This article by GreenBlue Program Director Anne Johnson appeared in this month’s issue of Packaging Digest, which features a monthly column by GreenBlue staff on packaging sustainability. Read the original article.
As a brief review of Economics 101, a free market is one where prices are determined by supply and demand. In the past several years, we have seen a steady rise in the price of many commodities, most notably oil, metals and the products that are in turn impacted by these price increases.
Aluminum also has seen price increases. Worth between $0.70/lb and $1.00/lb, aluminum cans are one of the most valuable packaging materials used. So why did we throw away 1.3 billion pounds of aluminum last year? This is equivalent to the aluminum in more than 27,000 Airbus A320s, according to Alcoa. (PSI EPR Dialogue, Jan. 19, 2010)
Using an average value of $0.85 for baled used beverage containers, this represents more than $1 billion thrown in U.S. landfills annually. So why aren’t we recycling more of them? Isn’t that what a free market would suggest should happen, especially when we have industries clamoring for these materials? Because aluminum is such a valuable resource, this is a prime example of how the free market is not adequately addressing the value of materials.
Aluminum has been the backbone of many recycling systems, yet its recycling rates have remained flat below the 50 percent mark over the past five years, according to EPA estimates (which do not include cans imported for recycling). Aluminum Assn. recycling rates do include growing numbers of cans imported for recycling purposes, according to the Container Recycling Institute, and show rising recycling rates over this same period from 52 percent to 58 percent.
So how can it be when some material pricing is at market highs, U.S. aluminum can recycling rates are not increasing proportionately? Where have we gone so terribly wrong that there is a disconnect between the value of a material and our infrastructure to recapture that material?
Perhaps we have done too good a job on selling convenience and disposability. While our grandparents and great-grandparents of the Depression Era were radical savers, the current generations are so far removed from where things come from that they are also removed from the value of the materials they buy. We have encouraged a system where we blame consumers for not participating in the recycling system, yet we send signals that products are disposable-not valuable-to make it convenient for everyone. Marketing shapes behavior and, as marketers know, consumers are Pavlovian. If consumers are rewarded, they tend to respond.
To incentivize behavior that recognizes the true value of resources, the regulatory response in some states has been container deposits. But we are still throwing away over $1 billion of cans a year so this incentive is not enough. Outside of regulation, there is a role for marketers who influence and shape consumer behavior to get in the game in a coordinated and meaningful way to develop effective recycling messaging that drives consumer behavior, such as through the SPC’s Packaging Recovery Label System.
The alternative is to continue bearing the consequences of some of the lowest recovery rates in developed countries, which equals money down the drain. The idealism that the free market would keep valuable materials out of landfills is not working, so it’s time to think about other market incentives or drivers to prize aluminum and other materials for the valuable resources they are.
0 replies on “Market Price of Recycled Material Just Doesn't Match Its True Value”
Hi Anne, I enjoyed your article and share your concern over the low recovery rate for used beverage containers. I agree that the convenience and disposability themes have probably been promoted to social detriment, and in conjunction with this a mobile lifestyle where people are generating empties away from home with less obvious recycling options.
I do, however, think it is a little too convenient to lump bottle bill states in with other states when it comes to recovery. From what I’ve seen, recovery rates are a lot higher in bottle bill jurisdictions such as British Columbia which has an 83.5% recovery rate based on a nickel per tin deposit. Deposit systems work better than a market solution when the value of an empty can is only 2 or 3 cents to aluminum buyers, assuming 31 cans per pound and $0.70 – 1.00 per pound. In fact, the free market works a little too well. The value of a tin at 2 or 3 cents, unencumbered with the external environmental costs, is too low to adequately influence consumer behavior. There really does need to be an intervention, whether it is a deposit (and a larger deposit than any currently levied), or an environmental penalty levied against suppliers based on an estimate of containers not recycled.
I can’t envision any prize or incentive programs really helping achieve transformational change unless they are a lot more alluring than what is presently available – you need to up the ante to a new car or million dollar lottery. Or how about one of 27,000 new Airbus A320s?
I agree, Rick! Deposits work well in recovering beverage containers, especially in Michigan where the refund is 10 cents. But unfortunately, I don’t think it’s feasible to put a deposit on every package. Ultimately we need to find a way of internalizing the (currently externalized) costs of the packaging and products we use every day. Maybe if everyone knew the true cost of their food, packaging, car, aluminum can, etc. they would be more likely to waste less and recycle more.