Waste Paper Recycling and the Future Timber Market

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Waste paper recycling and the future timber market

Research shows that the accelerated re- terms of regional timber consumption cycling of waste paper in the 1990s will and prices. likely have substantial timber market im- In the past two years, another issue by Peter J. Ince pacts, particularly in the Southern U.S., has been at the forefront of public atten- and Joanne T. Alig where more than half the U.S. pulp, tion and debate: the economic implica- paper and paperboard is produced. tions of protecting the notthern spotted Peter J. Ince is a research forester and Much of the projected increase in owl. Like the growth in waste paper re- Joanne T. Alig is an economist with the waste paper recycling will occur in un- cycling, the conservation of this species U.S. Department of Agriculture’s Forest bleached kraft board and newsprint may have a large influente on future Products Laboratory in Madison, Wis- grades now produced mainly in the timber markets. A third objective, then, consin. This article summarizes a de- South from softwood pulpwood. Thus, is to compare the effects of waste paper tailed research paper. recycling will tend to offset future de- recycling and protecting the northern mand growth for softwood pulpwood to a spotted owl on timber markets. greater extent than that for hardwood, and it will mainly offset demand growth Methodology in the South. Economic effects on timber markets of Recycling will extend softwood timber Paper recycling reduces the implementing a conservation strategy for supplies, leveling market differentials be- need for wood fiber. Im- the northern spotted owl have been pro- tween hardwood and softwood pulp- jected by the Forest Service and the portant research conducted wood, and extending softwood saw- Bureau of Land Management (1). There timber supply. As a result, there will be by forest industry experts is much uncertainty about the extent to increased opportunity for domestic pro- quantifies the future which wildlife conservation strategies will duction of paper, paperboard and other savings of this critica1 be implemented in the future. forest products, particularly in the South. Our analysis, therefore, does not con- In this article, timber market implications natural resource and in- sider the ramification of all possible land are projected into the 21st century, and dicates the substantial or wildlife conservation strategies or results are compared with implications benefits from increased technological developments. Rather, it of implementing a conservation strategy projects timber market implications into paper recycling in the U.S. for the northern spotted owl. the 21st century and compares results with the implications of implementing a Introduction conservation strategy for the northern It is timely and appropriate to consider spotted owl . future timber market implications of a Our larger report includes a detailed significant development that will unfold explanation of this research methodol- in the 1990s: acceleration in the rate of U.S. waste paper recycling. By all ac- OgY. counts, not only will waste paper recycling accelerate, but the use of re- Recycling in perspective cycled waste paper as a fiber input for The recycling issue has been brought production of paper and paperboard will home to nearly every Amerizan. Within continue to grow. With this increase in the past few years, each of the 50 states recycling, the consumption of pulpwood has enacted some form of recycling will grow more slowly than previously legislation, and communities across the anticipated. U.S. have developed programs for The objectives of this article are to source separation and collection. People present information on likely rates of in most households now separate plastic waste paper recycling in the late 1990s bottles, aluminum cans and newspapers by product grade and to show the an- from other trash. ticipated timber market consequences in More than 50 million tons of waste ,

