Tempest in a Green Bin

Uproar over compost and recycling fees in Oakland illustrates challenges of achieving a zero-waste goal

When Oakland restaurateur Gail Lillian received her July compost bill for her food truck and brick and mortar restaurant, Liba Falafel, she was shocked by the dollar figure. Lillian was expecting to see some increase in her waste disposal bill. She had received notices from the trash and recycling companies about a coming rate hike, and she remembered the contentious and controversial fight that occurred last fall over the City of Oakland’s new contract for waste hauling. But she was unprepared to get hit with such huge jump in her compost bill.

Jepson Organics Composting Facility Tour-43photo by Marc on Flickr

A composting facility.

“My compost rates more than doubled – from $225 per month to $460 per month. That’s huge, it’s really huge,” Lillian told me. “When I suddenly have to spend almost $3,000 more [annually] for compost, for a service I was already happy with, that is really hard to swallow. I don’t know where to come up with that.”

So Lillian and other Oakland restaurant owners decided to push back. Earlier this month she organized a press conference on the steps of city hall denouncing the rate increases and complaining that the new fees create a disincentive for businesses to compost. Some businesses – notably Luka’s Taproom & Lounge, a downtown Oakland institution that says its monthly composting fee has gone up by $700 – say they have stopped composting altogether. Oakland landlords and residents are also upset as some multi-unit apartment buildings in the city experience increases of almost 200 percent on their trash and composting bills, along with an increase for recycling services.

“It’s not OK where the rates are,” Lillian says. “I want rates that resemble other cities, and I want our compost rates to be far below the trash rates. … The rates have to be set to incentivize people to compost.”

The backlash from Lillian and others has sparked something of a political firestorm in the city of 400,000 people located across the bay from San Francisco. Last week the city council convened a special meeting to address residents’ and businesses’ concerns – a meeting that gave locals a chance to vent, but resulted in no action from the council other than a directive to city staff to examine how the rates can be restructured. As Oakland city staff tries to figure out how to diffuse the controversy, local media coverage has focused on whether elected officials understood that the new deal with trash giant Waste Management, Inc. would – as the contract stated quite clearly – lead to a jump in trash and compost fees.

“Yes, I should have checked their math,” Oakland City Councilwoman Rebecca Kaplan told the San Francisco Chronicle, “But I shouldn’t have to check their math.” For her part, Oakland Mayor Libby Schaaf has promised to work with Waste Management to “find a thoughtful resolution.”

To an outsider, the whole thing might sound tré Bay Area – a tempest in a green bin, as it were. But the stakes involved in this compost kerfuffle are much bigger than they might seem. The Bay Area has long been a national leader in waste reduction. Berkeley was the first city to launch curbside recycling, and San Francisco is on track to be the nation’s first zero-waste city, having reached an 80 percent diversion rate in 2012. Alameda County – which includes the cities of Oakland and Berkeley – has an ambitious plan to ensure that, by 2020, less than 10 percent of what winds up in the county’s landfills is readily recyclable or compostable. What happens in the San Francisco Bay Area in terms of trash, compost, and recycling has an influence far beyond the region.

recyclingphoto by John Lambert Pearson, on FlickrRecycling bins on the U.C. Berkeley campus.

The Oakland compost controversy, then, is so important because it illustrates the economic and political challenges of reaching a zero-waste goal. If we want to reduce our environmental footprint by recycling and composting more while throwing away less, someone is going to have to pay for such services. And that “someone,” waste industry experts agree, is probably going to be you.

There’s No Such Thing as Free Lunch Leftovers Disposal

People involved in the Bay Area’s waste management sector universally acknowledge that the sharp increases in the trash and compost fees in Oakland are a tough pill to swallow.

“We recognize – and share – the concerns [about the higher rates],” Sean Maher, the City of Oakland’s Zero Waste Outreach Program spokesperson, told me. “We started hearing the restaurant community’s displeasure with the composting rates being higher than the trash rates. Everyone at the table recognizes that’s a problem.”

“What’s happening in Oakland is the huge rate shock, and any rate shock is a problem,” Jack Macy, the commercial zero waste coordinator for San Francisco, said. “I have a lot of sympathy for my colleagues in Oakland.”

At the same time, trash disposal insiders say the new, (relatively) high composting fees facing Oakland businesses and residents reflect the true cost of providing the service. And, more to the point, it was inevitable that those fees would eventually have to rise – just as they eventually will rise for communities nationwide.

