The Recycling Industry is Losing Money -- and Fast

It seems like easy work. You finish a bottle of water, toss it in the blue recycling bin and sleep easy at night knowing you contributed to helping the environment preserve products that can be salvaged. Recycling can reduce greenhouse gas emissions, conserve natural resources like water and trees, save energy, and prevent pollution. But it also costs millions of dollars.

Waste Management and other leading recycling companies recently admitted that more than 2,000 towns and cities are paying to dispose of their recyclables. The recycling industry is losing money at astounding rates, with facilities unable to handle the smorgasbord of recyclables in timely enough fashion to produce profits. With environmentalists and lawmakers urging for bigger blue bins, they are backhandedly encouraging consumers to not sort their recyclable items.

The blue recycling bins sometimes trigger consumers to just throw in anything they deem recyclable without even questioning the practicality of reusing such an item. This leaves the workers for Waste Management not only stuck sorting items from glass to plastic, but also determining what’s actually recyclable and what’s just been thrown in the bin.

The once-profitable business for cities and private employers is now becoming a profitless enterprise, and the future doesn’t look great. Waste Management’s recycling division reported a $16 million loss in the first quarter of this year alone. The Houston-based company has pointed to closures for the temporary solution, with 1 in 10 of its biggest recycling facilities shut down as a result of the losses.

Globally, falling oil prices, a powerful U.S. dollar and a weakened Chinese economy have twisted the prices for American recyclables downhill worldwide. While the U.S. has seen a large increase in cardboard use thanks to the online shopping industry, the Chinese demand for such products is reaching an all-time low.

Washington, D.C. residents’ carelessness while recycling left the city’s share of Waste Management’s profit depleted by more than 50 percent, driving the price of processing recyclables to nearly $63 per ton.

The increase in recycling participation has certainly seen positive repercussions for the environment, but recycling the wrong way only creates headaches and losses of profit for big companies.

Environmentalists suggest that composting is the solution to recycling’s inefficiencies. With cultured West Coast cities like San Francisco, Seattle and Portland instituting citywide composting, waste has been reduced significantly. Composting can have a more direct impact on environmental issues by compartmentalizing items and sifting through trash before the dumps have a chance.

The EPA estimates that around 55 percent of all U.S. waste comes from households -- meaning engaging the public around proper waste disposal is crucial. In 2010, more than 85 million tons of trash --- of the 250 million tons thrown out -- was diverted from landfills and separated as recyclables. According to the EPA and a CBS News article, that’s similar to removing the emissions of 33 million cars.

While the recycling industry is hurting because the commodity level of certain items is taking a hit, it still has a dramatic impact on the environment. With Americans recycling at impressive levels, companies such as Waste Management may have to find a better way to handle all of the waste it receives.

Image credit: Flickr/allybeag

Editor's Note: An earlier version of this post mistakenly reported that 5 percent of U.S. waste came from households. The post has been updated with the correct statistic, 55 percent.