An interindustry approach to analyzing economic and environmental effects of the recycling of waste

Recycling of waste reduces the demand for virgin materials, the amount of waste to be incinerated and/or landfilled, and also reduces emissions from these sources, however, it generates waste and emissions of its own. This paper presents a static inter-industry model for analyzing economic and environmental effects of the recycling of waste that is capable of accommodating these aspects of recycling. Waste can be classified into two major categories depending on the way it is generated: (1) those generated as 'undesired' by-products in the production process such as wastewater or sludge, and (2) those originally produced as goods but have turned to waste with the passing of time, such as old paper or discarded consumer durables. We are concerned with the second category of waste. This category of waste tends to be distributed over a wide geographical area because it is generated in the place of final use, whereas the first one is generated in the place of production. Since the issue of sorted collection will thus be a non-negligible element of any recycling program involving this category of waste, we treat the collection and recycling of waste as distinct activities, instead of their being put into a black box. In this respect, our model is an extension of Duchin, 1990, Structural Change and Economic Dynamics, 1, 243-262. We regard the amount of waste as a given stock, and do not consider the process of its generation. As an empirical illustration, we construct a numerical example for the recycling of old paper based on the Dutch NAMEA data for 1992, and analyze effects of alternative recycling scenarios on the industrial activity and emission of CO₂. Each scenario consists of a set of parameters referring to the proportion of recycled goods in total input, the efficiency of waste collection, and the efficiency of recycling technology.