Is Recycling Good Or Bad -- Or Both?

"What a Waste. Recycling squanders money and good will -- and doesn't do much for the environment, either." This was the cover blurb for John Tierney's story in The New York Times Magazine picturesquely titled "Recycling Is Garbage." Lest the reader miss the point, the subhead in the article explained: "Rinsing out tuna cans and tying up newspapers may make you feel virtuous, but recycling could be America's most wasteful activity."

This was, of course, anathema to most mainstream environmental organizations, who have spent decades trying to convince Americans to "reduce, reuse, recycle." These "three Rs" of the environmental movement are sometimes called the "solid waste hierarchy," with source reduction -- using less stuff -- being better than directly reusing old products, which in turn is better than recycling. Recycling, of course, is better than all the other options -- incineration, say, or, God forbid, landfilling. Environmental groups responded to Tierney's article with a flurry of studies of their own, essentially restating their longtime position that recycling is "perhaps the most basic . . . of all environmental policies."

Unfortunately, both sides have it wrong. Recycling is neither "good" nor "bad"; solid waste is neither trash nor treasure. Like all other activities, recycling makes economic and environmental sense in some cases and not in others. The challenge is to figure out how to tell which cases are which -- not to describe recycling in a simplistic, catch-all sound bite.

Recycling Initiatives. During the past decade, responding to public concern about resource conservation, most states adopted either "supply side" or "demand side" policies to encourage recycling. (Consumers who recycle are the suppliers of recyclables; firms who use recycled materials are the demanders.) Forty-one states went the supply-side road, adopting waste-diversion or recycling laws. Attempts to enact demand-side policies were less successful. Only two states -- Oregon and California -- passed recycled-content mandates for products other than newsprint. Florida passed (and then allowed to sunset) an "advance disposal fee," which is a tax on non-recyclable packaging. Nevertheless, since the prices of recyclables vary greatly, when scrap values for recyclables fell in the mid-1990s -- many recyclable values are at near-historic lows today -- the press for politices intended to stimulate demand resurfaced. Legislators and recycling advocates in Massachusetts, New York, Georgia, and elsew here began pushing for new recycling legislation. The Environmental Protection Agency (EPA) is also considering raising its national recycling goal from 25% to 35%.

The premise, stated or unstated, behind these initiatives is that recycling reduces waste. This may seem obvious -- at least if we use the inituitive definition that waste means "throwing things away instead of reusing them." But this is proof by definition. If we adopt a more sensible definition of waste -- "doing with more resources what can be done with fewer resources" -- the picture becomes more complicated. Whether we use virgin or recycled materials, manufacturing a product always uses resources of some sort, and it is hard to say ahead of time which method uses more resources. Is virgin manufacturing more wasteful than recycled manufacturing? It is really an empirical question.

The correct answer is: "It depends." Certain forms of recycling have existed for ages, because they save resources. Recycling aluminum conserves 95% of the energy required to make primary aluminum, and doesn't change the physical properties of the metal. Using one ton of recycled aluminum avoids the use of 4 tons of bauxite and 700 kg of petroleum coke and pitch, and avoids the emission of 35 kg of aluminum fluoride. But not all products are like aluminum. Some bath tissues and paper towels can be made out of 100% recycled content, but they aren't as soft or absorbent, and have lower wet strength and use more fiber than virgin-material products. As a result, people who use the recycled product use more towels at a time. Ironically, using recycled materials may not even reduce total solid-waste generation in this case.

Or consider coffee "brick packs." Made out of an aluminum foil/plastic laminate, these aren't easily recyclable and can't be made from recycled content. But they are also lightweight and produce only 15% as much waste as traditional metal cans. Steel cans are easily recyclable, and are in fact recycled at a rate higher than 50%. But unless steel can recycling rates rise to 85% -- which is highly unrealistic -- the non-recyclable brick packs actually take up less landfill space.

The same paradoxes can be illustrated using other materials -- recycled vs. virgin plastic grocery bags; glass juice bottles vs. aseptically packaged juice boxes. The fact is that reality is tricky. Resource use is complex -- more complex than most recycling advocates realize. Intuition suggests that recycling always reduces landfill usage and other resource use, but this intuition is sometimes wrong.

Does Recycling Make Sense? Everything seems more convincing when attached to precise numbers. To precisely discuss whether recycling "makes sense" in the aggregate, we would have to gather a mind-numbing array of statistics. For any firm, the costs of producing from virgin or recycled materials depend on a number of factors. How scarce are resources, now and in the future? What sorts of machinery is the firm using currently, and would switching from virgin to recycled production require buying new equipment? What sort of market is there for recycled products? How easy will it be to get recycled materials of the proper quality?

