Recycling is becoming less profitable in America

Aaron C. Davis has an excellent piece on this theme.  Here is one bit:

Once a profitable business for cities and private employers alike, recycling in recent years has become a money-sucking enterprise. The District, Baltimore and many counties in between are contributing millions annually to prop up one of the nation’s busiest facilities here in Elkridge, Md. — but it is still losing money. In fact, almost every facility like it in the country is running in the red. And Waste Management and other recyclers say that more than 2,000 municipalities are paying to dispose of their recyclables instead of the other way around.

But why?  According to Davis:

1. “A storm of falling oil prices, a strong dollar and a weakened economy in China have sent prices for American recyclables plummeting worldwide.”

2. Consumers are bringing too many items to recycling centers, and with inadequate sorting.

3. Larger bins have encouraged indiscriminate contributions: “Residents have also begun experimenting, perhaps with good intentions, tossing into recycling bins almost anything rubber, metal or plastic: garden hoses, clothes hangers, shopping bags, shoes, Christmas lights.”  A lot of people simply put in their garbage.

4. Many small problems are accumulating in the user contributions to recycling, such as consumers no longer breaking down their cardboard boxes as they used to.

5. The value of recycled newsprint and glass just isn’t that high right now.

Previously I had simply assumed that recycling technologies would scale rather easily and effortlessly, but maybe that isn’t the case:

“If people feel that recycling is important — and I think they do, increasingly — then we are talking about a nationwide crisis,” said David Steiner, chief executive of Waste Management, the nation’s largest recycler…

Do read the entire article, and while you’re at it Adam Minter’s Junkyard Planet.

Comments

One anecdotal, Los Angeles local indication of the desirability of scrap metals is the amount of time it takes for a piece of scrap metal left on the street to be picked up by roaming metal scavengers.

Before this year, an abandoned piece of scrap metal would remain in place in a nearby alley for only one or two days before being picked up by someone. But this week I've seen a desirable piece of metal in the usual alley go uncollected for five or six days. On the surface, it does look as if the scavengers and their trucks aren't circulating as frequently as they used to. Of course, this is just one small data point.

After the economic crash of 2008, it became common to have several people root through our garbage cans. (We bought a shredder to reduce the chance of identity theft.) But I haven't seen them in the last year or two.

"Scavenger"is a lovely old-fashioned word: in my childhood they were referred to as "scaffies".

Maybe another nudge is needed?

Place a higher levy on garbage and stop charging people for recycling bids.

Sydney has a nudge. Put drink containers in a recyling bin to win movie tickets: http://www.cityofsydney.nsw.gov.au/live/waste-and-recycling/clean-streets/envirobank-reverse-vending-machines

And the state of South Australia pays people to take empty drink containers to recyclers.

That would only aggravate problem #2.

Did you read the same post as I did? The problem described is very much not insufficient use of recycling bins by consumers.

Zealots can be deaf. But for that reason, this comment thread is entertaining

+1

Actually it is more of: what people aren't doing what I believe in? Well push their faces harder into the dirt then they will realize I was right.

It's really their lack of awareness and adaptability that brings the humor.

Phase 1: Recycling will save the planet.

Phase 2: Actually, recycling is no longer very important or necessary.

Phase 3: Dammit, fewer people are recycling now! HOW CAN WE GET THEM TO RECYCLE MORE???

Use the money form the garbage tax to build better recycling centers that can properly separate the various materials.

This is how it works in my city. Garbage stickers for roughly $3.80/can, unlimited free recycling. Pretty much everybody has a 50/50 trash-recycling ratio or better.

Better for who?

I think the "or better" was about the ratio -- meaning that 50% or more was going to recycle rather than trash.Pointing out that if trash costs to get rid of but recycling doesn't more stuff will be seen as recycleable and not as trash.

Yep, people who don't recycle proper need to be shot.

As long as we recycle the corpses and bullets.

