Master’s Project Proposal
Cost Benefit Analysis of Aseptic Carton Recycling in Bandung, Indonesia
By
Marc-Antoine Dunais
October 1, 2008
Duke Environmental Leadership Masters of Environmental Management
Proposal Approved By:
____________________________________________
Prof. Randall Kramer
Nicholas School of the Environment and Earth Sciences
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1
Introduction
Growing populations, rising incomes, and changing lifestyles contribute to severe waste
management problems in many urban centers around the world (UNEP-IETC HIID 1996). In
low-income Asian countries, a majority of municipal solid is inadequately processed. This
leads to serious environmental problems that affect the health of humans and animals and
cause economic and welfare losses. These impacts take the form of contamination of surface
and ground water through leachate, soil contamination, air pollution through open air
incineration of waste, and spreading of diseases by vectors such as rodents (Zurbrügg 2002).
Jakarta, the capital of Indonesia, is a sprawling city of 8-10 million people that is located on
the northwestern coast of the island of Java. The constant influx of people from all over
Indonesia has created severe waste management problems in the city. While some of the
waste is processed to landfills, a lot of it is burnt at transfer points, on blocks of land, and in
front of household premises. This creates smoke and odor impacts on surrounding areas.
Some of the waste is dumped in unauthorized areas and some ends up in rivers, contributing
to flooding in the city during the rainy season, as well as pollution of rivers and coastal waters
(Pasang H 2007).
In response to corporate commitments to environmental sustainability, along with new legal
requirements on waste management, several large firms in Indonesia are looking at ways to
reduce the waste created from the discarded packaging of their products. Tetra Pak Group, a
global leader in the production of aseptic cartons, has been especially proactive in exploring
and setting up recycling systems for its products around the world.
What are aseptic cartons?
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Aseptic cartons are made primarily
of paperboard (75 percent) with
thin layers of plastic (20 percent)
and aluminium (five percent),
allowing liquid food to be safely
stored at room temperature without
preservatives (Tetra Pak 2007).
One of the leading companies to
produce these cartons is Tetra Pak.
Source: (Tetra Pak Canada 2006)
Recycling of aseptic cartons
Tetra Pak’s achievements in recycling its products globally suggest that Indonesia also has the
potential to benefit from recycling of aseptic cartons. In 2007, 22 billion Tetra Pak packages
(16% of total production (Tetra Pak 2008)) were recycled in 49 market companies worldwide
(Tetra Pak).
The selection of the most optimal waste management method and technology depends among
other on local conditions such as transport distances, collection systems, markets for the
recovered material, and legislation. In some countries, cartons must be used for their energy
value (e.g. Denmark). Elsewhere, collection systems depend on laws (Germany) or culture
(India) (Tetra Pak 2008). However, in many countries there is no infrastructure for managing
household waste such as aseptic cartons usefully. Such is the case of Indonesia.
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1.1 Recycling of Tetra Pak aseptic cartons in Indonesia
Efforts to begin a recycling program for aseptic cartons in Indonesia began in earnest at the
initiative of Tetra Pak Indonesia in 2003 (Nazech). In collaboration with a local NGO, Dana
Mitra Lingkungan (DML) and the Office for Pulp and Paper, or Balai Besar Pulp dan Kertas
(BBPK), a parastatal research institution, a range of activities have been initiated. These
efforts include:
 Raising waste scavengers’ awareness of the value of Tetra Pak cartons
 Initiating education programs at local primary schools to collect used milk cartons for
recycling
 Establishing a Carton Collection Network that links scavengers, recyclers and buyers,
with the aim to ensure a continuous supply of discarded aseptic cartons to recycling
plants
Tetra Pak packing paper was first recycled in Bandung, West Java, in 2004. This activity also
succeeded in establishing collector groups in 12 TPS (Intermediate Waste Transfer
Stations).The collector groups are organized at seven transfer points, resulting in two to three
tons of recovered aseptic carton which are sent to factories. In 2006, the recycling program
expanded to East Java and has continued operations ever since (Nazech) while a similar
programme has been setup in Bali.
Challenges with recycling aseptic cartons in Indonesia
Notwithstanding the progress made by Tetra Pak to initiate recycling programs in large urban
areas, problems remain in creating a sustainable and efficient system that generates social,
financial and environmental benefits. Whereas recycling firms in Bandung and East Java have
found markets for selling pulp recycled from the cartons, it is still difficult to recover and sell
the polyethylene and aluminum (“polyfoil”) component. With a production of about 1.5
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billion packages in Indonesia in 2007, Tetra Pak estimates that it currently only recycles less
than one percent of this amount (Akiyama 2008).
Another constraint is selling recovered materials at a price that ensures sufficient profit
margins for recyclers. Recycling costs need to take into account the purchase of discarded
cartons, the resources used to recycle the cartons and their processing. In 2008, research by
BBPK, the research institute retained by Tetra Pak to explore opportunities for recovering
ALL components of aseptic cartons, revealed that one cost-effective option of using polyfoil
from aseptic cartons was to use it as a coagulant. However, it is as yet unclear what market
prospects exist for this use (Akiyama 2008).
Master’s project scope and focus
This Master’s Research project responds to the challenges faced by Tetra Pak Indonesia in
promoting the recycling of its aseptic cartons in the city of Bandung. The research will
explore the costs and benefits of recycling aseptic cartons and provide recommendations for
increasing recycling capacity at BBPK.
Research questions
Can BBPK’s sales of recovered Tetra Pak materials (pulp and polyfoil) cover all costs arising
from sourcing, transporting and recycling discarded cartons and unused Tetra Pak
packaging?1 If not, what options are available to BBPK and Tetra Pak to increase recycling
capacity?
1
Currently, Tetra Pak pays for the collection and transportation of pre consumer aseptic carton waste
from factories to BBPK
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Objectives
1. Determine the cost of recycling 1 kg of aseptic cartons, factoring in processing expenses
(collection, transportation, sorting, cleaning, recycling, storage etc)
2. Based on the results of (1), identify the break even price for selling recovered pulp and
polyfoil from aseptic cartons
3. Identify willingness to pay (WTP) by prospective buyers for the components of recovered
carton materials (pulp and polyfoil)
4. If there is significant discrepancy between prospective buyer WTP and the selling price
for recovered carton materials, identify and assess options available for BBPK to reduce
recycling costs of aseptic cartons
Methodology
1. Recycling data collection and analysis: This data will be used to determine the real cost
of recycling 1 kg of aseptic cartons. Information on costs for collecting, transporting,
inspecting, sorting and disposing aseptic cartons from existing collection centers to
BBPK, and the current monthly volume of collected aseptic cartons, will be sought from
BBPK; costs for collecting and transporting pre consumer waste from Tetra Pak factories
to BBPK will be sought from Tetra Pak Indonesia; costs for recycling 1 kg of aseptic
cartons (human resources, electricity, maintenance, packaging) will be sought from
BBPK; Yields in terms of volume of recovered materials from 1 kg of aseptic cartons will
also be sought from BBPK. This information will make it possible to identify the break
even price for selling recovered materials from aseptic cartons
2. Willingness to Pay (WTP) study: To identify the WTP of prospective or potential buyers
of pulp and polyfoil, the Contingent Valuation Method (CVM) will be applied using an
open-ended question format (Hanley N 2001). As a result of this study, it will be
determined whether break even selling price and WTP differ at a significant degree.
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3. Cost Benefit Analysis (CBA): The CBA will assess the costs and benefits of recycling
aseptic cartons at BBPK in Bandung. Benefits and costs will be based on a mean price
derived from steps one and two, converted into present value terms using an appropriate
discount rate. If possible, the benefits will also factor in monetary terms the savings in
terms of foregone landfill costs (e.g. based on tipping fees). The CBA will be carried out
over the expected lifetime of the recycling facility, and sensitivity analysis will be applied
to determine the relative impact of increases in energy prices (including fuel costs for
transportation) and personnel wages. The CBA will show whether recycling can be costeffective for BBPK if it internalizes all the processing costs for the aseptic cartons that are
used. If the CBA does not show any net benefits for recycling aseptic cartons for the
stated WTP, then it will be necessary to consider if increasing recycling capacity at BBPK
can reduce the relative operational costs.
4. Recommendations: A set of recommendations will be made for BBPK and Tetra Pak in
light of the results of the study. These will outline measures that both parties can
implement to make recycling more effective in Bandung.
Outputs

