Dear Recyclebank: I’ve read that some recyclables are more valuable than others, and that sometimes a town might not accept certain recyclables “because there’s not a market for that material”. What does this mean? How does recycling work financially? –Ken P.

Dear Ken: Are you ready? We’re going to take the long way around with this answer so that we can lay out all the pieces as clearly as possible. Understanding how recycling works financially helps to make sense of some of the rules around recycling, and maybe even to change what we buy and how we dispose of it.

The Recycling Process

To understand how recycling works financially, let’s first start with an overview of the recycling cycle:

• Disposal: We toss recyclables into our recycling bin or cart.
• Collection: Haulers pick up recyclables and take them to a materials recovery facility [MRF].
• Processing: The MRF separates recyclables by material.
• Manufacturing: Manufacturers buy materials from the MRF, process them, and turn them into new materials. Companies buy the materials to make products that go back on store shelves.
• Purchase: We buy products (hopefully some that are made with recycled content!) — and then we dispose of them again.

On a daily basis, we don’t really get to see the whole process. But step 4 is where the creation of a recycling market really starts to take shape — when manufacturers specify what material they want to buy from a MRF and how they want it, they initiate a recycling market with a supply and demand for recycled materials.

In 2013 alone, 65 million tons of materials like metal, paper, plastic, and glass were recycled in the U.S. These recyclables came from consumers like you and me, and went to recyclers who sold them to companies all around the world. But profits from selling recyclables don’t just go to recyclers — they often go to municipalities, and the benefits can trickle down to taxpayers, too.

Recyclers and Municipalities

Municipalities pay to dump trash in a landfill. They pay by the ton, and many, many tons of trash go to a landfill each year — in 2013, over 134 million tons of trash went to a landfill — so municipalities have a vested interest in sending waste elsewhere. That’s where recycling comes in.

Most municipalities’ contracts with recycling companies allow them to drop off recyclables at a MRF at no cost, so municipalities are able to save money by disposing of some waste for free rather than paying to drop all waste at a landfill. In 2014, recycling saved cities over $3 billion in avoided landfill disposal fees. Once the recyclables are sorted by type at a MRF, the recycling company sells them by the tons. After covering processing costs, which include things like sorting and cleaning, the profit from the sale is usually split with the municipality.

For recycling companies to be able to afford recycling, the market value of their recyclable material must be more than the cost to process it at a MRF. Just like any other industry, the quality of and desire for the product (in this case, the different recyclables) has to be there. This is where we get to a key part of your question: Some recyclables have more value than others.

Check out Part 2, where we explain the value of recyclables and our part in the recycling market.

SOURCES
EPA
EPA
GreenBiz
GreenBiz
ISRI
Waste360