Going all the way: The Zero Waste Movement

December 11, 2009

A recent move to a rental home has disrupted my personal waste management cycle.  After nearly 30 years of composting household food to create garden soil, I'm now throwing it out with the trash.  Aside from the affront to my value system (and providing me with one more item to feel guilty about when my green daughters come to visit), this has economic consequences as well.  Lower Merion Township recently delivered an "IMPORTANT NOTICE" flyer to all households.  Lower Merion is raising its trash fees for the first time in 10 years. They're also rationalizing fees such that annual pickup of each additional waste disposal container will cost an added $50/year. Interestingly, the only other incentive mentioned in the flyer to reduce trash disposal besides the increased fees is through use of a new "mini-can" option which carries a reduced annual fee. This is puzzling, since the Township has one of the best recycling rates in the region and could have taken the opportunity to plug for more recycling. With a 40% diversion rate, well above the Pennsylvania goal of 35%, Lower Merion has achieved remarkable recycling success in a low key fashion. The flyer could have been an easy way to promote recycling as a mechanism to avoid higher fees, especially since the Township provides a tremendously valuable incentive:  an unlimited number of recycling bins for no additional charge. 

So is more recycling the way to go? The economics of waste management have been much in the news lately.  From San Francisco's mandatory composting law to Pennsylvania communities dependent financially on New York State trash to the Charlottesville, Virginia entrepreneur taking recycling market share from government waste authorities, the waste market is heating up one way or another.  And it's not necessarily a well understood market or one that operates smoothly.  As consultants Eunomia and Arcadis point out in an excellent study of the  European Union, the most obvious market failures in recycling are related to negative externalities (spillover costs such as environmental impacts, or law enforcement) of the alternatives to recycling such as illegal dumping, land-filling, and incineration.  Because these costs are not captured, the costs of the alternative disposal methods are too low compared to the cost of recycling.

To help matters, the EPA has encouraged local governments to use Full Cost Accounting (FCA) to more accurately consider the direct and indirect operating costs of municipal waste services over time. This means, for example, that municipalities should take into account the lifetime costs of operating a landfill, including its eventual closure and remediation. But at this point FCA is only a recommendation, not a requirement. 

One suspects Lower Merion understands the horns of this dilemma well. Scrap market prices for most recovered materials are down from 2008 levels, haulers who collect and sell are apt to raise contract rates with municipal clients to cover their own processing costs.  Materials recycling facilities are not cheap businesses to start. A single stream system built and designed by Sherbrooke, a premier manufacturer of recycling sorting equipment in Canada, can cost US$3.2 million. Those capital costs, combined with variable scrap prices, are why most recycling companies rely on revenues from hauling fees to balance their books. Local governments, who outsource waste management, have no revenue opportunity except household fees. In fact, the more recyclables or waste generated per household, the more collection costs increase.

So, the economics of recycling for a township are fraught. In fact, to those on the cutting edge of green, recycling is part of the waste problem. For example, one claim of the "Super-Green" is that production of disposable/recyclable bottles and cans instead of reusable ones is the driver behind both litter and waste management costs (see treehugger blog). The design, manufacture, and production of products that place the onus on the consumer, rather than on the producer, is a shift that occurred during the last 50 years. Take milk. Fifty years ago, milk was delivered and picked up at household doorsteps in reusable glass containers. Now, consumers go to a store to purchase it in a waxed paper carton that is placed into a plastic bag and brought home, where both the carton and bag are thrown away. Consumers then are charged to pay for disposal. (Note:  I'm not arguing for the return of the milkman, just providing a vivid example).

No one abhors that scenario more than The Zero Waste movement.  As described by the Zero Waste Alliance, Zero Waste emphasizes moving attention from the back end of the process, disposal, to the front end of the process, and "designing and managing products and processes to systematically avoid and eliminate the volume and toxicity of waste and materials, conserve and recover all resources, and not burn or bury them." A key principle is the notion of Extended Producer Responsibility (EPR), a means of encouraging or requiring manufacturers and distributors to take accountability for reducing the inherent waste in products and their packaging post-sale and post-use through deliberate design and post-use-collection processes.

Two cities that already have achieved very high recycling diversion rates, San Francisco (72%) and San Jose (62%), both have adopted Zero Waste policies with goals of 90% conversion. Those policies recognize that without EPR, they will not reach the goal. Recycling waste without a shift toward reducing waste at its source will not be economically viable. 

In other words, municipalities that purchase waste management services need to take a lesson from one of the best in the business of supply chain management, Walmart.  Instead of charging the consumer (households like me!) more for disposal, start squeezing the suppliers to reduce their cost-of-waste through up-front design and pass the efficiency on down through the process chain.     

Hmm....sounds a lot like what I'd like in healthcare, too....

--Judy Tschirgi, Senior Executive Fellow