August 9, 2007
Roland Benjamin: “A very sound case can be made that the proponents of recycling as an environmental cause are being manipulated by quasi-public and private interests looking to monopolize the entire process in the state.”
Roland Benjamin, South Kingstown resident and member of the town GOP Committee, has thought in great detail about his town council's move towards restricting citizens who want to pay someone to pick up their trash to a choice of one company. All of Rhode Island should take note, because as Mr. Benjamin explains, the issues are as much statewide as they are local...
Roland Benjamin: Living in South Kingstown, and being fundamentally conservative, the trash hauling issue strikes a chord with me. In a letter to the South County Independent editor I wrote a few months back, I discussed what the inevitable regression of enabling and encouraging a monopoly would be. The central landfill monopoly is at the core of the “problem” here, yet the solution offered merely layers another monopolistic bureaucracy on top of the already dysfunctional one.
The publicly stated issue here is that the landfill is running out of space and the only solution will be to increase diversion (recycling) rates. Towns that do not comply with diversion targets will face higher per ton rates for its residents. On the one hand, there is a sense of embarrassment that a town as “progressive” as SK has the third lowest recycle rate in the state. Ironically, 4 of the 5 worst communities have no Republican representation on their respective Town Councils, while the 3 of the top 5 communities are balanced, non-partisan and/or Republican controlled.
But forget that for a moment and consider an alternative motive driving the “need” to recycle. In the central landfill’s annual report, it’s not hard to miss the margins on recycling. The cost to operate the recycling center is about $3.9 million as referenced in section 8-2-3 of the Solid Waste Management Report from 2006. With revenues of $7.5 million from recycling in 2005, the operating margin for recycled waste management is 48% compared to 7% for traditional waste. The RIRRC is simply doing what any business would do by trying to expand its more profitable product line. The downside to citizens is that the surplus generated from recycled material processing gets transferred to the state. In 2005 and 2006, that transfer was a combined $11+ million. We’re talking about a tax here that gets buried in the quasi-public world of waste management. So SK is faced with a choice: a) pay higher rates for regular waste (thus balancing operating margins at the landfill and enabling higher transfers to the State coffers), or b) send more recyclable waste to the landfill and allow greater transfers to the State coffers.
The Town of SK has decided that option (b) is optimal because, in their opinion, no one wants to pay tipping fees at double the current rate. But the societal cost of that choice will mean putting several independent haulers out of work and greatly limiting the service provided to and choices of the taxpayer. So what are the real consequences of choosing option (a) then? Reports state that tonnage rates will increase by approximately $30/ton if SK does not meet diversion targets. The average SK individual generates 0.425 tons per year of non-diverted waste according to this study, on page 5 of attachment 1. Essentially, this means the town is going through all of this effort to save the typical resident $12.50 per YEAR!!! Yet the cost (regardless of funding source) to contract the study and to administer the single franchise Request for Proposal will at least partially offset the $12.50 per resident savings in tipping fees. And if lawsuits arise from disabling companies to do business in town, regardless of the merits of the cases, legal fees will further devalue any savings to the residents. It may be cheaper for us to simply pay the higher rates to the landfill!!!
This is all occurring while technologies to manage Municipal Solid Waste are developing and shrinking. The central landfill is currently evaluating these technologies that can convert waste to electricity through gasification and other technologies. Additionally, the town could take advantage of the advancements in the shrinking footprints, throughputs, and costs of these technologies, but the easiest route is simply to charge more. With NO competitive price pressures (and with the power of the legislation) they will just increase the price to the taxpayer.
This issue is only about recycling on its surface. Prevailing wisdom is that recycling is absolutely needed to address the shrinking resource of land in Johnston. A very sound case can be made, however, that the proponents of recycling as an environmental cause are being manipulated by quasi-public and private interests looking to monopolize the entire process in the state. The taxpayer of SK has nothing to gain going down the path of single franchise and would cede control of the waste management to a small handful of bureaucrats and some of the largest pseudo-monopolies in the world with no price controls on the horizon and no incentive for innovation.
I was wondering about this.
1.) The Johnston landfill serves the entire state so Andrew is correct that this is a statewide matter. It should have been closed years ago. The town of Johnston tried to cap it and shut it down but the state forced it to stay open. So when they say the landfill is at capacity, I tend to believe it.
So. First of all, do you agree or disagree with their assertion about capacity, Roland?
2.) Before going on, I must confess that I am surprised to learn that the state is profiting off recycling. I agree that it is a hidden and unnecessary tax. Fees charged to recycle should be adjusted so that there is no profit. Among other things, the state doesn't need the money.
Now, presuming a "yes" to #1, when the landfill reaches capacity, will we not have to truck our rubbish out of state? Will that not be expensive? Isn't the point of recycling to stretch the capacity of the landfill and avoid (or postpone) the presumably far higher cost of out-of-state disposal?
Susan,
I have no idea whether the landfill is at or near capacity. It is certainly plausible to expect that it is, and even prudent to plan for the eventuality at any rate.
But because the monopoly exists, and there are NO competitive pressures to stimulate innovation, the path of least resistance is to simply charge more in hopes of diverting more waste. The landfill/State benefit either way. It's a gravy train with considerable "flow".
A plausible alternative would be to install technology like is being done in Ottawa (http://www.plascoenergygroup.com/content.php?cat=tech&subcat=Capacity). The system is self-providing, clean, and turns the liability of MSW into an asset, namely fuel that provides electricity to the grid. Google "plasma gasification" and see where the technology is heading. The MSW now causing problems could be converted into energy savings for RI businesses, communities and households.
The technology could eliminate the need to "recycle" at home AND alleviate the real or perceived threat of landfill space depletion.
Of course, this type of innovation could divert some the the "flow" back to the Rhode Island taxpayer rather than leaving it in Johnston and Providence. With no competitive pressure (or legislative for that matter), the choice they will make is obvious.
The landfill is acting as a perfectly predictable (perhaps even well run) private business. Until there is a real threat (residents sending their MSW elsewhere), there is no reason to take the risk associated with a large scale capital investment that could ultimately diminish revenue streams. Especially when it can rather just force its consumers to use the more profitable service.
Posted by: Roland at August 9, 2007 10:31 PM