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The Economics of Recycling in Hawaii

Paper, metal, plant clippings, plastic and many more items are recycled in Hawaii and each has a dollar value

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Much more than just HI-5, the economics of recycling is about fluctuating market prices for metal, glass and paper, and about jobs, electricity, carbon footprints and the cost of landfills

Hawaii got a basic lesson in the economics of recycling starting in 2005 when the state imposed a 5-cent deposit and 1-cent fee on each beverage container. As the lesson sank in, more and more people returned bottles to collect the 5-cent deposit. Economics 101: People respond to financial incentives, even 5-cents-a-bottle incentives.

But the economics of recycling has many other layers: Paper, metal, plant clippings, plastic and many more items are recycled in Hawaii and each has a dollar value. Hawaii Business asked sustainability expert Scott Cooney to look deeper into the economics of recycling. He is an adjunct professor of sustainability at UH-Manoa’s Shidler College of Business, author of “Build a Green Small Business” and principal of the GBO Group, which advises companies on sustainability strategies.

Here is his report.

If you have doubts about the HI-5 bottle deposit program, consider this: On Oahu, before HI-5 went into effect in January 2005, the landfill diversion rate was 41 percent, according to the state Department of Health’s Office on Solid Waste Management. In other words, about three-fifths of all of Oahu’s municipal solid waste went to the Waimanalo Gulch landfill.

Since then, more than 4.2 billion beverage containers have been recycled through the program, the waste office says, which helped increase the overall diversion rate to 72 percent. It’s not just HI-5, of course. The diversion rate includes many other recycled materials, plus waste sent to H-Power, the incinerator that turns trash into electricity and generates about 6 to 8 percent of Oahu’s power.

Recycling has also created jobs and revenue for local workers and companies. Recycle Hawaii, the nonprofit that coordinates recycling and green-waste capture on Hawaii Island, says green waste is processed as mulch, glass is used locally to fill potholes and to help build new roads, and paper fiber is used by local packing companies as filler material. Glass, metals, paper and plastic of all kinds are also shipped to mainland and Asia-based brokers, according to the 2012 Recycling Guide published by Recycle Hawaii.

Suzanne Jones, recycling coordinator for Honolulu County, says that dumping our opala into landfills is not a sustainable approach for Island communities. Instead, she says, “We see our waste as a resource. We can make new products, generate power ... that makes a lot more sense.”

Hawaii is not alone in facing a waste challenge. According to a recent study by the World Bank, municipal solid waste worldwide is projected to grow 70 percent by 2025. Post-consumer waste may account for almost 5 percent of global greenhouse-gas emissions, but methane escaping from landfills represents 12 percent of total methane emissions and methane is 18 times more potent as a greenhouse gas than carbon dioxide, according to the World Bank.

In most locations, the environmental benefits of recycling are clear. The Technical University of Denmark study of Life Cycle Analysis of 55 materials found 83 percent of them were environmentally beneficial to be recycled versus other forms of disposal. Aluminum, for instance, showed a 95 percent reduction of energy needed when using recycled aluminum versus extracting the raw material from a mine. The reductions were lower, but still substantial, the study found, for other materials: 70 percent for plastic, 60 percent for steel, 40 percent for paper and 30 percent for glass.

On Oahu, curbside pickup has made a huge difference in diverting trash away from the landfill. After pilot programs starting in 2007, islandwide curbside recycling and green-waste programs were in full operation in 2010 on Oahu. In its first full year, the program collected 18,000 tons of mixed recyclables and 53,000 tons of green waste, representing a 6 percent reduction in municipal solid waste going to Oahu’s landfill, according to Honolulu County’s recycling office.

A similar program, the “3 Can Plan,” is in its first full year in Maui County, with similar programs in development by both Hawaii and Kauai counties.

How much does curbside recycling cost? According to the Danish study, most curbside recycling is not financially self-sustaining except for dense urban areas with high landfill costs and near ports to ease shipping. For instance, in New York City, the estimated cost of landfilling was $34 to $48 less per ton than recycling in 2004, but the gap narrowed to $17 in 2008, and was supposed to reach parity this year, according to a 2008 report by the Natural Resources Defense Council.

“In many places, it is less expensive to put something in a landfill than to do waste-to-energy and, in many cases, than recycling,” said Jones. “Here, our goal from the beginning was to create curbside recycling that was economically self-sustainable, and we’re pleased with the results so far.”

Part of the calculation is the cost of putting waste into a landfill, but those costs are hard to pin down. Honolulu charges private companies $81 in tipping fees to dump a ton of waste in its landfill, and there are often other fees, but those do not represent the real cost of landfills to taxpayers. Those costs include site selection, stakeholder involvement, development, construction, permitting, ongoing maintenance, disaster management, methane capture, closure and other costs that aren’t all reflected in the tipping fee. There are other ways to get rid of trash, but a recent attempt to ship Honolulu County’s waste to Oregon cost $99 a ton and doesn’t seem like a long-term solution.

