Tag Archives: recycling

09.26.2012 | More Recyling Matters

Aluminum recycling is in the news because of a break-up. Together, Alcoa and Novelis (owned by HindalCo, an Indian firm) had been collecting and recycling cans–40 billion last year. But no more. Now, competing for used cans, each firm will do it alone.

Should business firms recycle aluminum? It depends.

Every 2 or 3 months, a recycled aluminum can might be recycled again. Used and empty, cans could be collected by someone who receives 55 cents a pound (approximately 25 cans) and takes them to a scrapyard that crushes, scrapes, and bales them (sort of like a hay bale, but made of cans). Melted and rolled at Alcoa or Novelis or another aluminum producer, the can becomes a part of an aluminum sheet. Next stop? The sheets are deposited at a can producer who prepares them for the beverage firm. Filled with beer or soda or juice, the can is sold and the cycle starts all over again.

Producing cans from recycled materials requires a lot less energy than making aluminum from scratch and municipalities that recycle can generate revenue. However, businesses might not benefit because using recycled aluminum is only marginally cheaper, the product is lower quality and a collection infrastructure is necessary. In addition with Novelis and Alcoa competing for scrap, price could go up.

That takes us to a question we have considered before at EconLife. Is it ethical for a profit-seeking business to be ethical? Believing that profits are the responsibility of the business firm, economist Milton Friedman (1912-2006) said that it is not appropriate for corporate management to pursue social responsibility. Agreeing, former Harvard president and Secretary of the Treasury Lawrence Summers cited Fannie Mae and Freddie Mac to display the cataclysmic results of combining doing good with seeking profits.

So, should businesses produce recycled aluminum? The answer seems to be sometimes.

Sources and Resources: This WSJ article does a very good job of conveying how aluminum recycling works. Combine it with this YouTube video and you will see what the business is all about. But, I suggest also looking at this cost benefit analysis.

This brief aluminum recycling video is interesting:

Posted by: adminEcon
Tags: Alcoa, aluminum, Evermore joint venture, Hindalco, India, life cycle of a can, Milton Friedman, Novelis, profits, recycling, social responsibility, UBCs, used beverage cans
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08.21.2011 | Recycling Matters

Coca-Cola has a recycling problem. Last year, it had hoped to process 100 million pounds of recycled PET (bottle grade) plastic in its Spartanburg, S.C. plant and is not even close. Here is why:

Less supply of recycled plastic:

It is tough to get enough PET plastic because many of us do not recycle plastic bottles. Maybe bottle deposit programs would make a difference. However, Coke and Pepsi say that paying 5 to 10 cents for a returned bottle is inefficient, pricey and unfairly targets them.
Coke and Pepsi prefer using municipal recycled plastic. Mixed with other plastics, though, the plastic from curbside programs tends to be less than bottle grade.

More demand for recycled plastic:

Increased demand from China for used plastic in clothing and furniture manufacturing is nudging the price upward. As a result, “virgin PET” is cheaper.

The Economic Lesson

Is it ethical for a profit-seeking business to be ethical? Believing that profits are the responsibility of the business firm, Milton Friedman (1912-2006) said that it is not appropriate for corporate management to pursue social responsibility. Agreeing, former Harvard president and Secretary of the Treasury Lawrence Summers cited Fannie Mae and Freddie Mac to display the cataclysmic results of combining doing good with seeking profits.

In this economix blog, Harvard economist Edward Glaeser discusses the debate surrounding corporate responsbility. Reminding us that it need not be “black and white,” he encourages us to ponder different levels of corporate social responsibility

An Economic Question: Implying that we cannot put a price on environmental responsibility, a a U.S. senator from Maine, Edmund Muskie, once said, “Can we afford clean water? Can we afford rivers and lakes…which continue to make life possible…?…These questions answer themselves.” Your opinion?

Posted by: adminEcon
Tags: Coca-Cola, environment, Milton Friedman, recycling, social responsibility
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01.19.2011 | Pay-As-You-Throw

Hearing Beethoven’s Fur Elise, a Taiwan resident knows the garbage truck is near. As described by a Washington Post writer, entire neighborhoods assemble with their garbage as the truck approaches. Called pay-as-you-throw (PAYT), through unit-pricing, people are charged for their garbage removal.

A Freakonomics podcast explained that certain U.S. municipalities were less successful. Perceiving the payment as just another tax or costing too much time, residents of Sanford, Maine eliminated PAYT after 4 months. Elsewhere, to lower their garbage expense, people threw garbage in the woods or flushed it down the toilet (which created plumbing problems).

How then, whether looking at PAYT, buying local, or recycling, can green initiatives ensure their goals?

The Economic Lesson

When people support PAYT, the amount of garbage decreases by 17%. (A sociologist quoted this statistic in the Freakonomics podcast.) Facing a heretofore non-existing cost, people recycled, they mulched, they gave items away.

Others, opposing the approach, tried to circumvent it. They threw trash in the woods or tried to get the policy repealed.

This takes us to the heart of economics. Incentives shape our behavior. The obvious response to a greater cost for garbage removal is to throw out less. We can see though, that new incentives might instead create unintended consequences. We then need to ask whether the benefit still outweighs the cost.

Posted by: adminEcon
Tags: Freakonomics, garbage, incentives, municipal finance, pay-as-you-throw, recycling, Taiwan
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02.14.2010 | Recycling Garbage

A recent article in SF Gate focused on Berkeley’s garbage problems. Because of Berkeley’s commitment to recycling, the revenue it receives from garbage collection has dropped precitously. Less garbage means more job and service cuts.
If people everywhere are recycling and composting, and if cities like Washington, D.C. are charging bag taxes, what is the cost? How are time, money, and jobs affected? Berkeley’s recylers take us to a much larger issue. They return us to opportunity cost and free lunches.

The Economic Life
Any decision we make has an opportunity cost. Any time we decide to do one thing, we sacrifice the next desirable alternative.

Posted by: adminEcon
Tags: Berkeley, municipal finance, opportunity cost, recycling
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