For a business, the true cost of waste can be 5 to 20 times worth the actual money spent on waste disposal. But what does “true cost of waste” mean?
The true cost of waste of your organisation does not only cover the costs of disposing of your waste. It also includes a number of associated costs such as:
- Cost of wasted resources: meaning purchase of resources which could have been avoided with a better use of materials
- Cost of handling
- Cost of management
- Maintenance costs on waste management infrastructures
- Lost revenue
- Any potential liabilities
When implementing a waste reduction program, the savings in the purchase of materials usually has the biggest impact on the true cost of waste. Let’s look at an example with paper consumption in an office.
Let’s assume the following:
- the office building consumes 10 tonnes of paper per week.
- Paper cost is $2,000/tonne
- Cost of disposal is $100/tonne
- No strict recycling practices.
After a waste audit, the office building management team realises that:
- 20% of the paper usage could be avoided
- With proper segregation, the waste collector is willing to take the paper waste for free.
As a result, the true cost of waste of this facility can be estimated at:
- $400/tonne for wasted resources
- $700/tonne for handling cost
- $50/tonne for management
- $10/tonne for maintenance of infrastructure
- $0/tonne in lost revenue
- $100/tonne for disposal
- Total of $1,260/tonne (12 times higher than the cost of disposal)
Here, the office building management team implements the following:
- Default setting for double-side printing on all printers
- Pull-printing on all printers
- Paper waste segregation
Finally, the true cost of waste is reduced to $760/tonne (we assumed that the cost of handling, management, and maintenance are unchanged).