Recycling of Plastics: A Materials Balance

Optimisation Model
P. FOLKERT STARREVELD* and EKKO C. VAN IERLAND**
* Bdt3 Consultants, Researcher, Rotterdam; ** Wageningen Agricultural University,
Environmental Economist, Department of General Economics, P.O. Box 8130,
6700 E W Wageningen, the Netherlands

Abstract. At present the volume of solid waste produced in modern consumer societies is

increasing, requiring policy measures to reduce the volume of waste to be dumped or

incinerated. In this article a materials balance optimisation model for the recycling of plastics
is developed to analyse the impact of policy measures that stimulate recycling. The study
presents the structure of the optimisation model and it gives the results of a charge imposed
on the dumping and incineration of plastics. The calculations show that considerable effort
should be made to reach the recycling targets for plastic that have been set by the public
authorities for the year 2000.
Key words. Recycling, plastics, waste management, environmental economics, optimisation,
materials balance.

Introduction

The increasing volume of solid waste produced in m o d e r n consumer society

requires policy measures that reduce the quantities of waste to be dumped or
incinerated. The optimal method of treating plastic waste can be calculated
by means of an optimisation model given various constraints. Such a model
makes it possible to establish the impact of various environmental policy
instruments on the rate of recycling of plastic products and plastic materials.
Large quantities of plastic wastes are produced annually. Despite considerable efforts to implement m o r e recycling, the total quantities of waste
are still growing. Proper waste treatment facilities are not generally available
to treat this waste and large quantities of waste are dumped or incinerated.
The incineration of plastics leads to considerable emissions of dioxin which
are detrimental to human health even in the smallest quantities. A b o u t 1% of
the total volume of waste produced in the Netherlands consists of plastics
and the use of plastics is increasing annually, mainly because the light weight
and durability of plastics lend it a distinct advantage over some other
materials.
Public authorities in the E u r o p e a n Community have tried to stimulate
waste prevention and recycling, but with little success. 1 In the Netherlands,
an effort is being made to recycle about 42% of plastics by the year 2000
(Ministry of Physical Planning, Housing and Environment, 198 9). At present,
only about 10% is actually being recycled. In absolute quantities, the amount
Environmental and Resource Economics 4:251--264, 1994.
1994 KluwerAcademic Publishers. Printed in the Netherlands.

252

P. Folkert Starreveld and Ekko C. Van [erland

of recycled plastics in the year 2000 has to be 5 times as high as at present.

Figure 1 gives an estimate of quantities of plastic waste in the Netherlands
for 1986, 1994 and 2000.

Quantities of plastic waste

in the Netherlands
950.000
toR
850.000
ton

6%

10%
26%

90%

1986

68%

1994

2000

Year

[] Dumping/incineration ~ Recycling [~ Waste prevention

Fig. 1. Quantities of plastic waste in the Netherlands 1986 (dumping, recycling and waste
prevention) and targets for 1994 and 2000.

Also, the policy targets are indicated. Data for The Netherlands has been
used as a case study for the empirical validation of the optimisation model.
In this article the structure of the materials balance optimisation model
and the model results are discussed.

1. The Aim of the Optimisation Model

Despite many options for the use of plastic waste material, the re-use and
recycling of plastics is limited to about 10% of the annual volume of waste.
In comparison to other materials like paper and glass, this percentage is very
low. If the conditions now preventing the more frequent recycling and re-use
of plastics were modified, better results could be achieved. The limited size
of the market for recycled plastic and the low profitability of plastic recycling
are the main, obstructing conditions. If public authorities are to reach the

Recycling of Plastics

253

specified policy targets, then these barriers should be removed in close cooperation with plastic producers and consumers. Public authorities have a
number of policy instruments available, such as charges and subsidies or
direct regulations for deposit systems (Baumol and Oates, 1987). The choice
of policy instruments is mainly determined by the effectiveness and efficiency
of the instruments. To select the optimal policy instruments, a materials
balance optimisation model may be helpful. The model is designed in such a
way that we can show the impact of a fuel tax and an increase in waste
dumping tariffs on the rate of recycling and waste dumping. Recycling of
wastes is not only beneficial in reducing the volume of waste, but it may
also contribute to energy conservation and the reduction of CO 2 emissions
(Okken et al. (eds), 1989).
Hereafter, we discuss the main structure of the model and the technical
possibilities for recycling plastics. We also analyse which economic factors
play a role in the decision-making process on the re-use and recycling of
plastics.

