, Japan landfills about 27 percent of its municipal solid waste, recycles 50 percent, and burns 23 percent to create energy. The corresponding figures for West Germany are: 55 percent landfilled, 15 percent recycled/reused, and 30 percent incinerated. [7] In France, where disposal costs are almost three times higher than in the U.S., one-third of municipal solid waste (MSW) is incinerated, 7 percent is composted, 52 percent is landfilled, and the 9 percent balance is listed under "other" with no additional explanation. [8]
When national and international cross-section comparisons are to be made, all data claiming to show what percent of any nation's or region's waste stream is currently landfilled, recycled, or burned should be viewed with caution. [9] For one thing, such data are derived from random-sample survey over different points in time and, especially for the United States, only from those areas of the country where such data can be most easily obtained. For example, the most commonly reported data for the U.S. are based on sample surveys from 1986 whereas data for both Japan and West Germany are based on 1984.
In addition, the Japanese data are misleading in that they deduct the amount of waste Japanese families send to secondary materials markets from the waste they actually generate in arriving at the conclusion that the Japanese produce only 76% of the waste produced by the typical American family.
When a more complete "net-discards" analysis is used, the U.S. figure is about 3.2 pounds, for West Germany 2.6 pounds, Sweden 2.4, Switzerland 2.2, and Japan, a surprising 3.0 pounds. Australia, Bulgaria, Canada, Hungary, New Zealand, and Korea have generation rates similar to the United States. [10]
In his interesting study of American landfills, Dr. William L. Rathje of the University of Arizona, [11] reports that it may or may not be true that Americans throw away about 3.5 pounds of garbage per person, per day. His analysis of landfill contents compared with local population densities in various regions of the United States strongly suggests that for many areas the actual figure may be much less than 3.5 pounds per person, per day. Short of surveying every specific region and obtaining hard data, the truth is that no one can ever know with anything near perfect statistical certainty just how much is thrown away.
As economic conditions change, patterns of waste disposal and waste management change. The Newsweek (November 27, 1989), article which painted such a stark picture of America's solid waste situation (we shall argue that the problem is not "America's Problem", but a problem affecting only certain regions of the nation), also points out that in Japan, rising family incomes and the increase in the number of families in which both adults work outside the home have combined to reduce their percentage of waste recycled/reused from 50 percent to 40 percent while improvements in mass-burn technology have increased the proportion burned.
For the U.S., recycling/reuse has risen from near 10 percent to 15 percent and the amount landfilled has decreased. [12] James E. McCarthy, Issue Coordinator of the Environment and Natural Resources Policy Division of the Congressional Research Service, says that the landfilling figure is not 80 or 85 percent, but 70 percent. [13]
Even these figures must be taken with caution. A recent national survey of state solid waste management officials conducted by BioCycle magazine reveals that there is no clear definition of municipal solid waste. [14] Some state reports include sewage sludge, industrial waste, and demolition debris in their definition of solid waste and some do not. Estimates of the amount landfilled in this survey were in the range of 83.5 to 83.9 percent, while the amount claimed to be recycled was between 8.3 and 8.6 percent. Washington's claim of 29 percent recycled was the highest among the 50 states, yet even this figure is questionable since the survey was derived from private recyclers and brokers who included auto hulks in their estimates, dramatically inflating the total.
Finally, since all current estimates of per capita waste generation are based on a model of how materials flow through society rather than on direct observation of actual waste generation, all estimates of waste generation and recycling may be subject to significant statistical error. For example, if the approximately 12 million tons of steel recycled from old automobiles were added, the EPA/Franklin national estimates of American recycling would almost double. [15]
These marginal changes in disposal patterns and the degree of uncertainty which exists for estimates of both the weight and volume of municipal solid waste strongly imply that if one or more units of government are contemplating legislative action to mandate what must be done with waste throughout an area as narrow as even a single state, one important fact must be recognized: a solid waste stream – from beginning to end – is a product of market phenomena.
As market conditions change, the mix of materials in the waste stream and the most efficient method of disposing of that waste stream may change. Efforts to freeze any part of the stream by law, and to apply that law to all parts of a state, must assume that both waste disposal technology and consumer consumption patterns will remain constant throughout all regions of even a single state and, most importantly, that someone actually knows what the size of the waste stream is and what is and is not included in it.
Consequently, in the absence of absolutely certain knowledge of what a community's waste stream actually is government mandates aimed at dictating patterns of solid waste management may have the unintended consequence of arresting the development of emerging technologies which might be able to do a far better job of managing waste both today and in the future.
By necessity, attempting to manage the solid waste stream through mandates must be based on the assumption that what we know now about the nature of the stream and the best way to manage that stream is all we will ever know. In reality, exactly the opposite is true: what the waste stream is now and what it will be in the future cannot be known with the degree of certainty assumed in legal mandates. The dynamic character of markets is based on information discovery and information discovery tends to yield new and better technologies. Mandates lock us into old technologies. Markets create new technologies. In that respect, using market forces rather than legislative mandates to manage the solid waste stream holds the promise of far better prospects for economically and environmentally sound solid waste management.
Current wisdom argues that with approximately 85 percent of U.S. trash going to landfills; with more than half of the 18,500 landfills that existed in 1979 closed and half the remainder expected to close within the next ten years; and with growing political resistance to siting new landfills and incinerators, something drastic has to happen to change America's waste generation and disposal practices. That something has been proposed by both the U.S. Environmental Protection Agency (EPA) and the Congressional Office of Technology Assessment (OTA).
EPA's proposal [16] recommends an "integrated waste management" system built on what it calls a "hierarchy" of steps aimed at solving waste generation and management problems at the local, regional, and national levels. [17] This hierarchy consists of the following elements:
Source Reduction. (OTA prefers to use the term "prevention" rather than source reduction.) The assumption is that the volume and toxicity of waste going into landfills and incinerators can be reduced before it even starts by measures aimed at decreasing the volume and toxicity of products. This involves changing marketing and manufacturing practices of American firms along with the buying habits of American consumers. The end result claimed for this component of EPA's proposed waste management hierarchy would be a reduction in the amount of waste – especially packaging waste – that is created.
Reuse and recycling, including composting. Although listed second on the scale, EPA considers reuse and recycling to be the most desirable method of handling solid waste. To reuse is to do what the word itself implies: rather than throwing something away, it should be either kept, sold, or given to someone – say, the Salvation Army or Goodwill Industries – who may find some way to use what others no longer want. One obvious candidate for reuse would be those types of consumer goods which can be immediately passed along to others or those which, with some repair, may be used again. Recycling means separating marketable materials from the solid waste stream so these source-separated materials can be sent into national and international materials markets where they can be used to produce something else. Composting involves turning organic waste (including waste-water-treatment sludge) into a substance which can be used to enrich the soil.
Incineration. EPA acknowledges that even under the best of conditions, not all elements in the waste stream can be recycled. Those which cannot may be candidate for burning in high-technology mass-burn incinerators. Incineration has the advantage of reducing bulk while at the same time producing energy as well as the advantage of destroying pathogens which might be in waste. (Estimates on the amount of bulk reduction vary depending on who's doing the estimating, but the usual figure for mass-burn incineration is 90 percent.) When used to produce energy, incineration is no longer called incineration but, rather, "Resource Recovery." Residual ash from incinerators would have to be landfilled. With proper landfill design, EPA's research suggests that landfilled ash would not represent a health problem.
Landfilling. Landfills will continue to be needed for materials – construction waste, for example – which cannot be recycled or burned. Recognizing that landfills have a role to play in waste management, EPA's only warning is to make sure that landfills are designed and managed in such a way as to assure health and safety. Done properly – which means with proper engineering and oversight – landfills, like incinerators, should present no health risk.
There is absolutely no question that if source reduction (i.e., "prevention") and increased recycling were to occur, the amount of solid waste going to incinerators and landfills would drop. Therefore, given the so-called NIMBY (Not In My Backyard) problem of siting landfills and incinerators, it is not surprising that the EPA report has led to legislation in some states aimed at mandatory recycling and source reduction – including an outright ban on some types of products such as expanded polystyrene drinking cups and food containers.
If some states and communities are choosing to interpret the EPA and OTA reports as requiring specific regulatory mandates for particular types of waste and waste management programs, there may be good reason: both reports contain numerous statements which imply that efficient and environmentally sound solid waste management cannot be achieved without direct government intervention into the economic phenomenon known as the Municipal Solid Waste Stream.
While the EPA report, for example, claims to present only a number of "recommendations", it also calls for "planning at all levels of government" aimed at "fostering source reduction at the manufacturing, governmental, and local levels." To this end, EPA "will study options for reducing lead and cadmium in products in order to reduce the risk of incinerator ash, landfill leachate, and recycling operations ..... will foster workshops for manufacturers and educators to promote design of products and packaging for effective waste management and.....will identify economic, regulatory and possible legislative incentives for decreasing the volume and toxicity of waste." [18]
To say that something is merely a "recommendation" carries with it the notion that nothing more than a set of ideas has been offered – ideas which may or may not fit the needs of any particular community or region and which may or may not be taken seriously.
But to go beyond merely "recommending" to asserting the need for government planning to change manufacturing and consumption patterns is something quite different. Government planning requires the development and implementation of specific programs which must – if planning and implementation mean anything at all – involve the power to reward those who meet the requirements of the plan and to punish those who do not. Therefore, to suggest, as the EPA report does, "economic, regulatory and, possibly, legislative incentives for decreasing the volume and toxicity of waste" [19] is nothing if not direct government intervention into the economics of the solid waste stream.
In its proposals for managing the solid waste stream, the Office of Technology Assessment goes even further in the direction of what is known in the economic literature as "Indicative Planning,"( i.e., while government leaves productive resources in private hands, it directs the uses to which these resources may be put through "a system of partial planning from the center, entailing measures of government intervention for purposes of modifying specific aspects of the pattern of production, consumption, or distribution" through explicit taxes and/or subsidies. [20]) Wherever it has been tried, and France in the 1960s provides the best example, indicative planning has failed to produce anything other than political corruption.
OTA argues that the EPA "should complete regulations for all municipal solid waste (MSW) management" and, once this has been done, these regulations should "be accompanied by strengthened federal enforcement provisions." Moreover, "A clear national policy on MSW that addresses the use of materials is essential for providing a broader context in which specific MSW programs can be developed and implemented." [21]
OTA believes that a "vigorous federal role will be needed" to manage MSW materials on a "material by material basis in which discarded materials (including discarded products, yard waste, etc.) are diverted to the most appropriate management method based on their physical and chemical characteristics. In addition, the manufacturing of products should be coordinated (emphasis added) with the needs of different management methods." [22]
However, despite the fact that OTA admits that individual communities may choose to use only those parts of its recommended plan which may be applicable to their local needs [23] – an admission which discounts the nationwide import and urgency of its own plan – it argues that even though states are currently not required to submit solid waste plans to Federal authorities, "Congress should require them to submit plans to EPA and specify particular issues that state plans must address." [24] Once these plans have been submitted, "Congress should require that (state plans) be reviewed and further plans for implementing them be made for the states by EPA and other federal agencies, unless there is demonstrable reasons for not doing so." [25]
Recognizing that legal precedent exists to allow states to reach agreements among themselves to permit waste to be transported from areas where landfills are closed to areas where space is available, OTA suggests that Congress could, as a device to promote recycling, "adopt measures to discourage interstate shipments." [26]
Yet even while proposing measures to force waste to remain in the state where generated, OTA also recommends that Congress mandate "capacity assurance" by encouraging States to require those who hold landfill permits to act quickly to develop landfills. [27] (State lawmakers may be excused for thinking that there is a slight contradiction, if not outright confusion, in these two mutually exclusive recommendations.)
While the OTA list of "sticks" is much longer than what I have noted here, its proposal is not without some "carrots." Citing its own preference for prevention (i.e., "source reduction") and recycling over incineration and landfilling in managing MSW, OTA acknowledges that fluctuation in the market price of secondary materials makes recycling problematic. Therefore, "procedures must be developed for sustaining recycling when market prices drop below a certain (emphasis added) level" [28] and, "The ability to sustain marketing of collected materials at a high level cannot be assured due to the dynamic nature of markets." [29]
Having acknowledged the dynamic nature of markets, OTA makes no attempt to say what "certain" price level would induce more recycling. Indeed, to do so would be virtually impossible. Why? Because what matters is not the level of prices, but the structure of relative prices and costs.
If the secondary materials market's price of, say, tin cans were to make it worthwhile for one community to collect, process, and ship tin cans; it might not induce another community to do so. What makes it sensible for one community and not another to collect, prepare, and ship tin cans to secondary materials markets depends on each community's particular collection and preparation costs (minus whatever price they can get for the cans) relative to the cost of using a landfill. What those net costs are will depend on population densities – i.e., ease of collection; the level of labor costs associated with managing a recycling center in each community; and the distance to, and tipping fees at, the nearest landfill open to the community. Therefore to speak of some "level" of secondary material prices is to chase a ghost. Behavior is not affected by the "level" of prices but, rather, by relative prices and relative costs.
When the subject is recycling, OTA believes the "carrot" has to come into play. To increase demand and, consequently, the relative price of secondary materials, OTA recommends expanded government procurement of goods made from recycled materials even when doing so would require the government to pay higher costs.
When the costs of secondary materials extracted from MSW are too high, OTA recommends that the Federal government offer direct subsidies to firms which use materials extracted from MSW.
Finally, to encourage private firms to use materials extracted from the MSW stream, OTA recommends the provision of low-interest government loans to firms attempting to develop products from such materials. "Congress could provide direct subsidies to manufacturers to increase the use of secondary materials." [30] Local communities could be encouraged to attract firms which process and use secondary materials through "low interest loans, loan guarantees, government equity partnerships, and direct grants." [31]
At the same time OTA offers its list of "carrots", particularly government procurement of goods made from secondary materials, it warns "It is unclear whether procurement has a substantial effect on stimulating increased recycling" and, efforts to provide direct subsidies or low interest loans to some firms will cause competitor firms to react negatively on the grounds that such favoritism is inequitable. [32]
In a word, having argued for government financing of recycling, OTA acknowledges that "politicizing" the management of MSW to favor secondary materials over virgin materials may create its own set of problems.
Given the increase in legislation aimed at incorporating both EPA's and OTA's recommendations into local and state legislation – including legislation currently under consideration in Michigan – at least four statements in the EPA report have tended to be overlooked: [33]
EPA admits that its hierarchy "is not meant to be rigidly applied when local unique waste and demographic characteristics make source reduction and recycling unfeasible." In fact, EPA now places little emphasis on the waste reduction component of its hierarchy, and because of lack of data, is unable to determine whether manufacturing practices are generating more or less waste. [34]
"An integrated waste management system may contain all or some of the EPA plan's components."
"Every community can custom-design its integrated waste management system to emphasize certain management practices, consistent with the community's demography and waste stream characteristics."
"Strict adherence to a rigid hierarchy is inappropriate for every community."
In the same manner, OTA fills its report with warnings against legislative "quick fixes" and rigid application of its recommendations in all communities. "At the local level, communities should use our framework to decide how to manage particular materials in light of local conditions." [35] (emphasis in the original).
In advocating prevention as the preferred method for reducing MSW – with special focus on product packaging – OTA acknowledges that "Containers and packaging, which are mentioned frequently as potential targets for waste prevention efforts, serve many functions (e.g., sanitation, theft prevention, public safety, weight reduction, customer appeal) which must be considered." [36] (emphasis added) "The likelihood that production and consumption patterns will change hinges on behavioral, cultural, and economic considerations, and thus it is difficult to estimate whether and when prevention, particularly in terms of quantity, might have a significant effect on MSW. Also, since there is no standardized way of defining and measuring prevention, it can be difficult to know when it has occurred." [37]
Regarding the trade-offs between prevention and recycling, OTA observes that "Prevention and recycling efforts can sometimes work at cross-purposes .... plastic bottles which replace glass bottles reduce the weight of MSW, yet glass can currently be more easily recycled." [38]
With regard to preventive measures to reduce the quantity of MSW, OTA warns that "Even if quantity reduction (and associated savings in waste management costs) can be measured, it would still be difficult to resolve all potential tradeoffs, and particularly difficult to quantify other potential benefits (e.g., using less materials and energy) against costs (e.g., effects on GNP and convenience) offered by prevention, and to assess the performance and effects of new or alternative products.
Quantity reduction also has to be evaluated in terms of its effects on MSW toxicity; for example, using cadmium-coated bolts reduces corrosion, prolongs product life and reduces waste, but it also can increase potential toxicity when the products are eventually discarded in MSW." [39]
Concerning efforts to ban certain products – for example, some types of plastic packaging – OTA notes that "It is often not clear whether the replacements for banned products are better in terms of reducing quantity or toxicity or of using fewer natural resources during manufacturing." [40] (On this, more below.)
With regard to proposals to recycle some specific percentage of the MSW stream, (EPA aims at a national goal of 25 percent while OTA would settle for "progress") OTA argues that "Although such a goal is a useful target, it does not appear to be based on a quantitative evaluation of market potential. The actual amount that recycling can be increased nationally is not easily predicted, nor is such a prediction particularly worthwhile given the dynamic nature of materials markets." [41] In addition, if Congress were to place a tax on certain products to encourage changes in manufacturing techniques and choice of materials used, "it is not clear that substitute materials will be more compatible with recycling." [42]
But whatever the condition in secondary materials markets, some argue that mandatory recycling pays off through cost avoidance (i.e., the cost of landfilling or incineration). Against placing too much reliance on this argument, OTA notes that "The main problem with implementing the avoided cost concept widely is the absence of an accepted calculation procedure, which makes it hard to evaluate competing claims about the costs of different waste management scenarios." Moreover, "the avoided cost has to be compared with costs for collecting and processing secondary materials. These relative cost differences will change as recycling expands and landfill space becomes relatively less scarce following the diversion of MSW from landfills." [43]
In response to its own argument that increasing the cost of virgin materials by removing whatever tax advantages they may have (e.g., the depletion allowance for extractive raw materials such as oil) would make secondary materials more attractive and, thereby, increase the advantages of recycling, OTA admits that "Data from the 1970s indicate that removing the incentives may not significantly affect secondary materials markets," and, given that there has been no substantial change in the structure of the economy since that time, the effect of tax penalties on virgin materials on secondary materials markets could yield roughly the same outcome now. [44]
Moreover, OTA argues, efforts to mandate secondary materials recovery and reprocessing "would likely entail significant costs to other sectors of the economy. Mandatory recycling approaches should be undertaken only after the full range of social and economic costs are clearly understood." [45] (Emphasis added.)
Carrots and sticks! Explicit proposals to bring the force of law into the management of MSW combined with warnings against attempting to apply carrots, sticks, and the force of law equally in all communities! What are both EPA and OTA saying? By clear implication, both EPA and OTA are acknowledging that America's municipal waste stream is the product of market forces and, in that context, legislative efforts to restructure that waste stream in ways which ignore market forces could, potentially, generate unintended consequences.
Before the State of Michigan moves too far down the path of legislative intervention in the management of solid waste, it would be worthwhile to examine the basic economics of the solid waste stream. The next chapter attempts to address that issue.
Nobel Laureate George Stigler notes that "The first and purest demand of society is for scientific knowledge: knowledge of how the economic system works. Whatever role one may play in society, it is useful to know the causes and consequences of economic phenomena." [46]
How does our economic system – an economic system based on reasonably well-defined private property rights and freedom of exchange – work? It works on the basis of choices people make while attempting to satisfy their own personal wants by simultaneously supplying others with what they want.
In such a system, buyers will seek to buy at the lowest possible price commensurate with the quality and durability of product wanted and suppliers will search for ways to supply what is wanted at the lowest possible cost commensurate with the quality and durability of products demanded by consumers.
Therefore when one observes any particular mix of goods being successfully marketed to consumers, the only sensible conclusion one can draw with any degree of certainty is that what millions of individual consumers continually buy is nothing more nor less than what each individual believes meets his own subjectively determined wants. If that were not the case, the current mix of goods moving through the market place would make no sense at all. Goods not wanted would disappear in favor of other goods. Therefore, what is there, is there for a reason.
Likewise, successful suppliers will attempt to use only those production techniques and materials which keep production costs below the prices demanders are willing to pay. If that were not the case, firms which failed to take account of costs would eventually fail in the face of competitors who develop alternative production techniques and employ other materials which would allow them to capture the non-innovating firms' markets.
An economic system based on exchange must have some device which constantly sends signals which tell both producers and consumers what works and what doesn't. That device is a system of relative prices or, if one prefers, a system of relative exchange ratios – i.e., the rate at which one thing can be exchanged for another. Without such a system, producers' efforts to satisfy consumer wants while minimizing production costs; and consumers' efforts to minimize outlays while simultaneouslymaximizing their utility, would have to take place in an environment in which no one could know with any reasonable degree of certainty where to go or what to do.
Moreover, given that all goods and services are produced from resources which are scarce relative to the uses to which people want to put them, everything exchanged for something else in the market competes with everything else which is exchanged – no matter where or in what industry.
With everything ultimately dependent on everything else, efforts to intervene in that system to change even one element of the production/consumption process will impact all other elements of the production/consumption process. In some cases, the impact will be immediate and the consequences significant. In other cases, the impact will be less immediate. But in all cases of government intervention into the production/consumption process, there will be with consequences.
If this is a fair, if all too brief, picture of our basic economic system, then the first point one should note about any municipal solid waste stream – whether in Michigan or any other part of the country – is that everything in it, is there for a reason. Food waste, grass clippings, newspapers, plastic milk jugs, paper milk cartons, you name it; it's all there for a reason.
If more plastic, and less glass, wood, and metal, is part of MSW now than 30 years ago, there's a reason. If more paper, especially newsprint and packaging material, is there now than 30 years ago, there's a reason. If more households are now bagging their grass clippings and putting it all out with the garbage compared with 30 years ago, there's a reason.
The reason should surprise no one. Plastic has replaced glass, wood, and metal in many common household products because, with no loss in product quality, it costs less to use plastic than it does to use either glass, wood, or metal. (Keep in mind that the cost is not just the cost of actually making the product, but also the cost of transporting and storing the product until it is in the final user's hands.) If that were not so, the waste stream would contain more wood, glass, and metal and less plastic.
There is more paper – particularly newsprint – because, as the economy has grown and markets have become more competitive, newspapers have become larger. A growing economy means more firms competing with one another for the consumer's attention and competitive market forces foster more and more print advertising. More print advertising means larger newspapers and larger newspapers means more paper which has to be put somewhere.
Once again, there is a reason for everything and everything has a reason. Any legislative intervention into the solid waste stream aimed at changing the mix of goods being consumed and produced which takes no account of the reasons why the structure of the product stream is what it is will have consequences. Some would argue that the resulting changes in the structure of consumption and production would make us all better off. Some would argue that it would make us worse off. Addressing the logic of both positions is one part of what this study is all about.
Much of the discussion favoring source reduction (i.e., waste prevention) focuses on the kinds of materials used to produce goods and, especially, the packaging which surrounds finished goods. At the same time both the EPA and OTA reports called for measures to reduce waste at the source, they warned that care should be taken in banning materials until there is evidence that substitute materials would do the job as well with less waste and/or environmental damage.
