Policy Analysis A Framework for Evaluating the Economic Performance of Recycling Systems: A Case Study of North American Electronics Recycling Systems J E R E M Y R . G R E G O R Y * ,† A N D R A N D O L P H E . K I R C H A I N ‡,§ MIT Energy Initiative, Department of Materials Science and Engineering, and Engineering Systems Division, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139
Received October 22, 2007. Revised manuscript received June 4, 2008. Accepted June 12, 2008.
A framework for evaluating the economic performance of a recycling system is proposed, and data from four electronics recycling systems in North America (Alberta, California, Maine, and Maryland) that use different operating models are used as a preliminary test of the framework. The framework is built around a hierarchy of descriptors that clarify the function of the system components under consideration and the activities, cash flow elements, and resources within those functions; costs are incurred by specific stakeholders. Data from each system on fee and mass collection amounts and collection, processing, and management costs are used to create a matrix of several net costs for stakeholders within each system. Although all four systems are relatively new, thereby making data collection a challenge, some preliminary insights can be gleaned from comparing the systems. Processing costs vary significantly in the four systems, with Alberta and California having the highest reimbursement rates for processing. Alberta and California also have relatively high system management costs, but processors are generally quite satisfied with the systems. Maine has an additional cost for consolidation that is an implicit management cost because of the need to count incoming products by manufacturer.
Introduction The environmental virtues of recycling have been thoroughly extolled: reductions in landfilling, primary extraction, energy consumption, and environmental burden. As such, the controversy around recycling rarely includes these benefits (with a few exceptions, e.g., refs 1–4); rather, it focuses on whether the benefits outweigh any costs and the characteristics of an effective system. Despite this ongoing debate, municipal recycling programs are broadly viewed by the public as beneficial (5) and continue to expand (6). This popularity has led policy-makers * Corresponding author phone: +1 617 324 5639; fax: +1 617 258 7471; e-mail:
[email protected]; address: 77 Massachusetts Ave., Rm. E40-417, Cambridge, MA, 02139. † MIT Energy Initiative. ‡ Department of Materials Science and Engineering. § Engineering Systems Division. 6800
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to turn their attention to the end-of-life of more complex and durable goods (CDGs). These products, including automobiles, white goods, and electrical and electronic equipment (EEE), present a greater challenge for material recovery because they contain a diversity of highly commingled materials, including potentially toxic materials and precious metals. Contemporaneous with the attention to CDG recycling, the principals of Extended Producer Responsibility (EPR) have reached popular (or at least policymaker) consciousness. The confluence of these issues has led to the implementation of regulation that requires the recycling of CDGs and places the responsibility, material and/or financial, on original equipment manufacturers (OEMs). Ultimately, policymakers confront the challenging question: What is the “best” system architecture? However, to answer this question they must first be able to effectively evaluate the performance of any given system instance. Clearly, there is a need for a methodology to compare and evaluate the performance of current and prospective recycling systems for CDGs that involve OEMs. A number of performance evaluations of recycling systems can be found within the economics literature (7) and popular media (8, 9). These evaluations typically take the form of cost-benefit analyses and comprehend three major benefits: (a) increased materials recovery, (b) reduced landfilling or incineration, and (c) reduced solid waste collection; and two major costs: (a) recyclable collection and (b) reprocessing (10). Some analyses incorporate environmental externalities (11) or indirect socio-economic implications (12, 13). The scope of the literature is such that several reviews exist that summarize the debate (7, 10, 14–16). Notably, these studies have focused almost exclusively on municipal waste, predominantly packaging and paper. Studies on the economics of CDG recycling systems do exist, particularly on automobile (17–19) and EEE recycling (20–26), but these have focused on the costs associated with specific recycling activities or events without resolving system-wide costs. Notable exceptions include a framework proposed by the OECD for evaluating EPR systems (27), Bohr’s evaluation of a hypothetical EEE recycling system (28), and a recent review of the EU’s WEEE directive (29), the latter of which represents the most comprehensive and detailed compilation of information on CDG recycling systems to date. Characteristics of current studies and methods make it challenging to apply them to guide the design of CDG recycling systems with intensive producer involvement. First, the complexity of CDG recycling and the involvement