Raymond So wrote in this page (March 27, 2014) to oppose government subsidies for the recycling business. If recycling is an activity grounded on commercial value and nothing else, he's totally correct. However, recycling is not meant just for the commercial value of the activity. To the extent that properly conducted recycling makes the world a more livable place and furthers the cause of sustainability, I would argue there's is a strong case for subsidizing recycling.

Make no mistake. I am not saying that recycling is always worthy of government support. I am saying, rather, that recycling should be valued properly, and that the market will not automatically do this job properly. If recycling makes the world truly more sustainable, our future generations will inherit an earth that is cleaner and better endowed. But they will not pay us for leaving a better world for them. If recycling helps improve the environment today, again it is not easy for the recycling industry to collect charges from all those who benefit from this. So the true value of recycling may go well beyond its commercial value. On the other hand, activities conducted in the name of recycling do not necessarily imply they are truly consistent with sustainability. Indeed, they could be wasteful and could consume more energy and may even hurt the environment.

Recycling activities today are in general not profitable in high-income countries because the cost of labor is high and because recycling also usually requires much land. Like labor, land is also costly in high income countries. Where the "recycling business" can survive without government subsidies, usually unemployment is high and wage costs are low. Moreover, the recycling business is often poorly regulated and because of this, it generates serious pollution to the environment. Thus, the business is viable only because the cost of pollution from poor handling of the discarded materials is not counted.

In order for recycling works to be done properly, specific procedures involving precautions are needed. Indeed, recycling could be wasteful and harmful if the precautions are not taken and necessary procedures are not followed meticulously.

There's also a need to ensure that recycling is truly environmentally worthwhile and there is a need for recycling technology research to improve its cost-effectiveness, particularly environmental cost-effectiveness. A commentator last year raised the question, for example, whether the huge volume of gases released into the atmosphere during the process of recycling, processing, and transporting recycled paper is not becoming itself a major environmental and sustainability concern. He suggested that, perhaps, tree farming and harvesting fast growing trees for the paper industry may be more sensible. Perhaps, we need to develop an entirely new field of study - environmental cost accounting for recycling strategies. At present, we simply know too little about the environmental implications of products and procedures that have been introduced in the name of protecting the environment.

Today, much of the used or discarded materials to be recycled are shipped to the less-developed world. The industrialized world is generally not interested in recycling because it is not profitable. Advanced countries generally prefer to dump their wastes onto the poor countries, where not only labor and land costs are much cheaper, but people's concern over environmental degradation also fades behind the concern for survival. As a result, recycling often becomes a source of serious pollution that harms health and shortens people's lives. For example, a story on Youtube made us think: "How are the West's 'recycled' TVs and computers ending up in a toxic dump in Ghana?" A local driver said: "Every month, 500 container loads of electronic waste are being shipped to the port."

Professor So said if the government subsidizes the recycling business, then other industries may also demand similar subsidies. Recycling is, however, not quite like other industries. Most of the benefits are external to the parties involved in the recycling trade. If we can recycle our resources better, our world will become more sustainable, and this will benefit future generations. If the recycling is not properly conducted, our resources may be depleted quickly and the toxic waste from poor handling of these materials may raise cancer rates and accelerate global warming. More forest fires and more super typhoons could result, leading to more homes being swallowed by forest fires, floods and landslides.

Thus, it does make sense to subsidize recycling and research into recycling technology. However, where is the money going to come from?

I would argue that the money should come from consumers who generate the wastes in the first place. Just as the benefits of recycling are external to those who are in the recycling business, so the costs of consumption and solid waste dumping are external to consumers. While Hong Kong is now debating over garbage disposal charges, and a question is whether garbage collected should be charged by weight or by volume. Perhaps, we may note that toxic materials that need special treatment should be charged at the point of consumption. We also need to establish a mechanism so the revenue collected can be directed to support recycling and navigate it in the proper direction.

The author is a director of the Center for Public Policy Studies at Lingnan University.

(HK Edition 04/23/2014 page9)