What's actually in the solid waste stream? The Franklin Associates report done for EPA suggests something like the following: In 1960, the largest fraction of our waste stream included organic materials like grass clippings, leaves and discarded food. Now it is packaging, which has increased by 80 percent since that time ...the average American may throw away about 650 pounds of packaging every year. [47] (In the early 1900s, the average American threw away about 1,200 pounds of coal ash per year and the typical American city had to dispose of thousands of dead horses every year. That's offered just to put modernity in perspective in case someone is ready to get perturbed about 650 pounds of packaging every year.)
The Institute of Resource Recovery (that segment of the solid waste management industry which promotes incineration) of the National Solid Waste Management Association, argues that we need to substitute undesirable (emphasis added) materials that are used to manufacture consumer goods. "Plastics, inks, and cadmium that ultimately find their way into the waste stream. These and other substances make handling waste (i.e., burning waste) more difficult and expensive. Developing alternative processes or using degradable (emphasis added) materials would reduce the environmental burden of disposal." [48] A New York-based environmental group charges that "many kinds of packaging items are simply unnecessary" and that "based on a comprehensive review of a wide variety of packages and products undertaken for this Guide, it is clear that packaging waste and convenience/disposable items have contributed greatly to this (solid waste) crisis. (The packaging industry) has helped burden America with a waste crisis threatening local economies, the environment and the public's health." [49] Gene Pokory, President of Cambridge Reports, Inc, told a Washington, D.C., audience that "plastics could become the symbol of much that is environmentally bad." His polling firm found 57% of Americans believing that the growing use of plastics presented a serious environmental threat even to the extent that despite the benefits rendered by plastics, on balance plastics did more harm than good because of their nondegradability and lack of recycling. [50]
What portion of the material found in the typical MSW is packaging? A 1989 study prepared by Franklin Associates, Ltd., in conjunction with Dr. William Rathje of the University of Arizona's Garbage Project, determined the volume of various types of waste under landfill conditions and then applied their findings to an existing database that characterizes MSW components by weight. [51]
Packaging represented approximately 34% of the total volume of MSW generated in the U.S. Everything else accounted for the remaining 66 percent. (Given that some 85% of all waste still goes to landfills, what one finds in landfills is a reasonably good estimate of the over-all structure of MSW.) Of all MSW, plastic products accounted for 18% by volume and 7.3% by weight (Not surprising, given that the volume-to-weight ratio for plastics is 2.5:1.) Previous volume estimates reported by the media have ranged from 30% to as high as 70 percent. Of all packaging in the MSW, (34% of all MSW) plastics packaging accounted for 27 percent – making plastics packaging about 9 percent of total MSW volume.
Paper and paperboard packaging comprised the largest portion of packaging volume in MSW – representing about 16% of total MSW and 46% of the packaging segment. Metal packaging represented 5% of total MSW and 15% of the packaging portion, and glass packaging accounted for 2% of total MSW and 7% of the packaging portion.
Fast-food packaging – the target of legislation in many states anxious to avoid the need for siting new landfills (including states with landfill space to spare) – amounts to 14/100 of one percent (.0014) of MSW. This includes cups, plates, bowls, containers, and trays. Polystyrene foam used to make food trays and egg cartons accounts for less than 7/100 of one percent (.00066).
Ban all fast-food packaging and 21/100 of one percent of the waste going to landfills would be eliminated. [52]
Clearly if we could get rid of absolutely all packaging, the amount of waste landfilled or burned would decrease by approximately one-third. Getting rid of all packaging or, at least, what the National Wildlife Federation and other such groups call "excessive" packaging, would certainly make a dent in reducing the rate at which landfills fill up.
Unfortunately, no one has yet defined what "excessive packaging" means. Clearly if various groups are determined to attack "excessive packaging", one or more of them ought to provide hard examples of "acceptable" packaging beyond what the packaging industry is now
doing on its own .
While some may choose to dismiss their arguments as merely self-serving, the packaging industry argues that current packaging technologies not only reduce production costs (i.e., they economize on scarce resources), they actually reduce waste. Before legislators rush to ban certain materials, their arguments deserve at least some consideration.
On the average, as the amount of packaging is increased, the amount of food waste is decreased. Food processing and packaging remove the husks, peels, vegetable tops, bones, etc. before the food reaches the consumer. These wastes are often used for animal feed. For example, the waste from three or four ears of fresh corn equals 1.5 pounds; that from a one pound bag of frozen corn kernels is 0.14 ounce. If all the orange juice consumed daily in New York City had to be made from fresh oranges rather than from frozen and packaged concentrate, the orange peels which would need to be dumped somewhere would weigh as much as two ocean liners. However, when processed and packaged into juice concentrate, the resulting peels are reprocessed into animal feed and, in some instances, biologicals such as Vitamin C tablets.
What may appear to be excessive packaging on the products we take home may actually reduce the packaging necessary to prevent spoilage or breakage in distribution – which would itself increase waste. Indeed, research at the University of Arizona, based on landfill excavation analysis, indicates that households in Mexico City, which consume little packaged food compared to American households, discard 33 to 50 percent more solid waste. [53] Therefore, to conclude automatically, as many do, that packaging makes a net contribution to waste would be an error.
Packaging protects the consumer by carrying detailed instructions for product use.
Packaging protects the consumer with tamper-evident and child-resistant systems.
Packaging protects products from harm during transportation and display.
Since manufacturers do not want to incur shipping costs which are high relative to the market value of the product, nor to use packaging which takes up valuable shelf selling space, improvements in packaging technology have actually reduced the amount of packaging relative to product.
For example, plastic soft drink bottles are now 21 percent lighter than they were in 1977. [54] Did plastics users reduce the amount of material used only to reduce MSW? Hardly! With the rise in oil prices in the 1970s, the cost of virgin plastic made from petroleum feed-stocks rose. Fabricators had an incentive to develop techniques which permitted less material to be used.
In the same vein, a survey by the Chemical Manufacturers Association found that between 1981 and 1986, chemical plants reduced their solid hazardous waste production by 56 percent and recycled 70 percent of the solid waste they generated. [55] While it was clearly in the interests of packaging manufacturers and chemical companies to reduce the volume of waste generated and to recycle as much of their own waste as possible in response to higher prices for raw materials, it was also in society's interest. Changes in relative prices – i.e., pure market forces – generated desirable outcomes for everyone.
Aluminum beverage cans are now so light that it is only the pressure of the carbonation which keeps them from collapsing in transit. The amount of glass in non-refillable bottles has been reduced by 43 percent. [56] Aluminum foil, once used as a laminate material in multilayer paper and plastic packages has been replaced in many applications by metalization, which coats plastic film or paper with gaseous aluminum.
Rather than ship water, many firms are now test-marketing concentrates of such products as laundry detergents and household cleaners which can be mixed at home.
Finally, fabricators of materials that can be reused on the container-manufacturing line habitually run scrap back into the mix. Doing this meets the fabricator's own economic interest while at the same time meeting society's interests via less waste through the MSW.
If packaging is something which ought not to exist at all, why does it exist in the first place? Why, for example, does the most ubiquitous form of packaging – expanded polystyrene food-service containers (seen in too many places along the roadside not because it exists, but because some people are too lazy to dispose of it properly) – exist in the market at all? Moreover, if states and/or cities mandate source reduction through bans or taxes (as advocated by the Environmental Defense Fund and current legislative proposals in the Michigan State Legislature) on certain types of packaging materials, what will take the place of what has been banned?
Packaging exists for health, safety, and convenience reasons. Which is to say, given sellers' needs to both protect and sell their product, packaging exists for economic reasons. (Packaging a product so as to reduce, if not totally eliminate, the kind of tampering which caused so many problems with Tylenol capsules several years ago is as much an economic reason for packaging as is packaging designed to attractconsumer attention.)
Moreover, the particular type of packaging any given firm will elect to employ will, given technology and marketing requirements, depend on the relative price of one type of packaging compared to another. Grocery stores which encourage their customers to accept bagged groceries in plastic rather than paper bags do so for one simple reason: plastic bags are not only as much as 80 percent less costly to the grocery owner than paper bags, they take up far less storage space. (Space which does not have to be used for bag storage can be used for selling space.) One thousand paper grocery bags will weigh 140 pounds and stand almost four feet high. The same number of plastic grocery bags will weigh less than 19 pounds and stand only four inches high. Any waste management plan aimed at banning one or the other form of packaging should at least begin with some understanding of why grocery stores seem to have moved from one to the other in recent years.
What about health reasons? In 1988 testimony before the Forum On Foam Products and Plastics held in Providence, Rhode Island, as that state considered action against plastic food packaging, Nancy J. Sherman reported the findings of a study conducted by the University of Michigan School of Public Health and the Michigan Department of Natural Resources. That study found that the level of microorganisms found in food service permanentware was considerably and consistently higher than that for plastic disposable ware. [57]
Moreover, plastic ware has reduced the need for labor – the most scarce and costly of all economic resources. Disposable ware has eliminated the need for staff to wash and care for permanentware. Those cost savings have not been inconsequential.
One of the main arguments for source reduction, with special emphasis on packaging, is that source reduction conserves scarce economic resources.
The relative scarcity of any resource is reflected in the relative price of that resource. Polystyrene packaging has increased relative to paper packaging in food-service containers because expanded polystyrene is cheaper than paper. If, say, expanded polystyrene packaging is cheaper than paper packaging, it can only mean one thing: the resources consumed in presenting paper packaging to market are relatively more scarce than the resources absorbed in bringing polystyrene packaging to market. If that were not true, the price of one material relative to another would tell no one anything.
McDonald's switched from paper to expanded polystyrene cups and trays ten years ago due to concern about vanishing forests and paper-mill pollution. Moreover, switching to plastic saved McDonald's money. By contrast, when Lake Forest College in Illinois decided – after the college president banned foam-plastic food service containers in order to avoid what he called "potential ecological disaster" – the school's food service costs doubled. [58]
In effect, McDonald's decision to use plastic containers saved them money and, in their own opinion, a vital resource (trees) which was far more scarce than the resource used to produce the material they now use. [59] Why did Lake Forest College's decision to reject plastic packaging in their food service programs significantly increase their costs? Only one reason: the resources absorbed in producing the substitute material were far more scarce and valuable to society in alternative uses than the resources used in producing plastics.
Any tax on or outright ban of one particular packaging material must result in an increase in demand for some other form of packaging material. Therefore it is not surprising that the views expressed by all the many elements within the packaging industry, have been of less-than-one-mind on this issue. Glass packagers tout their wares over paper. Paper over plastic. Plastic over all the others. The glass people claim that glass can be recycled while plastic cannot. The paper people make the same claim while the plastic people counter both and not only press to prove that plastic can also be recycled, they spend millions of dollars developing new uses for recycled plastic – money which, in my judgment, ought to have been spent doing something else. Obviously, given the mounting calls for banning plastic packaging, the plastics industry probably feels compelled to spend scarce capital resources in self-defense.
Given that plastic seems to be one of the more important targets, if not the major target, of proposals for diminishing the flow of solid waste into landfills through source reduction, two studies cited by EPA may be of interest to those states and communities seeking to mandate the abolition of one material or the other. While neither study examined the impact on consumer product safety or utility of an outright ban on plastics, they did examine the environmental effects of direct substitution of other materials for plastics.
Comparing the resources used, and the environmental releases generated in the production of seven varieties of plastics products and seven products made of alternative materials – including paper, aluminum, and steel – the studies concluded that using plastic products was more favorable for conservation of raw materials and reduction of environmental emissions than using the competing nonplastic products in six of the seven categories. In the remaining category (production of a nine-ounce vending cup from either high-impact expanded polystyrene or paper), the competing products were roughly equal in resource utilization and environmental releases.
The authors noted that the study did not consider any raw materials which aggregated to less than 5 percent of the finished product, nor did they take account of post-consumer wastes which could add to energy recovery when burned. [60] This report, in effect, supports what the OTA study concluded: before any one material or product is banned, the environmental impact of substitute materials should be carefully considered.
At base, however, all elements of the packaging industry agree that the banning of one type of material simply exchanges one form of waste for another and until the broader issue of what to do with waste is resolved, ad-hoc measures aimed at one form of packaging or another will not solve the problem.
Even if all the decisions made by the packaging industry to use less packaging or packaging which is in some way made from materials which are more "environmentally friendly" were made only for self-interest rather than "social" reasons, why would these actions not be acceptable as a form of source reduction?
Because, as some argue, what the packaging industry has done is not enough. Reducing the volume of packaging is inadequate unless the packaging material can be either recycled or biodegraded. Plastics are considered bad because they don't degrade. Paper packaging is considered better – if, in fact, packaging cannot be reduced below some minimum – because it may degrade in landfills, or, if not contaminated by food waste or contain some types of inks, may be recycled.
Absent the capacity for recycling or biodegradability, and regardless of the reduction in material volume per package, outright ban of many forms of packaging has been called for in several states, especially states in the Northeast where landfill space is believed to be quite scarce relative to population.
The Coalition of Northeastern Governors (CONEG) has voted to adopt a source reduction plan for their states which calls for voluntary (emphasis intended) "preferred" packaging guidelines short of outright bans. Included in CONEG's proposal was a call for "minimal packaging accomplished through design changes; lightweight or single packaging; and different modes of shipping which require less product packaging. Moreover, plastic packaging composed of recyclable materials that have no need to be separated prior to introduction into the recycling process were recommended. [61]
That the CONEG action was met by wide support from the plastics packaging industry is, in some respects, not surprising. One part of the reality of American business in the age of government intervention is that business will not argue with government when the consequences of losing the argument might very will be more intervention. That's not an indictment, that's just the way it is.
Economics Nobel Laureate John R. Hicks once said that a monopolist desires nothing more than to lead a quiet life. It's not just the monopolist, it's virtually all business persons. Therefore, in this writer's opinion, the fact that some elements of the packaging responded positively to the idea that "voluntary" rather than mandatory action would be taken against some forms of packaging should have surprised no one who has been a careful observer of the way business people respond to the threat of government intervention. Business support is not by itself an indicator of the economic merit of any given government market-intervention program.
Voluntary or mandatory, some cities (New York City; Los Angeles; Minneapolis and St. Paul, Minnesota; Berkeley, California; and Portland, Oregon) have already begun to entertain or pass ordinances to ban fast-food packaging unless it can be recycled or is biodegradable. More will be given later on the consequences of the Portland decision. [62]
At the Federal level, legislation has been proposed by Representative George J. Hochbrueckner, whose district includes the heavily populated and land-scarce Suffolk County, N.Y., (The Recyclable Materials Science and Technology Act, H.R. 500) to require that non-recyclable materials be biodegradable. After five years the bill would prohibit materials that are neither biodegradable or recyclable. (More on Representative Hochbrueckner below.)
The Environmental Defense Fund has proposed a sales tax or user tax based on the quantity of packaging in a product and a national sales tax on disposable items like diapers, razors, and plates. [63]
What would be the amount of tax? Who would collect it? Would cash registers need to be reprogrammed to distinguish a taxable package from a non-taxable package? How many valuable labor and management resources, which have many alternative uses, would be absorbed in meeting the requirements of this tax system? Would the revenues raised be used for environmental purposes or, as has been the case with such taxes in New Jersey, would the tax revenues simply be used to offset other taxes?
Both EPA and OTA in their reports in MSW management warn that such measures are not without cost. Neither are they certain to attain the end they propose to attain. Caution is advised – caution which is often not apparent in the rush to propose and legislate.
Pennsylvania has not allowed new landfills to be developed at a pace sufficient to handle the volumes of waste being generated. In response, Perkasie, a suburban Philadelphia borough, requires households to separate their garbage and provides both an economic incentive and an economic disincentive to make sure families do what is required. By imposing a per-bag fee for garbage collection, while simultaneously collecting materials which may be sold in secondary materials markets, the community tries to "compensate" households for participating. At the same time, families which fail to comply face heavy fines.
Borough Manager Paul A. Leonard claims that in imposing per-bag charges in concert with heavy fines for those who do not participate, the community is "letting Adam Smith lead the way." At the same time, Mr. Leonard puts a chill through consumer-products companies and plastics manufacturers when he argues "We're not going to let the big guys dump on us anymore. Why should we pay to dispose of trash that companies needlessly produce?" [64] At base, Mr. Leonard seems to be saying that if there was source reduction, he could stop having to be a garbage policeman.
It is abundantly clear that in Perkasie, as well as in other communities, source reduction is aimed at decreasing reliance on landfills or incineration. Recycling is aimed at decreasing reliance on landfills or incineration. Insisting that materials be biodegradable is aimed at extending the life of landfills by, presumably, allowing nature to create additional space where more may be dumped (i.e., as materials in a landfill biodegrade, nature gives us what amounts to a perpetual space-making machine.)
If this is a reasonable picture of what is driving the effort to ban or tax-away certain materials, the real "solid waste crisis" issue is the lack of landfill space.
Create more landfills or build more incinerators and the problem would take care of itself. If landfilling is considered to be environmentally unacceptable, build incinerators. If both landfills and incinerators are unacceptable, as many argue, there is always source reduction. If source reduction will not reduce waste sufficiently, recycling is the only option left.
Indeed, some have argued, recycling ought to be the first, if not the only, option. If something can't be recycled, it shouldn't be allowed to exist at all. If organic materials cannot be recycled, they should be composted. If that were not reason enough, there's another: "Recycle or Die". That's the way some "environmental activists" argued their case before Saginaw, Michigan officials in a hearing on that region's solid waste management plan. [65]
The first rule in understanding recycling is to remember that nothing has been recycled until it leaves the solid waste stream and comes back to final users as another product. That includes not only aluminum cans which can be turned in to other aluminum products; paper, which can be used to make paper as well a cattle bedding; tin cans which, after de-tinning, can be used as scrap in metal fabricating; glass, which can be used to make glass or road-construction aggregate; plastic which can be used to make products ranging from certain forms of packaging, to fence posts and wood-substitute building materials; but also grass clippings and food waste which can, theoretically, be composted to yield a material which may be used to enrich the soil.
Encouraging households and commercial establishments to separate one thing from another in their waste is not recycling. It is something called "source separation". Taking source-separated materials to a neighborhood recycling center, whether publicly or privately operated; moving unseparated garbage to a place where source separation can occur (commonly called a "Materials Recovery Facility"); or even offering curb-side pick-up of source-separated materials placed in special bins provided by private or government waste haulers are not recycling (emphasis intended). Only when something which has been removed from the solid waste stream is brought back as another product can recycling be said to have occurred. That is the definition of recycling I will use throughout this section.
Clearly, however, source separation has to be the first step in the MSW recycling process. After that has been done – and doing it will absorb scarce economic resources and, thereby, incur costs – one can really begin to talk about the possibility of something coming back as a "recycled" product.
There is nothing new about recycling. Indeed, William Rathje argues, there is nothing new about any of the proposals which are now being offered as the solution to the MSW "crisis." [66] Some forty years ago, as this writer sat in the family car at a railroad crossing with his parents and a family friend, the friend watched as one railroad car after the other passed before our eyes. "They're sending it to Japan so that the Japanese can make guns to kill us", he said. I was taken back. My parents were not. This man had spent more than three years in a Japanese prisoner-of-war camp following his capture at Battan. All those railroad cars were filled with scrap metal on its way to some point where it would be turned into various and sundry metal products.
That was recycling then, and it's recycling now. Indeed, the many American steel mini-mills which have created so much competition for the larger fully-integrated steel firms have done so by using scrap iron to avoid the cost of turning raw iron ore into blast-furnace pig iron and then turning pig-iron into steel. Scrap metal allows them to break into the steel-making steel cycle mid-way. They get their scrap iron directly from that old American industry which used to blanket virtually every city and town in America: the junk yard. During the decades before World War II, the Japanese did the same thing. Indeed they still do it on a large scale.
To turn the many materials which are in MSW into another product, something analogous to the old junk yard will have to become part of cities and towns across the country. It may be publicly or privately owned. This time the recycling center (no one would dare call a recycling center a "junk yard") will have to be able to receive, process, compress, and ship glass, paper, aluminum, tin cans, and plastics on the way to all the many places where many firms in many different industries can do their own exercise in manufacturing cost-avoidance.
By comparison with the old scrap metal junk yard which loaded railroad cars and sent its wares to essentially one industry, the modern American recycling center will have to be operated by people who possess a far wider range of market information than was previously required for the old junk yard. With the complexity of many different markets and materials, many of which have more than one market, any community really serious about diverting waste from landfills and into secondary materials markets would do well to turn all aspects of the process over to private firms which have direct, world-wide, market information.
The National Solid Waste Management Association reports that 125 recycling laws were passed in 38 states plus the District of Columbia in 1989. In all, 26 states plus the District have comprehensive recycling laws. Six of the ten largest American cities have curbside collection efforts to move potentially recyclable material toward markets. [67] In Michigan, several counties either now have, or are preparing to have, mandatory recycling laws. [68]
With such growth in the number of community recycling programs, and with more expected, many materials which were never part of the old scrap yard will have to be moved into secondary materials markets. In such a situation, markets may be expected – as both EPA and OTA have noted – to become extremely volatile. Some materials will move easily most of the time, but not all the time. Some will move slowly most of the time, but not all the time. Some will seem to never move at all.
Among the materials currently moving from the source-separation point into secondary materials market, aluminum tops the list at 25% (that's percent of total waste; more than 54% of all aluminum soft-drink and beer can in the U.S. are recycled); paper follows at 23% of total paper waste (recycled paper fiber is used in more than half the paper-board cartons found on the shelves of a typical U.S. supermarket.) Glass comes in at 8% (but 25% of all glass bottles and jars); metals are at 4%; rubber and leather at 2%; and plastics hold last place at one percent. [69]
While there is still much progress to be made in the plastics category, the industry is now investing hundreds of millions of dollars in facilities designed to process and apply materials from secondary sources. Approximately 130 million pounds of polyethylene terephthalate (PET) from 2-liter soft-drink bottles are being recycled each year. While public health laws do not allow PET to find its way back into food packaging, it sees new life as carpeting, construction materials, and stuffing for jackets. Suppliers of high-density polyethylene (HDPE), the material used to make milk jugs, are working hard to turn this material into other uses. [70]
Getting ready to develop a recycling program in any community involves investing scarce resources and preparing to enter markets which may be quite new to waste management officials in many communities. Recycling may save money or it may lose money. The why and wherefore of this issue has to do with the economics of secondary materials markets. The next section addresses some of the economic problems facing those who enter those markets.
These figures on what percentage of various materials are coming back into the product line from secondary materials sources are already dated. Moreover, what they do not reveal is the life of the products involved. Many long-lasting durable goods are made from plastics while aluminum and paper are generally used to make disposable goods; which is to say, some materials come back through the MSW stream rather quickly while others do not.
The current relative recycling success of some materials compared to others suggests this question: Why have some elements of MSW met with greater success in secondary materials markets while others, at least to this point, have not? The reason has to do with the economics of production costs and, following that, the price sensitivity of quantity demanded for materials in the production process as a function of their relative position in overall production costs. In the jargon of economics, it has to do with what economists call "The Cross-Price Elasticity of Derived Demand," or, in its shorthand version, "The importance of being unimportant." [71]
In the recycling industry, some materials are referred to as "Demand Limited" and others as "Supply Limited". To say that a material is demand limited says that there is more of it than is currently wanted given what it costs to collect, prepare, and present it to market. To say that a particular material is supply limited is to say that those who want to use it are anxious to get more than they are able to get.
