When it comes to absolving your conscience and saving the planet, recycling is a quintessential penance. For anyone suffering from eco-apathy, many jurisdictions make the choice for you, with mandatory recycling and other regulations. Such mandates, however, keep us from knowing whether recycling is cost effective.
Environmentalists claim that recycling consumes less energy and destroys fewer natural resources than original production. For example, recycling aluminum supposedly requires 95 percent less energy than virgin production.
Studies that produce such statistics, though, make many assumptions about human behavior. Government-mandated recycling programs hide costs, rendering the net economic and environmental benefits unknowable. How much energy, for example, was consumed in the collection and handling of the used materials?
Government interference alters the market structure in many ways. California and 10 other states, including Oregon and New York, add surcharges to the price of beverage containers to encourage consumers to take them to recycling collection facilities. Policymakers also create demand for recycling through minimum recycled content requirements and by purchasing recycled materials for public projects.
The problem is that all this meddling distorts the market, artificially increasing demand while blurring costs. Its probably safe to say that an aluminum soda can is not worth exactly 5 centsthe standard redemption value in the 11 states with bottle laws. Studies indicate a real value of about a penny. The arbitrary nickel redemption deposit merely reflects how much the legislature values a certain behavior.
Environmentalists tend to assume that without their efforts everything would be bound for landfills or incineration. Thats why they favor forced eco-friendliness.
They forget that the world is filled with other incentives.
A business, for example, would look at the costs and ask simply whether recycling is a viable low-cost production option, all else being equal. If the cost of collecting and remanufacturing aluminum cans is less than the cost of mining ore and manufacturing new cans, businesses can be trusted to actively promote recycling.
When decisions are based on information from free markets, prices act as unifying language between producers and consumers. Compulsory recycling and price-fixing short-circuit this process, making accurate judgments about the merits of one production option versus another impossible.
Using regulation to alter priceseither directly or indirectly, by politically manipulating demandreplaces a healthy economy with a Tower of Babel. Five cents no longer means 5 cents: It merely represents the power of special interests to force compliance with a politically favored behavior.
Eliminating mandatory recycling, deposit laws and other regulations and subsidies would enable entrepreneurs to freely respond to market signals, prompting competitive efficiency as well as individual responsibility.
Its certainly possible that recycling is as beneficial as environmentalists claim. But because we lack perfect knowledge of every factor of production, profit marginsnot politicsshould determine if and how recycling is a part of the equation.