Waste paper trade and recycling: The implications for development and environment in India

The objective of this study is twofold, to assess the benefits of wastepaper import to India, and the benefits of waste paper export from the United States. This study is significant because it focuses on trade of non-hazardous waste for recycling purposes, which is neglected in current discussions on the trade and environment. The impact of non-hazardous waste import for recycling is especially great in developing countries because it serves as a source of raw materials for resource-poor countries, and affects the local recycling industries.

This is a case study of wastepaper import to India. It examines the solid waste management, the paper and recycling industries. It points out structural weaknesses of each, and hypothesized that waste paper import benefits India by: (1) alleviating the pressure on the forests; (2) reducing pollution; (3) providing additional raw materials to the paper industry; and (4) producing high quality paper for the Indian public.

This study incorporates a cost-benefit analysis using a classical supply-demand model. The analysis reveals that the import of wastepaper to India from 1980 to 1990: (a) did not reduce the use of virgin materials; (b) displaced some domestic wastepaper in the paper industry; and (c) did not increase paper production. Thus, the first three of the hypothesized benefits were not realized.

The reasons for this are: (1) the market distortion arising from the dichotomy of the industry which left one section of the industry untouched by the imports, and (2) the industry's inflexibility to utilize imported wastepaper. The current arrangement to provide large mills with cheap virgin materials does not encourage large mills to be efficient and shift to use wastepaper which is cheaper, better quality, more energy-efficient, and less polluting than virgin materials. Wastepaper import had some impact on the recycling industry by providing useful competition.

The author's recommendations assert that the best policy for India to vitalize the paper and recycling industry is to correct the existing market distortion. This can be achieved by eliminating the subsidy and setting a quota on logging, and to encourage waste paper import consistently.

A similar analysis was done for an exporter of waste paper, the US. As expected, the analysis reveals that the US benefited from the export environmentally and economically.

Overall, wastepaper trade between developing and industrialized countries can be beneficial to both.