The potential value of recycling municipal household solid waste in Shanghai, China

ABSTRACT

The recycling of municipal household solid waste (MHSW) is important for the environmental preservation and wellbeing of the society. In recent decades, continuous efforts in research, policy-making and municipal administration have led to improvements toward more sustainable MHSW recycling. However, MHSW recycling remains a major challenge for China. This paper analyzes the current value and potential value of MHSW recycling in order to guide residents to recycle MHSW effectively and to reduce the amount of recycle-worthy materials missing recycling. A multivariate probit model is developed to ascertain the current value and potential value of MHSW recycling. Results from a case study of Shanghai reveal that waste glass has low current value and low potential value, and waste plastics has low current value but high potential value. The results also indicate that the waste metal has high current value and high potential value, whereas waste paper has high current value but low potential value. These findings provide policymakers with useful information and rationale for directing efforts to achieve a better or optimal MHSW recycling practice.

Implications: Be a multivariate probit model is developed to calculate the current value and potential value of MHSW recycling in order to guide residents to recycle MHSW and reduce an amount of miss-recycling materials. Our results have shown that waste glass has a low current value and a low potential value, waste plastics have a low current value and a high potential value. Regarding the waste metal, they have a high current value and a high potential value. For waste papers, the result indicates that it has a high current value and a low potential value.

Introduction

The amount of municipal household solid waste (MHSW) has been steadily increasing due to the increasing population and urbanization (Demirbas 2011; Yang, Xu, and Chai 2018, 2019; Yang et al. 2016). In China the total amount of MHSW increased from 31.3 million tons in 1980 to 203.62 million tons in 2016, and is expected to increase to 480 million tons by 2030 (Zheng et al. 2014). Recycling is regarded as a plausible path to reduce the amount of MHSW generation in a sustainable manner (Low, Tee, and Choong 2016), because MHSW is a rich source of various useful recyclable materials such as metal, paper, plastics, and glass (Gundupalli, Hait, and Thakur 2017). In recent decades, continuous efforts in research, policy-making and municipal administration have led to improvements toward more sustainable MHSW recycling in China (Challcharoenwattana and Pharino 2016; Exposito and Velasco 2018; Fei et al. 2016; Gundupalli, Hait, and Thakur 2017; Harijani et al. 2017; Tsai et al. 2007). However, compared with many advanced countries, China still has a large gap to catch up in this area (Zhuang et al. 2008).

China’s current recycling system is still a typical informal system characterized by small-scale, low-technology, low-pay and unregulated work (Fei et al. 2016). The recycling of MHSW is often undertaken by individuals or family groups, who are driven solely by revenues derived from selling recovered materials (Louis and Shih 2005). While the residents and revenues are important elements of MHSW recycling, not much attention has been paid to examine the relationship between residents’ recycling behavior and revenues. It is unclear how much revenues or benefits are brought by residents’ behavioral changes in recycling practice. That is, it is unclear how much is the potential value of residents’ more active recycling behavior over time. This is an important issue to explore and should be a concern by governments, residents and researchers, as there are potential significant environmental benefits if the residents can be motivated to recycle MHSW in a better manner continuously over a longer period of time. Governments need to come up with guidelines and incentive schemes to guide residents toward better recycling behavior. This paper attempts to join the research endeavor for improving the current state of recycling system and behavior. Specifically, this paper aims to evaluate the current value of MHSW recycling if residents’ recycling behavior remains unchanged and the potential value of MHSW recycling if residents’ recycling behavior is improved (i.e. recycle more actively and effectively).

The remainder of the paper is structured as follows. Section 2 explains the method used to analyze the current value and potential value of MHSW recycling. Section 3 describes the Shanghai case study and data collected from the websites for the study. Section 4 presents and discusses the results. Section 5 summarizes and concludes with future research directions.

Methods

Multivariate probit models, originally introduced by Ashford and Sowden (1970) for the bivariate case, are particularly useful tools to capture some of the interdependent structure of binary, and more generally multinomial, response variables (Bock and Gibbons 1996; Chib and Greenberg 1998; Gueorguieva and Agresti 2001; Li and Schafer 2008; McCulloch 1994; Moffa and Kuipers 2014; Natarajan, McCulloch, and Kiefer 2000, Verhoef and Donkers 2001). Multivariate probit models are also appropriate for analyzing both observable and unobservable MHSW recycling through various explanatory variables.

