Lost Value Costing of Trash Builds a Bridge to the Circular Economy

by | Aug 29, 2016

Daniel A. GilbertOne of the most talked about topics in the sustainability world today is the Circular Economy and its goal of making materials infinitely reusable – eliminating the concept of waste.

That’s an amazing concept, but with waste disposal prices in most of North America relatively low and commodity prices at historically low levels, how do we change behaviors and incentivize waste generators to stop throwing away items that still have value?

As a starting point, let’s explore a concept called “Lost Value Pricing” for waste disposal.  Instead of charging everyone the same price to dispose of their waste, what if we audited their waste stream to identify the recyclable and reusable materials that they’re throwing away?  The more valuable commodities in your solid waste stream, the higher price you pay for disposal.

For example, if your commercial waste stream is full of cardboard, plastic sheet wrap and wood that can be easily recycled, you would pay a higher cost for service than a business that is throwing away just residual wastes that are too small, degraded, or mixed together to recycle or reuse.

Obviously, the trick is to make the process as simple, transparent and inexpensive as possible, along with defining values, surcharges and waste pricing.  There’s also the issue of what to do from extra revenues generated through this process.

On the residential side, individual residents can be given some simple app as a template guiding them through an annual self-audit that would be submitted with a set of photos supporting their findings.  The audits could either be entered right through the app, mailed or E-mailed to their waste provider.

Businesses would be required to perform a waste audit at least once every 24 months and submit the results, with supporting photos, to their waste provider.  These audits could be self-performed, after an initial baseline audit performed and certified by an experienced professional.

Waste providers in a local community would be required to post base disposal prices that would serve as the lowest possible price charged to a residential, commercial, or industrial customer that has waste relatively free of material with value. 

Community-specific values for all types of recyclable and reusable commodities would be used to mark-up pricing on an individual waste stream from there.  If your business throws away a lot of cardboard, for example, you will pay the base price plus a surcharge for OCC set in your community. 

This system makes it more expensive to throw away valuable commodities.  It surcharges bad behaviors and rewards good behavior, since the surcharges can be removed if the generator can demonstrate after one year that the wasteful behavior has been corrected.

Waste providers in the community could administer the surcharge system with input from local governmental and private stakeholders, and be allowed to keep a percentage of the surcharge revenue as compensation.  This would also incentivize waste providers to invest in recycling infrastructure, because it could make money on commodities as the surcharges causes recycling rates to increase in the community and demand for recycled materials rises. 

The rest of the surcharge revenue would go to the local city or county agency responsible to managing waste providers and used to promote local recycling and reuse infrastructure.  How could your community support The Circular Economy if it had Lost Value Surcharge revenue rolling in from people who have consciously decided to throw away items with value?

Instead of spending millions of dollars on “One Bin” programs and “Dirty MRFs” that sort recyclables from trash, eliminating the concept of personal accountability and greatly increasing the contamination of recyclables, let’s invest our resources building a financial penalty and reward system that minimizes disposal and maximizes the value of recyclables.

Is this concept perfect? No, there are many blanks to be filled in and questions that need answers.  It needs a lot of thought, vetting and planning by a lot of smart people.  However, is it better than doing nothing and waiting for someone else to magically create The Circular Economy?  Absolutely!  It’s a bridge to the circular economy that is self-funding.  It only takes one community willing to put in some time and prove the theory.

Note:  Daniel A. Gilbert is a sustainability subject matter expert with a global integrated facility management organization with operations in more than 50 countries.  He has more than 25 years of experience in the environmental industry working with Fortune 500 clients like GM, Pepsico, Hewlett-Packard and MolsonCoors.

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