But surely if there is any truth to the economists' old saying about prices falling when supply is abundant relative to demand, and prices rising when demand is strong relative to supply, the market price of a demand limited material should fall to a point that would eventually take it off the market and the price of a supply limited material should rise and induce more of it to be brought to market.
Does it actually work that way? Yes, it does. But, as those who like to make fun of economists should expect, there is the well-known "on the other hand" problem.
There is an economic rule so fundamental that it may be the only economic observation which deserves to be called a Law. That rule is: Other things the same, people will tend to do less of that which costs them more and more of that which costs them less. Translated into the economics of production it means that firms will try to use relatively more of that production input which costs them relatively less, and relatively less of that production input which costs them relatively more. If, for example, the price of labor rises relative to the price of capital, firms should attempt to use less labor and more capital. If the price of capital rises relative to the price of labor, firms should attempt to use less capital and more labor, etc., etc.
However, there's a little more to it than that. (This is the "on the other hand" issue) Even though firms will try to use less of that which costs them more and more of that which costs them less, the intensity of efforts to substitute away from the higher priced input and in favor of the lower priced input will depend on the relative importance of one input compared with another in the particular production technology being employed.
Strong substitution efforts in the face of a rise in the price of a particular production input will occur only if that particular input is one which represents a significant share of total production costs. Even then the substitution process will occur only over a period of time. [72]
Even if an particular input is a significant component of production cost, a change in the price of that input may or may not result in an immediate adjustment in the quantity of that input used. A lot depends on whether or not the current technology of production is one in which inputs can be easily substituted for one another.
Generally speaking, if a particular material is an important component of production costs, firms will be more responsive to lower priced substitutes. The less important an input is in calculating total production costs, the less sensitive the firm would be to a change in the relative price of that input.
The success of aluminum in secondary materials markets derives from the rigid production technology which characterizes that industry. Aluminum is an extremely energy intensive industry and no one has yet come up with a way to make aluminum without substantial amounts of electric energy. Turning aluminum cans into new ones takes 95% less energy than refining new metal from raw bauxite. Anything that can save 95% on an industry's single most important production cost is going to be an attractive input substitute. Therefore, it is not surprising that 50 percent of aluminum beverage cans are recycled.
Given that the market value of secondary material depends on the cost of source-separation, processing, and shipping relative to the importance of that material in the cost structure of the industries which use it, and given that most of the aluminum cans which come back as secondary material come from those states which have container deposit laws – thereby making source separation a relatively easy and simple process – and given that secondary aluminum saves the most important input in the aluminum industry, the continued strength of aluminum among recyclers is not surprising.
When U.S. Recycling Industries of Denver, Colorado, conducted a poll at the recent 8th National Recycling Congress in Charlotte, N.C., 85 percent of recyclers overwhelmingly felt that the markets for aluminum were the most secure and profitable. [73]
Recycled aluminum is clearly a supply limited secondary material. Even though the aluminum industry would gladly take all it could get from recycling centers, there is still more out there which doesn't get to them. While, theoretically, close to 100 percent of all aluminum available in forms which would allow it to move through the source-separation, collection, processing, and shipping network could be used to make more aluminum, it has been estimated Americans throw out enough every three months to rebuild the entire U.S. commercial airline fleet. [74]
The supply-limited character of aluminum derives from one fact: there will never be more put into secondary materials than there are people who are willing to source separate and present it for collection. The price of secondary aluminum simply does not get back to the source, which is not the recycling center but the kitchen.
Glass fares well, but not as well as aluminum. Recyclers polled in Charlotte felt that the market for recycled glass was "secure" with 58 percent rating it "excellent." [75]
For every 10 percent of crushed glass added to a glass plant's furnace, energy costs drop as much as 5 percent; and for every ton of crushed glass used, up to 1.2 tons of raw materials is saved. [76] This would suggest that demand should be strong. However, only 10% to 15% of glass soft drink bottles are being recycled into secondary materials markets and the bulk of that is coming from states which have deposit laws. [77]
While glass, like aluminum, has all the characteristics of being a supply limited secondary material, it also has demand-limited qualities.
Not all glass is created equal. There is brown glass, clear glass, and green glass. A recycling operation must incur the costs of collecting and separating the different kinds; crushing each into separate bundles; and shipping each bundle to the places where it's wanted. The cost of bringing it to the point where it can actually be sold and shipped – cost incurred by the community which operates its own source-separation and processing facility, or the private firm which engages in such operations – may sometimes be high relative to the price which would induce glass manufacturers to use it. These costs are part of the "supply-limited" equation and explain why so much of the glass which is recycled comes from states which have bottle-deposit laws which, effectively, relieve processors of some of the cost of collection.
Glass firms are willing to buy it provided it comes to them in a form which they can use. But they are willing to use it in place of virgin materials only if its price is low enough to overcome its "importance of being unimportant" character. That's the demand-limited part of the glass equation. Nevertheless, markets for secondary glass are growing steadily and when the collection and the sorting process improves, more and more old glass may be expected to come back as new product.
Newsprint is clearly a demand-limited secondary material. Those who might use it find more coming to them than they want. Therefore, the prospects for newsprint were ranked "poor" by 67 percent of professional recyclers polled in Charlotte. [78]
The fact that the amount of energy used in processing old newsprint is less than the amount used in manufacturing newsprint from virgin material, doesn't have the same impact as is the case with energy-saving secondary aluminum. Again the issue is the relative importance of one input compared to another. Unless and until the technology of newsprint paper-making changes, the relative unimportance of secondary material in the total cost of newsprint manufacturing will continue to be a problem for newspaper recycling.
That doesn't mean that secondary paper has no market. Recall that at 23 percent, paper is the second most widely recycled secondary material. The problem is that 23 percent of the largest single component of MSW still leaves 77 percent to be dumped or burned. (Currently that's more than 70 million tons.)
Consequently, when Minneapolis residents began to respond to that city's recycling ordinance by turning in vast quantities of old newspapers, dealers who used to pay $12 a ton began to charge $20 a ton just to haul it away. Reluctantly, some newspapers have to be hauled to landfills. In Washington, D.C., following that city's recycling push, papers quickly began to pile up in a big storage bin. [79]
Moreover, newsprint is a homogenous product. Therefore, its market price will tend to be the same everywhere. For example, when the market collapsed in early 1989 and forced many communities heavily dependent on newsprint to close their recycling operations, the first phase of the price drop was greater on the East Coast where more urban population densities and community recycling mandates had brought more paper to market; and in the Mid-west where distance from markets made transportation costs higher relative to final materials price (recall the comment above about why it is not the price level which matters but, rather, the relative price). The less-glutted West Coast market was also hit. Bargain-hunting South Korea and other foreign buyers of American paper abandoned West Coast brokers and started dealing with oversupplied East coast materials brokers. As a result, West Coast prices fell and many schools and church recycling programs found it uneconomic to continue their paper drives. [80]
Are there real prospects for recycling newsprint? Not really. While there is much that does move through the market, the realistic prospect is that the portion truly recycled will always be less than, at most, half the total. Indeed with only eight mills equipped to process secondary newsprint and with their capacity more in tune with Boy Scout paper drives than with the gush of paper flowing from mandatory recycling ordinances, where we are right now is where we will likely be for several more years.
With regard to what is called "white paper" (i.e., paper from offices, including computer print-out paper) markets look better. Though there has been some price softening of late, white paper still sells for $60 to $100 a ton. [81] This market, unlike newsprint, has supply-limited qualities; the stuff is there, but getting to it has its costs.
If the development of new technologies is all that matters with regard to recycling plastics, research and demonstration projects have already shown that many of the more common forms of plastics can by recycled. Though not as easy as recycling aluminum, there are already a number of new products made from old plastic products extracted from secondary materials sources to prove that plastics recycling has potential. (Approximately 130 million pounds of PET is already recycled into new product each year.) But even though 57 percent of the Charlotte recycling brokers indicated that they would like to include PET in their recycling programs, and 43 percent said that they wanted more HDPE in their secondary materials stock, they were not aggressively moving to bring these materials through the stream because of what they called "low" prices. Consequently, 45 percent called the market for HDPE "poor" and 39 percent gave PET the same rating. [82]
Plastic is not a homogenous product – despite the fact that the CONEG list of "recommendations" noted above implies that making plastic goods from simple and easily separable resins should not be a problem. The many plastic products in MSW include not only goods made from a single resin, but an increasing number which include a blend of resins. This does not eliminate the possibility of plastics recycling, it only circumscribes it – not only at the point where new resins can be made from old plastics, (some resins must be separated from others) – but also at the point where the recycling process begins: household source separation.
Plastics have a high ratio of volume to weight compared to other recyclable elements in MSW. This poses cost problems for collection and transportation to processing establishments. Shredding or crushing at the processing point may help relieve part of this problem, but these actions may reduce the practicality of separating mixed plastics into individual resins. Moreover, the sheer volume of plastics adds to problems of collection and storage at all stages of collection. [83]
According to a report in Fortune magazine, August 28, 1989, the plastics for which recycling markets have developed were then selling at $75 to $200 a ton, making these plastics the second-most-valuable material in MSW. Nevertheless, the Charlotte recyclers who said that they wanted more PET and HDPE in their stock still rated its prospect as poor due to low price.
Low price? Again the issue is not absolute price, but relative price. The costs of collection, storage, processing, and shipping to the point where the real recycling process may begin are too high relative to the costs of virgin resin.
According to General Electric Corporation's Uwe Wascher, head of GE's plastics division, high-density polyethylene (HDPE) used in milk jugs and the polyethylene terephthalate (PET) used in pop bottles, sells for 50% less per pound than virgin resins. But when the costs of collecting and separating the wastes are taken into account, the total cost of producing from these secondary materials is 20% higher than virgin resins. [84]
Plastic, still in its recycling infancy, is currently a demand-limited secondary material relative to the sheer volume currently in consumers' hands. But at the same time, it has supply-limited characteristics. The volume/weight ratio of those plastic products which current technology can recycle will continue to make the cost of supplying it a problem. Absent a solution to that problem, secondary plastics extracted from MSW will not likely compete with virgin resins.
Any rush to mandate recycling as a way of reducing the amount of material going to landfills should first consider what it is that makes some secondary materials "demand-limited" and others not. Put simply but forcefully, it would be a grave mistake to assume that government has the power to increase producers' demand for specific secondary materials independently of the relative importance of specific materials in each and every producer's production process. The demand for production inputs is derived from consumers' demand for final product. To minimize the cost of production in light of the quantity of final product consumers will take at any given price, specific production technologies have been developed for every final good sold in America. Certainly the relative price of one input compared to another signals opportunities for input substitution, but to think that such substitution will necessarily be in favor of one or more of the goods government would like so see recycled so that landfill costs can be avoided is to forget the "importance of being unimportant." When that is the case, as it appears to be in, say, secondary glass; and significantly so in secondary newsprint, passing laws will simply not have much effect.
When the issue is plastics, failure to understand that the high volume/weight ratio which makes it so attractive for so many consumer products (i.e., the supply-limited quality); and the high-tech chemistry which is its reason for being (i.e., the demand-limited quality); also makes it more difficult to recycle. Simply demanding that it be recycled will not do.
Composting is straightforward. Take organic material, put it all together in a pile, and let it rot until it becomes humus. Grass, general yard debris, and food waste constitute 26.8 percent of MSW. [85] Collecting such material at curbside, while not costless, is not all that difficult.
Oakland County, Michigan mandates composting and households put grass and other yard wastes in specially marked "biodegradable" plastic bags for pick-up. It's then taken to a site where it's laid out in huge piles and allowed to rot overtime. Turning it to diffuse oxygen through the mass speeds decomposition, and generates carbon dioxide. Allowing it to rot internally without access to oxygen infusion takes longer and generates methane. Both carbon dioxide and methane are "greenhouse gases." The end product is compost and, theoretically, ought to have market value as top soil for greenhouses, family gardens, city parks, or anywhere else someone wants plants to grow.
There can be no doubt that any plan which could totally divert compostable material from landfills would have a significant impact on extending the life of landfills. The only problem is that once it has been collected and placed out to rot, problems arise. Moreover, even when it has rotted into humus, problems arise.
Compost piles stink. Oakland County, Michigan's Southeastern Oakland County Resource Recovery Authority (SOCRRA), handles trash for 14 southeastern Oakland County communities with a combined population of more than 400,000 and collects about 270 tons of yard waste a day. SOCRRA currently takes this waste to a site where nature is allowed to take her course. Rochester Hills, Michigan, a very trendy town near the compost pile, sought and obtained a preliminary injunction against SOCRRA's stinking grass pile.
By picking-up the compostables in bags, SOCRRA hoped to save time and labor costs. The problem is that the bags and their contents take up to two years to produce the humus that is the end product of composting. SOCRRA thought about chopping the bags as soon as they arrived at the compost site but that created mechanical problems for the mulching machine's 18-inch blades. Moreover, once chopped-up, the waste would have to be periodically turned, or aerated, to reduce odors. Despite the biological fact that aeration would reduce time-to-humus by one year, the added labor and maintenance would further drive up costs.
So that's where the issue stands. SOCRRA wants to collect compostables to save landfill tipping fees and those who live anywhere the compost pile want it to stop. [86]
Bay City, Michigan has a similar problem. The City and surrounding township are planning a big composting program to avoid landfill tipping fees and have received $119,000 from the State to buy the necessary equipment. The only problem is, no one anywhere near the proposed compost site wants it. Legal battles are now underway. [87]
Solve all those problems with compost and there's still one more. Rep. George Hochbrueckner, (noted above) author of HR 500 which mandates recycling and federal funding of research into finding potential markets for recyclable materials, testified before the U.S. House of Representatives Agricultural Subcommittee on Department Operations, Research, and Foreign Agriculture on some of the problems with composting. "The instability of markets is a serious problem", he told the Committee. [88]
Communities all over the country which have become involved in collecting for composting are finding it almost impossible to sell it. Mr. N.C. Vasuki, General Manager of the Delaware Solid Waste Authority, blamed the federal government, [89] A lack of federal health and contamination standards is one of the main reasons agricultural and infrastructural markets have failed to materialize, he charged. In response to these problems, Mr. Michael Simpson of Boston's Energy Systems Research Group now argues that there must be a thorough examination of costs and benefits before any community tries composting as a major disposal option. [90]
If mandated composting, with all its attendant collection and processing costs, may by called the triumph of hope over experience, mandated recycling carries with it some of the same characteristics. But government-mandated recycling has powerful political appeal and with that, its day in the halls of power. What that may mean for workable political management of MSW is next.
Analysis of the recent calls for legislation aimed at managing MSW in Michigan will be reserved for the next chapter. What has happened in Washington, D.C. and what has happened in many cities and states across the nation, is the topic of this section.
When both EPA and OTA called for a more active federal role in managing the nation's MSW, they did so believing that while incineration and landfilling could – with proper controls – be part of the solution, real legislative emphasis had to be on source reduction and recycling. Such legislation has been offered in Washington.
Both before and since the EPA and OTA reports were issued, the federal focus has been on recycling and waste reduction. Waste is regulated under the Resources Conservation and Recovery Act (RCRA) and the Solid Waste Disposal Act (SWDA).
The following is a partial list of some amendments which have been offered to both RCRA and SWDA: [91]
HR 130: Would require that the disposable trays, dishes and beverage containers used in food service operations be biodegradable.
HR 500: Would encourage scientific research and development of recycling technologies.
HR 586: Would require a return deposit on all plastic and glass beverage containers.
HR 871: Would create a National Packaging Institute to establish national packaging standards.
HR 1439: Would require the administrator of the Environmental Protection Agency to issue rules requiring that certain plastic articles be made of naturally degradable material.
HR1810: Would amend the Solid Waste Disposal Act to promote recycling activities and the use of recycled goods and facilitate recycling efforts by states and municipalities.
HR 2156: Would prohibit the introduction of a plastic container into interstate commerce if it is not coded by resin.
HR 2723: Would amend the Resource Conservation and Recovery Act to improve procedures for establishing and operating regional disposal facilities for municipal and industrial solid waste.
HR 2845: Would amend the Solid Waste Disposal Act to promote recycling and other resource conservation.
HR 3105: To encourage the development and use of a recyclable consumer labeling system for plastic consumer products; and encourage other methods to reduce municipal solid waste.
HR 3127: To establish national goals for the reduction and recycling of municipal solid waste, and to require the Environmental Protection Agency to promulgate regulations to attain these goals.
HR 3264: To prohibit disposal of solid waste in any state other than the state in which the waste was generated ( Senator Dan Coats of Indiana and Senator Don Riegle of Michigan have independently offered similar legislation to block the interstate movement of MSW); to require a refund value for certain beverage containers; to require a study of degradable materials and recycling; and to establish an office of recycling research information in the Department of Commerce.
S 1112: The Municipal Solid Waste Source Reduction Act would impose restrictions on packaging materials and provide assistance to municipalities to develop recycling and reclamation programs.
S 1237: The Degradable Commodity Procurement And Standards Act would require federal agencies to utilize materials that are biodegradable.
S 1884/HR 3663: To promote the use of recycled materials derived from municipal refuse.
S 1885: The National Recyclable Commodities Financing Act.
The most comprehensive federal RCRA reauthorization bills introduced to date are S113 and HR 3735/3736/3737. These bills are aimed at regulating municipal incinerators, restricting solid waste exports, tightening requirements for land disposal of solid waste, establishing source reduction and recycling goals (despite the fact that EPA has virtually conceded that source reduction is so problematic as to be hardly worth pursuing), and encouraging incentives for Federal procurement of recycled materials. [92]
The following list of legislation proposed or enacted at the state and/or local level is only a sample of what has been done or is proposed to be done to manage municipal solid waste:
Alabama: Following a two-year moratorium on landfills, the only legislation likely to be proposed will focus on more recycling statewide.
Alaska: Bills of intent are being considered to encourage recycling.
Arizona: At the state level, legislation to assess the feasibility of statewide recycling is under consideration. At the local level, the City of Tucson voted to ban plastic foam cups from all local government offices.
California: Numerous bills are under consideration focusing on mandatory recycling aimed at raising recycling to 50 percent of MSW by the year 2000. Included in these proposals are ones for higher specific taxes on certain kinds of plastics packaging unless the manufacturer can prove that at least 35 percent is recycled.
Massachusetts: Legislation has been approved banning the disposal of metals, glass and plastic containers, newspapers, cardboard, and office paper in either landfills or incinerators. Landfill and incinerator operators who fail to block these materials from their facilities will face fines of up to $25,000 per day.
New Jersey: Already the only state which has made recycling mandatory, bills to review and assess all nonrecyclable, nondegradable packaging materials continue to be proposed.
New York: Under The Solid Waste Management Act of 1988 (Chapter 70, Laws of 1988), a recycling goal of 50 percent is to be achieved by 1997. All local governments must have a state-approved recycling program in place. Two bills specifically require that retail foods be sold only in biodegradable packages and use of nonbiodegradable packages in all packaging uses would be banned. One bill calls for state purchases of recycled paper if economically feasible (emphasis added). Under Chapter 70, local communities must design a solid waste plan with special emphasis on recycling.
North Carolina: One bill already ratified calls for strict limits on the use of certain plastic packaging unless it can be demonstrated that at least 25% of it is being recycled. This applies especially to plastic grocery bags and polystyrene food containers. However, even though the State has an overall goal of 25 percent recycling, this applies only in those communities where recycling is economically feasible and markets for the materials exist in close enough proximity to make transportation practical (Emphasis added).
North Dakota: Legislation recently signed into law requires certain plastic products to be degradable and encourages state agencies to use recycled products. Moreover, one bill was introduced mandating that only biodegradable materials could be put into a landfill. This bill was introduced and then withdrawn from consideration.
Oregon: Already passed and signed into law, Oregon prohibits state agencies from purchasing food packaging material which is not biodegradable or recyclable. Bills still under consideration would ban polystyrene in food service packaging; establish a plastic container tax to fund plastics recycling; ban disposable containers which are not recyclable; require retailers to offer paper as well as plastic bags; and would prohibit the use of plastic containers for which an effective recycling program does not exist.
Pennsylvania: Bills currently under consideration would prohibit the sale of all food service packaging not classified as degradable, manufactured from recycled material, or recyclable. Governor Robert Casey has issued an Executive Order (Order #1989 No. 8) which places a moratorium on the issue of permits for both new landfills and resource recovery facilities (incinerators which burn MSW to produce energy) as well as expansion of previously licensed and operating landfills. However, this Executive Order contains a modifying clause which allows new landfills and incinerators if, and only if, operators can prove that 70 percent of the waste they receive was generated within Pennsylvania.
Wisconsin: In what may prove to be the most far reaching legislative act to date, Wisconsin has banned disposal of a wide range of materials which are believed to be recyclable. Newspapers, metal, glass and plastic containers, cardboard, office paper, magazines, and foam containers may not be disposed of in landfills or incinerators. Landfill and incinerator operators who allow such materials to enter their facilities will face stiff fines. Wisconsin expects to support this ban through laws supporting investment in recycling plants to assure a steady supply of secondary materials. Moreover, the state is attempting to develop laws which require 10% recycled content in all plastic containers sold in the state by 1995, and 45% in newspapers by 2001.
The common theme which runs through virtually all the legislation one finds at both the state and federal level is as follows:
Recycling is to be the top priority.
Governments should buy recycled goods.
Special tax subsidies should be available to promote recycling.
Any tax advantage enjoyed by virgin materials should be ended.
Biodegradable materials are to be preferred to nonbiodegradable materials.
Landfills are to be either blocked outright or discouraged.
In Massachusetts and Wisconsin, fines are to be levied if certain recyclable materials enter either landfills or incinerators.
What have been the problems so far?
In 1987, New Jersey passed the nation's first mandatory statewide recycling program. How's it doing? In its 1989 survey of solid waste management programs nationwide, Biocycle magazine reported that New Jersey recycled 18 percent of its waste, almost the same proportion of MSW as did its neighboring state of Delaware, which has no law mandating recycling. In addition, while 80 percent of New Jersey MSW goes to landfills, only 37 percent of Delaware's MSW ends up in landfills. [93] Conclusion? Even with a mandatory recycling law, New Jersey has come virtually no closer to pulling goods into secondary materials markets than has its neighbor. Clearly, legislative mandates aimed at forcing recycling have not yielded the outcome expected.
The situation is no different at the federal level. Despite federal legislation mandating paper recycling, The U.S. General Accounting Office found that only 120 of the more than 6,000 federal agencies nationwide have records documenting recycling, despite the fact that the government buys 1.7 million tons of paper annually. The reason? Agencies have been unable to sell paper at an economic price which covers separation and collection costs; employees haven't gotten into the habit of separating paper for recycling; internal controls are weak; many government offices do not have storage space to hold accumulated paper; and, with a supply glut, the paper recycling brokers cannot absorb the quantities of wastepaper that increased mandatory recycling might generate. [94]
Conclusion? Even the federal government can't push paper – of which it has more than virtually any other paper-using entity in the country – through secondary materials markets when markets are not able to take them at prices sufficient to cover the cost of source-separation, collection, and storage.