123 Resource Recycling April 1992 Waste paper recovery and utilization The likely acceleration in waste paper H Table 1 - U.S. paper and paperboard production and waste paper recycling can be better visualized by utilization, 1988-2000 examining paper and paperboard pro- Utilization rate in percent duction figures along with waste paper Product grade 1988(l) 1995 (2) 2000 (3) utilization rates for selected product Paper grades (Table 1). The utilization rate is a Newsprint 24 37 45.0 measure of how much recyclable paper Printing and writing 7 7 8.9 is actually used in U.S. paper and Tissue and sanitary 46 49 50.0 paperboard mills in relation to paper and Packaging and industrial 5 5 6.1 paperboard production. (By taking into Paperboard account the expot-t of secondary Unbleached kraft ll 20 20.4 fibers and the domestic use of recov- Semichemical 41 ered paper in other applications, such as 33 43.8 Bleached 0 0 insulation and mulch, the recovery rate 0 Recycled 100 is much higher than the utilization rate.) 100 100.0 In 1988, the utilization rate was 25.2 All grades (4) 25 30 30.9 percent; in 1989, 26.5 percent (2). Ac- cording to Forest Products Laboratory (1) Actual. (2) Franklin Associates, Ltd., Paper Recychg: The View to 7995, 1990. projections, if the industry’s waste paper (3) Forest Products Laboratory. recovery goal is achieved by 1995, the (4) Excluding construction paper and board. utilization rate for waste paper will be around 31 percent by 2000. Source: Forest Products Laboratory, 1991. Table 1 lists actual data for 1988 and projections for 1995 and 2000. The More significantly, in terms of timber zation rates will nearly double by the projections for 2000 were designed to markets, the projected increases in re- end of the decade. In the U.S. these simulate the long-term consequences of cycling are concentrated in product trends are particularly significant be- technological developments in the grades such as unbleached kraft board cause those product grades are cur- 1990s. and newsprint, where waste paper utili- rently produced mainly from softwood 44 Targetíng Calífornía? Over 9 yeurs ECOLOBAGS provide the petfect solution of Experience to both private and municipal leaf collection. They comply with local legislation against the use ELyeing for of plastic bags for leaf disposal, plus they can be l-l more economical than plastic bags. Tests show that twice as rnany leaves can be stuffed into a

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125 Resource Recycbng April 1992 This is a very interesting result because it indicates that accelerated recycling will n Figure 1 - Pacific Northwest sawtimber stumpage market, alternate actually increase the long-term growth projections potential of the U.S. industry, by ex- $/MBF (1) panding fiber resources in terms of both pulpwood and recycled fiber. Although paper and paperboard pro- 100 duction will increase, this new analysis nevertheless results in reduced growth in pulpwood consumption. Pulpwood 80 consumption will continue to grow in the future, but consumption will grow more 60 slowly than originally projected. Although Owls & Recycling pulpwood consumption climbed from 40 around 90 million cords in 1986 to over 97 million cords in 1989, the consump- 20 tion trend will not continue at the same pace in the 21st century. In the new scenario, pulpwood consumption will be 0 20 million cords lower by the year 2040 1988 2000 2010 2020 2030 2040 than in the earlier projection. Year (1) Real price index in dollars per million board feet. Impacts on sawtimber markets Source: Forest Products Laboratory, 1991. Reduced pulpwood consumption in the decades ahead will extend timber supplies, particularly for softwood timber. recycling will affect sawtimber markets. the northern spotted owl issue in the Therefore, in addition to examining We considered three scenarios, placing Pacific Northwest. pulpwood markets, we examined how the impact of recycling in the context of Figure 1 portrays the results of this In Most Places They GRUENDLER Waste

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127 Resource Recycling April 1992 analysis. The estimates in the top two lines (“0~1s” and “Base”) were obtained n Figure 2 - Southern softwood sswtimber stumpage market, alternate from the recent joint Forest Service and projections Bureau of Land Management study of the economic effects of implementing a conservation strategy for the northern spotted owl (1). The “Base” scenario ad- dresses all issues except for the protection of the northern spotted owl, and the “Owls” scenario expands this case to 801 /T simulate the impacts of a major conservation strategy for the northern spotted * owl and related forest plans in the U.S. Pacific Northwest and Pacific Southwest 11 z Recycling regions. The “0~1s” scenario assumed a substantial reduction in allowable sale quantities for timber in the national forests in those regions. Both the “Base” and the “Owls” scenarios assumed no PI acceleration in waste paper recycling in 1988 2000 2010 2020 2030 2040 the 1990s. Year To introduce the impacts of acceler- (1) Real price index in dollars per million board feet. ated recycling, a third scenario was de- Source: Forest Products Laboratory, 1991. veloped (“Owls and Recycling”). This scenario was identical to the “Owls” scenario except that it also included the above. This third scenario incorporated growth in pulpwood consumption as- projected pulpwood consumption levels a substantial projected reduction in sociated with accelerated waste paper derived in the research summarized timber sales in the West, plus reduced recycling. b .

