Reason Foundation - Authors > Lynn Scarlett

Conservation, Not Commerce Keys Revival of Environmental Localism

info@reason.org (Lynn Scarlett) — Fri, 02 Mar 2001 00:00:00 EST

Tech Central Station

An oil spill off the coast of Santa Barbara in 1969 helped trigger a volley of federal environmental statutes. Those statutes left Americans with volumes of top-down prescriptions from the nation's capital. Thirty years later, that top-down legacy is bucking up against opposition — from citizens, city officials, some scientists, and sea-centered businesses — along that same California coastline.

Just as the 1969 spill and its regulatory aftermath became symbolic of environmentalism in the 20th Century, the outcome of this new battle may be symbolic of what to expect from 21st Century environmentalism. Thirty years ago, in the political tug-of-war between localism and federal power, the feds prevailed. Voices for greater local control, however, are gaining momentum. California's coastline politics is a microcosm of the waxing of this new localism.

The new localism is not mainly a battle between economy and environment. It's a struggle over information — over who has knowledge tailored to best manage ocean habitat and resources. The locals say they, not the feds, have that knowledge.

After the 1969 oil spill, federal lawmakers passed the 1972 National Marine Sanctuary Act to protect marine habitat and resources. Out of the act came the Channel Islands National Marine Sanctuary, created in 1980 to protect the marine area surrounding the five Channel Islands that lie off the south-central California coast. To protect marine resources, the act banned oil development, prohibited illegal discharges of fuel, waste, or other materials into the waters, and required permits for any seafloor alterations within marine sanctuaries.

Marine sanctuary managers were supposed to produce a new management plan every five years. It took, instead, almost 20 years before a new management plan began to take shape.

Two decades of accumulating ambition is getting condensed into an aggressive federal management plan that may call for expanding the original six-mile boundaries around the island, possibly extending the sanctuary all the way to the mainland shores. A new regulatory package may accompany the management plan. That package could restrict boat traffic through the zones, establish no-fish zones, and prohibit seafloor alterations, including the deposit of sand dredged from harbors.

Local port and harbor officials have no dedicated seat at the table of the Sanctuary Advisory Council that makes recommendations regarding sanctuary management. And even this council has no real decision-making authority. That authority lies with federal officials who run the marine sanctuaries.

North of the Channel Islands, harbor managers in Monterrey Bay have a taste of what this federal authority means. There, the marine sanctuary already includes the shore. Since the harbor comes within sanctuary boundaries, just about every harbor-management decision requires the OK from national sanctuary officials. Moving a boat-mooring block 50 feet, for example, can trigger review by these national officials. Harbor dredging can require approval by sanctuary authorities.

To date, sanctuary authorities have called municipal input on the sanctuary management plan premature. Wait, they have said, until the Environmental Impact Statement for the revised plan, which will include boundary-expansion options, is complete. Locals, in other words, can react to the plan. They cannot help shape it from the outset.

But local folks want to help shape the plan.

In part, their motivation is economic. The value of seafood landed in Santa Barbara and Port Hueneme to its south was $40 million in 1999. One estimate puts the total economic value of commercial fishing and related activity at $280 million for the area. Recreational fishing adds to that tally. Commerce through Port Hueneme generates $388 million annually and produces $34 million in tax revenues.

This is the same-old, same-old environment versus economy argument that has long sparked feuds over environmental policy. But the new localism debate goes beyond the matter of economics. Local (and state) officials say environmental protection is at stake in the sanctuary management plan debate. These officials say they have a better understanding of marine habitat than federal managers.

From Washington, "bigger" often looks better, translating into a sanctuary-expansion mindset. But local folks say wholesale implementation of large reserves, according to a report by the Ports and Harbors Working Group in the south-central coast area of California, "countervails conventional fisheries-management wisdom." Local experience has shown that "fishing modestly over large areas is more prudent (and more likely to encourage resource sustainability) than fishing intensely over small areas."

Yet expansion of the marine reserve area could squeeze fisheries into an ever-smaller area. The result, opines the Ports and Harbors Working Group, would be a "congestion externality" — poor fisheries management resulting from crowding fisherman out of a larger area as "no-fishing zones" expand.

Dredge disposal looms as another potential environmental problem. Harbor dredging now occurs with oversight from federal, state, and local authorities. Timing and disposition of dredged sand are determined based on knowledge of local conditions. Federal usurpation of that local decision-making could well interrupt time-sensitive dredging needs, with adverse environmental consequences.

