Subsidy Or Disposal Service Fee?

Subsidy Or Disposal Service Fee? That Is The Question.
By Daniel Knapp, Ph.D., CEO, Urban Ore, Inc., a Material Recovery Enterprise in Berkeley, California since 1980.

Hello Annie Sciacca and Sophie Mattson:

In response to your July 27, 2016 article in the Mercury News, “Why Are Bay Area Recycling Centers Closing — and Can Anything Save Them?”

I am a professional reuser and recycler with 35 years experience in California. The company I work for and with, Urban Ore, Inc., has survived many market fluctuations. Our primary business is reuse, but we also do lots of recycling. In 2015 we sent just 70 tons to landfill, less than 1% of the materials we accepted, upgraded, and returned to commerce.

Your article throws into sharp relief the extreme underlying unfairness that shackles our industry and prevents it from realizing highest recycling goals that are overwhelmingly popular both with voters and with elected politicians. This unfairness stems from dominance within the materials recovery industry by solid waste management ideology, despite this managerial elite’s having lost as much as 50% market share to recyclers in some areas (like Alameda County) in the last several decades.

“…the system is rigged to make sure wasters get theirs, no matter what. And recyclers are left to beg, or close their doors.”

To see how this unfairness works and is baked into our language, consider this sentence from your article:  “Recycling centers are increasingly dependent on the state’s subsidy program, but critics say the payouts are too slow to arrive and the subsidies aren’t adjusted quickly enough to reflect changing market conditions.”

I recognize that neither you nor your newspaper are responsible for this usage. But here’s the thing:

All recyclers compete with wasting industries for the same supply of materials. Wasting industries are, however, never paid with funds that are called subsidies. Instead, they are paid with funds derived from disposal service fees. What’s the difference?

The difference couldn’t be bigger or more consequential. Subsidies are mere handouts, temporary grants, while disposal service fees are monies paid to pay for the costs of making unwanted things go away, legally, plus a minimum 15% profit. But wasting industries accomplish this task by destroying value and creating pollution. Don’t recyclers make unwanted things go away legally too, and don’t they do it in a way that produces jobs and environmental benefits far beyond what wasters can provide?  Of course they do. Then why call monies paid to recyclers subsidies?  Why not call them disposal service fees instead?

There is no good reason at all for this imbalance, other than inertia, waste industry protectionism, and public confusion.

My dictionary tells me that a subsidy is “money granted to a charity…held to be in the public interest.”  The same dictionary says a fee is “…money regularly paid for continuing services.”  Grants can be withdrawn or at least not adjusted upward when money is tight, and that’s what’s behind all these recycling center closures and all the entrepreneurial pain that your article describes so well. But fees have to be paid and even increased as costs go up, regardless. So the system is rigged to make sure wasters get theirs, no matter what. And recyclers are left to beg, or close their doors. Could anything be more unfair, even dangerous to public health and safety?

With few exceptions, the solid waste profession controls both wasting and recycling all over California at the present time. I believe we need to “feel the Bern” in our field, and create a new management structure for recycling that recognizes that we recyclers are now the centerpiece of the disposal service industry, not an expensive add-on fueled by subsidies, and therefore that we deserve full payment for our work with the coin of the realm, disposal service fees.

Waste management is a sunset industry. The fact is that we recyclers have products to sell, and wasters have only liabilities to give future generations. Enacting this needed change will make the recycling industry even more of a formidable competitor than it has been since we hands-on recyclers started our revolution on or about Earth Day, 1970.

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