-59 In many cases there may be a sound policy reason for considering the limitation of salvage value in favor of some other parameter or complex of parameters. Thus the goal should be an optimal and not a necessarily maximal salvage value. Increasing salvage value thus only makes good sense if the present salvage value is below the optimal value. 3.2 Salvage Value and Virgin Raw Materials The salvage value of an item whose highest economic value lies in the use of its component materials as raw materials in another industrial process is a function of a variety of factors such as: the level of demand for the raw material in question. As expected, salvage value and percent recycled of the available amount of precious metals (75%) is greater than the percent recycled of steel (26%). Interestingly, it is less than the percent recycled of stainless steel (88%). the technological limitations of using reclaimed materials in the manufacturing process. This will vary according to the type of raw material, its relative purity and reliability, and the demands of the existing production technology. -60 the nature and structure of the demand market dustries as opposed to the manufacturing industries Robinson, Lowell. "Rubber Reclamation from Municipal Waste", Markets for Solid Waste, New York Council on the Environment. ** Interstate Commerce Commission, Ex Parte 281: Increased Freight Rates and Charges, Petition to vacate Commissions Order dated October 31, 1972. (Filed by National Association of Secondary Material Industries, Inc.) -61 by the Internal Revenue Code (principally Sections the available short-run and long-run supply of virgin The relatively low levels of percentage recycling among ferrous and non-ferrous metals tends to suggest that there is at least one major factor in those listed above which probably distorts the operation of free-market forces by not permitting -62 the free flow and operation of recycled ferrous and non ferrous reclaimed metals, and of recycled rubber from tires. The following Table sets out the present resource recovery rates for such materials: Source: Battelle Memorial Institute, A Study to Identify Opportunities For Increased Solid Waste Utilization, 1972. -63 The resource recovery rate for passenger tires is projected to decline from 30.9% in 1968 to 27.7% in 1974.* There appears to be a subsidy of a substantial nature granted by the operation of the Federal tax laws to industries engaged in extraction or mining of ferrous and non-ferrous metals. This subsidy tends to operate as a major hinderance to the efficient and orderly circulation and use of reclaimed raw materials in the economy. The percentage depletion allowances, as stipulated in The depletion allowance for iron ore and copper ore is ⭑ Robinson reference on page 60. ** U.S. Department of Treasury, Tax Reform Studies and Proposal, 1969 |