of OEMs mean that both the scope, in terms of stakeholders and operations, and number of possible configurations of CDG recycling systems are considerably larger than those for municipal recycling systems (30, 31), making municipalbased conclusions not necessarily applicable for CDG cases. Second, existing frameworks either address systems of broad scope but do not resolve the impacts on individual stakeholders (15, 27–29), or are detailed about the impact of specific geographic or operational characteristics on specific stakeholders but do not comprehend the cash flows within the entire system (20–24). Third, it is often difficult to compare costs among studies because of inconsistent terminology and scope and ambiguous mapping of stakeholders to costs incurred. Finally, the conclusions of many studies are based on hypothetical data and assumptions. Even if these assumptions have borne out for municipal recycling, their validity may not be generalizable to CDG systems. 10.1021/es702666v CCC: $40.75
2008 American Chemical Society
Published on Web 08/13/2008
FIGURE 1. Descriptors for evaluation framework. In light of the pressing need and the limitations of existing information and methods, the primary objective of this research has been to begin to understand how to effectively and consistently evaluate the performance of current and prospective architectures of recycling systems for CDGs that involve OEMs and are mandated by public entities. As the authors began to attempt to evaluate the performance of existing systems, it became clear that a more detailed framework for comparing systems was needed to inform future architectural design. Therefore, a secondary objective emerged to develop such a framework. The first attempt at this framework, limited to economic performance, is presented in this paper and it is tested against data on the costs associated with actual recycling systems. Analogous benefit data in the form of materials recovered was also collected. (The authors would like to emphasize that economic and mass performance are not the only relevant measures of system performance. The health and safety of processors and the environmental efficacy of material recovery systems are critical aspects of performance, but quantitative assessment of these issues was beyond the scope of this study.) The exercise serves as a means to explore economic metrics that emerge from the framework. Although this represents a key step toward guiding future design, it is, only part of the decision-making picture. Such information, ultimately, must be complemented with an understanding of a society’s willingness-to-pay for the benefits of recycling. Specifically, this paper presents a snapshot of the economic performance of novel recycling systems for electronic waste (e-waste) in four North American jurisdictions: the U.S. states of California, Maine, and Maryland and the Canadian province of Alberta. Each of these systems operates under a different model and, as such, provides insight on the spectrum of possible CDG system architectures. Recycling of e-waste is used as a test case because it is a timely, global issue. In the United States alone more than 25 states introduced over 60 e-waste bills in 2005 and over 50 bills in 2006 (32). Numerous approaches have been proposed including landfill bans, EPR, and advanced recovery fee (ARF) funded recycling systems. Although there has been discussion on the merits of several such approaches (30, 31, 33), little quantitative analysis of their performance exists. It is important to note that all four of the systems studied are new. As such, data may not reflect long-term costs. Therefore, the analyses presented should be not be used to make a final assessment of the merits of CDG recycling nor of any specific operational model. Nevertheless, the analyses presented herein serve to (1) identify trends that warrant further observation and study and (2) highlight data gaps that hamper such long-term evaluations for such CDG systems.
The proposed framework for evaluating the economic performance of recycling systems is described in the next section, followed by overviews and evaluations of each system. The paper concludes with some overarching observations on the four systems and the implementation of the evaluation framework.
Evaluation Framework The primary objective of the proposed framework is to add transparency to any discussion on the merits of system architecture. It seeks to answer two questions related to costs within the system: “Costs to whom?” and “Costs of what?” In addition, the framework delineates what elements are included in a cost, thereby facilitating comparability across assessments. Analogous information on the benefits and corresponding stakeholder beneficiaries could also be developed. In the interest of concision, analysis of benefit is limited to recovered material which is only examined in the aggregate. The framework is built around a hierarchy of descriptors that clarify the function of system components under consideration and the activities, modes, cash flow elements, and resources that are comprised within those functions; all costs are incurred by specific stakeholders. This hierarchy is depicted in Figure 1. The designation of a stakeholder helps to answer the question, “Costs to whom?” and the definition of the