In part this has to do with the specifics of Oakland’s situation. The last time the city negotiated a citywide garbage contract was in 1995. When the 15-year contract expired in 2010, city officials decided to extend the old rates. The country was in the grip the Great Recession, and officials didn’t think ratepayers could handle an increase in garbage fees. “We had had small, incremental increases,” during those 20 years, city spokesman Maher says, “but nothing that kept pace with the costs of the service. As a matter of necessity the rates were going to go up.”

But the fee increases sending shockwaves through Oakland are also connected to long-term, structural imbalances in the garbage disposal sector. For the last couple of decades, waste experts say, recycling and composting fees have been kept artificially low to encourage residents and business to sort their trash into separate bins. Customers have not paid the real costs of turning kitchen scraps into agricultural soil or of transforming cardboard into recycled paper cups.

“The way things were arranged back in the day was to incentivize recycling,” says Amy Kiser of the Berkeley Ecology Center, which pioneered curbside recycling starting in 1973. “So the smaller your trash can was, the more you were recycling, and you’d pay less with a smaller can. …That inadvertently made people think that recycling was free. And the same thing is now happening with composting. People think that you shouldn’t have to pay for it, even though the logistics of picking up your [green waste] and taking it someplace is still costly.”

For a while the “pay-as-you-throw” system worked as trash fees subsidized low recycling and composting fees. But as trash diversion rates have increased, the system has become economically unviable. In communities that have been composting and recycling for years, there’s not enough trash disposal to prop up composting and recycling. The economics are further complicated by the fact that, while hauling and dumping trash is relatively cheap and easy, recycling and composting are complicated and expensive.

Peter Schultze-Allen, former chair of the Berkeley Zero Waste Commission, explains: “Typically what will happen is that the garbage rate offsets the costs of compostables and recyclables, because there are costs to that. … A lot of it then becomes: How you are going to calculate the cost? The landfill is relatively cheap. You just dump it in the hole and cover it up. If you get to zero waste, what’s the rate structure going to look like? You are going to have to charge them [residents and businesses] for composting and recycling.”

In a sense, waste diversion in environmentally progressive places like Berkeley and Oakland has become a victim of its own success. The more green waste people put into their compost bin and the more paper, glass and plastic they put into the recycle bin, the less trash there is to cover the costs of those services. But then when people are asked to pay those services, it leads to a populist revolt.

Asked if she thought whether her businesses should pay the true costs of composting and recycling, Gail Lillian of Liba Falafel said, “Yeah, I can see that.” Then she quickly added: “But the rates are so out of whack right now, that basing that rate structure off of the actual dollar cost that we have right now doesn’t make any sense.”

Lillian’s resistance points to a quirk of environmental social psychology: People think they should be rewarded for doing the planet a favor. After all, composting and recycling are good; wasting resources by tossing things in the garbage is bad. So shouldn’t trash disposal be more expensive than recycling and composting? Normally, environmental economics would say Yes. Gas taxes or proposed carbon taxes are an obvious example: You should pay more to pollute.

But waste experts say that, in this case, we need to view the situation different – doing Earth a favor is actually going to cost us something. Which is to say: There’s no such thing as free lunch leftovers disposal.

The Fingerprint of Big Trash

So far, much of the local media narrative has depicted this as a story of a feckless city council that failed to read the fine print of a major contract after being bullied into a bad deal by a giant, out-of-state corporation. The corporation in this case is Waste Management, Inc.

Waste Management is the largest waste disposal company in the world, a company that has distinguished itself by its ruthless pursuit of increased marketshare. The company manages 399 collection operations and close to 250 landfills, which consume roughly 97 million tons of waste annually. Last year the Houston-based company (a city that, incidentally, has a recycling rate of about 6 percent, compared to the national average of 34 percent) grossed around $14 billion. You’ve heard of Big Oil and Big Auto? Well, you can think of Waste Management as “Big Trash.” The company is the unrivaled king of the garbage disposal sector.

2012-04-12%2012.41.13photo by Mike Linksvayer, on FlickrA Waste Management collection vehicle in Oakland, California.