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129 Resource Recycling April 1992 jected impacts of implementing a con- (2) U.S. Environmental Protection Agency, for the Future, Forest Resource Reporl No. setvation strategy for the northern spot- Characterization of Municipal Solid Waste in 24. 1988. the United States: 7990 Update, June 1990, ted owl included a reduction in U.S. and Ameritan Paper Institute, Paper, Paper- softwood lumber production (because of board and Wood Pulp: Monthly Statistical increased scarcity of softwood saw- Summary, 68( 1 ), 1990. Acknowledgments timber) and an increase in softwood (3) National Solid Wastes Management Associ- lumber imports. The addition of the recy- ation, Recycling in the States: 7990 Review, We acknowledge the assistance of Irene Durbak cling projections to the “0~1s” scenario 1991. and James L. Howard of the Forest Products (4) Raymond, Michele, State Recycling Laws: Laboratory, Professor Darius Adams of the Uni- had little near-term impact on projected What’s New?, 1991. versity of Washington, and Richard W. Haynes lumber production and imports to the (5) U.S. Department of Agriculture, Forest Serv- of the Pacific Northwest Experiment Station in year 2000. ice, The South3 Fourth Forest: Alternatives Portland, Oregon. However, after 2010, the impact of the owl will be reversed, and projected U.S. lumber production will increase to levels above the “Base” case. Also, projected lumber imports will decline as a result of increased domestic supplies of softwood sawtimber.

Conclusions Waste paper recycling will continue to grow in the 199Os, largely as a result of legislative developments favoring recycled products. Accelerated waste paper recycling will have many important implications for future U.S. timber markets. Accelerated recycling will result in a smaller projected increase in future pulpwood harvest. This, in turn, will result in a substantial reduction af projected price increases for pulpwood and softwood sawtimber stumpage. In- creased stumpage prices associated with preservation of habitat for some en- , dangered species, such as the northern spotted owl, will tend to be offset in the IMAGINE ! long run. However, this offset effect may not avoid near-term impacts on timber Can you imagine the amount of work you could get done supply, prices and eniployment in the with a bucket like this ? Can you imagine a bucket that Pacific Northwest. would do everything any other bucket would do plus In the South, accelerated waste paper recycling will cause prices for delivered much more? Then the VERSA BUCKET is the answer softwood and hardwood pulpwood to ap- to your wiIdest imagination. proach equivalency by around 2000. Ac- celerated waste paper recycling will offset future demand growth for l INDIVIDUALLY PULL ARTICLES FROM PILES softwood pulpwood more than growth l GRAB HORIZONALLY OR VERTICALLY for hardwood, and it will mainly offset demand growth for decades to come as l CAPACITY INCREASES WITH COMPRESSION a result of accelerated recycling and l HANDLES MOST ALL MATERIALS projected growth rates for timber. As a result, there will be increased op- l FITS ALL MAKES AND MODELS portunity for domestic production of paper, paperboard and other forest MANUFACTURED BY: products, particularly in the South. RR

Referentes

(1) U.S. Department of Agriculture, Forest Serv- ice, and U.S. Department of Interior, Bureau of Land Management, “Economic Effects of P.O. Box 642 q Astoria, Oregon 97103 0 USA Implementing a Conservation Strategy for the Northern Spotted Owl,” unpublished Phone: (503) 325-5187 Cl FAX (503) 325-0397 report, 1990. Circle 200 on RR service card

