Toward Estimating Displaced Primary Production from Recycling: A Case Study of U.S. Aluminum

Recycling materials from end†of†life products has the potential to create environmental benefit by displacing more harmful primary material production. However, displacement is governed by market forces and is not guaranteed; if full displacement does not occur, the environmental benefits of recycling are reduced or eliminated. Therefore, quantifying the true “displacement rate†caused by recycling is essential to accurately assess environmental benefits and make optimal environmental management decisions. Our 2016 article proposed a market†based methodology to estimate actual displacement rates following an increase in recycling or reuse. The current article demonstrates the operation, utility, and challenges of that methodology in the context of the U.S. aluminum industry. Sensitivity analyses reveal that displacement estimates are sensitive to uncertainty in price elasticities. Results suggest that 100% displacement is unlikely immediately following a sustained supply†driven increase in aluminum recycling and even less likely in the long term. However, zero and even negative displacement are possible. A variant of the model revealed that demand†driven increases in recycling are less likely than supply†driven changes to result in full displacement. However, model limitations exist and challenges arose in the estimation process, the effects of which are discussed. We suggest implications for environmental assessment, present lessons learned from applying the estimation methodology, and highlight the need for further research in the market dynamics of recycling.