How is that going to stop people putting garbage into the recycling bins? The issue is not getting enough recyclable material. It is the cost of operation and the value of the commodity material that they sell.

I used to volunteer at a recycling center in the nineties and learned a lot about how they work. They are really dependent on commodity prices (which is set by the market and they can't control), and it really drives up costs when they receive material they can't actually recycle or need to spend time to put into a usable condition for the baler.

As a result, when I recycle I am very good at breaking down boxes, removing waste from materials, and only including those materials listed as accepted. Most people don't bother to do that.

I had a recent roommate who put everything in the recycling thinking she was doing good. I had to keep telling her that most of it was garbage and was actually hurting the recycling center if she put it in. I imagine there are a lot of "environmentalists" or "progressives" out there who are creating these problems out of sheer ignorance.

If you put garbage in the recycling bin, it still ends up in the garbage. It just adds cost to the recycling center to segregate it out from the stuff they can use and put it in their own dumpster.

My guess is America would be behind on automation for recyling sorting compared to down under thanks to lower minimum wages. But the machinery for sorting our all in one recycling bins is pretty sophistocated and includes magnetic separation and intelligent optical sorters. Of course, in many places a lot of work is still done by hand since big automated machines are expensive. And if it wasn't worthwhile to invest in automation in the US before the value of recycled materials fell, it's not going to be worthwhile now. Of course, I expect the cost of automation gradually fall in relation to the cost of labour - even if wages continues to stagnate in real terms for lower income Americans.

Do we really think people working in the recycling centers make anything resembling the MW? Though it is admirable how well you can steer the story into a talking point.

Jay, so do people working in recycling centers who sort recyclables make above or below the minimum wage in the US? I don't know enough to know which way it goes. In Australia people who sort recyclables in recycling centers typically make around minimum wage, while people you see picking through bins for deposit containers in South Australia and the Northern Territory, typically make less than minimum wage. (Or at least the ones I employ do.)

Your guess is incorrect. Please try again.

Please tell me about recyling automation in the US. (If that is what you are referring to.)

Maybe we can bury the sorted recyclables in giant holes and then dig them up when prices rise?

Why not just bury them and build beautiful golf courses on top?

Another interesting thing which the article appears to omit: roaming people who, quite profitably, cherry pick the most valuable recyclables right out of every blue recycling bin in a neighborhood. This is a city-wide phenomenon in Los Angeles.

It's no wonder that the stream of recyclables is mostly just left over, low value items and garbage. All the good stuff is gone by the time city trucks arrive.

Does this happen in other cities?

Yes, it is commonplace in San Francisco.

I am surprised recycling was profitable in the first place. I thought only aluminum recycling made any economic sense whatsoever.

A few months ago I was listening to RadioLab, and they had a feature called "Poop Train" on New York sewage. They used to concentrate it, and ship it by rail all the way to Colorado (the only people who would take it off their hands, most places did not want anything to do with NYC). The Colorado farmers found it was a highly effective fertilizer. Unfortunately, with the rise in oil prices, NYC no longer wants to pay to freight biosolids and is now putting them in landfill, much to the chagrin of the Colorado farmers and biosolid processors.

California pays per bottle, plastic or glass, and aluminum can.

Thus the price has a floor.

That's interesting. In Adelaide biosludge, what's left after sewage has been treated, is free but the farmers have to come and pick it up themselves. I don't know if there's ever been a shortage of farmers willing to take our crap.

Recycling has always been profitable for various materials. In fact, one large group of objectors to the building of sewage systems were people who profited from selling human poop.

"Recycling has always been profitable for various materials."

Some metals, maybe, for small time scavengers. Bigger firms like Waste Management have been heavily subsidized for collecting supposed recyclables and then taking them to landfills. The entire business is based on the feel-goodism of suburban soccer moms who think that they're saving the planet by putting their empty soda cans in blue plastic bins on the curb. People spend a fortune acquiring an attractive home, maintaining its appearance, keeping up the lawn and then leave garbage on the curb in front. It's a crazy world.

