SERA
United States
Environmental Protection
Agency
Advancing Sustainable
Materials Management:
2016 Recycling Economic
Information (REI) Report
October 2016
EPA530-R-17-002
-------
Background
Sustainable Materials Management (SMM) refers to the use
and reuse of materials in the most productive and
sustainable way across their entire life cycle. On a broader
scale, SMM looks at social, environmental and economic
factors to get a more holistic view of the entire system. The
benefits of maximizing this connection include conserving
resources, reducing waste, slowing climate change, and
minimizing the environmental impacts of the materials we
use. In an era of limitless business ingenuity and limited
resources, the sustainable management of natural capital is
increasingly a part of the international conversation about
how to achieve economic growth without compromising
human health and the environment upon which that growth
depends. By looking across the life cycle, businesses can
maximize the use of goods, while limiting the amount of material sent to landfills. The 2016 Recycling
and Economic Information Report aims to increase the understanding of the economic implications of
material reuse and recycling. Additionally, the methodology provides a foundation for future work to
expand the information and analysis on the economic aspects of sustainable materials management.
The 2001 National Recycling Coalition report, U.S. Recycling Economic Information Study laid the
foundation for the methodology used to quantify the potential economic benefits of recycling, reuse and
remanufacturing.1 Since this landmark publication, significant changes have occurred regarding the scope
and magnitude of recycling activities, their contributions to the national economy and the data and
methodologies available to analyze economic activity attributable to recycling.
The 2001 REI study acknowledged several challenges and limitations of the REI methodology, including
the inability to isolate recycling activities within multi-faceted manufacturing sectors and the issue of
double-counting inherent in the methods used. Since 2001, other researchers refined the methodology to
address some of these issues, but challenges remain. The 2016 REI report presents an alternative
approach for measuring the economic activity associated with recycling and addresses uncertainties from
the 2001 REI study.
The 2016 REI report uses a Waste Input-Output (WIO) model built on the official Input-Output (IO)
tables maintained by the United States Bureau of Economic Analysis, which describe the economic
transactions between industries and are used to formulate U.S. monetary and fiscal policy. Currently, the
U.S. official IO table shows flows of transactions between industries, but does not distinguish between
recycling operations and recyclable material flows. Recyclable material flows include products and
materials which may be collected, processed and incorporated into another product for final or
intermediate use. Recycling operations are the processes involved in the recycling of materials or the use
of recycled materials in final or intermediate products. Separating out the recycling activities is
complicated because they are either embedded in the broader activities of a manufacturing sector or
aggregated within the waste management and remediation services industry. Therefore, to isolate the
impact of recycling, EPA identified nine material sectors a priori, then developed a methodology to
determine the presence of recycled content in final goods and the upstream impacts of the aforementioned
recycled content.
r >
This report presents:
An understanding of the
importance of recycling's role to
the nation's economy.
S A new methodology that
addresses key areas of
uncertainty in the 2001 REI
study.
A framework that can be updated
with new materials and data over
time.
^ J
1 R.W. Beck/NRC. (2001). U.S. Recycling Economic Information Study. Washington, DC: National Recycling
Coalition (NRC).
2016 EPA Recycling Economic Information (REI) Report
2
-------
The 2016 REI report methodology improves upon the 2001 REI study and is able to model the impact of
recycling while limiting the issue of double counting. The 2016 REI report fills a gap in understanding
material flows by establishing an analytical framework for estimating the broader environmental and
economic impacts associated with recycling. A critical contribution of the refined methodology in the
2016 REI report is the development of a WIO model designed to capture the material inputs (production
sectors like mining, energy, materials, parts and products) and outputs (waste and material separation and
reprocessing, of products, services and wastes). The WIO model includes the flow of goods and the flow
of wastes. The information from the WIO model is cross-walked with separate data tables of taxes, wages
and jobs to assess the impact of recycling activities within the U.S. economy.
Additionally, the methodology in this report allows those with the relevant expertise to reproduce results
through a transparent model. The methodology allows itself to ongoing improvement, as specific
components of material flow estimation are constantly refined. An additional benefit of this improved
methodology is the ability for users to explore "what if' scenarios to examine potential impacts of a
modified waste flow system. The data are then provided in such a way where each sector can be identified
with direct, indirect and induced impacts.
