Tim Worstall at Forbes:
We all understand how pricing in the retail chain goes. Each unit of something in a shipload of them is worth less than each unit when there’s only a container of them, and so it goes on. As we get closer to the retail point each unit rises in value. As we break down the shipment from tens of thousands of units, to a truckload, then a pallet load, finally to the one single item sitting on the store shelf. If you agree to purchase 5,000 iPads you’ll expect to pay less for each one than if you tried to buy just one.
We get that: the thing about recycling is that pricing works entirely the other way around. To a reasonable approximation the value of one unit of anything for recycling is worth nothing. The value of each of 1,000 units in the same place is higher than that solitary one. One scrap car in the middle of a field isn’t worth much if anything. 1,000 cars in a scrap yard might be worth $300 a tonne for the steel content (don’t take these numbers too seriously by the way, they’re examples only). Precious metals refining, scrap metal, recycling: they all share this same economic point. The more of something you have then the more each unit of that something is worth.
[. . .]
… the way we tend to look at the economics of recycling. We hear a great deal about how recycling plastics, or cooking oil, metals, electronics, you name it we hear the same thing, “saves resources”. Sometimes this is absolutely true. Other times however what we get shown is the value of the actual recycling being done. And we’re not told about the costs of collecting what is to be recycled. And as above it’s those costs of collection that are really the key to the whole enterprise.
Just as an example there’s value in 1,000 tonnes of used plastic bags. Among other things you can burn them in a power station and get some energy. Great: but what is the cost of collecting enough used plastic bags to make 1,000 tonnes? That’s the part that seems not to get into the calculations that our green friends present to us.
Cash4Gold seems to have gone under because the collection costs of the materials were higher than the value of recycling those materials. What’s really rather worrying about the larger recycling movement is that this can be/is often true of other materials. But because we don’t properly account for the collection costs we don’t see this as clearly as we do in the accounts of a (failed) for profit company (OK, would be for profit company).
