How Trash Makes Money In The U.S.

Summary

The North American waste management market, valued at $208 billion in 2019, is projected to reach $229 billion by 2027, driven by environmental regulations and waste surge. Despite being one of the world's most wasteful nations, the US sees waste as a lucrative industry with private companies like Waste Management and Republic Services leading the sector. Modern landfills are engineered to protect the environment while generating revenue through tipping fees. Innovative practices such as landfill mining for metals and energy recovery are transforming waste into a valuable resource, bolstered by government subsidies and the pursuit of a circular economy.

Takeaways

• 💼 In 2019, the North American waste management market was valued at $208 billion and is expected to grow to $229 billion by 2027.
• 🌱 The U.S. generates 239 million tons of garbage annually, averaging about 1700 pounds per person.
• 🏭 Modern landfills are well-engineered to protect human health and the environment, with strict regulations enforced by the EPA.
• 💸 Landfills primarily generate revenue through tipping fees, charging per ton of waste brought to the site.
• 📈 The average tipping fee in the U.S. was $53.72 per ton in 2020, with significant regional variations.
• 🔝 Private companies like Waste Management and Republic Services have seen significant growth and stock performance in recent years.
• 💰 The cost of constructing, operating, and closing a landfill can range from $1.1 to $1.7 million, with ongoing financial obligations post-closure.
• 🔄 Landfill mining and reclamation is a process that extracts and reprocesses materials from older landfills, recovering valuable assets like metals.
• ♻️ Landfills can be a source of energy through the capture and conversion of methane gas into electricity or fuel.
• 🌐 The U.S. Energy Information Administration reports that landfill gas generates about 10.5 billion kilowatt-hours of electricity annually.
• 🌿 The waste management industry's profitability is tied to viewing garbage as a resource, promoting a circular economy and sustainable practices.

Q & A

What was the size of the North American waste management market in 2019?

The North American waste management market was worth $208 billion in 2019.

What is the projected growth of the waste management market by 2027?

The waste management market is expected to grow into a $229 billion industry by 2027.

How much garbage does the United States generate annually, and what is the per capita amount?

The United States generates 239 million tons of garbage annually, which is about 1700 pounds per person.

What are the two major federal acts that have influenced waste management practices in the US?

The Solid Waste Disposal Act of 1965 and the Resource Conservation and Recovery Act of 1976 have significantly influenced waste management practices.

How do modern sanitary landfills prevent harmful liquids from leaking?

Modern sanitary landfills use a reinforced plastic liner to prevent harmful liquids from leaking out.

What is the average tipping fee for municipal solid waste landfills in 2020, and how much does it translate to in annual revenue for small and large landfills?

The average tipping fee in 2020 was $53.72 per ton, which translates to approximately 1.4 million a year for small landfills and 43.5 million a year for large landfills.

Why do tipping fees vary widely across different regions in the US?

Tipping fees vary due to factors such as population density, disposal options, and the cost of constructing and operating landfills.

What are the financial obligations of landfill owners even after the landfill has been closed?

Landfill owners must adhere to the Resource Conservation and Recovery Act's Subtitle D, which includes managing and overseeing the site for 30 years after closing, even after it has stopped operating.

What is the current ownership trend for landfills in the United States?

Private companies have replaced municipal governments to own and operate the majority of landfills in the US, with more than half of all municipal solid waste landfills being privately owned.

How do landfills generate revenue beyond tipping fees?

Landfills generate additional revenue through landfill mining and reclamation, extracting and reprocessing materials from older landfills, and by capturing methane gas to produce fuel and generate electricity.

What is the significance of landfill gas to energy projects, and how much electricity do they generate annually?

Landfill gas to energy projects generate about 10.5 billion kilowatt hours of electricity every year, enough to power roughly 810,000 homes and heat nearly 540,000 homes each year.

Outlines

00:00

🌍 The Expanding Waste Management Market

In 2019, the North American waste management market reached $208 billion, driven by strict environmental regulations and an increase in waste production. By 2027, the market is projected to grow to $229 billion. The industry is seen as profitable but challenging, with companies like Waste Management and Republic Services showing significant growth due to their innovative and efficient business strategies. These companies have outperformed the market and demonstrated strong cash flow growth by adapting to increasing consumer demands and environmental policies.

