Hostname: page-component-78c5997874-v9fdk Total loading time: 0 Render date: 2024-11-11T16:59:23.440Z Has data issue: false hasContentIssue false
  • English
  • Français

Challenging pollution and the balance problem from rare earth extraction: how recycling and environmental taxation matter

Published online by Cambridge University Press:  21 April 2020

Bocar Samba Ba ,
Pascale Combes-Motel  and
Sonia Schwartz Open the ORCID record for Sonia Schwartz [Opens in a new window]
Bocar Samba Ba
Affiliation:
Terres Univia, Paris, France
Pascale Combes-Motel
Affiliation:
Université Clermont Auvergne, IRD, CNRS, CERDI, Clermont-Ferrand, France
Sonia Schwartz*
Affiliation:
Université Clermont Auvergne, IRD, CNRS, CERDI, Clermont-Ferrand, France
*
*Corresponding author. E-mail: sonia.schwartz@uca.fr
Get access Rights & Permissions [Opens in a new window]

Abstract

Rare earth element extraction induces environmental damages and the balance problem. In this article, we show that recycling can challenge both problems in a two-period framework. We also find other results depending on the amount of scrap that can be recycled. If the recycling activity is not limited by available scrap, it does not change extraction in the first period. Environmental taxes on extracted quantities reduce extraction and favor recycling. But if the recycling is limited, the extractor reduces extraction in period one, adopting a foreclosure strategy, and environmental taxes can decrease recycling. In all cases, environmental taxes are never equal to the marginal damage from pollution, in order to take into account the recycling effect.

Keywords

rare earth elementspollutionbalance problemrecyclingPigouvian taxationCournot competition

JEL classification

Q58: Government Policy L72: Mining, Extraction, and Refining: Other Nonrenewable Resources Q53: Air Pollution • Water Pollution • Noise • Hazardous Waste • Solid Waste • Recycling L13: Oligopoly and Other Imperfect Markets
Type
Research Article
Information
Environment and Development Economics , Volume 25 , Special Issue 6: The Environment, Resources and Pollution – New Challenges for Economic Development , December 2020 , pp. 634 - 656
Copyright
Copyright © Cambridge University Press 2020

