Wednesday, August 6, 2008

Recycling part 2

It appears that a little clarification of the effect of recycling is required. First, consumption of the raw resource MAY decrease – but consumption of other resources is likely to increase. This is probably the most important point in the recycling discussion. We can target a particular resource to recycle for what ever reason (it better be a good one), but this necessarily involves the sacrifice of an increased consumption of other resources.

Now to the issues raised by my lovely friends.

The first interesting point raised (thanks Angie) is that we are not recycling goods themselves, simply the packaging or vessel that delivers the good. How can these two things be separated in a physical sense? Without the vessel, the newspaper to deliver the news, or the bottle to deliver the drink, there is no news or drink – since we cannot consume these things without their complementary packaging. Even with the Internet, consuming news requires computing power and a global communications network for the delivery. You can take this to the extreme – cars deliver travel, computers deliver communications and entertainment, food delivers nutrition, clothes deliver warmth and so on. Quite simply, the physical goods we consume to deliver these human desires are the ‘best’ ways we can do it. This type of logic is an extension of Becker’s theory of the household, developed in the 1970’s to explain the way we organise ourselves to maximise the services that generate satisfaction rather than goods themselves (by the way, he won a Nobel prize for his work, and if you want to read some more about it start here).

Moving on.

The graph below shows world aluminium production since 1976, including primary and recycled aluminium, and confirms many of the key principles I espouse. To begin, it appears that the quantity of recycled aluminium is not the major cause of changes in the quantity of primary aluminium production. The fluctuations in the primary production line (pink) are not correlated at all with the recycled production (yellow) line. If we look at the trend between 1983 and 2000, we see that both the quantity of recycled AND the quantity of primary aluminium production is rising.

But of course, you may like to argue that primary production would have risen faster without recycling – and I would argue that recycling actually enabled primary production to be higher than it otherwise would have been. Because time series evidence of one commodity cannot provide evidence either way, we need to resort to some kind of theoretical argument.

The comment was made (again, thanks Angie) that a new equilibrium quantity of new and recycled materials will emerge – this is definitely true. I am not saying that this new equilibrium quantity of new glass is always higher (but it can be). But this new equilibrium almost always mean the total consumption of both new and recycled material be higher than before, and the price of goods made from these materials will be lower. The aluminium graph supports this stance. Total production is higher (and rising very steeply) but unlike this graph, primary production does not need to continue to rise, and this ‘extra’ material can all be sourced by recycling.

Of course there are limits to recycling as well. Not all of this can be sourced from recycling. Many of the goods made from aluminium have quite long lifetimes (think construction materials, car and bike frames and so on), and will not be available to recycle for many years. Thus if we reach this limit, either new production will begin to increase more rapidly, or substitute resources will be found (with their own associated environmental problems).

One point I have tried to make clear is that resources saved are not spared, but only spared from one use to be employed in others. Unless there is some limit (and a physical one will do) the consumption of raw materials will continue to expand. I will save a thorough exposition for another time, but read ‘Jevons paradox and the myth of resource efficiency improvements’ by Polimeni, Mayumi, Giampietro and Alcott, or ‘Why conservation fails’ by Herbert Inhaber.

Many people find this idea hard to grasp. I would like to step through a couple of thought exercises to get this message across. First think back to the movie ‘The Gods must be crazy’. If you don’t know the one, a glass bottle falls from a plane onto the head (if I remember correctly) of an African tribal man. This bottle is found to be quite useful for starting fire, crushing seeds an many other applications, and causes hilarious disruption to the tribe. But the message here is that by reusing the bottle, it enabled the tribe to be more productive, and consume more nuts, berries, and other resources. Without the bottle, their resource consumption would have been lower than what it is with the bottle!

