Changing waste streams to profit streams

Changing waste streams to profit streams
  • New study shows that rolling out waste as a green industry would affect a 0.5% increase in GDP

A recent study undertaken by the Energy Research Centre of the University of Cape Town investigates the economic impact of the introduction of resources back into the economy through waste stream management. The study highlights that the GDP could increase by up to 0.5% with 13 661 new fulltime equivalent jobs created.

Commenting on the findings of the first phase of the study entitled, General equilibrium impacts of monetising all waste streams in South Africa, co-author, economist and head of research and development at REDISA, (Recycling and Economic Development Initiative of SA) Dr Reza Daniels says, “Our need to grow the economic pie in SA is now more important than ever before, and waste offers us the opportunity to take what is fundamentally dead capital and bring it back to life by monetising it. The results show that, given the massive change in technology, consumer behaviour and business models, the circular economy is both viable and attractive.”

However, one of the biggest challenges in the country, is educating people about the opportunities that can be found and created in waste, all by creating a circular economy of which extended producer responsibility forms a part.

Daniels explains that the biggest hurdle faced in encouraging circularity, namely funding, has already been defeated. “If it were easy to recover and re-use materials profitably, then business would be doing so. At a macro level, it is not only a necessity but also profitable once you take into account all the externalities that effectively subsidise a linear economy,” he says. 

REDISA has seen the results of successfully implementing a circular economy approach in their organisation. In 2015 The McKinsey Report used REDISA as a case study to show how major economic and environmental benefits can be gained from turning ‘Waste into worth’. The report showed that by 2020 the REDISA Plan would deliver an annual net benefit to the economy of over R80 million before even considering the environmental benefits, estimated at an additional R380 million.

Using the SA General Equilibrium (SAGE) model to estimate the economy-wide impacts, and working with a scenario of 13 monetised waste streams, other key impacts of the study include:

  • The potential to increase domestic supply and lower prices of commodities through the re-introduction of recycled commodities
  • The increase in waste to electricity and plastics recycling adds the most value of the 13 waste streams, due to their sizable impacts on the supply and price of commodities
  • There is a notable decrease in the level of coal mining activity due to the decrease in coal-fired power generation; however, this creates a significant upswing in gross value added (GVA) for electricity-intensive users such as non-ferrous metals, and iron and steel
  • Other key sectors such as agriculture and service experience an increase of more than 0.5% in GVA
  • Households experience an increase in income of up to 0.6% which is driven by increased returns in production factors and increased levels of employment
  • By reintroducing waste as an economic commodity there are a number of social and environmental benefits from removing waste from landfills, including impacts on health, greenhouse gas emissions, and reduced soil and water contamination, to name a few.

The research only scratches the surface of what is truly possible and shows that South Africa can significantly alter its current economic growth trajectory in the short-term to a lower-skilled and more employment-intensive path, using waste beneficiation as the strategy to achieve it.