Scope and Definition of Recycling
For the purpose of this analysis, recycling is defined as the recovery of useful materials (such as paper,
glass, plastic, metals, construction and demolition material) and organics from the waste stream (e.g.,
municipal solid waste), along with the transformation of the materials to make new products to reduce the
amount of virgin raw materials needed to meet consumer demands. The most significant structural change
from the 2001 REI study is the incorporation of material transformation into the definition of recycling,
allowing this model to capture the process influence from refurbishing or remanufacturing of goods,
providing a more realistic scope of the entire process. The 2016 REI report also considers the economic
activity associated with the donation of edible food (e.g., canned goods nearing their expiration date).
EPA recognizes that food donation and product reuse or remanufacturing are not "recycling" activities.
However, the report uses the term "recycling" when describing the overall scope and results of the
analysis.
To estimate the economic activity attributable to recycling, it is necessary to associate recyclable
materials and recycling flows with the physical processes involved in transforming recyclable materials
into useful products, providing reusable materials to intermediate and final consumers and delivering
donated food to those in need. These processes can then be associated with specific product and service
industries to estimate the direct, indirect and induced economic activity attributable to recycling, reuse
and food donation.
Recycling processes and activities include a range of activities including: (i) material collection; (ii)
separation, cleaning and/or other processing (e.g., baling plastic bottles); (iii) transformation of recyclable
materials into marketable products; (iv) distribution, storage and service delivery (e.g., distribution of
food to and from food banks); and (v) transportation between each stage. For this analysis, recycling
activities are defined to include all of these activities. The scope of recycling activities in this report does
not include materials that are recovered or reused during the initial production stage, but rather on
materials already distributed into the economy. However, to create an efficient analytical framework
while avoiding the issue of double-counting, recycling activities were further distinguished as direct or
indirect:
Direct recycling activities are those associated with the actual transformation of recyclable
materials into marketable products such as the transformation of aluminum scrap into semi-
fabricated products (e.g., ingots) in a secondary smelter. For reuse and food donation, the
recycling activity is defined as the point for sale (e.g., where reused goods substitute for new
goods) or the point of service (e.g., where a food pantry provides donated food to those in need).
2016 EPA Recycling Economic Information (REI) Report
3
-------
Indirect activities associated with recycling, reuse and food donation include the activities
involved in the value chain of the direct processes such as the collection, sorting and
transportation of aluminum scrap to the smelter or the transportation of donated food from the
food bank to the local food pantry.
Table 1 summarizes the materials and types of recycling processes captured in the analysis, which formed
the basis of the WIO model developed to estimate the economic impacts of these recycling activities.
Table 1. Materials Included in the Scope of Recycling for the 2016 REI Report
Material
Material Category . . Material Description Example Recycling Processes
Subcategories 1
Ferrous metals
Iron
Steel
Ferrous metals recovered from
appliances, automobiles, steel
containers, construction and other
sources
Used as a feedstock in steel mills and
foundries to manufacture raw steel and
castings
Aluminum
No subcategories
Aluminum scrap from used
beverage cans, other containers,
transportation, construction and
other sources
Used as a feedstock in smelting
operations to manufacture semi-
fabricated products (e.g., ingots, slabs)
Plastics
PET
HDPE
LDPE
Recyclable plastics recovered for
recycling
Used in new food and nonfood
packaging products
Used in new rug fibers
Used in new pipe products
Use in new composite lumber
Rubber
Rubber crumb
Other recyclable
rubber
Ground rubber produced from
scrap tires used to produce rubber
crumb and used in other scrap
forms
Used in new molded rubber
products
Used for playground surfacing and
athletic fields
Glass
No subcategories
Glass cullet recovered from glass
bottles and jars
Recovered cullet used in new glass
containers
Recovered cullet used in new
fiberglass
Paper
Paper and
newsprint
Paperboard
Recyclable paper and paperboard
recovered and recycled
Pulp from recovered paper products
used in new paper products
Construction and
demolition (C&D)
material
Concrete
Asphalt pavement
Asphalt shingles
Gypsum wallboard
Wood
Recyclable materials recovered
from construction and demolition
waste2
Recovered material used in road
construction
Recovered material used in new
building products
Electronics
Computers
Computer displays
Hard copy devices
Recyclable electronics that are
recovered for refurbishing,
remanufacturing or resale3
Refurbishing, remanufacturing and
resale as substitute for new equipment
2 C&D metal waste is included in ferrous and nonferrous metals recycling analysis.
3 For the purposes of this analysis, electronics recycling includes the recovery, refurbishing/remanufacturing, and
resale of electronics devices. It does not include the processing of used electronics into commodity-grade scrap, such
as ferrous metals, nonferrous metals, glass, and plastic. To avoid double-counting, commodity-grade scrap is
included in estimates of recycling of the respective commodity.
