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1 FINAL REPORT Economic Impacts and Environmental Benefits of Separating, Sorting, Processing, and Recycling Plastics in the Automobile and Appliance Shredder Aggregate Robert Damuth Economist and Principal Consultant Nathan Associates Inc. DECEMBER 21, 2010

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3 Economic Impacts and Environmental Benefits of Separating, Sorting, Processing, and Recycling Plastics in the Automobile and Appliance Shredder Aggregate Robert Damuth Economist and Principal Consultant Nathan Associates Inc. DECEMBER 21, 2010

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5 Contents Executive Summary iii 1. Introduction 1 2. Data Requirements for Estimating Economic Impacts Initial Changes in Demand 6 Estimation of New Equipment Spending 7 Estimation of New Construction Spending 8 Estimation of Sales of Separated, Sorted, and Processed Plastics in ASR Multipliers for Estimating Total Output Effects Jobs and Earnings Ratios for Estimating Total Jobs and Earnings Effects Requirements for Estimating Environmental Benefits Model Results 17 ILLUSTRATIONS Figures 1. Material Separation Facility Flows /a 2 2. Demand Directly Affected by Allowing Recycling of Plastics Separated from ASR /a 6 Tables 1. Spending on New Equipment Required to Separate, Sort, and Process 1.75 Million Tons of Plastics Annually from ASR 8

6 II 2. New Construction Spending on Facilities Housing the Equipment Required to Separate, Sort, and Process 1.75 Million Tons of Plastics Annually from ASR 9 3. Spot Prices of Virgin PP, PE, and HIPS Resins in 2010 ($ per pound) Industry-by-Industry Total Requirements for Construction, Machinery Manufactures and Waste Management and Remediation Services Industries, Jobs and Earnings Ratios Total Output Effect by Industry ($ of output generated directly and indirectly by demand for new equipment, construction, and recovered plastics) Total Jobs Effect by Industry (jobs created from output effects) Total Employee Gross Earnings Effect by Industry ($ of earnings generated from output effects) 20

7 Executive Summary Current Environmental Protection Agency (EPA) regulations create uncertainty over and barriers to recycling plastics in the appliance and automobile shredder aggregate. The result is that these plastics are disposed of in landfills. If material separation facilities were allowed to separate plastics from the shredder aggregate and sell the material as recycled plastics, they would have an incentive to invest in new equipment and facilities to house the equipment. Such investment would stimulate the economy. In addition, recycling the plastics instead of disposing of them in landfills would have environmental benefits. The economic and environmental benefits would be in keeping with economic policy goals of spurring innovation and growth. Nathan Associates Inc., an economics research firm founded in 1946, analyzed and estimated the economic impacts and environmental benefits of separating, sorting, processing, and recycling plastics in the shredder aggregate currently disposed of in landfills. Using expert opinions of material separation industry leaders, Nathan Associates quantified the amount of plastics likely to be recovered annually, the new investment spending on equipment embodying the technologies capable of separating, sorting, and processing plastics in the shredder aggregate, and the new construction spending on facilities that would house the new equipment. Nathan Associates also analyzed spot prices of virgin plastic resins to determine a price of recycled plastics and material separation industry sales revenue. Once new spending on equipment, facilities, and recycled plastics were estimated, Nathan Associates applied the industry-by-industry total requirements table of the U.S. input-output accounts, which is published by the U.S. Bureau of Economic Analysis, to estimate total industry output 1 generated directly and indirectly by the new spending. Using ratios of jobs 1 Output includes intermediate and final sales of goods and services. Intermediate sales are industry-toindustry. Final sales are industry to consumer.

8 IV per million dollars of output and employee earnings per million dollars of output, Nathan Associates also estimated total jobs and earnings effects. On the basis of industry expectations of 1.75 million tons of plastics separated, sorted, processed, and recycled annually, Nathan Associates estimated the following initial economic impacts: $946.7 million of new spending on equipment produced by machinery manufactures, $247.9 million of new spending on construction industry services, and $1.3 billion of additional material separation facility sales revenue from sales of recycled plastics. This new spending will have total economic impacts of $5.3 billion of additional economic output, 23,746 new jobs, and $1.1 billion of additional gross earnings of employees. Approximately half ($2.4 billion of output, 12,471 jobs, and $529.2 million of earnings) of the total economic impacts are generated by new spending on recycled plastics. Unlike the economic impacts of new investment spending on equipment and facilities, which are impacts that expire once the equipment is manufactured and sold and the construction of new facilities is completed, new spending on recycled plastics occurs annually. Hence, impacts occur annually. In addition, an annual supply of less costly recycled plastics will spur new product innovation. Already, recycled plastics have promoted development of plastic lumber. There are additional economic impacts not included in the Nathan Associates study. Chief among these are tax revenues collected on industry sales and business and household earnings, as well as U.S. balance of trade effects. Exports of recycled plastics or substitution of domestic recycled plastics for imports would make a positive contribution to the U.S. trade balance. And finally, environmental benefits will accrue from using 1.75 million tons of recycled instead of virgin plastics. Such benefits include: Annual savings of trillion Btus of energy, which is equivalent to the energy content of 1.5 billion gallons of gasoline. 2 At an average fuel efficiency of 21 miles per gallon and an average of 12,000 miles traveled per year, an auto consumes 571 gallons of gasoline annually. An annual savings of 1.5 billion gallons of gasoline is equivalent to removing 2.6 million autos from the road each year. 2 One U.S. gallon of gasoline is equivalent to 115,000 Btu. See Bioenergy Conversion Factors at

