Composting: A Financially Viable Alternative to Recycling

Despite widespread consumer participation, the unpredictable nature of the recycling industry presents constant economic challenges. Factors like fluctuating energy prices, shifting market demands, and currency instability cause industry costs and revenues to change frequently, making it difficult for recycling operations to maintain consistent profitability. This year, especially, European businesses supplying recycled plastic materials from PET bottles are facing a tough market, as more expensive energy has forced them to raise prices, while prices for virgin plastic continue to fall, creating stiff competition and falling demand.

In light of these challenges, it is crucial for waste management systems to explore and implement alternative solutions that can provide greater economic stability and environmental benefits. One option worth more attention is composting, a zero-waste solution which has steady demand, and local market resilience. Composting is not limited to food and garden scraps; it can also include paper and, increasingly, new forms of compostable plastics and packaging.

This ability to compost a broader range of materials is particularly important given the significant amount of packaging waste produced globally. For instance, the EU generated 84 million tons of packaging waste in 2021, with plastic accounting for 19% of this total. The United States generated 14.5 million tons of plastic packaging in 2018, the most recent year for which full statistics are available. Redirecting even a fraction of this packaging waste toward composting rather than recycling could significantly alleviate the financial strains on the global recycling industry and reduce the volume of waste sent to landfills.

The economic challenges of recycling

Recycling's economic viability is heavily influenced by external factors beyond any individual or industry's control. Energy prices, for instance, directly affect the cost of recycling processes. As energy prices rise, the expenses involved in collecting, sorting, and processing recyclable materials also increase – which can significantly impact recycling profitability. This was evident in 2022 when Italy experienced skyrocketing energy prices and saw 40% of its recycling operations halted due to unsustainable energy costs. 

Plastic resin prices also play a critical role. Plastic resin is the raw material used to make plastic products. When the price of resin falls, it becomes cheaper to produce new plastic than to recycle old plastic, which undermines the financial motivation for companies to recycle.

Market demand for recyclable materials can also fluctuate, influenced by both domestic and international economic conditions. When the economy is down, for example, reduced manufacturing and consumer spending lower the need for recyclable materials. 

International trade regulations and currency fluctuations can further disrupt the global recycling market. For instance, trade restrictions or tariffs can limit or reduce market access, and fluctuating exchange rates can suddenly increase costs and reduce revenue for recyclers. 

Why composting adds stability to circular waste management

A main advantage of composting is the steady demand for the valuable end product it creates. High-quality compost is used widely in agriculture and landscaping due to its ability to improve crop yields and combat soil degradation. This consistent demand provides composting operations with a stable source of revenue and long-term financial viability.

Local market resilience further contributes to the stability of composting, which can be effectively scaled at a local level to manage organic waste. For instance, cities like San Francisco have established successful municipal composting programs that convert organic waste into valuable compost for local use. These local programs are relatively insulated from global market fluctuations and international trade regulations, providing a consistent and stable operation that benefits both the environment and the local economy.

The composting process is often not extremely energy intensive. Although industrial compost facilities do use machinery that requires electricity, in many situations, composting relies on natural decomposition. In the right settings, minimal human intervention is required – composted waste breaks down on its own, which reduces operational costs and susceptibility to energy price fluctuations.

Municipal composting programs as untapped revenue streams

Municipal composting programs have the potential to transform waste management into a profitable and sustainable industry. By selling high-quality compost to the agricultural, landscaping, and gardening sectors, cities can generate substantial income. For example, Seattle's municipal composting program produces compost that is sold to local farmers and gardeners, creating a profitable cycle of waste management.

In addition to generating revenue, municipal composting programs create jobs in the waste management industry. These programs require workers to collect, process, and distribute compost, providing employment opportunities and stimulating the local economy.

Environmental and community benefits

Composting also offers substantial environmental and commun ity benefits. By diverting organic waste from landfills, where anaerobic decomposition produces methane (a potent greenhouse gas), composting reduces greenhouse gas emissions and improves local air quality. 

Furthermore, composting contributes to a circular economy, where waste is transformed into valuable resources that help support agriculture. When used on fields, compost improves soil quality, increases crop yields and reduces irrigation needs. It also enhances the ability of soil to sequester carbon dioxide, another prominent greenhouse gas. A waste management system that includes composting not only strengthens local economies but also promotes sustainable practices and reduces environmental impact. As the global population grows, so will the need for sustainable agricultural practices and demand for compost.

Looking forward, it is clear that recycling alone cannot solve all of the world’s waste and sustainability challenges. However, municipalities that add composting services will be better prepared for the future, able to maintain more stable waste management systems, and contribute to the health of the environment.