Faaiqa Hartley, Tara Caetano, Reza C. Daniels
2017 Annual TIPS Forum
13 -14 June 2017
Bulk of generated waste is landfilled
◦ approximately 90% in 2011 (National Waste Information Baseline Report, 2012)
Recovery, recycling and reuse has potential economic benefits
◦ DST (2014): Value of lost resources ~R17 billion in 2011
◦ ERC (2016): Simple supply shock analysis (manna from heaven)
Result suggests real GDP could increase by up to 0.5% with ~14,000 FTE jobs created
does not include the catalytic impacts from expanding recovery and recycling industries nor
potential costs of these industries
This paper: economy-wide impact of waste recovery, recycling and reuse
◦ Consider waste tyres only (0.2% of total waste): funded; extended producer responsibility;
significant progress since 2011
◦ First attempt proof of concept, paper therefore more focused on methodology
2011: Very little recycling/recovery less than 4% or 10,000 tonnes
2012: Integrated Industry Waste Tyre Management Plan (IIWTMP)
◦ supports and promotes waste tyre beneficiation
◦ provides the collection and depot infrastructure required to collect waste tyres and deliver to approved recyclers
◦ assists in developing and supporting the collectors, storage depots, recyclers, and secondary industries that make products from recycled output
◦ funded through a waste management fee of R2.30/kg of new tyre rubber produced (local and imported)
2012-2016: ~ 42,000 p.a. (2013: 16,037; 2015: 71,806)
Waste avoidance and reduction
Reuse
Recycling
Recovery
Treatment
/disposal
Consumer Education
Retreading Kraftek
Crumbing – rubber products
WTE - gasification, pyrolysis, incineration
Landfill/Dumping
Gasification & pyrolysis by-products include: steel, diesel and char
27%
35%
13%
Waste avoidance and reduction
Reuse
Recycling
Recovery
Treatment
/disposal
Consumer Education
Retreading Kraftek
Crumbing – rubber products
WTE - gasification, pyrolysis, incineration
Landfill/Dumping
Existing technologies in waste recovery, recycling and reuse
Available information
Pyrolysis excludes elec
Recovery & recycling virgin intermediate commodity substitutes
Reuse final consumption
Existing studies generally use extended standard Input Output frameworks given complexity
◦ Models are useful for analysis as they include linkages between sectors in the economy
◦ Examples: Leontief (1970); Huang et al. (1994); Pimenteira et al. (2005), Nakamura and
Kondo (2002, 2006a, 2006b); Nakamura et al. (2009)
◦ IO frameworks has limitations
linear; no price impacts; no behaviour, static
◦ CGE models, which also has limitations, improve on these frameworks by addressing
limitations
Use input-output or supply and use tables to inform database (i.e. social accounting matrix)
Non-linear model
Includes prices and behavioural responses (functional forms; elasticities)
Incorporates macroeconomic constraints such as labour constraints
Can also run dynamically over time
Miyata (1995, 1997) ; Miyata and Pang (1999)
◦ CGE model to analyse the waste-economic system (waste-economic accounting matrix):
cost of waste treatment enters production and cost functions therefore influencing
production decisions and prices
◦ Extended to consider waste transformation to assess impact of a zero-emissions
orientated society (economic-material accounting matrix): waste is either treated and
disposed of or transformed by either internal/external material transformation sectors;
recycled products are re-introduced for intermediate consumption
South African General Equilibrium (SAGE) model
◦ dynamic recursive (UNU-WIDER; National Treasury) first pass, run in static mode
◦ 2009 SAM (Davies and Thurlow, 2013)
◦ 49 activities and 85 commodities
◦ 4 labour groups by level of education
◦ 14 expenditure-based representative households
Non-shaded: economy without IIWTMP; shaded: blocks added to capture IIWTP
Refuse disposal -
Landfill
IIWTP
Reuse, Recycling, Recovery
(crumbing, pyrolysis, Kraftek)
Collection, storage &
transportation
Management & coordination
www.redisa.org
Representative
Industry
FINANCIAL INFORMATION FROM REDISA
Representative
Industry Labour (70%)
Low skill intensive
Capital (10%)
Intermediate goods & services (20%)
Rubber (19.3%), steel (9.9%), diesel (7.2%), coal (5.7%), other manufacturing activities (0.4%)
Transportation and storage service for waste tyres (58%)
• Scenario 1: Baseline scenario
