Metal markets and recycling policies: impacts and challenges

Journal article, 2020

An increased understanding of the existing markets for recycled (secondary) metals, including interactions with virgin material
production, is essential for public decision-making processes concerning the implementation and evaluation of different categories
of recycling policies. In this paper, we review the existing literature with the purpose of discussing (1) the impacts of various
recycling policies on metal markets in which aggregate demand can be met by both primary and secondary production, and (2) a
number of challenges that policy-makers need to confront in choosing between various types of recycling policies and policy
designs. A simple partial equilibrium model is used as a pedagogical tool for shedding light on the impacts of tradable recycling
credits, virgin material taxes, and recycling subsidies. In a second step, the paper identifies and discusses a few key challenges
that policy-makers will need to address in recycling policy-making. These challenges include improving the functioning of
secondary material markets by addressing various non-environmental market inefficiencies; identifying and designing (secondbest)
policy mixes due to the presence of incomplete monitoring and enforcement of waste disposal behavior, and regulating
environmental impacts through price- or quantity-based policies. Throughout the analysis, we consult the empirical literature on
the functioning of scrap metal markets (e.g., steel, copper, and aluminum).