Region 4: Municipal Government Toolkit

Economic Growth: Testing the Water

In August 2006, the South Carolina Department of Commerce released a report compiled by the College of Charleston's Department of Economics and Finance on the recycling industry's role in South Carolina's economy. The South Carolina Department of Health and Environmental Control's Office of Solid Waste Reduction and Recycling funded this study.  The findings are astounding.  Below is an economic summary for South Carolina in 2005:

• Jobs—Directly and indirectly supported 37,440 jobs with $1.5 billion in personal income impact.

• Revenue—Produced $69 million in state tax revenue.

• Economic Impact—Generated a total economic impact of $6.5 billion.

The report further estimates that if all of the common recyclables available in the municipal solid waste stream were recycled, South Carolina would see an immediate cost savings of as much as $30 million. At current growth rates, South Carolina's recycling industry promises a total economic impact of more than $11 billion by 2010.  These are real numbers that show the economic power of the simple act of recycling. 

In 2001, the Recycling Economic Information (REI) Study, an unprecedented national study that demonstrated the importance of recycling and reuse to the U.S. economy, was commissioned by the U.S. EPA, the National Recycling Coalition, and numerous states across the country.  According to the REI study, the U.S. recycling and reuse industry grosses approximately $236 billion per year and is competitive with other major industries (e.g., the food manufacturing industry) in employment and annual salaries.  The study clearly shows that recycling is profitable for local governments and businesses alike.

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Recycling jobs stack up against other major industries

The demand for recyclable materials moves beyond the basic reuse of resources. To a community, it can boil down to a central need—jobs. The South Carolina report points out that these recycling jobs pay above the state average.  And with an estimated 12 percent growth over the next five years, the number of these good South Carolina jobs is expected to grow.

In terms of employment and wages, the recycling and reuse industry compares very well to industries often targeted for recruitment and support by economic developers. Often times, the needs of the recycling industry are simple—specifically, they desire access to materials that are currently disposed.

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Recycling spurs downstream job and economic growth

The recycling industry is an elaborate and diverse network of public sector institutions and private companies. Investments in local recycling and processing, as well as policies and programs that encourage recycling and reuse, spur significant downstream investment in recycling manufacturing by the private sector. All of these actions promote economic growth. The REI study indicates that beyond the 1.1 million people directly employed by recycling, there are an additional 1.4 million jobs with a $52 billion payroll in businesses that support the recycling and reuse industry. That is a total of 2.5 million people whose wages are tied to the recycling industry; consider the impact of those 2.5 million employees when they spend their wages in the economy. 

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Gauging economic impact on a national level

It is clear from the REI study that recycling and reuse industries are a significant force in the U.S. economy. The REI numbers show that the U.S. is home to more than 56,000 recycling and reuse establishments that generate an annual payroll of nearly $37 billion and gross over $236 billion in annual receipts. The table above shows the direct impact of recycling and reuse industries on the U.S. economy.

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Factoring in the ripple effect

How can states expect recycling to benefit their local economy? As South Carolina's economic report points out there is no one economic development category that covers all of the activities that fall under recycling. The report stresses that when communities evaluate the economic impacts of their local recycling programs and the businesses those programs support, they must include the indirect and induced impacts that are produced from recycling's ripple effect. This ripple effect is demonstrated in South Carolina where, "the total income impact of recycling is estimated to be $1.5 billion in 2005, which the State estimates will generate $30,604,726 in sales taxes and $38,674,883 in income taxes."

Recycling Markets: Potential for easy growth

Heard any good urban legends lately? How about this one: there are no good markets for recyclable materials. The past few years have seen steady, strong market prices for materials and there is no forecast of a crash. In fact, as China continues to import massive quantities of recyclable material from this country, U.S.-based manufacturers are scrambling to ensure that there will be enough supply of recyclable material to meet demand. Manufacturing companies do not just make products with recycled content solely in an attempt to "green" their image. Recycled materials are established as valuable commodities that provide an economic opportunity for both new and existing markets.

As shown in the figure below, market prices for commonly recyclable materials have generally increased over the past few years, suggesting that the recycling industry is strong and will remain a key contributor to local economies in the future. As market prices increase, the opportunity for new businesses to enter the economy and create jobs also increases. See the chart below for a glimpse at market price growth for major commodities over the last few years.

Graph Source (Below): Kentucky Department of Environmental Management, Division of Waste Management, The Marketplace Newsletter

For example, the August 2006 edition of Resource Recycling points out that, "as the paper industry's most important raw material, collecting and processing recovered paper is becoming a global priority.” This is an important point to note, given the Southeast's strength in pulp and paper products production.  The American Forest and Paper Association certainly has taken notice.  That is why they have set a goal to recover 55% of all paper consumed in the U.S. by 2012.  Why the interest?  In 2005, 78% of the U.S. paper and paperboard mills used some recovered paper and 149 paper mills used recovered paper only.

