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The Economics of Recycling

Article  in  Resource Recycling · January 1993

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The economics of recycling
by Susan Bogert
and Jeffrey Morris.

I n four cities, the average net cost

per ton of recycling in 1992 was
low& than the cost of disposal.

Recycling need not cost more than waste col- n Figure l- Recycling vs. disposal net costs per ton, 1992
lection and disposal. In fact, recycling can
make good economic as well as environ-
$200
mental sense, according to our recently pub-
lished study The Economics of Recycling and
Recycled Materials (l), The study documents
1992 costs of residential curbside recycling
versus disposal systems in four Washington $150
State cities - Seattle (2), Spokane, Belling-
ham and Vancouver - which are geograph-
ically diverse, use different collection and
materials marketing approaches and differ- $100
ent disposal methods, and range in popula-
tion size from 47,000 (Vancouver) to 535,000
(Seattle).
The study also compares costs and prices $50
for using five recycled materials in manu-
facturing or cornposting against their com-
mon, typically virgin, material substitutes.
The study provides a factual and objective
report that could serve as an information base
for discussing and formulating policies to
improve the economics of recycling.

Recycling can cost less than disposal Source: Clean Washington Center, The Economics of Recycling and Recycling Materials, 1993.
Based on 1992 cost data from the four Wash-
ington cities, recycling can be less expensive
than disposal, especially considering the rev- at the lower end in Spokane, to $65 per ton selling materials, curbside recycling’s total
enues that may be obtained from selling recy- at the higher end in Bellingham, with Van- costs still were less than disposal system costs
cled materials. Figure 1 shows recycling and couver and Seattle in between at $25 and $41 in three of the cities. In Spokane, curbside
disposal system net costs (total costs less any per ton, respectively. Excluding revenue from recycling’s total costs were about the same
revenues from selling recycled materials or
selling electricity from incineration). Susan Bogert is the policy and research manager for the Clean Washington Center, the state agency responsible
Disposal costs exceeded recycling costs recycling market development in Washington State. Jeffrey Morris is the director of economics and econometric
per ton in all four cities studied: $13 per ton analysis for Sound Resource Management Group, a Seattle-based solid waste management consulting firm.
as disposal system total costs, excluding the Only Spokane enjoys n Table 1 - Recycling costs per ton, 1992
credit for electricity revenues. revenues from disposal,
because it sells electric- Collection Processing
One of the major findings of this study is
ity generated by its cost cost Revenue (1) Net cost
that with smart management and efficient
operations, cities can minimize costs for both waste-to-energy facility.
Looking at the col- Bellingham $91 $25 $--- $116
recycling and disposal. Understanding the
Seattle 89 42 41 90
components of their recycling and disposal lection component, curb-
side collection cost more Spokane 199 - 24 175
system is critical for cities to achieve route,
for recyclables than for Vancouver 137 - 6 131
truck and labor efficiencies. For example,
Seattle’s curbside recycling contractors garbage in all four cities
(1) Processing costs and revenues are netted in all cities except Seattle,
receive a combination of market revenues in 1992. This is to be because of the other cities’ practice of delivering materials to a third-
plus a per-ton fee for collection and process- expected. Recycling’s party processor, not the city or the hauler.
ing. This gives the contractors substantial goal is to produce mar- Source: Clean Washington Center, The Economics of Recycling and Recy-
incentive to maximize both handling effi- ketable materials. Care- cled Materials, 1993.
ciency and material quality. On the disposal ful handling and separa-
side, cities that arrange their operations and tion of materials during
n Table 2 - Disposal costs per ton, 1992
contracts so that costs vary directly with ton- collection maintains
nage will be able to realize savings when material quality and Collection Transfer/
switching material tonnage from disposal to value. Densities in the cost disposal cost Revenue Net cost
a lower cost recycling system. recycling truck are usu-
ally less because com- Bellingham $90 $91 $ 0 $181
Recycling and disposal system paction is avoided, Seattle 67 70 0 137
component costs resulting in trucks being Spokane 101 97 10 188
Table 1 summarizes the cost components for able to collect less V a n c o u v e r 8 5 71 0 156
recycling in the four cities, by comparing col- weight before filling up.
lection costs (including administrative over- Also, in recycling, mul- Source: Clean Washington Center, The Economics of Recycling and Recy-
head, publicity and education), processing tiple materials typically cled Materials, 1993.
costs, revenues and net costs (total costs less must be segregated. For
revenues). example, in Spokane recyclables are sorted plastic bottles (PET and HDPE). As a result
In Table 2, disposal system costs for each at the curb by the collection truck operator Spokane’s recycling collection costs are
of the four cities are depicted in terms of col- into seven different truck compartments for almost double (197 percent) its garbage co1
lection costs (including overhead), trans- newspaper, corrugated containers, three col- lection costs.
fer/disposal costs, revenues and net costs. ors of glass, cans (aluminum and tin), and For the other three cities, which use stack
ing three-bin systems and load newspaper, unloading. On the other hand, costs allocat-
mixed paper, and commingled cans and bot- Paying for recycling ed simply by volume (cubic yards) collected
may not adequately reflect costs of handling
tles into three or four collection truck com-
partments, recycling collection still costs more and disposal heavy, dense materials. For example, heavy
materials may require heavier handling and
than garbage, but the difference is less pro-
nounced (Vancouver, 161 percent; Seattle, n In cities where disposal systems are processing equipment.
133 percent; and Bellingham, 101 percent). expensive, recycling systems are cost- Our study compared recycling and dis-
However, other factors elevate Spokane’s ly, too. posal costs for each material, using both cost
per- ton recycling collection costs as well. The allocation methods - first by tons collected,
other three cities collect mixed paper; Spokane n Most residents pay for all curbside or then again by cubic yards collected. In Seat-
does not. Mixed paper composes a large por- disposal costs through rates charged tle, a third method is considered as well, using
tion of the volume and weight in recycling for mandatory garbage collection. volume for collection and allocating proc-
programs where it is collected. As a result, essing costs according to the National Solid
Spokane's trucks collect less material per stop, n Households that divert materials for Wastes Management Association’s recent
but spend more time per stop, increasing costs recycling may save money through materials recovery facility cost study.
per ton collected. reduced frequency or lower volume With the exception of glass and tin in
On the other hand, on-route sorting allows of garbage collection. Spokane, recycling was cheaper than dis-
Spokane to sell materials directly off the col- posal in 1992 for all materials in all cities for
lection truck to local processors in essential- ton to accept recyclables. In the Seattle- weight-based costs. Conversely, in all cities
ly a ready-to-market condition at an average Northend recycling program, where the same except Bellingham. recycling was more
price of $24 per ton. In the other three cities, contractor does collection, processing and expensive than disposal for some materials
separation of materials and removal of con- marketing of materials, processing costs when costs are allocated on the basis of vol-
taminants is done at a processing facility rather exceed materials revenues by just $1 per ton. ume in the collection truck. Even recycling
than on the collection route. aluminum cans in some cities was not cheap-
Although Bellingham and Vancouver also Allocation of system costs by material er than throwing them in the garbage, due to
sell materials from the collection truck to local The study also examined recycling versus dis- processing charges for separating commin-
recyclers, they receive lower prices because posal system costs by material collected. gled food and beverage containers.
more sorting and removal of contaminants is Costs allocated simply by weight collected Looking at Seattle’s costs in particular, in
required at these recyclers’ privately owned may not adequately reflect the cost of han- the weight-based analysis for aluminum cans
processing facilities. Vancouver receives an dling relatively lightweight, bulky materials. and PET and HDPE plastic bottles. revenues
average of only $6 per ton and Bellingham For example, trucks fill up more quickly with from selling these recycled materials exceed
pays its private processor an average $25 per bulky materials, requiring more frequent their collection and processing costs, result-