elements within the triangle answer the question, “Costs of what?” The top level of the hierarchy is function and includes collection, processing, and system management. These designations refer to specific goals of the program and all viable systems comprehend all of these functions. The activities that effect a function include collection, consolidation, processing, management, and transportation; the same activity may occur within multiple functions. Activities are realized through one or several modes. For example, collection may occur in the form of one-day events, permanent collection facilities, retailer collection, etc. Processing may occur as manual dismantling, automated shredding and sorting, etc. Management may include monitoring, auditing, and fee collection. The decision of whether to define processes as activities or modes within the framework is related to a preference of how to aggregate costs; it does not influence total costs. The cash flow elements that are associated with an activity may include material costs and revenues, direct labor, equipment, maintenance, energy, building, overhead (separate from management), advertising, education, and revenues. These elements derive from the consumption of resources, which would also include items such as labor, equipment, and energy, but would refer to nonmonetary VOL. 42, NO. 18, 2008 / ENVIRONMENTAL SCIENCE & TECHNOLOGY
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quantities such as number of workers, pieces of equipment, or kilowatt-hours of energy. The stakeholders involved in a recycling system will vary depending on the types of materials and products in the system. The subsequent set of analyses specifically comprehends the following stakeholders (roles are listed in parenthesis): electronics consumers (purchase electronics products), e-waste generators (dispose of end-of-life (EoL) electronics), municipalities/collection agencies (collect ewaste), haulers (transport e-waste), consolidators (consolidate e-waste collected from various sources into one stream prior to shipment to processors), processors (transform e-waste products into scrap commodities), government/ system managing body (oversee recycling system), retailers (may collect fees and/or EoL products), OEMS (may collect EoL products and/or fund recycling system), and society (may fund recycling system through taxes). Across every level of the hierarchy, stakeholders may be directly involved in multiple activities or provide a source of revenue for multiple activities. Furthermore, the revenue for one stakeholder may be the costs for another stakeholder (e.g, OEMs paying processors or processors paying haulers). At the detailed level, even this list of stakeholders could be expanded to delineate specialized actors. This is particularly true regarding the processors category which could be broken down to include the large number of specialized materials processors who transform specific subcomponents of e-waste back to useful materials or products. While conceptually the proposed framework could accommodate any number of stakeholders, the question being addressed should dictate a finite scope. For subsequent analyses, that scope is truncated at those processors who transform e-waste to salable commodities (materials or components). This boundary was chosen as one where subsequent actors, across the systems investigated, are no longer directly governed by e-waste recycling policies and where material streams are no longer transacted as e-waste (i.e., as opposed to some material for recycling or component for reuse). The ultimate evaluation of the economic performance of the recycling system is accomplished by examining the net costs of all the stakeholders in the system. The outcome of this process can be effectively summarized by a matrix comparing costs and revenues to each stakeholder within each function. This net cost matrix as developed here (e.g., Tables 1-3) lists stakeholders on the vertical axis and costs and revenues for each of the three functions on the horizontal axis; net costs for each stakeholder are tabulated from all of the costs and revenues across the functions (net cost matrices for each of the systems are presented in following sections). Notably, not all stakeholders will be involved in every system. Revenues listed include net amounts transacted within the system. Costs include both expenditures by that stakeholder and revenues transacted outside of the system (e.g., processors reselling materials or reusable products). As such, costs should be viewed as net excluding system-internal revenues. For comparisons among several systems it is important that each cell within the matrix has a description of the activities, modes, and cash flow elements (those that are known) that make up the cost. This enables a true assessment of whether systems are comparing the same costs. The detailed nature of this framework was created for four reasons. First, to address the lack of consistent nomenclature used to describe recycling systems; the framework is first and foremost a proposed taxonomy to help resolve this issue. Second, detailed data collection resolves which stakeholders bear what costs, which also limits the possibility of double-counting cash flows internal to the system in any overall cost assessment. Third, the framework can accommodate data collected by numerous methods and at various levels of resolution. Finally, if fully populated, this data 6802
