Wednesday, August 6, 2008

Recycling not such a great solution

It would be hard to find an environmentalist who does not see recycling as a way to reduce resource consumption, and subsequently improve our natural environment. But there is no clear evidence that the emergence of recycling has reduced resource consumption. In fact, there is a solid theoretical argument that recycling has limited impacts on decreasing consumption of the targeted resource, and is likely to increase consumption of other resources. This alone should not be controversial to economists, but the real question is why we continue to perpetuate the myth. Let’s start digging to the bottom of this mystery.

I’m not really sure how to explain this succinctly, but I will give it a go. It is best to have in mind throughout this explanation a particular material – think glass, paper or aluminium. There are two cases to consider – one in which recycling is subsidised by the government, and one where it begins via market forces.

Imagine that the glass industry realises that it is cheaper to source glass through recycling then from sand mining. If recycling was not an option, glass would be more expensive than what recycling enables it to be. Because glass is cheaper due to recycling, it enables the industry to produce glass products more cheaply, creating a higher demand for these products. Of course, glass is rarely a final product itself, and thinking of bottles here, cheaper glass and products will require more caps, labels, cartons and shipping. Furthermore, because of the access to recycled glass has decreased demand for new glass, the price of new glass may fall, encouraging greater consumption. In all, recycling can reduce the consumption of new resources by a much smaller amount than first thought, and can increase consumption of other resources. In fact Valerie Thomas, in the Journal of Industrial Ecology, shows that second hand goods (the equivalent of recycling) can actually increase the consumption of those goods with large second hand markets.

The second type of recycling, the subsidised variety has similar results. It artificially makes recycled materials cheaper and therefore makes the goods made from both recycled and new materials cheaper – again increasing demand for the resource in question, as well as complementary resources.

So why then, if recycling can at best result is a minor reduction in resource consumption and an increase in consumption of other resources, and at worst result in an increase in consumption of the resource in question as well as others, do we persist in advocating it as an environmental cure all?

I would suggest the reason is simply that environmentalist do not know any better. Also, if you acknowledge that recycling is not effective it leaves very few options remaining that do not involve radical social upheaval. Governments must surely know about the ineffectiveness of recycling, but perpetuate the myth as a way of appearing active on the environmental front.

The most important point to take from this is that recycling may very well be counterproductive. Shouldn’t we at least know if what we are doing is helping or harming the environment?


  1. But Cam, isn't what we're generally recycling not the actual good itself but the vessel that carries that good, or something which brings us a certain service but isn't actually the service itself? For example we don't actually consume a glass bottle, we consume the drink inside it, or we don't buy a newspaper for the paper itself but for the news that's written on it. The demand for those goods and services probably isn't going to be affected by how much glass or paper costs, as the cost savings incurred by the company producing the drink or newspaper will just absorb any price differences in their profit margins until inflation eats away at it, so the price to the consumer remains the same. Granted it might provide the company with some extra leeway to carry out some additional marketing...
    I'm not an economist, but wouldn't the increased demand for glass push price signals up anyway, until a new equilibrium is found at a higher level of consumption, but at least some portion of that new demand would be coming from recycled goods rather than solely new, and for that price to be maintained there would have to be less new goods being used than before, otherwise the price would be higher than before. So while consumption of the end good or service might be higher, in terms of actually resource extraction it should be less?
    It probably doesn't also take into account that a lot of the economically extractable reserves of raw resources are running out pretty soon (I can't remember the figures right now, but some are within 17 years...), so the prices for raw resources will probably shoot up soon even if oil prices and carbon pricing doesn't cause this (not that carbon trading seems set to do much at all...). While we should probably be trying to reduce consumer demand for goods as strongly as we try to reduce raw material consumption, there are some things we will still need and by implementing systems for recycling now, the time lag between when we really do need them (although I kind of think we do already need them) and when we could have put them in place is shortened.
    But actually as an aside, I do think recycling can increase consumption because people may feel justified in buying or using something if they recycle it at the end, which kind of misses the point. But that would be a small proportion and it's probably more that people don't reduce their existing consumption as much as they might otherwise have.
    Cool blog though Cam! nice work... see you soon,

  2. Without arguing either way, I reckon some fact are needed here!

    This book is a popular example of how you are attempting to get to the bottom of economic concepts which sometimes lead to seemingly contradictory results.

    (I'm sure you've got a view on this book though... I know I do)

  3. Angie - will write a Recycling Part 2 later today - hopefully it will address all the issues you raise.

    Dan - Yeah, I've read freakonomics, but don't have much of an opinion on these guys. They appear to be in the entertainment business rather than economics, but as long as it stirs up real debate, it all helps build our understanding. Also, will put some 'facts' (whatever they are?) in if you like!

  4. Here's 1 reason to recycle (after you've reduced!)