Recycling and Reuse: Are Financial Incentives Necessary?

Call me cynical (and you’d be right), but I think that humans as a species have a couple of basic tenancies. We want life to be better and want to do less to make it so. In other words, we want more comfort and convenience at less cost. That is why we live in a consumer based society with disposable products. We also focus almost entirely on short term gain vs. long term gain. There are obviously exceptions to these rules – like our friends the Mennonites – but in general I think this holds true.
So here comes the million dollar question. If the above is true then how do we solve the environmental problem since it is a long term problem (vs. short term) and most of the solutions come at a higher cost and less convenience. Even a simple tasks like recycling takes time and energy (vs. throwing everything in the trash can) and has no immediate reward (only long term). With all this said I do also think that people want to do the right thing. However wanting something is less powerful than doing and the act of doing is governed by the aforementioned rules.
The solution is incentive. A fantastic case study in RecycleBank’s approach to recycling demonstrates this point. Recyclebank simply pays people to recycle. Prior to recyclebank recycling rates in Philly were under 30%, after recycle bank they were above 80%. Amazing.
TerraCycle (my company) runs brigade programs where millions of Americans sign up to collect waste (from Oreo wrappers to Stonyfield yogurt cups). Currently we donate $0.02 to $0.06 per unit of waste collected to the charity of the collectors choice. So here is my question: do we need to be giving out $0.02 to $0.06 per unit of waste? Over 1 million Americans are now sending specific non-recyclable waste to TerraCycle, postage paid, with the contribution to the charity of their choice. What will it take for you to collect your packaging waste and send it to TerraCycle (or another company), rather than sending it to an landfill? Is $0.02 or $0.06 not enough?

Tom Szaky is the Founder and CEO of TerraCycle, Inc. a company that makes eco-revolutionary products entirely from garbage! TerraCycle, since its humble beginnings in a Princeton University dorm room, is committed to being a triple bottom line company. Tom at the ancient age of 19 learned about composting with worms. The concept of using tiny little worms to turn food waste into a powerful, organic fertilizer fascinated Tom, who was appalled by the amount of food discarded by his campus's cafeteria. Tom started TerraCycle with no investors from a friend's garage by building a Worm Gin where he could house millions of worms in a small area. He all but bankrupted himself and maxed out all his credit cards to build the machine. With the help of friends he would shovel pounds of rotten, maggot-infested food from the Princeton cafeterias. Without any money left over, Tom could not afford to buy bottles to package his fertilizer. That's when the sustainability gods smiled on Tom, who was up one night wandering the streets Princeton in search of an answer to his packaging dilemma. It just happened to be recycling night and Tom realized that millions of homes were putting billions of free bottles out on the curb once a week! That serendipitous moment set everything to follow into motion. Slowly he began to finance his infantile start up by winning business plan contests. Finally he hit the pay dirt! He won the million dollar grand prize at the Carrot Capital Business plan contest. However, the financiers of the contest wanted to move TerraCycle away from used bottles and away from it's environmental focus. Despite being on the verge of bankruptcy, Tom turned down the money. In the six years since then TerraCycle has grown to a multi-million dollar company that doubles in size every year. Still we are committed to our triple bottom line beginnings. Still making our products from other's people waste. Still based in an Urban Enterprise Zone in Trenton, NJ. Still a second chance employer. Find out how and why, here at triplepundit.com

6 responses

  1. Unfortunately, I think we have moved so far into the “what's in it for me?” mentaility that it really WILL take a financial incentive to get people to re-think you they deal with their waste.
    Also, there seems to be this mindset that “being green” is solely a liberal agenda. There needs to be a shift in thought for people to become more consious of what they are doing to our planet. Maybe it does need to start with a financial reward to do the right thing. I guess it can't hurt.

  2. Mr. Szaky, I support your idea of compensation for recycling to individuals because people will be people and generally they won't do an extra effort unless it's in one's habit or one is allowed to make it a habit. In this case, people are made to think twice before throwing recyclable material away because of the benefit attached and philanthropy.

    I come from India and was wondering how can this idea be implemented in a place where there is mass illiteracy and less awareness of the existence of the concept of recycling.

  3. Unfortunately, I think we have moved so far into the “what's in it for me?” mentaility that it really WILL take a financial incentive to get people to re-think you they deal with their waste.
    Also, there seems to be this mindset that “being green” is solely a liberal agenda. There needs to be a shift in thought for people to become more consious of what they are doing to our planet. Maybe it does need to start with a financial reward to do the right thing. I guess it can't hurt.

  4. Mr. Szaky, I support your idea of compensation for recycling to individuals because people will be people and generally they won't do an extra effort unless it's in one's habit or one is allowed to make it a habit. In this case, people are made to think twice before throwing recyclable material away because of the benefit attached and philanthropy.

    I come from India and was wondering how can this idea be implemented in a place where there is mass illiteracy and less awareness of the existence of the concept of recycling.

  5. At my organization that educates about 25,000 students annually in one county about waste diversion, we no longer actively promote TerraCycle. We educate on the concept of REDUCE, making the decision to buy what you want in bulk and use reusable containers. We found students were then encouraging their parents to buy the items you collect just so they could collect them.

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