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framework would provide the information needed to develop generative models of system performance.
Economic Evaluation of North American Electronics Recycling Systems A preliminary comparison of four North American electronics recycling systems was completed using observed data. These systems represent a range of operational models, including advanced recovery fee (ARF) and EPR financing mechanisms, and thus, an analysis can illuminate unique characteristics of each model. Given the challenges associated with data collection for nascent systems, information was rarely available below the activities level. Nevertheless, the exercise accomplishes the research goals of testing the ability of the evaluation framework and associated metrics to resolve performance differences across system architectures and characterizing information (and information gaps) that enable effective system comparisons. Sources of data were limited to published literature and interviews with managers of each of the systems. Obviously, this leaves data gaps that could have been filled with more intensive data collection methods (e.g., interviews with other stakeholders), but was sufficient for the goals of this study. An overview of each system is outlined, followed by fee and mass collection amounts, collection and processing costs, management costs, and a stakeholder-function net cost matrix for that system. Alberta. System Overview. Alberta’s program started collecting e-waste October 1, 2004 (34, 35). An ARF that ranges from $4-38, depending on the product, is used to fund collection and processing; collection of the ARF began on February 1, 2005. (All currency figures in this document are in USD. Conversions from Canadian currency use an average exchange rate over the approximate time period related to the costs (4/1/05-3/31/06), when 1 USD ) 1.194 CAD.) The program is run by a quasi-governmental agency, Electronics Recycling Alberta (ERA), which is part of the Alberta Recycling Management Authority (ARMA); ARMA also manages tire recycling in Alberta. The scope of products covered in the system (and charged an ARF) includes the following: monitors (cathode ray tubes (CRTs) and liquid crystal displays (LCDs)), TVs (CRTs and LCDs), laptops, central processing units (CPUs), and peripherals. This is the most extensive scope of the four systems. The system also accepts e-waste from commercial generators. Processors must meet a set of qualification requirements to participate in the system. They must have an environmental management system (EMS), including occupational health and safety and hazardous material management systems. Audits of processors may be conducted at any time. Additionally, processors may not send e-waste to landfills or non-OECD nations and may not use prison labor; documentation must be provided on all downstream material destinations. There were four qualified processors and nearly 120 collection sites in Alberta at the end of 2006. Fee and Mass Collection Amounts. ARF collection by retailers in the first full fiscal year (FY) of the program, FY 2005-2006 (beginning April 1) was approximately $19.6M, over three times the expected $6.1M (36). Mass collection during the first year of the program (10/1/04-9/30/05) was 2.9 M kg (6.4 M lb) (37), which is 0.88 kg/capita/yr (1.93 lb/capita/yr). Mass collection during the second year of the program (10/1/05-9/30/06) more than doubled to 6.3 M kg (13.9 M lb) (38), which is 1.91 kg/capita/yr (4.19 lb/capita/ yr). Collection and Processing Costs. Cost data from collectors, haulers, and processors within the Alberta system were not available, but reimbursement rates for collection, transportation, and processing are $0.04/kg ($0.02/lb), $0.04/kg ($0.02/lb), and $0.57/kg ($0.27/lb), respectively (39). The
TABLE 1. Alberta Net Cost Matrix for FY 2005-2006 (Footnotes Contain Description of Activities in the Form Stakeholder/ Function: Activity) collection stakeholder
cost
processing
revenue
cost
revenue
system management cost
revenue
$19.6Ma
electronics consumers
net cost $19.6M net cost
e-waste generators collectors
?b
$0.10M [$0.04 /kg]
haulers
?c
$0.27M [$0.04-0.17 /kg]
consolidators ?d
processors system manager
e
$0.37M
$2.7M [$0.59 /kg]
$2.7Mf
retailers
$2.8Mg $19.6M [ARF]
($13.6M) net revenue
?h
OEMs society a Electronics Consumers/System Management: ARF Payment. b Collectors/Collection: Collection. c Haulers/Collection: Transport. d Processors/Processing: Processing. e System Manager/Collection: Reimbursement for collection and transport. f System Manager/Processing: Reimbursement for processing. g System Manager/System Management: Management, education. h Retailers/System Management: Fee collection and remittance.