The current value of MHSW recycling

Based on the general definition of current value, the current value of MHSW recycling is equal to the present discounted sum of the revenue streams generated by MHSW recycling over a period of time (such as a month, quarter or year) within the length of the expected life cycle, when residents retain their recycling behavior. Thus, the current value of MHSW recycling is the total value derived from residents recycling all types of MHSW. The current value of MHSW recycling is given as (1):

(1) $CV={\sum }_{t=1}^n\frac{P_j}{{\left(1+d\right)}^t}$(1)

Where: $d$ = the discount rate;

$p_j$ = the revenues of residents recycling $j$type of MHSW

$t$ = the length of expected life cycle for MHSW to be recycled continually

The current value-added and recycling value of various types of MHSW can be represented as different segments in a pyramid model. As shown in Figure 1, the high value-added MHSW is on the top of pyramid. The low value-added MHSW is placed at the bottom. However, the value of resource reuse from recycled MHSW does the opposite. That is, the values of resource reuse from recycling low value-added MHSW is at the bottom of the inverted pyramid, and the high value-added MHSW on the top. So, residents would have a stronger incentive and more enthusiastic to recycle higher value-added MHSW because of greater economic benefits accrued.

Figure 1. The pyramid model of MHSW

Sub-optimal outcomes might result from only considering the current value of MHSW recycling. We can illustrate this point with two examples. The first example is if a resident does not recycle certain type of MHSW that is at the bottom of the pyramid, but this type of MHSW may have a higher potential value than other types of MHSW. It is actually desirable to motivate residents to recycle this type of MHSW. Second, some high value-added MHSW do not have high potential value, so it is not necessarily cost-effective to continue increasing the value for and promoting recycling them. Simply put, the pyramid model has its limitations. That is, the pyramid model only considers the current value, and ignores the potential value of MHSW recycling. As a result, the recycling program is not implemented effectively or optimally. Therefore, it is necessary to also analyze the potential value of MHSW recycling. The potential value of MHSW recycling refers to assets attained when the high value-added MHSW and low value-added MHSW are reused under the assumption that residents recycle MHSW effectively or optimally.

The potential value of MHSW recycling

In order to increase and maximize revenues, some residents might be motivated to change their recycling behavior and more actively recycle their MHSW than before. Such behavioral change will create and raises some additional value of MHSW. This value is called the potential value of MHSW recycling. We take the quantity of each type of MHSW as a special variable and use probabilistic unit model to measure the potential value of MHSW recycling. The probit model for recycling $j$type of MHSW, $j=1,\cdots ,J$ is specified as follows:

(2) $y^{\ast }=\beta X+{\sum }_{K=1}^J{r}_k{Z}_{Lk}+\epsilon$(2)

(3) $y_j=1IF{y_j}^{\ast }>0$(3)

(4) $y_j=0IF{y_j}^{\ast }\le 0$(4)

Where: $y_j=$whether $j$ type of MHSW has been recycled ($y_j=1$ if $j$ type of MHSW has been recycled; $y_j=0$ otherwise) ;

$\mathrm{X}=$the general properties of MHSW (type, magnitude, and value)

$Z_k=$residents recycle$k$ type of MHSW (1 = recycling; 0 = not recycling);

$\epsilon =$the error term.

$\epsilon \text{~}\mathrm{N}\left(0,1\right)$, $\beta ,\gamma$ are parameters estimated by the maximum likelihood approach.

Using information on the profitability of recycling MHSW, recycling MHSW’s potential value can be predicted with estimation results of the multivariate probit model. Specifically, the predicted potential value of MHSW recycling can be obtained by multiplying the predicted probability of residents recycling MHSW with the expected profitability of such recycling behavior. When the recycling value of$j$ type of MHSW is known, its potential value can be predicted as (5):

(5) $PV={\sum }_{j=1}^{J}Prob\left(Resi{d}_j\right)\times Profi{t}_j$(5)

Where: $Prob\left(Resi{d}_j\right)$= the probability that $j$ type of MHSW is recycled by residents;

$Profi{t}_j=$the revenues generated by residents recycling $j$ type of MHSW.

The probability that $y_j=1$ can be shown as follows:

(6) $Prob\left(y_j=1\right)=\frac{QO{R}_j}{QO{P}_j}\times 100\mathrm{\%}$(6)

Where:$QO{P}_j=$ the output of $j$ type of MHSW;

$QO{R}_j=$ the recycled amount of $j$ type of MHSW.