One problem with all efforts to force recycling through legislative mandate is that they are based on the assumption that source separation and collection will automatically yield recycling. The problem with that assumption is that it is false. While source separation and collection are necessary conditions for recycling, they are not sufficient conditions for recycling.
True recycling occurs only when secondary materials have come back to final consumers in the form of new products and secondary materials will live to serve again only when market conditions exist to make the use of such materials cost effective in competition with virgin materials. In effect the most that can be said in favor of incurring the costs to source separate and collect MSW for entry into secondary materials markets is that when it makes economic sense it will happen on its own and when it doesn't. it won't. The presumption that simply passing laws will turn something which makes no economic sense into something which does is not only bad economics it's bad politics.
Efforts to mandate recycling in the absence of market forces which are acting to pull marketable secondary materials from the solid waste stream end up effectively damning recycling with faint praise, i.e., "We'll try to recycle only if it makes economic sense. If it doesn't make economic sense, we'll forget it." But, as our own political history teaches all too well, foolish laws are seldom repealed, they just stay on the books without being enforced with unintended consequences for both law and the political process.
Could it ever be the case that special interests will rally around laws which mandate recycling even when the reality of market forces sends contrary signals? The answer is, yes. Indeed the history of much government policy is that once a government program which ignores market forces has been instituted, special interests develop to maintain the program for its own sake. Those interests, whether inside or outside government, will generally argue that the program's failure to attain its ends was not the fault of the program itself, but the fault of inadequate funding. The normal response is, "Give us more money in the next budget cycle and we'll make this program work." The result is virtually always a continuing allocation of scarce tax resources to old programs which did not work because they could not work.
Why
has it been harder to successfully recycle some materials extracted from MSW
than others? What may be some of the problems associated with full and
sustained recycling of some plastics extracted from MSW? While this has been
discussed at some length above in terms of the relative importance of any given
input in the overall costs of production, one more observation is in order – an
observation having to do with supply elasticity.
In
both the EPA and OTA reports noted in Chapter II, great attention was given to
the need for government to try, through tax incentives or other forms of fiscal
influence, to increase the demand for goods made from secondary materials. OTA
argued that if demand could be increased, the U.S. could achieve a 10 percent
recycling rate for plastic containers and packaging by the mid-1990s.
In
addition, if recycled plastic products could capture a significant share of the
treated lumber market, plastics could achieve a 25 to 40 percent recycling rate
over the next decade. Moreover, OTA boldly projected that PET recycling could
reach a level of 300,000 to 350,000 tons, or at least 50 percent of all PET
beverage bottles, by 1993. If this were accomplished, the report suggested,
fully recycled PET could replace up to 4 percent of virgin PET sales. Actions
to increase demand could take 330,000 tons of HDPE, almost 6 percent of virgin
HDPE sales.
[95]
The
assumption in the OTA report is that markets for paper, glass, and aluminum
would grow if special financial incentives were given to increasing the demand
for secondary materials products in general. Given the vast amounts of plastic
products in the economy, and given the current very low rate of plastics
recycling, the current conventional government view is that all that is
retarding a boom in plastics recycling is demand. What is virtually always
ignored in this argument is the fact that no matter how much plastic product
there may be in the economy, plastic does not represent anywhere near the share
of MSW that it does of consumer products in general.
Clearly
any thing which might increase the demand for secondary material would, other
things equal, increase the quantity of secondary material supplied. (Remember
that until the quantity of secondary material supplied rises, the quantity of
material sent to landfills or incinerators cannot fall.) But what increase in
demand might be required to substantially increase the quantity of secondary
material supplied?
The
answer is, demand for secondary materials would have to increase substantially
to pull such materials away from landfills and/or incinerators in volumes
sufficient to make a real dent in the amount of waste being landfilled or
burned.
Suppose
special financial incentives could increase the demand for secondary plastic to
make, say, "Plastic Lumber". In one of its reports focusing on plastics,
EPA noted that given the nature of plastics products most likely to be in MSW,
the system for collecting and shipping MSW plastics, and the prevailing
technologies for using this material, plastic lumber may initially have a sales
price 50 to 300 percent higher than for comparable wood items.
[96]
There
can be no doubt that plastic lumber would last longer than ordinary wood. But
with that price difference, it won't compete with wood. Why? Because all people have what
economists call a "positive rate of time discount", which is to say,
a dollar in hand is worth more than a dollar to be received later.
If
plastic lumber cost, say, 10 percent more than wood, it might sell. But not if
it cost 50 to 300 percent more. That is reality. Anyone who doubts that should
ask why people will pass up a long-life light bulb at $1.59 in favor of a
normal-life light bulb at 50 cents. They do so because the $1.09 difference has
immediate use now in other things which can be bought for money. Most people
act as if they would rather keep the $1.09 difference to spend on other things
now rather than enjoy not having to buy another light bulb for a year. With a
price difference in the range expected for plastic wood compared to ordinary
wood, the long-life advantage of the former will not be sufficient to make it a
viable competitive product.
The
economic lesson is this: so long as technologies for the whole recycling
process are such that capital outlays will have to be made to collect, store,
process, and ship materials; and so long as capital outlays for new
technologies which use secondary materials are still in their infancy in some
manufacturing procedures (current manufacturing technologies – including raw
materials shipping technologies – are fully geared for virgin material) both
the supply and demand curves for secondary materials may be expected to be
highly, though not completely, price inelastic.
Indeed,
the fact that every observer has noted the price volatility for secondary
materials is clear evidence of the price inelasticity of both quantity supplied
and quantity demanded in secondary materials markets. Price volatility is the
trade mark of highly price-inelastic markets.
With
inelasticity in the system, any increase in demand, even a significant demand
increase generated by preferential government subsidies, will put significant
upward pressure on secondary material prices, with very little increase in the
quantity offered in response to that rising price. It is simply the case that
the whole system of source-separating, collecting, processing, and shipping
recyclable materials from the MSW to the point where they might be used is
still far too costly relative to the cost of bringing specially produced virgin
material to industries which could, theoretically, use one or the other.
The
moral of the story from careful economic analysis is that the price inelastic
nature of the supply of secondary materials, if not also the short-run demand
function for such materials, will force prices for secondary materials into a
virtually non-competitive price range with virgin materials long before
technologies are adopted to use secondary materials.
One
very important reason for the huge price difference between "plastic
lumber" and lumber from conventional sources – a price difference noted
above – is the simple fact that the cost of getting plastic from primary users
and waste disposers is high. The kinds of plastics found in MSW must be
collected, separated, cleaned, baled, and shipped to some point where, after
further processing, it can stand side-by-side against virgin resins. In order
to cover these costs, the price obtained by those who conduct all these
operations must be as high, if not higher, than what virgin materials cost.
That is part of what is meant by price-inelastic supply – only a high offer
price from those who intend to manufacture new products from secondary material
will induce the measurable increases in quantity of secondary material supplied
to assure final manufacturing users the continuing volume of raw materials they
need.
Essentially
the same problem exists for virtually all other post-consumer articles in MSW,
including, surprisingly, aluminum. Aluminum companies, one should remember,
were sending their own trucks to collect cans and paying individuals and groups
for all the cans they could deliver long before state deposit laws began to add
to supply. What state deposit laws have done is make it possible for them to
access supplies at somewhat lower costs to themselves. Yet, even with this
boost to supply, they still have not been able to obtain all they would like to
have. Quantity supplied has not been sufficiently responsive to demand – even
when augmented by deposit laws.
Clearly,
passing laws to force households to engage in source separation is not going to
automatically result in more recycling when recycling is properly understood.
Indeed, the evidence from both New Jersey's statewide mandatory system, and
from Seattle, Washington's mandatory curb-side collection system – a system
which has not yet yielded cost savings sufficient to compete with
landfilling
[97] – strongly suggests that laws which ignore markets cannot yield
true recycling on the scale envisioned by those who seem to believe that all
that's needed is the right set of laws.
There's
got to be a lesson here. Certainly laws can change behavior. After all, no
household which is not source separating either at the curb or at the recycling
center wants to pay a fine and no manufacturer wants to pass-up government
subsidies for using secondary materials if he thinks his competitor is going to
take one. Pass a law and behavior will change.
But
it is not only behavior which will change once laws are passed. The cost of
handling solid waste will also change. All government programs have their own
"overhead" costs and those costs must, if we are going to do honest
accounting, be counted as part of the cost of handling MSW through government
mandate. However, the lesson from laws already on the books is that all the
laws in the world will not pull MSW into the secondary materials markets so
that real recycling can occur if the market is not yet ready to use secondary
materials in place of virgin materials.
As the economy has grown and consumption has increased, there is more to throw away. [98] Nevertheless, the Municipal Solid Waste problem has less to do with the fact that more is being discarded than it does with the fact that, in recent years, new landfills have not been allowed to open at a pace sufficient to match the rate at which solid waste has been generated.
Across the nation, during the most recent five-year period, the number of new landfills constructed dropped almost 50 percent from the previous 5-year period, and was at the lowest level for new construction in 20 years. [99]
In Michigan, according to Carl Zollner of the Department of Natural Resources' waste management division, the state could run out of landfill space as early as 1992. Michigan now has about 70 licensed landfills. There were more than 10 times that number just a decade ago. [100]
Nationally, 46% of MSW landfills are more than 15-years old; 30% are more than 20-years old; and only 10% are less than five years old. [101] Data collected by the Council of State governments in 1986 indicate that Michigan, absent any effort to expedite the development of new landfills, currently has no more than six years capacity left in those landfills which remain. [102]
There can be no question that we need to close old landfills which were built and used long before we became aware of the hazards which poorly designed and managed landfills could create. But closing old landfills is one thing. Using the specter of old landfills as a model for opposing new, modern landfills is another.
Older landfills – many of which could more appropriately be called "dumps" – have, in the public mind, come to symbolize all landfills and have given rise to the view that landfilling can never be made safe. Therefore, on environmental grounds alone, many argue that landfilling must never again be considered a viable solid waste management option. Even if the case could be made that modern landfills are not a threat to the environment, [103] there are many who would argue that throwing household waste into a hole in the ground is an economically unsound use of scarce economic resources. [104]
The problem with many of the arguments against landfills is that they seem to be based on the notion that landfills can never be like anything other than the old "dumps" we all remember. No one wants an old "dump" in their backyard, neighborhood, or anywhere else. Therefore, no new "dumps" should be built. Consequently, virtually all legislative proposals aimed at forcing manufacturers to produce goods which are more durable – as if goods which last longer would automatically be kept longer – and goods which are made of materials which can be recycled or safely burned are aimed at one thing: reducing the need for additional landfill space. That these arguments form the basis for potentially dangerous political struggles cannot be denied.
The thorny politics of landfills is simple: no one wants them largely because no one really knows that much about modern landfills. For many people, a landfill is a "dump", and that's all there is to it. But the fine "art" of politics is to muster the information needed to confront the difficult questions. No progress can be made in bringing the landfill part of the so-called "Waste Management Hierarchy" into play in Michigan until both citizens and elected officials recognize that what an old "dump" looks like has nothing to do today with what have to do with our waste tomorrow.
Old landfills are part of the past and what is past, is past. The issue is, where do we go from here and what role can landfills play in helping us solve the solid waste management problem in ways which are both environmentally sound and economically efficient?
A modern landfill is not a "dump". Until efforts are made to make that distinction clear, needed landfill capacity cannot be created. But there is a way to make that distinction clear. Arkansas and Texas offer a model for Michigan. Both states have developed careful procedures for educating the public about what landfills are and how they compare, both in terms of cost and environmental impact, with other waste management alternatives. [105] Consequently, landfill development in those states has kept pace with the growth in waste volume far better than is currently the case not only in Michigan, but in many other states as well. [106]
Absent sustained development of new landfills, Michigan will, sooner than we would like, face a true solid waste problem similar to that which characterizes states in the Northeast quadrant of the U.S. – states where landfill development virtually ceased over a decade ago. When and if that time comes, Michigan communities may have no choice except to either ban or heavily tax certain products; institute programs aimed at recycling and/or composting of wastes regardless of the economics of recycling and/or composting; or increase the volume of waste incinerated. [107]
However, people are just as reluctant to accept new recycling centers, composting operations, and waste-to-energy incinerators as they are to accept new landfills. New Jersey's mandatory recycling law has not stopped citizens from blocking trucks going into recycling centers. [108] Thus, failure to move quickly to allow new landfills to be sited is not going to make solid waste management less politically troublesome. It is simply going to make solid waste management more economically and technically troublesome.
Perhaps if we could have "Landfill Education" similar to the "Recycling Education" which is currently in vogue in many Michigan school districts, we could help citizens understand the technical issues which surround landfills. Such an education effort would not guarantee that new landfills could be sited without controversy, it would only mean that the controversy would be based on something more than the passion which flows from the notion that there is no difference between a modern landfill and the old "dump."
Educating citizens to help them understand the difference between a landfill and a "dump" would not be a bad idea. What would be a bad idea is to do nothing for fear of political opposition and end up looking at landfill tipping fees similar to those which characterize the Northeastern U.S.
A great deal of the federal and state legislation already noted calls for the use of materials which "biodegrade", including biodegradable plastics. The assumption which underlies such legislation is that if most of the material which goes into a landfill were to decay, a landfill would last longer and, therefore, fewer new landfills would have to be built. As noted above, this argument seems to be based on the notion that if we have to use landfills and if only rapidly decaying materials would be allowed in landfills, a landfill could become what might be called a "perpetual space-making machine."
Fortunately, at least one city which passed legislation banning one form of non-biodegradable packaging material – polystyrene foam food containers – has moved to undo that mandate. City officials in Portland, Oregon, which passed such a ban in 1988, are now acknowledging that bleached paper cups and plates – substitute materials for expanded polystyrene fast food containers – leach dioxin when they decompose whereas expanded polystyrene has no such negative environmental impact. [109]
The issue faced by Portland officials really begs an answer to the following question: What's so great about having something biodegrade in a landfill? Do we really want material placed in a landfill to decay faster than it would otherwise?
When material decays in a landfill, several relatively mild acids and methane gas are produced. In addition, biodegradation alone yields a moderate amount of moisture. If rainwater is allowed to seep into a landfill, the combination of external and internal moisture could force the internally generated acids into groundwater supplies along with anything else the acids may have dissolved. This is the often-cited "Leachate Problem."
Methane gas is volatile. Indeed it is methane gas which heats our houses and cooks our food. In a landfill, methane gas – along with C02 one of the so-called "Greenhouse Gases" – can migrate through the ground and accumulate in underground pockets or escape into the atmosphere.
Therefore, questions of aesthetics aside, there are only two environmental problems posed by landfills: Leachate and methane gas. Given this, the reason why both EPA and OTA admit that modern landfills need pose no health threat to individuals or the environment is because modern landfills have systems which hold leachate in place as it develops, and remove it directly from the landfill. In addition, modern landfills incorporate systems which remove methane gas and, in many instances, use the gas to provide energy to the buildings used in the landfill operation.
The University of Arizona's Dr. William Rathje knows what goes on in a landfill – even an old landfill – and he's been trying to tell us something. What he has learned by excavating old landfills in climatically diverse parts of the country, landfills which do not meet the tough standards laid down by current EPA regulations, is that virtually nothing happens in a landfill.
A covered landfill is a dry anaerobic environment – an environment without oxygen or moisture. Organic material needs both to decay. Without oxygen and moisture, decay moves at a snail's pace. Therefore, what is put in a landfill tends to stay in the landfill in much the same form it had when first buried. While some decay does occur, it occurs so slowly that even after 30 years in place, it is possible to enter a landfill and find fully intact corn cobs and hot dogs alongside newspapers which announce the election of Dwight D. Eisenhower. [110]
A landfill – even, as Rathje has discovered, an old landfill – is not a place of massive waste decay with rivers of gushing leachate. It's a place where waste stays, and stays, and stays. Indeed, if decay were to occur at a rapid rate, the opportunity to build atop them would cease to exist. New York City's LaGuardia airport is on a landfill; Newark airport is on a landfill; the large VA hospital in Cincinnati is on a landfill.
The fact that landfilled waste is essentially entombed has caused scientists in some German cities – where land is quite scarce relative to population – to experiment with techniques for pre-treating garbage (all garbage) in open-air compost piles before releasing the material to landfills. The fungi generated in open air broke cellulose chains and allowed the garbage to enter the landfills as a mass of sugar. Decay time in the landfill was reduced by up to twenty-five years. Unfortunately, the open-air compost piles stink so much that neighbors were opposed to this technique for managing solid waste. [111]
Entombed garbage! If that's what happens in old, non-Subtitle D landfills, what would happen in the new landfills built according to the tough new standards established in Subtutle D of the federal Resource Recovery and Conservation Act? With the tight new standards which apply to modern landfills, MSW in a landfill will become even more benign than it now is in old landfills.
Contrary to much current popular commentary on landfills, waste placed in a modern landfill will stay there. Leachate will be removed and carried away for safe treatment and disposal. Methane gas will be removed and, in some instances, be used to supply energy to the landfill operation. On environmental grounds alone, that is more than enough to make a modern landfill an acceptable waste management alternative.
But what about the cost? Is a landfill economically superior to other waste management alternatives, or economically inferior?
Almost all of the 70 landfills currently operating in Michigan were constructed using containment or liner systems to protect against leachate seepage into groundwater systems. However, only seven currently use the double containment system which is preferable and which will soon be mandated. [112] What would it cost to assure that all landfills are fully designed with proper liners to provide maximum environmental protection?
There is a reason for the new, more restrictive, federal Subtitle D requirements placed on landfills. They are aimed at assuring that landfills become closed systems with virtually no impact on the surrounding environment. Such landfills are more costly than the old "dumps" we may remember. But the cost of building and operating such landfills serves as a measure of the environmental costs old landfills may have imposed on the community, but which new landfills eliminate. A cleaner environment has its costs – costs which a properly educated community might be far more willing to accept if they understand what these higher costs are buying for them.
One argument against the use of landfills is that since only modern Subtitle D landfills can be cited, and since these landfills would cost more than continued use of old, below-standard landfills, no community could afford to purchase the cleaner environment it seeks by using this method of waste disposal. Therefore, the anti-landfill argument might go, the best option would be to escape these higher tipping fees through aggressive recycling programs.
Modern environmentally secure landfills are expensive. But so also are all the steps which must be taken to affect recycling. Incineration, especially the large incinerators one finds in places such as Detroit, are expensive. (On this issue, more below.) Mandates which seek to restrict the use of certain types of materials in the manufacture of products are expensive. Indeed, given the significant impact which source-reduction mandates could have for certain classes of product, the cost of mandated source reduction could be far more costly in terms of jobs and industrial displacement than any of the other elements of the waste management hierarchy.
The real issue is not how much a modern landfill costs, but what its costs are per-ton tipped, and what these costs are compared to costs per-ton for other elements of the waste disposal hierarchy.
In a careful study published in Waste Alternatives, December, 1988, Robert T. Glebs, P.E., examined the cost of building and operating a modern 75 acre Subtitle D landfill in the upper-Midwest:
A Subtitle D state of the art landfill will likely have: one or two liners; leachate collection systems; final cover systems; more inspections and record keeping; more control of vectors; methane gas control; more detailed surface water run-on and run-off controls; more restrictions on wastes that can be received; a detailed closure plan and funding to cover closure; financial assurance required up front or as part of operations, thus increasing gate fees; and groundwater monitoring and corrective actions which may include monitoring systems, sampling and analysis programs, contingency plans with trigger levels, and contingency action plans. [113]
Glebs noted that before enactment of Subtitle D regulations, predevelopment costs (land, construction, legal fees, etc.) and operating costs (labor, machines, facilities, maintenance, etc.) accounted for as much as 93% of total cost. With the addition of strict leachate and methane gas collection requirements, along with both surface and groundwater control systems, these costs have risen in absolute terms, but have fallen as a proportion of total costs. Careful attention is now given to closure and post-closure with the result that these costs now account for 29% of the total, rather than the old 6.1%. [114]
With strict attention to environmental concerns both when a landfill is built and operated, and when it is closed, how much would a 75 acre Midwestern Subtitle D landfill cost?
Based on examination of what it cost to build state of the art landfills in the upper-Midwest in 1988, Glebs' analysis concludes that such a landfill would cost $55,038,000 to build, operate and safely close. Moreover, his cost estimate included such "unanticipated" costs as assessments for funding local recycling programs and protection for local property values – all based on the first phase of a four-phase operation. [115]
Glebs concluded that adding a 25% profit margin if the landfill is privately owned and operated, or setting aside the same margin to cover landfill replacement if the site is government owned and operated, the per-ton tipping cost would be $25.62 (Emphasis intended). [116]
With sound environmental standards, tipping fees are what matters. Indeed, the tipping is all that matters for comparing the cost of a landfill to other waste management options.
Glebs found that as much as 31.7% of this cost is first-phase predevelopment and construction cost. Therefore, as new cells are opened, per-cell costs fall. His estimate is that costs would fall by as much as 26% for the last three phases of a project which proceeded in equal 18.5 acre phases. [117] For a private firm this would mean a rising return on investment over time and, thereby, a greater margin of safety when and if competitive forces signaled the need to reduce tipping fees. [118] For a government operation, this long-term reduction in costs can translate into an increase in the net revenue which can be set aside for closure and/or expansion.
Glebs' conclusion? An environmentally safe landfill can be profitably built and operated at a tipping fee below $26 per ton.
How has experience squared with Glebs' analysis? Marquette County, Michigan recently opened a 53 acre state-of-the-art bale-fill landfill designed to accept 200 to 300 tons of waste a day over a 60 year period. With double liners, leachate collection systems, ground water monitoring, and methane gas removal, all construction and operating costs, including contingency funds for expansion and debt retirement, will be covered with a tipping fee of $25 per ton.
Marquette County's costs are an almost perfect match with the costs developed by Gleb's analysis.
In a report prepared for the Michigan House Conservation Committee, Special House Democratic Task force on Solid Waste, December, 1989, SCS Engineers reported the costs of building and operating a modern Subtitle D landfill in Michigan and compared those costs, on a per-ton basis, with costs estimated for the same Task Force by the Michigan Legislative Service Bureau and the engineering firm of Dell Associates. Dell Associates concluded that costs per-yard tipped would be $12.51. SCS Engineers estimated $14.02 per-yard. The difference was that the SCS estimate was based on a "worst-case scenario" involving longer siting time and higher siting costs. Without this difference, both firms' cost estimates were similar. [119]
Clearly, while the cost of disposing of MSW in a Michigan landfill need not be as high as what one finds in some Northeastern states, whether or not landfills are to be considered part of the Michigan waste management system, depends on what it would cost to landfill compared to other alternatives such as recycling and incineration.
The Council on Plastics and Packaging in the Environment contends that "Of all the disposal methods available today, solid waste managers recognize that recycling and waste-to-energy incineration are better long-run solutions to the solid waste problem than landfilling, in many parts of the country." [120]
If that is, in fact, true for some (many?) parts of the country, does that mean that it is also true for all parts of the country? Given present, and expected future circumstances, is it especially true in Michigan?
