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Paper Grocery Bags Require More Energy Than Plastic Bags

skaidra@reason.org (Skaidra Smith-Heisters) — Thu, 17 Apr 2008 00:00:00 EDT

Whole Foods Market won't offer plastic shopping bags at their stores after Earth Day this year. It is a savvy move for the upscale natural foods retailer, who estimates that by the end of the year the policy will have averted use of 100 million new plastic grocery bags at their 270 stores. It won't save the company any money-since the paper and multi-use bags that will replace plastic bags at their stores cost more to manufacture, stock and handle-but it is a savvy public relations move that will likely help to soothe the guilty environmental consciences of devoted Whole Foods shoppers who, like most Americans, believe paper bags are environmentally superior to plastic bags.

Unfortunately, the reality is that paper isn't better than plastic.

One hundred million new plastic grocery bags require the total energy equivalent of approximately 8300 barrels of oil for extraction of the raw materials, through manufacturing, transport, use and curbside collection of the bags. Of that, 30 percent is oil and 23 percent is natural gas actually used in the bag-the rest is fuel used along the way. That sounds like a lot until you consider that the same number of paper grocery bags use five times that much total energy. A paper grocery bag isn't just made out of trees. Manufacturing 100 million paper bags with one-third post-consumer recycled content requires petroleum energy inputs equivalent to approximately 15,100 barrels of oil plus additional inputs from other energy sources including hydroelectric power, nuclear energy and wood waste.

Making sound environmental choices is hard, especially when the product is "free," like bags at most grocery stores. When the cashier rings up a purchase and bags it in a paper bag, the consumer doesn't see that it took at least a gallon of water to produce that bag (more than 20 times the amount used to make a plastic bag), that it weighed 10 times more on the delivery truck and took up seven times as much space as a plastic bag in transit to the store, and will ultimately result in between tens and hundreds of times more greenhouse gas emissions than a plastic bag.

Biodegradable bags don't fare much better than paper bags; in a recent life cycle analysis, one type of compostable plastic bag was found to use somewhat less total energy and generate less solid waste, but represent more fossil fuel use, greenhouse gas emissions, and fresh water use than the comparable paper bag.

Part of the invisible cost of shopping bags is passed down to consumers as retailers recoup the price they pay for the bags-pennies in the case of plastic, a nickel or a dime for paper bags (ones with handles cost more), and the same or more again for biodegradable plastic bags. Costs like greenhouse gas emissions and air or water pollution might eventually be captured in a carbon tax, cap-and-trade scheme, or regulatory fee (again, ultimately passed down to consumers, whether they are aware of it or not). Still other costs are borne by the public (e.g. litter pick-up) or in less calculable ways (e.g. diminished aesthetic values or impacts to marine animals).

The good news is that, given a choice between plastic, paper and multi-use grocery bags, most people make the best available environmental choice: whichever bag they are most likely to reuse. In an informal online MSNBC survey last month, 38 percent of respondents said reusability was the most important factor in choosing what type of grocery bag to use. The plurality, 41 percent, choose plastic. Twenty-eight percent reported that environmental concerns were their top consideration and-unfortunately, given the comparative life cycle analyses-56 percent believed that paper is more "environmentally friendly."

The vast majority of people reuse "single-use" plastic bags for household tasks like bagging garbage and cleaning up messes. Ireland's plastic bag tax, initiated in 2002 to combat the aesthetic impacts of litter on tourism, virtually eliminated the use of the targeted bags but also resulted in a 77 percent increase in the sale of kitchen garbage bags. San Francisco's first-in-the-nation ban on non-biodegradable plastic bags last year surely has had similar rebound affects.

Nationwide, the most recent Environmental Protection Agency data show recycling rates for broad categories that include paper and plastic grocery bags to be 25 and 9 percent, respectively. The recycling rate for plastic is growing quickly under the pressure of new mandates and markets. The actual amount recovered nationwide doubled between 2005 and 2006. Most of the plastic bags recycled are reclaimed for use in the United States or Canada to manufacture decking, railing and fencing which replace the use of virgin forest products.

For those bags that aren't recycled, misconceptions about plastic and paper bags follow them all the way to their graves. In a landfill, paper bags, petroleum-based plastic bags and even degradable plastic bags share roughly the same fate. Modern landfills are managed for stability, not decomposition. Plastic bags can be better in a landfill because their compact size takes up the least space and, as opposed to biodegradable bags, they release zero greenhouse gas emissions.

Reusable shopping bags may be the norm at Whole Foods a year from now, but they're not for everyone in every circumstance. A multi-use plastic or durable bag is environmentally and economically cost-effective only if it is actually used multiple times. Some of these bags are recyclable or compostable, others are not. The basic principles of conservation apply here: the greenest individual choice is the one that results in the greatest actual reduction, reuse and recycling.

Less than a year after a law requiring grocery stores to accept plastic bags for recycling took effect, lawmakers in California are now proposing mandatory reductions in plastic bag use and up to a 25-cent charge for plastic grocery bags statewide.

Those who are cognizant of the environmental realities of the paper versus plastic debate, but nevertheless believe providing complimentary plastic bags at grocery stores should be illegal, cling optimistically to the idea that plastic grocery bags can be erased from the environmental equation without unintended consequences. At present, the only honest assessment is that a plastic bag ban is a de facto paper bag mandate, and increased use of paper bags means an increase in environmental ills including air and water pollution, greater energy and water use and higher greenhouse gas emissions.

In a sense, the persistent view of plastic bag use as emblematic of the nation's progress on environmental issues is right for the wrong reasons. It shows how far good intentions coupled with bad information can lead us astray.

Recycling Law Needs to be Thrown Out

skaidra@reason.org (Skaidra Smith-Heisters) — Thu, 24 Aug 2006 00:00:00 EDT

Recently it was reported that the Integrated Waste Management Board cut electricity use at their Sacramento headquarters by 8 percent, just by having janitors work during the day so that the lights could be turned off at night. The office building in question houses the state's environmental boards and departments, and the Environmental Protection Agency's website describes many of the "stat-of-the-art" (sic) features that make it "among the world's most energy and resource-efficient buildings." If the building is a metaphor for the agency it houses, the fact that cleaning up the agency's act was, literally, as simple as changing the way it takes out the trash is very telling.

It also makes us wonder what other barriers to the state's resource-efficiency might be right under our noses.

Ironically, you don't have to look any farther than an odd California anachronism that attempts to regulate not just what we put in the trash, but what we put the trash in�the Plastics Trash Bag Law.

The Plastics Trash Bag Law is one of four major plastics-related laws intended to boost recycling rates in California. The marginal successes of these laws are offset by an unintended consequence: the laws also boost the use of plastic.

As the casual observer might note, California has never exactly had a trash bag problem. In 1993, legislators wanted to create a bigger market for recycled polyethylene, so they picked a manufacturer of plastic products and simply forced them to buy it. Thus, the Plastics Trash Bag Law was born. Since the law's enactment, trash bag manufacturers have been required to utilize ten to thirty percent recycled plastic in all trash bags intended for sale in California, with all manufacturers reporting to the state on an annual basis for certification.

Of course, if there was a ready supply of post-consumer polyethylene suitable for recycling into new trash bags, manufacturers would have already been using it. Trash bag manufacturers affected by the Trash Bag Law immediately found that post-consumer plastics were hard to come by, and the poor quality of the materials required meant the bags had to be extra thick, reinforced with plastic from virgin sources. Worse, other industrial manufacturers increasingly sought to buy from the same limited supply of post-consumer plastics to make popular recycled products such as plastic decking and siding.

In 2003, the Integrated Waste Management Board commissioned a study on how the state could optimize plastics use, recycling, and disposal. The researchers returned to the Board with a report that California's four major environmental laws relating to plastics are "flawed collectively and individually" and that California's Plastics Trash Bag Law, along with a similar law relating to rigid plastic containers, "essentially became ineffective and obsolete upon their final implementation."

The Integrated Waste Management Board estimates that trash bags constitute about 1 percent by weight of the municipal solid waste disposed of in California. Less than half those trash bags are subject to the Plastics Trash Bag Law, because they're made outside of the country or are exempt for other reasons. Even at one-hundredth of one percent, the inclusion of the small amount of recycled plastic in those trash bags would still be significant in terms of waste diversion in California�if it were not for market realities. But because the quantity and quality of post-consumer plastics necessary to meet demand under the law is not available from within California, manufacturers must import some of the post-consumer plastic from outside of the state.

All to make a trash bag worthy of being thrown away in California.

Consider how much more efficiency could be gained by allowing the market to direct the use of recycled materials�say, for instance, into products other than the one designed for no other purpose but to be thrown into a landfill?

Skaidra Smith-Heisters is a policy analyst at Reason Foundation, a free market think tank. An archive of her work is here. Reason's California-related research and commentary is here and Reason's garbage-recycling research and commentary is here.

Variable-Rate or Pay-as-you-throw Waste Management

info@reason.org (Lisa Skumatz) — Mon, 01 Jul 2002 00:00:00 EDT

Executive Summary

As landfills fill up and recycling opportunities increase, more communities across the nation are interested in reducing waste disposal and its costs. City managers are considering a variety of strategies to improve incentives to recycling and composting, as well as increasing the variety of materials that can be recycled or composted.

Currently, in most parts of the country, garbage is removed once or twice a week with revenues coming from one of two places:

A portion of property taxes; or
A fixed bill amount that does not vary with respect to the amount of garbage taken away.

Neither method provides an incentive to reduce waste. In fact, with the property tax method of payment, customers never even see a bill and generally have no idea how much it costs to remove their garbage regularly. Areas using this method of payment have sometimes implemented mandatory recycling programs to reduce their amount of garbage.

Variable-rate pricing, or “pay as you throw,” is a new strategy with a growing number of advocates. Under a variable-rate system, customers are provided an economic signal to reduce the waste they throw away because garbage bills increase with the volume or weight of waste they dispose. Variable-rate pricing is being adopted in thousands of communities to create incentives for additional recycling in the residential sector. Variable-rate programs are very flexible and have been implemented by communities in many forms. The most common types of variable-rate programs are can programs, bag programs, tag and sticker programs, and hybrid programs. Other less common programs include weight-based rates. Each program type is briefly summarized below.

Can Programs. Customers select the appropriate number or size of containers (one can, two cans, etc., or 30–35 gallons, 60–65 gallons, etc.) for their standard weekly disposal amount. Residents who use larger cans or numbers of cans are charged more.
Bag Programs. Customers purchase bags imprinted with special logos ahead of time, and waste must be put in the appropriate bag (i.e. yard waste, recyclables, regular “wet” waste, etc.). The price of the bag incorporates the cost of the collection, transport, and disposal of the waste.
Tag and Sticker Programs. These programs are almost identical to bag programs, except instead of using a special bag, customers affix an appropriate sticker or tag that identifies the type of waste they are disposing.
Hybrid Programs. These programs form a hybrid of the current collection system and a new incentivebased system. Instead of receiving unlimited collection for payment of the monthly fee or tax bill, the customer gets a smaller, limited volume of service for the fee. If the customer needs to dispose of additional waste, there is an additional charge such as a fee per bag or additional container.
Weight-based Programs. This system uses a modified scale on trucks to weigh garbage containers and charge customers based on the actual pounds of garbage set out for disposal. On-board computers record weights by household and customers are billed on this basis.
Other Variations. Some communities or haulers offer variable rates as an option along with their standard unlimited system. Waste drop-off programs, that use punch cards or other customer tracking systems, are also in place in some communities.

Some systems are more appropriate than others, depending on local conditions. Larger communities and urban and suburban communities tend to use can programs. Smaller communities and more rural communities are more likely to use bag, tag, or sticker programs. Bag and drop-off programs are most prevalent in the East, can and bag programs are most common in the Midwest and the South, and can programs are the most popular in the western U.S.

Each type of variable-rate system has strengths and weaknesses. Key advantages and concerns are discussed in the following sections of this study. The factors driving the growth in each program are presented. The study also provides information on appropriate program selection, implementation issues and tips, and rate setting.

This study demonstrates that rate incentives in solid waste have strong and measurable effects on waste disposal behavior and waste disposal. Towns implementing variable-rate programs can expect to see reductions of more than 15 percent in tons disposed, with increases in recycling, yard-waste diversion, and measurable impacts on the highest rung on the waste-management hierarchy: source reduction.

Ultimately, variable rates can help reduce the burden on the disposal system and lead to more efficient resource use, reduced environmental burden, and lower long-run solid waste system management costs. The programs enhance community recycling and waste reduction programs. While these programs may not be appropriate in all communities, many communities can benefit from variable rates. This report offers guidance to communities wishing to examine the feasibility of variable rates for their solid waste systems.

"Pay-as-you-throw" Waste Management

info@reason.org (Lisa Skumatz) — Mon, 01 Jul 2002 00:00:00 EDT

Executive Summary

Currently, in most parts of the country, garbage is removed once or twice a week with revenues coming from one of two places:

A portion of property taxes; or
A fixed bill amount that does not vary with respect to the amount of garbage taken away.