2016 EPA Recycling Economic Information (REI) Report
4
-------
Material Category
Material Material Description Example Recycling Processes
Subcategories
Keyboards and
mice
Televisions
Mobile devices
Food and Organics
Donated Food
Gleaned produce
Rescued food
Salvaged food
Produce, prepared food, and
salvaged food recovered from
farms, wholesalers, retailers and
food service facilities that
otherwise would have been wasted
Delivery to people in need through
community food service programs
Recyclable Orsianics
Animal by-
products
Crop residue
Dairy by-products
Deceased animal
stock
Grease/Fats, Oil,
Grease
Plate waste
Produce, oilseed,
and grain residues
Spoiled food
Trim and other
cooking waste
Yard trimmings
Recyclable by-products from food
processing, spoiled food that is no
longer edible, grease and other
cooking waste and organic material
(food waste and yard trimmings)
diverted from the solid waste
stream
Recovered material used in producing
minimally processed animal feed,
rendering and animal by-product
processing, biofuels manufacturing,
anaerobic digestion, compost
manufacturing and landscape material
application
The Waste Input-Output (WIO) Model Methodology
The WIO model developed under the 2016 REI report quantifies employment, wages and tax payment
impacts attributable to recycling. Using the 10 tables as the starting point, the WIO model adds
information about recyclable and recycled material flows in the U.S., information about employment and
local, state and federal tax revenue. Combining this information with detailed statistics regarding
economic transactions enables the estimation of the economic activity attributable to recycling. The WIO
model also can be used to assess or disaggregate certain sectors from the larger scope to identify
economic information from individual sectors (i.e. material or industry).
The WIO model is based primarily on an approach that captures the direct and indirect production of
recycling. This approach also accounts for upstream supply chain economic activity attributable to
recycling processes. For example, in steel recycling this approach adds the number of employees who
work in material recovery facilities that separate and provide steel scrap, employees who work for
suppliers of other inputs to steel recycling (e.g., electric utilities) and employees of suppliers throughout
the upstream supply chain.
Two primary types of data were collected to create the WIO model: 1) recycling process data (including
data used to characterize recyclable material flows, recycling process inputs and outputs and recycled
material flows) and 2) economic data to enable analysis of the impact of recycling on jobs, wages and tax
revenue. These data are summarized below4:
Recyclable material production data were collected from a wide variety of industry sources
and publicly available reports. These reports were used to collect information on production
volumes, recycling statistics, and the recyclable material proportions. For the recycling process
4 Data sources can be found in the full methodology report.
2016 EPA Recycling Economic Information (REI) Report
5
-------
inputs, mass-based and monetary-based data were gathered from life cycle inventory datasets
such as ecoinvent 3 and CEDA 4 in addition to other sources.
Recycling material proportions were estimated based on publicly available information
describing virgin and recyclable material flows associated with each recycling process. The
distribution of recyclables was modeled by identifying the major consuming sectors of recyclable
materials and/or major intermediate and end-uses of recyclables and the economic sectors in
which the associated recycling processes occurs.
Employment and wage data inputs, reflecting total economic activity in a given sector as
opposed to recycling-related subset, were collected from publicly available information sources,
including the Census Bureau Statistics of U.S. Businesses (SUSB), the U.S. Agricultural Census
and the U.S. Census of Governments.
Corporate tax data were collected from the Internal Revenue Service (IRS) Statistics of Income
(SOI) program.
