Why do I need to calculate the total cost of my waste?
There are six basic cost categories to include in a total waste cost analysis. These
include:
1. Wasted Raw Material Cost
2. Waste Disposal Cost
3. Waste Transportation Cost
4. Waste Related Labor Cost
5. Miscellaneous Waste Costs
6. Future Disposal Liability Costs
All of these cost categories should be included in an economic analysis to determine the
feasibility of a waste prevention idea. If only some of the cost components are included
in an analysis, then costly mistakes are likely to occur as explained in the following three
steps:
Step 1. The graph below compares the cost of waste prevention to the cost of waste
disposal. The vertical axis represents money and the horizontal axis represents waste
quantity. The cost of waste disposal is zero for disposing of zero waste quantity. In this
example, the cost of waste disposal linearly increases as waste quantity increases. The
cost of waste prevention is zero to reduce zero waste quantity. In this example, the cost
of waste prevention slowly increases initially to represent the “low hanging fruit”. Then
the cost of waste prevention increases exponentially as waste quantity increases.
To achieve maximum savings and waste prevented, waste must be reduced until the cost
of waste prevention is equal to the total cost of waste generation. Point A represents the
economically feasible waste quantity in this example. Waste quantities to the left of
point A can be reduced at a savings to the facility. Waste quantities to the right of point
A cost more to prevent then to continue generating.
Step 2. The graph below compares the cost of waste prevention to the total cost of waste
generation. In this example, the total cost of waste generation is linearly increasing at a
greater slope than the waste disposal cost. This represents the total waste cost being
greater than waste disposal cost.
Here Point B represents is the economically feasible waste quantity. Waste quantities to
the left of point B can be reduced at a savings to the facility. Waste quantities to the right
of point B cost more to prevent then to continue generating.
Step 3. The graph below compares the total cost of waste generation to only the cost of
waste disposal.
Conclusion: By using only the waste disposal cost in an economic analysis, the waste
quantity going from point A to point B would not be prevented and its associated savings
would not be realized.
EXAMPLE:
An engineer wants to install two new dedicated pipe runs from the paint mix room to the
spray booths to reduce line cleaning waste. However, he doesn’t have the time to
calculate the total cost of the waste. So the engineer uses only the waste disposal cost in
the calculations!
Engineering Calculations:
Total Implementation Cost: $10,000
Estimated Waste Prevented:
5,000 gallons per year
Disposal Cost Analysis:
Disposal Cost: $0.40/gallon
Annual Savings: $0.40/gallon x 5,000 gallons/year = $2,000/year
Payback Period: $10,000/($2,000/year) = 5 years
Result:
Management rejects the idea of two new dedicated pipes!
So the engineer goes back and collects more cost data to calculate the total cost of the
waste:
Waste Disposal . . . . . . . . . . . . .
Waste Transportation . . . . . . . .
Wasted Raw Materials . . . . . .
Waste Related Labor . . . . . . . . . .
$0.40/gallon
$0.04/gallon
$3.05/gallon
$0.03/gallon
Total Waste Cost:
$3.52/gallon
The total Annual Savings is really: $3.52/gallon x 5,000 gallons/year = $17,600/year
Payback Period: $10,000/($17,600/year) = 7 months
Result:
Management decides to install the dedicated pipes!
Conclusion: By using the total cost of the waste instead of just the waste disposal cost
component the following was achieved:
Reduced Waste: 5,000 gallons/year
Annual Savings: $17,600/year
Improved Quality (reduced cleaning contamination)