Written report to be submitted as part of Master’s degree requirement

Powerpoint presentation to be submitted as part of Master’s degree requirement

Powerpoint presentation to be presented to Tetra Pak Communications and Marketing
divisions in Jakarta
To the extent that Tetra Pak and BBPK are the main beneficiaries of this research, it is
expected that the results will be used by both parties and hopefully by other Tetra Pak offices
in other countries.
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Faculty Advisors
The primary advisor for this project is Professor Randall A. Kramer, Nicholas School of the
Environment and Earth Sciences.
Sources of information and support
Data for this research will be sourced from PT. Tetra Pak Indonesia and BBPK. Other sources
of information will include Dana Mitra Lingkungan, Yayasan Kontak Indonesia (YSI) and
AMPL, two non-profits involved in waste management and recycling. All parties (except for
YSI) have already been contacted and are aware and supportive, in principle, of this
dissertation.
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References
Akiyama, M. M. (2008). M. M. Akiyama. Jakarta.
Hanley N , S. J., B White (2001). Introduction to Environmental Economics, Oxford
University Press.
Nazech, E. K. M. Program Daur Ulang Kemasan Kertas Tetra Pak. D. M. Lingkungan.
Jakarta.
Pasang H , M. G., and S Guntur (2007). "Neighbourhood-based waste management: A
solution for solid waste problems in Jakarta, Indonesia." Waste Management 27: 14.
Tetra Pak. "Environmental Performance." Retrieved July 22, 2008, from
http://markets.tetrapak.com/environmentalperformance/content/frset_main.asp?navid=146.
Tetra Pak (2007). "Aseptic Carton Structure."
http://www.tetrapakrecycling.co.uk/tp_structure.asp. Retrieved July 22, 2008.
Tetra Pak (2008). "Recycling Technologies." Retrieved September 10, 2008, from
http://www.tetrapak.com/environment/recycling_and_recovery/recycling_technologies/Pages/
default.aspx.
Tetra Pak (2008). "Tetra Pak Group Markets." Retrieved July 22, 2008, from
http://markets.tetrapak.com/environmentalperformance/content/frset_main.asp?navid=146.
Tetra Pak Canada (2006). "Environmental Focus." Retrieved September 28, 2008, from
http://www.tetrapak.ca/email/enviro-images-sept/english.html.
UNEP-IETC HIID (1996). International Source Book on Environmentally Sound
Technologies for Municipal Solid Waste Management, United Nations Environment
Programme (UNEP), International Environmental Technology Centre (IETC).
Zurbrügg, C. (2002). Urban Solid Waste Management in Low-Income Countries of Asia:
How to Cope with the Garbage Crisis. Urban Solid Waste Management Review Session,
Durban, Durban, South Africa.
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