The Southeast is also home to many companies that manufacture goods from recycled plastic. Mohawk Industries in Georgia is a prime example. Roland Jones, Procurement Manager for Mohawk Industries, Inc., reports that, “Mohawk Industries purchases and transports over 4 million pounds of recycled 'PET' bottles and food containers each week to our recycling facility in North Georgia for the purpose of processing this material into carpet fiber and fiberfill for home furnishings.  We currently purchase from over 40 states, some as far away as the west coast.  If more material was collected and recycled from sources located in the southeastern United States and closer to our recycling facility, we could reduce our transportation costs tremendously."

A wealth of material

Today's strong markets depend upon a steady supply of recyclable materials for feedstock.  In the Southeast, the recovery rate of recyclables is less than 25 percent. If communities could reroute more cans, paper, and bottles from the landfill into the recycle bin, the region's economy would benefit directly, producing significant income and growth for businesses that depend on recovered commodities.

In fact, Curbside Value Partnership estimates that the eight states that make up EPA Region 4 dispose of $1.2 billion worth of recyclables each year. Add the avoided cost of landfill disposal to that and the potential value grows further.

According to the Southeast Region Installation Management Command (INCOM-SE), Army bases located in the Southeast were able to recycle 32% of their material solid waste (MSW) stream and 82% of their construction and demolition debris, collecting $12.8 million in revenue and a $66.8 million cost savings in disposal fees during the 2007 fiscal year. Wood was recycled the most with 77,764 tons diverted from landfills.

Georgia estimates that each year it spends $100 million to throw away $300 million worth of recyclables.  That is part of the reason why in 2005, the Georgia Department of Community Affairs released a Georgia Statewide Waste Characterization Study. The study ran from the fall of 2003 though the fall of 2004 and found that approximately 36% of municipal solid waste disposed of in Georgia is composed of the most commonly recyclable materials that could have been utilized in manufacturing new products.  This includes more than:

• 1.8 million tons of recyclable paper products

• 160,000 tons of recyclable plastic bottles

• 220,000 tons of recyclable glass

• 360,000 tons of recyclable metals

The study showed that these valuable materials are going to landfills in Georgia, yet the recycling market infrastructure in Georgia makes it one of the most prominent recycling states in the nation:

• One-third of all the polyethylene terephthalate (PET) plastic, including beverage containers, recovered in North America is used by Georgia's carpet industry.

• Mohawk Industries in Summerville, Georgia, is one of the largest end users of PET in the nation.

• Georgia is the second largest pulp and paper-producing state in the nation, with 15 paper mills in the state using recycled fiber in their production and nine of them relying completely on recycled content for their operations. 

• Atlanta is home to Novelis, the largest aluminum recycler in the world that recently relocated its North American headquarters to Atlanta.  Aluminum cans are processed at their Greensboro, Georgia, facility.

During the summer of 2006, the Georgia Recycling Coalition and Department of Community Affairs conducted a study to determine the substantial economic impact of recycling in Georgia.  Preliminary findings show that:

• General Recycling—Georgia is home to more than 900 recycling-related companies handling a vast range of recyclable materials from compost to electronics to tires.

• Plastic Recycling—The plastic industry in Georgia accounts for $9 billion in annual sales and employs 75,000 Georgians with an annual payroll of almost $1.8 billion.

• Paper Recycling—The paper industry in Georgia, which utilizes a significant amount of recycled paper, represents $10 billion of annual shipments of pulp, paper, and paperboard and employs 25,000 Georgians with an annual payroll of more than $1 billion.

The information obtained from the Waste Characterization Study, combined with the strength of the recycling markets in the state has renewed Georgia's commitment to assist local governments in promoting recycling. In an attempt to increase recycling participation rates, the state has committed to helping community recycling programs convert to single-stream collection operations by funding a series of regional recycling collection hubs.

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Legislative action effective for supporting recycling

Mississippi also understands that these available recyclables have value. That is why in 2006, the
Mississippi Legislature adopted recycling legislation that, among other things, requires that the Mississippi Department of Environmental Quality:

• Give priority to recycling projects in awarding solid waste assistance grants.

• Develop a publicly available report on the amount of products in the state that are not recycled, and a report to the Legislature on the status of recycling in the state.

• Work with the Mississippi Development Authority to recruit and promote recycling industries in the state, including active promotion of potential markets of recyclable materials.

• Reconvene the state's Recycling Task Force to conduct an assessment of the recycling industry and recyclable materials markets in the state. This task force partnered with the Institutions of Higher Learning to survey recycling businesses and extrapolate an estimated economic impact from recycling. While the survey was inconclusive overall, the estimated total labor income and state general fund revenues for those participating in the survey would exceed $140 million. The Recycling Task Force notes that this figure is estimated to be very low compared to the actual economic benefits to Mississippi.

