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The Sher system illustrates a typical planning dilemma. Since it would be too complicated to trace the actual recycling costs of individual items, it uses state averages. Without this simplification, the program would be impossible to operate. With it, however, the price signals are completely distorted. Consumers who live in places where recycling is cheap will pay too much for products. Those who live in places where recycling is expensive will pay too little. And the program leaves plenty of discretion altogether outside the market: A state board decides when the fees are high enough and gets to compute the reasonable rate of return due recyclers.
The Sher bill, like many such schemes, represents not a “true cost” system but an elaborate way to subsidize recycling. It seeks to penalize materials not because they actually harm the environment (by, for instance, releasing toxic gases) but because they can’t be affordably recycled. The bill’s backers speak the language of economics, but they don’t understand it.
The basic problem with such schemes is that they start from a false premise. There is no market failure in solid waste. The economist will find no externalities in your garbage can, unless government subsidies put them there. But that doesn’t mean there are no problems.
Take landfills. They really are closing. In fact, more than half the 18,500 landfills that existed in 1979 have shut down the past 10 years. This is nothing new. Landfills have always had limited lifespans, usually about 10 years. What is new is that the old landfills aren’t being replaced. The number of new landfills built from 1985 to 1990 was almost 50 percent lower than during the previous five years, the lowest level in 20 years. New landfills are much larger than old ones, but not large enough to make up the difference. As a result, it’s hard to find space for trash. In a mini-version of the garbage barge, Santa Monica’s trash haulers drive around in their trucks, calling each other on cellular phones to find out who’s open to take their loads.
The cause of the landfill shortage isn’t that we’re “running out of space.” A. Clark Wiseman, in a Resources for the Future study, calculates that “all municipal solid waste for the next thousand years would require [a landfill 120 feet deep in] a square area having 44-mile length sides.” In other words, a hypothetical landfill that could accommodate the next 1,000 years of U.S. waste would take up less than 0.1 percent of the continental United States.
What’s missing isn’t land—it’s prices. Cities used to be able to shove landfills anywhere they wanted. When surrounding communities rebelled, using lawsuits and environmental regulations to drag out the siting process, solid-waste managers griped about the NIMBY (not-in-my-backyard) syndrome and environmentalists declared landfills (and incinerators) remnants of a passing age of waste.
But entrepreneurs have found a way around NIMBY. It’s called YIMBY-FAP: Yes, in my backyard—for a price. This new approach has two components. First, the landfill developer picks up the full costs of protecting the surrounding community from environmental harm. This includes such technical components as double landfill liners and leachate collection systems (to protect groundwater from the gop produced by decaying garbage) and methane-removal systems (to keep gas from building up underground). It also includes inspections, record-keeping, a detailed closing plan, and various monitoring systems.
Robert T. Glebs, a former city waste manager who now runs a business siting landfills, estimates that such a state-of-the-art landfill would cost about $55 million to build in the Midwest including such additional costs as running local recycling programs and offering financial guarantees of local property values. Adding in a 25-percent margin-profit for private landfills, replacement cost for public ones—the tipping fee to cover such a landfill comes to $25.62 a ton, way, way below the cost of recycling programs.
The second component of a YIMBY-FAP landfill is to share the wealth—to pay the surrounding community. Charles County, Virginia, for instance, collects $5.00 for each ton of garbage dumped in the landfill Chambers Development Co. runs in the rural county. Chambers also picks up local garbage for free. “We’re good capitalists; we realized there was money in garbage,” county Administrator Fred Darden told Forbes. Thanks to the landfill, the county collects more than $1 million a year, enough to cut property taxes by 20 percent while spending more on local schools. Such “host community fees” make landfill siting a win-win proposition.
They also bring the full cost of landfills into the market-place by making the landfill operator pay not only to install safety measures but to compensate the people most directly affected by the landfill. The next step to internalizing garbage costs is to bring landfill costs back to the person with the bag full of trash.
That means getting rid of free garbage service- the subsidy at the root of the “solid waste crisis.” And it probably means charging more to people who generate more trash.
Cities like to give people free garbage service. Suggesting that Los Angeles might charge for trash, political wisdom has it, brought down Mayor Sam Yorty. In a 1990 survey of 246 U.S. cities—ranging from 5,000 to 1.75 million in population—more than one-third didn’t charge any fees for garbage collection. Of those that did, about half charged flat rates, regardless of how much trash residents generated.
Now it is possible that a private trash collector paying full freight to a YIMBY-FAP landfill might charge all customers a flat fee for garbage pickup. But it isn’t very likely. What seems more realistic is a system something like the one MCO Re-Cycling devised for Freeport, Illinois. For $5.75 a month, residents get weekly pickup of one 30-gallon bag of garbage and unlimited recyclables. For 60 cents, they can buy a sticker good for another bag of trash; the average household uses about one sticker a month. Customers have an incentive to reduce, reuse, and recycle, but they also have a choice. And, in contrast to ADF schemes, this system allows prices to be set by people who actually know what the costs of garbage are.
Unlike most city-run recycling programs, MCO uses a single truck for both garbage and recyclables, picking both up at the same time. That saves on the extra trips that make recycling costs prohibitive most places. Customers don’t have to hang on to their bottles and cans forever and don’t have to sort every- 2 thing into a million different bins. “All we ask is that the stuff be clean,” says MCO owner Bernard Mrugula. Though it’s too early to be sure (the program is less than a year old, and trash composition swings wildly from month to month), the percentage of trash that gets recycled seems to be on an upward trend-hitting 23.7 percent in April.
Mrugula clearly hates to see any good stuff go to waste; he sounds genuinely stricken at the thought of the television sets they had to dump last “spring cleaning” without stripping them of valuable metal. He is a resource recovery enthusiast, but he thinks recycling promoters are often unrealistic about how much people have to recycle. “There’s not a lot there,” he says, “and we’re getting darn near all of it.”