Therefore, when $j$ type of MHSW is recycled by residents, its predicted potential value can be presented as follows:

(7) $pv=Prob\left(y_j=1\right)\times Profi{t}_j=\frac{QO{R}_j}{QO{P}_j}\times 100\mathrm{\%}\times Profi{t}_j$(7)

Based on the general definition of potential value, the specific potential value of MHSW recycling is equal to the present discounted sum of the potential value streams generated by MHSW recycling over a period of time (such as a month, quarter or year) within the length of expected life cycle when residents change their recycling behavior and more actively recycle their MHSW than before. The potential value of MHSW recycling is defined as follows:

(8) $wpv={\sum }_{t=1}^n\frac{pv}{{\left(1+d\right)}^t}$(8)

Where: $\mathrm{t}=$the length of the expected life cycle for MHSW to be recycled continually;

$d=$the discount rate.

Delphi Method was used to construct the parameter values of t and d. The experts were selected based on their knowledge in MHSW field and expertise in MHSW recycling. Delphi Method is essentially an improved version of Expert Opinion and Panel Consensus Method that can avoid a strong personality or bandwagon effect. By going through several rounds of soliciting experts’ opinion without direct interaction among them, the emerged consensus among the experts constitutes reliable estimates of the parameter values used in this study.

The segmentation matrix of current value and potential value of MHSW recycling

In order to optimize MHSW recycling, it is necessary to systematically consider and synthesize the current value and potential value of MHSW recycling. For that, a two-by-two segmentation matrix is displayed in Figure 2. This matrix is useful to formulate a better plan to guide residents to effectively recycle MHSW (Ma, Yin, and Xiao 2003). The plan is briefly discussed as follows:

1. SegmentⅠ: This segment can be regarded as unattractive. This type of MHSW has low current value and low potential value. Therefore, this type of MHSW recycling is not economically desirable.

2. SegmentⅡ: This type of MHSW recycling has low current value but high potential value, implying that currently residents are not recycling this type of MHSW actively or effectively to realize its potential value yet. So emphasis should be put on promoting recycling of this type of MHSW actively and effectively. That is, governments should encourage more residents to recycle this type of MHSW actively.

3. Segment ⅠⅠⅠ: This is the most valuable segment. This type of MHSW has a high current value and high potential value. Residents should be encouraged to continue active recycling of this type of MHSW continuously.

4. Segment Ⅳ: Segment Ⅳ has a high current value and low potential value. Residents are benefited from recycling this type of MHSW now. It is advisable for residents to continue recycling this type of MHSW into the future.

Figure 2. Segmentation with the current value and potential value of MHSW recycling

Case study

Study area

The study was conducted in Shanghai city, which is located in East China at 120°52′E-122°12′E, 30°40′N-31°53′N (see Figure 3). It is an important international economic, finance, trade, and science-tech innovation center, and the most advanced city in China. Shanghai is the second-largest municipality in China, has more than 2000 years of history, and spans over an area of 6340 km². It is made of 16 administrative districts (see Figure 3), with population 24.197 million at the end of 2016 (Shanghai Statistical Yearbook 2016).

Figure 3. Geographic location of Shanghai City, China

The recycling of MHSW in Shanghai was formally implemented in early 2008 and had been regarded as an important part of the comprehensive MHSW treatment plan. Since then, a series of supporting regulations and policies have been drawn by the government, such as “Measures for promoting the recycling and reduction of domestic waste in Shanghai” aiming at recycling and reducing the volume of MHSW. In April 2015, Shanghai was chosen as one of the 26 national MHSW sorting collection pilot cities by five ministries. This required residents to separate the recyclable materials (including glass, plastic, paper and metal) from MHSW generated at home. At present, residents do voluntarily pack and sell waste papers and waste metal to recyclers because of their high selling prices. On the other hand, due to low selling prices of waste glass and waste plastics, the government has to ask the regional municipality-owned company to collect these types of MHSW. Although some progress has been made toward sustainable MHSW recycling, there is still considerable gap for Shanghai to catch-up with many advanced countries.

Data

Data for this study were collected by a team of students and researchers from the Economics and Management School at Harbin Engineering University who have had a research background and understanding of MHSW. The fieldwork and data collection period were from May to October 2018. The composition of MHSW was primarily obtained from The Special Report on Heavy Metals of Waste. The results showed that the recyclable materials were mainly comprised of waste paper, waste plastics, waste metal and waste glass (SIDRE 2014). The selling price of papers, waste papers, metal, and waste metal were obtained from http://jiage.zz91.com. The corresponding data for glass and waste glass are from https://www.glass.cn, and for plastics and waste plastics from http://www.zgfeipin.cn.

