How A Bad Economy Impacts Recycling Programs

With people losing their jobs in America left, right and center, effects of the global economic crisis are being felt in the Middle East too. Israelis, whose Gross Domestic Produce relies so much on exports has to scale back dramatically when America loses spending power. Yet people are asking here, why isn’t there more recycling.

Today, Green Prophet’s Jeffrey Yoskowitz, a writer and researcher based in New York, asks if recycling is bad for the economy. To get some background on this piece, read his earlier post on Jeffrey’s tour of a recycling facility.

In a bad economy, it’s often the good environmental practices—using energy-efficient light bulbs, insulating homes, driving less, eating less meat—that end up prevailing, in part because they save people money.

But that’s actually not true of recycling, which, for better or worse, is intimately tied to the health of international markets—and the willingness of countries like China to buy our recycled materials. Right now, demand for those materials has shriveled up, which has been a huge blow to recycling plants.

“We were in the red by December,” says John Haas, the recycling coordinator of Ocean County, New Jersey—and it’s the same story throughout North America.

A factor in annual budgets

Ever since recycling centers became widespread in the early 1990s, they’ve turned out to be boons to municipalities, offering a reliable source of local revenue. The more prosperous and more productive the economy, the more revenue that recycling centers generate.

From the late 1990s up until last October, according to Haas, the price of raw materials was so highly inflated and recycling programs were so successful that many municipalities started factoring recycling revenues into their annual budget. Since 1995, for instance, Ocean County’s recycling plant had shared $16 million with its county government.

But, as a result of the current financial crisis, recycling centers aren’t generating enough money any more, costing the city and county governments much-needed cash.

Drops in demand reflect market prices

Since October, demand for manufacturing materials like aluminum, cardboard, and plastic have dropped precipitously, and so have prices. Aluminum, the most profitable material for the New Jersey recycling centers, was selling at $2,100 per ton back last July, but by January had dropped to $944 per ton, as big buyers like Anheuser-Busch lowered their bids to reflect current market values.

Plastics, cardboard, and paper have all seen a drop in demand as well, both because of the lack of new construction projects, and also—most startlingly—as a result of China’s economic slowdown.

“China is a major buyer of cardboard, newsprint and plastic, and usually pays high prices,” explains Haas. “When they stopped buying, it was very significant.” Until recently, the Chinese had been reliably high bidders on paper and cardboard products, which they would then reprocess into boxes to ship consumer goods back to the United States.

What happens when China stops buying

It was a standard formula that provided a stable relationship between recycling centers and Chinese manufacturing—and it helped prop up eco-conscientious recycling programs here in the United States. And it all made sense as long as China’s economy grew exponentially and its consumer goods poured into the U.S. market.

That fact alone raises a few alarming questions about the relationship between recycling and consumption. Is recycling wholly dependent on the reckless consumerism that is, in turn, responsible for many of our environmental problems today? Do, say, paper recycling and other eco-traditions here in the United States depend entirely on China’s continued breakneck growth?

To be sure, recycling will continue with the recession, and despite the hard times, things are looking up. “It will be a challenging year for everyone, but based on prices for March, we feel much better,” said John Haas. “Things are looking up, and we’ll be monitoring it on a regular basis.”

But for now, with fewer purchasers and lower prices, it seems that recycling centers will be forced to sell once-valued commodities for cheap, undercutting their expenses. And, if things worsen and the markets erode further, a great deal of recycling could halt altogether, putting stress on our landfills.

This, in turn could force manufacturers to seek out virgin raw materials to produce what were once products with multiple life spans. Let’s hope it doesn’t come to that.

This post was originally published in The New Republic.

[image via: bucklava]