WELFARE FOR WASTE: Packaging Costs NYC Taxpayers $600 million

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Executive Director, Bill Sheehan, Ph.D.There’s a battle going on in the United States over who should pay for managing products and packaging when consumers are finished with them. In Europe and Canada the principles of polluter pays and producer-consumer responsibility for waste have been firmly established. These free-market ideas have often been resisted in the United States by companies used to enjoying public subsidies in the form of government-managed recycling programs.

Packaging was the first target of producer responsibility laws in Europe, in the early 1990s. Now packaging is rising to the surface in several US states as a subject for producer responsibility legislation. This is partly due to developments in neighboring Canada, and partly due to the active support of a major consumer brand, Nestlé Waters North America. It’s also partly due to the increasing realization by public officials that municipal infrastructure to collect spent private goods (products and packaging) is costly and competes with important public needs like schools, police, water, transportation and parks.

A sure sign that industry is taking notice of this trend is a recent announcement by Walmart andiStock_reduce-reuse-recover a group of major brands including Procter & Gamble and Coca-Cola. Walmart and partners announced that they are establishing a Closed Loop Recycling Fund to loan $100 million to beleaguered taxpayer-supported recycling programs in the US. As the Walmart announcement noted, recycling rates are stagnant in the US. Indeed, the US Environmental Protection Agency calculates that the overall recovery rate of all “municipal solid waste” is 34.5%, little changed over the last 15 years.

How much are municipalities actually paying to collect, process and transport packaging and printed paper? These are the items most often collected in municipal curbside recycling programs, and are the subject of producer responsibility laws for packaging in North America.

Money down the drainOr put another way, how much is the public (taxpayers and ratepayers) subsidizing consumer goods corporations to pick up and handle their stuff?

The Closed Loop Recycling Fund is the brainchild of former New York City Recycling Commissioner, Ron Gonen. Mr. Gonen should know what it costs the taxpayers of New York City (population 8.2 million). The answer is a staggering $600 million per year.

In Fiscal Year 2013, according to the Mayor’s Management Report, the Department of Sanitation of New York (DSNY) disposed of 3.26 million tons of refuse and collected for recycling roughly 540,000 tons of paper/cardboard (one stream) and commingled metal, glass containers, rigid plastics, and beverage cartons (second stream) in curbside recycling collections. The vast majority of recycled materials are printed paper and packaging, with the exception of small amounts of bulk metal, rigid plastic durables such as toys or buckets (negligible).

In the same report, DSNY publishes “fully loaded” costs per ton of refuse and recyclables annually. These per ton costs reflect the costs of collection, costs of tipping refuse/processing fees for recycling, revenues from recycling, as well as associated capital and miscellaneous operating costs related to each collection program. In FY 2013, the fully loaded costs were $392 per ton for refuse; $656 per ton for recycling.

FY 2013 Tons Cost per ton Total costs
Disposed 3,260,280 $392 $1,278,029,760
Recycled 539,200 $656 $353,715,200

Multiplying the tons collected by the fully loaded costs of each stream yields total costs. In round numbers, we can say that it costs NYC $350 million annually to collect, deliver, and process curbside recyclables, most of which are printed paper and packaging.

In addition, prior waste characterization studies have estimated that 23% of curbside refuseRecycling bins consists of designated recyclables that were not properly recycled. Adjusting this down to reflect the fact that not all of the 3.2 million tonnage above is curbside refuse (e.g., it includes street sweepings and other miscellaneous categories), a conservative estimate of 20% can be used to calculate another $250 million to handle printed paper and packaging in refuse.

Adding these together it would be fair to say that New York City taxpayers pay $600 million annually to deal with printed paper and packaging in one way or another.

If producers included the costs of recycling their packaging in the cost of their products and packaging, like they do in Europe and in much of Canada, the City would save a lot of money. That’s money that could be repurposed for public goods like schools, police, water, transportation, and parks.

If this producer responsibility for packaging became the norm in the United States, think of what cities and local governments could fund instead of cleaning up after Corporate America’s unfunded liabilities. 

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