Thirty years ago, environmental protection had barely begun to surface as a high-priority value for Americans. Environmental protection efforts reflected that dim awareness — such efforts were sporadic and tentative.

Today, environmental values are situated squarely within the American "psyche" — over 85 percent of Americans say they are environmentalists to some degree. That environmental commitment shows up in local and state laws, in private conservation efforts, in investments in environmental research.

For the Santa Barbara coastline, this means 30 different federal, state and local agencies already oversee management of the Santa Barbara Channel and its harbors. Superimposition of a sanctuary "supra-authority" over this decision-making structure would sidestep the knowledge that comes from near-hand, long-time experience with local circumstances and conditions.

How the Channel Island sanctuary debate plays out may be a bellwether for 21st Century environmentalism. A growing chorus of voices — on issues ranging from marine sanctuaries to grazing lands to watersheds — is pressing for a greater local voice in environmental decisions that were relentlessly pushed to Washington, D.C., for the past 30 years. Their message? Local decision-making is critical to maintaining environmental protection and community well-being.

Lynn Scarlett is president of Reason Foundation.

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.

Attacks on Norton, Whitman Focus on Form, Not Results

info@reason.org (Lynn Scarlett) — Mon, 15 Jan 2001 00:00:00 EST

Tech Central Station

President-elect Bush's selection of Gale Norton, an articulate champion of property rights, as his Interior secretary has triggered a volley of protests by credentialed environmentalists.

These protests ignore the record. Norton has pursued innovative state and local solutions to problems that respect property rights. Furthermore, Norton as attorney general in Colorado has supported industry self-audits as a means of curbing pollution, something that Ken Cook of the Environmental Working Group told the Lehrer News Hour amounted to giving companies a right to pollute.

Cook's critique puts environmental form over substance. The only means to protect the environment, according to the environmental politicos inside the beltway, is top-down regulation and federal set-sides. Anything less, they believe, amounts to a capitulation to industry and destruction of the environment.

That's why Christie Todd-Whitman, Bush's choice for EPA administrator and considered a moderate by beltway standards, has received only a tepid welcome by environmentalists as well. They liked the fact that she supported a big land-protection measure as governor of New Jersey, but fiercely criticized her for eliminating the position of state environmental prosecutor.

What her critics did not explore was the actual environmental outcomes under Gov. Whitman's watch-and they were good. Through its facility-wide permitting program, New Jersey moved toward a results focus. Participating companies set pollution-reduction and other environmental goals. Their permits were tied to meeting these goals. Under the old environmentalism, permits were issued if companies invested in certain prescribed technologies.

One New Jersey company, Huntsman Polypropylene, received a facility-wide permit through which the company, cooperating with regulators, set performance goals. Under the program, the company eliminated 8.5 million pounds of emissions per year. It also upgraded its plant, getting rid of 107 pieces of old, potentially polluting equipment. New Jersey's citizens gained from these improvements. But the company gained as well. The old permits filled up ten binders of paperwork; the new permit was reduced to a 1.5- inch packet.

By putting Gov. Whitman to the old-fashioned regulatory and enforcement litmus test, the Sierra Club altogether missed the real performance story.

Similarly, the self-audit law in Colorado that Norton supports was intended to inspire companies to go beyond compliance - to look for environmental problems that regulators were unaware of - not give them a right to pollute.

Old-fashioned regulations, that give companies permits if they follow certain procedures, install specified equipment, and provide mountains of permit-related data, achieve only what the permits require. Regulators learn only about what's on the permits, get only the emissions reductions they can identify, and nothing more. Under voluntary self-audit programs, companies that voluntarily tried to identify problems, reported them to regulators and then fixed the problems in a timely fashion were to be shielded from fines and punishment for those problems.

Norton and these states have essentially tried to accomplish what former Sen. Tim Wirth, a Democrat, and the late Republican Sen. John Heinz sought in 1988 when they produced a report describing new directions for environmental policy. Theirs was the first of a wave of bipartisan reports calling for a new environmentalism — one focused on incentives, cooperation, and environmental results.

William Reilly, in the first Bush administration, talked this talk. Even Clinton's environment chief, Carol Browner, talked it for awhile, when she proposed a Common Sense Initiative and worked with states on National Environmental Performance Partnerships to generate a softer, gentler, but effective environmentalism.

