Do you know how much you pay for trash collection?
Neither do I. And that's a problem, because it means that most of us throw away more than we should
It's a classic case of market failure, and one that can easily be fixed, as a startup called RecycleBank has learned. The company, which helps people turn their trash into cash, recently attracted a $2 million investment from Coca-Cola (Charts, Fortune 500), as part of the beverage giant's effort to promote recycling.
Let me explain why the trash market doesn't work in most of America. It costs money to collect and dispose of garbage, of course, and we all pay for it, usually through local taxes.
But since the costs are invisible in most places, there's no economic incentive to throw away less. That's one reason why U.S. residents, businesses and institutions generated more than 245 million tons of municipal solid waste in 2005, according to EPA, which says that's 4.5 pounds per person per day.
Much of what winds up in landfills - paper, food waste and yard clippings - could be recycled, reused or composted, which would save energy and reduce greenhouse gas emissions.
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What to do? One option is for local governments to charge people for trash pickup based on what they throw away, a concept called "pay as you throw." About 5,250 cities and towns, representing about 20% of the country's population, do just that.
But the idea of "pay as you throw" is often politically unpopular because it is seen, mistakenly, as a tax. It's actually just a way of allocating costs more fairly.
Another option - the one taken by Philadelphia-based RecycleBank - rewards people for recycling. Think of it as the carrot, as opposed to the stick. (Both can ...