Degree Name

Bachelor of Commerce (Hons.)


Department of Economics


The past few years have seen the development of considerable interest in activities involving the recovery of materials and byproducts from the waste streams of industrial firms and their utilisation, by either the waste-producing firms themselves or other firms, as raw material inputs into production processes. This interest derives, of course, from community concern in the developed nations regarding the problem of environmental pollution. The use of waste recovery and re-use techniques actually reduces the volume of industrial wastes requiring discharge, in one form or another, into the environment and thus avoids the environmental pollution problems which tend to accompany the waste disposal activities of industrial firms. It would appear however, that waste recovery and re-use techniques have not yet received wide application, with economic considerations apparently playing an important role.

This study focusses on the Illawarra region as an example of a region in which waste recovery and re-use activities have not yet received wide application and investigates the treatment given in the economics literature to these activities, with this investigation being carried out with a view to assessing the contribution that has been made by economists to both the understanding of the particular nature of waste recovery and re-use activities and the stock of policy prescriptions appropriate as a means of inducing an increase in the level and extent of those activities and thus achieving a significant and sustained improvement in environmental quality. A subsidiary aim involved in carrying out this literature review is that of outlining and assessing the current state-of-theart in respect of the treatment of recovery and re-use activities by economists.

The thesis is divided into six chapters . Chapter I introduces the study by briefly outlining some of the background of, and justification for, the literature review carried out. Chapter II expands on this brief introduction by considering, and explaining, both the interest which has been expressed in waste recovery and re-use activities in the Illawarra region in recent years and the observation that these activities appear to be 'restricted and fragmented'.

Chapters III and IV present a detailed examination of the economics literature concerned with the analysis of waste recovery and re-use activities. The first of these chapters considers the literature concerned with the inclusion of these activities in analyses relating to the problem of environmental pollution. These analyses have been carried out within the theoretical framework provided by modern welfare economics. The economy-wide perspective of the static and dynamic general equilibrium analysis carried out within this framework reveals that the factors underlying the restricted and fragmented nature of waste recovery and re-use activities basically relate to the existence of a defective system of economic incentives arising out of deficiencies in the operation of market processes.

The second chapter referred to above examines the work of those economists who have analysed waste recovery activities by including them within a framework which deals explicitly with that entity known as 'the firm'. The theoretical and quantitative analysis carried out within this framework indicates that economic factors are seen by economists as playing an extremely important role in the behaviour of firms in relation to waste generation, abatement and discharge activities.

The emphasis placed on economic factors in the literature is accompanied by the prescription of policies, particularly the effluent charge strategy, which seek to induce an increase in the amount of materials and by-product recovery carried on through market related means. In view of this Chapter V considers, and evaluates the importance of, problems and difficulties likely to be encountered in any practical implementation of the effluent charge strategy.

It is concluded (Chapter VI) that the economics literature has made an important contribution to the understanding of waste recovery and re-use activities as they are carried on in the Illawarra region. The factors making for the particular nature of these activities, however, operate on an economy-wide scale, so that the policies advanced by the literature represent an approach that might be taken by governments at a state or national, rather than regional, level.