Unfortunately, the big national environmental organizations who view this softer, more voluntary and cooperative approach with, at best, caution, have since won the day in the Clinton administration.

They succeeded in pushing back to the forefront their agenda of prescriptions, permits, and punishment, garnering from President Clinton in his last executive actions the unilateral set aside millions of additional "roadless" acres on public lands. Similarly, they've gotten Carol Browner to propose over 80 new regulations.

All that's neglected in these top-down approaches of permits, process and punishment, though, is real protection, performance and progress. What environmentalists fear is that Norton and Whitman may at least try another way to achieve goals their approach hasn't — a new environmentalism that uses the tools of incentive-based programs to encourage private sector stewardship of our land and natural resources.

Old-style environmentalists used to litigation in a permit-driven regulatory environment are understandably cautious of these new programs. But they are translating this caution into a rhetoric that mistakes the regulatory tools they are used to for the actual environmental results that people want.

Lynn Scarlett is president of Reason Foundation.

Moderate Environmental Agenda on Horizon

info@reason.org (Lynn Scarlett) — Tue, 02 Jan 2001 00:00:00 EST

Solid Waste

The Great Chad War is over—Gov. Bush will succeed Bill Clinton as the nation's next president. Most environmental activists had backed Al Gore. He spoke their language; he shared their comfort with the current regulatory infrastructure. These same environmental activists saw Gov. (now President-elect) Bush as a purveyor of environmental degradation, pointing to continuing air quality challenges in Texas as their evidence. But a political caricature limned in the midst of a presidential campaign offers a poor guide to environmental policy under the new administration—and the new Congress.

There's an enduring French saying, "the more things change, the more they stay the same." The quip offers a fair starting point for assessing environmental politics for the next few years. For the solid waste industry, business as usual will—for the most part—persist.

Focus will be on problem-solving

At the micro-level—the realm of daily rulemaking—many items currently in the pipeline will probably move toward implementation. The Environmental Protection Agency will finalize clean air standards for landfills. Minor modifications to various hazardous waste definitions will proceed. Haggling over diesel rules will continue. New rules may allow alternative landfill liners to permit leachate recirculation and stimulate use of bioreactors.

But these rules all emerge as part of a larger regulatory framework. It is this overall framework that President-elect Bush's critics fear will come under assault. I wager that they are wrong.

Consider the governing context. President-elect Bush faces a Senate evenly split among Democrats and Republicans. In the House, Republicans have a narrow edge over Democrats. This is not a political context in which major initiatives to revamp environmental regulations are likely. Even with a sizeable majority in the mid-1990s, Republicans were unable to push through major—or even modest—changes to environmental laws, with a few exceptions. (Congress did reauthorize the Safe Drinking Water Act with some notable revisions.)

But my predictions of a moderate environmental agenda result not simply from tallying the votes in Congress. What will give rise to this moderate agenda are the evolving sentiments of many members of Congress and an emergent "problem-solving" focus among state and local regulators.

Looking for an end to the stalemate

Stalemated over environmental policies for much of the past decade, many members of Congress want some way out of this impasse. Many Democrats and Republicans want better environmental information systems and performance measures. Some members of Congress want to address problems as yet untouched (or only lightly touched) by regulations. And many Democrats and Republicans want to smooth some of the rough edges of the current regulatory system. They recognize, for example, that the current regulatory framework inhibits more holistic, rather than pollutant-by-pollutant, decision making. They also recognize that the current system, in effect, locks in certain permitted technologies and slows the pace of environmental innovation.

These sentiments situate many Democrats and Republicans together in wanting some modest changes designed to enhance environmental performance. The focus is on performance within the context of existing goals—not on the much more divisive matters of cost-savings and goal selection.

This focus is translating into a quiet search for mechanisms that would nudge the current regulatory system toward a performance-focus and away from a prescriptive system, for example. Eyeing some of the modest successes of EPA XL Projects in fostering more holistic, facility-wide permits, other members of Congress are pondering how such programs can be more widely applied and given congressional support.

States have a window of opportunity

Here's where the emergent problem-solving focus among state and local regulators offers reinforcement for iterative change. States, under delegated authority, now issue most permits and undertake most enforcement actions. This hands-on experience—whether at a landfill, electric utility plant, manufacturing facility, or farm—makes apparent to state regulators the limitations of permits that prescribe specific technologies (rather than environmental results). This experience also makes apparent to them the limitations of laws that segregate permitting processes for air, water, and waste, a segregation that may inadvertently result in pollution shifting (turning an air emission into a sludge problem, for example).

