cost reductions, technology is not likely to dramatically improve the marketability of products. If incentives for secondary materials consumption were instituted, and improved prices for waste-based commodities were established, further technology development by the private sector could be expected.

Recovery from Mixed Municipal Waste

In order to achieve recovery of materials from mixed municipal

1 Not all of these values are additive. For example if paper is reclaimed as fiber it cannot also be recovered as oil or fuel.

2 Assumes a 1000 TPD plant operating 300 days per year or 300,000 tons of waste. Also assumes recovery rates based on technology assessment of available systems.

8 Yield equals the percentage of the material or energy in the waste which can actually be recovered. In general, losses and technical limitations make this less than 100%.

4 This assumes recovery from mixed waste. If recovery is from an incinerator residue, the value is assumed to drop to $10 per ton, and only 12,700 tons are recoverable.

Source: Midwest Research Institute. Resource recovery from mixed municipal solid wastes. Unpublished data, 1972.

Source: Midwest Research Institute. Resource recovery from mixed municipal solid wastes. Unpublished

data, 1972.

waste economics must be favorable at two key points. The municipality must find the cost of resource recovery competitive with disposal, and secondly, the user of the materials from these systems must find the cost of these secondary materials competitive with virgin materials substitutes. Recovery of materials from mixed municipal waste requires processing. With the exception of a score or so of very large cities, most communities have disposal costs which are lower ($2 and $3 per ton) than the resource recovery alternative. As shown above, recovery processing costs tend to exceed revenues from the sale of products, and the resulting net cost is higher in most places than current disposal costs.

Even in areas where disposal costs are already high-in excess of $5 per ton-resource recovery is limited because no markets can be guaranteed for recovery plant outputs at the tonnage levels at which they can be produced.

From the standpoint of the municipality, then, two changes that would bring about larger scale recovery of mixed municipal waste are (1) higher prices for recovery plant outputs or-alternatively -reduced recovery plant production costs and (2) an increase in demand for waste-based raw materials.

These requirements, however, are somewhat at odds with the requirements of the user who must purchase the outputs of such plants. As has been shown, the economics of virgin materials use are already more favorable than the economics of secondary material use. Lower waste prices are needed to change this situation. In order to insure a demand for secondary materials, they must either decrease in price or-alternatively-their use must be subsidized.

Section 3

DISCUSSION OF MAJOR OPTIONS

EPA's studies have progressed to a point where the major options available to bring about resource recovery at an increased rate where such action can be justified on environmental and conservation grounds-are generally identifiable. The fundamental requirement is to create a situation wherein industrial materials users will substitute secondary materials for virgin materials to the extent this results in more efficient use of resources. This situation could be brought about by three types of activities: (1) actions to inhibit the use of virgin materials, (2) actions to create a demand for secondary materials, and/or (3) actions to create a

supply of secondary materials of such quality and at such a price that they will appropriately satisfy the new demand.

Inhibitory mechanisms, timed at restricting the consumption of virgin materials, would normally take the form of disincentives or regulatory actions. Actions to create demand or supply would normally require the provision of positive incentives. An analysis of each of the major options follows.

Inhibition of Virgin Materials Use. If the supplies of virgin materials available to industry were denied or restricted, the cost of the remaining available portion would rise as a consequence of continuing demand. In relation to secondary materials, then, virgin materials would become more expensive, and more secondary materials would be used. Similarly, if the cost of virgin materials were raised artificially (by taxation, by removel of depletion allowances, capital gains treatment, or other means), the same consequence would reseult.

The desirability of major intervention into virgin materials use in order to increase recycling can be easily questioned on the grounds that a very large materials tonnage (5.8 billion tons) may have to be affected in order to increase a small portion (55 to 60 million tons).

Several "natural" events are likely to cause virgin materials to rise in cost without any form of government intervention. These events include: (1) tighter pollution control regulations and enforcement, resulting in higher pollution control costs; (2) increasing energy costs, which will affect virgin materials proportionately more because they are more energy-intensive than secondary materials; (3) depletion of high quality domestic reserves and the need to exploit lean ore deposits or to import raw materials across greater distances; (4) potentially adverse foreign trade policies; and others. The timing and impact of these market corrections are difficult to predict but are expected to be significant.

"Artificial" intervention is possible through the institution of virgin materials taxes and/or the removal or modification of favorable tax treatment of virgin materials and energy substances, regulation of virgin materials that are available from Federal land, denial of markets to virgin materials through Federal procurement policies, changes in transportation costs through Federal regulation of rail and ocean freight rates, changes in Federally mandated labeling regulations, and, at the extreme, the institution of national materials standards that would limit the use of virgin materials in major materials to some percentile below that now common.

The costs, benefits, and probable effectiveness of each major action listed above are under analysis. Based on initial findings,