The Commercialization of Garbage

For much of human history, people have found ways to profitably reuse their waste. But the rising tide of consumerism that followed World War II brought with it TV dinners, disposable razors and an ever-changing stream of new gadgets, clothes and automobiles. It also began to fill the world with trash. Encouraged by environmental legislation, and financed by Wall Street, large corporations were created to make the garbage disappear. Years later, and billions of dollars richer, these giants are now looking for ways to join the “green revolution.”

It’s not surprising that the ancient Romans, who engineered the world’s first sewage system, also created the first landfill, a mammoth mound of broken pots that eventually stretched more than half a mile across at its base and rose in terraces to a height of more than 135 feet. This small mountain of refuse was so skillfully constructed that today, more than 2,000 years later, archaeologists are carefully exploring its 55 million amphorae, many still with legible inscriptions, to learn all they can about the civilization that built Monte Testaccio (“Broken Pot Hill.”)

The citizens of ancient Rome were effectively the first recyclers, but they were not always so fastidious about their trash. Dumping garbage out of windows was common enough around the Coliseum to warrant legal remedies. But the laws were no match for the convenience of street dumping and the practice persisted.

Waste disposal has gone through several cycles of since those days in Rome, and today there is a rising trend away from the equivalent of the mound of pots — i.e. huge landfills — and toward a way of recycling that more than pays for itself.

It’s been a long road. A millennium after the terraced landfills, what had been a nuisance in ancient Rome turned deadly in medieval Europe, as accumulating waste provided a breeding ground for flea-infested rats carrying the bubonic plague. As the Black Death raged through Europe, governments finally began to regulate waste disposal. People still tossed trash out of windows, but now provisions were being made to remove it. In England, King Edward III ordered all refuse raked from streets and alleys, loaded onto carts and removed once a week. In medieval Germany, those who brought produce into the city were now required to carry their customers’ garbage out.

New Problems, New Solutions

To feed the growing urban centers of 19th century America, U.S. farmers turned to manufactured fertilizer, thereby destroying an important market for the natural fertilizers found in urban waste: hay, “night soil” (human feces), food scraps and horse droppings.

Scavengers took over, combing through the cities’ trash and becoming the oppressed recyclers of their day. Rags, bottles, rubber, horse carcasses, food scraps — all were scavenged and either sold or consumed by the desperate poor.

Robert Moses transformed the foul-smelling Corona Ash Dump, immortalized in The Great Gatsby, into the site of the 1939 World’s Fair.

The plight of these impoverished foragers did not go unnoticed. Reformers began to advocate change, hoping to quell social unrest among the poor, and to prevent the spread of disease within and beyond the slums. Noting the deplorable conditions of “pestiferous stench and filth” in which the scavengers themselves lived, the New York Association for the Improvement of the Condition of the Poor noted, “Though the poor may fall in greater numbers because of their proximity to the causes of disease … the rich, who inhabit the splendid squares and spacious streets … often become the victims of the same disorders which afflict their poorer brethren.”

Eventually, the reformers succeeded. In 1866, New York State passed the Metropolitan Health Bill, which regulated and professionalized sanitation. Similar laws were enacted in other states as well.

It is no accident that these new regulations emerged in the wake of the Civil War. According to Heather Rogers, author of Gone Tomorrow: The Hidden Life of Garbage, the war brought about “a new scale of battle-related industrialization,” which led in turn to rising urbanization. As the fighting ended, factories began to churn out manufactured products for citizens on a massive scale, triggering mass consumption and drawing workers into rapidly growing urban centers. And with less time to repair what was broken, and less space to store what might later be re-used, these urban dwellers began generating huge amounts of trash.

A new profession, sanitation science, emerged to deal with this new and growing problem, and reform-minded “sanitarians” set about finding solutions. Foremost among them was Col. George E. Waring, Jr., who assumed command of New York City’s Street Cleaning Department in 1895. During his brief tenure, Waring created an efficient system of sanitation that cleaned the streets and extracted whatever value could be found in the garbage that was collected.

New Yorkers of the time were required to separate their garbage and to put a “call card” in the window when it was ready for collection. A highly disciplined and well-paid army of licensed workers known as Waring’s White Wings (for the starched white uniforms they wore) collected the trash and brought it by barge to a processing center on Barren Island in Jamaica Bay. Workers at the center picked out items of value as they whisked by on a 104-foot conveyer belt. Organic waste was cooked and compressed into fertilizer and grease, which was used to make soap and candles, among other products.