9 V A savings of 28,525,000 barrels of oil each year. 3 At $75 per barrel, the savings is equivalent to $2.1 billion. A savings of 52.5 million cubic yards of landfill space each year. For significance, consider the fact that, in Michigan, 50 million cubic yards of solid waste are produced annually and, each year, 57 million cubic yards of solid waste are added to Michigan landfills. 4 Each year, 1.75 million to 5.25 million tons of carbon dioxide would be saved. An average medium size automobile with fuel efficiency of 21 miles per gallon traveling 12,000 miles per year emits 6.6 tons of carbon dioxide. 5 Hence, the carbon dioxide savings is equivalent to removing thousand to thousand automobiles from the road each year. Recycling 1.75 million tons of plastics annually will save 39.9 billion gallons of water each year. In the United States, a typical person consumes 123 gallons of water daily or 44,895 gallons per year. 6 The water savings of recycling 1.75 million tons of plastic annually is equivalent to the amount of water used each year by 888,740 people. In summary, as the U.S. economy works its way out of the global recession, the economic impacts and environmental benefits of allowing separating, sorting, processing, and recycling of plastics in the shredder aggregate would provide new jobs and incomes, promote innovation and growth, and help achieve a greener economy. 3 Barrels saved are equivalent to nearly one-half of one percent of the total number of barrels of crude oil and petroleum products consumed in the United States in 2009 (6,851.6 million barrels). See 4 See 5 See 6 See "Energy - How Much Water Does An Average Person Use Each Day?" Science Fact Finder, Phillis Engelbert, ed., UXL-Gale, 1998, enotes.com, 2006, October 17, 2010 available at

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11 1. Introduction This report presents an analysis and estimates of the positive economic impacts and environmental benefits of separating, sorting, processing, and eventually recycling plastics found in the automobile and appliance shredder aggregate. The aggregate, which consists of ferrous and non-ferrous metals, as well as pieces of foam, glass, fabric, rubber, plastics and dirt, can be processed to separate metals from other materials. Once metals have been separated, the remaining material, which is referred to as the automobile shredder residue (ASR) or the shredder fluff, contains pieces of foam, glass, fabric, rubber, and plastics, as well as residual dirt. Although uncertainty in the Environmental Protection Agency s (EPA) rules currently results in ASR, including plastics, being sent to landfills, EPA is reassessing the use and distribution in commerce of certain classes of polychlorinated biphenyls (PCBs) and PCB items and certain other areas of the PCB regulations. 7 Its reassessment has bearing on current management practices for ASR and the plastics it contains. The Institute of Scrap Recycling Industries, Inc. (ISRI) is advocating 8 Clarification of existing PCB regulations to allow for the separation, recycling, distribution in commerce, and re-use of plastics recycled from the shredder aggregate or Establishment of PCB levels below which such plastics may be distributed in commerce for the purpose of recycling, distribution in commerce, and re-use. 7 See EPA 40 CFR Part 761 [EPA-HQ-OPPT ; FRL-881-7], RIN 2070-AJ38, Polychlorinated Biphenyls Reassessment of Use Authorizations, Federal Register, Vol. 75, No. 66, Wednesday, April 7, 2010, pp available at 8 See the ISRI comments to the EPA s NPRM transmitted in a letter to Document Control Office (7407M), Office of Pollution Prevention and Toxics (OPPT), Environmental Protection Agency, 1200 Pennsylvania Ave., NW, Washington, DC, August 20, 2010, page 2.

12 2 Further processing of ASR can separate plastics from all other material (Figure 1). According to ISRI, the scrap recycling industry currently generates approximately five million tons of ASR annually for disposal, 15 percent to 45 percent of which are plastics. 9 Hence, 750,000 tons to 2,250,000 tons of plastics are landfilled annually. Using a variety of proprietary technologies that either exist now or are being developed, most of these plastics can be separated from ASR and recycled. 10 Figure 1 Material Separation Facility Flows /a Material Separation Facility Obsolete/EOL metal-containing products Current technology Shredder Magnetic separator Eddy current separator Metal finder Other Current ASR Plastic separating, sorting, and processing technologies Recycled metals Current ASR Remaining ASR Recycled plastic material Landfill Plastic product manufactures a. Current flows are denoted by solid lines. Possible future flows are denoted by dashed lines. New plastic products Spending on new equipment required to separate, sort, and process plastics in ASR, as well as new construction spending to house the equipment and new spending on plastics recovered and recycled will increase economic output, create jobs, and generate employee earnings. Directly and indirectly, new spending will increase economic output $5.3 billion. This increase in output will support nearly 24,000 new jobs and generate $1.1 billion in household earnings. 9 See the ISRI comments, page See the ISRI comments, page 4.

