that’s garbage! (or why recycling is kind of a joke)

I just read an interesting article (you might not be able to get access to this article unfortunately) that looks at the welfare implications of recycling programs.

As usual, a close analysis reveals some really interesting issues.

On first glance, it seems that recycling is kind of a losing proposition.

The costs to the
municipality to collect, process, and transport recyclable materials exceed by an
average of roughly $3 per household per month the budgetary benefits of
reduced disposal fees and revenue from the sale of recycling materials (Kinnaman,
2000; Aadlan and Caplan, 2005). On a per-ton basis, recycling is roughly twice as
costly as landfill disposal.

The costs to the municipality to collect, process, and transport recyclable materials exceed by an average of roughly $3 per household per month the budgetary benefits of reduced disposal fees and revenue from the sale of recycling materials (Kinnaman, 2000; Aadlan and Caplan, 2005). On a per-ton basis, recycling is roughly twice as costly as landfill disposal.

And, as this author points out, most of the benefits to recycling do not come from the natural resources they preserve, because the preservation value is incorporated into the above quote via the price that recycled goods fetch in the market for raw resources.

Assuming that markets for recycled material are sufficiently competitive, the marginal benefit of preserving natural resources through recycling is equal to the corresponding market price for each recyclable material and is therefore internalized by municipal recycling programs selling recyclable materials. Prices for recycled glass, various recycled papers and cardboards, and the various forms of recycled plastics have historically been near zero.1 Prices for aluminum and bi-metal cans are higher, but the quantity of these materials recycled by households is rather small. Judging by the prices for recycled materials, the natural resource benefit of recycling is not particularly substantial.

So, given this, why recycle. Well, the authors point to two other benefits of recycling. First, recycling can reduce costs that are not internalized by trash collection. For example, landfills have costs, including smell, reduced housing prices in an area (landfills are ugly), possible water contamination and the CO2 and pollution cost of transporting garbage to and from the landfill (though recycling probably wouldn’t reduce this last factor very much). However, these costs are not very significant to start and they are mostly reduced by taxes that already exist precisely to try and incorporate these costs.

What’s far more interesting is that these authors propose that the apparent loss of recycling is outweighed by the utility recyclers derive from recycling. As they point out, many consumers will pay to be able to recycle (many people contracted with private parties to recycle before their municipality required it):

Recycling is something parents and children feel good about, and for this reason households may be willing to pay for the mere opportunity to recycle. An expanding literature employing the contingent valuation method finds that households are willing to pay an average of $5.61 per month for recycling services (Jakus, Tiller, and Park, 1996; Lake, Bateman, and Partiff, 1996; Tiller, Jakus, and Park, 1997; Kinnaman, 2000; Aadlan and Caplan, 2005).2 Unlike the sources of external benefits discussed above, these benefits to households exceed the $3 per household average cost of operating curbside recycling programs in many (but not all) municipalities.

This benefit is known as the “warm glow” effect of recycling.

The semi-philosophical question I want to raise is this: if the warm glow utility benefit rests on a mistake (that recycling is good for the environment), then should it count in our total welfare assessment. In other words, I think people only feel good about recycling because they think it helps, but if it’s a source of inefficiency, wouldn’t the warm glow feeling disappear?

Thus, the question: should we respect people’s preferences, or their considered preferences (their preference after finding out about recycling). Or is it that the benefit of recycling does not make anyone better off, yet it makes the results of our actions better off. In other words, is it just good that we respond to our natural surroundings in a certain way even if that response is actually less efficient.

Another argument one might make against this analysis is that the price of raw materials does not price in the damage to animal habitat and the blight it causes to the environment (my guess is that these might be significant, but my guess is also that they are partially if not completely accounted for in various environmental regulations and taxes).

So the question really is: why recycle?


2 Responses to “that’s garbage! (or why recycling is kind of a joke)”

  1. 1 FedUp
    April 16, 2012 at 5:25 pm

    Guess where the excess “curbside recycled” material ends up if no one buys all of what’s collected? (And this happens more often than you might think.) You guessed it, the residential land-fill.

    • 2 pissedoffconservative
      October 27, 2015 at 9:59 pm

      /\ this. “Recycling may be the most wasteful activity in modern America: a waste of time and money, a waste of human and natural resources.” – John Tierney (New York Times)

      But feeling good is justification to do anything….you want a warm and fuzzy…visit your local liquor store and buy a bottle of schnapps! Don’t forget to landfill the bottle when you’re finished with it!

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