For any consumer, the benefits of using virgin or recycled materials also depend on a number of factors: How much will a product cost if it's made from virgin or recycled materials? Are there quality differences, and if so, how important are they?

The answers to these questions are different for each firm and each consumer. Changing local conditions will change the relative costs of using virgin or recycled materials. Moreover, much of this information isn't written down or even observable. It exists in the heads of individual business people and consumers, who aren't required to reveal their costs or preferences, and who may have trouble making their tacit knowledge and intuition explicit even if they wanted to.

All of which means that any effort to discuss whether recycling "makes sense" in the aggregate should be taken with a large shaker of salt. Still, we can engage in the following intellectual exercise. Suppose every company has identical costs, equal to national averages. Suppose all packaging material can be recycled back into the same sort of packaging material (of equal quality), which consumers will still buy. Finally, suppose each industry -- glass packaging, paper packaging, steel packaging, and different varieties of plastic packaging -- stays the same size over time, and that there is no substitution between materials. These are highly stylized assumptions, but without them, we can't even begin to talk about aggregate costs and benefits of recycling. (On average, our assumptions stack the deck in favor of recycling.)

Now, we can calculate the average cost of making all-virgin packaging, and compare it with the average cost of making packaging with a given level of recycled materials (say, 30%). The difference between those two costs is the average cost (or average benefit) of using that level of recycled content. To be truly comparable, of course, these costs should incorporate all elements of the product's life-cycle. For virgin materials, we consider the costs of extraction, production, and landfilling. For recycled materials, we consider the costs of recyclables collection, production using recycled content, and reintroduction of the materials into the recycling stream. All costs include energy and transportation costs; the costs of recycled materials include estimates of how much waste can be reasonably collected and recycled, how much is lost during the production process, and how much will realistically end up being landfilled anyway. Finally, for an extra dose of realism, we estimate costs for a "best-case" scenario (where recycling is cheaper) and a "worst-case" scenario (where recycling is more expensive).

Crunch the numbers, and we find that under best-case conditions, using some recycled content produces net benefits to society for almost all materials -- paper, glass, metal, and plastic. For example, under best-case conditions, making glass packaging with 30% recycled content can yield (in the aggregate, across all production) benefits of $4 per ton over making glass packaging out of virgin material, and making paper with 30% recycled content can yield benefits of $50 per ton. (See Figure 1, below.) But as the amount of recycled content rises and conditions become less favorable, the cost of using recycled materials rises, resulting in net societal losses when mandated. For instance, under worst-case conditions, requiring 30% recycled content in all glass packaging can cost -- again, in the aggregate, across all production -- $119 per ton more than using virgin material, and requiring that paper contain 30% recycled content costs $80 more per ton.

Remember that the numbers used in this model are approximate national averages. Actual benefits and costs for different manufacturers -- and therefore, the best amount of recycled content to use -- vary widely. While these numbers give us a rough sense of aggregate costs and benefits, we shouldn't believe in them too deeply; they may not actually be true of any individual manufacturer. Because all manufacturers are different, the best mandate is no mandate. Forcing specific, arbitrary levels of recycling will be counterproductive.

The Problem With Government Recycling Policies. While forcing specific, arbitrary levels of recycling may be counterproductive, it is precisely what many governments around the world have done. Recycled-content mandates -- "Thou shalt use x percent recycled content" -- are a common and obvious way of increasing the use of recycled materials, though like all one-size-fits-all resource-use plans, they make about as much sense as "Thou shalt use steel." Then there are virgin material taxes, designed to discourage the use of virgin materials by making them more expensive relative to recycled materials. Again, such taxes may make sense if recycling always saved resources, but in the complicated world we actually live in, they are unlikely to produce environmental benefits if applied across the board.

Other recycling-friendly policies are more complicated, but share many of the same failings.

• Disposal and Recycling Fees. Florida has recently tried a system of "advance disposal fees" (ADFs). Essentially, ADFs are a tax, added to the cost of a product, that incorporates the cost of disposing of that product when it is thrown away. Because poor families spend a higher proportion of their income on consumer goods, ADFs are a regressive tax; some of the proposed higher-end ADFs (around 10 cents per package) could be equivalent to a sales tax increase of as much as 7.5%.

  The Florida government determined that ADFs weren't an effective way to promote efficient resource use. ADFs didn't increase recycling much; recycling did increase in Florida, but it also increased nationwide, and most of the increase predates the adoption of ADFs. On the other hand, while ADFs cost Florida consumers $45-$50 million, only $6 million of that was spent on recycling-market development. In the end, though, it was the complexity of the real world that made ADFs unworkable.