When I was an undergrad ('99-'03), my intermediate micro professor used to say that aluminum was the only material that could actually pass cost/benefit analysis, in terms of recycling. I never could find evidence to the contrary.

It's a big mistake to think of recycling as "profitable." Unfortunately its proponents have sold it that way.

"Less expensive than trash" is closer to the real story.

Anything that requires constant vigilance on the part of the users to sort, clean, break down, not put anything incorrect, etc, into the bins AND must be heavily subsidized by the man does not make something profitable in the traditional sense, profitable to the recyclers maybe.

Hmm, seems like this might be an application of Alchian's Law (if I'm remenbering the lable -- basically high quality goods ext exported when the transportation cost for high/low quality are the same).

Do you remember back around 1990 there was a huge scare about how the world was running out of places to dump garbage? It turned out to be basically a PR offensive by Waste Management Inc. to give them the upper hand in negotiating dumping contracts with municipalities.

Another rising cost, unmentioned by the article, is name sponsorship of professional golf tournaments. Brand recognition is increasingly important for recycling companies, especially among golf fans. http://wmphoenixopen.com/

Is it though? At this point Waste Management is the Google of waste management.

I happened to be in elementary school at that time, it was when I first learned to distrust the wit of teachers. I made the mistake of asking "the garbage has to come from some place when they first make it, why don't we put it back there?" I never understood how we could have more garbage than we extracted from the planet and how that could lead to us being buried in garbage.

Yeah, I remember that.

IIRC, the landfills in and around LA were all more than half full and filling up really quickly because of the increasing population. It was described as almost some sort of crisis. Interesting to learn this angle on that story now ...

OTOH, it seems to me that one of the benefits of that whole effort has been the transition to standardized bin sizes and more automation in the sanitation trucks. It only takes one person to drive and collect the garbage now. And it's an easier job than in the distant past. FWIW.

Well, that's not the way trash is picked up in New Jersey, but there are other reasons for that.

Southern California was not lacking in deep canyons to dump trash into. Eventually, you push dirt over the top of them and make them into parks or golf courses, like the Mountain Gate Country Club in Sepulveda Pass off the 405, a mile north of the Getty Center art museum, which was converted from garbage dump to country club in the early 1970s.

When I was a youngster my father explained to me the economics of recycling, as we then didn't call it: if only a few people store their old newspapers for collection, they have some value to the collector. If everyone does it "the bottom falls out of the market". Roughly the same would be true of (aluminium foil) milk-bottle tops, and the like. ( I presume it wouldn't have been true of recycling whole bottles, such as milk bottles, pop bottles, and beer bottles.)

He also pointed out that the economics depended on the householder doing a fair bit of the work i.e. segregating the paper, milk bottle tops, and whatnot.

I suspect that the intervening decades have proved the old boy right.

P.S. there was at least one natural, local market for old newspapers - the fish and chip shop.

If I put something wrong in the bin, I get a nasty note attached. So I started throwing dirty plastic in the trash, rather than washing it.

Time to stop forced recycling and just go back to burying everything in land fills.

Although I often point to the drawbacks of living in an "unenforceable city" like Los Angeles, I can at least mention that, in LA, it seems that pretty much anything goes in the blue "recycling" bins.

I haven't seen any nasty notes on anyone's cans. I've never even heard of such a thing from anyone here. One guy I heard of dug out his entire front yard in the course of landscaping and put it into his green bins week after week until it was all gone. No tickets. The sanitation truck drivers come through and take it all away...

In LA, most rules and regulations are more like nice-to-haves. Mere suggestions.

Politicians who try to enforce rules generally either lose their source of campaign funds or find themselves accused of some sort of crime against humanity. The only kind of discourse/advocacy that's allowed is along the lines of "we need more money for public outreach and education."

You should move here. It's great.