13 3 In addition to these positive economic impacts, recycling plastics has considerable environmental benefits. Separating and recycling plastics currently sent to landfills will save energy, oil, landfill space, and water, as well as reducing carbon dioxide emissions. Our report, which has four sections, details these and other findings. Following this introductory section, we present and describe the data relied on in estimating impacts and benefits (Section 2). In Section 3, we describe the model we used to estimate impacts and benefits. Section 4 presents our estimates.

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15 2. Data In this section, we present the data required and used to estimate economic impacts and environment benefits of allowing separation, sorting, processing, and recycling of plastics in ASR. 2.1 Requirements for Estimating Economic Impacts Changes in demand for goods and services produced in the United States create direct and indirect effects on the U.S. economy. For example, when a separation facility purchases an automobile shredder, the spending has a direct effect on the manufacturer of the shredder. Shredder production and sales increase. In addition, this direct effect generates a ripple of indirect effects. Shredder manufacturers purchase from other businesses the materials, parts, electronics, and services necessary to manufacture and sell a new shredder. Hence, sales of these other businesses also increase. Other rounds of spending are initiated until the ripple effect subsides, at which time the total impact on the U.S. economy is a multiple of the initial direct effect on production and sales of shredders The economic impacts considered in this paper include total effects on output of the U.S. economy, U.S. jobs, and household earnings. Output is gross output, that is, it is the value of intermediate-use goods and services (those used by industries to produce other goods and services), as well as end-use goods and services. For example, flour used by bakeries to bake bread is an intermediate-use good. Bread baked by bakeries and sold to consumers is a final-use good. Jobs include all employees at a business establishment who worked part- or full-time or received pay for the part of the pay period including the 12 th of specified months (March, June, September, or December). Employees on paid sick leave, paid holiday, and paid vacations are included. Household earnings are gross earnings from all forms of employment-related compensation (salaries, wages, commissions, dismissal pay, bonuses, vacation and sick leave pay, and compensation in kind) prior to deductions for employee social security contributions, withholding taxes, group insurance, union dues, and savings bonds.

16 6 Data required to calculate these impacts include initial changes in demand for goods and services as a result of the ability to separate, sort, process, and recycle plastics in ASR, total output multipliers for the industries whose output is directly affected, and industry ratios of jobs and household earnings per dollar of output INITIAL CHANGES IN DEMAND Allowing plastics in ASR to be separated and recycled will have direct effects on equipment manufacturers, the construction industry, and the material separation industry itself (Figure 2). The material separation industry will purchase new equipment embodying the technologies capable of separating, sorting, and processing plastics in ASR. Hence, manufacturers of such equipment will experience an increase in demand for their products. Purchased new equipment will need to be housed either on- or off-site. Hence, demand for construction industry services will increase. Plastic product manufacturers demand for less costly recycled plastics will have a direct effect on sales of material separation facilities. Figure 2 Demand Directly Affected by Allowing Recycling of Plastics Separated from ASR /a Industrial equipment manufactures Demand for new equipment Construction industry Demand for new construction Material Separation Facility Obsolete/EOL metal-containing products Current technology Shredder Magnetic separator Eddy current separator Metal finder Other Current ASR Plastic separating, sorting, and processing technologies Recycled metals Current ASR Remaining ASR Recycled plastic material Demand for recycled plastic Landfill Plastic product manufactures a. Current flows are denoted by solid lines. Possible future flows are denoted by dashed lines.

17 7 We began our study by interviewing separation facility industry members and asking their opinions regarding the amount of investment in equipment required to separate, sort, and process plastics from ASR; equipment deployment alternatives; and costs of constructing facilities housing the equipment. Six respondents provided information. 11 Answers were given based on their knowledge of the throughput of their facilities, the likely amount of ASR that would be processed monthly at their facilities, and the amount of plastics likely to be separated and recovered. Estimation of New Equipment Spending Once a respondent indicated the capacity of a new piece of equipment, as well as the price he or she expected to pay for the equipment, we calculated a respondent-specific total investment spending required to purchase equipment capable of recovering 1,750,000 tons of plastics annually. Although the industry believes the plastics content of ASR ranges from 15 percent to 45 percent, a typical range is 30 percent to 40 percent. 12 Hence, we assumed the mid-point of the typical range (35 percent of the five million tons of ASR disposed of annually) to be the percentage of plastics separated, sorted, processed, and recycled from ASR annually. To illustrate how we derived estimates of respondent-specific total investment spending in new equipment, consider a respondent who indicated his or her facility produces a shredder aggregate of 80,000 tons monthly. Once metals have been recovered from the aggregate, 30,000 tons of ASR remain, which consists of approximately 20 percent plastics, or 6,000 tons by weight. Approximately 75 percent of plastics in the ASR would be of high enough quality to separate, sort, process, and recycle. Hence, in this case, the respondent would have identified equipment capable of separating 4,500 tons of plastics monthly or 54,000 tons annually. 13 From the operating parameters of the respondent s facility, we then asked for an estimate of the price that he or she would likely pay for new equipment capable of separating, sorting, and processing 54,000 tons of plastics annually. Once the price point was provided, we calculated total investment spending on equipment required to separate, sort, and process 1.75 million tons of plastics annually. In our illustration, approximately 32 pieces of equipment would be required (1,750,000 tons of plastics divided by 54,000 tons). Total investment spending calculated from the operating parameters provided by the respondent would equal the reported price per piece of equipment multiplied by 32 pieces. 11 All data were provided directly to Nathan Associates Inc. None of the company-specific information was shared with other companies. 12 See the ISRI comments, page ,500 tons equals 0.20 x 30,000 tons of ASR x 0.75.

