The business of recycling

Good for the planet but not immensely profitable

Earlier this year, for-profit Contra International faced a problem with a decidedly not profitable recycling initiative it operates in Lebanon. The company was doing a residential door-to-door pick up of paper, cardboard, aluminum and all types of plastics, losing money in the process. Residential pickups were not in the company’s plans when it started its initiative, Zero Waste Act, in 2011. Salim Barakat explains that, based on opinion surveys Contra conducted, the company started its recycling work in schools as it found that older Lebanese were unwilling to sort their trash at home. The idea was to “focus on the new generation.” It worked well, he says. Kids soon began pestering their parents to sort at home, and those parents brought the idea to work with them, so Contra’s first pick up expansion was to offices. Home pick up followed later, and Contra was collecting free of charge. In May, that changed.

Barakat says that residential clients were calling to have their recyclables picked up when 60-liter capacity garbage bags began overflowing. People wanted to remove what appeared to be massive amounts of waste from their homes. In reality, Barakat explains, that 60-liter bag only actually amounts to a kilogram or two of plastic – which Zero Waste Act then sells on to local industry by the ton – meaning the “valuable” recyclables being picked up don’t cover the cost of retrieving them. He says in four years of collecting, Zero Waste Acts’s revenues from selling recyclables have yet to cover the initiative’s operational expenses. In May, he says, Zero Waste Act began charging a fee for at-home pick up. Barakat says the company was picking up recyclables from more than 800 homes before imposing a fee. The number plummeted afterward. Two months later – after the Naameh landfill was closed and Lebanon plunged into its smelliest crisis yet – he says his phone does not stop ringing as he shows Executive a four-centimeter-thick stack of new Zero Waste Act member applications.

Waste ideology

Bassam Sabbagh, the Ministry of Environment’s solid waste expert, does not believe Lebanese people will sort their trash at home. The ministry has ignored the magazine’s interview requests in the past two months, but in previous conversations, Sabbagh has correctly noted that not even Californian residents sort at source 100 percent, from which he concludes Lebanon is a hopeless case, despite evidence to the contrary supplied by Zero Waste Act and several NGOs with recycling programs. That said, recycling is not a cash cow. Barakat notes that prices paid for some recyclables – particularly plastic and aluminum – are volatile. He admits that, in the past, Zero Waste Act would store these materials in a warehouse to wait for prices to rebound.

Arcenciel, another NGO that has been recycling also since 2011, is also not making money from the operation. “Currently, the revenues we make from selling recyclables,” says Arcenciel’s Olivia Maamari, “do not cover the costs of the services we provide.” The limited economic value of recyclables was a lesson learned in Saida as well. When IBC – a private company with Lebanese and Saudi partners – wanted to build a waste treatment plant in the coastal city, CEO Nabil Zantout tells Executive that initially, the idea was not to charge municipalities for bringing their waste there as profit would come from selling recyclables. Zantout says reality soon set in, and the plant now charges $95 per ton to receive trash.

The known unknown

There is an informal recycling sector in Lebanon as well, but Executive has not found any research on the contribution of scavengers to recycling in the country. Zantout explains that IBC loses some potential revenue to this gray market, but he views it as minimal. Some municipalities have even banned scavengers (Executive saw a sign announcing such a ban in Kfar Aabida, south of Batroun). What their existence indicates, however, is a local market for recyclable materials, even if the size of that market is difficult to estimate. Everyone Executive interviewed for this article says they sell recyclables locally. It is unclear how elastic demand is, but the answer to that question may present itself if and when municipalities start ramping up their own recycling efforts – as envisioned in the latest national waste management plan. What is clear, however, is that recycling will not completely fund municipalities’ trash schemes. An expert who helped write Agriculture Minister Akram Chehayeb’s waste plan notes that recycling revenues are unlikely to cover more than “15 to 20 percent” of municipal garbage bills.

Matt Nash

Matt is Executive's Economics & Policy Editor. He has been reporting on Lebanon since 2007 with a focus on oil and gas, policy and legal matters.

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