Is Municipal Solid Waste Recycling Economically Efficient?

It has traditionally been argued that recycling municipal solid waste (MSW) is usually not economically viable and that only when externalities, long-term dynamic considerations, and/or the entire product life cycle are taken into account, recycling becomes worthwhile from a social point of view. This article explores the results of a wide study conducted in Israel in the years 2000–2004. Our results reveal that recycling is optimal more often than usually claimed, even when externality considerations are ignored. The study is unique in the tools it uses to explore the efficiency of recycling: a computer-based simulation applied to an extensive database. We developed a simulation for assessing the costs of handling and treating MSW under different waste-management systems and used this simulation to explore possible cost reductions obtained by designating some of the waste (otherwise sent to landfill) to recycling. We ran the simulation on data from 79 municipalities in Israel that produce over 60% of MSW in Israel. For each municipality, we were able to arrive at an optimal method of waste management and compare the costs associated with 100% landfilling to the costs born by the municipality when some of the waste is recycled. Our results indicate that for 51% of the municipalities, it would be efficient to adopt recycling, even without accounting for externality costs. We found that by adopting recycling, municipalities would be able to reduce direct costs by an average of 11%. Through interviews conducted with representatives of municipalities, we were also able to identify obstacles to the utilization of recycling, answering in part the question of why actual recycling levels in Israel are lower than our model predicts they should be.