Now Is The Time For Environmental Economics

Eric-LombardiAhead of him speaking at the Scottish Resources Conference in October, we asked Eric Lombardi, executive director of Eco-Cycle International, what he sees as the biggest waste and resource management challenges (and opportunities) facing his own business at this time… the answer was long enough to form this article!

Lombardi-West-Bank-landfillThe short easy answer is “surviving the current market price volatility” for our products.  There aren’t many other industries where your product value drops over 50% in a few months, yet your hands are tied regarding how much product you produce for the market.

For example, when the market price for copper drops due to oversupply or low demand, the mine owner simply sends half his workers home and reduces production. But in recycling, the stuff just keeps coming and we need to process and sell it, regardless of market demand or price.

But the real answer to your question is much bigger and here I am probably going to say more than you wanted to hear. But I would say our greatest challenges are the same ones recyclers are suffering around the world, and that is the “honest” vs “dishonest” economics issue.

Just as with “clean energy” versus “dirty energy”, the world is finally understanding that there are hidden costs to how we run our societies that don’t show up on the company books, but rather are paid for by “the community” in various ways. I know this is a big topic, but the issue of carbon pollution-global warming and the catastrophic economic impacts that are happening (and increasing) are serving to educate everyone about a topic that before only “economic geeks” talked about, and that is the issue of “environmental externalities”. The economists say that these are costs related to a specific activity that aren’t being paid by the ones creating the cost impact.

An Uneven Playing Field?

To bring this discussion down to my town and my company, Eco-Cycle (one of largest community-based recycling social enterprise in the United States) is still forced to compete with landfills and incinerators on an uneven economic playing field. By that I mean that our financial statements are an honest ledger of all our costs without needing a second set of books to cover the “environmental externalities” and “legacy pollution costs” that our competition is subsidised for. In the case of landfills, which are very “inexpensive” in my region, I am talking about the groundwater pollution that is inevitable over time as every plastic liner system will eventually leak, some believe after only 30 years.

Yet, there is no plan to prevent this inevitability or clean up the pollution after it happens.  In addition, landfills emit everyday large amounts of methane, a serious greenhouse gas, as well as other toxic air pollutants, such as methyl mercury. These environmental insults will have an economic impact on someone, but it won’t be the landfill owners paying the bill. Similar problems are found with the toxic air emissions from trash incinerators, as well as the landfilling of the toxic ash, which is a byproduct of the combustion process.

This issue of dishonest economics hurts the Zero Waste Systems approach to managing our discards, but it also hurts the upstream product/packaging design goals of waste reduction by industry not having to pay a price for global resource depletion. Our economic system is acting as if there is a limitless supply of natural resources in the world, and we know that isn’t true. If a company can go into nature and remove virgin resources “for free” other than their direct costs of extraction, yet they have to pay cash for the “secondary resources” available through recycling, then how is this fair when one process creates large amounts of negative impacts upon the environment, while the other prevents these negative impacts?

In summary, our economic systems need to catch up with the times, as they have in the past. It is no longer acceptable to use children in factories even if they are cheap labor.  And it wasn’t a spreadsheet analysis that forced us to stop using slaves… it was our moral compass. Today it must become morally unacceptable to destroy nature, kill ecosystems, displace traditional people and their villages, and emit pollution that will destroy the biosphere upon humanity depends. The day for implementing “environmental economics” is here, and we must push that revolution forward as fast as possible through a combination of financial disincentives and new regulations.


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