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If Only We Had One "Sustainability" Number That Summarized the Value of the Time and Resources That Went Into a Product or Service….

Posted by on | July 17, 2018 | Comments Off

From an article about how China’s decision to restrict imports of recyclable materials is throwing the recycling industry for a loop:

The trash crunch is compounded by the fact that many cities across the country are already pursuing ambitious recycling goals. Washington D.C., for example, wants to see 80% of household waste recycled, up from 23%.

D.C. already pays $75 a ton for recycling vs. $46 for waste burned to generate electricity.

“There was a time a few years ago when it was cheaper to recycle. It’s just not the case anymore,” said Christopher Shorter, director of public works for the city of Washington.

“It will be more and more expensive for us to recycle,” he said.

Which raises the obvious question:  If it is more expensive, why do you do it?  The one word answer would be “sustainability” — but does that really make sense?

Sustainability is about using resources in a way that can be reasonably maintained into the future.  This is pretty much impossible to really model, but that is not necessary for a decision at the margin such as recycling in Washington DC.  When people say “sustainable” at the margin, they generally mean that fewer scarce resources are used, whether those resources be petroleum or landfill space.

Gosh, if only we had some sort of simple metric that summarized the value of the time and resources that go into a service like recycling or garbage disposal.  Wait, we do!  This metric is called “price”.  Now, we could have a nice long conversation about pricing theory and whether or not prices always mirror costs.  But in a free competitive market, most prices will be a good proxy for the relative scarcity (or projected scarcity) of resources.  Now, I am going to assume the numbers for DC are correct and are worked out intelligently (ie the cost of recycling should be net of the value of materials recovered, and the cost of burning the trash should be net of the value of the electricity generated).   Given this, recycling at $75 a ton HAS to be less “sustainable” than burning trash at $46 since it either consumes more resources or it consumes resources with a higher relative scarcity or both.

Postscript:  I have had students object to this by saying, well, those costs include a lot of labor and that doesn’t count, sustainability is just about materials.  If this is really how sustainability is defined, then it is an insane definition.  NOTHING is more scarce or valuable than human time.  We have no idea, really, how much recoverable iron or oil there is in the world (and in fact history shows we systematically always tend to underestimate the amount).  But we do know for an absolute fact that there are 182.4 billion human hours lived in a given day. Period.  Labor is if anything more important than material in any sustainability question (after all, would you be willing to die a year earlier in exchange for there being more iron in the world?  I thought not.)

In fact, it is probably the changing scarcity and value of labor in China that is driving the issues in this article in the first place.  China can’t afford the labor any more to re-sort badly sorted American recyclables, likely because the economic boom in China has created much more useful and valuable things for Chinese workers to do than separate cardboard boxes from foam peanuts.  Another way to think of the market wage rate is as the opportunity cost for labor, ie if you use an hour of labor for to do X, what is the value of production you are giving up somewhere else by their no longer having access to this hour of labor.

 If Only We Had One "Sustainability" Number That Summarized the Value of the Time and Resources That Went Into a Product or Service....  If Only We Had One "Sustainability" Number That Summarized the Value of the Time and Resources That Went Into a Product or Service....  If Only We Had One "Sustainability" Number That Summarized the Value of the Time and Resources That Went Into a Product or Service....

 If Only We Had One "Sustainability" Number That Summarized the Value of the Time and Resources That Went Into a Product or Service....

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