$0.04/kg transportation cost covers 75% of the population. The remaining areas of the province have transportation costs of $0.13/kg ($0.06/lb) and $0.17/kg ($0.08/lb). System Management Costs. ERA spent a total of $2.84M on system management costs in its first fiscal year (FY 2005-2006), which includes $0.58M for fee collection compliance program delivery, $0.94M for recycling program delivery, $0.46M for administration, and $0.87M for public information (36). This is a system management cost of $0.86/ capita/yr. Net Cost Matrix. The net cost matrix for Alberta during FY 2005-2006 is shown in Table 1. Stakeholders that are not directly involved in the economics of the system are shown in plain text (i.e., not bold). A question mark in a cell indicates a cost is unknown. Each cell contains a reference to a description below the table of the activities that incur the cost or provide the revenue. It is important to note that a positive net revenue for the system manager is not necessarily indicative of an excessively high ARF. It is possible that recycling expenses will exceed ARF revenue in future years based on an influx of e-waste entering the collection system. Net revenue from previous years would be used in such a circumstance to meet recycling expenses. The primary area of uncertainty in the data is related to costs incurred by collectors, haulers, and processors relative to the reimbursement they receive from ERA. Although not all figures are available, the matrix serves as a useful illustration of the manner in which stakeholders interact in a recycling system, the types of costs they incur, and the activities that drive those costs. California. System Overview. California’s program started January 1, 2005 (40). Collection and recycling of e-waste are funded by an ARF that ranges from $6 to $10; collectors may charge e-waste generators a fee to help cover their costs. There are three agencies involved in managing California’s system: the California Integrated Waste Management Board (CIWMB), the Department of Toxic Substances Control (DTSC), and the Board of Equalization (BOE). CIWMB is responsible for recycling reimbursement and public education, DTSC is responsible for recycling oversight and enforcement, and BOE is responsible for fee collection. The scope of products covered in the system (and charged an ARF) is centered on display devices including monitors (CRTs
and LCDs), TVs (all types, including CRTs and LCDs), and laptops. The system accepts e-waste from commercial generators. Approved processors must meet standards similar to those in Alberta’s program (an EMS in place, regular audits, documentation of downstream material destinations), but processors are allowed to export collected products if they notify DTSC in advance of the destination and the means of recycling there. By the end of 2006 there were approximately 50 approved processors and nearly 450 approved collectors. Fee and Mass Collection Amounts. ARF collection in the first full calendar year (CY) of the program (2005) was $73M (41) and for the second calendar year (2006) was $79M (42). Retailers collect and remit the ARF. Claims made by processors and collectors for reimbursement of expenses during 2005 were approved by the CIWMB for 27.6 M kg (60.6 M lb) at a cost of $29.1M (this reflects an approval rate of about 93%; not all claims met CIWMB’s requirements) (41). Claims approved for 2006 more than doubled to a total of 55.3 M kg (121.6 M lb) at a cost of $58.4M (approval rate of 97.7%) (42). These collection amounts represent 0.76 kg/capita/yr (1.68 lb/capita/yr) for 2005 and 1.53 kg/capita/yr (3.37 lb/ capita/yr) for 2006. Collection and Processing Costs. CIWMB reimburses collection at a rate of $0.44/kg ($0.20/lb), which includes transportation to the processor, and processing at a rate of $0.62/kg ($0.28/lb) (41). An analysis of 2005 reported costs (excluding profit) from a sample of collectors and processors showed a weighted average (by mass collected and processed) of $0.37/kg ($0.17/lb) for collection and $0.55/kg ($0.25/lb) for processing (43); there was significant variation in reported costs. System Management Costs. CIWMB, DTSC, and BOE were collectively authorized to spend $6.9M in FY 2004-2005 (beginning July first; they actually spent $5.4M with a breakdown of 32% for CIWMB, 11% for DTSC, and 58% for BOE (41)). They were authorized to spend $8.3M in FY 2005-2006 and actually spent $6.2M with a breakdown of 27% for CIWMB, 11% for DTSC, and 61% for BOE (41). An additional management cost is a reimbursement of 3% of ARF collection amounts paid to retailers; this amounted to $2.2M for CY 2005 and $2.4M for CY 2006. VOL. 42, NO. 18, 2008 / ENVIRONMENTAL SCIENCE & TECHNOLOGY
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TABLE 2. California Net Cost Matrix for CY 2005 (Footnotes Contain Description of Activities in the Form Stakeholder/Function: Activity) collection stakeholder
cost
revenue
processing cost
revenue
system management cost
revenue
$73.0Ma
electronics consumers e-waste generators
?b
collectors
?c
net cost $73.0M net cost
$12.1M [$0.44 /kg] +? [fees]
haulers consolidators processors system manager
?d $12.1M
e
$17.0M [$0.62 /kg] f
$17.0M
retailers
$7.6Mg ?h
$73.0M [ARF]
($36.3M) net revenue
$2.2M [3% ARF]
OEMs society a Electronics Consumers/System Management: ARF Payment. b E-Waste Generators/Collection: Recycling fees (some locations). c Collectors/Collection: Collection, transport. d Processors/Processing: Processing. e System Manager/Collection: Reimbursement for collection and transpor. f System Manager/Processing: Reimbursement for processing. g System Manager/System Management: Management (FY 2004-2005), reimbursement for fee collection (CY 2005). h Retailers/ System Management: Fee collection and remittance.