05:00

💸 The Economics of Tipping Fees

Tipping fees are a crucial revenue source for landfills, varying greatly across the United States. The average fee in 2020 was $53.72 per ton, generating significant income for both small and large landfills. Regional differences in fees are influenced by population density and available disposal options. The South Central region reports the lowest average tipping fees, while the Northeast has the highest. Despite being a lucrative revenue stream, managing landfills is costly, requiring millions of dollars for construction, operation, and long-term maintenance.

10:03

🔄 Private Companies in Waste Management

Since the 1980s, private companies have increasingly taken over landfill operations from municipal governments. Waste Management and Republic Services dominate the market, operating hundreds of landfills nationwide. This shift towards privatization is due to the high costs and complexities involved in modern landfill management. Hybrid ownership models, like those in Wake County, North Carolina, combine private operation with public ownership, aiming to balance profit with environmental responsibility. Innovations such as landfill mining and gas-to-energy projects are being explored to further monetize waste.

Keywords

💡Waste Management

Waste management refers to the collection, transportation, and disposal of garbage and other waste products. In the video, the waste management industry is depicted as a growing and profitable sector, driven by strict environmental regulations and increased waste production. Companies like Waste Management and Republic Services are highlighted as leaders in this field.

💡Landfill

A landfill is a designated area where waste is buried under layers of soil or other materials. Modern landfills are highly engineered to prevent environmental contamination. The video describes them as 'civil engineering marvels' designed to manage waste efficiently and minimize pollution, a critical component of the waste management business.

💡Tipping Fee

A tipping fee is a charge that landfills impose on trucks dropping off waste, typically calculated by weight. This fee is the primary source of revenue for landfills. The video explains how tipping fees have increased significantly over time, contributing to the profitability of landfills, with average fees varying by region.

💡Methane Gas

Methane gas is produced as waste decomposes in landfills and is highly flammable. The video discusses how modern landfills capture this gas and either dispose of it or use it for energy production. Landfill gas-to-energy projects, where methane is converted into electricity, are highlighted as both an environmental benefit and a revenue source.

💡Solid Waste Disposal Act of 1965

The Solid Waste Disposal Act of 1965 was a key legislative act that gave the federal government a larger role in waste management. The video mentions this act in the context of modernizing landfills and making open dumps illegal, contributing to safer and more regulated waste disposal practices.

💡Resource Conservation and Recovery Act (RCRA)

The RCRA, enacted in 1976, expanded federal regulation over waste disposal. It played a significant role in shaping the current waste management system. The video emphasizes its impact by introducing design and operational regulations for landfills, including financial obligations for monitoring closed landfills for up to 30 years.

💡Landfill Mining

Landfill mining involves excavating old landfills to recover valuable materials like metals. The video discusses the economic potential of this process, citing examples like a successful mining project in Maine, while also noting the financial risks and challenges, as seen in the failed project in Denton, Texas.

💡Recycling

Recycling is the process of converting waste materials into reusable products. The video emphasizes the importance of recycling to conserve resources, such as metals and plastics, and reduce the need for raw materials. It also ties recycling to broader environmental and economic benefits, like reducing the need for more landfills and conserving natural resources.

💡Privatization of Landfills

Privatization of landfills refers to the shift from government-operated to privately-owned landfills. The video explains that private companies now operate most U.S. landfills, driven by the need for larger, more sophisticated landfill operations. This shift is credited with improving the industry's efficiency and profitability.

💡Environmental Regulations

Environmental regulations refer to the laws and policies aimed at reducing pollution and protecting public health. The video discusses how these regulations have made landfills safer and more environmentally sound, with strict guidelines on waste disposal and emissions control. These rules are vital to the long-term sustainability of the waste management industry.

Highlights

In 2019, the North American waste management market was valued at $208 billion.

Strict environmental regulations and increased waste production are expected to expand the market further.

By 2027, the waste management market is projected to grow to a $229 billion industry.

The United States generates 239 million tons of garbage annually, averaging about 1700 pounds per person.

Landfills have seen financial success due to advancements in modern chemistry and government support.