18 8 Our final estimate of total investment spending required to separate, sort, and process 1.75 million tons of plastics annually is an average value across all respondents. As can be seen in Table 1, respondents provided operating parameters and equipment prices that varied. Because economic impacts vary with the amount of new equipment investment spending, we examined the effect on our estimate of total investment spending if minimum and maximum reported values were excluded from our estimated average. Table 1 Spending on New Equipment Required to Separate, Sort, and Process 1.75 Million Tons of Plastics Annually from ASR Item Minimum Across All Respondents Maximum Across All Respondents Calculated Average Across All Respondents Reported equipment cost per piece $5,000,000 $34,000,000 $20,460,000 Reported capacity per piece (tons per year) 15,000 54,000 34,256 Calculated number of pieces required Calculated total spending on new equipment $583,333,333 $1,340,000,000 $946,692,130 Note: Calculated total spending cannot be replicated from data presented here. Totals were calculated from data provided by individual respondents which cannot be revealed for reasons of confidentiality. Excluding minimum and maximum reported values resulted in an estimate of total investment spending that was just 1.1 percent lower than the estimate calculated using all reported values. Total investment falls from $946.7 million to $936.7 million. For our purposes, we used the calculated average across all respondents ($946.7 million). Estimation of New Construction Spending Our interviews revealed that industry members expect each piece of new equipment to be housed in a new and separate facility. Hence, the number of new facilities required equals the number of new pieces of equipment required to separate, sort, and process 1.75 million tons of plastics annually. We asked respondents for their estimates of the total construction cost of a typical facility that would house the piece of equipment they described in terms of its price and separating, sorting, and processing capacity. Again, as we did in determining investment in new equipment, we averaged construction cost estimates across all respondents to determine the total amount of new construction spending that would be required to house the equipment necessary to separate, sort, and process 1.75 million tons of plastics annually. However, the disparity in calculated total construction spending on new facilities across all respondents was significant when using all reported responses. Hence, our final estimate of new construction spending did not include minimum and maximum reported values. By excluding reported extreme values, total new construction spending fell 38.7 percent, from $404.8 million to $247.9 million (Table 2).

19 9 Table 2 New Construction Spending on Facilities Housing the Equipment Required to Separate, Sort, and Process 1.75 Million Tons of Plastics Annually from ASR Item Second Lowest Value Across All Respondents Second Highest Value Across All Respondents Calculated Average Across All Respondents Excluding Minimum and Maximum Responses Reported new construction spending per facility $3,500,000 $5,000,000 $4,250,000 Reported capacity per facility (tons per year) 17,280 50,000 29,320 Calculated number of new facilities required Calculated total construction spending on new facilities $175,000,000 $320,833,333 $247,916,667 Note: Calculated total spending cannot be replicated from data presented here. Totals were calculated from data provided by individual respondents which cannot be revealed for reasons of confidentiality. Estimation of Sales of Separated, Sorted, and Processed Plastics in ASR Given that 1.75 million tons of plastics will be separated, sorted, and processed annually at material separation facilities, what remains in determining new spending on recycled plastics is simply the average price paid for recycled plastics. However, determining a price is not simple. The type and quality of plastics recovered from ASR as well as market conditions and, perhaps most important, the price of crude oil will ultimately determine prices of plastics. The most common automotive plastics types are polypropylene (PP), polyethylene (PE), polyurethane (PU), and polyvinylchloride (PVC). It is our understanding that PP accounts for approximately 41 percent of all car plastics. 14 It is found in bumpers, wheel arch liners, and dashboards. PP, as well as PE and PU (which are found in seat foam) are easily recycled. Moreover, viable markets for PP, PE, and PU from non-automotive sources already exist. However, PVC, which makes up approximately 12 percent of the plastics content of automobiles, is relatively difficult to recycle. The types of plastics found in appliances include acrylonitrile styrene butadiene (ABS) and high-impact polystyrene (HIPS). It is also our understanding that the ABS/HIPS recovery process from obsolete appliances is expected to be highly profitable. 15 The price of recovered ABS is likely to be approximately 48 percent of the price of virgin ABS while the price of recovered HIPS is likely to be approximately 44 percent of the price of virgin HIPS. 16 For the purpose of this study, we examined spot prices of virgin PP homopolymer, high density PE, and HIPS plastics in 2010 (Table 3) to determine a price material separation facilities might receive for recycled plastics in ASR. Average spot prices of PP and PE rose during the early part of the year before declining. Average spot prices of HIPS rose throughout the year. The data below illustrate the volatility of plastics prices for a given 14 See End of life vehicle and tyre recycling information sheet, at Waste Online, available at 15 See E.J. Daniels, Advance Process Research and Development to Enhance Metals and Materials Recycling, Energy Systems Division, Argonne National Laboratory, Argonne, Illinois, 1997 available at 16 See E.J. Daniels.