Faced with these challenges, many states have begun to experiment with facility-wide, multimedia permits. Some have introduced incentive-based permits that reward high performance. Several have developed comprehensive performance indicators rather than rely on "bean-counting" of enforcement actions as their measure of regulatory success.

A roadmap for the future

These state regulatory innovations offer a roadmap for a modest congressional environmental agenda—an agenda that centers on fostering and affirming these state efforts while also supporting more investment in development of environmental performance indicators. The state efforts also provide an integrating political context, since states with both Democratic and Republican governors and legislatures are spearheading these modest experiments. Bush's selection of Christine Todd-Whitman, governor of New Jersey, to head up the Environmental Protection Agency, signals that the new president views the states and their experiences as keys to future environmental progress.

No environmental agenda will be immune from criticism, either from those who prefer the status quo or from those who prefer a major overhaul. Already, for example, one group within EPA has challenged the agency's own Project XL as inconsistent with current law and unproven in its benefits. These critics will disapprove congressional efforts to foster more XL-type programs. And critics who view current environmental laws as promoting rules unconstrained by science and too focused on negligible risks will still chafe at what they perceive as unwarranted clean-up goals. But a moderate congressional agenda along these lines is likely to mesh well with the political realities faced by President-elect Bush and a Congress with neither Democrats nor Republicans holding a strong majority.

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.

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.

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.

States Can Teach the Feds

info@reason.org (Lynn Scarlett) — Sat, 31 Jul 1999 00:00:00 EDT

Journal of Commerce

An environmental policy revolution began in the 1970s that put the federal government center stage in the decision-making process.

In the Clean Air Act, Clean Water Act and companion laws, the states became supplicants to the federal boss in what looked like a game of "Mother, May I?"

Even after nearly 30 years, Congress and the Environmental Protection Agency remain largely locked in this old game. Not so for the states, which are launching their own policy revolution.

But this second revolution is not just a churlish rebellion by upstart adolescents.

Now, the states have well-developed environmental laws and a cadre of highly qualified professionals. Nine of 10 environmental enforcement actions are now brought by states. And because state and local regulators implement most federal environmental laws, they have a better idea of what works and what doesn't.

They want to move away from the prescriptive, procedure-obsessed approaches of federal environmental law, and they are not waiting for a green light from Congress or the EPA to do so.

Daily, state regulators experience the limits of mandates and top- down prescriptions that stifle environmental innovations. But even amid these difficulties, the states are achieving tangible results with "out of the box" thinking.

Many states have recognized the value of results-oriented flexibility. Illinois passed its own flexible-permitting law when its efforts to obtain approval from the EPA stalled.

Under the law, Illinois has negotiated with Minnesota Mining & Manufacturing Co., setting an overall emissions cap in which 3M can make process changes without additional regulatory approval — as long as it stays beneath its maximum emissions cap.

This type of agreement saves time and money while improving environmental results.

Many states also see the limits of an obsession with punishment, especially when the "crime'' is a mere procedural violation with no impact on the environment.

California launched a compliance-assistance program in 1988 — well before any significant federal action in this arena.

Many companies that violate environmental laws are not flouting the law. Many are small companies, like local dry cleaners or small gas stations, that simply don't have environmental expertise. California's EPA found high noncompliance rates among these businesses - about half for solvent cleaning, for example.

The old regulatory mind-set would have been to slap them with fines. Under the new mind-set, however, California regulators created compliance manuals to help these firms better understand how to reduce emissions.

So far, the manuals have helped reduce noncompliance by 50 percent to 60 percent. In this win-win situation, the environment improves and companies avoid sometimes costly fines and litigation.

States have also discarded the old mind-set in which environmental values were perceived to eclipse all other values.

Jim Seif, secretary of Pennsylvania's Department of Environmental Protection, says this "purity and Garden of Eden" attitude makes for good political posturing, but it is "a practice which, of course, produced no hazardous waste cleanups" because of the extreme expense or even impossibility of chasing after the last molecule of a given chemical compound.

Wanting results instead of symbols, Pennsylvania passed a land recycling act that set realistic cleanup goals and provided incentives for private land owners and developers to clean up old industrial sites.

