环境与自然资源经济学教师手册M09_TIET1380_08_IM_C.pdf

Chapter 9 Recyclable Resources:Minerals,Bottles,and E-waste Chapter 9 examines trash disposal,pollution damages from disposal,factors mitigating resource scarcity,and recycling.Efficient markets for recyclable resources are described.An examination of disposal costs and public policies to encourage recycling are discussed.Reducing,reusing,and recycling are the themes.1.Discuss the relationship between the demand for virgin ores and the demand for recycled materials.2.Define efficient recycling.3.Discuss the factors that reduce resource scarcity.4.Discuss the market imperfections in the market choices between recycling and the use of virgin ores.5.Discuss the damages from e-waste.6.Discuss issues related to pollution damages from waste disposal.7.Outline economic incentives to internalize damage costs such as volume charges and returnable deposits.I.An Efficient Allocation of Recyclable Resources A.Virgin ores are usually cheapest and thus used first.B.As natural inputs become scarce relative to demand,the demand for recycled materials should rise.C.Disposal costs rise with rising wealth and with increasing population densities.D.As the costs of disposal rise,recycling rates should also be increased.E.As land has become more scarce and thus,valuable,the burial of wastes is becoming increasingly expensive.Concerns over contamination of groundwater from buried waste has also made landfill disposal less attractive.F.Box Example 9.2 illustrates how the market should work using lead recycling as a case study.G.The composition-of-demand effect suggests that,as long as quality is not adversely affected,consumers will shift to materials made of recycled products if products made with virgin materials are more expensive.50 Tietenberg/Lewis Environmental and Natural Resource Economics,Eighth Edition H.Consumers will have additional incentives to recycle materials if they also bear the cost of disposal.I.If there is little or no market for the recycled materials or if the supply of recyclables is increased to the point that prices drop severely,returning products to recycling centers will have little effect on total recycling.J.Some materials are easier to recycle(e.g.,aluminum),while others are contaminated with impurities(e.g.,plastics)and are harder to recycle.K.Transport,labor,and processing costs are usually significant and play a large role in overall recycling rates.L.As recycling becomes more cost competitive,however,manufacturers should rely more heavily on recycled inputs.M.Some manufacturers are facilitating recycling through product design.For example,some aircraft manufacturers and ski boot manufacturers will stamp parts with a code to identify the composition of recyclable materials.N.In terms of the switch point introduced in the previous chapter,if the resource can be recycled at a marginal cost lower than that of the substitute,the market will likely use the recyclable resource longer than it would the non-recyclable resource.O.With a stock of A,a recovery rate of a,and an infinite time period,the amount made available by recycling will be A/(1 a).If a 0,the resource is non-recyclable.The effect of recycling is to increase the availability of the resource.II.Factors Mitigating Resource Scarcity Recycling is affected by resource scarcity,hence it is important to study those variables that affect resource scarcity.Market economies typically rely on three coping alternatives to mitigate the adverse consequences of resource scarcity:(1)exploration and discovery,(2)technological progress,and(3)substitution.A.Exploration and Discovery 1.A profit-maximizing firm will continue to explore until the marginal discovery cost of exploration equals the marginal scarcity rent from a unit of the resource sold.2.The marginal scarcity rent equals the difference between the price received and the marginal cost of extraction.This is essentially the marginal benefit of exploration,and thus profit maximization entails equating marginal benefit to marginal cost.3.Income growth and population growth both cause demand for the resource to rise over time.Rising demand causes both the marginal user cost and the scarcity rent to rise.Producers will then have incentives to take on larger marginal discovery costs.4.Increases in scarcity rents will stimulate large amounts of exploration if the marginal discovery cost curve is flat and less exploration if the marginal discovery cost curve is steep.The relative steepness depends on the number of available resources.B.Technological Progress 1.Technological progress reduces the cost of ore.2.Rising extraction costs stimulate the development of new technologies.3.The rate and type of technological progress are influenced by the degree of resource scarcity.4.New technologies can focus on using more capital or more labor depending on which is more abundant.Population growth could result in new technologies that rely more on labor.Chapter 9 Recyclable Resources:Minerals,Bottles,and E-waste 51 C.Substitution 1.Figure 9.1 illustrates the effect of substituting abundant resources for scarce resources.The greater the ease of substitution,the smaller the impact of rising costs and reduced availability will be.2.Figure 9.1 uses isoquants to illustrate the above point.An isoquant shows all the possible combinations of inputs that can produce a given output.3.Fixed-proportions isoquants are right-angled because no input substitutability is possible.Reduction in one input requires a reduction in output.4.The isoquant S1 shows a case for which substitutability is possible.Reduction in one input,does not require reduced output level,but requires a substitution of more of the other input.5.The more substitution possibilities that are available,the smaller the impact resource scarcity will have on output.6.Box Example 9.1 examines these issues with respect to timber.Technological progress has had a large effect on resource development as well as resource substitution.III.Market Imperfections,Waste Disposal,and Pollution Damage A.An unbalanced treatment of waste by products and consumers can lead to biases in the market choices between recycling and the use of virgin ores.B.If an economic agent does not bear the full cost of disposal,the agent will be biased toward the use of virgin materials and away from recycling.C.The avoided marginal cost of disposal is considered a marginal benefit from recycling.This amount must be included in recycling decisions.Thus both marginal disposal costs and the prices of recycled materials will affect the efficient level of recycling.D.Recyclable waste comes from either new scrap or old scrap.New scrap is residual material from a production process while old scrap is recovered from used products.E.Recycling of new scrap is less problematic since it does not have to be transported and can usually be easily reentered into the input stream.Additionally,since new scrap is always under the control of the manufacturer,the manufacturer has an incentive to design products that will minimize the amount of processing needed to reuse the scrap.All costs are internalized and markets should thus be