20 10 plastics type as well as price differences across types, both of which reveal the difficulty of determining a price material separation facilities would receive for the plastics in ASR that will be separated, sorted, processed, and recycled. Table 3 Spot Prices of Virgin PP, PE, and HIPS Resins in 2010 ($ per pound) Janurary 15, 2010 April 16, 2010 November 26, 2010 Resin Low High Average Low High Average Low High Average PP homopolymer $0.630 $0.720 $0.675 $0.745 $0.840 $0.793 $0.660 $0.720 $0.690 High density PE $0.560 $0.600 $0.580 $0.650 $0.730 $0.690 $0.620 $0.680 $0.650 HIPS $0.750 $0.810 $0.780 $0.810 $0.840 $0.825 $0.800 $0.900 $0.850 SOURCE: ThePlasticsExchange market updates available at We used an average of the nine product and period averages in Table 3 to determine a virgin plastics price. On a per pound basis, the average price is $ Per ton, the price is $1,452. Setting a price for recovered and recycled plastics equal to half the virgin price, our price point estimate is $726 per ton. 17 At $726 per ton, sales of 1.75 million tons of separated, sorted, and processed plastic would generate annual additional sales revenue of $1,270,500,000 for material separation facilities. To the extent that separated, sorted, and processed plastics will match the quality of virgin plastics, the price received by material separation faculties and revenues generated would be even higher MULTIPLIERS FOR ESTIMATING TOTAL OUTPUT EFFECTS The input-output (IO) accounts of the Bureau of Economic Analysis (BEA), U.S. Department of Commerce, reveal how industries rely on each other for purchased inputs and sales of output. 18 In the accounts, output is gross output, which measures the value of products and services used by others in production processes (intermediate products and services) plus the value of products and services sold to final users (final products and services). In other words, output counts both types of output intermediate and final products and services and, thus, is sometimes referred to as gross duplicated domestic output. 19 The industry-by-industry total requirements table shows total industry output required directly and indirectly to meet a change in demand for a given industry s output. For example, the new equipment required to separate, sort, and process plastics in ASR is produced by machinery manufacturers They likely purchase primary metals and fabricated 17 It is worthwhile to note that E.J. Daniels used prices of $880 per ton for ABS and $440 per ton for HIPS in determining revenues from ABS and HIPS recovery from obsolete appliances. 18 See 19 Output is not industry value added, which when summed across industries yields gross domestic product of the economy. Value added measures industry sales less the value of purchases from all other industries. It is non-duplicative

21 11 metal products, among other products and services. And once they demand goods and services of other industries, successive rounds of industries buying from and selling to each other are initiated. Eventually the ripple of spending subsides, leaving a total output effect greater than the initial output effect on machinery manufactures. In our study, new spending on equipment, construction, and recycled plastics has a direct effect on machinery manufactures, the construction industry, and the waste management and remediation services industry (the industry to which material separation facilities belong), respectively. According to the total requirements table of the U.S. input-output accounts, every dollar of The industry-by-industry total change in demand for U.S. machinery manufacturers requirements table of the U.S. inputoutput accounts published by the output requires $ of total U.S. industry Bureau of Economic Analysis is the output; every dollar of change in demand for output standard dataset used to estimate of the construction industry in the United States total output effects of a change in requires $ of total U.S. industry output; and demand for an industry s goods and services. every dollar of change in demand for output of the waste management and remediation services industry requires $ of total industry output (Table 4). Inter-industry linkages throughout the economy guarantee that each of the industries listed in Table 4 will be affected by changes in demand for new equipment, construction, and recycled plastics JOBS AND EARNINGS RATIOS FOR ESTIMATING TOTAL JOBS AND EARNINGS EFFECTS We also estimated jobs and earnings ratios to be used to calculate total jobs and earnings effects of increases in output. Jobs are measured by employees at a business establishment who worked part- or full-time or received pay for the part of the pay period including the 12 th of specified months (March, June, September, or December). Employees on paid sick leave, paid holiday, and paid vacations are included. Earnings are measured by household gross earnings from all forms of employment-related compensation (salaries, wages, commissions, dismissal pay, bonuses, vacation and sick leave pay, and compensation in kind) prior to deductions for employee social security contributions, withholding taxes, group insurance, union dues, and savings bonds. We calculated jobs and earnings ratios by industry per $1 million of industry output (Table 5).