Net Cost Matrix. The net cost matrix for California during CY 2005 is shown in Table 2; the net cost matrix for CY 2006 is listed in the Supporting Information (Table SI-S1). It is important to note that costs for collectors in this matrix include collection and transport. Furthermore, system management costs are based on fiscal years. The paths of monetary flows are quite similar to those in Alberta’s system. Maine. System Overview. Maine’s program started January 18, 2006, but recycling was not required (due to a ban on landfill disposal of covered products) until July 20, 2006 (44). Municipalities are responsible for collecting e-waste and transporting it to a consolidation facility. Consolidators document the manufacturer of each collected product and then transport the products to a processor. Municipalities pay for collection costs (which may be passed along to e-waste generators through a recycling fee) and OEMs are billed for consolidation, transportation, and processing costs. Alternatively, OEMs can opt to take responsibility for their units or share of units. The Maine Department of Environmental Protection (DEP) monitors the program by setting processing standards, checking compliance, and educating the public about the program. The scope of products covered in the system includes monitors (CRTs and LCDs), TVs (all types, including CRTs and LCDs), and laptops. The system does not accept e-waste from commercial generators. Recycling standards for Maine processors are similar to California’s (an EMS in place, regular audits, “due diligence” in selecting downstream material destinations), including documenting export destinations. There were five approved consolidator/processors and approximately 160 collection points in Maine in 2006. Fee and Mass Collection Amounts. 1.75 M kg (3.85 M lb) of approved electronic devices were collected in the first year of Maine’s program (45), which represents a rate of 1.32 kg/capita/yr (2.91 lb/capita/yr). Approved consolidators and processors billed OEMs $0.75M to consolidate, transport, and process these devices (45). Consolidation and Processing Costs. Approved consolidators must submit quotes for consolidation, processing, and transportation to the DEP each year. (Even if consolidators 6804
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do not also do processing, they are responsible for billing OEMs for all costs.) Five consolidators received approval for participation in the program from the DEP in 2006; six were approved for 2007. Quotes for consolidation in 2006 ranged from $0.09 to 0.26/kg ($0.04-$0.12/lb), transportation prices ranged from $0.07 to 0.29/kg ($0.03-0.13/lb), which were dependent on distance in some cases, and processing prices ranged from $0.26 to 0.48/kg ($0.12-0.22/lb) (45). The majority of consolidation and processing in the first year was done by one consolidator; weighted average prices were $0.09/kg ($0.04/lb) for consolidation, $0.07/kg ($0.03/lb) for transportation, and $0.26/kg ($0.12/lb) for processing. Quoted consolidation prices in 2007 were approximately double the 2006 rates (45). Transportation rates were also generally higher, whereas processing prices were about the same as or less than 2006 rates. System Management Costs. No specific cost information for system management was available, but the DEP estimated that two full-time employees (FTEs) were needed to run the program (45). Including fringe benefits, overhead, and expenses for public education, it is estimated that system management costs are $0.2M. Retailers are also involved in system management to a certain extent because they must implement a sales ban against OEMs who do not comply with the regulations in the system. Net Cost Matrix. The net cost matrix for Maine during CY 2006 is shown in Table 3. All of the stakeholders in the matrix with the exception of electronics consumers have costs in the system. The stakeholder “society” is meant to represent the source of funds for the government to pay for DEP system management; this is most likely taxpayers. Maryland. System Overview. Maryland’s program began January 1, 2006 (46). OEMs are charged an initial registration fee of $5,000 per year to take part in the system, which essentially means they are allowed to sell their products in the state (this initial fee increased to $10,000 starting October 1, 2007). OEMs are subsequently charged $5,000 per year to take part in the program unless they set up their own collection and processing system for their own products, in which case they pay $500 per year. The revenues from the
TABLE 3. Maine Net Cost Matrix for CY 2006 (Footnotes Contain Description of Activities in the Form Stakeholder/Function: Activity) collection stakeholder
cost
processing
revenue
cost
revenue
?e
$0.47M
system management cost
revenue
net cost
electronics consumers e-waste generators
?a
collectors
?b
? [fees]
haulers
?c
$0.12M
consolidators
?d
$0.16M
processors
$0.2Mf
system manager
OEMs
$0.2M
--
?g
retailers $0.28Mh
$0.75M net cost
$0.47Mi $0.2Mj
society
$0.2M net cost
a E-Waste Generators/Collection: Recycling fees (some locations). b Collectors/Collection: Collection and transport to consolidator. c Haulers/Collection: Transport from consolidator to processor. d Consolidator/Collection: Consolidation. e Processors/Processing: Processing. f System Manager/System Management: Management. g Retailers/System Management: Management (enforcement of sales ban). h OEMs/Collection: Payment for consolidation, transportation to processor. i OEMs/Processing: Payment for processing. j Society/System Management: Payment for system management.
