Marc-Antoine DunaisNicholas School of the Environment

Duke University

Cost Benefit Analysis of Aseptic Carton Recycling in Bandung, Indonesia

BackgroundBackground

• In low-income Asian countries, a majority of MSW is inadequately processed

• Results in environmental problemsaffects the health of humans and animalscauses economic and welfare losses

BackgroundBackground

• Bandung is Indonesia’s third largest city: 6 million habitants, 3% annual population growth rate, 8000 m3 of waste generated each day

Processed to landfills

Burnt (toxic fumes)

Dumped (causes flooding,coastal pollution)

Recycled

Aseptic cartonsAseptic cartons

Allow liquid food to be safely stored at room temperature without preservatives

Consist of:• paperboard (75%)• plastic (20%) • aluminum (5%)

Aseptic cartonsAseptic 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

http://www.chinesemol.com/member/upload/product/63375151/20077151781083849.jpg

Scope & objectivesScope & 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

MethodologyMethodology

About BBPKAbout 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)Methodology (scenarios)

Scenario 1Baseline/Business as usual

Scenario 2BBPK pays for the purchase of waste cartons in Bandung

Scenario 3BBPK 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

ResultsResults

Scenario 1Baseline/Business as usual

Scenario 2BBPK pays for the purchase of waste cartons in Bandung

Scenario 3BBPK 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

DiscussionDiscussion

• 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

RecommendationsRecommendations

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*

http://blog.inertiabev.com/wp-content/uploads/2008/03/tetrapak.jpg

ConclusionsConclusions• 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!