Tuesday, September 15, 2020

econlife - Why We Should Care About Curbside Cardboard Crime by Elaine Schwartz

In 2016, the dumpsters in Madrid got smaller holes to prevent cardboard theft.

It didn’t work.

Called “beige gold,” curbside cardboard is picked up by cities and then sold for recycling. But in Madrid, where thieves were arriving first, authorities have estimated a multi-year €16 million (close to $19 million) revenue loss. Now, New York and California are also reporting cardboard thievery.

Recycling Revenue

We had had the perfect setup. The shipping containers that arrived here from China were going home empty. Decades ago, Chinese entrepreneurs figured out they could pay us for our trash, recycle it into raw materials, and then remanufacture it. By 2016, we had been sending upwards of 700,000 tons a year of trash to China. The system let cities get the recycling revenue that could support trash management.

But then, during January 2018, China said it was banning most trash imports. The decision was a whopper.

China had two reasons:

1. The waste was too dirty. After all, our Amazon boxes are okay but not all of the plastic and foam inside. And beyond that, we discard our clothes hangers, shoes and garden hoses. Most then go to sorting machines that inadequately separate the filthy and hazardous materials from everything else. China used to get it all. Now they are saying “No.”

2. They are more affluent. China can afford to purchase the new materials they need to make carpets and pipes and all they send us. They can import new plastics.

When China limited the kind of cardboard it would recycle, price plunged as their demand curve shifted to the left:

However, there are still markets for recycling cardboard. Like most commodities, used cardboard’s supply and demand push price up and down. Currently,  recycled cardboard is selling for somewhere between £70 and £80 per ton in England (with price spiking to £130 a ton when coronavirus first spread).

Our Bottom Line: Tragedy of the Commons

Because curbside cardboard, the ocean, and the air are shared resources, some of us mistreat them. Called the tragedy of the commons, thieves take the cardboard, we overfish, and factories pollute. The reason is the “commons.” When no one owns a resource, there is less incentive to care for it.

For years, the recycling revenue that came from China created an incentive for municipalities to recycle. Now, with China banning most of our trash and cardboard, it has disappeared.

My sources and more: Thanks to Marginal Revolution for alerting me to cardboard theft and this BBC article. From there it made sense to look at recycling in The Atlantic, an NPR report, WSJ, and from a WTO press release, Please note that several of today’s paragraphs were in a previous econlife post.

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.