The Barren Island processing center remained in operation, profitably reducing New York’s waste until 1936, when Robert Moses closed it down in favor of landfills that actually created land. Among his many accomplishments, Moses transformed the foul-smelling Corona Ash Dump, immortalized in The Great Gatsby, into the site of the 1939 World’s Fair, attracting visitors from every part of the globe with its motto “The World of Tomorrow” and preserving for future archaeologists the detritus of 20th century America.

Commercialization

In the first years of the 20th century, the world of sanitation shifted. Instead of looking for ways to extract value from waste, those in charge of the nation’s garbage focused instead on removing trash from sight as quickly and efficiently as possible. Intentionally or not, their success supported the growth of a new consumer culture. As waste disposal became more proficient, the value in waste grew more obscure and throwing things away became routine.

According to the EPA, the amount of waste going to landfills has declined from 89% of total municipal solid waste (MSW) in 1980 to 54% in 2011.

The Great Depression and World War II kept consumer culture in check for some time, but once victory was declared in 1945, years of pent-up demand and manufacturing capability brought consumerism roaring back. The baby boom meant a rapid rise in customers, and increasingly efficient manufacturing meant an equally rapid rise in things people could buy. Companies continually introduced new models of everything from cars to hats, while advertising stoked the public’s desire for the latest fashion. According to historian Elaine Tyler May, consumer spending skyrocketed 60% between 1945 and 1950.

The result of all this consumption was an enormous increase in the volume of garbage that needed to be collected and disposed of. “Sanitary landfills” proliferated. Most were located away from population centers in rural and often impoverished areas. Within the city limits, garbage was used to fill in swampy areas and create new real estate.

Kitchen-sink garbage disposals, the modern compaction garbage truck, small-scale incinerators for individual buildings and numerous other innovations helped sustain and fuel the unfettered growth of consumerism for decades. But gradually America’s growing waste stream began to raise concerns, even in Washington.

In 1976 Congress responded by enacting the Resource Conservation and Recovery Act (RCRA), which focused primarily on hazardous waste. A statement by the House Committee on Interstate and Foreign Commerce explains why: “Current estimates indicate that approximately 30 to 35 million tons of hazardous waste are literally dumped on the ground each year. Many of these substances can blind, cripple, or kill. They can defoliate the environment, contaminate drinking water supplies and enter the food chain under present, largely unregulated disposal practices.”

Congress significantly expanded and strengthened RCRA, passing the Hazardous and Solid Waste Amendments (HSWA) in 1984. According to a history of RCRA published by the Environmental Protection Agency (EPA) in 2002, the amendments established more than 70 statutory provisions requiring EPA action, including an investigation of the “environmental soundness of municipal solid waste landfills (MSWLFs), and on amounts of waste being processed by them.” One of the more significant findings in the EPA’s final report was that thousands of municipal solid waste landfills “inconsistently used environmental controls, and that they posed significant threats to ground and surface water resources.”

The EPA quickly published new goals and recommendations for municipal solid waste management, but it was not until 1991 that new federal standards were established. Among other things, the regulations specified design and operating standards, restricted landfill locations, required liners and groundwater monitoring and required the closing of all landfills that did not meet these standards.

According to the EPA, there were 6,500 landfills operating in 1988. By 2002, that number had dropped to 2,500. This decline did not signal a diminution of waste or of landfill capacity. Quite the opposite: in 1985, the country produced 166.3 million tons of municipal solid waste (MSW); by 2005 the volume had grown more than 50%, to 253.7 million tons. The average size of America’s landfills skyrocketed as their numbers shrank.

Garbage Goes Public

The drop in the number of landfills was due primarily to the high cost of meeting the stringent new standards. Many small companies and public facilities simply could not afford to upgrade their landfills and ended up shutting them down. Two large publicly traded companies had the resources to buy up and consolidate many of these smaller operations, and to create mammoth new state-of-the-art landfills that dwarfed all previous facilities. Browning-Ferris Industries (BFI) and Waste Management Inc., both launched in 1968, emerged as the dominant players in what had quickly become a new corporate era of garbage collection and disposal.

In 2012, San Jose announced that it wanted to divert 75% of its municipal solid waste from landfills and increase that percentage over time.