Under the new law, over 300 sites have initiated cleanups, and over 100 cleanups have been completed - only a few at taxpayer expense.

Many federal laws essentially prohibit flexible, incentive-based approaches to environmental protection. In other cases, years-long federal delays in approving state innovations has placed them in jeopardy.

Some states complain that federal rules mandate the use of inferior pollution-reduction technology, essentially dragging states down to lower levels of environmental protection.

For many federal policy-makers, the old environmental laws have become symbols, rather than tools, for achieving stated goals. When this is the mind-set, these rules become hard to change.

But times have changed, as have our environmental problems. Now it is time for the process to change, too.

Lynn Scarlett is president of Reason Foundation.

Environmental Information

Tue, 01 Dec 1998 00:00:00 EST

Executive Summary

Environmental-information initiatives, including “right-to-know” laws, currently enjoy widespread popularity. The U.S. Environmental Protection Agency (EPA) has expanded its Toxics Release Inventory (TRI), a database of chemical releases and some chemical uses, and further expansion of the TRI to include “materials accounting” is under consideration. The information generated by right-toknow laws, especially TRI data, has found many different uses. The federal government, and some state governments, use it to track their environmental progress. Journalists write about it; researchers analyze it; environmental groups lobby on the basis of it; and companies and industry groups discuss it in their annual reports. But in terms of securing greater environmental quality and communicating meaningful information about the environment, the TRI process has substantial limitations, as discussed in Part One of this two-part study. Some of the TRI limitations identified in part One of this study include:

A focus on materials-use reduction, often irrespective of demonstrated risk-reduction or environmental quality gain;
Inaccurate characterizations of the health and environmental effects of chemical use, often failing to distinguish between safer and riskier chemicals, and between chemical use that exposes people or communities to potential harm and chemical use that is safely managed;
Overestimation of actual releases through double-counting reported releases, transfers, or waste;
Inconsistent and incomplete coverage of chemicals and facilities;
Creation of an open-ended right of citizens to sue over legal violations that may have no relation to personal harm, risk-reduction. or environmental quality;
The potential to expose trade secrets to competitors, or facilitate industrial sabotage.

This study summarizes the current state of alternative environmental information and environmental management systems, and compares them with traditional environmental information and environmental management measures, such as the Emergency Planning and Community Right-to-Know Act, TRI and Proposition 65. Some of those alternative systems include:

Environmental performance measures, such as those of EPA or the Florida Department of Environmental Protection, which measure environmental variables people find relevant and meaningful.
Environmental-management systems, which make it easier for firms to adopt risk-reduction and sourcereduction goals that fit their own local circumstances. These include private environmental-management codes (Responsible Care, The Coalition for Environmentally Responsible Economies Principles, The Global Environmental Management Initiative, ISO 14000), but they also include nonregulatory state programs that strive to reduce environmental risk or materials use for voluntarily participating companies through technical assistance, pollution-prevention incentives, or flexible compliance. They also include accident-management and accident-prevention programs which can be adopted through private insurance companies, through the action of Local Emergency Planning Committees, or through membership in an industry program such as Chemtrec.
Mechanisms for stakeholder involvement, which increase the ability of relevant stakeholders to become informed about, and provide input regarding, relevant environmental impacts that affect them in their communities. These run the gamut from company communication policies, such as Good Neighbor Policies, to the formation of community groups to deal with well-established environmental procedures like brownfields redevelopment, to the formation of totally new coalitions of stakeholders to address emerging concerns such as watershed restoration.

After reviewing the available alternative environmental information and environmental management systems in development, this study concludes that government, at this point, cannot identify the optimal environmental information or environmental management systems that best address the needs of all the stakeholders. Government should, we conclude, allow and encourage the discovery process to continue, a process in which different reporting and participation mechanisms emerge and compete to provide useful information at reasonable cost. Companies and communities are constantly experimenting with different instruments to determine which ones best serve their needs.

Should government choose not to facilitate this process, they should at least refrain from foreclosing the development of such options by mandating a one-size-fits-all reporting scheme—such as a dramatically expanded TRI—that may offer information that is not always directed at disclosing potential harms to the public or ecosystems.

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.

Race to the Top

Sun, 01 Feb 1998 00:00:00 EST

Preface

A sea-change is taking place in environmental management in the United States today; the states are its leaders.

