Cost Benefit Analysis of Aseptic Carton
Recycling in Bandung, Indonesia
Marc-Antoine Dunais
Nicholas School of the Environment
Duke University
Background
• In low-income Asian countries, a majority of
MSW is inadequately processed
• Results in environmental problems
affects the health of humans and animals
causes economic and welfare losses
Background
• Bandung is Indonesia’s third largest city: 6 million
habitants, 3% annual population growth rate, 8000
m3 of waste generated each day
Burnt (toxic fumes)
Processed to landfills
Recycled
Dumped (causes flooding,
coastal pollution)
Aseptic cartons
Allow liquid food to
be safely stored at
room temperature
without
preservatives
Consist of:
• paperboard (75%)
• plastic (20%)
• aluminum (5%)
Aseptic 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
Scope & 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
Methodology
1
Collect data on economic costs and benefits of
recycling aseptic carton material at BBPK
2
Carry out CBA to determine the economic values
of aseptic carton recycling
3
Apply sensitivity analysis to the CBA
About 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)
Scenario 1
Scenario 2
Baseline/Business as BBPK pays for the
usual
purchase of waste
cartons in Bandung
Scenario 3
BBPK pays for the
purchase of
discarded cartons
and sells polyfoil in
addition to pulp
BBPK continues to
receive financial
support from Tetra
Pak
Long-term scenario
Potential scenario
for BBPK starting in
2010
Results
Scenario 1
Scenario 2
Baseline/Business as BBPK pays for the
usual
purchase of waste
cartons in Bandung
- Negative cash flow
(NPV = - USD 58,618)
- 50% increase in the
amount of aseptic cartons
recycled per year creates a
positive NPV
Scenario 3
BBPK pays for the
purchase of
discarded cartons
and sells polyfoil in
addition to pulp
- Substantial negative cash - Negative cash flow
flow (NPV = - USD 426,790) (NPV= - USD 70,997)
- Sensitivity analysis for
Quantity of Aseptic Cartons
and Purchasing Price of
Aseptic Cartons shows
positive cash flow
Discussion
• 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
Recommendations
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*
Conclusions
• 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!