February 23, 1998
Recycling: To Centralize Or Decentralize?
The environmental movement scores its biggest coups when it takes positions based on common sense. That's why the public generally supports recycling programs, which turn garbage into reusable material. If they work, we waste less.
This logic appeals to Canadians. Nearly three out of four households across the country now have access to such services, and we recycle three times the material we did just a decade ago.
But recycling can be wasteful, too. Environmentalists pressured fast-food chains to replace polystyrene packages with ones made from recycled paper. Ironically, manufacturing the cardboard containers uses 30% more energy and produces almost 50% more air and water pollution than making the plastic ones.
Many lessons of the same kind have filtered down. The growth of recycling collapsed the prices of the materials we seek to re-use. This has upset these programs' carefully plotted budgets and rendered them uneconomic. In Toronto it costs about $800 to collect a tonne of plastic pop bottles that's worth only $400.
But the intricacies of costs and benefits are not the only issue. The success of such programs depends on the framework that houses them. Provinces that followed old-style public sector models in establishing them have learned that good intentions and top-down programs are not enough. Often the result is an over-centralized, needless bureaucracy and nuisance taxes.
Manitoba and Alberta use the tax system to fund recycling initiatives. In Alberta, consumers pay environmental taxes on commodities as diverse as tires, fruit juice, automotive oil and even welding rods. In the case of tires, the money goes to a government-sponsored "Tire Recycling Management Association". Since 1992, this organization has collected $40 million but spent only $19 million, much of it on dubious recycling ventures. The rest idles in a bank account.
Like so many others, recycling initiatives in Manitoba began with an entrepreneurial flair. Three small companies in Winnipeg, for instance, charged modest fees for collecting recyclable material from homes that contracted for the service. On January 1, 1995, the Province passed a two-cents-per-container environmental levy to provide municipalities funding for recycling programs.
With all those pennies jingling in its pocket, the City of Winnipeg embarked on a badly thought out "privatization" exercise - granting an exclusive city-wide contract to one operator. This wiped out the three fledgling competitors and service levels immediately suffered. The monopoly contractor said it couldn't meet its obligations unless the public stopped putting the blue boxes in back lanes and placed them on front streets instead. Pickups became irregular, revenue estimates were off by $2 million, and many folks simply stopped participating. Especially when they discovered that many of their carefully sorted items were ending up in the landfill anyway.
One locale in Saskatchewan has discovered a better way. A non-profit company named REACT, headquartered in Humboldt, collects trash for 26 urban and rural municipalities. In less than two years, it has expanded from one employee to eleven. It has reduced landfill use by 60% with a system that needs neither a tax regime nor a legislated monopoly.
It's a model of simplicity. People buy yellow tags for a dollar apiece that identify unrecyclable garbage, and REACT hauls those bags to the landfill. Recyclables are sorted by homeowners and taken to REACT depots which process paper, glass, aluminum, etc. REACT guarantees that this material does not end up in dumps.
The key to REACT's success lies in its transparency. People don't pay universal taxes to anonymous civil servants to channel to a faceless monopoly. If they're not satisfied, they can use their money to make other arrangements.
That decentralized framework provides a direct connection between performance and payment. Without it, recycling becomes like so many other government services-expensive and unreliable. With it, everybody's happy.
The Frontier Centre for Public Policy
is an independent public policy think tank whose mission is "to broaden the debate on our future through public policy research and education and to explore positive changes within our public institutions that support economic growth and opportunity."