How America’s Recycling Crisis Threatens You

America is going to trash. We may feel guilty about it. But out of sight, out of mind. That is the state of recycling today in America.

Even California, America’s greenest state, is at the tip of the trash can on this national trend. California can proudly point to recycling 19 percent of the nation’s beverage containers. But in just the last year, a third of the state’s recycling centers have closed.

The global crash in commodity prices is one of the two major reasons reason why recycling economics have collapsed. Slow global economic growth is depressing all commodity prices. The price of PET plastic is less than half its 2011 levels. Aluminum prices have fallen over 40 percent during this same time period. It is now cheaper for beverage container companies to use new plastic rather than recycled plastic.

The second major reason why recycling is economically threatened is because consumers and businesses love the idea of trash being government’s responsibility. The economic equation that recycling is trying to overcome is: Make + Consume + Toss = Someone Else’s Problem.

When the government attempts to assign a cost to this equation, then it becomes a problem for consumers and businesses which they strongly resist. In California’s case, government fees collected for recycling have always had tedious political support. With the decline in commodity prices they are now insufficient to support mass recycling.

The result is that the economics of recycling now threatens our beliefs, the environment and our wallets.

Our love of trash is causing recycling to fail

The consumer love of our disposable economy is the foundational reason why recycling is failing. We buy, we consume and then we throw away. The consumer benefits of a throwaway economy are huge. Imagine if trash was not priced as a free good. Imagine how you would shop if the environmental impacts were included in the prices for goods and services. This would reshape what we buy and how we shop.

Such a commercial system would financially empower the concept of cradle-to-consumption-to-cradle, where goods are manufactured to be recycled and repurposed. The result would be less trash, better products and increased national competitive advantage gained through more efficient use of resources.

Businesses are also conflicted over waste recycling

Businesses are also conflicted over recycling. Imagine taxing businesses for the waste stream created after consumption. This would reshape most businesses and their business practices. Few businesses would support such a plan.

Yet businesses are pioneering zero-waste practices. They are doing so for two reasons. The first is that it is proven to make money. Companies like Walmart and GM have proven that zero-waste best practices can generate hundreds of millions of dollars in annual savings.

The second reason why businesses support recycling is that it enhances a business’ brand. The recycling logo is one of America’s most recognized and trusted logos. A recycling bin in front of a store is viewed by consumers as a sign of business integrity.

But the bottom line of business is, well, the bottom line. Trash created through consumer consumption is not recorded as a cost on a business’ income statement or as a liability on its balance sheet. Trash generated from consumption is a free good for businesses.

A sustainable consumption economy

Trash is not free. It is a waste of resources. This is harmful to economic productivity. It is harmful to the environment. Trash is an externality or societal cost not captured by production or consumption.

America is beset with externality costs because 70 percent of our economy is based on consumption. The externality costs of this economic model are now measurable. One such cost is climate change. Another is a stagnant economy seeking breakout productivity gains achieved through more efficient uses of resources and people.

The externality costs of our consumption economy can now be measured by their impacts on people. Consumption has made the boomer generation the fattest generation in history. It is projected that this consumption economy where externality costs tied to sugar, fat and sat are ignored will result in 50 percent of Generation Z, the first generation born in the 21st century, being obese.

The frustration for this economist is that we can have our cake and eat it too. We can have a sustainable consumption economy. The path for doing so is as easy (and hard): price goods and services for their externality costs. Such a tax would propel our economy to buy renewable energy and smart building solutions that will generate lower electricity bills, economic growth and local jobs. It would dramatically increase our productivity by making trash too expensive to waste. It would slash health care costs by reducing our weight.

Think about that the next time you feel good about putting a plastic bottle into the recycling bin. That effort is now becoming meaningless due to the financial crisis sweeping the recycling industry. It doesn’t have to happen. But the question is whether we can come together as consumers to create a Green Economic Revolution that will restore our incomes, health and the environment.

Image credit: Flickr/Alan Levine