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Recyclable Resources: Minerals, Paper, Glass

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Recyclable Resources: Minerals, Paper, Glass & More Man is creative. But he has not been able to use his powers to increase & multiply the endowments, as yet. – PowerPoint PPT presentation

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Title: Recyclable Resources: Minerals, Paper, Glass


1
Recyclable Resources Minerals, Paper, Glass
More
  • Man is creative. But he has not been able to use
    his powers to increase multiply the endowments,
    as yet. He has only destroyed.

2
  • Once used energy resources dissipate into heat
    energy cannot be recycled
  • Other resources retain their physical chemical
    properties during use can be recycled/reused
  • How much recycling is efficient?
  • Will market mechanism decide it?
  • How is efficient allocation different over time
    between recyclable non-recyclable resources?
  • What impact does product durability has on
    allocation of virgin recyclable materials?

3
  • Lets find how efficient markets work for
    depletable recyclable resources then use this
    as benchmark. Assume finite resources.
  • Efficient allocation of recyclable resources
    initially reliance on virgin resources as they
    are cheaper later ?ingly difficult to extract
    then to lower grade then import
  • Technological progress - ? lower grade ore ?
    ?cost - difficult to extract ? price rises
  • Same time cost of disposing product - migration
    to urban areas

4
  • Slowly, land scarce - burial of waste ? expensive
    concerns over evn effects on water supplies
    eco effects on value of surrounding land -
    buried waste acceptable
  • ? Cost of virgin material ? in waste disposal ?
    recycling attractive its also an alternative to
    both
  • Virgin ore - products costly - ? demand for
    recycled goods composition of demand effect
    additional incentive to return used product
  • Purity of recycled goods plays key role

5
Recycling
  • Will ? as virgin ore disposable costs ?
  • Costs many mainly transport processing -
    significant labour cost collecting, sorting
    processing scrap is labour intensive
  • Scrap as input has evn consequences
    compliance with rules adds to cost
  • Design products to facilitate recycling - stamp
  • Recycling is adding more to resource depend on
    it longer than on non-recyclable -

6
  • If recycling rate is 100, resource flow is
    infinite
  • If 100 units of resource are in a product with
    one year of useful life. After one year 90 of
    resource is recovered reused next year 90 of
    that i.e. 81 units can be recovered reused
  • If stock is A recovery rate is a total amount
    used would be AAa Aa2 Aa3 .. This is A/
    (1- a)
  • For non-recyclable resources a 0
  • Efficient economy strikes balance between
    consumption of depletable recycled material

7
The Strategic Material problem
  • US oil imports that of strategic importance a
    few suppliers true social cost gt market price
  • Policy tariff on imports use proceeds for
    stockpile
  • Vulnerability of nation (importing) depends on
    (1) severity of shortfall (2) its ability to cope
    with shortfall (by substituting or suffering)
    Larger disruptions (gt 35) can have serious
    impact
  • Tilton 1985 examined substitution effects of
    rapid rise of tin prices during 1970s

8
Waste disposal pollution damage
  • Treatment of waste by producers consumers
    biases in market balance between recycling use
    of virgin ores disposal cost is a key in
    determining efficient amount of recycling
  • Failure to bear full cost of disposal shows bias
    towards virgin material away from recycling
  • Method of financing disposal of potentially
    recyclable waste affects the level of recycling

9
  • Disposal cost efficiency
  • cost of recycling gt price of recycled material
    sold. Loss?
  • Must understand relationship of marginal
    disposal cost to efficient level of recycling.
  • Example cost of recycling 20 p t , sold for 10
    per ton inefficient?
  • Town is avoiding cost of disposal 20 p t . ?
    benefits 20 for avoiding disposal10 resale
    30 p t cost 20 ? efficient recycling venture

10
Recyclable Waste
  • Old scrap New scrap
  • Old scrap recovered from consumers -transport
    cost very imp - market works efficiently -
    doesnt count marginal social cost of disposing
    ? market away from recycling old scrap towards
    the use of virgin materials
  • New scrap generated during production requires
    no transport cost - under control of producer -
    design a product for scrap - minimum processing -
    guarantee of homogeneity - works efficiently

11
  • No direct relation between size of trash fee
  • MC to homeowners of throwing one more unit of
    trash is negligible, but to society it is not.

/unit
MCR
/unit
MCs
MCp
Qp Qs
0
100
recycled disposal
0
100
12
Disposal Cost Scrap Market
  • How will market respond if all are to bear the
    true marginal disposal cost?
  • Effect on supply of materials to be recycled
    consumers paid for discarded products material
    to recycling centres ? supply ? - economies of
    scale - ? AC of processing more recycled
    materials
  • C ? due to price fall Use of virgin ore ?
  • ? Correct inclusion of disposal cost would tend
    to ? amount of recycling extend life of
    depletable- recyclable resources

13
Subsidies on Raw Materials
  • Are troubling source of inefficiencies they
    take bias away from recycled inputs - raw
    materials are artificially cheap can
    inefficiently undermine the market for recycled
    inputs
  • Public lands prices are low as compared to
    market people dont receive true value for
    mining services provided by public lands
    subsidy is lowering the cost of extracting the
    raw materials

14
Corrective Public Policies
  • Such inappropriate pricing creates improper
    incentives ? misallocation ?
  • Volume pricing
  • Refund system
  • Deposit refund
  • Disposal recycling charges at the time of sale
  • Tax for using virgin material

15
Pollution Damage
  • If environmental costs are added to virgin
    material Price rise leftward shift of supply
    curve - ? use more of recycled material
  • Disposal cost external environmental costs
    odours, pests, contamination of water
  • Govt. regulates landfills for public safety
    locating the facility is difficult
  • Impose host fees
  • Sometimes package is bigger than the product

16
Tax Treatment of Minerals
  • Some minerals get subsidy
  • Severance tax
  • Durability of the product
  • Three ways of obsolescence
  • Functional
  • Fashion
  • Durability
  • Market mechanism automatically creates pressures
    for recycling reuse in right direction ?
    disposal cost ? scarcity ? ? demand for
    recycling
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