Materials Recycling — Strategic Management And Conditions For Economic Viability

Abstract

Material recycling (MR.) is attractive for society because it reduces the use of resources and the amount of waste generated for disposal. Although theoretically the environmental benefits of MR are obvious, currently it is not being applied widely. The reason for the slow development of MR is economic — it simply costs more to recycle than to use virgin raw materials. This situation will continue as long as the costs of environmental impacts are not fully integrated into the cost calculations of all the stakeholders such as producers, converters, users, recyclers, and waste operators.

Since the end of the war prices of both raw materials and energy have steadily declined in real terms, albeit with some temporary exceptions caused by political or supply problems. Cheap raw materials, combined with mass production techniques, have made cheap final products possible. The low intrinsic cost of landfilling, which is still a low-eost solid waste management option, makes waste disposal considerably cheaper thanreuse or recycling. This is mainly because selective collection, handling, sorting and intermediate storage of waste for MR is labour-intensive. Furthermore, the quality of goods manufactured from recycled materials is often much lower thanwhen virgin material is used in production. Consequently, they have fewer market outlets compared to goods made with virgin raw materials.

The development of MR is also being thwarted by the absence of a scale-effect, limited outlets and low demand, as well as insufficient prospects for research. In practice only those materials (such as gold, lead, iron and steel, and some other metals), whose properties are not degraded by recycling, are now being recycled in large quantities. Large quantities of some of the lower-quality recycled mass products, such as hygienic paper for which there is a strong demand, are also being produced. There is thus a ‘vicious circle’ operating to inhibit the wider development of MR.

Thus, a strategic management to promote MR depends on the creation of structurally sound economic conditions. It is argued that MR would attract necessary investment only when the aforementioned ’vicious circle ‘ is replaced by a ‘virtuous circle ‘ characterised by a growing scale-effect that would ensure regular and reliable supply of goods of the right quality and quantity made from recycled materials. It is also argued that a strategic management plan to favour MR should comprise the following: (a) an integrated approach to MR to facilitate the involvement of operators from both virgin and recycling systems: (b) creation of stable conditions for long-term investment in progranunes to promote MR; and (c) inputs and actions from competent authorities to facilitate the creation of the ‘virtuous circle ‘ via demand-side management (in order mainly to create a guaranteed minimum demand and for demonstrating MR).