The argument in favor of recycling over landfilling is that recycling yields "cost avoidance." Even if markets fail to cover the cost of source separation, collection, processing, and shipping of distinct materials into their individual secondary materials markets, recycling will divert a portion of MSW from landfills and, thereby, save what would have otherwise been spent on tipping fees. In that context, Caroline Price, writing in the February, 1990 issue of Michigan Business, argues that as landfill tipping fees rise, recycling can make sense on strictly economic terms – becoming less expensive than traditional waste removal systems. [121] Some waste professionals discuss the value of "avoided" landfill costs achieved through recycling programs in terms of the average cost of the next generation landfill or some weighted average of current and expected future landfill costs. This approach oversimplifies the issue. For one thing, not only are recycling costs different across regions of a state – given population densities and location relative to secondary material markets – landfill costs are not the same in all regions of a state or, certainly, in all parts of the country. In addition, once cost comparisons are to be made across time, (i.e., "current" versus "expected future") expected future costs and benefits should be reduced to "present values."
How much "cost avoidance" really occurs depends on what it actually costs to develop a system for collecting and processing municipal waste so that it can be presented for sale in secondary materials markets, compared to what it costs to landfill wastes both now and in the future. Therefore, no matter how much initial public enthusiasm may exist for a community-wide curbside "recycling" program, those responsible for instituting the program should take account of the following:
Curbside collection involves major capital expenditures for specialized collection vehicles.
Labor, maintenance, administration, and transportation costs must be incurred. If a community hires a private firm, that firm will certainly factor these costs into its bid.
Finally, when "cost-avoidance" savings are expected to materialize only over several years, decision makers should discount expected future costs and benefits to the present to generate the date required for valid cost comparisons.
The cost of landfilling in Michigan now ranges from a low of $9.75 per ton in Montmorency County to a high of $37 per ton in some Detroit-area communities. The current average state-wide tipping fee is well below $25 per-ton. (In June, 1990, Saginaw officials were complaining about the fact that their landfill tipping charges had increased to $21.75 a ton. [122]) Some studies suggest that the range is between $22-$33 per-ton with the average near $21 per-ton. [123]
However, sound environmental management demands that old landfills be closed and new landfills meet tough environmental standards. Even though the SCS study noted above, along with the Marquette County experience, strongly suggests that tipping fees in new, environmentally sound, landfills need not rise to the levels which characterize some other states, assume that with the closing of old landfills and the development of new landfills, tipping fees rise to, say, $40 per ton.
At tipping fees of $40 per ton, can careful and fully implemented recycling programs be as cost effective as landfilling – even when landfills are designed to provide complete environmental protection?
Ann Arbor, Michigan has one of the oldest recycling programs in the state. The city also pays Browning-Ferris Industries a $30 per-ton tipping fee to accept its non-recycled waste. According to Mr. Bob Line of BFI, that cost may soon rise to $33 per-ton. Yet, according to Brian Weinert, Ann Arbor resources recovery manager, the city pays the non-profit "Recycle Ann Arbor" program $85 a ton to take away about 4,500 tons of paper, glass, metal and other recyclable materials. [124]
Dearborn, Michigan, households are now paying an extra $22 per-family, per year – about 30% more than previously – to fund the city's curbside recycling program. That comes to over $700,000 per year. The city hopes to get back about 10% of that each year through the sale of recyclables, but acknowledges that it all depends on what happens in the market for recyclables. [125]
Mr. Tom Tryce, public works superintendent for Royal Oak, Michigan, told the Detroit News that "Recycling is a very, very expensive business. It's not a cost-saving measure." Royal Oak citizens will be paying $5 million more over the next three years to expand its recycling program, which previously provided curbside pick-up for newspapers only. [126]
Madison Heights, Michigan, has spent $250,000 to launch its recycling program, largely for three new trucks and drivers. Pete Connors, assistant city manager of Madison Heights, hopes that through savings on landfill tipping fees the city will break even. However, Connors told the Detroit News, "I think it's unlikely residents will ever get anything back from the sale of recyclables. I think that the best we can hope for will be no increase in landfill tipping fees." [127]
The Southeastern Oakland County Resource Recovery Authority (SOCRRA), handles the plastics which local governments in that county require households to place in special containers for recycling. Michael Czuprenski, operations manager for the Authority, claims that the cost of transporting these materials is double what it would cost to landfill them. In addition, he admitted that while one recycling firm has approached the Authority about buying the materials, the Authority has rejected the offer because the cost of processing the material to meet the requirements specified by the firm was too high relative to the price offered. (Some plastics recycling firms in Michigan are prepared to offer between $80 and $160 a ton for baled and processed plastic containers. [128])
But despite these experiences, all these communities believe that recycling is cost-effective because it reduces the quantity of wastes being sent to landfills and, thereby, saves landfill tipping fees.
For the sake of argument, assume it costs $35 a ton to dump waste into a state-of-the-art landfill (a figure higher than the current state-wide average) and every day a typical mid-sized Michigan city sends 500 tons of waste to a landfill. (Marquette County, Michigan, with a population of 70,000, will be paying $27 per-ton to dump 300 tons a day in its recently completed high-tech landfill.) Assuming waste is dumped 260 days a year, 130,000 tons per-year would be landfilled at an annual dumping cost of $4,550,000. (For those who like to read tables, everything which follows can be found in Appendix I and II.)
At present use rates, the landfill used by the city has an expected life of five years, i.e., 650,000 tons capacity remaining. After that time the landfill will have to be expanded and tipping fees raised to $40 per ton.
Assume further that by spending $5 million over a three-year period (the cost Royal Oak, Michigan, will be paying to expand its recycling program to accept recyclable material beyond just newspapers) 25% of this waste could be diverted to a recycling center at a daily cost of, say, $20 a ton – including the net effect of receipts from the sale of recyclable materials, but not including the cost of collection.
To the charge that this net-cost estimate is too high, recall that SOCRRA's operations manager Michael Czuprenski reported that the Authority's cost just for hauling plastics was twice what it would cost to landfill the material, and Ann Arbor pays $85 a ton to have its recyclables hauled away, net of what it receives from sales. Moreover, Seattle, Washington, which has the most extensive curbside recycling program in America has net costs $7 million per year. Seattle's two private contractors charge the city nearly $50 per ton for handling secondary materials and are losing money at that price – money which the city's contract requires the municipality to cover. [129]
By diverting 25% of its MSW from the landfill, this city reduces the volume of waste landfilled by 32,500 tons per year. Instead of paying $4,550,000 to some landfill operator (which may be either a private firm or some other branch of government) to dump 130,000 tons a year, the city now pays only $3,412,500 for 97,500 tons per year at $35 per ton. Landfilling costs have been reduced by $1,137,500 per year.
Many advocates of recycling see the amount of tipping fees avoided as the correct measure of recycling's economic advantage. However, this hypothetical city will, at $20 per ton, have to pay $650,000 per year to "sell" recyclable materials. Therefore, even though it spends $1,137,500 less per year on landfilling costs, its net "saving" is less than that. By diverting 25% of its waste stream from the landfill, this hypothetical city "saves" $487,500 ($1,137,500 minus the $650,000 spent to market recyclables).
The $5 million which it cost to develop the program will be spread over three years. The first year the city directly pays 1/3 of that figure – $1,666,667. At the same time, it sets aside enough money at, say, 8% interest, to pay the second and third installments only when those installments are due.
To pay the second year's obligation, the city only needs to set aside $1,543,210 in the first year. To pay the third year's installment, the city only needs to set an additional $1,428,898 aside in the first year. The law of compound interest will do the rest.
The $5,000,000 it costs the city to develop the recycling program – special trucks, recycling containers for different types of recyclable materials, storage and processing facilities, marketing costs, professional staff and drivers, etc – really only costs $4,638,775. At 8% interest on funds held through years one and two, the law of compound interest has become the city's friend. (We intend to use the favorable assumption that the city does not have to borrow, and pay interest, on the money needed to start the program. We are trying to make the very best case we can for what it may cost to divert waste from a landfill through a carefully developed curbside recycling program.)
In the first year, the city experiences net savings of $487,500 in tipping fees (taking account of the cost of marketing recyclables) and spends, i.e., pulls from current city revenues, $4,638,775. Net? First year recycling costs come to $4,151,275.
But recycling has lengthened the life of the landfill from five years to six years and eight months and pushed back the onset of higher tipping fees. Therefore rather than having to pay $5,200,000 per year beginning in year six had there been no diversion of waste through a recycling program (130,000 tons at $40 per-ton), the city has preserved the $35 per ton price through the eighth month of year seven. Moreover, the city has ceased to dump 130,000 tons per year. It now will be dumping only 97,500 tons per year. Money which would have been spent without recycling, will now be saved through recycling.
How much money will be saved? Money saved in years two through, say, year eight, is not money saved now. Money to be received (i.e., "saved") later does not have a value in the first year equal to what it would have in the year the saving is actually realized. Therefore, what money expected to be saved in later years is worth now, is the summed present discounted value of that future dollar figure.
The operation which must be performed to calculate the present discounted value of future savings is one every government or private sector financial officer understands. The expected future dollar figure must be divided by 1/(1 + r), where "r" is the discount rate. Following that, each future year's expected savings must then be summed to provide a cumulative current dollar figure.
In this exercise, the discount rate is the same rate of interest this hypothetical city is to earn on the funds it sets aside in the first to amortize its three-year $5 million obligation for starting the recycling program. We have assumed 8% and will use that as the appropriate rate of discount in calculating the present discounted value of all savings to be realized from year one through, say, year eight.
In the first year, the city incurs a net cost of $4,155,275. In year two, the city begins to see net savings of $487,500 from reduced tipping fees minus the cost of marketing recyclables. But the present discounted value of money saved in year two is not $487,500, but only $451,389. In years three through five, the city continues to experience net waste disposal savings of $487,500 each year. But the present discounted value of these savings is not $487,500 times three, i.e., $1,462,500. It is only $1,163,273. Indeed, the present discounted value of all the savings our hypothetical recycling program can yield from years two through eight will total $3,382,509.
Net of first year savings on net tipping fees, it will cost this hypothetical city $4,151,275 to put the recycling program in place. Looking forward to the end of the eighth year, discounted and summed savings total $3,382,509. The recycling program shows a net cost of $768,766. This amounts to an annual surcharge of almost $1.00 on each ton of waste landfilled after 25% of the waste stream has been collected and dispersed into secondary materials markets. Recycling is not really saving money, even when the extended life of the landfill is taken into account.
Perhaps it would pay to take a look over a longer time horizon, say, ten years. After the tenth year, the summed present discounted value of savings will total $4,058,845. There is still a net cost – $92,430. In terms of an annual surcharge on each ton of non-recycled waste landfilled, while this cost is not much – less than 10 cents a ton – it's still a net cost.
Actual savings will emerge only after the tenth year. In year eleven, savings – discounted to year one – will equal $208,646. After that, the present discounted value of savings realized from the community's investment in a recycling program will continue to grow, but at a decreasing rate of increase. While 12th year savings will exceed 11th year savings by a whopping 133.9%, the rate of improvement will drop to 52.9% and 32.1 % in years thirteen and fourteen, respectively.
As Royal Oak, Michigan's Mr. Tom Tryce noted, recycling is a "very, very expensive business; it's not a cost-saving measure." It can, as he indicated he hoped would be true for Royal Oak's program, delay the onset of higher tipping fees by extending the life of a community's landfill. But even with that, it is not clear that genuine savings can be expected for quite a long time – unless the gap between current and expected future landfill costs are great and the expected life of the current landfill is short; and the market for secondary materials becomes strong enough to reduce the direct cost of handling secondary materials. Absent these elements, it is not automatically true that "avoided" landfill costs will actually result in money saved.
If secondary materials markets weaken as more and more communities attempt to supply raw materials – as many experts fear – the net per ton cost of handling diverted materials could rise overtime. Moreover, given that a very large proportion of the cost of operating a landfill are fixed costs – costs which do not vary with the amount dumped on any given day – a reduction in the volume of waste presented to a landfill will reduce revenues more than it will reduce costs. In this situation, the landfill operator (whether private or governmental) would have an incentive to reduce the per ton tipping fee to attract additional customers.
Surely a landfill operator would not reduce tipping fees in the face of reduced tonnage coming into the landfill. That is exactly what has happened in New York City's government-owned landfill where loss of customers forced a 37.5% tipping fee cut. The possibility of that happening suggests that the costs "avoided" may not be as great as initially assumed and, consequently, the real costs of the "cost-avoidance" program could rise.
Taking these very real possibilities together, efforts to divert waste from landfills through recycling might never pay, no matter how long the time horizon. Clear analysis is required before the first step is taken. This does not mean that there is no reason to incur the costs of starting a community recycling program. It just means that it ought to be done on the basis of sound analysis, not emotion.
Landfills are expected to play an important role in solid waste management for many years to come. Properly engineered and managed, they need pose no threat to the environment. They are not always welcomed, but neither are incinerators, recycling centers, or compost stations.
While the decision to site a landfill is certainly an economic decision, it is also a political decision. Given the obvious political aspect of the landfill siting decision, elected officials must develop programs which assure communities that landfills are not a threat to the local environment, and communities must decide, in light of all the evidence, whether to accept or reject them. Moreover, if a landfill is to be sited, communities must be assured that some portion of the fees collected will be returned to the community. Indeed, if the landfill is privately owned and operated, the community will acquire job-creating and property tax-paying business. That fact should always be part of everything which is "put on the table" when the decision to allow or disallow a landfill is reached.
Recycling programs aimed at avoiding landfill tipping fees may save money and they may not save money. It depends on many factors, all of which should be studied carefully before any decision is made to incur the costs of a recycling program. If a community knows all the possible costs, and still wants a recycling program rather than a landfill, that is their right. But all the cards should be on the table before that decision is made.
Modern landfills are expensive. But, unlike the Northeast quadrant of the U.S., Michigan land costs are not such in most parts of the state to result in landfill tipping fees anywhere near what citizens in, say, New York City, pay. [130] Therefore Michigan officials would do well to avoid measures which could virtually close the landfill options part of a sound waste management program.
Both the Environmental Protection Agency and the Congressional Office of Technology Assessment have noted that when properly designed and operated, waste incinerators can be both safe and effective. For that reason, incineration is part of both federal agencies' waste management recommendations. However, unlike landfills, which bury waste, incinerators – called "Waste-to-Energy" or "Resource Recovery" systems by waste management professionals – have the capacity to turn waste into electricity – a marketable product. Indeed, burning waste to generate energy may be the ultimate form of recycling: energy is used in producing the products which become elements in municipal solid waste, and burning that energy under controlled conditions generates new energy.
Provided the right mix of waste is provided, and under controlled high temperature conditions, most of the incinerators which are currently in operation can reduce the volume of waste which enters the incinerator by 75-90 percent. Most existing or planned U.S. incinerators are either "mass burn" systems that burn mixed, unprocessed MSW or "refuse-derived fuel" systems, which first mechanically process solid waste to produce a more homogenous fue1. [131]
Many of those who favor source reduction and recycling over landfilling cite Europe and Japan as prime examples of successful recycling and argue that the United States should imitate both countries. At the same time, many of these individuals dislike incineration on the grounds that incineration is both expensive and environmentally risky.
What is often overlooked in the argument for recycling and against incineration is the fact that in both Japan and Europe, a substantial proportion of MSW is disposed of through waste-to-energy incinerators. [132]
In Japan, over 1,900 cities – almost two-thirds of all municipalities – have waste incinerators of one type or the other. About one-fifth of all Japanese incinerators are mass burn. Nearly two-thirds of Japan's post-recycling municipal solid waste is burned. [133]
The majority of European facilities are mass burn, waste-to-energy facilities. Sweden and Denmark combust more than half of their post-recycling solid waste and West Germany about one-third after recycling. [134]
The safety issue surrounding waste-to-energy facilities centers on toxic particles in either released stack gases, or in the residual ash. In Sweden in the early 1980s, questions were raised about the health risks associated with mass burn combusters. Two families of toxic chemicals were believed to be emitted from municipal incinerators: polychlorinated dioxins (PCDD) and polychlorinated furans (PCDF). In response, the Swedish Board of Environment placed a moratorium on new municipal combusters and began an intense study of the issue.
After a thorough review of the scientific evidence in Sweden and other European countries, Swedish environmental authorities concluded that PCDDs and PCDFs, while present in residual gases and ash, were present at levels were well below acceptable minimums. Therefore, on the grounds that this method of waste disposal posed no health risk, incinerators were released from moratorium. [135]
Floyd Hasselriss, Diplomate of The American Society of Environmental Engineers, has studied incineration as an option for managing MSW and concludes, "worldwide research on emissions from combustion has produced a consensus that with good design, operation, and monitoring, municipal refuse combustors can reduce potentially toxic organic compounds to extremely low levels which do not represent a health risk. The residues of burning, which represent about 20% by weight of the MSW, can be partially recovered for beneficial use, reducing landfill requirements to as little as 5% to 10% of the original MSW weight." [136]
Given the advances which have been made in waste combustion technology, and in light of the fact that, properly designed, waste-to-energy incinerators pose no health hazard, EPA and OTA concluded that this part of the waste management hierarchy should be able to handle as much as 20 percent of MSW by 1992. [137]
Waste-to-energy incinerators already handle 63% of waste in Connecticut; 57% in Maine; 48% in Massachusetts; and 43% in Delaware. In Michigan, only 4% of MSW is disposed of in this manner. [138]
But incinerators are not cheap. With construction costs running as high as $500 million, the economic advantages of simultaneously disposing of garbage while generating electricity are not compelling. While the Public Utility Regulatory Policies Act of 1978 requires public utilities to purchase electricity from such facilities at a price equal to the utility's "avoided cost" (what it would cost the utility to generate this energy), waste-to-energy plants' costs are higher than the price utilities would have to pay to produce their own energy. [139]
Moreover, with the high start-up costs associated with large (1,000 and more tons per day) conventional waste-to-energy plants, the only way economies-of-scale can be achieved – i.e., overhead costs can be spread over extended periods of operation – is if sustained flows of MSW are presented to the plant. A city which has built, or invited a private firm to build, a conventional large waste-to-energy plant at the same time it has implemented a recycling program will discover that the two may not be complimentary. They may be competitive. A corrugated box or a plastic bottle – plastic has high BTU value – can be either burned or recycled, but not both.
As is true for landfills vis-a-vis recycling and recycling vis-a-vis landfills, failure to consider the costs of alternative waste disposal options before committing to a conventional large incinerator could be financially disastrous. Case in point: EPA officials are now seeking public response on proposed regulations forcing all cities that incinerate garbage to achieve a 25% recycling rate. A resource recovery – i.e., waste-to-energy – plant needs fuel to produce steam and electricity. Recycling deprives the plant of some fuel. The two may be incompatible and the public needs to take account of this problem.
Detroit's huge waste-to-energy plant now faces the prospect of future "fuel" shortages. Consequently its operating costs are expected to rise. With rising operating costs, incinerator "tipping" fees are expected to rise. Per ton disposal fees at Detroit's incinerator were originally calculated to be $38.20 per ton, rising to $53. The city's engineering consultants are now warning that costs could more than double to in excess of $120 per ton under certain circumstances. [140] That is a figure well above what anyone currently expects to be the cost of landfilling anytime in the future in Michigan.
Question: Is it necessary to spend upwards of $500 million to build an incinerator of the type which the City of Detroit, and several other large cities, operate? Detroit's incinerator, like that of many large cities which are using this method of waste disposal, was designed to burn as much as 2,000 tons per day. With that design, and with such high start-up costs, it virtually has to have that amount every day to realize the economies-of-scale required to keep its per ton costs as low as possible while simultaneously recovering construction and operating costs.
What about smaller waste-to-energy incinerators? Are they possible?
Morbark Industries of Winn, Michigan, has developed and tested what its people call a "Waste Gasifier." Starting with a shredder unit which combines common household garbage, construction debris and wood, it shreds these materials and passes them along on a conveyer to a metering bin which accepts the blend of wood chips and garbage. At this stage any oversized material is reduced to proper size and then augered to a primary combustion gasifier. The gasifier takes the garbage and wood chip blend and converts the fuel to a hot gas at a temperature range of 1,200 degrees achieved by controlling internal air flow. The material then passes through a cyclone scrubber where more air is injected and a super heat level between 3,000 and 3,300 degrees is achieved. The circular flow inside the cyclone at these high temperatures (more than twice the temperatures achieved in the large Detroit incinerator) insures that all fly ash material is completely gasified before entering the boiler. The super heat in the boiler produces high temperature steam. Any unburned ash and char is removed and recycled back to the beginning of the process to be used as primary first-stage fuel.
The Morbark gasifier is small and inexpensive. After glass, metal, and batteries have been removed – all of which are better candidates for secondary materials markets than is the case for many other elements in typical MSW, it is capable of safely handling up to 200 tons of waste a day – including grass and leaves which, properly mixed with wood chips, will burn easily. [Hillsdale County, Michigan, generates less than half that amount of waste a day. Isabella County, Michigan, which includes Winn and Mount Pleasant, along with the large student population at Central Michigan University, produces no more than 100 tons of MSW per day.]
With the ash and char which remains from Morbark's gasifier recycled into primary fuel supplement waste reduction, the system is capable of reducing the volume of waste by as much as 98.5% – compared to, at best, no more than 90% for large conventional waste-to-energy incinerators.
The cost? While conventional incinerators may cost $500 million, Morbark' Gasifier is expected to sell for around $1 million. With costs this low, energy production from MSW need not be economically inefficient in competition with recycling and landfilling. For many, if not most, Michigan cities and counties, the Morbark gasifier could handle virtually all waste. For larger cities, several such gasifiers could be used at strategic points around the city to take 100 to 200 tons per day. Located at the edge of cities in or near industrial areas, with minimal garbage transportation costs, waste could be received and gasified, and energy – up to 10 megawatts according to Morbark officials – could be created.
Private firms operating in competitive markets supply goods which people want at prices people are willing to pay not by accident, but by paying careful attention to the choice of materials and production techniques which minimize production costs. The fact that most people take this for granted is both a blessing and a curse. It's a blessing because we don't have to think a lot about it. It's a curse because, not having to think a lot about it, we tend to forget that the same forces which generate goods and, residually, the waste which derive from discarded goods, can also operate to manage the disposal of wastes.
