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It is not at all clear to me that comparing a world with mandated curbside recycling to a world with no recycling (mandates) that we get reductions in MSW generated. At least it is an empirical question. What the heck am I talking about? You might think that by having recycling, less stuff gets put into the waste stream, but that is not clear to me. It is certainly the case that less material is likely to end up in landfills, but it is not obvious that less overall waste will be produced.

Mandated curbside recycling programs can very easily lower the total cost of throwing out trash, so it might very well lead to some people generating more trash than if the recycling program had not been put in place. Now, I do not think the current way trash is priced would lead to the outcome I am describing in this post, but it could. To illustrate, suppose I have to pay a monthly trash disposal fee based on the weight of my trash. And suppose that I spend $15 per month for disposal right now in a world without recycling, and that I generate 1000 lbs per month of trash. What if my town introduces mandatory recycling. They will, for “free” pick up the recyclables that I roll to the curb. In other words, for any given weight of trash I generate, it will now cost me less for disposal. What if, for argument’s sake, that half of my trash is recyclable. Now, it would cost me $7.50 per month to throw out 500 lbs of my MSW and $0.00 to recycle the remaining 500 lbs of recyclables.

How do people respond to price changes like this? Well, it does two things. First, the lower price means I am richer. When I am richer, I consume more of the things that I like and less of the things that I don’t like (we have fancy terms and equations for that). But in this case, I’d have $7.50 of additional income to spend on goods, which generate waste. Of course, this income effect, as it is known, should be perfectly offset by an income effect working in the opposite direction (my taxes should have to go up to pay for the recycling services). If the cost of recycling is on net less than the cost of trash collection, then the income effect would still be positive. But let’s assume that is zero. There is still a second effect. When the price of generating waste falls, there is a substitution effect. Now, people will find it in their interest to substitute toward the less expensive trash “consumption” and away from the now more expensive other ways to consume. Some things that maybe made sense to reuse, now end up in the recycling bin. Some objects you may not have bought before (because they were heavy) you may now be induced to purchase because it won’t cost you anything at the margin to dispose of them.

In summary, if the pricing of the recycling program lowers the marginal cost of throwing away anything you should expect to see more stuff thrown away. Will we throw so much more away so as to make recycling a bad idea? That’s an empirical question. I don’t suspect that the effect, if there, is very big, but it is certainly something that serious thinkers about the recycling issue ought not dismiss out of hand, especially when they are crafting pricing policies.

Here is the reference for the post title.

3 Responses to “Peltzman and Plastics”

  1. jb says:

    OK, but isn’ this unrealistic? I’ve never known anything but a flat rate for trash pickup (e.g. $30/mo. no limit). In that case if recycling is made mandatory with no change in the rate there typically would be no income effect.

    If the perceived problem is a shortage of landfill space, then flat rate pricing should be the first thing to go. It seems to me that charging for disposal on a variable rate (weight) basis is all envirnomentalists would need, then it’s just a question of getting the price right. Or, I suppose they could paid me for separating my recyclables…

  2. Rod says:

    In Pennsylvania, municipalities over 5,000 in population are required by the commonwealth to have a recycling program that achieves fifty percent compliance (measured by the municipality or, if the Department of Environmental Protection wants to, by DEP itself; kind of like the Gestapo overseeing whatever strikes its fancy).

    Many municipalities smaller than that have recycling programs, and municipalities are also allowed to form joint recycling groups with other municipalities. In our little corner of Montgomery County, the regional planning commission, an eager appointed agency that allows our area municipalities to evade “fair share” zoning, has volunteered to take on regional recycling as an additional function. But once a township or borough goes over that 5,000 threshold, the municipality has to have its own recycling program.

    What the municipalities often do is regulate and license trash haulers and require them to offer curbside pickup. They can also appoint one trash hauler to pick up all residential trash and to require the purchase of official trash bags costing $1.00 to $3.00 each. All of this costs money, and trash collection rates and the price of trash bags cover both the disposal of the trash in the trash bags and the disposal of the recyclables. Individuals can minimize their regular trash disposal costs by limiting their use of trash bags. One municipality in our area even sends out the code enforcement officer to snoop in the trash to make sure there are no bottles or cans in the bags. The code enforcement officer is paid generously.

    Meanwhile, all businesses have to make their own arrangements for trash disposal even when the municipality collects all the residential trash. (Local officials assume that all businesses have excess piles of money lying around the office that can be sopped up by paying for trash removal.) One way to cut down on trash bag purchases is to pitch a regular Hefty trash bag into that dumpster behind one of the businesses. Another is to throw the trash bag out the car window. And anyone can avoid recycling the rest by just pitching those beer and booze bottles onto one of my farm fields. (One spring I loaded a whole pickup bed with Rolling Rock pony bottles. We don’t have a bottle law in PA.)

    One of the ironies of recycling is that the markets for various stuff can vary widely and make it simply unprofitable to sell. Aluminum cans are usually valuable enough to pay the costs of their recycling, but currently the price of steel scrap is low enough to force our local recycling center to board up the chute for tin cans. In other cases, the recycling center just sends unprofitable categories of recyclables to the landfill. The idea is that you’re training an ignorant public and you would not want to let them in on the fate of all these things they’ve separated and washed. Also, you want people to feel good even if their effort produces no benefit to the planet.

    In the end, all of our local municipalities pay to have recyclables disappear — or, rather, the taxpayers pay. The idea that recycling should pay for itself has, as one might say, been thrown in the trashcan.

    Now, I’m not opposed to thrift, and if some things like clear plastic bottles are actually worth something, I’d be thrilled to sell them. I also think bottle laws can discourage people from throwing Rolling Rock bottles into my alfalfa field. But I sure hate to be ordered by DEP to get a lot of exercise and spend a lot of my tax money on something that produces limited environmental benefits. The older I get, my resentment of government grows.

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