Variable-rate programs are very flexible and have been implemented by communities in many forms. The most common types of variable-rate programs are can programs, bag programs, tag and sticker programs, and hybrid programs. Other less common programs include weight-based rates. Each program type is briefly summarized below.

Can Programs. Customers select the appropriate number or size of containers (one can, two cans, etc., or 30–35 gallons, 60–65 gallons, etc.) for their standard weekly disposal amount. Residents who use larger cans or numbers of cans are charged more.
Bag Programs. Customers purchase bags imprinted with special logos ahead of time, and waste must be put in the appropriate bag (i.e. yard waste, recyclables, regular “wet” waste, etc.). The price of the bag incorporates the cost of the collection, transport, and disposal of the waste.
Tag and Sticker Programs. These programs are almost identical to bag programs, except instead of using a special bag, customers affix an appropriate sticker or tag that identifies the type of waste they are disposing.
Hybrid Programs. These programs form a hybrid of the current collection system and a new incentivebased system. Instead of receiving unlimited collection for payment of the monthly fee or tax bill, the customer gets a smaller, limited volume of service for the fee. If the customer needs to dispose of additional waste, there is an additional charge such as a fee per bag or additional container.
Weight-based Programs. This system uses a modified scale on trucks to weigh garbage containers and charge customers based on the actual pounds of garbage set out for disposal. On-board computers record weights by household and customers are billed on this basis.
Other Variations. Some communities or haulers offer variable rates as an option along with their standard unlimited system. Waste drop-off programs, that use punch cards or other customer tracking systems, are also in place in some communities.

Future of Waste Technology

info@reason.org (Lynn Scarlett) — Wed, 07 Feb 2001 00:00:00 EST

Solid Waste

As we settle into the new century, waste management pundits are gazing into their crystal balls to describe the future of waste technology, infrastructure and programs. These forecasters fall into two camps�the incrementalists and the visionaries. After a century of incremental changes in waste management, it might seem safe to bet on the incrementalists. That would be a mistake. Big systemic changes may be on the horizon.

Futurism is perilous, because imagination is always bounded by past trajectories and present experiences.

Prognosticators have a habit of being wildly wrong

Over a hundred years ago in a futurist project focused on the new century, one pundit predicted, for example, that during the 20th century the law would have been so simplified that the number of lawyers per capita would decline precipitously. Another thought the cost of political campaigning would plummet with the advent of radios and telephones. Most of these 19th century forecasters did not dream of commercial flying machines. Trains, they thought, would crisscross the United States and be the transportation mode of choice within cities and between them.

Even with technological know-how at hand, prognosticators misread their tea leaves. Alexander Graham Bell�s telephone, many thought, might become a household novelty for listening to music concerts. No one imagined it becoming a near-necessity in daily discourse.

Bell Laboratories invented the transistor in 1947. They figured—sometime way in the future—it would replace vacuum tubes in consumer electronics. But Akio Morito, president of a near-unknown Sony Corporation in Japan, had other ideas. He paid a trivial $25,000 for a license for the Bell Lab transistor. Within a few years, Japan had captured the radio market with a technology that proved revolutionary, not incremental.

But why expect transformational changes in waste management?

After all, Bruce Parker of the Environmental Industries Association is correct to observe that the history of 20th century waste management has been a matter of "improvements, add-ons, rather than technological changes." The industry, he observes in a Waste Age article, "is not a high-tech industry and never has been ... There's something very fundamental about the industry, just like they haven't improved on the zipper for design and functionality."

But Parker's lens is too narrow. True, since the dawn of civilization, mankind has had four options for dealing with waste. We could burn it, bury it, or transform it into usable materials or energy. Or, with forethought, we could avoid producing quite so many leftovers by changing production processes and consumption patterns. And it is true that those leftovers, once generated, usually must be collected and transported somewhere in order to be burned, buried, or transformed.

Technological changes that modify how we collect, cart, burn, or bury the waste are, as Parker notes, not really revolutionary. They are refinements. Into this category fall most of the inventions now in sight�bioreactor landfills, computerized hydraulics, optical scanners at recycling facilities.

Looking for transformation—in the right place

But, like his zipper example, Parker may be looking at the wrong place for the transformation. Zippers went through a series of improvements—what technology writer Henry Petroski calls "incremental variations and improvements on the same basic idea." But the revolution came not in the improvements of zippers. It came—in 1948—with the invention by Swiss tinkerer George de Mestral of Velcro, an invention inspired by a cocklebur de Mestral removed from his trousers after a walk in the woods.

The world of fasteners looks dramatically different today than when zippers were the fastener of choice. Zippers could fasten boots and clothes—and still do, though Velcro supplants them in many uses. But Velcro also could seal the chambers of artificial hearts or hold objects in place in orbiting spacecraft.

The revolution in fasteners lies not in some marvelous new zipper, but in the advent of an altogether new fastener. Velcro did not eliminate zippers. But it changed its market share and transformed the mix of available options.

Views on the future of the industry

It is just such a revolutionary transformation that the visionaries among the waste prognosticators envisage. Kay Martin, deputy director of public works for Ventura County, California sees the old waste infrastructure "�biomass and duplicate products currently produced by oil; they can take organics and convert them to energy." In a recent Waste Age augury, she foretells "new industries springing up in industrial parks, run by waste companies and waste processors, competing with landfills."

In the same Waste Age article, technology expert Jesse Ausubel foresees a world of industrial ecologists in which business strategies center on fusing "economics and ecology." In what I call a "viridian verge" industries will be minimizing waste—at the plant and in their retail products—and increasing their use of production residuals (formerly waste) as product and manufacturing process inputs.

Martin and Ausubel are on to something. Waste collection—and its burial grounds and pyres—may undergo only incremental changes of the sort Bruce Parker describes. But the revolution will, like the zipper tale, lie in the advent of new players. It will also lie in up front changes to industrial processes and products that alter the amount and mix of "rejectamenta" left over for old-fashioned waste managers.

This is no Pollyanna prediction

While Ausubel's world of industrial ecology and closed-cycle economies may still lie some decades away, the precursors to this future are already underway. When Chaparral Steel bought a cement company, the firm's management soon realized that the ash from their steel plant was an ideal input for the cement company. Building on that experience, they began looking for other synergies.

One example does not by itself signal a trend, but some folks from Chaparral Steel have gone on to create a new firm, Applied Sustainability. Its entire business strategy centers on bringing firms together to help them find synergies in which one firm's waste is another's feedstock.

Dell Computer has found a niche making modular computers than can be easily dismantled, reassembled, or upgraded—an endeavor with substantial potential to reduce electronics waste over time. Xerox redesigned its copiers for ease-of-disassembly and remanufacturing. Remanufacturing has become a $53 billion industry—trivial as part of the great U.S. economic juggernaut but a sign of what the future might portend.

Don't get me wrong. Trash trucks and landfills will be with us for a good long time. But don't bet on past trash generation trends to continue in a nice smooth line into the future. Don't bet on the two "b's", burning and burying, dominating the scene far into the future. And don't even bet on traditional low-tech recycling growing by leaps and bounds. Count, instead, on new kinds of transformation, new participants in waste transformation, and more industrial ecology. The driver won't be some ecological crisis. It won't be mandates. It will be competitive market forces.

Lynn Scarlett is president of Reason Foundation.

Industrial Ecology on the Horizon

info@reason.org (Lynn Scarlett) — Tue, 05 Dec 2000 00:00:00 EST

Solid Waste

In the mid-'90s, the waste industry engaged—again—in self-reflection. What would constitute a winning business strategy in the years ahead? At the time, poor returns on recycling activities had impelled many waste-management firms to laud a "back-to-basics" strategy—a strategy focused on familiar hauling and disposal activities. Gazing into my own crystal ball, I saw a different future, one in which waste firms would become "industrial ecologists." They would begin to offer their business customers waste audits and waste-reduction services. Recent trends confirm my guess. As Yogi Berra once quipped, "the future ain't what it used to be."

My initial prognostications encountered dubious head shaking. For a few years, the skeptics seemed to be right. Many companies retrenched, spinning off other environmental services, focusing on core hauling and disposal businesses, and viewing recycling merely as a different hauling pathway. But some signs point to a shift. A few firms are tiptoeing into waste auditing and waste-reduction services.

Waste auditing and reduction is gaining ground Waste Management, for example, has field-tested some standardized waste-reduction and recycling auditing procedures. Many property management and janitorial companies now include waste reduction and recycling among their services. Waste consultant Eugene Tseng reports that Waste Management has responded to these initiatives by helping to implement waste-reduction programs for businesses. Several waste management firms are working closely with large manufacturers to implement end-of-life product return programs to facilitate remanufacturing.

In California, the state's Integrated Waste Management Board embarked on a Waste Reduction and Recycling Technical Assistance Audit Program. Among other goals, the program's architects attempted to obtain data useful to local governments, haulers, and businesses interested in developing targeted waste-diversion programs. A number of haulers participated in the test program.

These waste-reduction efforts can yield substantial environmental benefits, ones often overlooked during the past 10 years in which recycling became the preferred "proxy" measure of environmental performance. As Tseng points out, a firm that manufactures 5,000 two-pound employee manuals each year will reduce paper consumption and waste by 10,000 pounds if it moves to electronic manuals in a computerized workplace. That same company will recycle 10,000 pounds less paper, an apparently negative outcome if bean-counting recycled tons is the measure of environmental success. But that reduction in recycling would actually represent an environmental improvement of fewer resources consumed and discarded. Without waste audits such opportunities can go unfulfilled—and unacknowledged in public-sector waste diversion programs.

Customer demand drives changes Waste-management firms operating under the old "haul and dispose" model generated revenues by handling more and more tons of waste. In many respects, this framework stood directly at odds with environmental goals of waste reduction. Hauling firms whose bottom line benefited from more waste had little interest in waste-reduction.

But waste management firms, like those in other industries, are largely driven by customer demand. As more and more businesses seek to reduce their costs through waste minimization and selective recycling, haulers that can apply their expert knowledge of where to look for waste-reduction opportunities will retain�or attract new—customers.

This slow evolution of the waste industry parallels changes elsewhere in the economy—changes in which sellers of "stuff" become sellers of knowledge. Some firms selling agricultural chemicals, for example, have begun to sell packaged programs and technology that reduce chemical consumption per acre. Others offer product "servicizing" in which they lease rather than sell equipment, then offer modular upgrades, and take the product back for remanufacturing at the end of its useful life. Dell worked out just such an arrangement in providing computers to at least one large firm.

A need for some elbow room here There is, however, a risk in all this emerging focus on waste auditing and waste-reduction services. That risk lies in the press by some policy watchdogs to transform market-driven trends toward industrial ecology into government-mandated programs. As firms, including those in waste management, look for new ways to add value to their customers by reducing waste, they need the market elbow room to "discover" what waste-reduction programs best achieve both economic and environmental goals in tandem.

Firms also need elbow room to decide what long-term business strategies best fit their capabilities. Even in a waste-minimizing context, hauling and disposal will fill critical waste management needs. Some firms may specialize in that niche, leaving the "knowledge services" of waste audits to others. But my own prediction of five years ago was that the waste industry would not long be immune from the industrial ecology strategies surfacing in manufacturing and other businesses. Major firms like Waste Management seem to be confirming that prediction.

Lynn Scarlett is president of Reason Foundation.

E-Waste Politics

info@reason.org (Lynn Scarlett) — Wed, 04 Oct 2000 00:00:00 EDT

Solid Waste

A decade ago, disposable fast-food packaging and diapers dominated the waste-watcher agenda. Now waste watchers are turning their sights on those engines of the dot.com economy, computers, and other electronics products.

Those taking aim at this latest waste-management target are pressing for new policies to promote electronics recycling, pay for electronics waste-handling, and reduce adverse environmental impacts of these Information Age discards. Mandatory product take-back programs, product bans, and recycling requirements all hover on the policy horizon.

But caution is in order. Though mandatory recycling, product take-backs, and bans arise from good intentions, they all risk increasing product and waste-management costs for consumers, limiting innovations, and provoking unintended environmental consequences.

Aboard the take-back bandwagon

Despite these potential pitfalls, recycling managers are increasingly climbing aboard a product take-back bandwagon. In September, Raymond Communications released results of a 42-state survey of state recycling managers. Asked about "extended producer responsibility" (EPR)—the policy jargon for product take-back programs—27 of 29 respondents to a question about EPR supported the idea.

Eight state recycling managers expect state policy initiatives to address electronics products within a few years. And "almost half—16—indicated there should be EPR legislation, advance disposal fees, or some other policy aimed at ensuring manufacturers do their part." The central issue? Money. State recycling managers trying to recycle electronics products face financial challenges—challenges that they believe electronics product manufacturers should help them overcome.

Some states have already launched their first electronics waste-policy salvos. Massachusetts became the first state to ban cathode ray tubes (used in televisions and computer monitors) from landfills. Others—such as Minnesota—are considering a product take-back requirement for electronics products. New Jersey launched a public recycling program for electronics waste in 1996 in Union County. In the mid-1990s, Rhode Island recommended a landfill ban.

