Now Is the Time for Environmental Economics

If you were asked “What is the biggest challenge facing your recycling business today?,” your short, easy answer would be something about surviving the current market price volatility for recycled materials. And exactly how a business survives the current revenue challenge is varied, interesting and worthy of a blog, especially considering the recent statements by the CEO of Waste Management Inc. that it is cutting back on its collection of glass and organics as a way of cutting its losses. But I am going to address another perspective on this issue, which is the purview of the “mission-driven recyclers”, as opposed to the strictly for-profit recycling sector.

First, we have to admit that there aren’t many other industries where the value of your product drops more than 50 percent in just a few months, yet your hands as a producer are tied regarding how much product you produce for the market. For example, when the market price for virgin copper drops due to oversupply or low demand, the mine owner simply sends half his workers home and reduces production. But in recycling, the material just keeps coming and we need to process and sell it, regardless of market demand or price. It’s a unique and crazy-making market dynamic that has plagued recyclers for decades.

Perhaps the real answer to this question of survival is much bigger than focusing only on the short term and is one of the greatest challenges faced by recyclers around the world. The real issue here is the difference between “honest” and “dishonest” economics.

Just as with “clean energy” versus “dirty energy”, the world is finally understanding that there are hidden costs to how we run our societies that don’t show up on the company books, but rather are paid for by “the community” in various ways. I know this is a big topic, but the issue of carbon pollution/global warming and the catastrophic economic impacts that are happening (and increasing) are serving to educate everyone about a topic that before now only economic geeks talked about, and that is the issue of “environmental externalities.” The economists say that these are costs related to a commercial activity that aren’t being paid by the ones creating the cost impact.

An Uneven Playing Field?

To bring this discussion down to my town and my company, Eco-Cycle (one of largest community-based recycling social enterprises in the United States) is still forced to compete with landfills on an uneven economic playing field. By that I mean that our financial statements are an honest ledger of all our costs without needing a second set of books to cover the environmental externalities, or “legacy pollution costs," that our competition (local landfill) is being subsidized for.

The landfills in Colorado are very “inexpensive” (as in less than $20/ton), but that’s only because they are held accountable for keeping leachate out of the groundwater “to a degree.”  By that I mean, their company liability for protecting the groundwater runs out 30 years after the landfill closes, which many of us believe is about the lifetime of the plastic liner system (if they even have one) that theoretically is containing the leachate.  After 30 years, no one is maintaining the landfill cap or even monitoring the local groundwater anymore, so when the nasty stuff eventually leaks into the groundwater, it spreads and impacts human health in the future.   

In addition, even if a leachate leak is discovered in the future after closure, there is no plan or responsibility to clean it up other than the publically-funded program known as Super Fund, which is one of the subsidies of which I speak. And let’s not forget that landfills emit large amounts of methane, a serious greenhouse gas, as well as other toxic air pollutants, such as methyl mercury, every day. These environmental insults will have an economic impact on someone, but it won’t be the landfill owners paying the bill. Similar problems are found with the toxic air emissions from trash incinerators, as well as the landfilling of the toxic ash, which is a byproduct of the combustion process.

This issue of dishonest economics really hurts the growth of the zero waste approach to managing society’s discards. The issue of artificially cheap landfills also hurts the upstream waste reduction goals of redesigning product/packaging to be less toxic, more recyclable/compostable and less dependent upon global virgin resources, which are being quickly depleted. Our economic system is acting as if there is a limitless supply of natural resources in the world, and we know that isn’t true. If a company can go into nature and remove virgin resources “for free” other than their direct costs of extraction, yet they have to pay cash for the “secondary resources” available through recycling, then how is this fair when one process, the free one, creates large amounts of negative impacts upon the environment, while the other, recycling, prevents these negative impacts but costs more?

In summary, our economic systems need to catch up with the times, as they have in the past. It is no longer acceptable to use children in factories, even if they are cheap labor. And it certainly wasn’t a financial spreadsheet analysis that forced society to stop using slaves … it was our moral compass. Today, it must become morally unacceptable to destroy nature, kill ecosystems, displace traditional people and their villages and emit pollution that harms the biosphere and water upon which humanity depends.

The day for implementing “environmental economics” is here, and we must push that revolution forward as fast as possible through a combination of financial disincentives and new regulations.  And the waste industry shouldn’t fight this since society will always have discards that need to be managed. There will be plenty of opportunities for zero waste millionaires to emerge from the resulting marketplace shakeup.

Eric Lombardi is the Director of Eco-Cycle International (www.EcocycleSolutionsHub.org) and is recognized as an authority on the social and technical aspects of creating community-based “Zero Waste” resource recovery programs.