EPA sees justification for more aggressive Federal procurement policies to limit the use of virgin materials in products (with all the implied consequences of such a leadership posture), actions to remove freight rate disparities that appear to favor virgin materials, and removal of labeling regulations that discourage consumer purchasing of products that contain "waste" materials.

An example of Federal procurement changes already exists. The changes introduced in 76 paper product specifications by the General Services Administration under orders from the President are already having some impact on paper and board production. Intensification of such actions is certain to have beneficial impacts on resource recovery.

Fiscal measures (e.g., taxes to discourage virgin use) could be addressed to the artificial economic benefits which now favor virgin materials use. Such measures, however, would have a variety of other impacts as well, which are being evaluated to determine whether or not fiscal measures to inhibit virgin materials uses are cost effective. In light of a series of natural events that will raise virgin materials costs-especially rising energy costs-fiscal intervention may not appear either necessary or desirable.

Regulatory actions are viable alternatives for increasing resource recovery, but such actions, as related to virgin materials resource use, need further evaluation to determine their side effects, which may be adverse.

Demand Creation. EPA's investigations to date lead to the conclusion that positive economic incentives may be desirable in order to arrest the relative decline of materials recovery and to increase the proportion of total national materials needs satisfied from waste-based raw materials.

There is evidence that energy recovery from mixed municipal waste will become a very real option to both private and public sector waste management organizations without incentives of any sort and that limited materials recovery-steel, aluminum, and glasswill accompany such energy recovery activities.

The most efficient incentive for materials recovery would be one which results in the creation of new demand by industry for secondary materials, such as some form of tax incentive or subsidy payment to users of secondary materials. If an incentive results in a "demand pull" by industry, such demand will automatically result in changes in the way wastes are stored, collected, and processed. The key to increased recovery is the waste commodity buyer rather than the commodity supplier. Only if the buyer finds waste materials a more economical alternative than virgin materials will greater quantities be utilized. Incentives provided directly to the

buyer are most likely to have the most dramatic effect on his actions.

Demand creation incentives can take a variety of forms. The particular form the incentive takes is important from the administrative and legal points of view. Also, different types of incentives have different efficiencies (cost-effectiveness). The important point-regardless of mechanism used—is that the materials producer (steel mill, paper mill, glass plant, etc.) should find himself in a situation where the use of secondary material is to his economic advantage.

Potentially, several types of incentives measures satisfy this criterion investment tax credits, tax credits for use of secondary materials, subsidy payment or bounties, subsidy of plant and equipment for processing or using secondary materials, etc. If the incentive is made available to the materials consumer directly, a demand for waste materials will result.

Functionally, the incentive must be high enough so that at the point of materials consumption-the cost of the secondary material to the buyer is at least the same (in the same quality range) as the cost of the virgin material. Investigations are underway to identify the level of necessary incentives. As shown in a previous section, it appears that the incentive required to "equalize" the costs of virgin and secondary materials would range from $2.50 to $30 per ton of material recovered. These values are based on a limited number of comparisons and should be viewed as somewhat tentative. It is estimated that an "across the board” incentive sufficient to result in substantial increases in resource recovery would range from $3 to $5 per ton of material recovered. A subsidy of this magnitude should be largely offset by savings in disposal cost since materials recycled would be removed from the waste stream and thus would not incur the cost of landfill or incineration. In addition, there would be important environmental benefits from increased recycling.

Supply Creation. Incentives for demand creation are viewed as sufficient inducement to bring about resource recovery at an accelerated rate. Such incentives, if appropriately designed, should spur private and public investment in resource recovery plants and systems, to deliver to industry the types and quantities of secondary materials it will demand.

As incentives bring about demand by consumers for increased quantities of secondary materials, the demand will reverberate down the chain of suppliers and will bring about some changes in supply patterns. It is likely, for example, that increased "skimming" of accessible wastes (removal from wastes before discard)

such as newspapers, corrugated boxes, and office papers would occur from municipal and commercial sources and that such recovery would take place at lower overall costs than technological sorting.

Most of the solid waste materials that would be demanded by industry now pass through the hands of municipal solid waste management organizations who collect waste in mixed forms. In order to sell all proportions of waste now collected, these organizations face two alternatives: to collect waste fractions separately or to process mixed wastes into separate fractions.

Both alternatives have drawbacks. Separate collection of different waste fractions, while once widely practiced, has virtually disappeared. Combined waste collection using the more efficient compactor truck has become standard in residential, institutional, and commercial waste collection practice. Reinstitution of separate collection will require changes in practices and equipment.

The processing option is capital intensive. The economics of processing require large plant sizes in order to take advantage of economics of scale. In order for the economics to be attractive, plant sizes of 1000 tons per day of input or higher are required. There are few communities with such high generation rates.