efficient.F.Old scrap needs to be transported from recycling centers.Transport costs will be an important factor in determining how much old scrap is recycled.G.The market for old scrap is inefficient.Product users do not bear the full marginal social cost of disposal.The market is thus biased toward the use of virgin materials.H.Traditionally,consumers have not had to pay the true marginal costs of disposal.Many disposal charges have been lumped into property taxes or are flat rates,and thus the cost is the same regardless of how much trash is disposed.These flat rates suggest that the marginal cost of disposal is zero.The marginal cost of disposal,however,is not zero.I.When the private marginal cost of disposal is lower than the marginal social cost,the market level of recycling is inefficient.J.Subsidies on raw materials are another source of inefficiencies.One example is the Mining Law of 1872.K.Public policies include volume waste disposal charges,refundable deposits,and taxes.52 Tietenberg/Lewis Environmental and Natural Resource Economics,Eighth Edition L.One policy option is to use volume pricing,which are disposal charges that reflect the true social cost of disposal.An example is presented in Box Example 9.3.Residents in Marietta,Georgia were paying$15 per month for trash pickup.This amount was changed to$8 plus either a per bag fee of$0.75 or a fee based on the number of cans.Both programs resulted in substantial waste reductions and encouraged recycling.The per bag fee resulted in the largest waste reduction,just as economic theory suggests.M.Another policy option is the use of a refundable deposit.A refundable deposit system is typically designed to be an initial charge that reflects the cost of disposal and to provide a refund that encourages recycling and helps conserve virgin materials.Sweden and Norway use refundable deposit systems for automobiles.N.Ten U.S.states use refundable deposits for beverage containers.The coverage of containers varies by state.The recycling of aluminum beverage containers has been most successful with over 50 percent of aluminum beverage containers now recycled in the United States.(Recycling rates are higher in“bottle bill”states.)Recycling aluminum saves approximately 95 percent of the energy needed to make new aluminum from ore.O.Deposit-refund systems are also being used in some states for batteries and tires.Some developing countries and U.S.states use deposit-refund systems for pesticide containers.Some areas are imposing a disposal or recycling surcharge on the product.P.A third policy option to encourage recycling is the use of taxes on virgin materials and/or subsidies for recycling.Q.In Europe,virgin lubricating oils are taxed and the revenues are used to subsidize the recycling industry.Residential and commercial users are also required to recycle all waste oil.Many countries collect up to 65 percent of waste oil.R.The United States does not subsidize waste oil recycling,and as such,only about 15 percent of waste oil is recovered.S.Subsidizing the acquisition of recycling equipment is also being pursued for some industries.These subsidies typically take the form of sales tax exemptions or investment tax credits.Oregons program,for example,offers tax credits of up to 35 percent of the cost of any equipment used for recycling.Paper companies have used these credits to fund equipment for the recycling of newsprint.Due to the recycling capacity created,the newspaper-recycling rate in Oregon is twice the national average.T.Box Example 9.4 illustrates an option pursued in Germanythe“take back”principle.According to the“take back”law,producers are responsible for the product through the disposal end,and thus must take back products once they are no longer being used.U.Non-internalized environmental damages from the use of virgin materials will also bias the market away from recycled materials.These might be damages from extraction or from processing.A graph is described in the text but not presented.This graph should illustrate the supply of virgin ore(marginal private costs),the supply of recycled materials,and the total supply curve.A demand curve will determine how much of the market demand is met using recycled materials and how much from virgin materials.Now add to the graph the marginal social cost of virgin materials that includes the disposal costs.The supply of virgin materials and total supply shift left.Less material is used and the ratio of virgin to recycled materials will fall.It will be useful to draw this graph in class.V.Putting the responsibility for recycling on industry is the newest trend.California passed a bill in 2003 that addresses the recycling of electronic waste.W.Host fees are being used to address the issue of sitting of landfills.Host fees compensate the community that agrees to house the landfill.Chapter 9 Recyclable Resources:Minerals,Bottles,and E-waste 53 It will be useful to point out to your students the various incentives or disincentives involved with recycling and disposal.Recycling for the consumer can be time consuming and costly if trash must be separated and recyclables driven to a drop-off center.If residents do not pay the marginal cost of trash disposal,there will be little(monetary)incentive to recycle.Additionally,you may have to reinforce the point that the cost savings to a municipality resulting from avoiding the cost of disposing of a product is a benefit from recycling!The marginal avoided disposal cost is the marginal benefit from recycling.This important point is frequently missed by students.Ten U.S.states have passed“bottle bills.”A fun exercise is to put students into groups.Hopefully,you will have enough students to have at least one student in the group from a state with a bottle bill and at least one from a state without a bottle bill.Ask them to put together a list of the pros and cons of passing a“proposed”bottle bill in the non-bottle bill state.This exercise can continue as a problem set for which they can do a little research on the state in question.You can also ask them to address whether or not the bottle bill would be a move toward efficiency for the state.A potentially interesting source of information is .Additionally,the one municipality that had a bottle bill(Columbia,MO),recently repealed that law.Why?I have always found it very interesting to ask random students where they are from and then ask them how trash is priced in their hometowns.Most of the time,they do not know.So I send them to find out and gather as much information as they can on trash pickup rates and to do a simple analysis of efficiency.Ask them what city they examined and what information they gathered.You can ask them to comment on the efficiency of the pricing.Is it per bag or per can?Is it just a fee with unlimited pickup?Is recycling pickup included?The students usually have a lot of fun with this assignment and learn something at the same time!The sitting of Liquefied Natural Gas terminals is a source of great controversy.Recently in Maine,for example,several locations where chosen,only to be voted down,by the local constituency.Where should these terminals be located?