Recycling itself has limitations: Unless the materials can be economically recycled in Hawaii, they must be shipped at least 2,500 miles to Asia or the mainland, which adds costs and carbon footprint. Nonetheless, shipping Oahu’s lower-value recyclables, such as waste paper, across the ocean for recycling has substantial global environmental benefits, according to a 2005 study commissioned by the Honolulu Department of Environmental Services’ Refuse Division. The global benefits would include an overall net reduction in global greenhouse gas emissions and a net energy benefit of 330,000 megawatt/hours a year, versus a net energy benefit of 49,000 MWh for processing that waste into energy at H-Power (both figures are compared against a baseline of putting those materials in a landfill).

However, shipping materials overseas to recycling centers has only nominal economic benefit for the Islands, while recycling them locally, either as materials or through conversion to energy, clearly creates more economic activity in Hawaii. The Refuse Division’s 2005 study found that if you looked at the life cycle of materials, sending Oahu’s waste paper and other low-value materials to H-Power would result in $4.8 million in direct wages, 211 total jobs and $823,000 in reduced energy-production costs a year. On the other hand, recycling those same materials on Oahu would create 235 total jobs, but lower direct wages of about $4.1 million. The study provided incentive for Honolulu to invest in a local recycling infrastructure that has an ongoing financial return for Hawaii, and to send the bulk of those low-value recyclables to H-Power.

In Hawaii, green-waste recycling has been an economic boon. Honolulu County considers its green waste program a big success, saying it is on par with more mature programs in other municipalities around the U.S., despite having started only a few years ago. But the county wants citizens to separate items correctly, because improper placement of items in green-waste bins (which are, conveniently, colored green) costs the county an estimated $18,000 last year.

Currently, blue bins are for aluminum cans, glass bottles and jars, newspaper, corrugated cardboard, and No. 1 plastic (PET) and No. 2 plastic (HDPE). Last year, 52 percent of all recyclables were placed in Honolulu’s blue bins, while 48 percent were put into the gray bins, which are designed for materials sent to the landfill. Honolulu’s recycling office figures the county can earn another $500,000 annually if it can increase the curbside recycling rate from the current 52 percent level to 75 percent. From curbside recycling, the city earns a 5-cent deposit and 2 to 4 cents in handling fees for each HI-5 container, plus between 8 and 13 cents a pound for nondeposit glass containers, and market value prices for other recyclable commodities. According to Jones, selling recyclables at market price generates the lion’s share of revenue for Oahu’s program. Those revenues, plus the fact that Honolulu turned its twice-a-week curbside trash pickups into one recycling and one trash pickup a week, helped make the program economically sustainable.

Hawaii Business magazine invites you to comment on our articles and the issues they raise. Comments are moderated for offensive language, commercial messages and off-topic posts and may be deleted. Some comments may be chosen for inclusion in the magazine on the Feedback page.

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Aug 9, 2012 10:39 am
 Posted by  brvhi

As I work in the recycling industry, I find this article important for those who do not understand the economics of recycling and believe that we in the industry make "tons" of money.

A successful recycling infrastructure, even if costs exceed that of landfilling, is critical to the future of our great state of Hawaii.

Aug 9, 2012 10:50 am
 Posted by  brvhi

Most local recyclables are shipped off-island. A recyclable materials processing infrastructure would reduce costs and increase our independence. For example, processing plants and smelters should be established in Hawaii. The materials developed, such as aluminum structural materials, and composites, can be used in construction, increasing jobs and contribute to the local economy. For our sake, we must consider this as an option. As well, we must not fall into the NIMBY syndrome.

Dec 14, 2012 08:25 am
 Posted by  princessbm

i love this cite

This has been flagged
Aug 14, 2013 04:35 am
 Posted by  Latoya.Smith

Recycling is good! Over the years I’ve ordered dozens of catalogs that were printed with less than expected quality, some being downright scrappy. A couple months ago my company in Hobe Sound FL, printed some catalogs with PCA Delta and they were great. I’ve been printing with them ever since. They show care for the environment by using soy based inks, plus recycled papers are available upon request. If you need items printed on recycled paper go to http://www.pcadeltaprinting.com/

This has been flagged
Jan 1, 2014 12:46 pm
 Posted by  johnjesselaRue

Made in hawaii products suffer from expensive glass containers shipped in to the islands. Create a glass factory here to use recycled glass for Hawaii products. A beautiful solar power glass factory Hawaii state funded to create jobs and reduce greatly the carbon footprint of the islands. New manufacturing in food and beer can instantly be more profitable. Adissionally unseparated glass (low grade) is used in Oregon to make a sand-like road material. We always can use more sand that we lose.

This has been flagged
Jan 1, 2014 12:52 pm
 Posted by  johnjesselaRue

Make a glass factory a priority in Hawaii. Please, use here this valuable recycled resource.

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