But these policy initiatives should be put into some perspective. A European study of electronics waste estimated that they compose a modest 4% of the total municipal waste stream. U.S. levels are likely to be similar. Moreover, white goods (for example, refrigerators or washing machines), brown goods (televisions) and computer and related equipment make up about 70% of the total amount of electronics products in the waste stream (totaling 2.8% or so of the waste stream).

Electronic goods pose special problems

Still, their explosive entry into the marketplace makes computers a high-visibility target of waste managers. By the mid-1990s, approximately 70 million personal computers had found their way into homes and offices in the United States. The Electronic Industries Association estimates that 37% all households and 58% of worker households own at least one computer.

Their rapid obsolescence makes computers especially vulnerable to criticism in that they pose a waste problem of crisis proportions. An estimated 12 million computers end up each year in the waste stream, resulting in as much as 600 million pounds of waste. In 1998 alone, some 20 million personal computers became obsolete. Of these, about 11% were recycled. Perhaps an additional 3% were refurbished, resold, or given to nonprofit organizations.

Computers, along with other electronics products, pose some special waste-handling and recycling challenges. They often contain various heavy metals; they often use many different materials, which makes disassembly before any recycling imperative (and costly). Pilot programs to recycle electronic equipment show costs ranging from $0.19 per pound (in a New Jersey program) to over $0.44 per pound (in a one-day Massachusetts experiment).

Champions of mandatory recycling or product take-back programs note, rightly, that electronics products contain many materials that, if recaptured, have value. Yet some electronics products—for example, a small Walkman—yield little, or no high-value material. And the potential value of materials, once separated, is only part of the equation. The other critical part of the recycling equation is cost. Transport and disassembly costs can be high—as much as $10-$15 just to ship a computer, for example. Yet the residual value of materials in old electronic equipment may be as little as 1 to 5% of the original cost.

None of these factors is an indictment against electronics recycling, per se. There are opportunities to recycle some electronics products. And there are certainly opportunities for manufacturers to reduce the total environmental footprint of their product.

Manufacturers face challenges

But these efforts require flexibility, dynamic innovation, and an ability to tailor decisions regarding product discards to particular circumstances—in recycling, remanufacturing, and reuse decisions, it is nearly always the devilish details that matter. Materials selection, for example, involves a complex set of trade-offs as manufacturers strive to meet multiple performance criteria. Mandates that set recycling rates, ban altogether the disposal of particular products or materials, or require product take-back plans generally override these devilish details. The result may be less value to the consumer, higher waste management costs, and negligible environmental gains.

The noted Greek philosopher Heraclitus once opined that "all is flux; nothing stays still." So it is with the marketplace. Many manufacturers are beginning to address the very waste challenges that state recycling managers are now wringing their hands over.

Through its "designing-for-environment" efforts, Compaq eliminated ozone-depleting substances from its manufacturing processes and minimized waste generation and energy use in manufacturing. It also made its product more energy efficient, resulting in worldwide energy savings as high as $60 million for products sold in 1995 alone.

Hewlett-Packard now refurbishes and resells computers under a full-warranty. Apple Computer works with a third party to refurbish Apple equipment. Digital Equipment Corporation refurbishes and upgrades equipment. Xerox employs a remanufacturing strategy for its copiers—a strategy that has saved the firm almost $200 million in materials and parts costs in less than five years.

Most major electronics and computer manufacturers now have environmental design initiatives. Many computers now can be partially upgraded; some can yet be traded in for newer models. Dell has a pioneering computer leasing and take back program.

Regulatory barriers

Minimization of some regulatory barriers may go further to nurture these design-for-environment initiatives than product take-back or recycling mandates. For example, current hazardous waste regulations can increase costs associated with recycling some materials. The much ballyhooed Basel Convention, which restricts international waste flows, can limit the ability of those engaged in refurbishing and recycling used electronics products from shipping these products across national borders. Superfund liability still deters some firms from sending materials to a facility for recycling, since they can be found liable under Superfund as an "arranger" if that facility later develops clean-up problems. And the Federal Trade Commission considers selling products with reconditioned parts deceptive unless sold with labels indicating their use.

State recycling managers understandably want funds to support their programs. But, like other local services, such program costs are best paid for through user fees—fees paid by the consumers who use products and make personal choices regarding if, when, and how they discard those products.

Lynn Scarlett is president of Reason Foundation.

Garbage Mess: Private Sector is Cleaning Up

info@reason.org (Geoffrey Segal) — Tue, 12 Sep 2000 00:00:00 EDT

Investors Business Daily

Remember the "garbage crisis" of the 1980's, when the forlorn garbage barge, full of New York city�s trash, cruised up and down the East Coast looking for somewhere to dump its load. While it littered the headlines a decade ago, you hardly hear about it anymore. In fact, the "crisis" of insufficient landfills went away, almost unnoticed, and the nation now has more landfill space than ever before. Thanks to a government program? Nope. In addition to recycling programs, a factor that played a significant role in addressing this crisis was that the private sector got into the business of running solid-waste disposal facilities.

Private sector landfill management has dramatically improved the efficiency of landfill operations, lessened their environmental impact, and saved cities countless amounts of money in the process. However, a handful of governors want to derail this move in a classic NIMBY (Not In My Back Yard) move, by re-initiating "flow control", the placement of limitations on the interstate trade of trash.

Over the last decade, city and county governments have turned over their solid-waste operations to private companies at a vigorous pace. According to a recent survey by solid-waste consulting firm, R.W. Beck, 27 percent of municipalities with populations greater than 100,000 are considering privatizing their landfill. Another survey showed that more than half (17) of the nations 30 largest cities have already privatized their landfills, and two others contract out their landfill operations.

But why the sudden change? What gives the landfill industry the edge that lets it grow so fast? A major contributing factor is that private firms are much better situated to address the regulatory and financial challenges of the modern solid-waste industry.

In 1976 federal regulations were established to minimize environmental impacts of landfill operation. But two results of these regulations have been rising landfill costs and the closure of "unfit" sites—mostly thousands of small government-owned landfills. This dramatic increase in capital and operational costs of solid-waste disposal made larger, regional "megafills" more cost effective and accelerated privatization.

While larger landfills are more environmentally friendly because of the reduction in the amount of smaller sites, they also cost a great deal more money to build. This is a difficult hurdle for local governments to overcome; however, a solid waste company can finance the megafill, find an acceptable location, and build and operate it serving any willing governments in the region.

Private companies are interested in profit and focus a great deal of attention on efforts to reduce costs, and thus, improve efficiency. Private companies can also raise capital more easily than local governments, without the use of unpopular taxes to raise revenue. Finally, private landfills are held to a higher standard of environmental regulations than local governments. And municipal and county contracts hold landfill operating companies accountable for inadequate performance.

By privatizing operations, government officials become consumers, shopping around for the best price and service. Contracts set service and performance standards, often giving them more control than they typically have over their civil-service employees. Privatization also helps cities cut costs, eliminate debts, and reduce their risk of liability. All of these conditions created fertile ground for the privatization revolution we are now witnessing.

Despite the many benefits of landfill privatization, the revolution is not without critics. In the 1980's, private sector participation was threatened by "flow control", or local government requirements that all trash in a jurisdiction go to government facilities. Eventually flow control was struck down by the Supreme Court the trash trade was protected by the Commerce Clause of the Constitution. Even so, several governors from trash-importing states are lobbying Congress to implement a new version of flow control, which would limit the 'flow' of trash across state lines.

Virginia Governor, James Gilmore, is leading the charge for flow control. Virginia, the second largest trash importer, receives most of its imports from New York. Recently, more and more trash has been diverted from NYC's Fresh Kills Landfill, which is set to close. To solve the impending environmental situation, NYC has invested in a series of transfer stations, to haul waste across the eastern seaboard. Flow control places these and similar efforts around the country in jeopardy.

But this isn't just a New York issue. Cities and counties around the country rely on importing and exporting trash, often utilizing the private sector. In fact 49 states export and 45 states import municipal solid waste. Since 1990 interstate shipments of waste have increased 30 percent, during which time real disposal costs have fallen. If advocates of flow control have their way, these gains may be lost.

We should savor and embrace the market for trash. Governors already have vast regulatory authority to control and prevent any negative impacts of landfills. Congress needs to see flow control for what it is, NIMBYism. If advocates of flow control succeed, the sure results will be less competition and higher prices. More important, the environmental and efficiency gains that competition and landfill privatization ushered in may blow away like a plastic bag in the wind.

Geoffrey Segal is director of privatization and government reform at Reason Foundation

Diversion and Consolidation

info@reason.org (Lynn Scarlett) — Fri, 04 Aug 2000 00:00:00 EDT

Solid Waste

An old French saying cautions that "the more things change, the more they stay the same." So it is in solid waste management. Over the last decade, management of municipal solid waste (MSW) has experienced some rapid, substantial changes.

The 1990s became the Diversion Decade, as cities, responding to state laws and public sentiment, embarked on aggressive recycling and composting programs. The '90s also became the Era of Consolidation as big waste firms gobbled up smaller ones. But, for all the changes that occurred, familiar themes dot the waste management landscape.

Landfills are alive and well and...

Landfilling, for example, remains the dominant waste-management tool. Sure, the national waste diversion rate (recycling and composting) had climbed from below 20% in 1990 to nearly 30% by 2000. But most waste still ended up in landfills.

Moreover, this reliance on landfills is likely to continue well into the future. Paraphrasing Mark Twain, reports of the death of landfills are greatly exaggerated. Though the number of landfills has dropped precipitously, capacity remains steady—or has increased. In 1990, just less than 8,000 MSW landfills existed. Today, BioCycle magazine puts the tally at 2,216. A decade ago, predictions of plummeting numbers of landfills were thought to augur skyrocketing tip fees and a landfill capacity shortage. But statistics mislead. What the landfill bean counters missed was the evolution to larger and larger landfills. The typical new landfill was at least four times larger than the traditional small-town landfill that closed down. Though specific local areas face landfill-capacity constraints, most localities have access to adequate space in which to unload their trash.

A scan of the various states confirms this assessment. Though one state, Massachusetts, reports less than two years of remaining capacity, most states report 10 to 40 years of remaining capacity. Montana reports having over 1,500 years of remaining landfill capacity. And adequate capacity has generally translated into relatively stable tip fees. Though tip fees vary widely from location to location, most hover between $20 and $40 per ton. Tip fees in a few areas in the Northeast (and Alaska) exceed $60 per ton. These fees are not wildly different from fees in the early 1990s. Landfilling, then, remains a competitive and available waste management option.

Competition is robust

A quick look at the solid waste management landscape shows another familiar feature—diversity. As in 1990, location matters. While tip fees have remained relatively smooth within specific locations, they vary widely across locations. Average tip fees in Oklahoma are a mere $18 per ton; in Vermont tip fees average $70 per ton. Some states—such as Wyoming—import and export no waste. Others—like Illinois—import nearly 16 million tons of waste each year. New York is a net exporter of waste, taking in some 300,000 tons each year but sending out 4.6 million tons per year. But this web of importing and exporting is not a new phenomenon. In the early 1990s, the National Solid Waste Management Association put out a report documenting the interstate criss-crossing of waste flows.

Operationally, of course, there have been modest changes. Implementation of Subtitle D landfill regulations has resulted in an upgrading of technologies and practices. But the changes are not dramatic. Just a small number of landfills have installed gas-recovery system. Landfill mining remains a peripheral practice, with just six landfill-mining projects under way in the United States. Talk of using waste as a fuel or as a biochemical feedstock keep surfacing, but the talk has not translated into major investments in these new technologies.

Even the implications of the Era of Consolidation turned out to overstate the transformation of the waste industry. Competition remains robust, though, as in the past, some firms dominate individual markets. In 1998, despite mergers and acquisitions, Waste Management held just 15% of market share; USA Waste Systems held just 8%. The mega-merger of these two would give them 23% of market share. The 11 largest firms controlled under 45% of the market. Yes, consolidations occurred in the 1990s, but the waste management industry was still a competitive one.

Economics drives decision-making

What, if anything, can we learn from this tale of unrealized transformation of the waste management landscape?

First, economics is a powerful driver behind waste-management decision making. Many of the prognostications in the Diversion Decade sprang more from hopes than from careful analysis. Folks wanted to see the demise, or at least the atrophying of landfills result from a new recycling ethic. But land in many areas remains relatively cheap. Costs to landfill waste remain low�in most areas�relative to waste-diversion costs. And demand for recycled materials by manufacturers, while steadily increasing, remain modest largely because the economics often don't pencil out.

There is a corollary to this lesson: technology feasibility is not enough. What is feasible from a technology standpoint—such as landfill mining—may not be cost effective, or at least not everywhere. Too often, predictions about the future of waste management succumb to technology blinders—the expectation that because something is possible it will happen.

