How much does Recycling Reduce Imports? Evidence from Metallic Raw Materials

In countries with limited exhaustible natural resources, reducing imports of raw materials is increasingly viewed as a significant side benefit of waste recycling. Using a panel of 21 developed and developing countries from 1994-2008, we seek to measure the size of this benefit by estimating the impact of metal scrap recovery on imports of metallic raw materials. We deal with the endogeneity of metal recovery with exogenous country characteristics including population density, the level of education, and knowledge of environmental technologies. We also develop a strategy for controlling for the price volatility in raw material markets. We find that increasing metal recovery by 10% reduces imports of metallic raw materials by 3.3% in our base specification. This result confirms that waste policies that favor recycling may have a sizeable impact on the balance of trade