OEMs are used to assist counties in the collection and processing efforts that the counties currently pay for out of their own budgets. The Maryland Department of the Environment (MDE) administers the program. The scope of products covered in the system includes monitors (CRTs and LCDs), laptops, and CPUs (this was expanded to include televisions starting October 1, 2007). It is important to note that this scope determines the OEMs that must participate in the system; the e-waste collected depends on the county doing the collection. The counties do not generally accept e-waste from commercial generators. Currently, there are no system-wide standards for e-waste processors in the Maryland system. Funds are provided to the counties, which select a processor. Hence, MDE does not interact with processors directly. There were sixteen collection sites in Maryland in 2006. Fee and Mass Collection Amounts. Thirty-seven OEMs paid the $5,000 fee in the program’s first year for a total fee collection of $0.19M (47). These fees were used exclusively for education efforts for the first year of the program, but will be used to support local recycling efforts in future years. Mass collected during the first year of the program amounted to 2.85 M kg (6.27 M lb), compared to 1.59 M kg (3.49 M lb) in 2005, the year before the formal statewide program was implemented (47); both amounts contain an unknown composition of e-waste (accepted devices vary by collection location). These amounts translate to 0.51 kg/capita/yr (1.12 lb/capita) for 2006 and 0.28/kg/capita (0.62 lb/capita) for 2005. Collection and Processing Costs. Costs for collection and processing since the program has started were not available and may not provide much meaning because the fees collected from OEMs were not used to support recycling efforts. However, data provided by MDE on collection and processing costs for previous years provide insight into Maryland’s costs. Total recycling costs for municipalities (including collection, transportation, and processing) generally ranged from free to $0.44/kg ($0.20/lb), but average values (depending on type of collection mechanism and year) were in the range of $0.11-0.24/kg ($0.05-0.11/lb) (47). Average total recycling costs for Maryland during a 2001-2002 EPA study were $0.44/kg ($0.20/lb) (23). A processor in that same EPA study charged $0.13/kg ($0.06/lb) for collection, $0.09/
kg ($0.04/lb) for transportation, and $0.31/kg ($0.14/lb) for processing (23). System Management Costs. No specific cost information for system management was available, but the MDE estimated that two full-time employees (FTEs) were needed to run the program (47). Including fringe benefits, overhead, and expenses for public education, it is estimated that system management costs are $0.22M (assuming higher labor and education costs than Maine). Retailers are also involved in system management to a certain extent because they must enforce a sales ban against OEMs who do not comply with the regulations in the system. Net Cost Matrix. A generic net cost matrix for Maryland is provided in the Supporting Information (Table SI-S2). The matrix is generic because of the atypical situation that occurred in the first year of the program when all of the fees collected from OEMs were used to fund public education. Fees in future years will be used to fund recycling efforts, which is the situation depicted in the matrix. (The assumption in the table is that the collected fees will be similar to 2006 levels: $0.19M. This is likely to be true for 2007, but fees will increase in future years when televisions are included as covered devices.) The system manager is listed as paying a fraction of the collected fees to collectors, haulers, and processors. In actuality, the grants would likely be bestowed upon collectors who would pass along monies to haulers and processors. However, the representation in the matrix reflects the participation of all stakeholders.
Observations First, it is important to note that all systems are new. As such, it is difficult to draw substantive conclusions about certain aspects of system performance, particularly mass collection, because these will change in the next few years. Nevertheless, the comparison of the systems is still an important exercise at this juncture because it can delineate which trends in performance warrant further and future study and what information gaps exist to make those studies effective. Mass collected is one of the most common metrics tracked in recycling systems. Despite the nascent nature of the collection programs, the prevalence of this metric warrants further investigation. Annual per capita mass collection VOL. 42, NO. 18, 2008 / ENVIRONMENTAL SCIENCE & TECHNOLOGY
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FIGURE 2. Annual mass collected per capita and the associated product scope for all four systems.
FIGURE 3. A. Processing costs (function: processing, activity: processing, stakeholder: processor) and B. system management costs (function: system management, activity: management, stakeholder: system manager) for all four systems. amounts for all four programs are plotted in Figure 2. Alberta and California both have data for two years and it is clear that both programs realized significant increases in mass collection; each program collected over double its first year amounts during its second year. While it is tempting to compare first year per capita collection amounts across all four programs, this would overlook an important issue that differentiates the programs: product scope. The product scope for the four programs is summarized in Figure 2. There are significant differences across systems, particularly in the types of products accepted and whether or not e-waste is collected from commercial generators. An objective of future research is to develop metrics that accurately reflect the mass collected in a system normalized by the mass available and within the product scope (48). In the meantime, the first year collection amounts for Maine are remarkable in comparison with the other systems given that they have a more limited number of products within their system’s scope and they do not accept e-waste from commercial generators. As a point of reference, the European Union’s WEEE directive has set an annual collection target of 4 kg/capita for each member state. This collection target includes all types of e-waste, but an analysis of Category 3 waste (an EU-defined category, which includes information technology and telecommunications equipment, but not televisions) indicates that systems that have been operational for several years are collecting 1-4 kg/capita/year (48). Although the 6806
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North American systems are new and their collection amounts include Category 4 waste (i.e., televisions), their collection amounts are slightly below the lower end of the more established European systems and are similar to the amounts collected by the European systems when the European systems were new (48). It is also illustrative to compare costs of different systems that share the same function, activities, and stakeholders. Two such candidates are processing costs (function: processing, activity: processing, stakeholder: processor) and system management costs (function: system management, activity: management, stakeholder: system manager). Even though the costs incurred by processors are unknown for all systems, reimbursement rates for processors may be used as an imperfect proxy. Management costs can be normalized by population for comparison. System management and processing costs for the four systems are shown in Figure 3 (Maine’s processing cost is the weighted average processing price; Maryland’s is an estimated average). There are a wide variety of processing costs, which can be affected by location (e.g., labor and transportation rates), product scope (e.g., higher value products, commercial e-waste generators), and system structure (e.g., competitive bidding process). However, none of these factors alone explain why the rates set by the managers in Alberta and California’s systems are higher. The system management costs in the ARF systems are higher than the observed costs in the other two systems.