Private firms collect most of the garbage in America because experience has shown that private firms are far more cost efficient at collecting garbage than governments. The rates charged for private garbage collection will, provided there are no governmentally imposed barriers to entry, reflect the real value of the resources absorbed in providing this service. That's as it should be. Garbage collection has for too long been an "invisible" service: people put the stuff out and someone comes and takes it away. If that "someone" is a city or county government sanitation department, the cost of that department is covered in the household's tax bill. No direct relation is established between the number of garbage bags or cans put out for collection and the real cost of collection. [141]
In the same way, private firms can and do operate landfills more efficiently than do governments. Moreover, private landfill operators are compelled to operate landfills in ways which minimize landfill operating costs. Strict observance of all relevant environmental laws which apply to the operation of a landfill is cost-minimizing behavior. No private firm which has invested the large sums required to open and operate a modern landfill will ever knowingly allow that landfill to face the risk of closure by state or federal environmental authorities. Therefore, private landfills are comparatively easier for government environmental officials to monitor since the legal threat of closure is so compelling from the perspective of the private operator. [142]
Even recycling is best handled by private firms. Firms which have worked in secondary materials markets, sometimes for several generations, are knowledgeable brokers of secondary materials. They understand both sides of the demand-limited and supply-limited character of secondary materials markets and are equipped to discover new – often overseas – markets for materials which may not currently be in demand domestically. When Adam Smith observed in his 1776 Wealth of Nations that the division of labor was limited by the extent of the market, he was telling both his contemporaries and future generations that expanded markets are essential to economic efficiency. (In using the word "markets" throughout this section I am revealing my economist's hard heart. While it may be true that recycling is the only thing which can "save the planet" – and I don't believe that is actually the case – absent real markets for secondary materials, all the things the pure-in-heart may bring to a recycling center, or may by law be compelled to prepare for curb-side collection, will be spirited away to a landfill or incinerator in the dead-of-night if there are no final markets for these materials.)
With regard to incineration, Michigan's Morbark Industries' waste-to-energy gasifier reveals that private sector entrepreneurs can offer economically superior alternatives in what may prove to be the most expensive component of MSW management.
As legislation is being considered in the Michigan State Legislature to tax some products and subsidize others to reduce reliance on landfills and stimulate recycling, several things about waste disposal techniques need to be reviewed.
For one thing, one ought to recognize that neither our current pattern of waste disposal nor proposals for altering that pattern are new. The University of Arizona's William Rathje notes that throughout human history, every culture which archaeological research has been able to uncover shows us that humans have always recycled, burned, dumped or tried to minimize their waste. [143] Therefore, to suggest, as EPA does, that doing all these things through a managed, comprehensive, and "complimentary" [144] hierarchy of waste management methods is something quite new is simply not true.
That fact that everything which is now being offered as the "best" way to address the Michigan solid waste problem has been done before (landfilling, recycling, source reduction, burning) tells us something we would do well to acknowledge before we move too quickly to alter the pattern of economic signals which currently moves the economy: the four elements of EPA's waste management hierarchy are not, as EPA claims, "complimentary". They are competitive. If they were truly complimentary and if the market were poised to welcome these procedures, all these elements would have already been done.
It's time to take a look at the various legislative proposals and currently enacted laws which have been offered at both the state and local level to manage Michigan's solid waste.
Michigan's basic legislation governing the handling and disposal of non-hazardous solid waste is Public Act 641: The Solid Waste Management Act of 1979. Administered by the State Department of Natural Resources, the purpose of this Act is as follows:
An Act to protect the public health and the environment; to provide for the regulation and management of solid wastes; to prescribe the powers and duties of certain state and local agencies and officials; to prescribe penalties; to make appropriations; and to repeal certain acts and parts of acts.
Aimed principally at assuring safe and environmentally sound waste hauling and disposal practices, this Act requires local governments to prepare five year and twenty year plans which define their "waste shed" and describe how solid waste will be handled within their area. Each county's plan must be approved by two-thirds of the county's municipalities.
With specific regard to waste haulers, for example, the Act demands that "Waste haulers transporting solid waste over a public road in this state shall deliver all waste to a disposal area or solid waste transfer facility licensed under the act and shall use only a vehicle or container that does not contribute to littering and that conforms to the rules promulgated by the director." [145]
The law requires that municipal and county governments make provisions to assure that all solid waste is removed from the site of generation frequently enough to protect public health, and that such waste be delivered to a licensed waste disposal area, except for those wastes which are permitted by state law or rules promulgated by the department to be disposed of at the site of generation. [146]
Sections (10) through (19) of Act 641 are specifically focused on landfills to assure that the siting, construction, operation, and closing of sanitary landfills will be such as to assure maximum public health and environmental protection. In September 1990, the state Department Of Natural Resources promulgated new rules with respect to landfill construction and operation to assure even tighter standards. [147]
The role of the private sector in waste disposal is not preempted by Act 641. Indeed, the Act specifically states, "This act is not intended to prohibit the continuation of the private sector from doing business in solid waste disposal and transportation. This act is intended to encourage (emphasis added) the continuation of the private sector in the solid waste disposal and transportation business when in compliance with the minimum requirements of this act." [148]
Amendments to this act which would permit local governments to impose per ton surcharges on waste dumped into landfills located in their jurisdictions have been passed and submitted to the Governor. Allowing such charges is not a bad idea. It helps take pressure off local communities which fear that landfills, and the truck traffic associated with landfills, will damage roads and bridges. With the revenues obtained from these surcharges, communities would be able to maintain their public capital infrastructure.
I am not aware of anyone who takes exception to any of the sections of Act 641. This law is designed to assure sound waste management. However, other legislative proposals have been offered for managing waste and some have already been enacted into law. It is these bits and pieces of legislation which we intend to discuss.
Significant 1988 solid waste legislation included:
Act 414: Enacted January 1, 1988, this act mandates coding of plastic containers consistent with Society of Plastics Industry recommendations.
Purpose? To make it easier for recycling centers to separate one plastic container from another at the point where plastic materials are processed and baled for shipment to their specific markets. The fact that it seems necessary to require such coding is one more indication of the fact that there is no such thing as "the plastics market." There could be as many different markets as there are different articles, each with its own unique combination of different types of resins. Those communities which are so intent on solving the solid waste problem by instituting recycling centers and manning them with community volunteers should read this legislation as one more piece of evidence for turning all aspects of source separation, processing, baling, and shipping over to private firms which have comparative economic advantage and expertise in brokering materials into secondary materials markets.
Act 415: Enacted December 17, 1988, this act establishes the Plastics Consortium and appropriates $5 million in state grants for research in plastics issues such as degradability, recyclability and end-use markets.
There is almost no "problem" for which there is not someone or some group waiting to get hands on taxpayers' money to find a "solution." In fact, chemical experts have long known that the chemistry of plastics is such that the only way anything plastic could be made degradable – and that would be photodegradability, not degradability within the anaerobic environment of a sanitary landfill – would be to mix the resins with starches. The result would be a product which would require more, rather than less, oil-based resins to assure the structural integrity of the product. [149]
With regard to recyclability and end-use markets, if there are markets for secondary plastics, and if these markets are strong enough to pull additional secondary plastics materials from MSW into the manufacture of other end-use products at prices which compete with virgin resins, taxpayers' money would be redundant. If taxpayers' money is required to fund these markets, then the stability and long-term durability of these markets would be doubtful.
There is a simple rule we ignore at our own political risk: if something has to be subsidized, markets are not ready for it. If it is subsidized, political forces will quickly rally around the subsidy, making termination virtually impossible even after it has become clear that the subsidy is not producing what markets on their own will not produce. There are some programs which ought never to have been started in the first place. That which is suggested by this legislative proposal is one such program.
PA 138/HB4178: Enacted during the 1990 session, this law established a surcharge on rubbish collection to create a fund for recycling and waste reduction.
Michigan currently has more than 250 drop-off centers and more than 25 curbside pick-up operations and the number is still growing. Some of them are only collecting old newspapers while others are trying to add plastic milk and detergent containers, glass and cardboard. At this moment, all are running a deficit.
The usual argument in defense of the need to continue to subsidize these operations is that despite the weakness of secondary materials markets relative to the cost of bringing such materials to market, recycling programs – even perpetually subsidized recycling programs – will save on landfill dumping costs in the long run.
We have already discussed the economics of recycling and the economics of landfills vis-a-vis recycling. But what about those communities such as Marquette County which have recently completed high-tech sanitary landfills? Having made the decision to incur the costs required to provide an environmentally acceptable waste disposal system which can be expected to meet their needs for several decades, are they now to be taxed to subsidize those communities which have refused to allow landfills?
Yes, that is exactly what this legislation does. It has the potential to send signals leading some communities to reject siting new sanitary landfills even when the geology, topography, and hydrology in their area would make it possible for environmentally sound landfills to be constructed. Moreover, access to what could become a perpetual fund for recycling could result in an excess supply of secondary materials sufficient to force prices well below what would be required to pay for instituting the program. That's not a prediction, it's only a probability--but a probability as close to one as it is to zero.
PA 145/HB 4882: Amended PA 145 of 1988 to extend to October 7, 1989, the earlier bill requiring all six-pack connectors to be degradable.
The problem here is litter. The presumption is that if plastic six-pack connectors were to degrade (only in sunlight, of course) litter would be reduced. Maybe, and maybe not. Could it possibly be the case that someone who wanted to discard the plastic connector surrounding their six-pack would now feel better about throwing it along the road believing that nature would make it disappear? If that were to happen we would discover something: litter attracts litter.
Legislation mandating comprehensive recycling, as well as legislation aimed at developing markets for degradable and recyclable plastics, have their advocates in Lansing. But that is no reason for passing such legislation if the end result could be something worse than doing nothing.
HB 4083: Would require restaurants to use degradable or recyclable food and drink containers.
Portland, Oregon, has backed away from such legislation. So have other cities and states. Why should food containers degrade? For all practical purposes, nothing degrades in a landfill. It's a good thing that there is so little decay in a covered landfill. If there were more, leachate would be a greater problem than it is now.
Why only recyclable containers? What is a recyclable container? Does anyone know at any moment in time what can be successfully recycled and what cannot? That's a market problem and markets are constantly evolving to ascertain what can and what cannot be recycled. Why try to make it a political problem?
Perhaps a particular type of container can be recycled (remember that nothing is recycled until it leaves in one form and comes back in another) one month and not be recycled in another month. Who's going to define what constitutes a "recyclable" product and who's going to police the process? Already there are law suits pending in Amherst, Massachusetts over a local recycling agency's "peeking" into citizens' trash bags to see if anything "recyclable" is somewhere it's not supposed to be. [150] Mandatory programs require policing and policing yields political and legal controversy. Who needs it?
As the old saying goes, "Hard cases make bad law." This legislation would be bad law precisely because it deals with hard-to-define and difficult to police cases.
HB 4783: Would mandate development of a comprehensive statewide recycling program.
Recycling is not a state issue, it is a local issue. There is currently nothing in state law which forbids a community from instituting its own recycling law. On the materials supply side, the ability to operate a truly successful recycling program is a function of population density (ease of collection and volumes which can be collected in a single day's collection run); and nearness to professional secondary materials brokers (in the Detroit area, such brokers would be close and numerous whereas in Ironwood or Iron Mountain, they would be distant and few).
Any legislation which mandates statewide recycling might be a relatively inexpensive proposition for, say, Ecorse, but a prohibitively costly proposition for, say, Newberry. After all, a recycling center or a truck especially designed to collect separate materials costs the same in Newberry as it would in Ecorse. Newberry might have to run that truck for a week to collect what could be collected in one day in Ecorse. Ecorse could sell or give the secondary materials to a nearby broker whereas Newberry might have to pay a substantial sum to ship its materials downstate.
Mr. Burt Rosen of Michigan's Great Lakes Paper Stock Corporation is an advocate of recycling, particularly paper recycling. After all, that's how he gets what he resells. Whereas he used to pay for newspapers, the glut in the market now requires him to demand payment from those who would deliver it to his company. Nevertheless, he is on record saying that the solution isn't to make laws forcing people to recycle. It would be more effective, he believes, to use tax incentives to encourage companies to use recycled materials. [151]
This legislation moves toward statewide mandatory recycling – as the term "recycling" is constantly used incorrectly not only throughout the state, but throughout the country.
If communities want to try to "recycle", let them do it. Legislating it statewide has the potential – through creating statewide excess supplies – to economically destroy those communities which are trying to do it in response to the particular and unique market signals which they face. The last thing in the world Ecorse needs is for Newberry to start a recycling program – and vice versa.
HB4819: Would allocate bottle deposit funds to the state for solid waste recycling.
Why the state? Solid waste is a local issue. Indeed that's precisely why PA 641 requires local governments to prepare their own solid waste management plans. Everything that can be said about making recycling a statewide issue applies to this legislation.
HB 4821: Would require certification of a percentage of recycled materials in the manufacturing process, and encourage state agencies to purchase goods manufactured with recycled products.
No doubt, many industries (the plastics industry comes to mind) which have invested millions of dollars in proving, at least technologically, that secondary materials can be used, would welcome such legislation. However, if it makes economic sense to make goods from secondary materials, goods will be made from secondary materials. If it doesn't, they won't. If it takes a law to accomplish this end, then something is fundamentally wrong with that law. What is wrong is that it flies in the face of market forces.
Currently, at the federal level, agencies are encouraged to buy goods made from recycled materials – provided such goods don't cost too much more than goods made from virgin materials. How much more will Michigan state agencies be allowed to pay for goods made from secondary materials? Ten percent? Twenty percent? If anywhere near either percentage, what would this mean for the costs of running state agencies? Would those higher costs be somehow compensated for through lower landfill tipping fees? Does anyone really know?
Who will examine goods claiming to be made from some mandated percentage of secondary materials? What are the chances that, to make a sale, some firms might be tempted to "stretch" the definition of what is a secondary material and what is not? Who will police this? How much will it cost to police this legislation?
Hard cases make bad law!
HB 4822: Would establish programs to encourage markets for recyclables.
How? Markets for recyclables – i.e., secondary materials extracted from municipal solid waste – will emerge when, and only when, the price of virgin materials rises relative to the price of secondary materials presented in forms which make them immediately substitutable for virgin materials in established production processes. That may or may not happen over time. When that time comes, if it ever does, markets will emerge to pull secondary materials from MSW. No government agency need encourage that. Markets will offer the only encouragement which will ever make economic sense.
A bill to regulate the prices charged by solid waste landfills has been suggested by Michigan state Senate Minority Leader Art Miller (D., Warren). Although not yet recorded and assigned a number at the time of this writing, this proposal is interesting for what it doesn't say.
Sen. Miller claims that landfill operators should be regulated in the same way electric utilities are because "State regulations banning transport of waste between counties gives landfill operators the power to set take-it-or-leave-it prices for local waste haulers. He contends that the Public Service Commission or the Department of Natural Resources should periodically review the prices charged by landfill operators. In addition, he argues that operators should be required to accept waste from any approved haulers, outlawing the alleged practice of refusing to accept waste from competing haulers. [152]
What's the problem? Is the problem too many landfills or too few? If too few, why are there too few? Is it because there aren't enough entrepreneurs willing to build and operate environmentally state-of-the-art landfills or is it because the state has been slow in moving on requests for siting authorization?
Move to expedite the landfill siting process and Sen. Miller's "problem" will take care of itself. Move to encourage counties to expand their "waste sheds" in their solid waste plans so that waste can move across counties and the problem will tend to take care of itself. To his credit, Sen. Miller has offered support for the latter idea.
The idea that a landfill operator will push customers away so as to reserve space for his own waste-hauling vehicles assumes that those who both own landfills and operate waste hauling firms don't know how to calculate their own internal costs so as to identify, at every moment in time, whether they should be in the landfill business or the waste hauling business.
The three major waste management companies currently operating in Michigan – Waste Management, Inc., Laidlaw, and Browning-Ferris Industries – license their landfill operations and their waste hauling operations as separate and distinct corporations. In this way it is possible, at every moment in time, to know how much it costs them to haul waste and how much it costs them to dump waste – even in their own landfills.
These firms charge themselves for dumping waste in their own landfills in the same way that the Chevrolet Division of General Motors Corporation used to charge the Pontiac Division of the same corporation for parts sold across division lines. In that way each unit knew exactly whether it was smarter to buy from the other or from someone else.
If a landfill operator also owns a waste hauling firm, it will welcome all the business it can get, whatever its source. If it is running short of space, it will attempt to acquire new space. Indeed, if anything, space constraints would signal the operator to get out of the waste hauling business so that he could concentrate on selling space to those who would bring in outside revenues. In a word, he would prefer to charge rising fees to non-related firms rather than make non-cash-flow internal bookkeeping charges internally.
Absent some real hard evidence, I am inclined to suggest that Sen. Miller's proposal is based less on fact that it is on anecdote.
Why should Sen. Miller or anyone else be concerned about higher landfill tipping fees? Unless the Senator is prepared to lead the charge for more expeditious siting of new landfills, he should welcome rising tipping fees if for no other reason than the simple fact that rising tipping fees lead to higher garbage collection charges and higher garbage collection charges make recycling and incineration more economically feasible.
Encouraging and subsidizing recycling while at the same time posing legislation demanding that landfill operators not raise their prices when space becomes scarce are contradictory. If we are to have state laws mandating recycling and if the state is going to spend huge sums to subsidize such programs, the best thing that could happen would be to allow markets, not state agencies, to set landfill tipping fees. Higher tipping fees make recycling sensible. Low legislatively-set low tipping fees do not.
While Sen. Miller wants to regulate landfill charges because the lack of landfills, in his opinion, grants landfill operators monopoly pricing power, Senator Doug Carl (R., Mt. Clemens) wants a law which would place a two-year moratorium on licensing new landfills (SB 0716'89). That would certainly grant present landfill operators monopoly power. Perhaps Sen. Carl and Sen. Miller ought to talk to one another every now and then.
SB 478: Introduced by Senator John Cherry (D., Clio), this bill would expand the 1976 "Bottle Deposit Act" to include a 10 cent deposit on all non-carbonated fruit juices and teas.
Maine does this, so why not Michigan? Maybe Michigan should do this. On the other hand, maybe Maine should not have done this. What Maine does is beside the point. Maine also burns 57% of its MSW and landfills only 37%. Michigan doesn't come close in either category. [153]
Despite the fact that Sen. Cherry's bill is supported by the state DNR and the Michigan United Conservation Clubs (MUCC), the first response of food dealers and processors was to oppose this bill. Food dealers and processors argued that requiring the same 10 cent deposit on single-service juice containers as is currently imposed on pop and beer containers would impose additional space and sanitation costs on food stores. Moreover, the industry contended, unlike pop and beer bottles which come from relatively few local distributors, single-service juice products come from all over the country. Whereas the return problem can be managed relatively easily for pop and beer, getting containers back to dozens of widely-spread suppliers would be extremely costly.
These arguments have only made proponents of the bill angry. Richard Jameson of MUCC says that if food stores don't go along, MUCC would "launch a petition drive to put juice returnables on the ballot." [154]
Is this nothing more than a move to get industry involved in recycling? Senator Vern Ehlers (R., Grand Rapids) has implied as much. But what is really the problem? Can cardboard juice containers really be easily recycled? Given that they have been filled with juices, what would be the cost of processing them to make them secondary material for something else? Gerber Products spokesman Richard Jarman says that the bottles used for his company's juices aren't reusable because they are too brittle. [155] In a word, many of these containers aren't technically recyclable.
The DNR notes that the bottle deposit law has kept six million tons of refuse out of landfills. Very well, that brings the issue full circle: the real problem is the lack of an expanding landfill space. The real problem is not the fact that such institutional sites as schools, jails, Head Start programs, hospitals and nursing homes find such single-service containers advantageous and need to be deterred from finding them advantageous. The problem is that we have not followed the lead of states like Texas and Arkansas to expedite the siting of landfills or waste-to-energy incinerators which could effectively accept and safely dispose of single-service containers.
Not surprisingly, many Michigan food chains have jumped on the bandwagon to support an additional tax on consumer goods to fund recycling programs. [156] In that way, they have attempted to deter what they correctly believe to be the far more costly deposit and storage law on single-service juice containers. However, to assume that their support proves the worth of this proposal would be a mistake. Food chains are simply trying to support what they see as the lesser of two evils.
Sen. Ehlers, who chairs a special committee on increasing recycling, welcomes the support of the state's largest grocery chains. Mr. Jameson of MUCC welcomes it also: "A lot of this is self-defense, but it's enlightened self-interest, and it's welcomed as far as the environmental community is concerned." [157] Mr. Jameson is right. It is self-interest – but only in the same sense that it's in one's self interest to jump off a bridge to avoid being run over by a truck.
One of the more interesting claims made for the tax on consumer goods as a way to avoid the deposit law on single-service juice containers is the following claim from MUCC: "Charging customers small fees up front to conserve resources will yield lower costs for consumers in the long run." [158]
But how can charging more for goods now (which is precisely what the tax will do) reduce goods prices in the long run? MUCCs Jameson explains: "If you are going to have some sort of tax, it's also important to provide incentives to businesses that buy recycled products. I think the two need to go together." [159]
The threat of this single-service container deposit bill and the counter-support for a broad tax on all consumer goods is clearly an additional tax on consumers above and beyond the current state sales tax on taxable consumer goods. In addition, it is a new tax on grocery store food purchases which are currently not subject to the sales tax. Consequently, this legislative proposal reduces to being nothing more than a device for creating a system of taxes combined with a system of subsidies and other types of "incentives" to generate outcomes which the forces of the market would not yield on their own – i.e., it's nothing more than a system of indicative central economic planning. Absent market forces compelling the recycling of some goods, the landfilling of some goods, and the incineration of others in a waste-to-energy plant, the goal of this proposal is to collect revenues and disperse them to those uses which fit the plan – a plan which is inconsistent with market forces or it would never need to have been dreamed up in the first place.
Start something like this, and there will never be an end to it. Firms will quickly arise to claim some share of the subsidies. Firms will arise to claim that their product should be exempted from the tax on consumer goods for one reason or the other. Cries will arise from those who represent the poor to argue – correctly, as every student of economics knows but lawmakers too often forget – that taxes on consumables impact the poor far more than the non-poor since the poor spend virtually all their income and the tax would raise prices of ordinary consumer goods. Exemptions for the poor will be sought and, maybe, granted.
Hard cases make bad law.
Sen. Ehlers has joined with Representative James Kosteva (D., Canton) to sponsor a bill outlawing the disposal of grass and leaves in landfills. In addition, the law makes the burning of leaves and grass illegal except in communities with populations less than 7,500, unless such smaller communities explicitly forbid burning. (Not being a lawyer, I have a hard time understanding why something which is illegal statewide can be legal locally.)
The law is predicated on the argument that since landfill space is scarce and expected to become even more scarce in the future, grass and leaves don't belong in landfills. They take up too much space. Grass and leaves should be composted and the law is intended to promote composting. Therefore, local governments will be required to develop procedures to collect yard waste and transfer it to composting operations. [160]
Rep. Kosteva claims that while it only costs $17 a ton to take material to a composting center, it costs an average of $34 a ton to take waste to a landfill. [161]
In fact, as noted above in note 119, the Task Force which provided Rep. Kosteva with the information he has chosen to use in sponsoring the landfilling ban, reported that the average cost of landfilling statewide was well less than $25 a ton, and the engineering estimates released to the Task Force indicated that even the newest landfills can operate at tipping fees below what he asserts it now costs to landfill grass and leaves. Where does he get his cost figures for landfilling?
Communities or private contractors will now have to continue their normal garbage truck runs here and there to collect household garbage to take to the landfill or the waste-to-energy plant. But they cannot collect grass or leaves as they did in the past. They will then have to come back at some appointed time to collect grass and/or leaves, depending on the season of the year, either in special bags or in some other form in which grass and/or leaves may be left for collection. This material cannot be taken to a landfill or waste-to-energy plant. It must be taken to a composting center.