22 12 Table 4 Industry-by-Industry Total Requirements for Construction, Machinery Manufactures and Waste Management and Remediation Services Industries, 2008 Industry Code Description Construction Machinery Manufactures Waste Management and Remediation Services 111CA and 113FF Farms, forestry, fishing, and related activities Oil and gas extraction Mining, except oil and gas Support activities for mining Utilities Construction Wood products Nonmetallic mineral products Primary metals Fabricated metal products Machinery Computer and electronic products Electrical equipment, appliances, and components MV Motor vehicles, bodies and trailers, and parts OT Other transportation equipment Furniture and related products Miscellaneous manufacturing FT Food and beverage and tobacco products TT Textile mills and textile product mills AL Apparel and leather and allied products Paper products Printing and related support activities Petroleum and coal products Chemical products Plastics and rubber products Wholesale trade RT Retail trade Air transportation Rail transportation Water transportation Truck transportation Transit and ground passenger transportation Pipeline transportation OS Other transportation and support activities Warehousing and storage Publishing industries (includes software) Motion picture and sound recording industries Broadcasting and telecommunications Information and data processing services CI Federal Reserve banks, credit intermediation, and related activities Securities, commodity contracts, and investments Insurance carriers and related activities Funds, trusts, and other financial vehicles Real estate RL Rental and leasing services and lessors of intangible assets Legal services Computer systems design and related services OP Miscellaneous professional, scientific, and technical services Management of companies and enterprises Administrative and support services Waste management and remediation services Educational services Ambulatory health care services HO Hospitals and nursing and residential care facilities Social assistance AS Performing arts, spectator sports, museums, and related activities Amusements, gambling, and recreation industries Accommodation Food services and drinking places Other services, except government GFG Federal general government GFE Federal government enterprises GFG and GFE Federal government, general and enterprises GSLG State and local general government GSLE State and local government enterprises GSLG and GSLE State and local government, general and enterprises Total industry output requirement Note. Detail may not add to total due to rounding. Values indicate total output required from each row industry for each $1 of output of produced by the column industry. SOURCE: " Supplementary Industry-by-Industry Total Requirements Table," Bureau of Economic Analysis, U.S. Department of Commerce at

23 13 Table 5 Jobs and Earnings Ratios Gross Employee Industry Ratios per $ Million of Output Industry Earnings Output Earnings Code Description Jobs ($ thousand) ($ million) Jobs ($ thousand) 111CA and Farms, forestry, fishing, and related activities /a 1,209,800 na 383, na 211 Oil and gas extraction 147,503 9,480, , Mining, except oil and gas 211,848 11,652,049 86, Support activities for mining 362,158 19,219, , Utilities 639,734 51,692, , Construction 7,316, ,002,718 1,404, Wood products 524,212 17,443, , Nonmetallic mineral products 476,825 20,125, , Primary metals 436,072 22,612, , Fabricated metal products 1,608,631 67,547, , Machinery 1,146,896 55,833, , Computer and electronic products 1,070,420 67,531, , Electrical equipment, appliances, and components 423,861 18,800, , MV Motor vehicles, bodies and trailers, and parts 902,746 46,950, , OT Other transportation equipment 632,442 38,039, , Furniture and related products 515,687 17,653,204 80, Miscellaneous manufacturing 658,803 28,611, , FT Food and beverage and tobacco products 1,620,014 57,662, , TT Textile mills and textile product mills 302,796 9,488,116 63, AL Apparel and leather and allied products 206,025 5,194,532 34, Paper products 417,367 20,804, , Printing and related support activities 644,839 25,681, , Petroleum and coal products 105,427 8,485, , Chemical products 801,567 48,780, , Plastics and rubber products 856,448 33,179, , Wholesale trade 6,209, ,436,007 1,192, RT Retail trade 15,540, ,088,172 1,179, Air transportation 490,935 26,438, , Rail transportation /c 233,733 na 63, na 483 Water transportation 69,611 4,040,970 33, Truck transportation 1,478,343 57,345, , Transit and ground passenger transportation 446,071 9,861,291 32, Pipeline transportation 37,482 3,213,770 26, OS Other transportation and support activities 1,200,465 46,136, , Warehousing and storage 709,331 25,151,859 56, Publishing industries (includes software) and internet broadcasting 1,055,205 77,281, , Motion picture and sound recording industries 331,588 17,806, , Broadcasting (except internet) and telecommunications 1,535,229 92,785, , Other information services 531,264 37,471, , CI Federal Reserve banks, credit intermediation, and related activities /b 3,251, ,445, , Securities, commodity contracts, and investments /b 869, ,548, , Insurance carriers and related activities /b 2,387, ,683, , Funds, trusts, and other financial vehicles /b 25,902 1,559,195 89, Real estate 1,511,533 61,137,860 2,285, RL Rental and leasing services and lessors of intangible assets 668,770 23,694, , Legal services 1,199,306 88,554, , Computer systems design and related services 1,339, ,255, , OP Miscellaneous professional, scientific, and technical services 5,386, ,747,618 1,009, Management of companies and enterprises 2,779, ,147, , Administrative and support services 9,905, ,923, , Waste management and remediation services 385,529 16,872,204 74, Educational services 565,512 15,048, , Ambulatory health care services 5,733, ,198, , HO Hospitals and nursing and residential care facilities 8,597, ,956, , Social assistance 2,468,614 48,114, , AS Performing arts, spectator sports, museums, and related activities 572,080 31,437, , Amusements, gambling, and recreation industries 1,506,120 27,036, , Accommodation 1,970,109 46,043, , Food services and drinking places 9,617, ,165, , Other services, except government 3,498, ,904, , GFG and GFE Federal government, general and enterprises /a 2,764,300 na 1,032, na GSLG and GSLE State and local government, general and enterprises /a 19,735,200 na 1,959, na Note: "na" means not available. Jobs, gross earningsl, and output are from 2007, unless noted. a. Data are for For farms, forestry, fishing, and related activities, employees are wage and salary, not self-employed and unpaid family workers. For federal government and state and local government, employees are presented as totals without differentiating between general and enterprises. Source is BLS employment by major industry sector, 1998, 2008, and projections to 2018 available at b. Data are for The 2007 Economic Census did not include data for industry 525 (funds, trusts, and other financial vehicles). The 2002 Economic Census did. c. Rail transportation jobs in 2007 from the Current Employment Statistics Survey of the BLS available at SOURCES: U.S. Census Bureau for jobs and gross earnings unless otherwise noted. Industry output is from the BEA's Supplementary Use Table after redefinitions at the summary level available at