The company’s twin-fisted tactics were on display in Oakland last August, when the now-controversial garbage contract went before the city council. At first, the city council awarded the contract to a local company called California Waste Solutions. Waste Management quickly sued the city and at the same time began collecting signatures for a ballot measure that would overturn the city council’s decision. In the face of this onslaught, the city council backed down, and awarded the garbage contract to Waste Management just five weeks after the lawsuit was filed. (California Waste Solutions retained the recycling portion of the contract.)

This kind of pugilism seems to come easily to the company. Last week, for example, Waste Management filed a similar lawsuit against the City and County of San Francisco. The company contends that a $130 million waste disposal contract signed with local trash hauler Recology “betrayed the city’s obligation to the competitive procurement process.” The company is so well known for its intimidation of critics that some people would only speak off-the-record when discussing the company.

“Waste Management’s business model is landfilling,” said one industry veteran with more than 30 years of experience in the environmental field, who insisted on anonymity. “Waste Management is making a lot of money right now, and they are making a lot of money on landfills because you don’t employ a lot of people there. But in a recycling plant, you have to employ a lot people. So they make their bigger margins on landfill.”

BART Ad for Compostphoto by Anthony Auston, on FlickrAlameda County encourages residential composting.

According to this point of view, the problems in Oakland stem from Waste Management’s lack of enthusiasm for trash diversion in general. The company’s CEO, David Steiner, was recently featured in a Washington Post story that focused on the declining state of the recycling industry. The company has shuttered 10 percent of its recycling facilities in recent months, and Steiner told the Post: “We won’t stay in the [recycling] industry if we can’t make a profit.”

But the company’s critics say that is a self-fulfilling prophecy. Waste Management, they argue, has created a business model that is reliant on dumping trash – not diverting it. According to a March slideshow prepared for Wall Street investors, the company earns twice as much revenue from landfills as it does from recycling operations.

Martin Bourque, executive director of the Berkeley Ecology Center, which manages that city’s recycling program, told me: “This is what happens when publicly traded garbage monoliths control the waste stream. Waste Management is a garbage company first and foremost. Composting, while good for the environment, is bad for their business model. The Ecology Center believes that we need strong government investment and control of our zero waste infrastructure.”

Waste Management disputes that charge.

“We are committed to the city’s zero waste goals,” Karen Stern, a Waste Management spokeswoman, told me “It’s a laudatory program, what they are trying to do. We wouldn’t have bid on this contract if we weren’t committed to Oakland’s goals of diversion.”

As for the legal wrangling that the company engaged in to secure the contract, “There’s no doubt that the contract award process was a difficult time,” Stern later wrote to me. “Our focus has always been on providing the City of Oakland with the comprehensive suite of services requested.”

How (Not) to Make a Buck in Trash Collection

Given Waste Management’s history of labor disputes, illegal accounting practices, and intimidation of municipal governments, it can be easy to view the company as the villain here. But that may be too simplistic an analysis. By prioritizing cheap landfilling over expensive composting and recycling, Waste Management is just being a rational market actor, seeking to make the most bang for its buck. In that sense, the garbage and compost controversy in Oakland follows a script that is all-too-familiar to environmental activists: Solid waste is yet another sector of the economy (like fossil fuel burning, like the production of useful yet deadly chemicals) in which free market accounting fails to include a host of hidden costs while also neglecting environmental benefits.

Here again is Peter Schultze-Allen, the former chair of the Berkeley Zero Waste Commission: “It’s hard to compare composting and landfills, because you’re not comparing apples to apples. What about all of the negative externalities? Are they [Waste Management] paying for the fugitive methane emissions? I don’t think so. So there’s a lot of issues, like climate change, that aren’t calculated.”

According to the US EPA, solid waste landfills are the third-largest source of human-related emissions of methane, a greenhouse gas that is about 50 times more heat-trapping than carbon dioxide. Those significant GHG emissions have a real impact on society by speeding up global warming – but they aren’t counted for in the market arithmetic.

On the other side of the ledger, taking food and yard scraps and processing them into compost is a benefit to society, as compost is an important ingredient of healthy soils, and healthy soils have been proven to help capture and store CO2. And yet compost-making is a kind of loss-leader for garbage hauling companies, or a break-even proposition at best. You don’t sell dirt for a lot of money, the industry veteran who spoke on condition of anonymity told me.

The economics of recycling are also challenging. Turning used paper into newly usable products avoids some logging or deforestation; taking a spent aluminum can and making a new one avoids some mining and smelting. There are clear environmental benefits to giving materials a second life. The profit margins of recycling, however, are incredibly tight, and have only become more so in recent years.

