Wednesday, December 03, 2008

Odd Economic News

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Today's oddity is courtesy of USA Today (2 December, page 3A).

Do you recycle? Probably you do. Perhaps because you believe in doing your bit for the environment. Perhaps because where you live, it costs less to recycle than to have trash picked up. In some communities, recyclables are picked up for free, while trash is billed on a per-bag basis.

Well, the economic meltdown has now begun affecting recycling. The way recycling companies make money is partially due to the fees paid to haul it away, but more so from the money they make selling the recycled materials to companies that use them.

But manufacturers and producers are making less stuff, thus the price of recycled newspaper has fallen from $120/ton to $50/ton and plastic soda bottles are now selling for 6 cents a pound, down from 15 cents a pound.

Look for a rise in the price you pay to have recyclables hauled away. At some point in time, it may become a more financially viable model to put trash on landfills than to recycle it.

That's where the government comes in. If the government on its own, or because of a flow of input from grassroots citizens, decides that saving the environment is a priority, there will be legislation passed to encourage recycling.

A state government, for example, can pass tax law which makes it more expensive to leave out trash than to recycle (which is how the free recycle-paid trash began in the first place in some communities).

Then again, this all becomes moot if the Obama administration can get the economy moving again: once people go back to buying again, manufacturers will need more recyclables.