Results and discussion

As explained in the preceding section, the numeric value of parameters ($t$ = 5 and $d$ = 8%) were determined by experts through Delphi Method. The average selling prices for papers, plastics, metal, and glass on September 4, 2018 are 4100 Yuan/ton, 6950 Yuan/ton, 4700 Yuan/ton and 1672 Yuan/ton, respectively. These selling prices are called the new selling prices. The average selling prices for waste papers, waste plastics, waste metal, and waste glass on September 4, 2018 are 2970 Yuan/ton, 1817 Yuan/ton, 42,090 Yuan/ton, and 490 Yuan/ton, respectively. The waste selling prices are called the old (or used) selling prices. The huge difference between new and old selling prices within the same day can be explained by two reasons. One reason is that the reuse value of waste papers, waste plastics, waste metal, and waste glass are low due to various factors including underdeveloped or immature reuse technology, limited profit space, and so on. The other reasons are that the Ministry of Ecology and Environment, Ministry of Commerce, National Development and Reform Commission, and General Administration of Customs jointly promulgated Catalog of Prohibition of Imports of Solid Waste which directly led to the increases in the prices of paper, plastics, metal, and glass.

The output of paper, plastics, metal, and glass wastes is 107.100.000 tons, 75.608.200 tons, 50.899.000 tons, and 36.931.000 tons, respectively. The recycled amount of papers, plastics, metal, and glass wastes is 48.320.000 tons, 18.000.000 tons, 8.760.000 tons, and 8.500.000 tons, respectively. Based on the above information we can compute the recycling rate for paper, plastics, metal, and glass wastes as 45.11%, 23.81%, 17.21%, and 23.02%, respectively, displayed in Table 1. Table 1 also presents the current value and potential value of MHSW recycling. The results derived from using the valuation algorithm in the preceding section indicate that the current value of waste paper, waste plastics, waste metal, and waste glass is 11,858 Yuan/ton, 7255 Yuan/ton, 168,053 Yuan/ton, and 1956 Yuan/ton, respectively. The potential value of waste paper, waste plastics, waste metal, and waste glass is 2036Yuan/ton, 4879 Yuan/ton, 3498 Yuan/ton, and 1086 Yuan/ton, respectively.

Table 1. The current value and potential value of MHSW recycling (unit: Yuan/ton)

	Waste paper	Waste plastics	Waste metal	Waste glass
Amount of MHSW generation (unit: tons)	107.100.000	75.608.200	50.899.000	36.931.000
Amount of recyclable MHSW recycled (unit: tons)	48.320.000	18.000.000	8.760.000	8.500.000
Recycling ratio (%)	45.11%	23.81%	17.21%	23.02%
CV (unit: Yuan/ton)	11,858	7255	168,053	1956
PV (unit: Yuan/ton)	510	1222	876	272
WPV (unit: Yuan/ton)	2036	4879	3498	1086

Based on the figures in Table 1, the resulting two-by-two segmentation matrix is displayed in Figure 4. As shown in Figure 4, It appears that waste glass has a low current value and a low potential value, and falls into the first segment. It is, therefore, necessary to find better ways to recycle and improve the economic value of waste glass. One such way is to create viable markets for recycled waste glass. The revenue model of waste glass recycling needs to be changed from relying on loosening policies toward high value-added products which conform to ecological design and green production. Innovative recycling technologies need to be adopted that could yield more value-added than do conventional waste glass treatment technologies. One such innovative strategy is to convert waste glass into all kinds of products or feedstock which replaces virgin materials in producing the same product that was previously produced exclusively from virgin materials.

Figure 4. Segmentation with currnt value and potential value of MHSW recycling

Falling into the second segment is waste plastics that has a low current value and a high potential value (see Figure 4). Thus, improving the recycling of waste plastics is quite desirable and can generate considerable benefits. To change the current situation that waste plastics producers do not need to pay directly for any waste plastics disposal fee, governments need to implement a charging scheme for plastics recycling that can motivate the users (businesses and residents alike) to decrease generation of waste plastics and improve waste plastics recycling. Businesses need to be motivated to build an effective waste collecting and separating system for different types of waste plastics, and to change the current state in which most waste plastics are collected and treated by the informal sector such as scavengers and junk-buyers. And residents need to be motivated to engage in high-quality pre-sorting and separation because mixed waste plastics cannot be reused due to chemical incompatibility and problems arising from waste plastics contaminated with organic waste. Indeed, residents’ pre-sorting practice is a crucial step to the effective recycling of plastics.