2. Technical Aspects
In general, the following possibilities for the reduction of the volume of waste
plastics are distinguished::
waste p r e v e n t i o n . Waste prevention can be effected both on the production and the consumption side of the economy. The plastics industry
could explore processes that reduce the wasting of plastics in the production process. Consumers could reduce the quantity of plastic waste by
using wrapping materials and bags that can be used several times, instead
of "throw-away" packing materials)
- - p r o d u c t recycling. Product recycling makes it possible to use the same
product several times. The advantages of product recycling can be
realised in the conservation of energy and materials in packaging and
distribution industries, for example, where bottles and crates are re-used.
- - m a t e r i a l recycling. Material recycling of plastics has two applications: the
material may replace similar materials or it may be used to replace other
materials, like paper or aluminium. A disadvantage of material recycling
is that it is often impossible to use the material for the original purpose.
Plastics become polluted when thrown away with other waste material.
Also the quality of recycled plastic is much lower than that of "virgin"
material. Instead of a full recycling process, a sequence of degradation of
material quality is taking place. Waste generated from high quality plastic
is ultimately transformed into low quality (material replacing) applications. 4 The stages of degradation can be shown by means of a so-called
"cascade diagram" (Fig. 2). The rate of degradation can be reduced by the
avoidance of pollution, and the mixing of different plastics, implementing
--

254

P. Folkert Starreveld and Ekko C. Van lerland

Qualityrequirements
of the users

,,Virgin"-material
required
Regranulate made of
waste o~ higher or

equalized
applications

..... iol

Rate of pollution of the material

Fig. 2. An example of a cascade diagram for three stages (according to VNCI, 1989).
well-designed systems of separate garbage collection. Another way to
achieve high quality recycled materials is the separation of mixed quantities of plastics from other household waste. However, the costs of these
techniques are very high and fully automatic separation seems t o be
impossible at present.
Thermal conversion (hydrolysis, pyrolysis, gasification). Apart from the
above mentioned techniques, methods are available to decompose plastics
by means of thermal conversion techniques. This is sometimes called
tertiary recycling. The advantage of these systems is that they can be used
for quantities of mixed plastics, to some extent. The remaining fractions
can be used to fabricate new plastics, s
3.

Economic

Aspects

An important pre-requisite for recycling is economic feasibility. The recycling industry should have an opportunity to realise sufficient value added.
Value added can be calculated in cost benefit analysis at the going market
prices. The following costs and expenditures are relevant: 6
-- costs of recuperation;
-- costs of separated garbage collection;
- - treatment costs of residuals;
-- avoided costs of waste dumping;
-- revenues from secondary materials.
Costs of recuperation are costs that are made to upgrade waste material for
further processing. It covers transport costs, storage costs and primary
treatment costs. Avoided costs of waste dumping are the costs that otherwise
would be made for disposal of the waste through dumping or incineration.
Value added for recycling can be calculated in the following way:7

Recycling of Plastics

255

Value added = revenues + avoided costs of waste dumping - / - costs of

separate garbage collection - / - recuperation costs - / - treatment costs of
residuals.
Depending on the source, type and quality of the waste and the cost
structure, this calculation may lead to positive value added or negative value
added. For analysing the potential value added, three categories of waste can
be distinguished: (a) waste that is produced by plastic manufacturers, (b)
waste that is produced by manufacturers of plastic products, and (c) waste
that is produced by the consumers of plastic products. For the first two
categories, in general, positive value added can be realised. Waste is usually
released at single locations and in large quantities, thus reducing collection
and treatment costs. For the third category, value added at present is
generally negative. The waste is released in small quantities at many different
locations and mixed with other garbage. Costs for separate collection are
high. The same is true for separation after garbage collection (U.S. EPA,
1990).
4. The Structure of the Model

