The Economics of Recycling Heterogeneity

We summarize the economics of recycling municipal solid waste. OECD data suggest that aggregate recycling rates in member countries have plateaued in recent decades. United States recycling rates for some materials remain low, even after decades of learning and participation. Major new policies may be required to increase recycling rates. Aggregate recycling targets are common in the US and OECD but may no longer be effective. We discuss many sources of recycling heterogeneity often ignored. First, recyclable materials are very different from each other. Economies and natural environments differ across space, and technologies change over time. Recycling policies that ignore heterogeneity are likely not set appropriately. If policy costs are low enough to set a unique recycling policy for each material in each locality, then a surgical recycling strategy may better serve society. Specific recycling policies for automobile batteries differ greatly from policies for yard waste, because these two materials are different. A surgical recycling policy could extend this practice, so that rules for aluminum cans differ from plastic jugs or glass bottles. Reaching future recycling targets could be frustrated by ignoring these heterogeneities across materials, locations, and time.