The greyness of being green

Second, as economist Thomas Sowell has quipped, "reality is tricky." During the Diversion Decade, its champions offered grand claims about unequivocal environmental benefits from recycling discards and avoiding so much waste disposal. But "big picture" environmentalism turns out to be a complex affair—a balancing act among many variables. Sometimes, recycling yields important environmental benefits, but not for all materials in all circumstances. Sometimes a shift to a highly source-reduced, but less easily recycled material yields greater environmental benefits than recycling the original material. As this "greyness of being green" became more apparent during the 1990s, waste-diversion decisions were tempered.

Of course, 10 years is a short time in the grand scheme of things. We may still see grand transformations of the waste industry. Perhaps landfill mining will flourish as more and more communities resist the siting of new landfills. Perhaps recycling and waste diversion will nudge slowly upward till waste diversion is the dominant waste-handling tool. But predictions about the future of waste management are likely to hit the target more often if they incorporate economic dynamics into the calculations.

Lynn Scarlett is president of Reason Foundation.

Privatizing Landfills

info@reason.org (Geoffrey Segal) adrian.moore@reason.org (Adrian Moore) — Mon, 01 May 2000 00:00:00 EDT

Executive Summary

Local governments face increasing regulatory costs in owning and operating landfills, as well as ever more difficult challenges in finding politically acceptable locations for new facilities to replace old ones or accommodate new landfill growth. Many governments have responded to these regulatory and siting challenges by privatizing their landfills.

Privatization of landfills is a growing trend—the percentage of facilities owned by the public sector declined from 83 percent in 1984 to 73 percent in 1997 and to 64 percent in 1998. And a 1998 R. W. Beck survey showed that 27 percent of municipalities with populations greater than 100,000 were considering privatization as an option to fulfill their disposal needs.

The many reasons for this privatization trend include managing liabilities, improving efficiency, cutting costs or debt, improving access to capital, and improving accountability. Each reason, or combination of reasons, lends itself to a different option for managing landfills. Privatization options range from cooperative agreements with private firms for support services to management contracts, asset sales, and even complete reliance on the landfill market for services.

To help public officials understand these options, as well as emerging policy issues such as consolidation in the solid-waste industry and attempts to control the flow of solid waste between states, this report examines in depth various objections to privatization, presents a number of detailed case studies of landfill privatization, and provides a short “how-to” guide for privatization.

Landfill Challenges and Environmental Justice

info@reason.org (Lynn Scarlett) — Mon, 06 Mar 2000 00:00:00 EST

Solid Waste

"California Struggles to Meet Recycling Goal," announces one headline. "State's Trash Disposal Problems Are Starting to Mount Up," proclaims another headline referring to a space shortage in Massachusetts. Still another states, "Los Angeles Country Considers Purchase of Desert Landfills." The headlines tell the story—landfills will continue to play an important role in solid waste management for the foreseeable future. And that means waste managers will need to attend to environmental justice issues. Attempts to site or permit landfills, ever controversial, will face even higher hurdles.

A 1998 environmental justice suit in Pennsylvania offers a glimpse at what the future may hold. Chester, Pennsylvania residents opposed siting of waste facilities in a minority neighborhood. Charging environmental injustice, these residents sued Pennsylvania's Department of Environmental Protection, claiming that state regulators had violated civil rights by permitting a facility in a predominantly African-American community. The court threw the case when Pennsylvania officials opted not to extend the waste permit after all.

But other environmental justice challenges loom. And controversy swirls around a U.S. Environmental Protection Agency (EPA) proposal for addressing environmental justice complaints. The guidance document outlines EPA's approach for investigating environmental justice complaints filed under Title VI of the 1964 Civil Rights Act. Typically, these complaints involve objections to siting or permitting of industrial and other facilities with potential environmental impacts, including landfills, transfer stations, and waste incinerators.

The Environmental Council of the States, an association of state regulators, called for EPA to go back to the drawing board on the guidance document. As currently crafted, the document would subject proposed landfills and other LULUs (locally undesirable land uses) to additional layers of citizen review to identify potentially disparate impacts on minorities. Moreover, the current guidance document does not distinguish clearly between construction and operating permits. And, "disparate impacts" remains a fuzzy concept. The guidance document offers no definition of what impact threshold could trigger a complaint; it offers no clear way to assign responsibilities for mitigating impacts; it provides no geographical boundaries that define what an "impact-shed" is.

Whatever the outcome of discussions over EPA's guidance document, the issue of environmental justice is likely to make landfill-siting decisions more complicated and more contentious. Many within the waste industry have protested new environmental justice regulations or procedures by arguing that no real proof of discriminatory siting exists. Data battles abound. Regarding the welter of empirical evidence, Brookings Institution scholar Christopher Foreman argues that "even a reasonably generous reading of the foundational empirical research alleging environmental inequity along racial lines must leave room for profound skepticism regarding the reported results."

EPA issued its first ruling on an environmental justice complaint in October 1998 regarding the construction of a proposed $175 million steel mill near Flint, Michigan. The agency ruled that the plant did not demonstrate disproportionate impacts after a study indicated that 90% of residents in the area were non-minority and non-poor.

But, as Foreman himself notes, whether industrial and waste facilities are disproportionately located among minority and poor communities in many respects misses the central driver behind the environmental justice movement. At its root, for many minorities the movement is primarily about a sense of disenfranchisement—an understandable desire by minorities and the poor to participate in decisions that affect their lives. It is, writes Foreman, about "enabling citizens to hold public institutions accountable and private capital at bay." For some other activists, environmental justice is simply one more tool to resist various land developments, especially of landfills and industrial plants.

Hence, resolving disputes over EPA's environmental justice document will likely not diminish environmental justice challenges nor ease up siting challenges. Nor will environmental justice challenges fade in the face of armloads of data indicating that discriminatory siting is not occurring. How, then, can waste managers—public and private—anticipate and mitigate environmental justice challenges?

First, waste managers need to understand that data battles over impacts are often largely irrelevant, though in specific cases such as that of the Flint, Michigan steel mill, data can help tip the decision scales. In part, the inutility of data battles results from a general hostility and distrust of science by many environmental justice advocates. But, more importantly, such data battles often fail to address the central focus of environmental justice advocacy, which is more about power and responsibility than risk reduction. Environmental justice concerns arise from a lack of trust and a perceived lack of control. And they are, in the end, more about broad livability issues—odor, noise, congestion, or dilapidated surroundings.

Second, waste managers need to recognize that environmental justice should be understood as a clamor for procedural inclusion rather than as an appeal for risk reduction per se.

So, what responses to environmental justice challenges might be feasible and helpful? Several companies with existing facilities have initiated outreach to their neighbors and local communities. These "good neighbor" programs have managed to create an audience more receptive to new investments or facility expansion when the need for expansion arises. In a similar vein, independently conducted health and safety audits can build trust, a practice the chemical firm Rhone-Poulenc has successfully used in Houston.

Most importantly, understanding the urge for political participation that fuels many environmental justice protests, waste managers should involve communities in siting decisions before a siting decisions has been finalized. Research at Reason Public Policy Institute and elsewhere indicates that people are far more open to communication of scientifically based risk assessments and engineering-safety information if they perceive that the public participation process is not merely designed to validate decisions that have, in essence, already been made.

Lynn Scarlett is president of Reason Foundation.

Waste Minimization, Resource Conservation, and Environmental Progress

info@reason.org (Lynn Scarlett) — Tue, 01 Dec 1998 00:00:00 EST

I. Background

Resource conservation and waste minimization goals have long influenced production and product-design decisions of manufacturers. However, heightened concerns about waste and other environmental impacts, especially of consumer products, have escalated over the past decade. Those concerns have prompted a search for new institutional relationships (within firms, among firms, and between firms and customers) that: 1) create incentives for companies to deliberately incorporate waste-minimization values into product design decisions; 2) motivate firms to reduce the overall environmental impact of their production processes and products; and 3) motivate consumers to generate less waste and reduce their environmental "footprint."

One such institutional innovation, now called "extended producer responsibility" (EPR), reallocates responsibility for postconsumer waste from the consumer or taxpayer back to the manufacturer through product take-back arrangements and/or product waste-handling fees. As firms compete to add value for the customers, EPR has emerged voluntarily in some settings, for some materials, and within some industries. These voluntary EPR arrangements are situated among a whole complex of other institutional innovations that share the common goal of reducing the environmental impacts of manufacturing processes and products. What distinguishes voluntary EPR arrangements from these other experiments in industrial ecology is one central feature--the reallocation from the end user to the manufacturer of some or all responsibility for products at the end of their useful lifespan.

In a 1998 informal survey of emerging institutional arrangements intended to enhance environmental responsibility, I have identified three different categories of voluntary programs that embody features of EPR. These include: 1) take back and product-leasing programs; 2) joint private-sector "green design," recycling, and remanufacturing consortia; and 3) producer leveraging agreements with their private-sector suppliers.

II. Brief Description: Three Program Models

Take Back and Product Leasing. Voluntary take back programs in many ways mirror those created through legislation or public-private negotiated agreements. Individual companies or specific industries set up mechanisms to "take back" products, either directly to the manufacturer or through a designated collection network. Costs are borne either by an individual firm, when acting independently, or through a fee system established collectively by the sponsoring industry. In the United States, only one example of the latter approach—an industry-wide take back scheme—appears to exist to date. That program is the Rechargeable Battery Recycling Corporation, established by the rechargeable battery industry. Several pilot industry-wide programs also exist, such as a windshield take back pilot sponsored by the U.S. Council for Automotive Research (USCAR).

Other programs have been established by individual businesses independent of other firms operating in the same industry. These programs include Nike's Reuse-a-Shoe program, Dell's computer take back program, Hewlett Packard's toner cartridge return program, several brand-name clothing return programs, a number of returnable transport packaging programs, Saturn's bumper fascia return program, a furniture manufacturer retrieval program for foam shipping material, and several returnable camera programs.

Consortia for Green Design, Recycling, and Remanufacturing. Where manufacturers within an industry share common environmental challenges, especially relating to product reuse, recycling, and disposal, many collaborative research efforts have been undertaken. Well known in this realm are efforts of trade associations such as the American Forest and Paper Association, the Steel Institute, and the American Plastics Council. However, some industries have moved beyond the traditional joint research efforts that occur under the rubric of trade associations to embark on direct, industry-funded research into reuse and recycling on a partnership basis. Most notable of these efforts is the Vehicle Recycling Development Center (VRDC), established in 1994 as a partnership of the three American auto manufacturers, who also collaborate with the Automotive Recyclers Association, the American Plastics, Council, and the Institute for Scrap Recycling Industries. The primary goals of VRDC include: 1) finding ways to recycle automobile "fluff"—the 25 % or so of material remaining after recycling of the ferrous, nonferrous, and other readily recycled components.; 2) finding ways to more cost-effectively disassemble cars, including removal of fluids.

Producer Agreements/Collaboration with Private-Sector Suppliers. Most manufacturers are not fully vertically integrated, meaning that they purchase parts and other production inputs from outside suppliers. These relationships are often stable and involve large transactions, giving the manufacturer substantial "leverage" over the private-sector supplier regarding the environmental characteristics of supplier inputs. Through this leverage, firms can essentially invest in product redesign to meet company recycling, waste reduction, toxics use reduction, and other environmental goals. Such "green partnerships" between manufacturers and suppliers are among the most common forms of voluntary extended (or shared) producer responsibility programs. Notable examples include, but are not limited to: 1) Dell's establishment of Environmental and Recyclability Design Guidelines for all input suppliers; 2) Hewlett Packard's "Controlled Materials List," in which suppliers must avoid 154 pre-identified hazardous wastes; 3) DuPont's Emerald Environmental Services, which works with DuPont clients to implement waste-recovery programs; Bell Atlantic's coordination with Westvaco, supplier of billing envelopes, to work with paper manufacturers to create an envelope of 100% recycled content, of which half is made from recycled phone books, diverting 575 tons of waste from landfills.

III. Program Challenges

Program challenges vary by program type but generally include: 1) finding mechanisms to attract customer participation; 2) establishing cost-effective collection and return networks; 3) identifying markets and uses for returned items; and 4) achieving cooperation where multiple firms are involved.

Customer Participation. Some programs use incentives--such as Nike's $5 rebate on returned shoes--to generate customer participation. Other programs involve direct economic benefits to consumers--as in the case of Dell's computer leasing and take back program--that stimulate consumer cooperation. Others, such as LensCrafters' eyeglasses return program, use a social services approach by working with local nonprofit Lions Clubs to generate consumer responsiveness.

Customer participation is a critical issue for take back programs; for manufacturer-supplier leveraged agreements, the preexisting relationships, the economic incentives suppliers have to meet the needs of their manufacturing customers, and the relatively small universe of suppliers that some companies interact with make customer participation less of an issue for these agreements.

Collection Networks. Our survey showed nearly as many different collection networks as there were programs, but these networks fall into several categories: 1) contracting with professional shippers using prepaid shipping labels; 2) direct return to retail outlets where they are reshipped to the manufacturer; 3) use of nonprofit service organizations as collection centers; and 4) use of a manufacturer-operated return network.

