Careers Business Ownership What Is Wrong? The Problems for Recycling Share PINTEREST Email Print Paper Boat Creative, Getty Images Business Ownership Operations & Success Sustainable Businesses Supply Chain Management Operations & Technology Marketing Market Research Business Law & Taxes Business Insurance Business Finance Accounting Industries Becoming an Owner By Rick LeBlanc Rick LeBlanc Facebook LinkedIn Twitter Consultant and news editor in the supply chain pallet and packaging trade Simon Fraser University Rick LeBlanc wrote about sustainability and supply chain topics for The Balance Small Business. He has been covering the pallet and packaging industries for 25 years. Learn about our Editorial Process Updated on 12/01/18 The problems faced by the recycling industry and policymakers, and the issues with recycling, became more obvious as scrap prices fell in recent years. Just about everything said about recycling is wrong, according to Michael C. Munger in "Recycling: Can It Be Wrong, When It Feels So Right?" He is not taking aim at the value of recycling to recover valuable resources. Rather, his focus is on overly simplistic economic thinking when it comes to recycling and solid waste management. He starts with two fundamental arguments, which he says are false: 1. Everything that can be recycled should be recycled. So that should be the goal of regulation: zero waste. 2. If recycling made economic sense, the market system would take care of it. So no regulation is necessary, and in fact, state action is harmful. Munger observes that if either argument were true, the debate would be finished. He stresses that society should be recycling resources, but it should not be recycling garbage. Recycling garbage needlessly uses up resources. "Recycling, including the costs of collecting the waste in tiny, mixed amounts, transporting the waste to a handling facility, sorting it, cleaning it, repackaging it, and then transporting it again, often for great distances, to a market that will buy the commodity for some actual use, is almost always more expensive than landfilling that same waste in a local facility," he notes. One of the key complications is that developed nations tend to under-price landfill space in order to help dissuade illegal dumping. The subsidization is necessary, but it results in challenges with respect to how to effectively determine what should be recycled, and what should be dumped. Because landfill rates are subsidized, we may toss used packaging or goods that might actually be more cost-effective to send to the landfill. In other words, a truly market-driven solution may not work because we have subsidized cheap dumping. Recycling, including the costs of collecting the waste in tiny, mixed amounts, transporting the waste to a handling facility, sorting it, cleaning it, repackaging it, and then transporting it again, often for great distances, to a market that will buy the commodity for some actual use, is almost always more expensive than landfilling that same waste in a local facility. Because the economics of recycling versus dumping are muddied by landfill subsidies, he argues that society pursues a “second-best” option of “using moral suasion, appealing to the public spirit rather than to the self-interest of the citizen.” There is a point of view espoused that recycling is always the best thing to do, no matter what the cost. Munger draws on several examples of peculiar behavior that follow this theme: householders putting their used containers in the dishwasher to clean them of any debris before recycling, when the cost of the dishwashing outweighs any net revenue, or the good citizens of Santiago de Chile, burning gasoline as they idle their cars for several minutes on a Saturday morning to queue up to the local recycling depot. At present, Munger notes, no one is responsible or retains liability for disposing of packaging, and so governments do their best to manage the problem. The solution, Munger suggests, is to shift away from the trap of moral imperatives and instead concentrate on market incentives. “The organizations with the cheapest means of enacting change, and who have the last best chance to reconsider packaging of all kinds, whether it’s liquid, food products, or microwaves, are the manufacturers and retail distributors of the products we buy,” he writes, arguing for extended producer liability. Such an approach, he argues, would encourage the use of effective market incentives and better outcomes in terms of waste management. Munger's article "The Recycling-Industrial Complex" was published in the North State Journal.