The materials balance optimisation model is designed on the basis of the

cascade diagram shown in Fig. 2. The structure of the model is largely
determined by the way in which the cascade for plastics is defined and
elaborated. With the quality requirements of the users and the rate of
degradation and pollution of the material as variables, we may discern the
following stages in the cascade:
1. "virgin" applications: applications for which material is required that has
not yet been used. Examples are packing materials for food and drinks
and high tech applications. The quality standards of the users are
reflected in the high quality of the material.
2. High standard applications: applications for which the use of first order
regranulate is required. These products can also be made of virgin
material. The regranulate and the virgin material are, in these applications, full substitutes for each other. Examples are applications for nonfood packing materials, foils and plastic car parts.
3. Low standard applications: applications for which the use of low quality
regranulate is sufficient. The applications are often for thicker plastics,
which means that small defects and pollutions of the material are acceptable. Examples are garden furniture, poles for fences and other wood
replacing applications.
These three stages are shown in Fig. 3, demonstrating the main structure of
the model. In the upper part of the figure, the production of virgin material
takes place. Crude oil is converted into raw material that, in its turn, is
converted into plastic granulate. Next, the granulate is used in virgin applica-

256

p. Folkert Starreveld and Ekko C. Van Ierland

(2) ~rodueg roey=li~

(3~ ~ h i ~ ;
a~vlrl~o~

Fig. 3. The main structure of the materials balance optimisation model.

tions as well as in high standard applications (middle of Fig. 3). However,

high quality applications can also be made of high quality, recycled material.
In this case, conservation of crude oil and virgin material takes place, while
the waste is properly recycled instead of incinerated or dumped. High quality
waste can be obtained from process and production waste, provided that the
material is separately collected. High quality waste can also be obtained from
product waste, provided that the material is collected by means of deposit
systems, guaranteeing the pureness of the collected waste. 8 However, even
then, the wastes are often polluted by remaining food deposits etc. which
implies that this kind of waste material should be cleaned in the process of
recuperation. A typical example is the PET-bottle 9 for consumer products,
used in several countries in Europe. It is made with a hard plastic which is
suitable for product recycling.
In the lower part of Fig. 3 the processing of low quality applications takes
place. These applications can be made on the basis of mixed and polluted
waste material. During the process of recuperation, the waste is cleaned and
upgraded to regranulate. The regranulate can be further processed by means
of compatibilisors,l into low quality applications.
An alternative way of processing mixed and polluted waste is thermal
conversion. The obtained raw material can again be used for the fabrication
of plastics. The model also contains the option to upgrade mixed waste for
high quality applications, However, in the process of recuperation this
requires complex and expensive separation and identification techniques.
Finally, the model allows direct product recycling. If virgin and high quality
products are collected, they may be used directly for the original purpose,
and in the case of bottles, for example, cleaning and disinfection is a
sufficient treatment.
5. The Functioning of the Model

The model is a static, step-wise, linear optimisation model. The driving force

Recycling of Plastics

257

behind it is the demand for plastic applications categorised as (a) "virgin", (b)
high quality and (c) low quality applications. Given the demand for these
products (DEMa, DEMb, DEMc), the price of crude oil (Poil), the costs and
the technical conversion parameters (r, s, t, u) for the different processes and
garbage collection systems, the model calculates the "optimal" way to satisfy
demand. In other words, the model determines, by means of the optimisation
procedure, which recycling technologies and garbage collection systems
should be used to reach the lowest cost solution, from an overall point of
view. The degree of waste prevention, recycling (high quality and low
quality), product recycling, thermal conversion and finally, the dumping and
incineration of waste, is simultaneously determined in the "optimal" solution.
The objective function is as followsP 1
Min (Poil * Xoil -t- CRA c * Xcr a -1- PRO c * Xpro + FAB~ i * Xfab "JF
+ C O L c * XcoI + P R O R c * Xpror + REC c * Xrec +
+ T H E R c * Xther + INC~ * Xin~+ D U M c * Xdum)

(1)

The most important constraints are:

Xfabl - - Xpror 1 > D E M a

(2)

Xfabl -1- Xfab2 - - Xpror 2 > D E M b

(3)

