Recycling
Cost–benefit analysis

In addition to environmental impact, there is debate over whether recycling is economically efficient. According to a Natural Resources Defense Council study, waste collection and landfill disposal creates less than one job per 1,000 tons of waste material managed; in contrast, the collection, processing, and manufacturing of recycled materials creates 6–13 or more jobs per 1,000 tons. According to the U.S. Recycling Economic Informational Study, there are over 50,000 recycling establishments that have created over a million jobs in the US. The National Waste & Recycling Association (NWRA) reported in May 2015 that recycling and waste made a $6.7 billion economic impact in Ohio, U.S., and employed 14,000 people. Economists would classify this extra labor used as a cost rather than a benefit since these workers could have been employed elsewhere; the cost effectiveness of creating these additional jobs remains unclear.

Sometimes cities have found recycling saves resources compared to other methods of disposal of waste. Two years after New York City declared that implementing recycling programs would be "a drain on the city", New York City leaders realized that an efficient recycling system could save the city over $20 million. Municipalities often see fiscal benefits from implementing recycling programs, largely due to the reduced landfill costs. A study conducted by the Technical University of Denmark according to the Economist found that in 83 percent of cases, recycling is the most efficient method to dispose of household waste. However, a 2004 assessment by the Danish Environmental Assessment Institute concluded that incineration was the most effective method for disposing of drink containers, even aluminium ones.

Fiscal efficiency is separate from economic efficiency. Economic analysis of recycling does not include what economists call externalities: unpriced costs and benefits that accrue to individuals outside of private transactions. Examples include less air pollution and greenhouse gases from incineration and less waste leaching from landfills. Without mechanisms such as taxes or subsidies, businesses and consumers following their private benefit would ignore externalities despite the costs imposed on society. If landfills and incinerator pollution is inadequately regulated, these methods of waste disposal appear cheaper than they really are, because part of their cost is the pollution imposed on people nearby. Thus, advocates have pushed for legislation to increase demand for recycled materials. The United States Environmental Protection Agency (EPA) has concluded in favor of recycling, saying that recycling efforts reduced the country's carbon emissions by a net 49 million metric tonnes in 2005. In the United Kingdom, the Waste and Resources Action Programme stated that Great Britain's recycling efforts reduce CO emissions by 10–15 million tonnes a year. The question for economic efficiency is whether this reduction is worth the extra cost of recycling and thus makes the artificial demand creates by legislation worthwhile.

Certain requirements must be met for recycling to be economically feasible and environmentally effective. These include an adequate source of recyclates, a system to extract those recyclates from the waste stream, a nearby factory capable of reprocessing the recyclates, and a potential demand for the recycled products. These last two requirements are often overlooked—without both an industrial market for production using the collected materials and a consumer market for the manufactured goods, recycling is incomplete and in fact only "collection".

Free-market economist Julian Simon remarked "There are three ways society can organize waste disposal: (a) commanding, (b) guiding by tax and subsidy, and (c) leaving it to the individual and the market". These principles appear to divide economic thinkers today.

Frank Ackerman favours a high level of government intervention to provide recycling services. He believes that recycling's benefit cannot be effectively quantified by traditional laissez-faire economics. Allen Hershkowitz supports intervention, saying that it is a public service equal to education and policing. He argues that manufacturers should shoulder more of the burden of waste disposal.

Paul Calcott and Margaret Walls advocate the second option. A deposit refund scheme and a small refuse charge would encourage recycling but not at the expense of illegal dumping. Thomas C. Kinnaman concludes that a landfill tax would force consumers, companies and councils to recycle more.

Most free-market thinkers detest subsidy and intervention, arguing that they waste resources. The general argument is that if cities charge the full cost of garbage collection, private companies can profitably recycle any materials for which the benefit of recycling exceeds the cost (e.g. aluminum) and do not recycle other materials for which the benefit is less than the cost (e.g. glass). Cities, on the other hand, often recycle even when they not only do not receive enough for the paper or plastic to pay for its collection, but must actually pay private recycling companies to take it off of their hands. Terry Anderson and Donald Leal think that all recycling programmes should be privately operated, and therefore would only operate if the money saved by recycling exceeds its costs. Daniel K. Benjamin argues that it wastes people's resources and lowers the wealth of a population. He notes that recycling can cost a city more than twice as much as landfills, that in the United States landfills are so heavily regulated that their pollution effects are negligible, and that the recycling process also generates pollution and uses energy, which may or may not be less than from virgin production.
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