Houston Chronicle

Big test arises on city’s will to recycle

- Tomlinson is the Chronicle’s business columnist. His commentary appears on Sundays and Wednesdays. He also posts a daily news analysis at Houston-Chronicle. com/Boardroom. chris.tomlinson@chron.com twitter.com/cltomlinso­n

How much are we willing to pay to do the right thing?

Houston’s City Council reached its limit on Wednesday when it rejected a contract offered by Waste Management to haul away recyclable materials. Mayor Sylvester Turner says $47 a ton is beyond what the city can afford to maintain the residentia­l recycling program.

Here’s how the math works. Waste Management says it needs $95 a ton to collect the city’s recycling. The company expects the city to make up the difference between what it costs to process the materials and what the company can collect on the recycled commoditie­s market.

Like all commodity markets at the moment, the prices for recyclable­s are way down. Waste Management expects prices to average $48 a ton for the next four years, down from $100 a ton just two years ago. After losing money for two years, the company is demanding more money from the city at a time when the council is facing a massive budget shortfall.

Houston, of course, is not alone. Waste Management and other recycling companies across the country are demanding higher fees in return for diverting waste from landfills. If the new contract doesn’t pay enough, the companies are whaling away, as they should. Processing cycled materials is costly, and local government­s can’t expect a company to

lose money.

That leaves politician­s, and the people they represent, with a dilemma. Pay $47 a ton to do the environmen­tally responsibl­e thing, or take the costeffici­ent option and pay $23.50 a ton to dump the material in a landfill.

If the City Council operated like a business, the right decision would be obvious. But a community is not a corporatio­n, and politician­s are not business people. The question for an elected official is what reflects the values of the community, and how much is the community willing to pay to implement those values?

Instead the argument has been about risk, and who assumes it.

Commodity prices will rise again, but no one knows when. Waste Management doesn’t want to take any price risk. Mayor Sylvester Turner tried to mitigate the risk by offering Waste Management a higher rate for a shorter contract, gambling that by next year commodity prices will be higher. A classic negotiatin­g ploy, but one that appears to have failed.

Trying to get a company to lose money or accept unreasonab­le risk is a copout to answering the much more important question: How committed is the city to recycling?


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