Much of recyclable waste is packaging. I detest packaging, not so much because of the waste but because it's often difficult to handle. Of course, packaging is part of marketing: it's designed to make the sale not facilitate the product's use. If packaging were standardized, it would facilitate both its handling and its recycling. Indeed, if products were standardized, wouldn't they be better?
Wouldn't quality differences be easier to detect? Wouldn't they be easier to use? Wouldn't they be easier to recycle? We've been brainwashed to believe that minor differences, in both the product and its packaging, is a good thing because it gives the consumer "choice". That's ridiculous. What it does is provide greater potential for deception. I'll come off my soap box and mention a reason why recycling has become less profitable: much of the recycled goods are used in construction materials (insulation being one I'm familiar with), and the depression in construction has diminished the demand for recycled materials. Now that construction is recovering, I would expect the profitability of recycling to improve. Recycling is just one of many activities profoundly affected by the construction industry. The construction industry, in turn, is dependent on growth (in population). In my state, Florida, growth is the largest industry. Does growth make Florida more productive? Does growth add to Florida's productive capital? Sure, growth is better than the alternative (leaving Detroit), but like packaging, growth masks what's beneath it.

I believe in Germany manufacturers are charged for the cost of disposal of their products. As a result, they have a strong incentive to make their packaging easy to recycle and be collected so they can recoup their costs by proving it isn't going into the trash. I'm not sure how exactly it works, but if something similar was adapted here, we'd see a change in how much packaging was used and ease of recycling.

You are completely spot on the importance of recycled materials in certain industries. When they have a downturn, it impacts the value of the commodities.

I would like to use your comment as a jumping off point for noting that I find the idea of individually wrapped slices of cheese mildly insane. Do people really have such problems with the slices sticking together that they need them in their own plastic wrappers? This actually seems less convenient to me, because it takes extra time to unwrap each slice and the cheese is just as likely to stick to the plastic as it was to the other slice of cheese.

The bashing now is a consequence of selling recycling to the public as free service. If a few years ago recycling was sold honestly as a tool to reduce the environmental impact in the place were raw materials are extracted and as a tool to minimize landfill size and pollution risk, no one would be making questions today.

However, why the great news are buried by the end of the article?

"With oil prices driving up transportation costs, manufacturers have engaged in a race to make packaging more lightweight. Coffee cans disappeared in favor of vacuum-packed aluminum bags; some tuna cans went the same way. Tin cans and plastic water bottles became thinner, too: The amount of plastic that once came from 22 bottles now requires 36."

One of the objectives of recycling is minimize the environmental impact of raw materials extraction. Making 36 PET bottles with the amount of plastic you made 22 has at least the equivalent impact of a recycling rate of 64%. Bravo.

Minimizing landfill size is not a meaningful goal and there is no pollution risk, so we left only with the claim that recycling pushes down commodity prices and thereby reduces extraction activity. Seems a bit dubious to me. I'm sure there is an effect on the margin but I doubt it pays for the residential recycling boondoggle.

I think (2) is the big one. Back in the day, it was typical for municipalities to require people to sort everything into glass, plastic, paper, etc first before giving it to the recyclers. Not only did that mean less sorting for recyclers, it also means less non-recyclable material being sent overall. Eventually factories came along that could automate some of this sorting, and I think that's how we ended up with today's one-heap recycling policy, but that has to be far more expensive than pre-sorted recycling. And to make matters worse, the new policy has encouraged people to recycle indiscriminately, putting trash in with the rest.

Don't you use different bins for different things? We have a green bin for garden rubbish (it goes to be composted), blue for paper, glass, plastic and aluminium, and black for the rest. You can also tie on a little plastic bag to hold batteries.

No, most US cities with curbside recycling have just one bin. It's kind of silly that the solution (multiple bins) is so obvious but isn't really being proposed.

There is a big household impact from multiple bins, in that the household has to sort and store those things.