Private waste management companies like Waste Management and Republic Services have shown significant growth over the last five years.

Publicly traded waste management stocks outperformed the market between 2015 and 2019.

Modern sanitary landfills are well-engineered to protect human health and the environment.

Landfills make most of their revenue from tipping fees charged per ton of waste.

In 2020, the average tipping fee for municipal solid waste landfills was $53.72 per ton.

Tipping fees have seen a 133% increase from 1982 to 2020.

Tipping fees vary widely depending on location, with the south central region having the lowest and the northeast the highest.

Constructing, operating, and closing a landfill can cost between $1.1 to $1.7 million.

Private companies now own and operate the majority of landfills in the US, controlling 85 to 90% of permitted capacity.

Landfill mining and reclamation is a process of extracting and reprocessing materials from older landfills.

Landfill gas to energy projects convert methane gas into fuel and electricity for profit.

Landfill gas generates about 10.5 billion kilowatt hours of electricity annually, enough to power around 810,000 homes.

The tipping fee, combined with mining techniques and government subsidies, has transformed the landfill industry into a profitable business.

Waste is viewed as a resource rather than waste, promoting a circular economy and sustainability.

Transcripts

In 2019, the North American waste management market reached

$208 billion. Strict environmental regulations as

well as a surge in the amount of waste produced is expected to

expand the market even further. By 2027, the waste management

market is expected to grow into a $229 billion industry.

Anytime when I'm going to a landfill I talk to my kids and I

talk to my son and daughters, yucky, you're going to come back

as a smelly. I told them, You smell the trash and I smell

money.

America remains one of the most wasteful countries in the world

generating 239 million tons of garbage every year, about 16 or

1700 pounds per person. While some view it as a threat to our

environment in society, others see it as an opportunity.

It's a profitable industry. It's a difficult industry, but it is

profitable. If done right and I think that is why there are so

many private companies that are involved in waste management.

Thanks to advancements in modern chemistry and the support from

the government landfills have seen astonishing financial

success in recent years. Raking in millions of dollars in

profit. Private solid waste management companies like Waste

Management and Republic Services have shown significant growth

over the last five years.

They've learned how to be best in class businesses. And as they

did that, what you saw was this growth occurring in new customer

growth, new business formation linked with consumerism,

consumer engagement housing, and the garbage industry. Publicly

traded stocks outperformed the market handily between 2015 and

2019. And underpinning it is a meaningful improvement in their

free cash flow conversion.

So how exactly are landfills turning profit out of garbage,

and just how much money can be made.

When people think of landfills, they usually imagine an endless

field of garbage emitting a terrible odor and housing all

manner of pests. But modern sanitary landfills today are

much more nuanced and a lot less smelly.

A modern landfill is a civil engineering marvel. These are

extraordinarily well engineered, they're designed to protect

human health and the environment, and at the same

time, contain and manage the waste that we generate at four

and a half pounds a person per day in United States.

If you walk towards the landfill and there is a smell, that means

they're doing something wrong.

Strict regulations and the work by the EPA have changed

landfills to become more modern and sanitary than ever. The

Solid Waste Disposal Act of 1965, combined with the Resource

Conservation and Recovery Act of 1976 dramatically expanded the

federal government's role in managing waste disposal.

Open dumps where garbage is dropped off without any

protection are now illegal. When waste is brought to a sanitary

landfill, they are disposed into an open section known as the

cell. This cell is protected by a layer of reinforced plastic

known as the liner that prevents any harmful liquids from leaking

out. Any liquid from the waste is collected at the bottom of

the landfill and is removed via a series of pipes gravels and

sand. Meanwhile, above ground trash is constantly compressed

within the cell using bulldozers and other compaction equipment

using daily covers to protect the trash from sun, rain and

pests until the cell reaches its max capacity. Once that happens,

either a new cell begins on top or a final cover is placed over.

The site is then continuously monitored for up to 30 years to

ensure everything is environmentally sound.

There is the potential for the miner system to leak, for

example, over long periods of time, and probably more likely

the cover system. You know, it's just going to be subject to that

settling and weathering and different things. So there's

potential for gas emissions, you want to be monitoring the

landfill as long as there's the potential for gas or liquid

emissions.

