June 10, 2010

Should Ukraine Go Green?

I would like to talk about Ukraine's environmental policy. Here and there Ukraine is pressured by international donors to develop sustainable environmental policy. I agree that Ukraine needs to responsibly conserve natural resources for the future. A responsible conservation must be based on a cost-benefit analysis so that our generation internalizes full costs of our actions today without passing our costs on future generations.

The problem is that the international organizations offer financial aid for the development of the recycling infrastructure. Available financial packages provide a wrong set of incentives for Ukrainian entrepreneurs because they can subsidize economically inefficient projects. The best case in point is a recycling factory in Kharkiv, the second largest city of Ukraine. Several entrepreneurs tried to build the recycling factory twice. The factory was build to assist the city of Kharkiv with a curbside recycling program. Each time they received a grant from the international donors and the city. And each time the factory went bankrupt.

Before more mistakes are made, Ukraine needs to learn a lesson from USA that a curbside recycling does not conserve resources. Industrial and large-scale recycling can conserve resources if a necessary infrastructure is in place. In USA it's very costly to run curbside recycling programs. You need to run trucks across the city to collect recycling bins. Trucks burn diesel fuel, pollute air, cause traffic, and waster other resources. On average, 85% of curbside recycling programs waste resources in USA. For instance, LA County has 800 trucks instead of 400 trucks on roads each day because of a curbside recycling program. Excessive number of trucks causes excessive air pollution.

The recycling is also a manufacturing process that can conserve resources. For example, 95% of a value of aluminum can is in electricity so the recycling preserves energy. However, aluminum cans constitute a trivial part in the US recycling. Americans mostly recycle plastic, cardboards and paper products that are worthless in terms of recycling.

Thus, the recycling should not be done to feel good. The recycling as any type of economic activity must be a subject of a thorough cost-benefit analysis. Ukraine should learn the lessons from the recycling experience of USA before more grants will be received to build more recycling factories.

Here is an outstanding interview about recycling in the US with Daniel Benjamin, the distinguished professor of Economics at Clemson University in South Carolina. He is also an author of an essay "Eight Myths about Recycling".

1 comment:

  1. You sound like libertarian nutjob! What part of the global warming don't you understand?