Modeling paper material flows and recycling in the US macroeconomy

Abstract

Recycling, especially paper recycling, has become a de-facto public policy during the last three decades of the 20th Century. At the cusp of the new millennium it receives widespread support. Unfortunately, at the same time, this well-intentioned and locally rational action has also been soundly criticized based on the observed market instabilities in the industry that are the cause of poor performance by firms. This poor performance, especially in the case of paper, threatens the value and usefulness of recycling as an environmental strategy. Many current works that address recycling issues fail to recognize that the basis for the behavior, problematic or otherwise, is the linked set of markets that cause the materials, in the form of products and by-products, to flow through the entire macroeconomy. The sources of this behavior include both the internal structure of the sectors from which the markets are comprised as well as the linkages between the markets. To understand the potential problems in the paper recovery and associated markets and to assess remedies, this thesis develops and explores a new, integrated, macroeconomic model using the system dynamics method. The model is calibrated to paper material-flow-related data. It replicates problematic behaviors in the paper market, and describes their genesis, and forecasts their effects for the future. Analyses undertaken with the model also describe outcomes from several different commonly proposed interventions in terms of market stability, production, profitability, resource utilization, and overall recovery.