Every year, we produce an estimated 1.3 billion tonnes of municipal solid waste (MSW) globally. The World Watch Institute estimates this will rise to 2.6 billion tonnes by 2025.

And that’s just MSW. In 2010, the European Community generated a total of 2.3 billion tonnes of waste, of which Britain ‘contributed’ 230 million (Source: Eurostat). So, how do we quantify what this is worth? Historically, as these figures reflect, we operate in a business that has focused on waste in terms of its weight, and the costs associated with dealing with it. Even today, figures that reflect the value of the waste management industry do so citing the turnover of companies paid for disposal. Inevitably, this misses the value of waste as a resource and the cost to society.

One prima facie approach is to match specific parts of the waste stream to their secondary material price. This does have the advantage of reflecting the value of items as they are collected, showing what it’s worth to operators in this industry. For instance, on this basis, paper and board in the UK waste stream is currently estimated to be annually worth in the region of £200 million (see opposite), and that’s just the value to collectors.

However, this approach misses something. Antoine Lavoisier, the father of modern chemistry, famously proposed a law governing the conservation of matter – namely that it ‘cannot be created or destroyed, only redistributed’. It means waste that does not biodegrade is consequently a reduction in the resources available to us on this planet. In this story of waste as a resource, the value of what is wasted needs to reflect the cost of replacing it.

The European Community’s revised Waste Framework Directive does, albeit fleetingly, introduce this notion, referring to impact of recovery and disposal in terms of ‘the substitution of natural resources in the economy and recognising the potential benefits to the environment and human health’.

This approach asks us to consider the full costs associated with the supply chain of raw materials, as well as opening the door for wider costs such as the impact of greenhouse gas emissions. According to Julian Parfitt, Principal Resource Analyst at Oakdene Hollins, these costs are especially stark and variable when it comes to considering food waste and the impact of preventing this: “In something like the hospitality sector, there are considerations like labour, energy, the cost of food procurement. As a result, it’s very easy to get large numbers when it comes to this.”

This poses a challenge for an industry used to quantifying its value in terms of the cost of disposal or the sale of secondary materials. As Parfitt notes, such a shift in approach can be very open-ended: “It gets very complicated when you start talking about environmental valuation techniques and capturing the full cost. You have to look at how realistic the value of carbon is, and all the areas that you are paying for a raw material.

“But even then, there are the externalities, the non-renewables issue of these being finite and the issue of material scarcity, which does not come into valuation easily. This includes the difficulty between known reserves of a raw material versus the estimated reserves, and there is no way of easily differentiating the value between more renewable and finite resources at the moment. It just comes down to what the market is prepared to pay.”

Our basic model seems to assume all materials are infinitely substitutable, so markets do not adequately reflect that resources are scarce. This makes pricing the full value of recycling, reuse, and especially prevention tricky. But this should not alter the fact that, as an industry, the real value lies in what raw materials are displaced, not in the cost of disposal.