24 Requirements for Estimating Environmental Benefits Additionally, we considered and estimated environmental benefits of recycling plastics separated from ASR instead of simply shipping the material off to a landfill. Data required to estimate these benefits include parameters relating to energy, water, and landfill space savings from recycling plastics. Although close examination and quantification of such benefits is beyond the scope of our study, we nonetheless collected readily available statistics to estimate the environmental effects of separating, sorting, processing, and recycling 1.75 million tons of plastics annually. Using recycled instead of virgin plastics will reduce energy consumption, conserve natural resources including oil and water, and save landfill space. Listed below are relevant statistics from various sources. According to the Mississippi Department of Environmental Quality, 20 the production of one ton of recycled plastics instead of virgin plastics saves 98 million British thermal units (Btus) 21 of energy; 16.3 barrels of oil; and 30 cubic yards of landfill space. Recycling one ton of plastics saves the equivalent of 1,000 gallons to 2,000 gallons of gasoline. 22 According to Mike Biddle, Ph.D., President and Founder of MBA Polymers, Inc., 23 The amount of energy required to produce recycled plastics is only 10 percent to 20 percent of the energy required to make virgin plastics and Between one ton and three tons of carbon dioxide are saved producing a ton of recycled plastics instead of virgin plastics. According to the Southwest Florida Water Management District s Communications Department and the Conservation Projects Section of the Resource Conservation and Development Department, it takes 24 gallons of water to manufacture one pound of virgin plastics. 24 It requires 90 percent more water to manufacture virgin plastics instead of recycled plastics. 25 Hence, one pound of recycled plastics saves 11.4 gallons of water. 20 As reported in Recycline s Recycled Plastic Saves Energy/Environment, Entrepreneur, June 1, 2005 available at 21 A Btu is the amount of heat energy required to raise the temperature of one pound of water by one degree Fahrenheit. 22 See 23 See 24 See 25 See

25 3. Model The model we employed to estimate economic impacts consisted of three basic steps. 1. First, we calculated the total output effects of initial changes in demand for new equipment, construction and recycled plastics. These effects are the products of new direct spending and industry output multipliers. For example, the $946.7 million of new spending on equipment (see Table 1 presented earlier) multiplied by the output multiplier for machinery manufactures total requirements of the primary metals manufacturing industry (see industry 331 in the machinery manufactures column of Table 4 presented earlier) yields a total output effect on the primary metals industry of $228.3 million. The manufacture of $946.7 million of new equipment will require $228.3 million of output from primary metal manufactures. 2. Next, we estimated total jobs effects attributable to the increase in total output. Jobs effects are jobs per $1 million of industry output multiplied by the increase in total industry output. 3. Finally, we estimated total earnings effects attributable to the increase in total output. Earnings effects are the product of earnings per $1 million of industry output and the increase in total industry output. To estimate environmental benefits, we multiplied tons of plastics separated and recycled annually by the parameters measuring environmental benefits of recycling plastics that were summarized in Section 2.

26

27 4. Results On the basis of separating, sorting, processing, and recycling 1.75 million tons of plastics, we estimated the following economic impacts: $5.3 billion of additional economic output (see Table 6 for industry details), 23,746 new jobs (see Table 7 for industry details), and $1.1 billion of additional gross earnings of employees (see Table 8 for industry details). Demand for recycled plastics generates the greatest economic impact. Of the $5.3 billion total output effect, $2.4 billion is attributable to the $1.3 billion of new spending on recycled plastics. Moreover, although output, jobs, and earnings effects of demand for new equipment and construction would no longer occur once demand has been met, output, jobs, and earnings effects of demand for recycled plastics would occur annually. And effects could be significantly greater as the quality and price of recovered and recycled plastics begin to more closely match the quality and price of virgin plastics. In addition to these economic impacts, business and personal income taxes and sales tax revenues would increase along with output and earnings. However, this paper does not include an analysis and estimate of these effects. The U.S. balance of trade also could be positively affected if recovered plastics are exported or substituted for imported virgin plastics. However, once again, an analysis of this effect is beyond the scope of this paper. Finally, regarding economic impacts, it should be noted that the availability of recycled plastics will promote growth and development of industries producing new products. Allowing plastics in ASR to be separated, sorted, processed, and recycled will promote innovation. Even now, plastic lumber is produced from recycled plastics. Demand for plastic