This is partly out of necessity. In addition to managing recycling efforts they are also charged with managing collection of the ARF (California’s system management costs include the cost of reimbursing retailers for expenses associated with fee collection). Furthermore, Alberta’s system has a larger infrastructure cost burden than its governmental counterparts because it is run by an agency separate from the government and hence must pay for items such as a board of directors and larger fractions of office space and IT services. Across all systems, added management costs may be worthwhile if higher collection amounts or lower operating costs can be achieved. Moreover, some stakeholders may believe the higher costs are worthwhile. For instance, the majority of processors in Alberta and California support their system as a national model (49). Maine has an implicit management cost unique to its system in the form of the cost for consolidation, which funds the tracking of incoming products by manufacturer and billing of OEMs. Furthermore, there is an added transportation step after collection that consists of sending collected products to a consolidation facility. If it were possible to break down costs for all four systems from collection to processing (collection costs in Maine are unknown and the breakdown of costs in California and Maryland is unknown), the inclusion of the consolidation and added transportation costs would most likely make Maine’s total recycling costs more than Alberta’s and perhaps close to California’s total cost. Notably, economics and mass collection are not the only important characteristics of system performance. Concerns over worker safety and environmental damage, particularly associated with shipments of e-waste to developing countries, are not addressed by these metrics. To address this, some systems have enacted recycling standards that must be met by approved processors. Such standards have the potential to increase processing costs, but attempt to prevent otherwise unacceptable outcomes. (It is interesting to note that Maryland had the lowest reported processing costs and does not have any statewide processing standards; it is unclear whether these two factors are related.) Similarly, there is a belief among some stakeholders that it is prudent to build up sufficient funds to guarantee that the cost of future e-waste collection will be covered. Systems that are pursuing such a strategy will have higher cash flows until the fund reaches steady state, compared to equally efficient systems that are not amassing reserve funds. An important lesson from this work is that data scarcity makes performance comparisons of various operational models challenging. This scarcity of information derives partly from the nascent nature of the systems studied, but more directly from a lack of data collection. To address this, system managers need to develop processes to collect more information, particularly by stakeholder. Nearly all of the more mature systems within the EU require some form of information sharing with the regulating agency as a condition for participation. Each of the North American systems requires some form of stakeholder certification; such certification could include necessary performance and cost reporting. Competitively sensitive information on the performance of private firms (e.g., processors) may have to be withheld for jurisdictions with too few firms to obfuscate individual responses. Even with this limitation, there should be more than enough information to enable effective assessment of operational practices and to support the development of prospective models of system costs. An attractive feature of modeling is that it can resolve the impact of contextual characteristics (e.g., labor rates or population density) that may be driving the cost. In the end, understanding the drivers of system economics and collection performance is critical for designing new and
improving existing recycling systems. To that end, the framework and data presented in this paper provide a start, but will have to be built upon with additional and more detailed data and modeling synthesis. Nevertheless, such information will always be only part of the decision process. The correct system for a jurisdiction ultimately will depend also on that society’s willingness to pay for the benefits of effective recycling. Some will want resources directed to other issues, while some will value increased recovery even at higher costs (50).
Acknowledgments The active participation of representatives from each of the four systems made this effort possible. We thank Doug Wright from Alberta, Shirley Willd-Wagner and Matthew McCarron from California, Carole Cifrino from Maine, and Hilary Miller from Maryland. Furthermore, Walter Alcorn and Jason Linnell from the National Center for Electronics Recycling provided valuable data and feedback.
Supporting Information Available Two tables: California’s net cost matrix for CY 2006 and Maryland’s generic net cost matrix. This material is available free of charge via the Internet at http://pubs.acs.org.
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