131 Resource Recycling April 1992 Figure 2 shows projected softwood cling will gradually extend sawtimber to the South, and it will place increased sawtimber stumpage prices for the supplies in that region. demands on softwood sawtimber in the Pacific Northwest as derived in the alter- In contrast, the projected impact of re- South. nate scenarios. As reported previously cycling on sawtimber markets in the However, when the recycling projec- (l), the “Owls” scenario resulted in a South is much more profound and im- tions were factored into the analysis, substantial rise in projected sawtimber mediate. Implementation of the spotted they largely cancelled out the softwood stumpage prices with severe conse- sawtimber shortage in the South as quences for the timber industry in the early as 2000, and after 2000 the result Pacific Northwest. Sawtimber was pro- was a projected stabilization of saw- jected to become much more economi- timber stumpage prices. Accelerated cally scarce relative to the “Base” proj- In 1989, over 26 million waste paper recycling will have the ection, resulting in higher projected greatest timber market impact in the prices, lower timber product output, and tons of paper were South because of more rapid timber corresponding unemployment and loss recycled in U.S. paper growth rates and greater potential for of revenues in the timber industry. substitution of mature pulpwood for saw- When recycling projections were and paperboard mills. timber. added to the “Owls” scenario, projected Also, as we have noted, much of the sawtimber prices did not return to “Base” projected increase in waste paper recy- levels until sometime after 2010, but cling will occur in product grades pro- prices then dropped below “Base” produced mainly from softwood pulpwood jections. Thus, in the Pacific Northwest, owl conservation strategy and forest and mainly in the South (such as un- the severe near-term timber market im- plans designed to preserve old growth bleached kraft board and newsprint). pacts of implementing a conservation timber in the West were projected to Thus, accelerated waste paper recycling strategy for the northern spotted owl are cause a nationwide shortage of soft- will largely offset the growth in pulpwood unlikely to be avoided by accelerated re- wood sawtimber. This included the im- consumption (primarily softwood pulp- cycling. Over the long term (beyond pact of increased softwood sawtimber wood) that otherwise would have oc- 2010), however, some timber market im- prices in the South (Figure 2). The curred in the South. pacts could be reversed, because recy- timber industry will move from the West Also, as reponed previously, the pro-

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130 Resource Recychg April 1992 pulpwood and primarily in the South vious projections, we now see pulpwood matches the growing demand for pülp- from southern pine. prices stabilizing in the South for dec- wood. This will result in stable prices. At the same time, we know that timber ades to come. In other words, in con- In addition, as hardwood pulpwood management and timber growth will approaches 40 percent of pulpwood yield larger softwood timber volumes in consumption in the 21st century, hard- the future, because extensive timber wood pulpwood prices will approach planting programs are currently under- equivalency with softwood prices. With way in the South and that timber ma- the increase in recycled fiber utilization, tures in the early patt of the next cen- after 2000 hardwood and softwood pulp- tury. wood prices will move together as they become economical substitutes. Projected impacts on pulpwood More than 50 million tons As pulpwood prices are stabilized markets over the long term and as the North The estimates in Table 1 provide a stark of waste paper end Ameritan industry relies more heavily on contrast to the projections of severa1 up in a landfill recycled fiber, the combined effect will years ago. First, in terms of the U.S. be a substantial increase in fiber supply. waste paper utilization rate, we are now or an incinerator. The relative advantage of the U.S. in- looking at a future in which we are likely dustry in world markets will be sub- to reach a 31 percent utilization rate in stantially enhanced as a result of ex- the 1990s. Beyond that, we project a 40 tended fiber supply and other infra- percent utilization rate by the year 2020 structure advantages. As a result, U.S. and a 45 percent rate by 2040. Although paper and paperboard production is a future utilization rate of 45 percent projected to be substantially higher in may seem extraordinarily high by cur- these new projections, while imports will rent U.S. standards, this rate has been be somewhat lower. achieved in Japan and West Germany. In the current scenario, U.S. paper Such an acceleration in waste paper trast to the rising pulpwood prices that and paperboard production will increase utilization will have a substantial impact had been projected, the future now 5 percent by 2000 and 15 percent by on pulpwood markets. In contrast to pre- promíses timber growth that more nearly 2030 compared with earlier projections.

