The typical student in an undergraduate environmental economics course is a shade green, or thinks they should be. They are horrified that I don't recycle (I don't personally, but someone else in my extended household does it for me, but I don't tell the students that). I ask them, what is the price of salt? They don't know. Then I ask them, how much do you pay the town/city/county to take your trash and dump it somewhere else?. They don't know the answer to that one either. I try then to argue that landfill space is cheap and we should worry as much about our trash (and recycling) as we do our purchases of salt (which we don't worry about at all -- have you ever tried to negotiate a lower salt price?).
I never had any decent, easy to obtain, evidence to back up these assertions ... until now. Here is a great article from the NYTimes looking at the economics of trash. We've come a long way since the 1980s trash barges that didn't have any place to dock.
The economics is simple. The cost of dump space has decreased for two reasons: supply has increased due to technological improvement and the cost per unit is lower due to economies of scale.
First, economies of scale. If you have forgotten your micro, this is when production on a large scale is cheaper for each unit of output than production on a small scale. Economies of scale explain why we have big factories for cars. Here is how the NYTimes puts it:
A 10,000-ton-a-year dump would cost $83 a ton to operate, estimates Solid Waste Digest, while a 300,000-ton-a-year site's cost would be $14 a ton. Dumps taking a million or more tons a year have even lower per-ton costs.
The NYTimes argues that the move to larger dumps was due to government policy:
Environmental regulations, which many feared would cause a disposal shortage, actually helped encourage the glut. The Resource Conservation and Recovery Act, passed in 1976 but put into effect over more than a decade, requires that liners be used to protect groundwater and that systems to extract water and methane be installed. The cost of all that forced thousands of small dumps to close and encouraged huge new landfills that could pile trash hundreds of feet deep to maximize the return on investment.
I'm not so sure. It seems that the natural order of things would be for high-cost urban dumps to close anyway and bigger regional dumps to open anyway. Economists tend to think that government never has any ideas, even accidental ideas, that lead to improvements in unregulated market outcomes.
The secon reason for the glut of dump space is technological advance. Technological advance increases supply by allowing firms to produce more at lower unit costs. Here is how the NYTimes puts it:
Waste companies and municipalities have fit much bigger dumps than originally permitted onto existing acreage, piling trash deeper and steeper, and vastly expanding permitted capacity. They are burying trash more tightly, so that each ton takes up less space, increasingly using giant 59-ton compacting machines guided by global positioning systems that show the operator when he has rolled over a section of the dump enough times. They cover trash at the end of the day, to keep it from blowing away, with tarps or foam or lawn clippings instead of the thick layers of soil that formerly ate up dump capacity.
Some operators are blowing water and air into landfills to hasten rotting and thus the shrinkage of buried garbage piles, creating more capacity.
Each practice is fairly prosaic, and many operators have yet to adopt the improved methods, but taken together the waste industry is in the early stages of the kind of increase in efficiency more typically seen in technologies like computer chips and turbines that generate electricity.
A well-run dump, tightly packed and using minimal dirt as cover, can hold 30 percent or so more trash than a poorly run site, said Thomas M. Yanoschak, a senior project manager at Camp Dresser & McKee, an engineering firm that advises waste sites. "Operators are much better now," he said.
And the effect of economies of scale and technology on the trash market:
... the oversupply is a damper on prices. The nation's average gate rate, the price dumps post publicly, has lagged inflation, rising just 21 percent from 1992, when the original disposal glut first became widely known, to last year, climbing to $35 a ton from $29, according to Solid Waste Digest.
If the price has lagged inflation, then the increase mentioned in the article is a nominal increase. The real price has fallen even as demand, trash, has increased (which puts upward pressure on prices). If the price is $35 in 2005 dollars the real price in 1992 dollars, the price you'd compare to $29 after adjusting for inflation, is about $25.
The article is well-researched with lots of neat numbers. My advice? Go ahead and save it to your hard drive before the NYTimes wants $3 for the archived article.
