Santa Monica Community Recycling Center shuts down as plummeting global demand turns a former city revenue stream into a financial liability

By Gary Walker

Feel-good recycling programs are costing taxpayers a lot

Santa Monica has built a strong reputation as an ecologically innovative city, but recent disruptions in the international recycling marketplace have left city leaders wrangling over how to continue the practice in a sustainable way.

The Santa Monica Community Recycling Center — the facility near Bergamot Station where residents could redeem aluminum cans, plastic bottles, cardboard and other recyclable material for cash — shut down on June 15, about two weeks after Santa Monica City Council members voted 4-2 not to renew a contract with recycling program operator the Allan Co.

Curbside recycling collection will continue, but what used to be a revenue generator for the city now costs Santa Monica taxpayers six figures a year. Last year the Allan Co. required a rate increase to cover increased collection costs and declining demand for recyclable materials. That took the city from earning $27.50 per net ton of recyclables, which translated to more than $300,000 in annual public revenue, to paying $25 per net ton — a $275,000 net loss.

The math has been similar throughout American cities since last year, when China — which once processed more than half of the world’s recyclable exports, according to the Yale School of Forestry and Environmental Studies — begin implementing its “National Sword” policy ban on imports of recycled materials, complaining that too much unrecyclable waste came mixed with paper and plastic bundles.

“We’re definitely seeing a market disruption,” confirmed Veronica Pardo of the California Refuse Recycling Council. “Recycling revenues are down statewide, and because of China and new regulations around recycling we are going to have to find new markets.”

China’s ban also triggered a domino effect of recycling contractors passing on the costs of a losing business model to cities, forcing city leaders to decide whether to pay more or recycle less.

“After China decided not to receive much of the world’s recyclables, the recycling market has been thrown into turmoil. That was the pressure that was reflected in the Allan Co. contract,” explained Santa Monica Mayor Gleam Davis, who voted to continue contracting with the Allan Co.

“The global market in recyclables is undergoing cataclysmic change, and I think the majority of the council felt entering into long-time contracts at this point was fiscally imprudent,” said Councilman Kevin McKeown.

A group of 10 people, led by a Santa Monica resident employed by the Allen Co., briefly demonstrated against the recycling facility closure outside Santa Monica City Hall.

Davis said the council will consider new recycling program options in the fall.

“It’s possible that we could move to a redemption center for bottles or other recyclables at another site — a place where people could take them after they collect them, because we do have people in our community who augment their incomes by turning in recyclables,” she said.

Los Angeles Bureau of Public Works spokeswoman Elena Stern declined to elaborate on whether China’s ban could result in facility closures in Los Angeles, but wrote via email that the policy has forced recyclers to seek more stable markets for recyclable goods in the U.S., Canada and Mexico.

“While this dependence on China clearly poses a challenge, it also represents an opportunity for an emerging industry with the development of green businesses and creation of new, green jobs here in the U.S,” Stern wrote.

Trevor Zink, an assistant professor of management at Loyola Marymount University’s Institute for Business Ethics and Sustainability, has studied the politics and economics of recycling for more than a decade. He believes the current market crisis is an opportunity for Americans to look at environmental sustainability in a new way.

“For cities, if there’s no market, then paying all of the associated costs no longer makes economic sense,” Zink said. But, “If recycling makes sense from an environmental standpoint, then maybe it’s worth doing even if it doesn’t makes economic sense. … The only reason it would make environmental sense to continue to recycle is if you’re preventing a higher environmental impact than you’re creating.”