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126 Resource Recycling Apri/ 1992 paper go to landfills or incinerators an- and paperboard mills. The United States sustained low prices for certain wiste nually. However, in 1988, compared to has come a long way, but we still have paper commodities. all solid waste materials, paper and far to go. paperboard had one of the highest rates The paper industry recognized the Legislative activity of recovery for recycling - 30.7 percent value of recycling and has become a Much of the supply of waste paper raw (2). In 1989, the recovery rate increased leader in this area. In a major commit- material can be attributed to a flurry of to 32.6 percent. More than 26 million ment to recycling, the industry an- national and state legislative activity. At tons of paper consumed in the United nounced its national goal of 40 percent the federal level, the Environmental Pro- States were recovered for domestic re- waste paper recovery for recycling by tection Agency has passed a number of cycling or export, and more than 20 mil- 1995. The recovery of waste paper has regulations affecting waste paper recy- lion tons were recycled in U.S. paper in fact been increasing, as reflected by cling. In September 1991, it established regulations restricting the location, de- sign and operation of all municipal landfills, making the disposal of materials in landfills more difficult. EPA has also passed guidelines for federal procurement of paper and paper products, set- ting minimum content standards for the purchase of these products by federal agencies. At the state level, legislators across the nation are looking at nearly 1,000 re- Your chance to learn more. cycling bilis. On the supply side, most i “i Do you really know what -\ state legislative initiatives continue to be ccycling is? Recycling is Manufacturing fune 3-4,1992 x, ? aimed at planning requirements for SUNY ESF Campus . _, f you’re a recycling professional, you municipalities, waste reduction goals Syracuse, New York . leed to know how end-use markets and mandatory source separation (3). vork. The New York State Association On the demand side, legislation con- Registration Fee $75 x Reduction, Reuse and Recycling, tinues to focus on recycled content nc. (NYSARa) is offering five courses % (non-members $150) Includes all course material, 2 lunchel standards; 10 states have mandated re- In Plastics, Glass and Paper at the Dorm lodging available on-site cycled content for newspapers (4). :ecyclinx Experts’ Manufacturing Landfill bans and procurement policies ktninar. Instructors are industry xofessionals who will explain in detail For More Information for state agencies are also popular legis- Bethany Dawes (315) 685-3874 LOWend users make new vroducts lative initiatives. In addition, by 1990, 40 rom recyclables, and why they insist states offered grants and loans, tax in- ,n quality feedstocks, both virgin & centives or other financia1 assistance to ecycled. Come to our classroom and manufacturers that develop technologies Isk fhe questions you don? get for using recovered materials in proc- Inswered elsewhere! Registration will essing and that develop markets for the w limited to 200. end use of recovered material (3). >n-site Demonstrations With a steady supply of waste paper lisit working paper mill at SUNY ESF raw material and with legislation requir- Yorkshop on Wastepaper identification ing manufacturers to use recycled materials, the total amount of waste paper Nith Participation by: bnerican Paper Institute used for recycling has increased steadily tihoeller Technical Papers, Pulaski, NY in recent decades. This had not always ;UNY College of Environmental Science & been the case. In fact, the waste paper Gxestry consumption rate per ton of paper and paperboard actually declined after the World War ll era and began to rise only in the mid-1970s. Therefore it was reasonable to as- sume that the waste paper consumption rate would increase only gradually in the Title l’hone decades ahead. In previous research, the waste paper consumption rate was Company projected to increase in the 21 st century, but no acceleration was seen in the Address - City _ - 1990s. Until recently, this was the sort of state Zip projection included in most long-range analyses of the timber situation, includ- NYSARJ Member? __ Yes ($75) __ No6150) ing a major study of long-range timber trends in the South, known as the Pleasc make mea NYSAR member! Send me additional information. Southern Study (5). Circle 140 on RR service card

124 Resource Recycling April 1992