Figure 4 shows that waste metal falls into the third segment, having a high current value and a high potential value. This indicates that recycling waste metal is economically desirable and optimal. However, due to the high cost of pollutant containment and treatment such as the collection and treatment of acid wastewater and waste residue, metal wastes have a low recycling rate. China has grown out of the “infancy” stage of waste metal recycling, and has achieved well-established metal recycling practices. In particular, the presence of several steel mills creates the ideal conditions for the development and maintenance of such recycling sector. In order to encourage residents to recycle waste metal continuously, the selling price of waste metal must remain stable as large price fluctuations hamper waste metal recycling. Furthermore, selling prices of waste metal need to be set not just by, as in the past, waste metals’ type, quality and fluctuation of supply and demand in the market, but also by metal waste’s natural resource value, ecological environmental value, and special protection value.

Segment four reveals that waste paper has a high current value and a low potential value. That implies that the recycling of waste paper is primarily focused on cultivating loyal recyclers. At present, waste paper recycling is one of the most well-established recycling schemes applied to MHSW in China. This is due mainly to the fact that some residents, especially older residents and retired residents, are attracted by the selling price of waste papers. Also, residents are enthusiastic about recycling waste papers as they feel that it is relatively easy and inexpensive to recycle waste papers. Some barriers need to be addressed to ensure that residents will continue recycling waste papers in the future. For example, the demand for waste papers must remain stable. For that, one technical issue concerning the stable demand for waste paper needs to be addressed. That is, it is difficult to use recycled paper wastes to produce high-quality paper because of the reduced fiber quality with short length and strength (Joshi et al. 2016). Also, the downstream utilization chain of waste papers needs to be established as quickly as possible.

Conclusion and future research direction

MHSW poses a grave environmental concern that has caught the attention of stakeholders around the globe. Recycling MHSW is considered as one of the most important ways to tackle the MHSW problem. As the second-largest municipality in China, Shanghai has made great strides to develop MHSW recycling program. However, there is still a large gap to catch up with many advanced countries. The objective of this paper is to provide a valuation guide of MHSW recycling, using Shanghai as a case study. The results indicate that recycling waste glass is not valuable from the economic perspective, with the low current value and potential value. On the other hand, waste plastics has low current value but high potential value. So plastics recycling is worth promoting, although a great deal of work needs to be done by the government, businesses and residents. The results show that waste metal recycling is economically optimal, with high current and potential values. So governments should direct great efforts to encourage residents to recycle this type of MHSW continuously. Finally, the waste paper has a high current value and low potential value. This implies that paper recycling should focus on cultivating loyal recyclers.

Some limitations of this study need to be noted and addressed in future research. For example, the recycling of various types of wastes (glass, plastics, metal and paper) analyzed here are only based on economic terms without analyzing the aspects of policy influences. Future research needs to consider policy and economic aspects together. Additionally, more precise data can contribute to a better understanding of MHSW recycling and its dynamic changes in Shanghai.

Acknowledgment

This paper stems from research projects supported by the Major Project of Philosophy and Social Sciences Research, Ministry of Education [grant number 17JZD026]; the National Nature Science Foundation of China (NSFC) Project [grant number 71473056]; the Fundamental Research Funds for the Central Universities [grant number HEUCFP201823 and GK2090260158]; and the PhD Student Research and Innovation Fund of the Fundamental Research Funds for the Central Universities [grant number HEUGIP201719].

Disclosure statement

No potential conflict of interest was reported by the authors.

Supplemental Material

Supplemental data for this article can be accessed on the publisher’s website.

Additional information

Funding

This work was supported by the Ministry of Education [17JZD026]; Harbin Engineering University [HEUGIP201719]; National Center for Research and Development [2018YFC1903605]; Fundamental  Research  Funds  for  the  Central Universities [HEUCFP201834]; Fundamental  Research  Funds  for  the  Central Universities [HEUCFP201834]; Shanghai Jiao Tong University [ZXYJ-2020017].

Notes on contributors

Zhujie Chu

Zhujie Chu is professor at the Shanghai Jiao tong University, No. 1954 Huashan Rd. Shanghai, China. She can be contacted at [email protected].

An Zhou

An Zhou is Ph.D. candidate at the Harbin Engineering University, No. 145 Nantong Street, Nangang District, Harbin, China

Zhiyong He

Zhiyong He is associate professor at Harbin Engineering University, No. 145 Nantong Street, Nangang District, Harbin, China. He can be contacted at [email protected].

Weichiao Huang

Weichiao Huang is professor at the at Western Michigan University, Kalamazoo, Michigan, USA.

Zheng Lv

Zheng lv is deputy director of resource conservation and environmental protection division at National Development and Reform Commission, 38 yuetan south street, xicheng district, Beijing, China.