The old environmental vision, formed in the 1970s and 1980s, was crisis-driven. It distrusted markets and the private sector; punishment rather than cooperation was the method of choice for securing environmental progress. The old vision, which assumed environmental problems and conditions were similar everywhere, called for “onesize- fits-all” regulations mandating acceptable technologies and cleanup methods. Moreover, the prevailing wisdom took it almost as an article of faith that the states lacked the capacity to regulate effectively, would strike cozy deals with bad polluters, and would “race to the bottom” in their attempt to cut environmental standards to attract businesses from other states.

As the largest environmental problems have been addressed, with the remaining problems being smaller, subtler, and varying from place to place, the costs and inadequacies of inflexible, prescriptive, and confrontational policies have become more apparent. Achieving future environmental goals will require innovation, flexibility, cooperation, and decentralization.

Our new environmental vision stresses problem-solving instead of primarily relying on punishment for failure to follow one-size-fits-all approaches. It strives to balance competing values—both environmental values against other values, and some environmental values against other environmental values. It seeks flexibility in compliance methods, so that companies can choose the lowest-cost way of achieving a given level of environmental quality rather than following prescribed approaches. It views the private sector as central to environmental improvement. And it tries to bring decisionmaking authority to the lowest possible level where it makes sense—so that local problems can have local solutions, state problems can have statewide solutions, and federal problems can have federal solutions.

Many states have taken the lead in enacting environmental reforms based on these principles. This report chronicles some of their efforts.

This report builds on NEPI’s report, Building Partnerships for Accountable Devolution (Fall 1996), and on Lynn Scarlett’s report, New Environmentalism (January 1997). Information in the report was drawn from in-person interviews and conversations with representatives from state agencies across the country, and from material provided by the Environmental Council of the States.

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.

Market Oriented Planning

sam.staley@reason.org (Samuel Staley) info@reason.org (Lynn Scarlett) — Sat, 01 Nov 1997 00:00:00 EST

Executive Summary

Under urban planning in the United States, virtually every major development is subjected to the vagaries of the rezoning process and the uncertainties associated with legislative review by planning boards and city councils. In many cases, the planning process creates unnecessary costs and delays and inhibits investments in land as communities evolve over time.

Surveys of the impact of zoning and other land-use controls suggest local regulations add 20 to 30 percent to the cost of housing. Moreover, planners are so absorbed by process and implementation that they spend little time on larger, strategic issues. A survey of 178 California cities, for example, found that landuse permit-processing and rezonings account for almost 60 percent of planners' time. They spent less than 10 percent of their time in general plan preparation. Moreover, modern planning has spawned an unbounded politicization of decisionmaking regarding land use.

Twenty-first century planning will need to incorporate the evolutionary and dynamic aspect of communities to be successful. This implies accepting and integrating the fundamental role markets play in allocating resources in a market economy.

Urban planning and land-use regulations need to adopt market-oriented principles and concepts that build upon a vision of communities as constantly evolving. Planning processes need to recognize the role markets play in meeting consumer expectations and preferences. And, planning practice must limit the politically arbitrary nature of development approval, moving toward a common law, nuisance-based standard for regulating land development. The focus should be on those directly and tangibly affected by the proposed development.

Several practical recommendations flow from these general principles. Specifically,

Planning should include a presumption in favor of property owners, requiring public hearings only if parties directly affected by the project identify tangible impacts on their interests. This approach does require that developers properly notice neighbors of proposed developments.
Local planning decisions should be protected from regional or state interference unless a clear public interest exists or regional spillover effects are not addressed in the proposed plan.
Developers should be expected to modify projects to minimize negative impacts, but these impacts should be tangible and measurable.
Planning boards should adopt zoning districts that accommodate a large number of uses to facilitate changing needs.
Cities should adopt administrative review processes that set forth clearly defined criteria for what is acceptable by local planning boards.
Property owners and developers should bear the costs of property development, including infrastructure directly associated with that development. However, property owners should be given latitude to determine what kind of infrastructure is appropriate.
Standing in public hearings should be limited to parties clearly and directly affected by a proposed development.
Development approval should be based on a set of clearly defined and stable rules, rather than on prescribing specific land-use outcomes. Stability can be enhanced by requiring a supermajority to modify planning board decisions and by requiring pre-application meetings.

Planning that relies on end-state prescriptions and unbounded political intervention into landowner choices, even where tangible impacts are not apparent, is both costly and incompatible with dynamic economies. Market-oreinted planning offers both greater predictability and greater flexibility so that communities can evolve as economies and consumer preferences change over time.