These data sources were selected to ensure that the methodology leveraged existing public data and could
be reproduced and updated in the future as new data become available. These data were integrated into
the WIO framework by associating economic sector classifications in the original data source with the
sectors used in the 10 tables. Economic data were attributed to specific recycling processes using the
material flow information to calculate the share of production in recycling industries that can be attributed
to recyclables. For more information on the full methodology and the data collection process for the 2016
REI report please see the separate 2016 REI methodology document.
Key Findings from the 2016 REI Report
It is estimated that in 2007, recycling activities contributed 757,000 jobs (0.52% of all jobs in the U.S.
economy), $36.6 billion in wages (0.62% of total wages paid), and $6.7 billion in tax revenues (0.90% of
total revenues). Table 2 summarizes the economic estimates from the most recent methodology.
Table 2. 2016 REI Report Estimates of Contributions of Recycling to U.S. Economic
Activity/Quantity and Value Contribution
Metric
Total
Percentage of US Economy
(2007)
Jobs
757,325
0.52%
Wages
$36,636,597,000
0.62%
Tax Revenue
$6,795,244,000
0.9%
When normalized on a per 1,000-short-ton basis, the estimates indicate that 1,000 tons of recycled
material attributes 1.57 jobs, $76,030 in wages and $14,101 in tax revenues. Construction and demolition
provided the largest contribution to all three categories considered (job, wage and tax revenue), followed
by ferrous metals, and non-ferrous metals (aluminum). The results from the analysis under the direct and
indirect production of recycling approach are summarized in Figure 1.
2016 EPA Recycling Economic Information (REI) Report
6
-------
Wages, Tax and Jobs Attributable to Recycling
o
o
o
I
w
c
X
(0
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
c/ jr
I I i
. J -
o\*
<3?
{U
,<£
a*
250,000
200,000
150,000
-Q
O
-------
Scoping approachin the 2001 REI study, industry sectors directly or indirectly engaged in
recycling were identified a priori based on the methodology established in earlier REI studies
and recommended by the Northeast Recycling Council (NERC, 1998). The 2016 REI report
identifies the scope of recycling activity using a materials flow approach. Recyclable
materials are selected a priori and industries directly engaged in recycling are identified
based on government and industry information documenting the flows and destination of
these materials. Industries indirectly engaged in recycling are identified using the WIO
model.
Proportioning economic factorsthe two studies used a different approach for apportioning
jobs and wages associated with processes that use a mix of recyclable and virgin material
feedstocks. The 2001 REI study counted all jobs (and associated wages) engaged in
processing recyclables regardless of the mix of recyclable and virgin materials in the process.
The 2016 REI report apportions jobs and wages according to the mix of recyclables and the
virgin materials for which recycles are used as a substitute.
Input-output methodologythe 2001 REI study used a proprietary set of multiplier models
created for local and regional economies using the national economic input-output tables,
estimates of non-market transactions and local and regional economic data. The WIO model
used in the 2016 REI report uses national IO tables with peer-reviewed primary factor input
multipliers. These differences affect the magnitude of double-counting in the indirect
estimates.
Base year and recycling trendsthe 2001 REI study used a base year of 1997 and the 2016
REI report uses a base year of 2007 to estimate economic activity attributable to recycling.
Differences in absolute and relative contributions of recycling to national economic activity
between 1997 and 2007 would be affected by changes in conditions such as: economic output
and employment in different sectors, recyclables recovery, recyclable and recycled material
markets and recycling technology.
Conclusion
The 2016 REI report illustrates that recycling provides positive economic impacts in the United States, as
well as environmental and social benefits. The report also provides a more precise analysis with a new
transparent, replicable methodology that benchmarks recycling activities in 2007. It affords new
opportunities to measure those impacts in nine major sectors while opening the doors to assess the
broader aspects of the life cycle of recycling and reuse in the U.S. economy.
Looking Forward
While the economic impacts documented in this report are pronounced, the effects of recycling reach
beyond employment. This report is just the beginning of EPA's work to document the economic impacts
of Sustainable Materials Management. Recycling is just one, albeit vital, component of SMM and
additional work is needed to document the economic impacts of other parts of the material life cycle.
Along with the social and environmental benefits of recycling, the economic impacts show a positive role
of recycling within the U.S. Thus, adopting SMM practices can help improve our social surroundings,
provide employment and vital wages, while conserving environmental resources.
2016 EPA Recycling Economic Information (REI) Report
8
------- |