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MATERIAL FLOWS IN FIGURE 1 A Post-consumer waste to environment B Producer waste to environment C Extraction waste to environment D Environmentally recycled waste. E Consumer residuals recycled to the production sector F Consumer residuals recycled to the consumer sector G Home, prompt, or industrial scrap H Primary, raw or virgin materals to extractive sector I Primary, raw or virgin materials to production sector J Final goods or finished products. K “Urban ore" to production sector The dashed line separates the economic sector from the environmental sector. Many of the problems which greater recycling may ameliorate take place on this interface. Through H flow virgin materials, sometimes called primary or raw materials. As materials are appropriated from the environment and introduced into the economy, we ask what is the proper amount of conservation, what are the obligations of mining companies to reclaim stripped land, and how do we decide between using land as a wilderness area or the preemptive alternative of timber and mineral extractions? Greater recycling tends to diminish some of the conflict in such questions, which have to do with common property resources (not only at a moment in time, but also across generations), mutually exclusive uses of environmental assets, and irreversibilities.

At the other end of the economy, materials (A, B and C) are disowned and flow back into the environment. At this boundary solid waste takes on the fundamental characteristic of a pollution problem. Costs are transferred from those who benefit to those who happen to be in the way or who otherwise bear the burdens. Those who benefit are the ones who generate waste and those who bear the cost may

be pedestrians who breath automobile fumes, downstream users of polluted water, or the taxpayers who finance city dumps. The trend from returnable to non-returnable bottles is a well known example of a shift of costs from those who benefit to the public at large. “Convenience packaging" is convenient to the individual beverage consumer who transfers the cost of disposal to the public agency which picks up litter or collects a larger volume of municipal solid waste.

It is tempting to think that waste flows associated with making a product are small residual flows. Unfortunately the situation is often just the reverse. Waste flows B and C, generated in the process of making a particular product in flow J are often hundreds and thousands of times the volume of the product. In the aggregate product residual flows B and C dwarf the aggregate of product flows J.

Of the three waste flows, A, B and C, the flow from the extractive sector, C, is by far the largest in tonnage. Until recently the 2 percent of the solid waste stream that ends up in municipal dumps was looked upon as a far more important problem than the 98 percent which represented agricultural wastes, mining, and timber residues. However, with the concentration of cattle in feedlots, the increase of fertilizer and pesticide runoff, and the increase in ratio of waste to mineral resulting from mining lower grades ores, the socially borne costs of

waste flows from the extractive sector to the general environment are becoming larger. Nonetheless, the principal focus of governmental efforts remains to manage the waste which flows into municipal dumps. A widely held view of the solid waste problem is that the municipal dumps are not sufficiently large and "modern” to accommodate waste flows A and B.

Of the four recycling flows, D, E, F and G, the flow of scrap inside the industrial sector, G, is by far the largest. Scrap which is recycled directly, not leaving the mill or bought or sold, is home scrap. Home scrap is usually a single unvarying material of known quality little different from the primary product. Because it is a nearly free substitute for the raw material, home scrap is often recycled at high levels. The GSA ruling to exclude paper fiber before the point of first cutting was an attempt to exclude home scrap, which in the paper industry is customarily recycled without any special incentive.

The dividing line between home scrap and the virgin flow material is often somewhat arbitrary. For example are wood chips home scrap or a form of the virgin raw material for paper making? Is a catalyst, which is literally recycled millions of times, a form of home scrap? The distinction between home scrap and the virgin raw material becomes important when subsidies are considered for scrap materials. With a subsidy on all forms of scrap there is an incentive not only to relabel "scrap what was previously called raw material. There is also an incentive to convert virgin material into scrap at some expense to the firm as long as the expense is less than the subsidy obtained. Without a subsidy on scrap, home scrap is already 25% of a “new” aluminium ingot, with a subsidy there would be a tendency to spill more metal and trim more metal to increase the volume of home scrap.

Prompt scrap, sometimes called converting residuals or industrial scrap, is much like home scrap. The dividing line between prompt and home scrap is again somewhat arbitrary, usually the distinction is made that prompt scrap is sold, while home scrap moves under the single "roof” of a firm, without sale. Skeletons left over from stamping out can tops from sheet metal are of the same material and can be easily recycled. In many cases a dealer collects prompt scrap from several fabricators, concentrates it and transports it to a producer. Because dealers must wait for, and act upon, favorable prices, dealers' inventories are very volatile and price sensitive.

A subsidy on prompt scrap, and not home scrap, would lead to more sales of scrap; that is, more home scrap would be converted into prompt scrap. And again with the value of home scrap indirectly increased there would be an incentive to convert virgin raw material into home or prompt scrap. Because the virgin material, home scrap and prompt scrap are basically the same material, these substitutions are feasible.

Home scrap and prompt scrap can be distinguished from other kinds of waste flows which are very different from the primary product. These waste substances, sometimes called process residuals, are much more likely than home or prompt scrap to be released into the environment, where they may become air or water pollutants or solid wastes. While many process residuals are in liquid or gas form, many are in solid form as well, and it is a mistake to think of waste restricted to a

particular medium-air, water, or ground—because waste material often changes form and its medium. In fortunate cases pollution controls, whether standards or fees, will transform unwanted process residuals into useful byproducts.

