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Cost Benefit Analysis of Aseptic Carton Recycling in Bandung, Indonesia. Marc-Antoine Dunais Nicholas School of the Environment Duke University. Background. In low-income Asian countries, a majority of MSW is inadequately processed Results in environmental problems - PowerPoint PPT Presentation
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Marc-Antoine DunaisNicholas School of the Environment
Duke University
Cost Benefit Analysis of Aseptic Carton Recycling in Bandung, Indonesia
BackgroundBackground
• In low-income Asian countries, a majority of MSW is inadequately processed
• Results in environmental problemsaffects the health of humans and animalscauses economic and welfare losses
BackgroundBackground
• Bandung is Indonesia’s third largest city: 6 million habitants, 3% annual population growth rate, 8000 m3 of waste generated each day
Processed to landfills
Burnt (toxic fumes)
Dumped (causes flooding,coastal pollution)
Recycled
Aseptic cartonsAseptic cartons
Allow liquid food to be safely stored at room temperature without preservatives
Consist of:• paperboard (75%)• plastic (20%) • aluminum (5%)
Aseptic cartonsAseptic cartons• Packaging structure
more complex than plastic bottles or magazines
• Recovery of all packaging components is challenging
• Only 1% of cartons recycled in Indonesia
Lack of information on the recycling potential of these products
Lack of efforts so far by the private recycling sector to recycle them
http://www.chinesemol.com/member/upload/product/63375151/20077151781083849.jpg
Scope & objectivesScope & objectives
Explore costs and benefits of recycling aseptic cartons at BBPK, a recycling plant in Bandung
Objectives:• Determine cost of recycling cartons• Assess 3 scenarios for carton recycling at BBPK through Cost Benefit Analysis (CBA)• Provide a set of recommendations to BBPK
MethodologyMethodology
About BBPKAbout BBPK
• Center for Pulp and Paper: parastatal body
• Focus on pulp, paper and environmental issues
• Activities: research, equipment calibration, certification, consulting… and recycling
• Supported by Tetra Pak to initiate aseptic carton recycling in Bandung
Methodology (scenarios)Methodology (scenarios)
Scenario 1Baseline/Business as usual
Scenario 2BBPK pays for the purchase of waste cartons in Bandung
Scenario 3BBPK pays for the purchase of discarded cartons and sells polyfoil in addition to pulp
BBPK continues to receive financial support from Tetra Pak
Potential scenario for BBPK starting in 2010
Long-term scenario
ResultsResults
Scenario 1Baseline/Business as usual
Scenario 2BBPK pays for the purchase of waste cartons in Bandung
Scenario 3BBPK pays for the purchase of discarded cartons and sells polyfoil in addition to pulp
- Negative cash flow (NPV = - USD 58,618)
- Substantial negative cash flow (NPV = - USD 426,790)
- Negative cash flow (NPV= - USD 70,997)
- 50% increase in the amount of aseptic cartons recycled per year creates a positive NPV
- Sensitivity analysis for Quantity of Aseptic Cartons and Purchasing Price of Aseptic Cartons shows positive cash flow
DiscussionDiscussion
• Challenging for BBPK to achieve positive cash flow, even with Tetra Pak subsidy
• By increasing recycling capacity, BBPK can reduce cash flow gap
• Full extent of BBPK’s negative cash flow requires further study
RecommendationsRecommendations
1. Increase recycling capacity, as there is enough raw materials to allow increased recycling rate
2. Sell pulp at a premium price to a niche market
3. Reduce Tetra Pak subsidy *progressively*
http://blog.inertiabev.com/wp-content/uploads/2008/03/tetrapak.jpg
ConclusionsConclusions• Increase BBPK recycling
capacity to reach more buyers who buy bulk; sell pulp to niche market with price premium
• A slow-down in recycling will undermine market for collection and purchase of discarded cartons
• BBPK will falter if subsidy is not sustained in the medium term
Thank you!