• counterfactual: no IIWTMP, activity in the tyre recycling industry and hence output from the industry is
set close to 0 (check SAM to see if 4% included)
• effective subsidy
• Scenario 2: 25% (42 000 tonnes)
• Representative of annual 2012-2015 impact
• Scenario 3: 100% (170 000 tonnes)
• crumbing (60%), which represents the REDISA target for 2020
• assume loss of 25% - prolonged use of tyres; unrecorded use (REDISA Interview, 2016)
Stylised facts for SA
◦ labour market: high skilled labour = fully employed; unskilled labour (<Matric) = unemployed
◦ no significant change in investment and government expenditure as shares of GDP
◦ flexible exchange rate; flexible government savings no fiscal rule
Recycled products perfect substitutes
◦ Outputs from crumbing and pyrolysis intermediate consumption; Kraftek outputs final consumers
Capital required for the tyre recycling industry assumed to be available therefore no impact on general capital use and allocation in the economy
◦ new capital account is created for the tyre recycling industry. The industry must however compete with the rest of the economy for labour and intermediate goods and services.
Pyrolysis exclude electricity generation. REDISA notes this technology does not currently exist in South Africa however it is possible that electricity generation could be a potential output of this activity in future.
There are significant environmental and health benefits associated with recycling, and the economic benefits from these positive externalities are not quantified nor included in this study. This presents an interesting case for future work.
25% waste tyre use 100% waste tyre use
GDP 0.002 0.005
Private consumption 0.001 0.004
Gross fixed capital formation 0.002 0.005
Government consumption 0.002 0.007
Exports 0.001 0.006
Imports 0.001 0.005
Employment* 346 1448
*Number of additional jobs. All other results are per cent deviation from baseline.
Overall positive impact on GDP and employment
Private consumption rises as household incomes increase increased low skilled employment; higher high skilled wages; additional capital returns
Higher investment higher incomes; new investment in beneficiation industries; rise in government savings (less expenditure; increased tax revenue)
Improved trade balance
Manufacturing sector experiences the largest gains in real gross value added relative to the baseline. Driven by new sector, but also increased growth in sectors that use recycled products as intermediates (metal product industry; food and beverages). Mining and agriculture also experiences stronger growth.
Rubber industry experiences the largest decrease in GVA due to the direct increase in production costs for tyre producers from the waste management fee.
Service GVA decreases marginally due to increased competition for high skilled labour
25% waste tyre use 100% waste tyre use
Agriculture, fishing and forestry 0.001 0.004
Mining and quarrying 0.002 0.010
Manufacturing 0.010 0.037
Services -0.001 -0.002
All results are per cent deviation from baseline.
Real household incomes increase
◦ concentrated at the lower end of the income distribution as employment of lower skilled workers increase: employment in the tyre recycling industry; increased employment in other sectors
Household real consumption levels also increase but dampened by overall increase in prices
0.000
0.005
0.010
0.015
0.020
0.025
1 2 3 4 5 6 7 8 9 10
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Household decile
25% waste tyre use
100% waste tyre use
Possible strategy for assessing waste beneficiation and extended producer responsibility
◦ Inclusion of sector is dependent on data and information
◦ Further improvements: are all links accounted for?; better information?; dynamic?
New industry provides additional value to the economy, results not large but telling
◦ Small share of waste <0.2% of total waste
◦ employment of new labour and capital; new source of demand; increased ‘useful’ resources; reduced financial burden on government producers pay for the disposal of their product
Impacts potentially understated
◦ environmental benefits not included; static analysis potential compounding impacts of higher investment
Increased high skilled labour could result in larger impacts
Impacts may be smaller if
◦ capital not as easily available to the sector; beneficiation products less substitutable; other sector production constrained