Material flowing in E, F and A is called post-consumer scrap. Flow F includes the second-hand market as well as private gifts and sales of clothes, pianos, cars, houses and other consumer durables. Generally, when people recommend more recycling to lessen the solid waste stream A, they are thinking of increasing E in order to decrease A. At present E is a relatively small flow. There are two main reasons why E is small. (1) As post-consumer waste is generated in millions of households, it is widely scattered and expensive to collect. (2) Once collected, materials are often mixed one with another. Separation is expensive, even more so when contaminants vary from one collection to another. Relative concentration and freedom from contaminants make old newspapers a prime target for recycling. Uncontaminated paper can be recycled into a high grade paper, but contaminated paper may be suitable, in its technical specifications, only for low-quality products, such as roofing felt, where the product price is low and the market already saturated.

Sometimes when people recommend recycling they are thinking of "mining urban ore;" that is, mining the dumps to increase flow D. However, in mining urban ore, the costs of collection remain and the costs of separation are often larger than those associated with direct recycling E. An oft-cited figure is that 80 percent of the $8 to $30 a ton cost of “solid waste management” (flow A) is collection and transportation cost; the remaining 20 percent is incineration, landfill or other management of the dump. Thus the cost of collection is not avoided by mining “urban ore.” The collection costs in A still remain. The problem of separation is greatly increased, compared with E, because for A materials are compacted and then thrown on the dump. Nonetheless, these two difficulties are at least partially offset by the opportunity to use large scale, capital intensive processes made possible by large volumes of mixed solid waste. Whether or not technology more than offsets the greater separation problem is a question of great interest and underlies the debate of whether or not to "separate at the source”—whether to encourage A and D or to encourage E. One difficulty with “mining urban ore” appears to be that only a small fraction of the waste volume is recoverable into usable products, and these products tend to be low-valued ones, such as glass and roofing felt. There is a question of how much of these products could be absorbed by the economy if there were many large scale “mines” processing mixed solid waste.

Another problem in terminology should be pointed out. The term post-consumer, conflicting with economists' usage, is sometimes used to include commercial scrap. Such scrap-used IBM punch cards for example—is not post-consumer, in an economic sense, because commercial scrap is waste material from intermediate, not final, products. Likewise, the final product of a supermarket is food, not the corrugated paperboard boxes piled up in back, which are scrapped intermediate products. The GSA definition of post-consumer scrap, cited

above, includes some commercial scrap. With the inclusion of commercial with consumer scrap, most of the recycled “post-consumer" scrap is not E or F, but G. Scrap dealers prefer commercial scrap to consumer scrap because it is of known quality generally uncontaminated, and concentrated in volume at the source. Obsolete is a more descriptive term than post-consumer for material, from either the consumer or producer sector, which becomes scrap after its intended final use.

As described above, GSA developed a definition of recycled paper partly in terms of a material's flow path. An alternative is simply to enumerate commodities which are “normally” reused. Because the Interstate Commerce Commission (ICC) sets freight rates commodity by commodity, it was natural for it to define recycling in terms of commodity name. In 1972 several environmental groups, including a law student group called SCRAP, brought suit against the ICC for allowing rate increases which were alleged to be discriminatory against recycled material without making an analysis of environmental impact as required by NEPA. When the Federal District Court upheld an injunction against temporary increases for recycled material, the ICC published a list of commodities which were “recycled.” EPA also made recommendations as to what commodities should be added to the list. The idea was to label as recycled those commodities which generally have been recycled in the past. In a sense the idea was just the reverse of the goal of GSA. GSA wanted to identify material that was not being recycled and then to subsidize its recycle. The ICC was enjoined to identify material that was already being recycled and then to make sure it was not being discriminated against in comparison to virgin material.

Closely related to definitions of recycling are definitions of solid waste. In its regulations concerning tax-free industrial development bonds for recycling facilities, the Treasury produced a definition in terms of price.

[Solid waste property must be] useless, unused, unwanted, or discarded solid material which has no market or other value at the place where it is located. Thus, where any person is willing to purchase such property, at any price, such material is not waste.

Price, of course, has a strong influence upon which flow a material ends up in. A material bearing a zero price is very likely to leak into the environment because then transportation and disposal costs are avoided. Such “disowning” happens all the time. Consumer litter varies from candy wrappers to automobiles; producers disown material by means of smokestacks and discharge pipes; in the agricultural sector vast quantities of pesticides and fertilizers are disowned through runoff and other entropic processes, and in the mining sector enormous quantities of material are disowned by smokestacks and acid mine drainage. A basic rule of thumb is: whenever in a long chain of material flows price dips to zero, the material is subject to a push into the environment.

The purpose of tax-free municipal bonds for waste treatment was to help prevent zero-priced waste from leaking into the environment by making it less costly to recycle. But a definition of solid waste based on

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