Much of what we recycle is bundled into bulk commodities – a huge load of paper, a huge load of plastic – and then sent to China to be turned into new products. But tapering economic growth in China, combined with a strong dollar, have devastated the global market for recycled commodities. “In October of 2007 the price of cardboard and plastics went through the floor, and within a few months China stopped buying anything,” Shultze-Allen says. “You went from $200 to $300 a ton to $20 or $30 a ton.”

In short: If a company takes your paper and plastic and metals and recycles them, the company makes next to nothing. If the company takes that same stuff and throws it all in a hole, it makes good money.

There are a couple of ways to resolve the problem. One would be to count (or internalize) the cost of landfill methane emissions to more accurately reflect the true burden to society, while at the same time counting the avoided greenhouse gas emissions from recycling or the sequestered carbon from composting.

“I think that you have this narrative coming out from Waste Management and other [garbage industry] giants who say that recycling is too expensive,” Jack Macy from the San Francisco Department of the Environment says. “Part of the narrative is that recycling shouldn’t cost more than landfilling. The question should be: Why is landfilling so cheap?”

Next Stop: Landfillphoto by Todd Lappin, on Flickr

San Francisco Municipal Waste Transfer Station.

Macy continued: “They [Waste Management] make it sound like there shouldn’t be any cost for recycling. But we pay to waste resources, and that has a huge cost, globally, environmentally – and it’s a cost on the future. Somehow it’s OK to pay to waste resources, but it’s not OK to pay to save resources, to feed the soil and return materials to the economy… There’s a huge dollar value [for compost and recycling], but it’s not being recognized in the marketplace.”

But for the market to recognize that value there needs to be a systemic change that would require a whole new economic paradigm. In the absence of such sweeping reform, the best strategy may be to convince residents and business owners that recycling and composting are valuable services for which they should be willing to pay the full cost.

Ruth Abbe – who has worked as a recycling consultant for more than 25 years and serves on the Zero Waste Committee of the Bay Chapter of the Sierra Club – says that the level of service that most Bay Area residents receive for compost and recycling pick-up is quite extraordinary, and that people should appreciate the value of what they are getting. “Even though you are paying more than you paid last year, you are getting weekly collection of compost and recycling – every week – and then weekly collection of trash,” she says. “You should be very happy. It’s much lower than your cable bill. It’s much lower than your gas bill.”

Making Sure the Price Is Right

There’s a sort of economic Gordian Knot at work here. If the rates charged for compost and recycling pickup and processing are too low, then the garbage hauling companies will have few long-term incentives for sustaining the practice. But if the rates reflect the actual cost of doing business – making recycling and composting more expensive than tossing things in the garbage can – then businesses and residents will have few incentives to do what’s best for the environment. So, how to cut this knot?

The short answer: divorce incentives from both sides of the equation; mandate that waste haulers and residents compost and recycle; and provide a way for the garbage companies to turn a profit.

Sounds wonky, but some cities are already making it happen. Recycling consultant Ruth Abbe says that the cities of Palo Alto, Napa, and Seattle each have in place systems that guarantee the trash haulers a steady profit while charging retails and commercial customers reasonable rates.

“In a zero-waste world, I would like to see rates [for customers] and compensation [for haulers] de-linked,” Abbe says. “The way it works is that a city sets the rates, and then they essentially pay their service provider a monthly fee – for both commercial and residential collection, for the infrastructure of the whole system. All the routes, all the drivers. The costs are not unit-based. The costs are spread out over the whole route, or the whole city. The hauler is not worried about any one customer. It separates the service provider from the decisions of the customers. They get their fee no matter what.”

But such a system still involves its own tricky politics. “It’s the responsibility of the city to ensure that they raise enough money to pay the compensation,” Abbe says. “You can see why a city council might be reluctant to get involved in that.”

Indeed, you can. All you have to do is look at the mess in Oakland right now.

Ultimately, there’s no getting around the fact that it’s expensive to have someone come to your house and cart away your crap. “The collection still costs more than the value of the materials,” Martin Borque of the Ecology Center says. Achieving the zero-waste goals many cities have set for themselves will require putting new emphasis on the first R on the three-R icon: That is, before reusing and recycling, it’s important to reduce consumption.

As Borque put it to me: “Eventually we have to realize that we want to waste less, not just recycle more.”

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