Under the first category are those such as Hewlett Packard�s toner cartridge take back program. HP supplies all customers with prepaid United Parcel Service (UPS) shipping labels. Large customers also receive free of charge bulk shipping containers for multiple cartridges. UPS picks up returnable cartridges either directly from the customer, or the customer can take the cartridge to Mail Boxes Etc., a private mailing service, where UPS will pick up the cartridge. UPS now has over 200 clients that use its Asset Recovery Service (ARS) to provide for efficient, prepaid return of items from the user back to the manufacturer. Some of these ARS programs have no environmental dimension; others, like the Hewlett-Packard program, are specifically designed with environmental goals in mind. The UPS program allows companies with take back programs to take advantage of a preexisting, highly efficient shipping network. However, such prepaid shipping programs appear most feasible only where the returned product has high reuse, remanufacturing, or recycling value, as can be the case for photographic equipment or some electronic supplies and equipment.

Under the second category are numerous programs such as Nike's Reuse-a-Shoe program and the Ecolog outdoor clothing program. Use of retail outlets appears feasible primarily when the manufacturer has a preexisting, decentralized and substantial network of retail outlets or distributors that provide broad customer access across market areas. LensCrafters "Gift of Sight" program uses a combination of its over 700 retail outlets, plus the nonprofit organization, Lions Club International, to provide a product return network.

Under the final category are several product-leasing programs, including, especially some returnable pallet programs. Chep USA ships products in a variety of returnable containers and pallets, each marked with a bar code for tracking purposes. Chep provides participating customers with computer software to allow for tracking and return of container inventory.

Manufacturing research consortia such as the VRDC typically work with existing infrastructure, including auto retailers, auto scrap dealers and dismantlers, to identify key issues and research applications. Since no real product take back occurs, the collection issue is not relevant.

Identifying Markets and Uses. All voluntary take back programs in our informal survey actively invested in and developed end uses for returned products, including reuse, remanufacturing, and recycling. In most instances, the take back program has generated up front product redesign. These redesign efforts vary but typically include one or several of the following features: 1) increased product simplicity for easier material separation and reduction in contaminants in the recyclate; 2) greater ease of disassembly, through use of modular parts, elimination of glues or welding; reduction in number of parts; etc.; and 3) increased durability of parts designated for reuse. Examples in each of these three categories include Ecolog's outdoor clothing, with all parts made of a single, highly recyclable polyester; Dell's use of modular computer components, reduction in number of materials used, and reduction in use of welding; Xerox's switch from plastic to more expensive, but more durable copy machine parts that facilitate reuse.

In numerous cases, manufacturers conduct materials research to create marketable and high-quality end uses for recyclate. Nike has developed its Nike Grind, made of recycled shoe parts, that it licenses for use by makers and installers of athletic surfaces. Saturn developed internal uses for recycled bumper fascias. Saturn developed processes to remove paint from bumpers and recycle the bumper fascia materials into new car parts.

Achieving Industry Cooperation. Most voluntary efforts operate through the actions of individual firms, so the issue of coordination and cooperation is not relevant. However, the several examples of industry-wide take back or joint research efforts suggest several features of the cooperative efforts. In the case of the RBRC, cooperation was, in effect, greatly facilitated as the industry faced a common legislative challenge--specifically, the designation of Ni-Cd batteries as a hazardous waste. This challenge helped coalesce the industry to move toward common action and provided an impetus for the 200 participating companies to pay licensing fees to use the RBRC "Charge Up to Recycle!" logo.

The other major industry-wide effort, involving the American automakers, did not result from specific legislation but from a common perception of a growing challenge of how to recycle the 25% of auto materials typically not recycled in traditional scrap operations, especially in the context of growing public interest on materials recycling. Transaction costs to achieve coordination were likely limited because of the small number of "players"—there are only three major American automakers.

IV. Thumbnail Sketch: Issues and Opportunities

Motivations for Voluntary Action. An informal survey of voluntary programs in each of the three institutional models shows varying motivations for program start up.

Regulations. At one end of the spectrum are indirect regulatory motivations--that is, regulations that do not require product take back but which make such arrangements more economically attractive. At least two programs fall into this category: the Rechargeable Battery Recycling Corporation (RBRC) "Charge Up to Recycle" program and several appliance take back programs. In the former instance, redesignation of nickel-cadmium batteries as hazardous wastes created product-liability concerns and introduced more costly and complicated disposal requirements. Recycling under these circumstances offered not only potential environmental benefits but avoided disposal costs and related liabilities. In the case of appliances, some take back initiatives emerged in response to state laws that required removal of hazardous materials before "white goods" scrap could be recycled and to federal Clean Air Act requirements regarding removal of chlorofluorocarbon refrigerants.

Economics. At the other end of the spectrum are economic drivers in which take-back programs create clear economic benefits for customers. Dell's Asset Management Program can provide economic benefits to customers. Ernst & Young uses Dell's direct leasing program, which in one year supplied the company with 20,000 laptop and desktop computers. US tax law requires that computers be depreciated over five years, yet most firms use equipment for just two to three years. As a result, computers often sit on the books, requiring continued payment of property taxes on the equipment, and generating storage costs. Companies can also pay $300 or so for their disposal. Avoiding these costs meant substantial savings for Ernst & Young, as well as environmental benefits. Under Dell's leasing program, after 24 months, older computers can be returned to Dell, who, in turn, refurbishes or recycles them. Economics plays a part in other take back programs such as Hewlett Packard's toner cartridge take back program.

Image-Building. For other programs, the primary motivation appears to have been image-building. Where image building maintains and attracts customers, image-building and economic benefit are integrally related. Nike's Reuse-a-Shoe program and LensCrafters' "Gift of Sight" program both provide opportunities to blend environmental, social, and economic goals. In both cases, the products represent a relatively small—even unmeasurable—part of the total waste stream. However, individually, the programs result in the return and reuse or recycling of millions of products. LensCrafters has collected over 2 million pairs of used eyeglasses; Nike collected over 2 million shoes in 1997. In both instances, the take back programs are then linked to social programs—provision of free eyeglasses to low-income recipients, and contribution by Nike toward building of athletic surfaces for schools, youth programs, etc., made from Nike Grind recycled material.

Challenges and Barriers. Voluntary EPR programs are situated within a larger market context. Sustainability of these programs, hence, hinges on cost-effectiveness. All programs surveyed placed a premium on integrating economic concerns with environmental goals. For example, a key to recycling automobile fluids is the ability to remove fluids quickly, reducing labor costs. VRDC set a goal of reducing disassembly time for a single auto from 45 minutes to 20 minutes, to improve the economics of disassembly. The white goods industry has likewise focused on improved, cost-effective means for removing CFC refrigerants before recycling.

But cost-effectiveness can be influenced by nonmarket factors. In the case of returnable shipping pallets, tax laws can deter the use of returnables. For example, many states exempt nonreturnable shipping pallets from sales taxes but require payment of sales tax on returnable, leased containers. This differential taxation creates an economic hurdle that can be difficult for suppliers of returnable, leased pallets to overcome.

Uneven enforcement of regulations can also affect incentives for firms to establish take back or other programs to enhance environmental performance. For example, US federal law requires removal of hazardous materials from appliances before recycling of scrap metal. However, this requirement is unevenly enforced. According to the Appliance Recycling Centers of America, Inc., only the U.S. EPA regional offices covering Pennsylvania and Ohio have taken enforcement actions against scrap yards for violations of intentionally venting CFCs. Appliances, on average, weigh 150 pounds; current scrap values garner recyclers about $3 per appliance (at $40 per ton, which is a "high" value in today's markets). Costs of hazardous waste removal are not offset by scrap prices, thereby requiring that a fee be charged for this service. But with widespread nonenforcement of the removal policies, neither manufacturers, end users, or others have any incentive to pay removal fees.

In several cases, public-private partnerships have created incentives for participation in take back programs. Indiana's Department of Environmental Management, working with the Indiana Drycleaning and Laundry Association, established a 5-Star Environmental Recognition Program for drycleaners. The program is a flexible labeling program, with five tiers of actions and options that drycleaners can undertake; the more of these tiered actions undertaken, the greater number of stars awarded. Levels two and above include the establishment by the participating drycleaner of a "take back" program for hangers and drycleaning bags.

Each product and industry faces a series of specific "devilish details" that influence what institutional arrangements will add both environmental and economic value. Ech industry also faces its own specific set of barriers and challenges that can only be hinted at in a general overview.

V. Conclusion

How effective these programs are (or will be over time) in advancing environmental goals depends on a number of factors that include, but are not necessarily limited to: 1) ability to overcome interfirm, intrafirm, and other coordination barriers (thereby reducing private enforcement costs; 2) success in motivating "green design," waste reduction, reuse, recycling, and remanufacturing; 3) success in motivating "green" consumption and waste-handling choices; 4) scope and intensity of unintended (negative) consequences associated with the program: and 5) financial sustainability. How these programs perform is both of function of the particular program design and the nature of the production and consumption marketplace within which the programs operate.

A number of factors appear to influence the likelihood that voluntary EPR programs will emerge, what particular form these programs will take, and whether they will be efficient and effective over time. The incidence and form of these programs appears to be affected by the:

Number of affected products within a target category
Frequency of product transactions
Degree of product homogeneity within a product category
Size and scope of a product distribution network
Degree of harm (liability) associated with product mishandling in use and disposal
Nature of existing discards-handling infrastructure
Number of manufacturers within an industry
Availability of consumer incentives/disincentives for appropriate product use and disposal or recycling

To date, voluntary take back programs appear to have emerged in circumstances where there are one or several of the following characteristics: 1) a high risk of improper disposal and associated liabilities; 2) a high value associated with the discarded product; 3) relatively low-frequency, high-value transactions between a manufacturer and a consumer; 4) a relatively close or ongoing relationship between the customer and manufacturer; and/or 5) specialty or high-end products for whom environmental or other social goals may enhance customer loyalty. In the absence of any of these qualities, environmental stewardship is taking different forms through environmental certification initiatives, firm-specific life cycle analysis in product development, and so on.

The variety of institutional arrangements that are emerging suggests that environmental progress involves not only technological innovation but also institutional innovations that better link production and consumption choices to the environmental impacts associated with those choices. A competitive market context helps to foster this institutional discovery process and allows firms and industries to tailor their environmental responses in ways that match the industry profile. Legislation can deter or stimulate this discovery process. Key areas for focus include taxing policies, policies pertaining to toxic waste liabilities, and information programs.

Lynn Scarlett is president of Reason Foundation.

Green Hand of Progress

info@reason.org (Lynn Scarlett) — Tue, 13 Jan 1998 00:00:00 EST

Journal of Commerce

A phone company in California recently began announcing one-stop shopping for telephone numbers. No need to know area codes: Just call a single number, name the location of the person you wish to call and, bingo, you get the desired phone number.

Environmentalists should rejoice. Behind this technological convenience lies an unintended environmental triumph. The phone numbers of millions of Americans used to reside in thousands of local phone books. Now a single CD- ROM can hold 90 million phone numbers, replacing five tons of phone books.

The process of uninhibited innovation and progress is commonly referred to as Adam Smith's invisible hand, but as this example illustrates, it is also an invisible green hand.

This invisible green hand lies behind most sustainable recycling efforts. Market forces, not regulators, inspired entrepreneurs to establish the first large wastepaper mill in the United States back in 1913.

Aluminum-can manufacturers, vying to remain competitive with less-costly plastic and glass containers, experimented in the 1970s with recycling. By the 1990s, aluminum cans were being recycled at a rate well over 50 percent.

But the biggest environmental rewards of the marketplace are elsewhere. They lie in the persistent drive that producers face to use less stuff per task or product. Technology historians call this drive toward efficiency the process of dematerialization.

The earliest generators operated at about 1 percent of theoretical limits. Today's gas-turbine generators operate at about 50 percent of theoretical limits. The mid-century switch to oil and natural gas heating from wood or coal cut residential sulfur-dioxide emissions from 2.52 million tons in 1940 to less than 500,000 tons by 1970.

All this happened before the Environmental Protection Agency was created. Much of this unglamorous improvement comes in small steps, largely invisible to conservationists.

Three decades ago, manufacturers used 164 pounds of metal to make 1,000 cans. By 1995 they used less than 33 pounds per 1,000 cans. Our ability to grow a ton of grain, build a high-rise building or make a soda can with less input has been a constant byproduct of market competition.

The unnoticed environmental benefits of these marketplace innovations are prodigious. Technology historian Jesse Ausubel calculates that global land space the size of the Amazon basin has been spared since 1960 simply through improved agricultural yields.

In recent years, the unintentional "green" side effects of competition have been supplemented with conscious private-sector efforts to incorporate environmental considerations into decisions on product design and manufacturing processes.

Ironically, this environmental progress may be curtailed by the very folks so eager to seek sustainable development. Champions of "sustainability" too often propose policies that could stifle the sorts of innovation that have produced environmental benefits. They push for all manner of product mandates and bans.

