This is starting to become a serious interest of mine. Previously, I did a post on bio-diesel made from chicken fat (here) and how it may mark the beginning of a waste product aftermarket within green economies. I will also write a piece on a company I am currently reading up on, Total Reclaim. (here) Although the idea itself is nothing new, I feel I need to make a theoretical framework for this.
Essentially, for our 21st-century economy, a new economy, the “green economy,” going green is expected to be the next big thing. This proposition has been made solely on the popular value judgment that there is a rising demand for eco-friendly products. There is nothing new about this. We can already see this with products ranging from toilet paper made from recycled paper to cell phones made from recycled materials.
There is nothing new about recycled products or aftermarkets either. If businesses are able to find ways to cut down and recoup costs by either adding value on site through production or from scrap, most are going to do so. (see auto aftermarkets as a popular example) Marketing products as green helps signal to eco-conscious consumers that these particular products (such as the cell phone linked above) will lower ones environmental footprint.
But is there necessarily a market for it? I believe that currently, there is, but it is fractured and not on par with the types of commodity markets we have today. Most business decisions regarding recycled products are not core competencies, but are more along the lines of reducing the marginal unit cost of particular products and their waste. These are the questions I want to continue to ask as more and more examples show up throughout the U.S. (and the world) on how businesses start to shift to waste products as a revenue source rather than efficiency measures.
How do I believe this change will happen? Remember, most of the important part of the surge in the waste product aftermarket is the demand to go green. Businesses have incentives to offer value for eco-friendly consumers as the demand to go green becomes even more popular. But how far will it go? As businesses start to take advantage of utilizing new technologies and implementing cost effective production techniques, cost for recycling will severely plummet. As profitability ensues, businesses will be able to acquire capital in order for them to grow. Then industry consolidation should be in order as businesses begin to attain economies of scale. By then, these companies will be able to sell their products on an open market commodities exchange, much like what we do with many natural resources available today. And the incentive for doing this? Commodities will be facing a long-term supply shortage as more and more countries begin to develop, demanding more resources and putting a strain on what is currently available. These forces will drive up the price of commodities, (a long-term trend we have currently experienced via China and other nations) making recycled materials an economic reality. And the best part is that it won’t be dependent upon the demand for green products anymore, but a means for making our industrial ecology more efficient.
This is the value proposition I am making for the future of our world economy. Technologies continue to be developed that make the production and reduction of physical goods not only a scientific reality, but an economic one. As more and more technological breakthroughs make it through the news, I will be there to comment on it. (here) As more and more environmental policy creates a more economic reality, I will be there to comment on it. (here) As more and more unexpected impacts from economic decisions influence the way we produce and consume products, I will be there to comment on it. (here)
I will continue my posts for waste product aftermarkets in parts as more and more real world cases come to light, charting the progress of this future. I believe that this is the most realistic avenue that our world can move in, not only for the betterment of the world, but to push possibilities farther then we have ever imagined.