We used to have two small bins, and I put paper in one, everything else in the other, but they've replaced that with one big bin, the same size as our trash can. It only gets collected every other week but it's generally filled to capacity while the trash can doesn't get close to halfway full.

Each of garbage, recycling, and yard waste it handled by separate trucks.

There's also a collection issue in that the truck will only have so much space for any given type and that will be the limiting capacity -- so there's a gain on the collection side with the single bin approach I would think.

Yes. That's pretty much what Los Angeles has. (But no battery bag or e-waste. For that you must go to a special collection center.)

In addition, I believe there is a bin of a different color for people who have horse manure to dispose of. (Yes, some LA homeowners do have horses.).

It's different all over the country. In a rural California town, yes, it's a large green bin for compostables (mostly grass clippings), a medium sized blue bin for glass, aluminum, paper, and plastic, and a small black bin for everything else. In suburban Northeast New Jersey, all your trash gets picked up twice a week, and all your recyclables get picked up once a week. What counts as recyclable is considerably reduced from what California calls it.

Expensive for whom? It's much cheaper for me (the household) to dump everything with the little arrows on it into one container rather than take the time to sort it out. It's much cheaper for GM if you agree to assemble the car yourself, too.

John Tierney explained in the New York Times almost 20 years ago that "Recycling Is Garbage" http://www.nytimes.com/1996/06/30/magazine/063096-tierney-magazine.html .

Exactly my thoughts. My understanding was that most recycling didn't make sense economically, but it's turned into a quasi-religious ritual.

It IS a religious ritual. Once, while I walked out my (always unsorted) trash to the 100% landfill dumpster, a new tenant asked me about recycling bins. I replied, "I'm Roman Catholic, not Environmentalist." She was speechless and red and I probably could have fried an egg on her forehead.

Sidebar: The main 716 city (equally True Blue "Unenforceable" as LA - but with an East German economy) also has zero recycling enforcement. I've been told by a sanitation supervisor that strict enforcement would only result in widespread dumping.
That said, one or two of the 716's trendoid burbs (with near zero NAM) are quite strict recycling, but the vast majority don't care.

Abysmal marketing. Contracts given to ad agencies that sell soap. Old psychology. When I was twelve and sold newspaper subscriptions I knocked on doors. Mid-morning Saturday - "Hi, I'm (name) your local recycler. Do you have any computer monitors (etc.) that need recycling today?" - once a year each household. Make it personal. Show the results on blogs. I care about recycling when I see the local down-and-outs going through the garbage trying to make a few scents. Not when I see advertisements.

An entire comment thread without any discussion of the solid waste disposal act?

Weight isn't a good measurement of value. And we are chasing after the last **Cough** marginal product.

About 10-15 yrs ago the place I worked at had a subscription to Waste News, the back pages of which charted the market price of various recyclables. Inevitably metals and newspaper had positive values, and the rest (mainly plastics) had negatives, i.e., you could expect to pay for someone to take this junk. The market for plastics was based upon government mandates and payouts. My information may need to be updated, but I've never recycled plastics since reading those.

How did the price to dispose of plastics compare to the price to dispose of trash?

I don't recall the trade journal making that comparison easy (Landfill tipping fees, for example are about $45 per ton, and most household recyclables are lightweight and measured by pound)

But the distinction you draw is not a clear line. If there is little or no demand for a given secondary use, then part of what you are paying is for its storage in a warehouse for the day there is demand. In the original days of the environmental movement, storing something without value and without a plan to use would have been called unlicensed waste disposal.

Some people appear to be under the impression that recycling is a modern thing. But it has always been going on. The cost ratio of raw materials to labour used to be much higher and so, as a result there was a lot of recycling, except it wasn't called that. The first paper mill to use recycled material in Australia was built in 1815, which was reasonably early given that the first convicts only showed up on the continent 27 years before. Waste paper collection started in the 1920s in Melbourne. (Before that, most households generally had very little in the way of waste paper.) Metals were of course recycled, by blacksmiths at first and later on an industrial scale. Glass was also recycled with bottles either being reused as they were or melted down. It really wasn't until well after World War II with declining material costs and increasing costs of labour, along with changes in packaging materials, that recycling started to really fall off as a portion of total waste produced. But improvements in technology and also efforts by manufacturers to make recycling easier have offset the trend somewhat. With the cost of waste sorting and handling gradually coming down I can see the portion of household waste being recycled increasing above what it is today.