What will it cost? Is the cost of the extra runs part of Rep. Kosteva's $17 per ton estimate? What will be the cost of operating the composting center? Will it be operated, as we discussed in the case of the Oakland County compost operation, in a way which accelerates decomposition? Or will the material simply be left to decay over a long period of time?
What about the odors which a large compost operation emits? Will it have to be sited far away from heavy population areas – and, therefore, farther from the areas where such material is collected, or will it be close to the areas where it is collected. If close to the areas where collected to reduce collection costs, will its neighbors just have to grin and bear it? Are there going to be political problems?
Has anyone attempted to analyze the costs of this law relative to its benefits? If they have, why was it deemed necessary to dramatically overstate the statewide cost of landfilling ordinary garbage? This law does not just apply to, say, Rochester Hills. It applies to, say, Traverse City as well. Landfill costs are quite different between those two points – and the ability of communities to move to implement this law are different across different regions of the state. Many communities will be forced to incur costs far greater than they currently incur.
The volumes of compost created by this mandate will find no market sufficient to cover the cost of meeting its requirements. This fact was noted above with regard to federal concerns about the lack of valid economic markets for municipal compost. Why is Michigan exempt from these economic concerns?
Once again, the failure to expedite landfill siting in this state – a state which still has significant amounts of open space – has moved the Legislature to pass a law for which the costs may well outweigh the benefits.
The question of what to do about grass and leaves would, left to market forces, be fully self-correcting. Those areas where landfill space – either natural or political – is scarce, will experience rising landfill tipping fees. Rising fees will send a signal to individual households telling them to do something about the amounts and kinds of waste they leave for collection. Rising landfill costs will make local compost heaps economically attractive. That, after all, is what this law intends. However, this law is not necessary to attain this end. Markets are better at doing this and markets should have been left alone to do it.
This is simply not an issue that requires a statewide mandate. It is a unique local issue and local governments who either collect waste or contract with private firms, as well as private individuals who pay private contractors for waste collection services, are in a far better position to know what to do with leaves and grass. Market signals tell them all they need to know.
Mandatory diversion of grass and leaves from landfills is not the most economically efficient way to get the job done. When the dollar costs start to mount for communities and individuals in areas which still have adequate landfill space, there will be a political backlash. That is the problem with trying to politicize what markets can do better without laws – political backlash. Why invite it when it was never necessary in the first place?
Perhaps the most troublesome solid waste management issue currently moving through the State Capitol is the proposal being made by Senator William Faust (D., Westland). Sen. Faust is circulating draft legislation that would severely restrict packaging, including food service disposable packaging. Although not yet given a legislative number or assigned to Committee, this proposal reveals a certain mind-set. It is that mind set which will be discussed in this section.
Specifically, Sen. Faust's proposal would require:
All packaging must be reusable or recyclable.
A two-cent fee would be placed on packaging that does not meet the following criteria:
Free of heavy metals or dioxin at more than trace levels.
Reusable.
Recycled at a 50% recycling rate.
Made with significantly less raw material than the year before or made with certain levels of recycled material. (Emphasis added.)
Packages meeting these criteria would be granted a "PACSAFE" logo as established by the Council of Environmental Quality which Michigan's Governor appoints. PACSAFE goods would be those goods the Council considers "environmentally acceptable."
New products for which a recycling infrastructure does not currently exist would pay a 5/100 cent for a period to be determined by the Council. Some packaging added at the point of retail purchase – giftwrap boxes, for example – would be exempted from the two-cent fee, while others, bags used for transporting purchases, would not.
Assume, just for the sake of argument, that all the criteria contained in this legislative proposal could be met – i.e., recycling content, reduced raw material usage, etc. Imposing a two-cent fee on consumer goods which fail to meet PACSAFE standards is clearly an economic incentive aimed at forcing manufacturers who want to sell goods in Michigan – and that means virtually every consumer goods manufacturer in America and not a few in foreign countries – to attempt to attain the PACSAFE logo. After all, Michigan is neither a small state nor a poor state and the sheer size of its market would force manufacturers who do not want their products to be perceived as "environmentally" unsound to do what has to be done. Furthermore, one may assume, having sent the right signal to manufacturers, some time will be granted for compliance.
Not all manufacturers will be able to meet these standards. To assume otherwise would be to assume that simply passing a law automatically creates a recycling market which draws secondary materials from MSW and returns it to consumers in another form. Indeed, by allowing for only a 5/100 cent fee on those goods containing materials for which a recycling infrastructure has not yet been developed, Sen. Faust's proposal essentially admits that such may not always be the case. But even here there is a "time period to be determined by the Council" for that smaller fee. [162]
Certainly there will be a period of time during which many goods will not be able to meet the standards. During that time, retailers, or some unit of state government, will have to create and staff a system for imposing and collecting the fee. What about goods purchased through catalogs rather than across Michigan retail counters? How would the two cent tax on non-PACSAFE be collected? In all these cases, scarce resources would have to be allocated to collect the fee. This will impose costs which must be paid by consumers or by taxpayers. Indeed it could be the case that the cost of assigning and collecting the fee would be greater than the amount collected.
Manufacturers who are unable to meet the standards face the prospect of losing sales because the tax causes their product to cost more, or experiencing a lower net return per unit sold (excise taxes – and this is a form of excise tax – will either be shifted forward to consumers in the form of higher final price, or backward to producers in the form of lower net returns). These manufacturers will be compelled to seek ways to reduce their overall production cost. In many ways, that's not a bad outcome.
But it all depends. It all depends on whether the Faust proposal would actually work. This is clearly a proposal aimed at accomplishing two things: first, source reduction through the use of fewer raw materials and, second, by requiring the product to be made with certain levels of recycled materials and to be capable of being recycled at a 50% rate, stronger markets for secondary materials.
What is it that now causes manufacturers to use more raw materials than they need to use? The answer is, nothing. Is there anyone who could seriously believe that manufacturers use more raw materials than they need to use? To believe that is to believe that producers are indifferent to their rate of return on investment. It is markets – especially competitive capital markets – which force producers to economize on materials. Indeed, if that were not the case, plastics – the target of many who want to get "source reduction" – would not now enjoy the place they do in manufactured consumer goods products. There is no need for a law to encourage producers to use fewer raw materials because producers are always looking for ways to reduce their production costs.
But when the Faust proposal says "fewer raw materials", what is really meant is fewer virgin materials. Indeed, when this portion of the Faust proposal is seen in context with the requirement that the product be reusable, made with certain levels of recycled materials, and be capable of being recycled at a 50% rate, it is clear that "fewer raw materials than the year before" means more and more secondary materials derived from recycling programs.
The Faust proposal is a complicated, scarce resource-absorbing, legally contentious effort to stimulate both the supply and demand side of markets for secondary materials.
To the extent that Sen. Faust's proposal increased the supply of secondary materials from MSW, the prices of many of these materials could collapse to the point that revenues from recycling programs would never come close to covering the costs of operating the program. Compared with landfilling or incineration, the effect could be solid waste management costs so high as to amount to an additional tax on every family in the state.
To the extent that the Senator's proposal would induce goods producers to increase their demand for secondary materials derived from MSW, it would not automatically follow that this increase in demand would induce a strong enough increase in the quantity of MSW-derived secondary materials supplied to avoid non-competitive increases in the prices of some or many of these materials. When some Michigan firms are willing to pay up to $180 a ton for secondary plastics and recycling officials find this price too low relative to the cost of supplying the materials, passing laws will not undo this supply problem.
Economic rule number one: when and if ever it is economically feasible to make goods from secondary materials derived from municipal solid waste, and make these goods at costs equal to or less than what it cost to make them from virgin materials, goods will begin to be made from such materials. Markets will yield that in their own time, but not before. Laws pretending to be able to produce outcomes which go against market forces are not just economic nonsense, they are mischievous nonsense.
Once again, hard cases make bad law.
Public Act 641 requires local governments to develop their own waste management strategies to assure the prompt collection and disposal of wastes in ways which meet strict environmental standards. However, there is nothing in this law which establishes standards of economic efficiency. In establishing the principle that waste management is a purely local problem, communities are left free to spend as much as they wish to handle their own local solid waste problems.
It's a good thing that local communities have largely been left free to design their own waste management plans because local programs designed to address unique local problems can provide a laboratory for testing different waste-management strategies. What is unfortunate is the fact that laws aimed at dictating waste management strategies to all communities in the state, not only violate the underlying principle embodied in PA 641, they rob all communities of the opportunity to examine economic and environmental laboratory evidence.
Many communities across the state have developed waste management strategies which emphasize recycling; recycling with composting; recycling with landfilling; and recycling with incineration of waste in waste-to-energy plants. At the same time most of the state's counties have continued to rely almost exclusively on landfilling waste. It is those plans emphasizing recycling which have attracted media attention.
In late June 1990, Wayne County commissioners approved a solid waste management plan which will require virtually every community in the county to set up neighborhood recycling centers – one per 100,000 people – no later than January 1, 1991. One year after that date, cities which do not incinerate their garbage will be required to reduce the amount of trash they send to landfills by either picking up recyclable goods at the curb or extracting them from a central waste transfer facility. Milton Mack, chairman of Wayne County's solid waste planning committee, reports that the population of Wayne County cities which do not incinerate their garbage is about one million. However, even those communities which do incinerate garbage will be required to set up recycling centers for voluntary usage by residents. The county's goal is to reduce the amount of trash going to landfills by 75 percent by the year 2000. [163]
Yet, even with recycling, Wayne County's plan anticipates the construction of two new landfills and the expansion of three others. In attempting to implement recycling, some Wayne County communities are turning to per-bag fees for garbage collection to provide households with an economic incentive to separate their wastes – remove recyclable materials from non-recyclable materials. [164]
Royal Oak was forced to drop the per-bag fee due to citizen complaints. Instead, it has opted for a general property tax millage increase. [165]
Due to the fact that, over the years, landfill space has not been expanded in the Detroit area, many officials believe that recycling is the only way to avoid rising landfill tipping fees. Officials in many Wayne County communities expect to recoup some of the costs by instituting recycling programs through the sale of secondary materials. Prices ranging from $20 to $40 for a ton of glass and up $40 for a ton of scrap metal are expected to cover some of the cost of recycling. However, communities are also facing costs of up to $25 per ton for moving old newspapers.
To assure maximum sales of recyclable materials, some communities are considering anti-scavenger laws that would prohibit people from cruising neighborhoods in search of recyclables to sell on their own. [166] Other communities will issue citations to households which fail to comply with mandatory recycling. The violation, which is a misdemeanor, can carry up to a$500 fine and 90 days in jail. [167] While all these things are certainly part of an "economic" incentive for recycling, adding whatever additional policing costs such laws may entail to what it costs to run a recycling program has not yet been considered.
Paul Sincock, Assistant City Manager for public works in Plymouth, acknowledges that, at the moment, "Any monies generated (from recycling) don't meet our rentals and transportation costs. there's no money in recycling." [168] But, he and other officials in Wayne County communities argue, paying $25 a ton to remove old newspapers is better than paying $35 a ton to dump trash in a landfill.
Questions: When trucks run through neighborhoods to pick up ordinary household garbage headed for a landfill, including old newspapers still in the garbage bag, is it not the case that the cost of doing so includes the $37 landfill dumping fee? Once newspapers are removed from household trash and placed in separate containers alongside other recyclables which are also placed in their own separate containers, don't other trucks – perhaps especially designed to accept several separate and distinct containers – have to come back over the same routes to collect these recyclable materials? Following this, don't these trucks have to go to recycling centers where each material is processed separately? If, after all this has been done, newspapers – the largest single component in the typical community's MSW – still have to face a charge of $25 per-ton just to be hauled away, how does the overall cost of this separate operation compare with $37 tipping fees at a landfill for unseparated household garbage?
That's the issue I discussed above. And that's precisely the issue which local officials ought to examine in a careful analytical fashion. It may be true, in the long run, that massive recycling programs with high initial start-up costs will be cheaper than landfills. On the other hand, it may be the case that efforts to create new modern landfills will prove to be the most economically efficient way to dispose of waste. It may also be true that small, economically affordable incinerators like the Morbark gasifier may be better for high-density communities such as those found in Wayne County. The only way to find out the answer to these questions is to do careful economic analysis.
It's a good thing that Wayne County is pushing hard for recycling in place of landfilling or extensive disbursed incineration. By providing what amounts to laboratory experiments for other counties throughout the state, Wayne County can teach us a lesson and it's always good to be taught a lesson – provided we are willing to learn from it.
Oakland County is moving to do what Wayne County is trying to do: reduce the need for landfills. Oakland County's program is expected to cost $500 million and will include a waste-to-energy incinerator and at least one recycling center. [169] The incinerator will be designed to accept 2,000 tons per day and the recycling center 400 tons per day. County officials will use limited obligation bonds – which do not require voter approval – to pay for the start-up costs of this program. [170]
Despite the fact that citizens have protested the compost operation in southeastern Oakland County (recall our earlier discussion on this issue), and a landfill for the County's Rose Township, Oakland County officials refused to close the compost operation.
Many Oakland County citizens are angry with the plan because it includes incinerators and maintains some landfills. One group, Residents Against Incineration and Landfills (RAIL) argued that "People want to know what they're breathing and when they get sick from this and watch their kids die they are not being overemotional." [171]
What Oakland County is trying to do will be costly. Citizen opposition to what officials are trying to do will probably continue. Nevertheless, it's an excellent laboratory – and that's why the local approach to solid waste management contained in PA 641 is so valuable.
Oakland County also provides another kind of laboratory – a laboratory for what to do about old landfills which are really old "dumps."
On the final day of writing this study, a story appeared in the Detroit News-Free Press (October 5, 1990), about the closure of an old dump. Through a groundwater monitoring system, a 22-year-old landfill in Oakland County's Waterford Hills area was found to be leaking methylene chloride and benzene into one small area near the dump. Testing of wells near the dump indicated that there was no threat to nearby residents who draw their drinking water from wells, but state DNR officials did what they should have done: they ordered the landfill to be capped and closed.
Given that the dump was privately owned and operated, it was closed immediately and the private operator was ordered to remove the contaminated water. There was no need to go through the complicated process of having one unit of government – the state – argue with another unit of government – the county.
Both elements were found in trace amounts: methylene chloride was present at 190 parts per billion; and benzene was present at 2 parts per billion. A person who happened to drink two liters (2.11 quarts) of this water every day for 70 years would have a 40-in-1,000,000 chance of contracting cancer from the methylene chloride and a 2-in-1,000,000 chance of contracting cancer from the benzene.
This was an old, unlined landfill which had been receiving up to 1,000 tons of MSW a day for 22 years. By contrast, the clay-based and lined landfill in Williams County, Ohio, which receives waste from several Michigan counties along with Ohio and Indiana counties, has been operating for more than 30 years. With constant leachate monitoring and collection systems and methane gas removal systems in place, and with groundwater testing wells distributed all around the facility, absolutely no leachate problem has been discovered.
The fact that leachate – which is flushed below a landfill largely by rainwater which seeps in due to inadequate daily cover – is removed constantly by the Williams County private owner-operator, whereas it was not in the old Oakland landfill, means that modern landfills need pose no threat to communities.
However, the ability to monitor and quickly close an old landfill, as has been done in Oakland County, is essential. From that point, as old landfills are closed – as they should be – there is no reason why plans for new, carefully designed and monitored landfills, should not be part of solid waste management plans in those counties which have the proper geology.
Once again, the ability to adjust local plans to local conditions – as allowed by PA 641 and as encouraged in both the EPA and OTA reports discussed earlier in this study, is important. At the same time, state mandates which attempt to force specific solutions on a statewide basis and which treat all counties as if they had the same population and geological parameters, is not good solid waste management.
PA 641 lets laboratories emerge. Statewide mandates do not. That should be enough to warn state legislators against statewide mandates for solid waste management.
Absent specific statewide directives modeled on the four-part EPA/OTA waste management hierarchy, we will never be able to handle the growing stream of municipal solid waste generated by Michigan households. That seems to be the assumption which underlies many of the demands for one piece of state legislation or the other aimed at mandating specific elements of waste management.
As a state, Michigan does not have a solid waste crisis. Some counties in the state do, while others do not. The common denominator found in those counties which do have a problem is that they tend to be largely urban, and they have not expedited the process which allows landfills and/or waste-to-energy incinerators to be built. State law allows them to do as they please provided they do it in a way which takes account of environmental safety and due regard for legal and democratic process. State law allows counties to enter into reciprocal agreements to dispose of solid waste. Some counties have done this while others have not.
Solid waste is a local problem, not a state problem. There is already legislation in place which allows counties to act. The consequences of failure to act should rightly fall upon those cities and counties which have chosen not to act. Those counties which have permitted sound waste disposal systems to evolve should not be subjected to rigid statewide mandates which are deemed necessary because of problems deriving from the failure of a few counties to make provision for their own wastes.
State law currently allows counties to impose per-ton taxes on all waste dumped within their boundaries. That's a step in the right direction. Legislation aimed at imposing a modest state tax on waste disposal has been proposed to fund various elements of a statewide waste management program. As of the end of 1989, Michigan had an estimated annual waste disposal budget of $10 million. [172] One source of these funds was a $1 charge per-vehicle tire imposed at the point where tireswere sold. Unlike many other states, Michigan did not have a statewide per ton fee levied on waste dumped in landfills or incinerators.
State solid waste budgets can include administrative expenses, waste facility inspection, remedial actions, licensing and permitting, litter collection, and educational programs. What funds collected from imposition of a statewide tax on waste disposal should not be used for is grants to local communities and private industries.
We have argued that markets are not only capable of managing solid waste without government mandates, they are capable of doing it in ways which are both environmentally sound – when clear environmental guidelines are laid out – and economically efficient. We have based this argument on the observation that solid waste is now, and will continue to be, a product of market forces.
Markets give rise to those products which meet the wants of consumers and, consequently, markets give rise to the MSW which flows from the consumption of these products. The idea that government-mandated source reduction programs can dictate the quantity and structure of materials used in producing products more efficiently than markets is to assume that government officials have the information needed to produce quality products at the lowest costs and private entrepreneurs do not. The events in Eastern Europe and the Soviet Union during 1989 and 1990 should tell us that government officials – no matter how well intentioned – have neither the information nor the capacity to direct the ways in which goods should be produced.
Both the EPA and the OTA warned that programs mandating source reduction could create more economic harm than good. Michigan legislators would do well to heed those warnings.
With respect to programs mandating recycling, we have argued that markets can and will remove from the municipal solid waste stream those materials which have value in other uses. In communities with high population densities and nearness to secondary materials brokering systems, more source separation and processing activities will occur than will occur in those communities which do not enjoy these locational advantages.
In those communities where recycling programs make less economic sense, there will be less recycling.
In all communities, those materials which, at a given moment in time, do not have value in other uses will not be removed from MSW. They will be disposed of in ways which are both technologically feasible and economically efficient. In some communities that may be a modern sanitary landfill. In other communities it may be an incinerator. Market forces will determine what has to happen.
We have contended that contrary to what both EPA and OTA seem to argue, the four distinct categories which form their waste management hierarchy – Source Reduction, Recycling, Incineration, Landfilling – are competitive rather than complimentary.
During some periods and in some regions of the state, the recycling component of the hierarchy will be activated when the value of those materials which may be demanded in one or more secondary materials markets fetch a price which exceeds the cost of collection, processing, and shipping. When this happens, and only when this happens, firms which specialize in selling secondary materials will attempt to obtain such materials from MSW.
Under these conditions, the volume of waste in one or more regions of the state – waste which would otherwise have gone to a landfill or a waste-to-energy incinerator – will decrease. With less waste moving to landfills and/or incinerators, the tipping revenues earned by operators of these facilities will decline faster than their costs, since a significant share of their costs are overhead fixed costs. With lower revenues, operators will either be forced to reduce their tipping fees – as New York City did at its landfill – or accept lower operating profits.
The market process will be starting to send signals through all elements of the solid waste management system.
At the same time materials are moving through the recycling network in one region, identical materials in another region of the state may continue to move to landfills and/or incinerators. It all depends on the cost of collecting and processing relative to the price which can be obtained for these materials. Such costs may simply be a function of population density and location relative to markets. Consequently, at the point where MSW is presented for collection, the decision to move some part of it to secondary materials markets and the rest to landfills and/or incinerators, or to move all of it to landfills and/or incinerators, will be a pure economic decision. That decision will vary from one region of the state to another.
In a word, markets will recycle what can be recycled, and landfill or incinerate what cannot be recycled. Note also, the word "recycle" means turning one thing into another thing. It does not mean simply source separating and not sending something to a landfill. Failure to appreciate the true meaning of the word and forcing all communities to "recycle" on the basis of the popular, but incorrect, use of the word could well result in some communities paying far more to dispose of their waste than the market would signal them to pay.
Markets tend to maximize results and minimize costs. They do that in the manufacture of hair combs and they do that in the disposal of hair combs. When it makes economic sense, markets will recycle hair combs into filling for ski jackets. When it doesn't make economic sense to turn hair combs in to filling for jackets, markets will turn hair combs in to perpetual plastic buried in a landfill or into energy-generating heat in an incinerator.
Is there any government employee anywhere who can know when and how to make that decision better than markets? With all due respect for public servants, I think not.
Beyond the point in space where waste is presented for collection, the decision to incur the costs required to build a landfill or waste-to-energy incinerator is also a pure economic decision. The same is true for building and processing a collection, processing, and shipping system for recyclable material. All parts of the system can be driven by economic signals. All parts of the system ought to be left alone to be driven by economic signals.
Once costs have been incurred to develop all the elements of a waste management system, all elements of the system become competitive with one another. Waste recycled cannot be simultaneously landfilled or incinerated. Landfill operators would lose "customers." Waste assigned to a landfill cannot be simultaneously recycled or incinerated to produce energy. Operators of recycling systems and incinerators would lose "customers." Waste assigned to waste-to-energy incinerators cannot be simultaneously recycled or landfilled. Landfill and recycling system operators would lose "customers."
Left to market forces, a set of equilibrium prices would emerge to direct waste to its most efficient point of disposal. Some materials will be pulled into secondary materials markets in one region or in all regions of a state. Some will move to landfills. Some will move to incinerators.
In some regions of a state, relatively more material will move into secondary materials markets than may be the case in other regions of the same state. In some regions of a state, no matter what the relative price of secondary materials, the majority of MSW will be landfilled. In some regions, at the same set of relative secondary materials prices, the majority of waste will be burned to create energy. The point is that market forces will be constantly sending all the signals needed to know what is best for waste in that place at that moment and what is not.
Private firms – waste haulers, landfill owner/operators, secondary materials brokers and recycling-center operators, and waste-to-energy plant owners/operators – have a decided self-interest in reading these signals. Indeed, economic sense would dictate that some private operators be invested across more than one component of the waste management "hierarchy." In that way they can serve as a conduit for moving market signals right to the front door of families who have waste to put out.
When governments operate waste collection systems, landfills, incinerators, and recycling centers, something other than market signals will come into play. Political turf will come into play and political turf is always going to be defended whatever the market signals.
