Deck 19: Managing Waste

Question 1

Glass bottles can be either recycled (crushed and melted) or reused. The market will tend to choose the cheapest path. What factors will tend to affect the relative cost of these options? Is the market likely to make the efficient choice?

Answer 1

It has been stated that glass bottles can be either recycled (crushed and melted) or reused. The market will tend to choose the cheapest path.
Factors that will affect the relative cost of these options -
1. In case of recycling of glass bottles expenditure with regards to crushing and melting of the glass bottles as well as cost of adhering with the pollution limits as placed by local authorities because recycling processes also generate pollution. On the other hand, reuse of glass bottles require sterilization process only and also do not impact the environment adversely.
So, expenditures related with making used glass bottles reusable once again either through recycling or reuse will affect the relative cost of these options.
2. Glass bottles are generally used in beverage industry and in this industry packaging plays an important role. Companies generally design their bottles in unique ways and therefore reuse is limited to particular company whereas recycle has wider acceptance.
So, this factor of packaging also affects the relative cost of these options.
Increase the relative cost in case of reuse (limited choice) and decrease the relative cost in case of recycle (wider choice).
Efficient choice to be made by the market will depend on appropriate incentives with regard to two options.
For appropriate incentive cost - benefit analysis as well as analysis of other factors such as government policy, producers' attitude and consumer behavior has to be undertaken.
As we know that market does not always get perfect information and therefore there are chances of number of imperfections being creeping into the market and thus there are more chances of market not likely to make the efficient choice.
For example, cost comparison suggests that sterilization and reuse of old glass bottles cost less than crushing, melting, and reformation of old glass bottles but since manufacturers have stated preference with regard to shape, color, and capacity they may go for recycling even though reuse is cheaper resulting in inefficient choice.

Question 2

In Europe conventional waste is primarily controlled by the centralized implementation of the "take back" principle whereas in the United States conventional waste management is primarily handled locally by means of disposal fees or deposit refund systems. Is one approach better than the other or is this a case where both have chosen the best policies for their unique circumstances?

Answer 2

It has been stated that in Europe conventional waste is primarily controlled by the centralized implementation of the "take back" principle whereas in the United States conventional waste management is primarily handled locally by means of disposal fees or deposit refund system.
This difference in methods with regards to control of conventional waste in Europe and United States act as a case where both have chosen the best policies for their unique circumstances.
Reason - Countries in Europe under the aegis of European Union generally formulate and implement laws that are uniform across the member countries.
This uniformity allows equal adherence to laws by each member country. Also, being near to each other pollution level in one country or any policy regarding the disposal of waste in one country has wider and important impact on the other countries as well.
Therefore, European Union want to implement the centralized policy across all member countries and would have gone for centralized implementation of the "take back" principle with regards to the control of conventional waste is concerned.
On the other hand, in United States respective states want the control over the policy making with regard to disposal of conventional waste and are implementing various laws regarding the same taking into account the local circumstances instead of going for a uniform centralized system across entire nation. For instance California's Proposition 65.
Therefore, in the United States conventional waste management is primarily handled locally by means of disposal fees or deposit refund system.

Question 3

Many areas have attempted to increase the amount of recycled waste lubricating oil by requiring service stations to serve as collection centers or by instituting deposit-refund systems. On what grounds, if any, is government intervention called for? In terms of the effects on the waste-lubrication-oil market, what differences should be noticed among those states that do nothing, those that require all service stations to serve as collection centers, and those implementing deposit-refund systems? Why?

Answer 3

Government intervention is required in order to increase the recycling of waste lubricating oil.
It has been witnessed that those countries where government makes it mandatory for residential and commercial users to recycle the waste lubricating oil as well as tax the virgin lubricating oil and subsidize recycling industry up to 65 percent of available waste oil has been collected.
On the other hand, those countries which does not have rules that make it mandatory for residential and commercial users to recycle the waste lubricating oil as well as do not subsidize the recycling industry only up to 15 percent of the waste lubricating oil is recovered.
Thus, government intervention can greatly increases the collection and recovery of waste lubricating oil.
Those states that do nothing with regards to collection or recovery of waste lubricating oil, market for waste lubricating oil would not be successful and very little amount of waste lubricating oil could be recovered in such states.
On the other hand, waste lubricating oil market would be more successful in those states that implement deposit - refund system than in those states that require all service stations to serve as collection centers because in latter case users does not get any monetary incentive for turning in their waste oil at the collection center and therefore may prevent some users from actually collecting and depositing their waste oil at collection centers while deposit - refund system provides strong monetary incentive and thus induce users to turn in their waste oil to the designated centers of collection.
Moreover, waste lubricating oil collection can have macro economic and environmental impact as well.
Recycling of waste oil will reduce the dependence of recycling countries on imported oil and thus save their economies from oil shocks.
On environmental front, this recycling will decrease the speed of extraction of new oil and thus would lead to sustainable use of precious natural resource that is oil.

Question 4

"As society's cost of disposing of trash increases over time, recycling rates should automatically increase as well." Discuss.

Question 5

Over the last several decades in product liability law, the court system has moved from a caveat emptor ("buyer beware") to caveat venditor ("seller beware") doctrine. In other words, the liability for using and consuming risky products has been shifted from buyers to sellers. Does this shift represent a movement toward or away from an efficient allocation of risk? Why?

Question 6

Should it be illegal for the industrialized countries to ship their hazardous waste to the developing countries for disposal? Why or why not?

Question 7

How should the public sector handle a toxic gas such as radon that occurs naturally and seeps into some houses through the basement or the water supply? Is this a case of an externality or not? Does the homeowner have the appropriate incentives to take an efficient level of precaution?