Xfabl -~- Xfab2 "~- Xfab3 - - Xpror 3 > D E M c

(4)

Xco I = Xdu m -1- Kin c q- (1/r * Xther ) -1-

(1/s * Xrec) + (1/t * Xpror )

Xfa b = U * Xre c

where:

P
X
suffix c
CRA
PRO
FAB
COL
PROR
REC
THER
INC
DUM
r, s, t, u

(0 < r , s , t < 1)

(5)

(0 < u < 1)

(6)

price
quantity
costs for relevant process
cracking process
production
fabrication
collection
product recycling
recuperation
thermal conversion
incineration
dumping
conversion parameters for respectively, thermal conversion, recycling, product recycling and recuperation.

258

P. Folkert StarreveM and Ekko (L Van Iedand

To determine the effectiveness and efficiency of the various policy instruments for stimulating waste prevention and recycling, we may impose charges
on the prices of raw materials, on processes and on certain products. Also we
can analyse the effects of changes in the prices of certain processes or
materials. In the case of a charge on the use of virgin material, the production
costs are increased thus reducing the profitability of this process. The model,
through its optimisation procedure, will "search" for alternative solutions to
meet the demand for plastics for the various categories. In this way the
impact of the policy measures on the full system become evident. The
efficiency of the policy measures can be established by plotting the effect of
the measures against the additional supply costs of the plastics. The cost
effectiveness of the policy measures is, therefore, established. In this article
we are focussing on specific charges. Other possible policy instruments are
charges on collection and incineration or a system of deposit refunds on
containers. The latter would place the cost of collection on consumers rather
than producers. Other policy measures to be analyzed are quotas on incineration or dumping -- perhaps supported by a system of tradable rights for
plastic disposal.
In Fig. 3, no distinction is made between the types of granulate and their
applications. In the actual model, we discern four types of plastics, i.e.
polyethylene (PE), polypropylene (PP), polyvinylchloride (PVC) and polystyrene (PS). These four types of bulk polymers are together responsible for
about 85% of the total volume of plastic waste. For the applications, we have
used four categories: 1. packing materials; 2. construction materials; 3.
plastics used in transport equipment; and 4. other applications (which
include, inter alia, agricultural, domestic applications and textiles). Basically,
each category can make use of the four types of plastics. Packing materials,
for example, can be made of PE, PP, PVC, and PS. In practice however,
plastics are not perfect substitutes for each other. Each type of plastic has its
own characteristics. A PET-bottle, for example, is completely different from
a PVC-bottle. For this reason, the model actually distinguishes 16 types of
application. Within each application, the different types of plastic can replace
each other partially. The model does not yet take into account that some
products consist of a combination of different types of plastics (laminates). In
the present version of the model we consider private costs augmented with
charges. If proper estimates of environmental damage costs were available
these could also be included in the model calculations.
6. Results

The model has been used to calculate the impact of a charge on the dumping
and incineration of plastic wastes. The calculations have been carried out by
means of the software package LINDO. 12 In the calculations, the total
demand for plastic is taken from the Dutch statistics for 1986, which is

Recycling of Plastics

259

considered to be the base year. The total demand is based on the actual
demand for the categories of polymers PE, PP, PVC and PS. 13 The demand
is specified according to the above mentioned categories of applications. We
have assumed that the virgin applications are mainly determined by the
demand for packing materials for food and refreshments, and the demand for
high-tech applications. The demand for high quality applications is by far the
largest (about 70%) and mainly consists of the demand for foils for non-food
applications. Finally, the demand for low quality applications is determined
on the basis of the base year figures. These applications amount to about 1%
of the total demand and consist of applications for garden furniture, poles for
fences and road marking. The market for these applications is, at present,
still very small.
We have used the following loss fractions for the conversion coefficients:
in plastic production 1%, in plastic products fabrication 4% and in recuperation about 10%. The price of crude oil is estimated at about USS 20 per
barrel. For dumping and incineration of plastics, the costs are estimated at
respectively USS cents 2.5 and 9 per kilogram (USS 0.025 and 0.09, respectively). Finally the costs of thermal conversion are estimated at USS 2.4 per
kilogram. If the quantities are increased, these costs are increased step-wise
linearly to USS 6.5 per kilogram, due to increasing costs per unit. The
estimation of the conversion factors and actual costs for the different processes needs further analysis. However, it is felt that the figures used are
reasonable estimates of the relevant parameters. However, not all actual cost
figures are available in published statistics and costs may change due to
technological progress.
On the basis of the presented input data, the model produces the base
case solution as presented in Fig. 4. In this solution the model chooses two
ways of recycling: materials recycling and product recycling. On the basis of
the presented input data that reflect, grosso modo, actual market prices, the

