Letter From Delhi

The Economics of Trash

Courtesy Reuters

The streets of India's major cities look dirty, piles of waste rot in the corners of buildings, and plastic bottles crunch underfoot. But the grit hides an informal waste collection system so effective that, despite an increase in the sale of disposable, non-organic consumer goods in India in recent years, the trash that ends up in the hands of municipal garbage facilities is over 50 percent organic -- that is, mostly food waste. In 2009, food scraps made up only 21 percent of non-recycled waste in the United States. India's ubiquitous trash-pickers may seem to some an unfortunate byproduct of Western-style consumption, but where others see garbage many Indians see opportunity. In an informal glass market in Bangalore, I was offered three rupees for a green glass bottle. By selling three bottles, I could have earned enough for a local bus ride.

The country's informal recycling sector, however, can only generate so much profit. It is constrained by its lack of capital and long-term investment. The country must work to upgrade and formalize the industry in order to both meet growing domestic needs and capture a greater share of the profit in the international secondary resource market.

The trash industry is worth about $410 billion worldwide per year. The scraps it yields are valuable in the production of consumer goods, as construction materials, or to provide a hedge in case primary resources, such as steel, become more expensive or harder to procure. In fact, in 2007 and 2008, the market for used scrap metal and paper mirrored and then predicted the market for raw material. Many of these secondary resources, such as used paper, are regularly and legally collected in developed countries and shipped overseas. Products Americans buy could very well be packaged in materials made from newspapers they discarded. Electronic waste, which contains bits of copper and gold, is also extremely valuable, especially in India, which is the world's largest consumer of gold.

In 2004, the country reaped around $1.5 billion from scavenged domestic electronic waste -- including

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