In the United States, recycling champions want recycled-content mandates to create more markets for discards. These mandates may end up compelling inefficient resource use.

For example, in California the effect of mandating recycled content in plastic bags has been to stall, and even reverse, innovations that were resulting in thinner and thinner bags.

In Sweden, "green" product advocates, working with retailers, have pushed to define which products are "green" and which are not. Their determinations may deter the introduction of new products with fewer environmental impacts.

No one argues that markets spontaneously take care of all environmental problems. Emissions into the air, for example, remain a challenge. Indeed, well-functioning markets always operate within a set of rules — contract protection, laws that clarify property rights and responsibilities, tort and trespass laws and so on. But not just any rules will do.

Too often environmentalists are blind to the role that competitive markets have played in stimulating both resource conservation and, often inadvertently, pollution reduction. They continue to press for command-style, innovation-suppressing rules and regulations.

Environmental regulators, however, are beginning to take notice of the role the private sector and market forces play in achieving environmental progress. The trend was clear at a recent conference of the Environmental Council of the States where the assembled regulators talked about "customer-service," "flexibility" and unshackling companies from prescriptive regulations.

Maybe it's time to celebrate Adam Smith Day, acknowledging the ideas that not only brought us the Wealth of Nations, but are also the best hope over the long run for reducing our global environmental footprint.

Lynn Scarlett is president of Reason Foundation.

Recycling Yes, Mandates No

info@reason.org (Lynn Scarlett) — Fri, 05 Sep 1997 00:00:00 EDT

San Diego Union-Tribune

Trash is on the legislative radar screen — again. In 1997, California's legislators proposed several bills that tinker with trash. Many of these bills have one goal: boost recycling.

No one likes waste. But the perpetual push to meet the waste challenge through mandates and regulations is wrongheaded. Recycling is often a good idea. Mandates are not.

By state law, California cities must soon divert 50 percent of waste away from disposal facilities. Yet these cities face widely varying situations. For example, rural communities often find it more costly to implement aggressive recycling programs than some suburban and urban communities. Even within San Diego County, costs to recycle vary among rural, urban and suburban areas. Mandates don't give communities adequate flexibility to determine what makes economic and environmental sense.

The waste stream is not a homogeneous and uniformly recyclable or compostable mass of material. A Duke University symposium on waste and recycling estimated that 35 percent to 40 percent of the waste stream might be composted and recycled at reasonable cost using current technologies and infrastructure. Specific communities may (and are) exceeding 40 percent diversion rates at reasonable costs, but their circumstances do not apply to all California communities.

The city of San Diego estimates that current curbside recycling programs, which serve less than half of all residences, lose $1 million per year. Extending that service to all households could cost the city $8 million to $10 million, unless citizens pay a direct fee for recycling service.

California's waste-diversion mandates generate more supplies of recyclable stuff — sometimes at a cost to cities. These supplies create pressures for new regulations mandating that manufacturers use recycled content. California already mandates use of recycled content in plastic bags, newsprint and some glass and plastic containers.

Yet these end-user mandates are not environmentally or economically beneficial. Proponents of mandates hope they will boost prices of recyclables to help offset city costs for curbside programs. And they believe mandates are necessary to create a sustainable, resource-conserving economy.

Resource conservation is important. Sometimes recycling does result in resource and energy conservation relative to use of virgin materials. But recycling is not always the best environmental choice.

A Public Policy Institute study demonstrates that under certain circumstances, recycled content produces net benefits; under other circumstances it does not. Our analysis of different materials shows benefits from using modest levels of recycled content in many instances. But whether recycled content makes sense depends on the product. And where recycling does save resources, many manufacturers already use recycled content without government intervention.

There simply is no single formula in the resource-conservation process. Many conservation efforts take place in small, almost invisible and difficult-to-regulate steps. These little steps have big consequences. For example, one juice company reduced the size of its package by 10 percent. This reduction saved 20,000 pounds of material, 500 truckloads of outgoing freight, 20,000 pallets, 7,000 pounds of shrink wrap and 250,000 square feet of chilled warehouse space.

Juggling all the details that determine what mix of resources works best is a persistent challenge for manufacturers. But the competitive marketplace provides a constant impetus to find ways to use fewer resources through price signals. Using less stuff means saving money.

Worried about recycling costs, many local governments now support the idea of "manufacturers' responsibility," in which producers would pay an up-front waste-handling fee on all their products. The idea is that these fees could support recycling programs and might give manufacturers more incentive to reduce packaging or "design for recycling."

Yet our study of such fees in Germany shows that overall reductions in packaging in Germany were not very different from the United States, which has no special packaging fees. A basket of typical U.S. grocery products went from over 2,750 pounds per gross production unit in 1989 to approximately 2,100 in 1993-94. In Europe, including Germany, packaging materials use went from just over 2,500 pounds per gross production unit to just under 2,100 — only marginally better than U.S. accomplishments.

There are lots of things California could do to nudge recycling along without imposing high costs on cities or inadvertently wasting resources. The state could maintain a waste-diversion goal — as many other states have done, but eliminate the mandate so each city could figure out what makes sense.

Following an Indiana model, the state could encourage cities to use business-based accounting methods, so that they could better identify cost-saving opportunities in their recycling programs. Better still, the state could encourage (but not mandate) competitive contracting of recycling and waste-handling. Private haulers usually can provide recycling service at lower cost — and they often have access to broader markets for the stuff they collect.

California could also borrow an idea from the state of Washington. There, rather than mandating recycled content, the state's Clean Washington Center provides technical assistance where using recycled stuff looks promising.

All these ideas harness, rather than shackle, the private sector. And they provide to cities and manufacturers the kind of flexibility they need to select the best options for environmental progress.

Lynn Scarlett is president of Reason Foundation.

Packaging, Recycling, and Solid Waste

info@reason.org (Lynn Scarlett) — Sun, 01 Jun 1997 00:00:00 EDT

Executive Summary

During the past decade, over forty states quickly adopted waste-diversion or recycling laws, responding to public concern about resource conservation. On the other hand, early attempts to encourage recycling by increasing demand for recyclables received a more mixed reception: only two states--Oregon and California--passed recycled content mandates for products other than newsprint. One state--Florida-- passed (and then allowed to sunset) an advance disposal fee on packaging. The federal government failed to pass any national "demand-side" policies in the early 1990s. But when scrap values for recyclables fell in the mid-1990s, the press for policies intended to stimulate demand for recyclables resurfaced.

Proponents of these "demand-side" laws typically want to accomplish one of four goals: waste diversion; reduction in pollution from producing goods; reduction in consumption of virgin materials; or revenue generation to pay for recycling or other waste-management programs. Recycling is basically a means for achieving one of the first three goals, not an end in itself.

Yet policies proposed to achieve these ends surfaced with little understanding of the effect these policies might have on waste-diversion, resource use, recycling, and product manufacturing. This study helps fill that knowledge gap by exploring the cost-effectiveness of these policies as a means to achieving specific levels of waste diversion and reduction in use of virgin materials. We look at four different policies:

recycled content mandates, which mandate that a proportion of recycled materials be used in packaging;
virgin materials taxes, which assess a tax on the use of material inputs based on the implied disposal costs for those materials;
advance disposal fees, which assess a charge on the final product based on the implied disposal cost for the associated packaging; and
manufacturers' responsibility, which requires manufacturers to implement waste collection and material recovery systems for their packaging and generally combines required recovery rates with packaging fees.

Our study evaluated these policies at a national level, with cost estimates provided for glass, steel, three types of plastic, and paperboard. In each case, policies were evaluated in relationship to specified recycled content (or waste-reduction) levels in order to provide a metric for comparison.

Our analysis summarizes the direct production costs, if packaging manufacturers had to bear the entire waste and recycled material collection, processing, and production costs and the social costs, which include both the direct production costs and the savings in reduced waste-disposal costs. The analysis ignores implementation costs by government agencies and other information-gathering and reporting costs incurred by manufacturers to comply with these policies, which could be substantial. The study also necessarily provides only a snapshot picture; changing technologies and changing economic circumstances would alter the results of our analysis. Finally, we do not try to put a price tag on air emissions or other emissions associated with different product processes. However, our study does look at total energy use and total resource use, including "use" of landfill space.

What is the bottom line? Our analysis shows that, under best-case conditions, there are net benefits to society at low or modest levels of recycled content for almost all materials. However, as content rises and conditions become less favorable, costs rise, creating net societal losses. The wide variation in outcomes reflects the large variations in waste-disposal costs across locations and by program design, as well as the large variations in material-specific production processes. Net costs (and benefits) are for levels of recycled content, not for the policy mandates per se.

The benefits at lower content levels are not surprising--many packaging manufacturers have used recycled-content materials at these levels without government intervention. Our findings suggest that the marketplace likely is producing efficient levels of recycling and that attempts to force specific levels of recycling--either directly through recycled-content mandates or indirectly through various taxes and fees--will not uniformly generate hoped-for benefits.

Even where benefits are predicted, our results do not indicate that a given level of recycled content is achievable or beneficial for each manufacturer and every product, which suggests that mandates and fees tied to recycling levels are not likely to be environmentally beneficial. Some manufacturers will be able to achieve economic (and environmental) benefits at much higher levels of recycled content; others may experience net costs even at very low levels of recycled content. The benefits we estimate are total societal benefits, using average production and disposal costs at a high level of aggregation.

Our analysis also demonstrates that some mandated recycled content levels would simply not be achievable on a steady-state basis due to physical limits on recycled material use (especially in worstcase scenarios). These limits result from production losses, spoilage and breakage during collection and processing, constraints on "capturing" all postconsumer recyclables, and so on. In these cases, only a reduction in package use would achieve the intended standards. In worst-case scenarios sustainable content levels top out between 26 and 37 percent, with higher levels achievable under best-case circumstances.

In examining virgin materials taxes and advance disposal fees, we are not predicting that the fee levels identified will result in the associated recycled-content levels; rather, we are predicting that wastedisposal rates will fall to a level equivalent to that of the recycled-content policy. To achieve specified waste-diversion rates from 10 percent to over 50 percent (depending on the material), our analysis shows that virgin materials taxes would range from a low of $16 per ton for glass (under best-case conditions) and a high of $136 per ton (under worst-case conditions) for containerboard (see Table 1).

Advance disposal fees (ADFs) intended to incorporate disposal costs of individual packages "up front" at the point of packaging purchase would range from fractions of a cent to two cents per package (see Table 2). On the other hand, ADFs designed actually to increase consumption of recycled materials would need to be set at substantially higher levels, especially in instances where the price of the package is only a very small percentage of total product price.

Policies that establish manufacturers' responsibility typically require that product manufacturers achieve particular recycling rates and impose packaging fees pegged to recycling costs. The cost (or benefit) of manufacturers' responsibility is the difference between the cost of production using virgin materials and the cost of producing at the target recycled content level, plus the waste-handling cost. Our analysis shows these costs ranging from almost zero (for containerboard under best-case conditions) to over $440 per ton (for PET under worst-case conditions). (See Table 3).

We supplement our quantitative analysis with two brief case studies: one of Germany's experience with its Green Dot program; the other of Florida's experiment with advance disposal fees on packaging. One key finding from this case-study analysis sheds some doubt on the effectiveness of Germany's program in promoting packaging source reduction.

Though Germany's program was accompanied by declines in packaging per product unit, overall reductions in Germany were not very different from the United States, which had no up front packaging fees. A basket of typical U.S. goods went from over 2,750 pounds per gross production unit in 1989 to approximately 2,100 pounds in 1993-94. In Europe, including Germany, packaging materials use went from just over 2,500 pounds per gross production unit to just under 2,100--only marginally better than U.S. material efficiencies.

Experience to date with packaging take-back policies suggests that the low-value, high-volume, decentralized, heterogeneous nature of consumer packaging transactions are ill-suited to establishment of efficient and effective product stewardship programs. These attributes especially characterize the U.S. packaging marketplace in which billions of products change hands annually, products move across large geographical distances, and waste-disposal systems (and needs) vary substantially.

Our study attempts to shed some light on the complexity of decisions about resource use and packaging. Our quantitative analysis shows net social benefits from some recycled content for most materials under best-case scenarios. The levels at which net benefits occur appear to be fairly consistent with levels being achieved in the aggregate through market transactions. As technologies change, opportunities for resource-conserving recycling may increase, but our study suggests that there is no one-size-fits-all formula in the resource-conservation process.

Nationwide Diversion Rate Study

info@reason.org (Lisa Skumatz) — Tue, 01 Oct 1996 00:00:00 EDT

Executive Summary

Even though there are 7,375 curbside and over 9,000 dropoff recycling programs across the nation, thousands of yard waste programs (bringing materials to over 3,316 composting facilities), and over 2,800 variable rates programs, communities have very little quantitative information available to help them improve their waste management programs. At conferences, when planners ask about the likely impacts of possible program improvements, the answers usually begin, “well, the city of [fill in the blank] made that change and found...”. As planners know, answers like this are seldom transferable to other communities. The information that is available from manuals or the literature are generally case studies of single (or a small number of) communities. And unfortunately, the case study communities that receive publicity are usually those that were “special” in some way, making the information from their experience even less representative or transferable to other communities.

