Marc-Antoine Dunais Nicholas School of the Environment Duke University Cost Benefit Analysis of Aseptic Carton Recycling in Bandung, Indonesia

Background In low-income Asian countries, a majority of MSW is inadequately processed Results in environmental problems affects the health of humans and animals causes economic and welfare losses

Background Bandung is Indonesia’s third largest city: 6 million habitants, 3% annual population growth rate, 8000 m 3 of waste generated each day Processed to landfills Burnt (toxic fumes) Dumped (causes flooding, coastal pollution) Recycled

Aseptic cartons Allow liquid food to be safely stored at room temperature without preservatives Consist of: paperboard (75%) plastic (20%) aluminum (5%)

Aseptic 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

Scope & 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

Methodology

About 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) Scenario 1 Baseline/Business as usual Scenario 2 BBPK pays for the purchase of waste cartons in Bandung Scenario 3 BBPK 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

Results Scenario 1 Baseline/Business as usual Scenario 2 BBPK pays for the purchase of waste cartons in Bandung Scenario 3 BBPK 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

Discussion 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

Recommendations 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*

Conclusions 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!