Wednesday, April 28, 2010

SB 234: Reducing Landfill Accumulation

In this post, I present the first of two excerpts from my written comments on SB 234, which would make universal recycling a reality for every Delaware household. In this excerpt, I look at the economic value of reducing landfill accumulation, using methods I first wrote about four years ago:
SB 234 finds “it is in the interest of all Delawareans to minimize the need for future landfill capacity and the associated costs by reducing the flow of waste to landfills.”
I have created a simple model of the relative costs of postponing the siting and construction of a new landfill to replace Cherry Island Landfill (CIL)—if the land could be found at any price. This simplified calculation assumes that the CIL would reach its capacity in 2035 under current trends, and that a zero waste strategy would extend its useful life a further 25 years to 2060.
Five years ago, the replacement cost for the CIL was estimated to be $106 million—a figure that is almost certainly low given any reasonable projection for land costs over the next 25 to 50 years. Thus I have included the figure of $250 million as a comparison, though the cost 25 years from now could go even higher.
I calculated the present value of postponing CIL replacement from 2035 to 2060 using a discount rate of 4.66%, the current AAA municipal bond rate. I found that postponing CIL replacement by 25 years would yield present value (PV) savings—savings in today’s dollars—of between $9.75 million and $23 million:
As a rough rule of thumb, postponing CIL replacement through a zero waste strategy would create roughly $9-10 million in present value savings for each $100 million of future costs postponed.
Of course, we may not be able to find the required 500 to 800 acres at any cost. The footprints of DSWA’s major landfills range from 513 acres (CIL) to 835 acres (Sandtown), which comes to roughly 12 to 20 40-acre farms. If a site for a new landfill cannot be found, we would be looking at higher costs for waste disposal, including transportation costs to a downstate or out of state landfill.
If Cherry Island closes and a replacement can’t be found in New Castle County, we could see a daily parade of trash trucks—one every minute for nine hours day, seven days a week—running down Route 1 to downstate Delaware.
SB 234 is scheduled to come up for a vote in the Senate on Thursday.


Anonymous Anonymous said...

Great analysis, Tom, very sound thinking. Thank you! Makes the case why the Delaware General Assembly could & should support Statewide recycling to the tune of about $10 million a year from the General Operating Fund.

Having said that, with a flat revenue stream, where does Delaware find the dollars.

SB234 proposes a SALES TAX! -- okay, the bill calls it a fee. And they hope the SALES TAX, 4 cents on certain beverage containers, will go away after 4 or 5 years.

This from a Legislature which never met a TAX it didn't like. I was there in 1975-76 when they passed the GROSS RECEIPTS TAX during a recession with the promise that it would be temporary. We're all still laughing that we believed that one!

Rather than gut the 1982 Bottle Bill, which SB234 proposes to do, to alleviate that incalculable burden on retailers of redeeming the deposit on empty Coca Cola bottles (that's a joke folks), just Escheat the Abandoned Property from the Unredeemed Deposits and revert it to the General Operating Fund. The amounts zero out, and we don't allow in the dreaded SALES TAX.

Thanks again, Tom, for a great analysis.

3:49 PM, April 28, 2010  
Blogger Tom Noyes said...

Thanks for your kind comments. As for the fee, the retailers, the grocery stores, restaurant association and beer distributors all voiced their support for the bill at last week's hearing.

7:38 PM, April 28, 2010  

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