Landfills make a majority of their revenue even before the

garbage makes its way to the pile of trash through a tipping

fee or a gate fee landfills charged trucks dropping off

their garbage based on their weight per ton. This fee acts as

the lifeblood of most landfills across the United States.

Shipping fee gets its connotation because the truck

comes in and tips, if you will, it literally tips up. The trash

is driven out of the trailer through what's known as a

walking floor. So tipping is it's your gate rate it's the

price per ton, and that is the principal source of income.

In 2020 municipal solid waste landfills had an average tipping

of $53.72 per ton. That translates to roughly 1.4

million a year in approximate average gross revenue for small

landfills and 43.5 million a year for large landfills just

from gate fees and tipping fees have seen steady growth over the

past four decades. In 1982. The national average tipping fee sat

at $8.07 per ton, or about $23 when adjusted for inflation.

That's nearly a 133% increase in 35 years. Tipping fees vary

widely depending on where the landfill is located. For

instance, the south central region in the US has the lowest

average tipping fee of $39.66 per ton, with some states like

Arkansas reporting a fee as low as $30.53 per ton. On the other

hand, the average tipping fee in the northeast is almost double

that at $68.69 per ton. With states like Delaware reporting a

fee as high as $85 per ton.

There's a list of reasons but at its simplest level, is scarce.

So where tipping fees are the highest, I would venture that

you have extraordinarily dense populations and very few

disposal options. The other difference is, the cost of

building done in western Pennsylvania dealing with rock

formations at very shallow level and I literally go 50 miles west

and go to Ohio, the cost of building a landfill in western

Pennsylvania versus Ohio are dramatically different.

While tipping fees make landfill sound like a risk free business,

they are still quite an expensive investment. It can

cost about 1.1 to $1.7 million just to construct, operate and

close a landfill. And there are financial obligations that must

be met even after the landfill has been closed entirely.

There was a major regulatory change that happened in the 70s

called the Resource Conservation Recovery Act by 1994. Every

landfill that was in service in North America had to adhere to

something called Subtitle D which is the design operation

and then the the lifecycle financial assurance obligations

of managing and overseeing that site for 30 years after closing.

So every business owner, whoever owns the business, they make

money up to the time it's working. Then even after close

up, they have to pay the maintenance fee, which is

around $1 million without making money for 30 years. That's part

of their business operation, so they need to make money upfront.

Today private companies have replaced municipal governments

to own and operate the majority of landfills across the US. In

1988, about 7900 landfills were publicly owned. By 2009, that

number had fallen to about 1900. It's now estimated that more

than half of all municipal solid waste landfills are privately

owned, with the industry controlling 85 to 90% of

permitted capacity.

Landfills are often owned by private companies. And I think

it's because the trend has been to go larger and larger so that

the small neighborhood dump can exist because the regulation in

the sophistication of the design so we're tending to see large

landfills, which would require a lot of investment upfront.

Two private companies, Waste Management and Republic Services

lead the Solid Waste Management sector. Waste Management says it

owns nearly 300 landfills across the US, while Republic Service

syas it operates just over 180 out of the 2627 landfills across

America. Together the two companies have seen staggering

performance in the market. With both companies stock prices

doubling in the past five years.

If you take the Great Recession, and sort of lay the framework of

how to garbage perform post the Great Recession. What what

you'll discover there's a five year window up to 2014 where

they did okay. They were you know they were in the green

matching or slightly outperforming the market but the

significant outperformance begins in 2014 through 2019.

They've learned how to be best in class businesses. And as they

did that, what you saw was this growth occurring in new customer

growth new business formation linked with consumerism,

consumer engagement housing, and the garbage industry public

traded stocks outperformed the market handily between 2015 and

2019. And underpinning it is a meaningful improvement in their

free cash flow conversion.

Some government jurisdictions have also transitioned to a

hybrid ownership in places like Wake County, North Carolina

landfills are owned by the county but operated by GFL

Environmental, a private company.

So if you give it fully privatized, a private company

will try to go through the regulation but they're meant

because they'll be making money. To me the combination of both is

the best choice because that way city has some control over the

landfill company. They will look at only for the profit. But city

also needs to make sure that not only the profit, the

environmental sustainability, environmental cases and people's

life, the key everything is maintained in the right way.