Base-case solution
Incineration
60%

Dumping
30%

Fig. 4. The base case solution.

260

P. Folkert Starreveld and Ekko C Yan Ierland

model calculates that about 10% of the total volume of plastics waste is
recycled or re-used. It calculates that 60% should be incinerated and 30%
should be dumped. At the going prices, thermal conversion is not profitable.
We have carried out 11 optimisations to calculate the impact of a charge
on the price of dumping and incineration. Apart from the base-case solution
we have calculated 10 optimisations, using increasing charges on dumping
and incineration of plastic wastes. By comparing the base-case solution and
the other solutions we can establish the impact of the charge at different
levels. Figure 5 gives the results of the calculations.
Plastic waste (1000 ton)

0.05

0.1

0.15

0,2

0.25

0.3

0.35

0.4

0.45

0.5

Charge per kilogram (in US$)

[] dumping

[] incineration

[ ~ mat.recycling

~ prod.recycling

[]

therm.conversion

Fig. 5. The impact of a charge on dumpingand incineration.

The first remarkable result is that product recycling is preferred to
materials recycling. Thermal conversion is too expensive and is not used at
all and is not stimulated by the charge. Secondly, it becomes clear that the
charge should be rather high in order to have a substantial impact. For
example, if we want to attain about 25% of waste recycling and re-use, then
we have to charge about US S0.30 per kilogram of plastic. Such a charge is
extremely high, in comparison with the costs of dumping and incineration,
which amount to US S0.03 and 0.09 respectively. The relative ineffectiveness
of the charge is due to the fact that the base-case solution already recycles
the (relatively clean) process and production waste. This implies that recycling can only be increased by using product waste coming from households
and offices. This type of waste, however, is only suitable for recycling if
separate waste collection is taking place and at present this is very expensive.
The share of product and materials recycling is further specified in Figs. 6
and 7. Product recycling clearly identifies three steps. Without the charge,
only 3% of the used products are recycled. A charge of US S0.05 to US
S0.25 leads to 9% recycling. A charge of US S0.30 and more leads to
product recycling of about 15%. The rather large "steps" that the model

261

Recycling of Plastics
Product recycling (1000 ton)
120 -1

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

0.5

Charge per kilogram (in US$)

[ ] Packing materials ~ Constr. materials [ ] Transport [ ] Others

Fig. 6. The impact of the charge on product recycling.

Material recycling (1000 ton)

250
20 n 2

. . . . . . .

Charge per kilogram (in US$)

[]

Process waste

V~ C o n s t r . m a t e r i a l s

~ Production waste [ ] Packing materials

[ ] Transport

[ ] Others

Fig. 7. The impact of the charge on materials recycling.

takes, can be explained by the fact that the model only includes a limited
number of applications. If a larger number of applications is taken into
account and if more step-wise linear relationships are being used, then these
steps will automatically become smaller.
The same analysis is true for materials recycling. For a charge below US
$0.35 relatively little impact can be noticed. Only if the price of virgin plastic
granulate rises to the level of the price of regranulate (obtained after
recycling), can we expect manufacturers to shift towards the processing of
regranulate. Particularly the production of regranulate on the basis of
packing materials will be strongly stimulated.
The efficiency of the charge on dumping and incineration is shown in Fig.
8. The costs that are shown are excluding the charges that are transferred to

262

P. Folkert Starreveld and Ekko C. Van ieHand

Total c o s t s (Billion US$)

0.6

0.5

. . . . . . .

0,4

0.3
j~
0,2

.
/ J

,J

0.1L
0

~j,o~j~

....