If demand incentives result in higher secondary materials prices, public and private waste management organizations would be able to justify processing of municipal wastes for recovery in lieu of processing for disposal. Higher prices for waste-based commodities will also permit the use of smaller capacity plants; the higher prices will compensate for the higher processing costs of small plants.

In smaller communities, where recovery by processing is not likely to be economical, provision of supplies by separate collections is a possibility. The separate collection option, which was once practiced extensively, will require technical, institutional, and social changes to become a part of today's society. At this point, enough knowledge has been gained to see that citizen enthusiasm for resource recovery (expressed in the institution of thousands of neighborhood recycling centers), holds the potential for new and innovative options for solid waste collection. Furthermore, the successful experience of Madison, Wisconsin, where city crews collect newspapers separated from other wastes by the citizenry, indicates that alternatives to large scale recovery plants do indeed exist.

Such approaches to supply creation are still being analyzed as part of EPA's resource recovery studies program.

Other Options. In addition to action programs that would impact directly on resource recovery, a number of related activities are

also under consideration whose consequences would be to attack the broader problem of "excessive materials consumption" in the United States rather than one aspect of that problem, low resource recovery rates.

Source reduction proposals are usually aimed at a particular product (beverage containers) or a class of products (packaging, appliances).

Source reduction options fall into four categories: (1) bans or other disincentives applied to a product or class of products; (2) performance standard setting that will result in longer-lived products, whereby more "use" or "service" is obtained from a given quantity of materials than is the case if rapid obsolescence is promoted; (3) substitution of production processes with low waste yields for waste-intensive processes, for instance, dry papermaking in place of wet pulping; and (4) substitution of products with low-materials requirements for those with high materials requirements, for instance, electronic calculators for the more material-intensive mechanical calculators or substitution of electronic communications media for media that require paper.

EPA's investigation of source reduction concepts is currently aimed at packaging and other disposables, products which are particularly significant in their contribution to solid waste quantities and whose consumption has been growing rapidly. An EPA study is underway to examine alternate taxing and regulatory measures for reducing the quantities of packaging materials consumed.

Such measures might be successful in either (a) reducing consumption of packaging and other disposables, (b) stimulating designs of more recyclable packaging or products, or (c) providing funds for defraying the litter clean-up, collection and disposal costs presently associated with these materials. The secondary effects of these measures, such as economic dislocations and employment disruptions are also being examined.

Of the various major options available for increasing the rate of recovery, intensified Federal procurement of waste-based products and further exploration of positive demand incentives appear most desirable in the long term, accompanied by activities to bring into line virgin and secondary materials freight rates. More information is needed about the necessity for and the effects, fairness, and workability of both source reduction and resource recovery incentive concepts before any such measures are implemented.

Demand creation would be achieved most efficiently by the direct route of rewarding the waste consumer for using secondary materials. Incentives for demand creation, if properly designed may bring about resource recovery at an accelerated rate and would

probably spur private and public investment in resource recovery plants and systems to supply secondary materials. Certain changes in supply patterns may emerge which will result in some waste materials circumventing the recovery plants. "Skimming" of accessible wastes such as newspapers, corrugated boxes and office papers is such a change. For smaller communities where recovery by processing is not likely to be economical, provision of supplies by separate collection is a potential solution.

Actions aimed at removing certain artificial barriers are under serious consideration by EPA, especially Federal procurement policies to increase the use of secondary materials in products and actions to remove freight rate disparities that appear to favor virgin materials.

Taxes and regulation to reduce the consumption of certain product categories such as packaging to reduce the load on the solid waste stream are presently under investigation. Stimulation of more recyclable package designs and provision of funds for litter clean-up are secondary benefits of such actions.

Section 4

DISCUSSION OF PROGRAM ACTIVITIES

The foregoing presentation and preliminary conclusion as well as the data, information, and discussions of specific materials included in the Appendix are based on EPA resource recovery program activities, carried out both by in-house staff efforts and contract research in support of internal analysis.

An overview of the basic plan for carrying out the Congressional mandate is shown in Figure 2. The problem is defined in terms of the adverse environmental effects of materials processing and disposal and efficiency of resource utilization. The broad solutions identified to the problem are increased resource recovery and source reduction activities. A number of policy options available to achieve the solution are shown. Next, specific program activities to implement the policy option are shown arranged into "primary" and "secondary" priority emphasis categories. Finally, an evaluation procedure by which specific action programs will be selected for recommendation is outlined.

Figure 3 shows the various alternatives available for reaching the objective of increased waste utilization; Figure 4 illustrates the alternatives available to obtain the objective of source reduc