  In practice, it is impossible for governments to come up with accurate and efficient fees for individual products. Disposal and recycling costs are location-specific; there is no uniformly applicable national or statewide cost. Recycling costs vary both by material and by product type; setting fees by material obscures differences among products, while setting fees by product can involve thousands of different items. Collection and disposal costs vary both by weight and by volume, which further complicates "efficient" fee calculations. And finally, disposal costs are dynamic. They change over time, sometimes rapidly -- definitely far faster than government agencies can respond.

• Packaging Take-Back Programs. German waste-reduction policies have been even more innovative than most U.S. recycling efforts. In 1991, Germany adopted a system of "manufacturers' responsibility," commonly called the "Green Dot" system, in which manufacturers are required to "take back," or otherwise implement waste-recovery and material-recovery systems, for their packaging. Manufacturers who participate in the system, for a fee, put a green dot on their packaging. This packaging can be thrown out in special green-dot bins, and is collected for recycling by an industry-funded collection-and-recycling system.

  It isn't clear that the German system has been greatly effective. Figure 2 shows that reductions in packaging use were about the same in Europe as in the United States, which had no such system -- from over 2,500 pounds per gross production unit in 1989 to about 2,100 in 1994. On the other hand, the program has been expensive. Maintaining two separate waste-collection systems -- regular trash cans, and green-dot bins -- is costly. Improper disposal is widespread; as much as 40% of packaging in the special bins is regular trash. Also, the costs of recycling some of the materials have been high -- two to three times U.S. recycling costs.

  

  Manufacturers' responsibility (or "product stewardship") programs have arisen in the United States through market forces for certain products, such as solvents, pesticides, herbicides, and other products with high potential toxicity if improperly handled and disposed of. In these instances, manufacturers have an incentive to take back these discarded products after use, or simply to lease rather than sell them to consumers, to avoid any potential liabilities that might occur when consumers improperly handle and dispose of these products. Film-processing companies, computer manufacturers, and other makers of specialty products that have either high recycling value or pose a significant hazard if improperly disposed of have also created their own private take-back programs. But most products don't fit this mold. Where transactions are high-volume and low-value, where products are highly heterogeneous and widely distributed geographically, and where the waste-handling or product-management infrastructure is already safe and efficient, packaging take-back policies are hard to implement and enforce.

Reality may be tricky, but there are some simple lessons to be learned from the recycling debate. The first is that "recycling" isn't the opposite of "waste." Sometimes recycling saves resources; sometimes it doesn't. Encouraging recycling across the board may reduce or increase energy use, water use, air and water pollution, and landfill usage -- depending on the manufacturer and product. Given such variations, mandates for particular recycling rates or recycled-content levels are unlikely to create environmental benefits.

The Strength of the Price System. The second lesson is that we already have a way of figuring out when particular uses of resources make sense and when they don't, and this method doesn't involve mandates or government micromanagement. It's called market pricing.

If all resources -- oil, wood, steel, landfill space, air and water quality, labor -- were universally abundant, everyone would be able to consume whatever resources they wanted without limit. Prices emerge as a result of scarcity. When a resource becomes scarcer, its price increases; consumers, responding to this market signal, cut down on their use of the resource. When a resource becomes more abundant, its price drops, signaling to consumers that they can use more of it.

The price of a product, in a competitive economy, is, all in all, a pretty good indication of its resource-intensiveness. We can, therefore, roughly estimate that when recycling is more expensive than using virgin materials, this is probably because it uses more resources.

The strength of the price system lies in its decentralization. Everyone in the economy knows the price of the products they buy, and generally tries to economize where possible, without any directives from a higher authority.

Of course, the price system isn't perfect. Many consumers don't have to pay for trash collection based on the weight or volume of trash they discard or, if they do, they often pay artificially low prices that don't reflect the actual cost of disposing of trash. (On the bright side, variable-rate pricing, also called "pay as you throw" garbage collection, is enjoying increased popularity in many cities.) The extraction of virgin materials, such as lumber or oil, is subsidized by the government, though the overall effects of these subsidies seem to be rather small. Such distortions to the price system, which make some resources appear more or less expensive than they actually are, should be fixed. But the problems of resource use will not be fixed by introducing new distortions: Advance disposal fees, for example, will skew, not improve, market signals about efficient resource use. Manufacturer take-back systems should be allowed to emerge voluntarily in the marketplace where they make sense.

"Is recycling good or bad?" then, is the wrong question to ask. Recycling can be beneficial, but sometimes isn't the best way to save resources. The real question is whether government mandates are a good way to foster resource conservation. The spotty experience of solid-waste legislation suggests that the marketplace does a better job of fostering recycling where it makes sense.