For example, in the face of citizen and editorial objections to the stinking Oakland County compost pile, and in the face of financial inability to operate the compost operation in ways which accelerate decay and reduce odors, one of the members of that county's solid waste committee wrote a letter to The Detroit News defending the operation. [173]
In much the same vein, having invested hundreds of millions of dollars in its huge but low-tech incinerator, which burns at less than 2,000 degrees, what has been the city's response to state and federal environmental officials' efforts to close the plant? Stonewalling!
Turf is turf and markets are markets. Better to let market signals move waste rather than allow political turf to arrest the efficient movement of solid waste.
But surely, some would argue, only large Subtitle D landfills will ever make economic sense and the cost is too high. Therefore only government can afford to build them. Our analysis has already shown that modern landfills on a fairly large scale can be built and profitably operated at tipping fees less than $35 per ton. Moreover, when privately owned and operated, landfills pay property taxes as well as excise taxes to local communities and, if necessary, to the state. That's as it should be.
Moreover, the tipping fees charged by a private operator will fully reflect the value of all the scarce resources absorbed in building and operating the landfill. Those costs will be reflected in the prices charged to households and businesses for collecting waste. That's also as it should be. That market signal tells households that they need to manage the amount of waste they create. Isn't that what good waste management is supposed to do?
Very well, incinerators have to be very large and that's going to require government money. Not necessarily so! If the only combuster one can imagine is the one Detroit has, then they will be expensive – probably the most expensive form of solid waste disposal. However, as the engineers at Michigan's Morbark Industries are showing us, incinerators do not have to be large and expensive. Indeed, for many – if not most – of the state's rural counties, the Morbark gasifier may be the most cost-efficient way to get rid of waste.
In some regions of the state, only large landfills would make economic sense. In some regions, incinerators may have to be large. In other regions of the state small landfills and small incinerators will do the job in ways which are both environmentally and economically sound. In some regions of the state, recycling operations will be large and sophisticated while in others they will be little more than church and Boy Scout collection drives for tin cans and newspapers. In all cases, markets will signal what makes sense and what does not.
Some would argue that the only way a recycling program will work is if it is mandated by government. Beyond that, many of the same people would argue, government ought to operate the center. At worst, they might concede, government may contract with a private firm to operate the program and guarantee the private firm some given rate of return on their investment, regardless of whether or not the program actually saves the community money over the long run.
Again, we argue, not so! Source separation and true recycling will occur only when markets become strong enough to attract secondary materials from MSW. When that happens, private firms will emerge to collect and move materials. Indeed, when that occurs, private firms may be willing to canvas households for some materials and pay them for it. Short of that, the economic logic of markets will move some materials into secondary materials markets some of the time, some all of the time, and some none of the time.
Operating in response to market forces, landfills will be a continuing option for some materials some of the time, some part of the time, and some none of the time. The same is true for incinerators – especially for the small, inexpensive, and highly burn-efficient Morbark-type gasifier.
If Michigan state government, no matter how well intentioned. takes it upon itself to solve the solid waste management problem by legislation aimed at dictating specific and rigid patterns of waste management in all regions of the state at all times, private entrepreneurs could be discouraged from developing innovative ways of handling waste which hold promise of doing the job better and cheaper. Entrepreneurs will not risk creating new systems if the politicization of waste management has written old systems in stone.
If experience has taught us anything, it has taught us that the politicization of anything which is naturally part of a continuing market process reduces the power of the market to move quickly to solve problems. Having a government "plan" is to politicize something and, therefore, something not part of the "plan" may never be allowed to emerge.
Markets can and will handle municipal solid waste in environmentally sound and economically efficient ways if allowed to do so without the uncertainty of political intervention.
This author would encourage all Michigan officials to make an open public announcement of our state's intention to let markets manage solid waste without state mandates and within environmental guidelines established on the basis of the best scientific evidence. Doing this holds the promise of allowing market forces to get the job done quickly and efficiently at the same time that real environmental science is applied in what ought to be a scientific, rather than emotional setting.
This study has been dedicated to encouraging that end.
"Buried Alive," Newsweek, November 27, 1989.
U.S. News and World Report, December 14, 1987.
"Buried Alive," Newsweek, op.cit.
Franklin Associates, "Characterization of Municipal Solid Waste in the United States, 1960-2000," prepared for the U.S. Environmental Protection Agency, 1988.
Lynn Scarlett, "Managing America's Garbage; Alternatives and Solutions," Working Paper #115, Santa Monica, CA: The Reason Foundation, September 1989.
Council of Economic Advisers, Economic Report of the President, Washington, D.C.: U.S. Government Printing Office, 1988.
Franklin Associates, op,cit. and Allen Hershkowitz and Eugene Salerni, Garbage Management in Japan, New York: INFORM, 1987; and Federal Environment Agency (UBA), Berlin: Federal Republic of Germany, 1987.
COPPE Update, Volume 3, Number 11, November 1989, p. 4.
Facing America's Trash: What Next for Municipal Solid Waste?, Congressional Office of Technology Assessment, June 18, 1989, p. 37.
Ibid, p. 79. Figures for Australia, Bulgaria, etcs, are from less reliable UN sources.
William L. Rathje, "Rubbish", The Atlantic Monthly, December, 1989.
Wall Street Journal July 19, 1990.
Congressional Research Service, May 10, 1990, order code IB90022.
American Legislative Exchange Council, Environmental Monitor, April 6, 1990, Vol. 2, No. 5.
OTA, op.cit., pp 14, 18, 37-38.
The Solid Waste Dilemma: An Agenda for Action, Draft Report of the Municipal Solid Waste Task Force Office on Solid Waste, U.S. Environmental Protection Agency, September, 1988, pp. 18 — 20.
The Congressional Office of Technology Assessment's paradigm for solid waste management does not use the term "hierarchy" on the grounds that the term implies a rigid, linear approach to decision making. OTA, op.cit., p. 3.
EPA, op.cit., p 3.
Loc.Cit. p.3.
Vera Lutz, Central Planning for the Market Economy: An Analysis of the French Theory and Experience, London: Longman, Green, 1969, p. 17.
OTA, op.cit., p 2.
Ibid, p. 3.
OTA, op.cit., p. 4.
Ibid., p. 6.
Loc.Cit., p. 6.
Ibid., p. 7.
Loc.Cit, p. 7.
Ibid., p. 6.
Ibid.,p. 18.
Ibid., p. 23.
Loc.Cit.,p.23.
Loc.Cit., p. 23.
EPA Solid Waste Task Force, op.cit., p 2, 17, 18.
"Solid and Hazardous Waste Management," James E. McCarthy, Issues Coordinator Environment and Natural Resources Policy Division, Washington, DC: Congressional Research Service, May 10, 1990, p. 10.
OTA, op.cit., p 4.
Ibid, p. 12.
Ibid, p. 13.
Ibid., p. 13.
Ibid., p. 14.
Ibid., p. 17.
Ibid., p. 18.
Ibid., p. 25, note 32.
Ibid., p. 21, particularly note 30.
Ibid., p. 24.
Ibid., p. 25.
George Stigler, The Economist as Preacher and Other Essays, Chicago, III.: University of Chicago Press, 1982, p. 61.
Cynthia Pollock, Mining Urban Wastes: The Potential for Recycling, Washington, D.C.: Worldwatch Institute, 1987.
Resource Recovery: An Essential Tool for Effective Waste Management, Washington D.C.: Institute of Resource Recovery, National Solid Waste Management Association, Bulletin, 1988.
Plagued by Packaging, New York Public Interest Research Group, New York, NY: 1989.
COPPE Update, November, 1989, op. cit., p. 5.
COPPE Update, loc. cit.
William Rathje, Letter-to-the Editor, New York Times, January 26, 1988.
Rathje, "Rubbish," op.cit., p.102.
Packaging, August, 1989.
Council for Responsible Waste Incineration, 1989 Public Report.
"Buried Alive," Newsweek, op.cit., p.76.
Foodservice & Packaging Institute Society for the Plastics Industry, January 6, 1988, p. 2.
Michael Walsh, The Detroit News, December 23, 1989.
"Buried Alive," Newsweek, op.cit., p. 69.
Methods of Reducing Plastics Pollution: Report to Congress, U.S. Environmental Protection Agency, April, 24, 1989.
COPPE Update, October, 1989, op.cit., pp. 1 — 2.
The New York City ordinance, introduced and debated in February, 1988, extends to all "containers", but allows exemption for packaging which has no biodegradable or recyclable equivalent. Moreover, if the requirements for meeting this ban would "Cause undue hardship the package would be exempt from ban or tax. Given the vague hints of "Let's Make a Deal" one finds in the proposed New York City packaging ban, enforcing this ban could make for interesting local-government politics.
"Buried Alive," Newsweek, op.cit., p. 76.
"Pennsylvania Town Finds a Way to Get Locals to Recycle Trash," Wall Street Journal, June 21, 1989, p.1.
The Saginaw News, November, 17, 1989.
Rathje, "Rubbish," op.cit., p. 103.
COPPE Update, January, 1990, Volume 4., Number 1., p. 6.
Detroit News, July 2, 1990.
Franklin Associates, March 1988 Report to EPA, op.cit.
Packaging, op.cit.
The demand for any input in the production process is derived from the final market's demand for the product which is produced with that input. When the quantity of a good consumers' demand shows a high degree of sensitivity to final-product price, producers' sensitivity to the relative price of production inputs will reflect that fact. However, how price sensitive the derived demand for any particular input is will depend on its relative cost in the overall production cost scheme. The smaller any particular input's relative cost is compared to total costs, the less sensitive producers will be to any change in its price. A fall in that input's price will not necessarily result in any significant increase in the amount of it demanded, and a rise in its relative price will not result in a significant decrease in the amount of it demanded. Therefore if a particular input accounts for an insignificant share of total production costs, a rise in its price will not result in a loss of quantity demanded. In that respect, sellers of "unimportant" production inputs will not suffer greatly when the price of their product rises. By the same token, the quantity demanded of the input will not greatly expand when its price falls.
It took almost three decades for the more inexpensive electric motor to replace steam driven belts and pulleys in American manufacturing. The reason? Fully depreciated steam engine and belt systems were earning "quasi-rent" for older firms: they were contributing to revenues with out simultaneously adding costs. Quickly moving to new electric engines would have forced the firms to incur massive capital outlays and depreciation costs. Only after new start-up firms began with electric motors and gained cost advantages over older firms did older firms junk their steam and belt power systems. The moral of the story? New materials or new techniques will be used only when competitive market forces compel their use, and not before. Stanley Lebergott, The Americans: An Economic History, New York: W.W. Norton & Company, 1984, pp. 354-355.
COPPE Update, Volume 4, Number 1, January, 1990, p. 6.
"Buried Alive," Newsweek, op.cit., p. 71.
COOPE Update, January, 1990, op.cit., p. 6.
Issue Brief: Solid Waste Management, Congressional Research Service, Natural Resource Policy Division, August 2, 1988.
National Soft Drink Association, September 1988, as noted in Who's Responsible for This Mess, Dow Chemical Company, 1989.
Ibid., p. 6.
"Buried Alive," Newsweek, op.cit., p. 69.
Wall Street Journal, March 13, 1990.
Wall Street Journal, June 8, 1990.
COOPE Update, op.cit., January 1990, p. 6.
EPA Report to Congress on Methods for Reducing Plastics Pollution, op. cit., pp. 37-39.
"Trashing a $150 Billion Business", Fortune, August 28, 1989, p. 94.
Franklin Associates, op.cit.
Detroit Free Press, July 7, and July 25, 1990.
Saginaw News. June 6, 1990.
American Legislative Exchange Council, Environmental Monitor, January 19, 1990, Vol. 2, No. 1, p. 12.
Of course! It has nothing to do with the fact that people who might want compost for one reason or another may prefer to buy humis in a brand-name bag from a garden supply store which will stand behind the purity of the product.
Environmental Monitor, ALEC,Vol. 1, No. 2, loc.cit.
Legislative Summary: Plastics and Solid Waste, Dow Chemical Company, January, 1990.
"Solid and Hazardous Waste Management", op.cit., p.4.
American Legislative Research Council Environmental Monitor, op.cit., April 6, 1990, p.4
COPPE Update. Volume 4, Number 2, January 1990, p.2
Cited in COPPE Update, December, 1989, op.cit., p. 2.
EPA Report to Congress on Methods for Reducing Plastics Pollution., op.cit., p.68.
Wall Street Journal, July 19, 1990.
Not everything a household "throws away" is actually thrown away. Both the Salvation Army and Goodwill Industries accept huge quantities of "throw-away" articles and return them to the economy every year.
Edward W. Repa, PhD., "Landfill Capacity: How Much Really Remains", Waste, Alternatives, December 1988, p.33.
"Tomb of Eternal Garbage" The Detroit Free Press, April 17, 1990.
"Landfill Capacity" op.cit., p. 32.
Ibid, p. 34.
Both EPA and OTA acknowledge that modern Resource Conservation and Recovery Act, Subtitle D, landfills pose no threat to public health and safety. EPA, op.cit., p. 66; OTA, op.cit., p. 32.
The term, "Economic resources" is actually a redundancy. Something which has no value in exchange – i.e., no economic value – is not a resource. It's just something that's there, or, as the economic geographers used to call it, just "neutral stuff".
Robert Peters, "Finding A Place To Put Refuse", Waste Age, op.cit., p. 54-55.
Edward W. Repa, "Landfill Capacity: How Much Really Remains?" Waste Alternatives, December, 1988, p. 32-34.
There are technologies emerging which would – as is currently being done in Philadelphia, Pennsylvania – turn garbage into high-quality marketable cellulose fiber or granulated "sand." Closer to home, the Acunet Corporation of Saginaw, Michigan has gained rights to a process developed in Australia for converting garbage into building materials. Private firms have the incentive to look for solutions to "problems." Failure to recognize and take advantage of that fact may be the real source of the solid waste "problem."
"Buried Alive," Newsweek, op.cit., p.59.
COOPE Update, December, 1989, p.3.
Rathje, "Rubbish", op.cit.,
"Tombs of Eternal Garbage", Detroit Free-Press, April 17,1990.
Michigan Landfills: Past, Present, and Future Democratic Task Force on Solid Waste, May, 1990
Robert T. Glebs, P.E., "Subtitle D: How Will it Affect Landfills?", Waste Alternatives, December, 1988, pp 56-64.
Ibid, p. 61.
Glebs, loc.cit.
Ibid.
Ibid
The idea that a landfill operator might be compelled to lower tipping fees is generally not entertained in current discussions of solid waste management issues. However, in the face of competition from out-of-state landfills, New York City recently reduced tipping fees at its old, out-of-date, Fresh Kills facility on Staten Island by 37.5%. Wall Street Journal, July 7, 1990.
Sanitary Landfill Costs in Michigan for Presentation to Special House Democratic Task Force on Solid Waste Disposal. SCS Engineers, December 4, 1989.
"Packaging Bans to Reduce Waste Fall Short of Mark:, by Edward J. Stana, Executive Director of COPPE, December, 1988.
Caroline Price, "Going Around Again," Michigan Business, February, 1990, p. 32.
Saginaw News June 19,1990.
Michigan Association of Counties Solid Waste Survey. 1989-1990. Reported in Democratic Task Force on Solid Waste, Michigan House of Representatives, 1990, op.cit..
"Metro Communities Find Recycling a Costly 'Pay-me-Later' Deal," Detroit News, August 13, 1990.
Ibid.
Ibid.
Ibid.
Ibid.
Wall Street Journal, July 19, 1990.
Even New York has ample land for landfills. Rathje's study reports that New York officials have found over 200 square miles of sound geological space available. The problem there is not so much technical and spatial as it is political.
Kenneth Chilton, Talking Trash: Municipal Solid Waste Mismanagement, St. Louis, MO:, Washington University Center For the Study of American Business, Formal Publication Number 101, September, 1990, p. 9.
The preferred method of burning in both Europe and Japan is the "mass burn," rather than "refuse derived," process on the grounds that mass burn facilities are cleaner and more reliable than refuse-derived plants.
OTA, op.cit., pp. 220-221.
Ibid.
Sweden: A Case Study, Washington, D.C.: Coalition for Responsible Waste Incineration, September, 1990, press release.
Floyd Hasselriis, MME, P.E., "Effects of Burning Municipal Waste on Environment and Health", New York, NY: The American Society of Mechanical Engineers, Report Number 86-JPGC-EC-17, October, 1986.
OTA, op.cit., p.36.
BioCycle Survey of Solid Waste Management Practices, Environmental Monitor, April 6, 1990. op.cit., p. 2.
Chilton, Talking Trash, op.cit., p. 11.
Detroit News, August 13, 1990.
Anyone interested in exploring the evidence on this issue is invited to read my Privatization: Theory and Practice for Michigan, 1988, published by the Michigan State Chamber of Commerce Foundation, Lansing, MI.
"Welcome to Pennsylvania's Dream Landfill", and "Great Landfills Start With Great Care" Waste Alternatives. December, 1988, pp. 14-18; 25-31.
Rathje, op.cit., p. 100.
EPA, op.cit., p. 18.
Public Act 641, Section 13.29 (21 a).
Op.cit., Section 13.29 (24).
Letter and materials from Alan J. Howard, Chief, Waste Management Division, Department of Natural Resources, September, 17, 1990.
Act 641, Ibid, Section (35).
Peter P. Klemchuk, "Chemistry of Plastics Casts a Negative Vote," Modern Plastics, August, 1989, pp.48-53, and "Broad-Based Plastics Task Force Finds Degradables May Worsen Waste Crisis," Inside EPA Weekly Report, Washington, DC:, Environmental Protection Agency, December 1, 1989.
"Recycling Program Causes Privacy Stink," Wall Street Journal, October 5, 1990.
"Coming Around Again", op.cit., p.35.
Gongwer News Service Report #231, Monday, December 4, 1989.
BioCycle Survey, op.cit. from ALEC, Environmental Monitor, April 6, 1990.
"Senate Bill Proposes Expanding Deposit Law," Detroit Free Press, November 11, 1989.
Ibid.
Detroit News, May 15, 1990.
lbid.
Ibid.
Ibid.
"Bill to Halt Burning OK'd", Detroit News, September 21, 1990.
Ibid.
Anyone who thinks that a "time period to be determined by the Council" would not generate, if not openly invite, all the special-interest political pathologies which lawmakers in all political parties both love and abhor, has not been a student of modern American politics. But, perhaps, that's another question.
"County OKs Large-Scale Recycling," Detroit Free Press, June 28, 1990.
"Cities Ponder User Fees to Make Recycling Pay," Detroit News, July 10, 1990.
Ibid.
"Dearborn, Southfield to Start Recycling Trash," Detroit Free Press, March 14, 1990.
"Catching Up With Recyclers" Detroit News, July 2, 1990.
Ibid.
"Oakland County Approves Trash Plan," Detroit Free Press, June 29, 1990.
Ibid.
"Solid Waste Fight Still On Despite Late Start," The Oakland Press, July 31, 1990.
"Financing Solid Waste Management Programs: A Survey of the States," Washington, DC: Congressional Research Service-Library of Congress, Report Number 89-656 ENR, December, 1989, p. 3.
Mr. Harry H. Denman, "Composting Meets the Needs of Today," Detroit News, July 2, 1990.
Click here to view Appendix I in PDF format.
|
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
|
YEAR |
tons/year* |
$/ton** |
tons/year# |
Cost* |
Cost# |
(5)-(6) |
Rec.Cost##/year |
|
1 |
130,000 |
$35 |
97,500 |
$4.5m |
$3.4m |
$1.14m |
$650th |
|
2 |
130,000 |
$35 |
97,500 |
$4.5m |
$3.4m |
$1.14m |
$650th |
|
3 |
130,000 |
$35 |
97,500 |
$4.5m |
$3.4m |
$1.14m |
$650th |
|
4 |
130,000 |
$35 |
97,500 |
$4.5m |
$3.4m |
$1.14m |
$650th |
|
5 |
130.000 |
$35 |
97,500 |
$4.5m |
$3.4m |
$1.14m |
$650th |
|
6 |
130,000 |
$40 |
97,500 |
$5.2m |
$3.4m |
$1.8m |
$650th |
|
7 |
130,000 |
$40 |
97,500 |
$5.2m |
$3.6m |
$1.6m |
$650th |
|
8 |
130,000 |
$40 |
97,500 |
$5.2m |
$3.9m |
$1.3m |
$650th |
|
9 |
130,000 |
$40 |
97,500 |
$5.2m |
$3.9m |
$1.3m |
$650th |
|
10 |
130,000 |
$40 |
97,500 |
$5.2m |
$3.9m |
$1.3m |
$650th |
|
11 |
130,000 |
$40 |
97.500 |
$5.2m |
$3.9m |
$1.3m |
$650th |
|
12 |
130,000 |
$40 |
97,500 |
$5.2m |
$3.9m |
$1.3m |
$650th |
* Tons dumped per year with no recycling. The cost per year shown in column (5) is equal to 350,000 tons times the tipping fee (no recycling).
** Tipping fee per ton. Beginning in the sixth year, this fee rises to $40 per ton.
# Tons dumped per year after 25% of the waste stream has been recycled. This extends the useful life of the landfill by an additional one year and eight months. The cost shown in column (6) is the tipping fee multiplied by the number of tons which remain to be dumped after 25% of the waste stream has been recycled.
## It costs $650,000 per year--at $20 per ton---to recycle 25% of the waste stream.
NOTE: All dollar figures are rounded except for those in columns (5) and (8).
Click here to view Appendix II in PDF format.
Year |
(1) Current Dollar Savings From Appendix I, Column (7) minus (8) |
(2) Present Discounted Value of Recycling* Saving at 8% Discount to Year 1 |
|
1 |
$487,500 |
$487,500 |
|
2 |
$487,500 |
$451,389 |
|
3 |
$487,500 |
$417,952 |
|
4 |
$487,500 |
$386,993 |
|
5 |
$487,500 |
$358,327 |
|
6 |
$1,137,500 |
$774,163 |
|
7 |
$975,000 |
$614,415 |
|
8 |
$650,000 |
$379,269 |
|
9 |
$650,000 |
$351,175 |
|
10 |
$650,000 |
$325,162 |
|
11 |
$650,000 |
$301,076 |
|
12 |
$650,000 |
$278,774 |
* In the first year, the city must set aside $4,638,775 to start the program. Therefore there is a first-year net cost of $4,151,275. This is nothing more than the difference between the first year's cost of starting the program less the first year's net savings from lower tipping fees obtained from diverting 25% of the waste stream through recycling.
Charles D. Van Eaton is an economist and Senior Policy Analyst with The Mackinac Center.
The author wishes to thank all those who contributed to this report. Special thanks to Mr. Michael Mills of the Michigan State Chamber of Commerce Foundation, Mr. Lawrence Reed of the Mackinac Center, and Mr. James Rodney of the Detroit Forming Company.
This report is published by The Mackinac Center and the Michigan State Chamber of Commerce Foundation. Nothing in this report should be construed as necessarily reflecting the views of The Mackinac Center or the Michigan State Chamber of Commerce Foundation or as an attempt to aid or hinder the passage of any particular legislation before the United States Congress or the Legislature of Michigan.
The Mackinac Center for Public Policy is a nonprofit research and educational institute that advances the principles of free markets and limited government. Through our research and education programs, we challenge government overreach and advocate for a free-market approach to public policy that frees people to realize their potential and dreams.
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