28 18 Table 6 Total Output Effect by Industry ($ of output generated directly and indirectly by demand for new equipment, construction, and recovered plastics) Industry Code Description Construction Machinery Manufactures Waste Management and Remediation Services Total 111CA and 113FF Farms, forestry, fishing, and related activities $2,463,250 $3,414,813 $3,114,377 $8,992, Oil and gas extraction $17,666,690 $38,072,360 $60,167,577 $115,906, Mining, except oil and gas $4,323,369 $19,489,362 $5,287,440 $29,100, Support activities for mining $376,908 $1,047,704 $1,061,630 $2,486, Utilities $4,121,813 $29,160,863 $20,190,151 $53,472, Construction $249,995,026 $12,011,062 $9,010,132 $271,016, Wood products $9,443,493 $6,811,355 $3,125,938 $19,380, Nonmetallic mineral products $11,765,927 $12,088,122 $5,248,054 $29,102, Primary metals $11,035,093 $228,288,086 $28,989,888 $268,313, Fabricated metal products $17,551,013 $141,017,082 $39,275,475 $197,843, Machinery $6,761,382 $1,062,908,529 $25,574,530 $1,095,244, Computer and electronic products $2,808,375 $33,384,814 $12,368,445 $48,561, Electrical equipment, appliances, and components $5,725,140 $44,399,009 $11,290,044 $61,414, MV Motor vehicles, bodies and trailers, and parts $2,493,372 $29,899,472 $25,455,484 $57,848, OT Other transportation equipment $507,609 $5,458,911 $2,484,717 $8,451, Furniture and related products $2,580,664 $2,194,432 $590,655 $5,365, Miscellaneous manufacturing $657,549 $9,172,027 $11,164,646 $20,994, FT Food and beverage and tobacco products $568,746 $2,640,987 $4,306,233 $7,515, TT Textile mills and textile product mills $943,992 $3,353,752 $3,281,956 $7,579, AL Apparel and leather and allied products $106,307 $492,848 $1,870,684 $2,469, Paper products $2,285,569 $14,054,591 $9,259,404 $25,599, Printing and related support activities $965,239 $3,683,768 $5,124,054 $9,773, Petroleum and coal products $19,856,464 $33,917,423 $63,964,593 $117,738, Chemical products $8,776,300 $44,163,945 $25,562,460 $78,502, Plastics and rubber products $6,166,159 $36,487,976 $10,493,949 $53,148, Wholesale trade $14,522,363 $110,529,998 $38,389,682 $163,442,044 44RT Retail trade $11,703,129 $6,811,545 $2,523,848 $21,038, Air transportation $769,781 $4,434,117 $10,568,527 $15,772, Rail transportation $1,353,923 $9,762,763 $2,884,670 $14,001, Water transportation $83,672 $280,978 $238,600 $603, Truck transportation $5,526,484 $22,094,090 $13,495,505 $41,116, Transit and ground passenger transportation $121,231 $662,874 $1,976,644 $2,760, Pipeline transportation $451,134 $1,653,303 $1,906,512 $4,010, OS Other transportation and support activities $1,553,892 $6,785,700 $18,027,760 $26,367, Warehousing and storage $647,608 $5,861,918 $3,796,381 $10,305, Publishing industries (includes software) $1,966,996 $7,634,788 $10,144,688 $19,746, Motion picture and sound recording industries $359,727 $1,256,260 $1,850,102 $3,466, Broadcasting and telecommunications $4,773,586 $16,204,151 $23,922,499 $44,900, Information and data processing services $874,923 $5,555,757 $10,176,451 $16,607, CI Federal Reserve banks, credit intermediation, and related activities $6,376,813 $27,665,941 $34,420,513 $68,463, Securities, commodity contracts, and investments $1,585,130 $14,486,188 $7,850,038 $23,921, Insurance carriers and related activities $2,126,034 $9,835,090 $71,518,732 $83,479, Funds, trusts, and other financial vehicles $38,130 $222,378 $595,483 $855, Real estate $6,222,832 $26,630,166 $35,728,366 $68,581, RL Rental and leasing services and lessors of intangible assets $5,013,396 $19,840,774 $33,675,746 $58,529, Legal services $3,347,891 $11,654,632 $14,707,689 $29,710, Computer systems design and related services $1,785,446 $10,472,498 $8,209,209 $20,467, OP Miscellaneous professional, scientific, and technical services $21,067,041 $63,956,627 $71,009,261 $156,032, Management of companies and enterprises $4,443,609 $49,982,126 $38,566,028 $92,991, Administrative and support services $6,452,329 $30,597,279 $65,493,767 $102,543, Waste management and remediation services $650,756 $3,067,283 $1,419,189,537 $1,422,907, Educational services $79,284 $199,468 $269,219 $547, Ambulatory health care services $9,123 $35,880 $80,931 $125, HO Hospitals and nursing and residential care facilities $1,587 $14,106 $26,045 $41, Social assistance $298 $2,083 $16,898 $19, AS Performing arts, spectator sports, museums, and related activities $504,362 $2,426,372 $4,541,402 $7,472, Amusements, gambling, and recreation industries $82,804 $445,513 $1,265,672 $1,793, Accommodation $785,003 $4,259,263 $12,698,902 $17,743, Food services and drinking places $1,300,348 $7,005,711 $17,228,742 $25,534, Other services, except government $4,738,803 $13,397,398 $27,796,634 $45,932,835 GFG and GFE Federal government, general and entrprises $1,757,729 $14,270,437 $14,301,510 $30,329,677 GSLG and GSLE State and local government, general and enterprises $1,564,825 $10,408,123 $36,190,701 $48,163,649 Total industry output effect $504,587,469 $2,338,016,868 $2,443,545,408 $5,286,149,745 Note: Items might not sum to totals because of rounding. SOURCE: Nathan Associates Inc.