10

20

30

40

50

60

70

60

90

1 O0

A l t e r n a t i v e t r e a t m e n t (in %)

Fig. 8. The costs of alternative options for plastic waste treatment.

the public authorities and finally reimbursed to the manufacturing sector.

Figure 8 clearly shows that the costs of alternative ways of processing, show
an upward sloping pattern. It reveals that the first tonnes of material can be
recycled at relatively low costs. Increasing quantities can only be recycled at
higher costs per unit.
The model also makes it possible to calculate the impact of other policy
measures. A comparison of the effects of the different policy measures can
identify the most effective ones in decreasing the quantity of plastic waste
being dumped or incinerated.

7. Conclusions
The aim of the analysis was to construct a materials balance optimisation
model for the recycling of plastics, in order to establish the effectiveness and
efficiency of various policy instruments to stimulate the recycling of plastics.
The effectiveness is established by calculating the impact of a charge on the
dumping and incineration of plastic waste. The calculations show that we
need a rather high charge, as compared to the actual cost of dumping and
incineration, to obtain significant results for the quantity of recycling. The
calculations show that product recycling is preferable to materials recycling.
The model, in its present state, is rather sensitive to small changes in the
charges. This is due to the fact that the model includes only a limited number
of plastic applications and that only one step-wise linear cost function is
applied. Introducing adjustments in this regard will make the model more
realistic and less sensitive, leading to a more natural reaction pattern.
Concerning the efficiency of the policy measures, the model shows the
total system costs for the different options, thus revealing the additional cost
per unit of reducing dumping and incinerating.

Recycling of Plastics

263

T h e analysis can be i m p r o v e d in a n u m b e r of ways. First the data and the

values of the parameters could be m o r e carefully studied. M o r e important
h o w e v e r is the dynamisation of the m o d e l and the introduction of technical
progress, also for new applications of recycled material. In the present
research project we limited ourselves to a (step wise) linear static analysis.
A n alternative would be to use comparative static analysis for changes in
parameters and exogenous variables. H o w e v e r , the analysis could also be set
in a dynamic context, further analysing the continuously growing m a r k e t for
plastics and recycled plastics. In this way, a dynamic scenario study for
plastic recycling could be carried out. T h e m o d e l would then m a k e it possible
to answer the question whether, indeed, it will be possible to reach the
targets for plastic recycling for the year 2000, as specified by the public
authorities. Also, it could p r o v i d e m o r e detailed answers about which policy
measures should be taken to reach the specified goals.

Acknowledgements
T h e authors kindly acknowledge the useful c o m m e n t s of two a n o n y m o u s
reviewers on a previous version.

Notes
OECD, Household waste, separate collection and recycling, Paris 1983.
2 See for example Curlee, T. R., The economic feasibility of recycling: a case study of plastic
wastes, Preager Publishers, New York, 1986.
3 See Van Weenen, H., Waste prevention: theory and practice. Pallas Offset BV, The Hague,
1990.
4 Recuperation refers to the processing of waste to make it suitable for re-use. In general
it consists of the following stages: transport, separation, shredding, agglomeration and
purification.
Morn, A. J. A., Environmental technology for recycling 1991--1994 (in Dutch). Civi
Consultancy, Leidschendam, 1991.
6 See for example E. Doekemeijer and E. C. van Ierland, Recycling of domestic waste (in
Dutch), Economisch Statistische Berichten, 2 (1987), pp. 166-- 168.
7 See Glenn, J., Recycling Economics Benefit-Cost Analysis. BioCycle.
s It is assumed that a product contains only a single plastic and is not a composite product.
9 PET means polyethyleneterephtalate.
i0 Cmpatibilizers make ne ldnd f plastic cmpatible with anther"
~ CRAc, PROc, FABc, etc. are the costs per unit process-output. X.... Xpro, Xfab, etc. are the
amounts of output,
,2 LINDO, Linear, Interactive, and Discrete Optimizer. Erasmus University, Rotterdam 1983.
~3 Kremers G. and R van Ooyen, The market for plastics in the Netherlands (in Dutch).
Kunststofen rubber (1988), nr. 11, pp. 14--25.

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P. Folkert StarreveM and Ekko C. Van ferland

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