Alternatively you could think of a subsistence farming family in Cambodia. Imagine they have a large harvest and trade some food from a large can of kerosene for their lamps. When it is all used, instead of throwing away the can, they use it to store water for their trip to the local river. So now, because of this reuse of the can, they need to take less trips for their daily water, and have more time to work the land, thus enabling them to produce more, have more surplus, and trade for more kerosene – and the cycle goes on. It is our very innovative and productive uses for materials that cause as increase in consumption of them.

Another comment on the previous post is that a reduction in costs from recycling will not necessarily result in a reduced price of goods, but may be taken as profit. But what then will happen with the profits – they will inevitably be spent on some kind of consumption. This is the rebound effect, and it the reason I believe that recycling will generally lead to increased consumption of other resources. For example, even if recycling resulted in a reduced consumption of a single material/resource, because as a society we are not spending less on that material, we will be spend more on others.

Another thought experiment is probably helpful. Think of two households. One household sees kids in the other household using brand new paper for colouring, and offers some used (on one side) paper for the kids thinking that it will ‘save’ paper. The trade/gift takes place. Now the kids are colouring the back of old tax returns (or something). But has this decreased consumption of paper, or resources as a whole? Each household has the same income as ever, and therefore the ability to consume goods. The money saved by using old paper for the kids colouring is simply going to be spent elsewhere. Not necessarily on paper of course, but on some resource – maybe fuel for the car for a trip to the coast?

This type of flow on effect is why I believe the message that recycling cannot reduce resource consumption in total is so important. When one resource becomes very expensive as natural limits are reached, it stimulates substitution of that resource with another. When many of these limits are reached, total production may begin to fall unless we can use the limited quantity of inputs more efficiently. But if recycling encourages more resource consumption in total, we are simply accelerating our approach to these limits.

What about a ban on recycling then? Would this be more effective? It would drive up the prices of some raw materials, subsequently driving up the price of final consumer goods, which means we would consume less of them. But of course this price rise would encourage substitution towards other cheaper materials. If we banned glass recycling, for example, we might see more plastic bottles and cans.

Maybe we should not get too carried away with our passionate environmental stance until we get to the bottom of things.


  1. This response was writen in response mainly to part 1 although i think my point is still valid.

    You make a good point Cam. Where the cost of producing a product like a can, bottle or cardboard box for a private company exist only for the sourcing of materials (say from the ground) and transport and sale of the product can be cheap. The cost of recycling that material back into use will quite obviously be higher and thus subsidised by the government, thus creating a competitive product for the other industries.
    Although perhaps the subsidy provides an economic benefit for the government in the first place. To produce the material has a cost but so does the safe disposal of said object, this responsibility lies in the governments hands. What is the cost of disposal of said objects, to answer this you might need to consider; transport from bin collection to refuse area, cost of occupying said refuse area, cost closing of refuse area for a safe amount of time before release, the cost of decontaminating the area of harmful by-products of decomposition (lawsuits against improper disposal). Again another angle could be considered here and that is the environmental impact of discarding to landfill or as New Yorks garbage disposal, the ocean. Anaerobic decomposition of waste creates large amounts of greenhouse gases, the most important being methane and nitrogen oxide.
    What would be the cost put on discarding waste that could otherwise be used for recycling and does this cost equate? Perhaps as an Economic Environmentalist this angle should be considered.

    Where there is economic opportunity there is also an economic responsibility.

    Paul M

  2. I'm kind of seeing where Paul is coming from...

    Most economists don't put value on the environment. I know it's a debate in itself..

    I heard a conversation the other day that went - "They should have just built the highway through Daisy Hill, it would be cheaper in the long run and also reduce pollution" But what value is being given to the few remaining Koala habitats / recreational parks in close vicinity to the city? How is that being valued?

    So again if you banned recycling it might force the destruction of more natural resources that could have been saved by recycling. But then you would say "but that encourages more consumption". But it would also encourage innovation etc.

    I think a line/value has to be set in what nature etc. needs to be conserved. If a $ is attributed to a tree maybe recycling will always be more economical than more resource extraction!