Private companies have also discovered new ways beyond

tipping fees to turn profit out of their garbage. Landfill

mining and reclamation a process of extracting and reprocessing

materials from older landfills is one of them.

Certainly looking at waste as a resource is the best thing for

for the economy. It's the best thing for the environment for

health. Putting metal in a landfill just makes absolutely

no sense. It's just gonna sit in the landfill forever and ever

and ever there'll be some corrosion but but it's pretty

much gonna sit there. Whereas metals are so easy to recover

and recycle, and and save so much money and energy and so

forth.

In 2011, a private scrap metal company contracted with a

nonprofit landfill in Southern Maine to mine precious metals.

In four years, they recovered over 37,000 tons of metal worth

$7.42 million. But it isn't always a success story. In 2017,

the city of Denton, Texas ended their landfill mining program

before could even start after realizing that the benefits

weren't worth its $4.56 million price tag. According to experts,

economics is usually the biggest challenge to make landfill

mining work.

There's virtually no way I can see how that makes money, the

commodity values would have to be at such higher levels than

they are today, whatever it is you're trying to get your hands

on.

However, some experts claim that landfill mining can be

profitable if done correctly. That's because mining can often

recover the most valuable asset of any privately owned landfill,

space.

You get new tipping fee, right? You put the trash back into that

little mined space. So as if you build a new landfill without

buying a new space. So that space gives you lot of money,

when you start backfilling. Many people are mining but they are

not reusing the space. So they are saying, oh, okay, we cannot

make money out of money. Yes, you cannot. But if you do the

operation, right, you're never going to be involved, if you

will always make money.

Modern chemistry has also allowed landfills to be mined

for energy. When trash decays inside a landfill, it produces

methane gas. For decades, regulations have required

landfills to suck out this highly flammable gas and dispose

of it safely. landfill gas to energy projects, however, use

the same gas to produce fuel and generate electricity for profit.

The landfill gas operations that are known as low or medium BTO

which are the predominant form of capture the gas policy a

little but turned into electricity or steam and then

sell it. Those are good return on capital projects.

According to the US Energy Information Administration,

landfill gas generates about 10 point 5 billion kilowatt hours

of electricity every year. That's enough to power roughly

810,000 homes and heat nearly 540,000 homes each year.

It just didn't paper where I was looking at how much electricity

you can generate from landfills compared to how much energy

we're using to produce electricity. And it's like, less

than 1% I mean, it's it's a minor contributer to our heav

demands for energy in the US But it's you know, it's 1%. So

you know, it's, it's helpful It's every everything counts

And if you're going to b attacking the gas for othe

reasons, you might as well g ahead and do that if you know i

it makes sense from an economi standpoint to generat

electricity

But it's also a big investment. Landfill gas to energy projects

can cost over $5 million to build and operate, while revenue

from generating energy and fuel doesn't quite cover the cost,

landfills do benefit greatly from generous subsidies.

Many cities went into that landfill gas to energy because

they get the carbon credits, and they get money from the federal

government. When they are producing the gas and capturing

the gas, they're converting that into electricity. The amount of

gas you're capturing you're reducing the greenhouse gas

emission. That's why government was subsidizing not only for

carbon credits are subsidizing because you're reducing the

greenhouse gas emission pressure on the environment.

The tipping fee combined with various mining techniques and

government subsidies have together transformed the

landfill industry into a booming business.

It's a profitable industry. It's a difficult industry, but it is

profitable done right and I think that is why there are so

many private companies that are involved in waste management.

Solid Waste Management will only continue to expand as long as

there are those who view garbage as a resource rather than waste.

Because when it comes to landfills, one man's trash is

quite literally another man's treasure.

Waste is not a waste but it's a resource. Because if you don't

recycle the plastic if we don't recycle the paper, if we don't

recycle the paper what we are going to do we are going to go

and cut more trees. If we don't recycle the plastic we are going

to go after more bio product from gasoline. If we don't reuse

the electronic material, we are going to keep mining virgin

material. World has limited resource. If we don't reuse and

recycle these, we cannot talk about circular economy. That

will always be a talk in the tabletop discussion.