Solid Waste Management

info@reason.org (Lynn Scarlett) info@reason.org (Joe Sloan) — Sun, 01 Sep 1996 00:00:00 EDT

Executive Summary

Over 50 percent of U.S. cities of varying sizes contract all or part of their refuse collection services. The National Solid Wastes Management Association (now Environmental Industries Association) has estimated that at least 50 percent of disposal capacity is privately owned and operated. While no comprehensive surveys have recently been undertaken, the private--sector role in the provision of waste management services appears to be increasing.

U.S. models of privatization take many forms. For collection services, at least six different models of private-sector service delivery exist. These include:

single--district, winner-take-all competitive contracting,
multi-district competitive contracting,
noncompetitive negotiated contractiing,
“free-for-all” competition,
nonexclusive franchising, and
competitive exclusive franchising.

In addition to these different privatization models, local governments employ a variety of procedures for: 1) specifying the desired scope of service, 2) evaluating service-delivery options, 3) selecting service providers, and 4) monitoring providers’ performance. The breadth and diversity of experience in privatization thus perrmits an evaluation of what procedures and programs result in high-quality, cost-effective waste management services. This paper will identify those privatization procedures and programs that enhance success.

Three primary forces have motivated the trend toward privatization in the United States: 1) pursuit of cost savings; 2) desire to access new technologies; and 3) desire to reduce risks associated with providing waste management services.

Successful implementation of competitive service delivery involves three stages: 1) an initial evaluation and review of available options; 2) a well-designed service-delivery procurement process (qualifying to bid, bidding, and contracting), and 3) ongoing monitoring and performance reviews (contract administration). Success lies more in the implementation process than in the specific contracting model selected.

Successful transitioning from public-sector to private-sector contracting of waste services requires up-front evaluation of the existing public system.

What are the components of the current system?
How do these components interrelate?
Who currently provides each service component?

One central purpose of privatization is to harness competitive market forces to generate ongoing incentives for more efficient and less costly solid waste management service. Central to this harnessing process is a procurement document that allows for precise and objective evaluation, flexibility, economies of scale, efficient contract length, and accountability.

The hard work really begins after the successful proposer has been selected through the RFQ/RFB process. The aim in contract negotiation should be to establish an agreement whereby the local government maintains needed control over its waste stream, residents are assurred low-cost/high-quality waste management services, and the private contractor is able to maintain a profitable business.

The contract should include several critical elements. These include:

A clear definition of the scope of work required. Waste management involves an array of different services. Successful privatization requires that one define which of these services will be transferred to the private sector.
A definition of minimum service requirements. Once the scope of service is defined, public officials need to clearly define minimum service-level requirements. This includes such matters as frequency of collection, permitted hours of operation, insurance and bonding requirements, health and safety restrictions, permissible service complaint levels, and other basic service parameters.
A description of risk, rate, and termination provisions.

There is no single best way to structure the contracting of solid waste and recycling collection services. However, in any contracting decision, the twin goals of service quality and competitive cost should guide the design of the bidding process and the delineation of contract details. Ultimately, long-term success of contracting depends on depoliticiziing the contracting decision as much as possible, using clear quantitative and qualitative performance standards, and clearly spelling out the responsibilities of the public and private sectors.

How Government Building Codes and Construction Standards Discourage Recycling

info@reason.org (Alexander Volokh) — Fri, 01 Mar 1996 00:00:00 EST

Executive Summary

Why doesn't everyone use recycled materials? In many areas, recycling is a relatively new technology, and the companies that use the technology tend to be fairly small. Many people don't know about the full range of products made with recycled material, and education is costly. This is especially the case with plastics. The basic problem is one that is common to many new technologiesthe world as we know it came to be in an earlier time, before current recycling opportunities became commonplace. Where recycling technology is relatively new, it has to overcome many institutionalized barriers to change.

Part of the problem is that potential end-users rely on industry standard-setting organizations, like the American Society for Testing and Materials (ASTM) or the American Association of State Highway and Transportation Officials (AASHTO), which write standards that sometimes shut out recycled materials.

Plastic lumber, a promising construction material, isn't generally being purchasedin part because the ASTM has been slow in drawing up testing standards;
The ASTM and AASHTO haven't advanced standards for drainage pipes made of recycled PVC or HDPE, because of infighting between different industry groups.

The problem isn't that such organizations exist; these organizations serve a useful purpose in developing standards and performance tests. Rather, the problem is that when governments rely on them, the standards often become mandatory, not voluntary. Another part of the problem is that governments themselves sometimes enforce restrictive regulations that shut out recycled materials:

Building codes, which are generally enforced on the local level, are very conservative and make it difficult for innovative building materials to be used in construction;
Highway construction standards are wedded to specific materials, methods, and industrial processessometimes mandating materials (as with a recent recycled rubber mandate) and sometimes prohibiting them. This makes innovation difficult in highway technology, even when such innovation would improve the performance of roadways.

Yet another part of the problem is that government procurement agencies can inadvertently or subtly discriminate against recycled materials, through such methods as:

The arcane rules of government bidding processes;
The somewhat arbitrary distinction between pre-consumer and post-consumer recycled materials;
Color and thickness requirements, and other conditions that are unrelated to performance;
Materials requirements, for instance in the purchasing of carpets or composts.

One theme runs through this array of government practices. Governments often don't rely on measures of performance. In the past, specifying materials or methods may have been the best proxy for performance one could find; when performance is difficult to measure, "doing it the way we've always done it" may have had some justification. Whatever the explanation, it's time for governments to move toward performance standards and away from specifying particular materials.

The question "Why doesn't everyone use recycled materials" is, in a sense, as ridiculous a question as "Why doesn't everyone make things out of steel" The physics and chemistry of recycling are complicated; there are lots of different processes which have lots of different effects, and it would be dangerous to draw blanket conclusions like "We should always use recycled materials" or "We should never use recycled materials." The honest answer is to admit that optimal levels of recycled material usage will vary by situation. Unless we adopt performance standards wherever possible, we can never know what those levels are, much less reach them. Many promising products are being discriminated against today because a performance standard isn't in place.

Governments shouldn't always rely on industry standards. In areas like plastic lumber or drainage pipe, when the ASTM or AASHTO don't have standards for a possibly good product, it may make sense for governments to draw up their own performance standards, allowing companies to submit performance data from approved testing labs.
Local building code offices, highway departments, and such agencies should establish clearer and more predictable approval procedures that are more open to innovative technologies. They should rely less on materials and methods specifications, and use performance standards whenever possible.
Government procurement agencies should scrutinize their procurement specifications to see whether they're using irrational or non-performance-related criteria to buy the products they need. President Clinton's 1993 Executive Order on recycled procurement has reformed and will continue to reform government procurement, though it treats recycling too much as an end in itself. More should be done to require performance standards whenever possible instead of dictating what a product must be made of.

The FDA vs. Recycling

info@reason.org (Alexander Volokh) — Sun, 01 Oct 1995 00:00:00 EDT

Executive Summary

Since 1958, the Food and Drug Administration (FDA) has regulated the components of food packaging as “indirect food additives.” The FDA doesn't have any special regulations for food packaging made with recycled materials. This means that any recycled material can be used as long as it's “suitably pure.”

But no one knows how pure “suitably pure” is. This is a problem for packagers who use recycled material. Recycled paper and plastic come from many different, unknown sources, and are more likely to contain “contaminants” than virgin materials. This doesn't mean they're necessarily unsafe, but it does mean they're less “pure.” So a standard that's too strict discriminates against recycled packaging.

To clarify things, the FDA issues informal “non-objection letters” to let packagers know that particular recycled content applications are O.K. Non-objection letters aren't required by law, but many packagers who use recycled material consider them a must. In July 1995, the FDA finalized its “threshold of regulation policy,” announcing that it would exempt some substances from regulation as food additives. To qualify, the substance musn't be carcinogenic, and should have an expected dietary concentration of less than 0.5 parts per billion. This policy is now being applied to non-objection letter requests. It has simplified the process, but because of the FDA's backlog, the process is still lengthy and expensive. Getting a non-objection letter can take half a year and cost hundreds of thousands of dollars.

The FDA continues to be too restrictive in its food packaging regulations, and discourages new packaging applications, especially recycled-content packaging. Every non-objection letter request now requires an environmental assessment, which will add an extra few months of delay. Also, the FDA uses conservative risk assessment methods. It assumes the worst for any chemical, regardless of whether any migration of contaminants between the packaging and the food has been detected. When many studies have been done on a chemical, FDA uses the most pessimistic one, and extrapolates the results to humans in the most conservative ways. The new policy may actually tighten FDA standards. And the FDA gives itself blanket permission to sidestep its rules.

The FDA should:

adopt reasonable risk assessment methods;
act less arbitrarily by encouraging procedural certainty; and
cut down on the delays in issuing non-objection letters by adopting a pre-market notification system and/or by farming out its approval system to approved, independent, competing labs.

We don't want to force food into recycled packages—that might not be safe. But we shouldn't discourage safe and profitable recycling. No one knows what “proper levels” are for recycled plastics in food packaging, but we do know that the more of a drag the FDA is, the longer it'll take recycled material use to grow to desired levels, whatever they are. Add to that the burden of misguided state regulations—like California's Proposition 65, which was designed to protect public health but which has unintended perverse effects—and it's small wonder that recycled materials aren't being used much in food packaging. Prop. 65 was adopted in 1986 by voter initiative and was intended to improve health by informing consumers of products with carcinogens and reproductive toxins. But it has unintended effects. Because Prop. 65 also uses conservative risk assessment, violations of Prop. 65 don't necessarily correspond to actual risks. This means manufacturers spend a lot of money testing their products for tiny quantities of chemicals, and then spend a lot of money reformulating their products to not contain these chemicals— but we don't get any safer.

Again, such a state of affairs threatens recycled materials, which are more likely to have low levels of “bad” chemicals. At first, FDA-approved products were exempt from Prop. 65, but this “safe harbor” for food and drugs was rescinded in 1994. Now, packagers can find that while the FDA says their products are safe, the state of California doesn't. Because recycled paperboard, for instance, tends to have more contaminants than virgin paperboard, Prop. 65 may impede the use of recycled paperboard packaging.

Protecting health is important, but health isn't served by exaggerating risk and arbitrarily enforcing regulations. There are many forms of recycling that make economic sense and don't require a government mandate. But they are being discouraged by superfluous health regulations that don't protect people's health. If food additive regulations are properly eased, both the food packaging industry and the environment will benefit.

“I hate a man who swallows [his food], affecting not to know what he is eating. I suspect his taste in other matters.”

—Charles Lamb, “Grace before Meat,” Essays of Elia

“Why it's the Uneeda Biscuit made the trouble. Uneeda, Uneeda, put the crackers in the package, in the package, The Uneeda Biscuit in an airtight, sanitary package, Made the cracker barrel obsolete, obsolete.” “Obsolete, obsolete, obsolete.”

—Meredith Willson, “Rock Island,” The Music Man

Recycling Hazardous Waste

info@reason.org (Alexander Volokh) — Sun, 01 Oct 1995 00:00:00 EDT

Executive Summary

Each year, about 100,000 to 1 million tons of hazardous waste are recycled in the United States. Another 13 million tons are dumped into hazardous waste landfills. The amount recycled is only about 0.8 percent to 7.7 percent of the amount dumped.

The two main federal laws regulating hazardous waste—the Resource Conservation and Recovery Act (RCRA) and Superfund—may be reauthorized in the 104th Congress. This makes hazardous waste a hot topic in the environmental world. Recycling is also high on many people's environmental checklists. But the two issues—hazardous waste and recycling—are rarely thought of together.

Still less frequently is hazardous waste recycling thought of favorably. Hazardous waste recycling's bad reputation stems from a number of environmental misconceptions. When thinking about hazardous waste recycling, one must keep in mind that:

Calling something hazardous doesn't make it so.
Calling something a waste doesn't make it bad.
A hazardous ingredient needn't produce an unsafe product.

We don't want too much recycling of hazardous waste—not if it wastes more resources than it saves. But we don't want to artificially discourage it either by needlessly making recycling more expensive than landfilling. Yet the federal government is doing exactly that—even while it's trying to encourage recycling in general, it's discouraging the recycling of hazardous waste.

Hazardous waste law is confusing. The terms “solid waste” and “hazardous waste” are difficult to understand. This is a big problem when a regulatory scheme hinges on the definitions, and it has led to uncertainty and litigation.
The EPA's risk assessment is unnecessarily conservative. The impact of improper disposal is small compared to other risks that the public willingly accepts. The risks posed by hazardous waste are also lower than most of the risks currently addressed by environmental regulation.
RCRA's requirements are expensive. The total cost of complying with RCRA is estimated at over $40 billion.
Recycling is treated differently than the manufacture of the same products out of virgin materials. RCRA often considers that substances intended for recycling are in fact “discarded.” Many perfectly acceptable and reusable (and regulated) raw materials become RCRA hazardous wastes the moment they are “discarded,” whatever that means, which virtually guarantees that few people will recycle them.