Resource Recycling September 1993

 ing in a “negative” net cost, or revenue. For mixed paper in the Seattle-Northend program At the same time, garbage collection is a serv-
the volume/NSWMA-based analysis, the net is about the same for recycling and disposal ice that households have come to expect.
cost of recycling mixed scrap paper and under either cost allocation method. This does Until recently, most materials were recy-
HDPE bottles was higher than disposal costs. not necessarily imply that one should be indif-cled by the private sector, and then only if
Also, lightweight, bulky containers such as ferent between recycling or disposal. their market price covered collection and proc-
plastic bottles and aluminum cans bear high- Whether mixed paper is economical to essing costs. Thus, in most cases, materials
er costs for both recycling and disposal when recycle depends not only on its markets, but were self-hauled to buy-back centers, and
volume-based costs are used. also on how collection routes for both recy- materials with low market prices were not
These results indicate the cost of ineffi- cling and disposal might change when a large diverted from disposal.
ciencies in collecting low-density materials. quantity of this low-density material is moved A recycled commodity’s market price as
Although attention has been drawn to the cost from one collection system to the other. If an industrial feedstock will generally be set
of these inefficiencies in collecting recy- large quantities of mixed paper can be recy- by prices for competing materials that sell in
clables, many of the same inefficiencies are cled, then there may be substantial opportu- larger quantities and are more established in
encountered in curbside collection of low- nities to restructure garbage collection routesthe marketplace. As a result, the market price
density materials for disposal as well. and reduce garbage collection costs when that for a recycled commodity cannot much
Costs measured in this study are a func- material is transferred to curbside recycling. exceed prices for substitute materials.T h e s e
tion of the mix of materials collected in a par- There also may be opportunities for reduced prices for substitute materials represent what
ticular program and geographic area during per-ton recycling collection costs when mixed the feedstock user is accustomed to paying,
a specific time period. Much more work waste paper is picked up at each participat- though users will usually seek to pay the low-
needs to be done to determine how a mate- ing household on a curbside recycling route. est price possible. The higher the price at
rial’s weight, volume and handling time on which a recycled material can be sold, the
the collection route interact to determine the Who pays and how? greater the revenue available from this source
actual cost of collecting that material for either One central issue in recycling collection and to pay for collection and processing.
recycling or disposal. As a result, extreme processing today is “Who should pay and Disposal costs (collection plus landfill or
caution should be used when making calcu- how?’ This study demonstrates that recy- incineration) represent a large expense that
lations regarding which specific materials are, cling can make economic sense in compari- households, at least to date, are willing to pay,
and which are not, profitable to recycle in an son with disposal. There are two obvious typically through public sector agencies.
existing curbside recycling program. Adding sources of funding to pay for recycling: mate- When materials are recycled rather than
or deleting materials affects the mix of fac- rials markets and disposal customers. How- thrown away, certain costs of disposal are not
tors that determine the cost of a program and ever, while market revenues from recycled spent; these are often called the “avoided
the specific costs for a material. materials may at times cover processing costs, costs” of waste disposal Since this amount
Finally, the average cost of collecting they are unlikely to pay for collection costs. would otherwise be spent to get rid of waste,
communities can afford to contribute it toward
the cost of recycling materials.
Thus, avoided disposal costs provide the
other revenue source to cover costs of recy-
cling materials with low market value. Avoid-
ed disposal costs plus market prices can pay
for recycling, provided that citizens who in
the past have been willing to pay for garbage
collection and disposal are willing to pay to
cover the costs of curbside recycling, and
manufacturers who have been willing to pay
for virgin materials are willing to pay similar
prices for recycled materials. RR

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