BFI was sold to Allied Waste Industries (AWI) and private investors in 1999. Nine years later, a smaller competitor, Republic Services, acquired AWI, growing into the second-largest public waste company virtually overnight. In 2012, Republic generated $8.1 billion in revenue. Waste Management, the largest waste company in the U.S., had 2012 revenues of $13.6 billion. Together these two companies represent nearly two-thirds of the publicly owned waste services sector and about 40% of the total United States non-hazardous solid waste services industry.

Both Waste Management and Republic have grown strongly over the years. Their business models look similar: Each company invests heavily in long-term fixed assets, such as trucks, landfills and recycling centers (also known as material recovery facilities). These investments generate revenue over long periods through customer fees. Once the capital investment is fully amortized, much of this revenue drops to the bottom line.

While landfills, some of which are observable from space, are among the more visible of Waste Management and Republic’s assets, they account for just 12% of Republic’s revenue and 20% of Waste Management’s. Both companies derive the bulk of their revenue (77% and 62% respectively) from collection, the use of trucks to collect and haul garbage to landfills, recycling centers or transfer stations, where material from several areas is consolidated before being transported to its final destination.

Traditional waste streams are changing, however. According to the EPA, the amount of waste going to landfills has declined from 89% of total municipal solid waste (MSW) in 1980 to 54% in 2011. During this same time period, the amount of material being recycled has grown from less than 10% of total MSW to more than 34%. With volumes of traditional waste declining, and many indicators suggesting that recycling, reuse and perhaps energy generation are the growth markets of the future, there could be changes in the structure of traditional waste handlers. (Waste Management’s total revenue from recycling in 2012, for example, was $1.4 billion, about 1% of total revenue.)

Waste Management and Republic are now investing in material recovery facilities, which in addition to processing fees, generate revenue from fluctuating prices for commodities like plastics, cardboard, metal, aluminum, glass and the like.

Elsewhere, Waste Management is pursuing a number of other large-scale strategies aimed at reducing its carbon footprint. Its website, in one example, notes, “At about 130 disposal sites, we use naturally-occurring landfill gas to power homes and businesses. Just recently, we even developed the technology to convert landfill gas into a fuel our fleet vehicles can run on.”

Adaptation

Republic Services is approaching the change in the marketplace differently. “We believe that our business is a local business,” notes Peter Keller, vice president of recycling for Republic. “People in Portland, Ore., Seattle or San Francisco have a different outlook on life than people in Phoenix or Tuscaloosa, Ala. Different communities behave differently; not every market is the same.”

Keller points to San Jose, Calif., which for years deposited most of its MSW in Republic’s landfill. Then in 2012, the city announced that it wanted to divert 75% of its MSW from the landfill and increase that percentage over time. “We said OK, we’ll do that and we made a significant investment [in a recycling facility] and are now processing 100% of the commercial material that comes out of San Jose.” The change has meant an 80% reduction in the volume San Jose sends to Republic’s landfill but “we have the opportunity to make reasonable returns on the recycling facility, too,” Keller notes.

Before building a recycling center in a specific location, Republic looks at a number of critical factors, including population density and growth, the density of its commercial routes in the area, the relative cost of disposal, and the local regulatory framework and culture. In San Jose, the decision was to make the investment in recycling. Every year, says Keller, Republic adds three to five new recycling plants to its current inventory of 74 plants.

“At the end of the day, we are service providers,” Keller notes. “We want to provide services that our customers demand, and to the fullest extent possible create business models that are sustainable and work for both parties.”

Citing Knowledge@Wharton

Close


For Personal use:

Please use the following citations to quote for personal use:

MLA

"The Commercialization of Garbage." Knowledge@Wharton. The Wharton School, University of Pennsylvania, [06 March, 2014]. Web. [28 August, 2014] <http://knowledge.wharton.upenn.edu/article/commercialization-garbage/>

APA

The Commercialization of Garbage. Knowledge@Wharton (2014, March 06). Retrieved from http://knowledge.wharton.upenn.edu/article/commercialization-garbage/

Chicago

"The Commercialization of Garbage" Knowledge@Wharton, [March 06, 2014].
Accessed [August 28, 2014]. [http://knowledge.wharton.upenn.edu/article/commercialization-garbage/]


For Educational/Business use:

Please contact us for repurposing articles, podcasts, or videos using our content licensing contact form.

 

Join The Discussion

No Comments So Far