People have been recycling houses, jewelry, and other possessions for thousands of years. We have entire massive industries devoted to reselling used stuff someone created and someone else once bought new.

Of course, none of that is what they call "recycling" now, which is apparently primarily focused on some sort of religious worship ritual of sorting your trash (bottles and plastic and cardboard) to somehow benefit the bureaucrats?

Having households sort trash into multiple categories makes no sense. At least not here where recycling sorters receive less than the median wage and are much more efficient at it than the average householder. Just two categories are all that's required, recyclable and non-recyclable, and one category would do in a pinch. Of course, waste management companies have an incentive to push costs onto households regardless of how inefficient that is, but municipalities that let them do this are really not doing their jobs properly.

This would seem to be a case where the economics is pure: if the value of the recycled material is greater than the cost of recovering it, you recycle it; if not, you store the garbage until it becomes cost effective to recycle it (storage costs included!).

Right?

Sounds straightforward if also considering the cost of dumping the trash instead of recycling it.

Minter's "Junkyard Planet" (which is a very interesting read) focuses mostly on the recycling of metals, and to a lesser extent on plastics -- rightly so, as this is where the money is. From what I recall, glass is barely mentioned, perhaps because the market for it is less globalized.

The conclusion of his book is that the best way to reduce waste is to buy less stuff (or less disposable stuff, at least) in the first place -- recycling will never successfully compete with reduction and re-use.

I too read the article and found it interesting but was less impressed than Tyler. It seems clear that the business remains profitable for Waste Management and others because the contracts are set up in such a way that the municipalities have to pay for the losses. Is it really a surprise then that the facilities operate at a loss?

How much water is wasted cleaning items to be recycled!

Like the anti-scavenging laws, rinsing out your recyclables before placing them in a bin does not appear to be enforced in Los Angeles.

Let the blue-bin scavengers do it. Let the recycling centers do it. Let the city do it.

It's effectively not your problem.

Why is this a recycling only problem? Aren't margins going down everywhere?

Its a problem because municipal government is paying for the losses. And it's not just tighter margins because of the increased processing costs; its the lack of demand for some of the recycled materials. If the demand doesn't exist, like in the case of glass, it's going to end up at the landfill one way or another.

The article is excellent. My only quibble is that it fails to mention that the sort of recycling conducted by Waste Management and other municipal recyclers accounts for only around 5% of what's recycled in the United States. The vast majority of recycling isn't household, but rather related to manufacturing, demolition, construction, infrastructure (when fiber optics replace copper, the copper is recycled) and automobiles. All of those recycling sectors are down, as well, and for one very easy to identify reason: commodities prices are down. This is nothing new, and for the non-municipal recyclers, it's just the latest downturn to wait out (the last was 2008/9).

Municipal recycling has been around a long time, too. But the technologies being applied to processing it are not new. Many were first installed in the last decade, and at considerable costs that seemed to make sense at the top of the commodities cycle. They do not make sense now, obviously, and that's why we're seeing the panic. So far as I know, no studies have been done on the cost of recycling, say, a ton of aluminum that comes from households, versus a ton that's collected in cuttings from the floor of a GM plant. But based on what I know about the costs of collecting for municipal recycling facilities, I'd hazard that it's considerably more expensive, and thus Waste Management is squirming.

A 21C business model - Create a business that profits by guilt tripping people. This has worked with recycling, all forms of alternative energy, "free trade" coffee and so on. You don't even need to do it yourself, self appointed moralists will do it for you. PT Barnum's observation is never more correct than today.

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