Mississippi isn’t the only state to adopt legislation to support recycling. Thanks to the North Carolina House Bill 1518, starting in 2008, 8,000 Alcohol Beverage Control permit holders must ensure that their recyclable beverage containers are separated, stored, and recycled.  An increase of approximately 50,000 tons of recycled glass is expected per year.

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It all starts with the community collection program

A greater commitment to increasing recycling totals would translate to a huge economic return at both the community and state level. The Aluminum Association reports that $1.2 billion worth of aluminum cans went into landfills last year. At the same time, large aluminum manufacturing plants in the Southeast had difficulty sourcing adequate supplies and incurred higher energy costs to run their operation because they had to turn to using virgin materials. In early 2008, aluminum recyclers enjoyed strong market prices. North Carolina’s end users paid approximately $.83 per pound of loose aluminum in January 2008, while Kentucky’s end users paid approximately $1.03 per pound of aluminum. In general, mixed metal markets experienced record prices in the Spring of 2008. In 2008, Alcoa, an international leader in aluminum recycling and manufacturing, announced that it had established a goal to raise the industry’s used beverage can recycling rate in North America from its current 52% rate to 75% by 2015.

By collecting more recyclable commodities from homes and businesses, the Southeast can help set the stage for the future expansion of current manufacturing operations. That expansion will result in more jobs, stronger tax revenue, and an overall brighter economic picture for the region. Recycling is a sustainable investment, one that reaps benefits for both your local community and the Southeast region as a whole.

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Pay-As-You-Throw Programs

In traditional solid waste programs, residents pay for waste collection through property taxes or a fixed fee, regardless of how much—or how little—trash they generate. In communities with Pay-As-You-Throw programs (PAYT), residents are charged for the collection of municipal solid waste—ordinary household trash—based on the amount they actually throw away, after reduction and recycling efforts. This creates a direct economic incentive to recycle more and to generate less waste. Most communities with PAYT charge residents a fee for each bag or can of waste they generate. In a small number of communities, residents are billed based on the weight of their trash. Either way, these programs are direct: reduced disposal results in reduced cost for the individual. Research indicates that PAYT can be a very cost-effective tool to increase recycling and waste diversion. The program of “paying as you go” shows national increases in recycling rates of 32—59%. For example, a survey in Iowa found that recycling increased an average of 50% after PAYT was implemented. Other benefits are that the program is flexible, quick to implement, and works well in communities of all sizes. According to the EPA and Skumatz Economic Research Associates (SERA) report Pay as you Throw (PAYT) in the US: 2006 Update and Analysis, PAYT programs in the U.S. have grown from about 100 in the late 1980s to over 7,000 in 2007, representing about 25% of U.S. communities. Collectively, these program are annually keeping 4.6-8.3 million of tons of MSW out of the landfill, and saving 61-109 million BTUs.

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Savings realized by EPA WasteWise Partners

WasteWise is a free, voluntary, EPA program that targets the reduction of municipal solid waste and select industrial wastes. It helps organizations eliminate these wastes, benefiting their bottom line and the environment. WasteWise is a flexible program that allows partners to design their own waste reduction programs tailored to their needs. The program offers assistance, in addition to recognition and awards. As of early 2008, WasteWise has 1,889 partners (including alumni) spanning more than 54 industry sectors. Partners include large corporations, small and medium-sized businesses, schools, colleges, universities, hospitals, state and local governments, tribes, and other institutions. In addition, WasteWise has 182 endorsers, mainly membership-based organizations, from more than 15 industry sectors. Winners of the 2007 WasteWise Partnership Awards in the Southeast include:

• Federal Government: U.S. Postal Service- Alabama District—For the past 10 years, the Alabama District of the U.S. Postal Service has engaged 100% of its 710 postal facilities in their “Discarded Lobby Mail” recycling program. As a part of this voluntary program, postmasters and managers are trained in recycling practices and how to promote recycling in their community. As a result of this training and implementation, the Alabama District has recycled over 5,624 tons of mail and materials, resulting in a disposal cost avoidance of approximately $5,000,000 in 2006.

• State Government: Tennessee Department of Environment & Conservation, Office of Environmental Assistance—The Tennessee Department of Environment and Conservation promotes many recycling programs throughout state office buildings. Thanks to its efforts, the department, a partner since 1998, sees increased waste reduction numbers every year. In particular, the department was able to reach its goal of increasing the amount of mixed office paper it recycles by 10% over last year by involving 132 office buildings. This resulted in 620 tons of paper being recycled and an avoided landfill cost of $18,627.

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