Going for increased recycling. A social cost-benefit analysis

While the environmental benefits of scenarios geared to increased recycling have been convincingly demonstrated by previous studies, the question arises whether such scenarios bring economic benefits, too. This study therefore assesses the main economic effects of increased recycling in the Netherlands, providing data that can be used to advance policy development in this area.

To address the main issue we performed a social cost-benefit analysis (SCBA), a welfare-theory-based tool that can be used to chart the full range of economic impacts (‘welfare impacts’) of a project or policy intervention. In doing so, a broad definition of welfare is adopted, encompassing not only financial and economic consequences, but also environmental and employment impacts and so on. Using SimaPro, all the environmental interventions inventoried (including energy consumption, transport and recycling process emissions) were assessed for each individual material flow, with impacts being expressed as far as possible in monetary terms to enable comparison.

The main social costs of increased recycling are the higher costs for local authorities associated with separate waste collection. There is also reduced revenue for waste incinerators, because more waste will need to be imported from abroad. Finally, there are the policy costs of incentives for increased recycling and extra efforts to induce citizens to separate their waste. The latter costs were not quantified. 

Over and against these costs are positive welfare impacts. The main benefits are environmental, expressed monetarily in the present study in terms of avoided damage costs for society as a whole and avoided measures for securing government reduction targets. In addition, the separated waste has a value, reflected in lower processing costs. Increased recycling also creates new jobs, while recycling firms generate more profit than waste incinerators. Finally, there are the benefits accruing from greater innovation and reduced resource dependency. In the SCBA the latter benefits were not expressed in monetary terms, however.

On balance, the monetary impact is positive: the social benefits of increased recycling are greater than the social costs. A sensitivity analysis shows this to be a robust result.