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

An, Y, Zhang, L and Adom, P (2019) Economics of wastewater management in China's industry. Environment and Development Economics 24, 457–478.CrossRefGoogle Scholar
Andre, FJ and Cerdà, E (2006) On the dynamics of recycling and natural resources. Environmental and Resource Economics 33, 199–221.Google Scholar
Ba, BS and Mahenc, P (2018) Is recycling a threat or an opportunity for the extractor of an exhaustible resource? Environmental and Resource Economics 73, 1109–1134.Google Scholar
Baksi, S and Long, NV (2009) Endogenous consumer participation and the recycling problem. Australian Economic Papers 48, 281–295.CrossRefGoogle Scholar
Barnett, AH (1980) The Pigovian tax under monopoly. American Economic Review 70, 1037–1340.Google Scholar
Binnemans, K (2014) Economics of rare earths: the balance problem. Paper presented at the 1st European Rare Earths Resources Conference, 4–7 September 2014, Milos, Greece.Google Scholar
Binnemans, K and Jones, PT (2014) Perspectives for the recovery of rare earths from end-of-life fluorescent lamps. Journal of Rare Earths 32, 195–200.CrossRefGoogle Scholar
Binnemans, K and Jones, PT (2015) Rare earths and the balance problem. Journal of Sustainable Metallurgy 1, 29–38.CrossRefGoogle Scholar
Binnemans, K, Jones, PT, Acker, KV, Blanpain, B, Mishra, B and Apelian, D (2013a) Rare earths economics: the balance problem. Journal of Metals 65, 846–848.Google Scholar
Binnemans, K, Jones, PT, Blanpain, B, Gerven, TV, Yang, Y, Walton, A and Buchert, M (2013b) Recycling of rare earths: a critical review. Journal of Cleaner Production 51, 1–22.CrossRefGoogle Scholar
Buchanan, J (1969) External diseconomies, corrective taxes, and market structure. The American Economic Review 59, 174–177.Google Scholar
Campbell, G (2014) Rare earth metals: a strategic concern. Mineral Economics 27, 21–31.Google Scholar
David, M and Sinclair-Desgagné, B (2005) Environmental regulation and the eco-industry. Journal of Regulatory Economics 28, 141–155.CrossRefGoogle Scholar
Duraiappah, AK, Xin, Z and Van Beukering, PJH (2002) Issues in production, recycling and international trade: analysing the Chinese plastic sector using an optimal life cycle (OLC) model. Environment and Development Economics 7, 47–74.Google Scholar
Elshkaki, A and Graedel, TE (2013) Dynamic analysis of the global metals flows and stocks in electricity generation technologies. Journal of Cleaner Production 59, 260–273.CrossRefGoogle Scholar
Elshkaki, A and Graedel, TE (2014) Dysprosium, the balance problem, and wind power technology. Applied Energy 136, 548–559.Google Scholar
Falconnet, P (1985) The economics of rare earths. Journal of the Less-Common Metals 111, 9–15.CrossRefGoogle Scholar
Fernandez, V (2017) Rare-earth elements market: a historical and financial perspective. Resources Policy 53, 26–45.Google Scholar
Fizaine, F (2013) Byproduct production of minor metals: threat or opportunity for the development of clean technologies? The PV sector as an illustration. Resources Policy 38, 373–383.CrossRefGoogle Scholar
Folger, T (2011) The secret ingredients of everything. National Geographic Magazine, June 2011.Google Scholar
Gaskins, D (1974) Alcoa revisited: the welfare implications of a secondhand market. Journal of Economic Theory 7, 254–271.Google Scholar
Gaudet, G and Long, NV (2003) Recycling redux: a Nash–Cournot approach. The Japanese Economic Review 54, 409–419.CrossRefGoogle Scholar
Golev, A, Scott, M, Erskine, PD, Ali, SH and Ballantyne, GR (2014) Rare earths supply chains: current status, constraints and opportunities. Resources Policy 41, 52–59.CrossRefGoogle Scholar
Grant, D (1999) Recycling and market power: a more general model and re-evaluation of the evidence. International Journal of Industrial Organization 17, 59–80.CrossRefGoogle Scholar
Gupt, Y (2015) Economic instruments and the efficient recycling of batteries in Delhi and the National Capital Region of India. Environment and Development Economics 20, 236–258.CrossRefGoogle Scholar
Hetzel, P and Bataille, D (2014) Etudes de faisabilité de la saisine sur les enjeux stratégiques des terres rares. Office Parlementaire d'Evaluation des Choix Scientifiques et Technologiques, n$^\circ $ 617 tome I (2015–2016) (in French).Google Scholar
Hollander, A and Lasserre, P (1988) Monopoly and the preemption of competitive recycling. International Journal of Industrial Organization 6, 489–497.CrossRefGoogle Scholar
Ichihara, M and Harding, A (1995) Human rights, the environment and radioactive waste: a study of the Asian rare earth case in Malaysia. Review of European, Comparative and International Environmental Law 4, 1–14.CrossRefGoogle Scholar
Kingsnorth, DJ (2012) The global rare earths industry: a delicate balancing act. Paper presented at Deutsche Rohstoffagentur, 16 April 2012, Berlin, Germany. Available at http://www.deutsche-rohstoffagentur.de/DERA/DE/Downloads/RD_kingsnorth_2012.pdf?__blob=publicationFile&v=2.Google Scholar
Levin, D (1985) Taxation within Cournot oligopoly. Journal of Public Economics 27, 281–290.CrossRefGoogle Scholar
Mankiw, NG and Whinston, MD (1986) Free entry and social inefficiency. Rand Journal of Economics 17, 48–58.CrossRefGoogle Scholar
Martin, RE (1982) Monopoly power and the recycling of raw materials. The Journal of Industrial Economics 30, 405–419.CrossRefGoogle Scholar
Massari, S and Ruberti, M (2013) Rare earth elements as critical raw materials: focus on international markets and future strategies. Resource Policy 38, 36–343.Google Scholar
Muller, M, Schweizer, D and Seiler, V (2016) Wealth effects of rare earth prices and China's rare earth elements policy. Journal of Business Ethics 138, 627–648.CrossRefGoogle Scholar
OECD (2015) Rare earth elements factsheet. In Material Resources, Productivity and the Environment. Paris: OECD Editions.Google Scholar
Packey, DJ and Kingsnorth, D (2016) The impact of unregulated ionic clay rare earth mining in China. Resources Policy 48, 112–116.CrossRefGoogle Scholar
Schüler, D, Buchert, M, Liu, R, Dittrich, S and Merz, C (2011) Study on Rare Earths and Their Recycling. Final Report for the Greens/EFA Group in the European Parliament. Öko-Institut e.V., Freiburg, Germany.Google Scholar
Seyhan, D, Weikard, HP and Ierland, EV (2012) An economic model of long-term phosphorus extraction and recycling. Resources, Conservation and Recycling 61, 103–108.Google Scholar
Simpson, RD (1995) Optimal pollution taxation in a Cournot duopoly. Environmental and Resource Economics 6, 359–369.CrossRefGoogle Scholar
Suslow, VY (1986) Estimating monopoly behavior with competitive recycling: an application to Alcoa. The Rand Journal of Economics 17, 389–403.CrossRefGoogle Scholar
Swan, PL (1980) Alcoa: the influence of recycling on monopoly power. Journal of Political Economy 88, 76–99.CrossRefGoogle Scholar
US EPA (2012) Rare Earth Elements: A Review of Production, Processing, Recycling, and Associated Environmental Issues (Report number EPA-600-R-12-572). US Environmental Protection Agency, Office of Research and Development. Available at https://nepis.epa.gov/Adobe/PDF/P100EUBC.pdf.Google Scholar
US Geological Survey (2016) Mineral Commodity Summaries 2016. US Geological Survey. Available at http://dx.doi.org/10.3133/70140094.CrossRefGoogle Scholar
Weikard, HP and Seyhan, D (2009) Distribution of phosphorus resources between rich and poor countries: the effect of recycling. Ecological Economics 68, 1749–1755.CrossRefGoogle Scholar
Wübbeke, J (2013) Rare earth elements in China: policies and narratives of reinventing an industry. Resources Policy 38, 384–394.CrossRefGoogle Scholar
Yang, X, Zhang, J and Fang, X (2014) Rare earth element recycling from waste nickel-metal hydride batteries. Journal of Hazardous Materials 279, 384–388.Google ScholarPubMed
Yokoo, H and Kinnaman, T (2013) Global Reuse and optimal waste policy. Environment and Development Economics 18, 595–614.Google Scholar