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Economics of Waste and
RecyclingTietenberg, Ch. 9 on Recyclable
Resources (Ch.8 in older
editions)
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Recyclable resources
Initially when the resource is plentiful, norecycled material will be used
As the resource gets depleted and
extraction cost increase, recycled materialwill increasingly be used
As disposal costs increase recycled
materials will be used If consumers bear the disposal cost
recycled materials will be used
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Questions
What is the efficient amount of recycling?
Will the market result in the efficient
amount of recycling in the absence of
government intervention?
What about (in-built) shelf life of a
product?
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Divergence of private and social
costs
Marginal private cost of throwing a unit oftrash is small, smaller than the socialmarginal cost
The level of recycling is inefficiently small Marginal private cost and marginal social
cost of disposal diverge
If social costs of disposal are included inthe cost of disposal then level of recyclingwill be efficient (diagram)
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Life cycle analysis
Full environmental impact of a good frombirth as raw material till its death at landfill,incinerator
Component of social cost benefit analysis How to define impact boundary?
Example: disposable drink cup: paper
versus plastic The private cost to consumer is about the
same
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Towards measuring social cost
Paper cup
Made of renewable
resource, wood
Uses 36 times moreelectricity
Generates 580 times
more waste water Landfill: degrades,
emits methane, CO2
Plastic cup
Made of non-renewable
resource, oil,
emission of pentane
Recycles easier
Landfill: Does notdegrade
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Policies
littering
Taxes
Flat rate
Pay by volume Aims to reflect social cost of disposal
Amount of garbage decreases
Deposit refund schemes: refund is given when theproduct is returned
Aluminium cans (production cost much lower from recycled!) Waste oil
Germanys take back principle
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Product obsolescence
Functional Obsolescence (computers)
Fashion obsolescence (clothes)
Durability obsolescence: incentive to decrease
useful life of a product, in-built durability Discount rates study: implied discounts rates from
purchases of consumer durables are higher for lowincome consumers (higher than market interest rates)
Competition tends to increase durability Cars in US
In Germany regulations were enacted requiringproducts to be durable
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Waste Trade
Developing countries
Waste recovery is a
market driven
phenomena occurringwithout government
intervention
low per capita waste
Goods used longer
Developed countries Waste recovery due to
environmental concerns and
government support
More waste separated atsource
High per capita waste
the amount of business waste
is greater than household
waste
the City of New York exports
25,000 tons of trash a day to
other cities and states
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Informal recycling
In developing countries government-runrecycling programs are rare
Instead informal recycling
estimated 15 million people worldwide, trashpickers are about 1 percent of the global urbanpopulation (2% in Asian, LatAm cities)
Brazil claims 90% Al recycling rate due toinformal recycling; U.S. about 50% Al recycled
Need integration of informal recyclers into formalmunicipal waste services
Recognized as legal profession only in Brazil
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Informal recycling
Zabaleen garbage recyclers in Cairo
Individual or family groups
Micro-enterprises
City of Cairo decided to modernize waste collection
and privatized and sold waste collection to MNEs MNEs are required to recycle 20% of the waste (while zabaleen
recycled 80%)
Gov encouraged MNEs to hire zabaleen
MNEs Offer much lower wages to the zabaleen
Relocation of recycling activities of zabaleen to out-of-town;eviction from current homes that also had waste-processing onsite
Conflict between traditional recycling economy andmodern waste processing done by large corporations
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Wilson et al, Role of informal sector
recycling in waste management in
developing countries, Habitat International,
vol. 30, Dec. 2006
Waste and Want: A Social History of Trash
by Susan Strasser, Metropolitan books
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Please recycle!