In short, hazardous waste law is expensive, irrational, and confusing. The only way to get around these requirements for certain products is by case-by-case exemptions. Lead acid batteries are exempted from hazardous waste law until they reach the recycler, so battery recycling is high despite the industry's costly regulation. RCRA regulation has discouraged the recycling of spent aluminum potliner, which is only now slowly starting up again. And state hazardous waste provisions in California and some New England states have discouraged the recycling of used motor oil.

Other aspects of hazardous waste law also do their part to discourage recycling. The Toxics Release Inventory (TRI), for instance, requires that companies report how much of certain “toxic chemicals” they use. There have been proposals to expand the list of industries subject to the TRI to include scrap metal recyclers and waste management facilities. This sounds like a good idea, but in fact it would discourage the recycling of copper, zinc, and other metals. These metals are hazardous in certain forms (for instance, when they're dissolved and discharged into water), but not when they're recycled; making scrap metal recyclers subject to the TRI would give people the impression that scrap recyclers are heavy polluters because of the amounts of metals they accept. Also, waste management facilities only receive wastes from elsewhere, and making them subject to the TRI would impose costly bookkeeping burdens on them without adding to health or safety.

And then there's Superfund, which provides for the cleanup of hazardous sites. If a hazardous substance is found at a Superfund site, whoever arranged for the treatment or disposal of the substance at that site can potentially be made to pay for the cleanup of the entire site. The problem here is that selling metal to a scrap metal recycler can be considered “arranging for disposal” if that recycler eventually goes bankrupt and his property becomes a Superfund site—and so everyone who ever sold anything to the scrap metal recycler can be stuck with huge cleanup costs for “contamination” they weren't even responsible for. This discourages the recycling of scrap metal and other products, like nickel-cadmium batteries, containing substances that are considered hazardous.

Superfund should be amended so that recycling isn't considered “treatment or disposal.” RCRA should be overhauled so that it is based solely on realistic risks of actual harms. Whether or not something is a waste is irrelevant to the risk it poses. At the very least, RCRA should be amended to exclude recyclable materials.

Solid Waste Recycling Costs

info@reason.org (Lynn Scarlett) — Tue, 01 Aug 1995 00:00:00 EDT

Executive Summary

By the late 1980s, concern that the United States was "running out of landfill space" had reached crisis dimensions. In addition, some environmental commentators forecast that we would "run out of resources" if present consumption patterns persisted. These twin concerns prompted a dramatic shift toward increased recycling. By 1995, nearly all states had implemented laws requiring or encouraging household and commercial recycling. The number of curbside recycling programs in the United States jumped from a few hundred to over 7,000 in a five-year period from 1989 to 1994.

The advent of these curbside recycling programs generated both applause and controversy. Few observers of the changing waste management scene opposed the basic concept of recycling; however, many critics raised the specter that curbside recycling programs were costly. Some local government officials, already facing financial constraints, began to claim that recycling programs cost more than traditional waste collection and disposal. Claims that recycling was costly escalated when a rapid influx of materials collected in the new recycling programs resulted in steep declines in scrap values of materials.

Instead of receiving as much as $60 or more per ton of recycled materials (in the aggregate), they began receiving as little as $15 or $20 per ton. This decline in receipts from sale of recyclables meant local recyclers received much lower revenues to offset program costs than had been anticipated. The result? A vigorous debate over the costs and merits of the new-fangled recycling programs. Just four years after the rapid increase in curbside recycling programs, the cost picture has undergone a fairly dramatic shift. The aggregate scrap value of a typical ton of municipal waste brought in as much as $100 per ton in some instances. Thus, instead of a meager $15 to $20, program operators were receiving four-to fivefold higher revenues from the sale of materials.

This hefty increase in revenues has -- at least temporarily -- changed the cost picture for curbside recycling. Where programs had generated net costs of, say, $150 per ton of materials collected, they were costing well under $100 per ton by 1995. The very low costs of traditional waste collection and landfilling in some areas still made recycling the moreexpensive option for some communities. However, in other communities recycling became increasingly competitive -- from a cost standpoint -- as a waste-management alternative. This brief saga demonstrates the pitfalls of answering the question: "what does recycling cost?"

Recycling costs vary over time, depending on scrap values as well as on a learning curve in providing recycling services. They also vary significantly depending on demographics, program design, whether service is publicly or privately provided, and what materials are collected. Despite the vagaries of recycling costs, several basic comments about recycling costs and the dynamics that drive those costs can help policymakers -- and citizens -- sort out facts from fancy.

If anything conclusive can be said in response to the question"what does recycling cost?," it is that "it all depends." Recycling costs depend on time, place, and circumstance. The following series of questions were posed as part of a Paper Task Force project conduced by the Environmental Defense Fund and several private-sector firms and institutions. The responses were prepared in the context of that project.

Redesigning CERCLA Liability

info@reason.org (Kathleen Segerson) — Sat, 01 Apr 1995 00:00:00 EST

Executive Summary

Superfund, the federal hazardous substance cleanup program, is one of the most hotly debated pieces of environmental legislation. It empowers the Environmental Protection Agency to identify high-priority contaminated sites and clean them up with the financial help of those responsible for the contamination. Since its enactment in 1980, it has been criticized for:

Relying on inaccurate risk assessments that overstate environmental risk;
Requiring more cleanup than may be reasonable, leading to costs out of proportion to benefits;
Placing responsibility for cleanup on innocent parties, unfairly distributing cleanup costs, and imposing large liability where there is no fault;
And, as a result of all these, encouraging long, bitter, and expensive litigation over what should be a Superfund site, who should pay for its cleanup, and how much they should pay.

Environmental scientists and policymakers (including the Clinton Administration) now universally recognize that Superfund reform is in order. Superfund problems were all debated during reauthorization hearings in the 103rd Congress. The cost side of the problem—hitting people, as it did, in the pocketbook—attracted most of the attention. Three types of liability that exist under Superfund were considered in reform bills:

Strict liability, under which a party is responsible for cleanup, even though it may not have acted negligently;
Joint and several liability, under which a party can be liable for the whole cleanup, even though it may have only been responsible for a small part of the overall contamination; and,
Retroactive liability, under which a party is responsible for cleanup, even though the contamination may have happened long before Superfund took effect.

Many people believe that these forms of liability are unfair for several reasons. First, nearly everyone who has touched a hazardous substance between its generation and its disposal can be held responsible for its cleanup. Second, the standards of proof for the EPA are less stringent than those required under common law. Third, the burden of proof is shifted to potentially responsible parties to show that they are not liable. According to others, however, draconian liability is necessary so that people take proper care with hazardous substances.

Superfund reform efforts in the 103rd Congress failed, but it is virtually certain that industry and environmental groups will tackle the issue again in the 104th Congress. The question of who should pay (and how much) for cleaning up hazardous substances is also important on the state level, since many states have adopted their own hazardous substance cleanup programs to supplement the federal program.

This report examines ideas for reforming Superfund liability. It looks at the three forms of liability and asks how efficiently alternative proposals reduce risks, allocate costs, and allocate risks among potentially responsible parties. A good liability rule should encourage people to prevent pollution and clean it up when it happens. However, it should keep in mind that there is such a thing as “too much cleanup” or “too much prevention.” Liability rules should make people bear the consequences of their actions by paying to clean up (to a reasonable level) the contamination that they've caused. However, to punish people for unforeseeable, non-negligent contamination that occurred long ago would have no deterrent effects. In addition, liability rules should be structured so that the allocation of costs is fair and risks can be spread for those parties who cannot easily absorb large risks. In some cases, though, a tradeoff among these goals may be necessary.

This report concludes that:

(1) In cases of retroactive application:

Strict liability should be eliminated; and,
A negligence-based rule should be adopted for both care and mitigation.

(2) In cases of prospective application:

Strict liability should be retained;
Joint and several liability should be eliminated, except when the parties have a contractual relationship (as do generators and site owners, or buyers and sellers of land).

Garbage by the Pound

info@reason.org (Lisa Skumatz) — Wed, 01 Feb 1995 00:00:00 EST

...

Solid-Waste Management

info@reason.org (Lynn Scarlett) info@reason.org (Joe Sloan) — Sat, 01 Oct 1994 00:00:00 EDT

How-To Guide 16 EXECUTIVE SUMMARY

Over 50 percent of U.S. cities of varying sizes contract all or part of their refuse collection services. The National Solid Wastes Management Association (now Environmental Industries Association) has estimated that at least 50 percent of disposal capacity is privately owned and operated. While no comprehensive surveys have recently been undertaken, the private-sector role in the provision of waste management services appears to be increasing.

U.S. models of privatization take many forms. For collection services, at least six different models of private-sector service delivery exist. These include:

single-district, winner-take-all competitive contracting,
multi-district competitive contracting,
noncompetitive negotiated contracting,
�free-for-all� competition,
nonexclusive franchising, and
competitive exclusive franchising.

In addition to these different privatization models, local governments employ a variety of procedures for: 1) specifying the desired scope of service, 2) evaluating service-delivery options, 3) selecting service providers, and 4) monitoring providers� performance. The breadth and diversity of experience in privatization thus permits an evaluation of what procedures and programs result in high-quality, cost-effective waste management services. This paper will identify those privatization procedures and programs that enhance success.

Successful transitioning from public-sector to private-sector contracting of waste services requires up-front evaluation of the existing public system.

What are the components of the current system?
How do these components interrelate?
Who currently provides each service component?

The hard work really begins after the successful proposer has been selected through the RFQ/RFB process. The aim in contract negotiation should be to establish an agreement whereby the local government maintains needed control over its waste stream, residents are assured low-cost/high-quality waste management services, and the private contractor is able to maintain a profitable business.

The contract should include several critical elements. These include:

A clear definition of the scope of work required. Waste management involves an array of different services. Successful privatization requires that one define which of these services will be transferred to the private sector.
A definition of minimum service requirements. Once the scope of service is defined, public officials need to clearly define minimum service-level requirements. This includes such matters as frequency of collection, permitted hours of operation, insurance and bonding requirements, health and safety restrictions, permissible service complaint levels, and other basic service parameters.
A description of risk, rate, and termination provisions.

There is no single best way to structure the contracting of solid waste and recycling collection services. However, in any contracting decision, the twin goals of service quality and competitive cost should guide the design of the bidding process and the delineation of contract details. Ultimately, long-term success of contracting depends on depoliticizing the contracting decision as much as possible, using clear quantitative and qualitative performance standards, and clearly spelling out the responsibilities of the public and private sectors.

Variable Rates for Municipal Solid Waste

info@reason.org (Lisa Skumatz) — Tue, 01 Jun 1993 00:00:00 EDT

Executive Summary

Most U.S. waste agencies have traditionally provided unlimited refuse removal to all citizens, funding that service either from their general funds or through flat-rate, "all-youcare- to-dump" billing. This type of service provision represents a simple solid waste policy: clean up the garbage.

Yet by the late 1980s, increased landfilling and incineration costs, tight local budgets, and growing environmental concerns began to fundamentally change the mission of many solid waste agencies. Many agencies began to design programs to divert waste from the "disposal stream."

Since waste-management decisions are fundamentally made by the solid waste customer, waste policy, in fact, becomes a matter of influencing customer behavior. Price signals are an effective way of influencing customer behavior. Charging refuse rates that vary with the level of waste disposed can bring market-style decision-making to solid-waste management.

Communities that implement these "pay-as-you-throw" variable rates in conjunction with recycling programs have routinely reported between 25 percent and 45 percent reduction in tonnage going to disposal facilities. Moreover, consumer surveys in these communities show that variable rates influence consumer purchasing behavior, giving them an incentive to reduce household garbage by buying less wasteful packaging, composting yardwaste, eliminating "junk mail" deliveries, and so on.

Over 1,000 communities nationwide now having variable rate systems, up from a handful just a few years ago. This increase in use of variable-rate systems has been driven in part by state legislative requirements requiring or encouraging use of such waste collection fees.

Since the popularization of these fees as recently as the late 1980s, fully 20 percent of legislatures in the United States have implemented laws that encourage or mandate variable rates. Features of successful legislation include: 1) allowing community flexibility, while emphasizing the importance of appropriate and real incentives to customers; 2) making incentives available for implementation of variable rates; and 3) encouraging feasibility studies of variable rates at the community or regional level.

Initial evidence indicates that variable rates can result in reduced waste generation and disposal. However, simply stating program participation figures or providing a gross comparison of tonnage diverted are inadequate measures of the long-term cost-effectiveness of these pricing systems. Program evaluation must take into account local prices, conditions, and facilities, customer behavior, recycling markets, and collection and disposal systems to determine the appropriate emphasis on waste reduction, recycling, and other waste management programs. This is the next key step in improving waste-management decisionmaking.