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.

Buying Green

info@reason.org (Julian Morris) info@reason.org (Lynn Scarlett) — Fri, 01 Nov 1996 00:00:00 EST

...

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.

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.

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.

Mandates or Incentives?

info@reason.org (Lynn Scarlett) — Sat, 01 May 1993 00:00:00 EDT

...

Too Little Too Late? Host Community Benefits and Siting Solid Waste Facilities

info@reason.org (Rodney Fort) info@reason.org (Lynn Scarlett) — Thu, 01 Apr 1993 00:00:00 EST

Executive Summary

Most states have established recycling mandates and goals to divert waste away from landfills. These goals have not, however, once and for all solved our waste problems. Even if U.S. cities and counties attain waste diversion and recycling goals, they will still need to handle millions of tons of waste in disposal facilities, including landfills. Yet notin- my-backyard (NIMBY) sentiment has slowed, or even prevented the siting of new waste facilities. Use of host-community benefit packages can help overcome local opposition, resulting in siting of landfills to meet future disposal capacity needs.

Top-down siting of facilities simply is not acceptable to local residents. Host-community benefits (HCBs) introduce market-like decision-making processes that allow local citizens to make choices about whether, where, and how a disposal facility is sited. A 1990 survey by Cornell Waste Management Institute of New York residents revealed that 86 percent believed that HCB packages were useful in the siting process. Another survey of 565 New York residents showed the importance of both financial compensation and environmental protection measures in siting negotiations.

HCBs internalize costs by compensating local residents for any real or perceived harms or losses they experience when a landfill is sited. Moreover, negotiations over the size of HCBs help generate answers to legitimate scientific, economic, and local welfare concerns. Finally, HCBs institutionalize citizen choice.

State legislation can help foster use of HCBs. One state, New Jersey, requires that any community hosting a waste disposal site receive at least $1 per ton of landfilled waste and allows for compensation agreements above that amount. Five other states have legislation to encourage or require compensation and/or enhanced citizen participation in the siting process.

Public and private-sector use of HCBs, while no guarantee that siting of waste disposal facilities will occur, can smooth the process.

Taking the long view reminds us of one more often-overlooked truth about garbage: Ever since governments began facing up to their responsibilities, the story of the garbage problem in the West has been one of steady amelioration, of bad giving way to less bad and eventually to not too bad. To be able to complain about the garbage problems that persist is, by past standards, something of a luxury. [William Rathje, "Rubbish!" The Atlantic Monthly, December 1989.]

Mining the Government Balance Sheet

Wed, 01 Apr 1992 00:00:00 EST

Executive Summary

President Bush's Executive Order (No. 12803) on Infrastructure Privatization of April 30, 1992 cleared away federal barriers to cities and states selling or leasing existing public works infrastructure to private investors. This report reviews the potential for state and local governments to make use of the new option granted them by the Executive Order.

Selling infrastructure enterprises can provide financial benefits to all three levels of government. For hard-pressed state and local governments that sell these assets, the immediate gain is the one-time retrieval of their capital, for use on other pressing needs. Local governments will thenceforth benefit from ongoing property tax payments, as formerly exempt highways, bridges, airports, water systems, and waste disposal facilities are added to the tax base. Each enterprise that is privatized also represents a new stream of state and federal corporate tax revenues. And the federal government will receive the depreciated value of its previous grant investment, at the time of sale.

Privatization of infrastructure is a worldwide phenomenon. Airports have been privatized in Britain; seaports in Britain and several Asian nations; water supply in Argentina, Britain, and France; electric and gas utilities in a number of countries; and highways in many parts of Europe, Asia, and Latin America.

Based largely on this international experience, estimations of the market value of privatized infrastructure are derived in this report. Applied to the numbers of commercial infrastructure enterprises owned by cities and states, valuation rules of thumb yield estimates of the potential sales value which cities and states could realize via privatization. This preliminary estimate is $227 billion.

In light of the easing of federal policy and the sizable potential benefits, state and local governments should consider the transfer of public assets to the private sector.

Integrated Waste Management

info@reason.org (Lynn Scarlett) — Wed, 01 May 1991 00:00:00 EDT

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Managing America's Garbage

info@reason.org (Lynn Scarlett) — Fri, 01 Sep 1989 00:00:00 EDT

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