GDP and waste

Waste recycling not only has positive effects on the environment but also at an economic level, since it contributes to the GDP, and at a social level, as a generator of employment.Waste, just like any activity in our society, is a part of the economy. It contributes to the generation of wealth, produces goods and services, and also generate employment.

What is GDP?

GDP (Gross Domestic Product) is a concept that is used in macroeconomics to measure the operations and flows of the economy in a country or region, in order to obtain an overall vision.

In more technical words, GDP is the monetary market value of the production of physical goods and final services carried out over a year’s economy by the productive factors in a country.

How much does the waste sector contribute to the GDP?

In Catalonia, it is estimated that its contribution for the year 2013 was around €12,000 M, that is, 6% of the Catalan[1] GDP. In Spain, it is estimated at almost €11,000 M for the year 2011, which is 1% of the Spanish[2] GDP. In Europe[3] (EU27), the contribution of the waste sector is estimated to be over €130,000 M/year for the year 2012, which represents 1% of the European GDP. According to the United Nations Environment Program[4] (UNEP), the global waste market is estimated to be at €410,000 M for the year 2011, which would represent 0.6% of the world GDP.

The waste sector accounts for 6% of the Catalan GDP, and 1% of the Spanish and European GDP

Different companies participate in the management and treatment of waste to generate this economic activity in the waste sector: in Catalonia,[5] (2013), 900 companies; in Spain,[6] (2010), a total of 2,400 companies. In Catalonia,[7] in addition to these 900 waste treatment and direct management companies are the 2,900 waste transport companies, as well as those that manufacture machinery and those involved in engineering and consulting services.

Relationship between GDP and waste

Historical data indicates that in most industrialized countries there is a direct relationship between waste generation and economic activity.

Over time, and specifically as a result of the progress experienced in the twentieth century from both the technological point of view and the development of society and the economy, the GDP increased 23 times, mineral extraction 27 times, fossil fuel consumption 12 times and the total extraction of materials 8 times, among other[8] data.

Equally, if we examine the GDP of different European countries and the generation of municipal waste (a rough indicator of partial consumption of resources) we see:

GPD and Waste graf Source: Official data of EUROSTAT, with GDP and the municipal waste of the year 2012

This graph shows a clear general trend: the higher the level of wealth or development of a country (GDP), the greater its waste generation.

This trend implies that if a country wants to progress in its development, it will generate more waste, with the current model. For example, if Spain (with a GDP = 1 trillion Euros and generating 21 million tons/year) proposed to increase its GDP by an additional 1 trillion, equaling the United Kingdom, the municipal waste generation would increase by more than 6 million tons/year (up to 27 million tons/year).

There is a direct relationship between the increase in wealth or GDP of a country and the increase in waste

Due to the shortage of the world’s natural resources, which as I said before are finite, the overexploitation of materials is one of the main priorities worldwide, both for the UN[9] and for the EU. Therefore, it is necessary to develop economic activity and production (to achieve human well-being) by reducing both global consumption and the impacts of the extraction of natural resources.

All of these reasons make it important to stand firm and work towards waste reduction, the dematerialization and efficiency of the economy, and the development of new concepts or the use of tools such as the circular economy (in the following posts).

Want to know more?

i   The book Stop garbage. The truth about recycling, Alex Pascual, February 2019

i   Official website of waste statistics:

https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Waste_statistics/es

[1].  Generalitat de Catalunya

[2]. Only the data of 3.6% is available for the entire environmental sector. It is assumed that 30% of the contribution is due to the waste sector

[3]. 1% on “Resources and waste,” 2012, and 0.75% found in “El Medio Ambiente y Europa” SOER 2011, both studies from European Environment Agency

[4]. General prevention and waste management Program in Catalonia 2013-2020

[5].  Agència de Residus de la Generalitat de Catalunya residus.gencat.cat

[6]. “Economic study about the environmental sector in Spain 2011,” Fundación Fórum Ambiental.

[7]. General prevention and waste management Program in Catalonia 2013-2020

[8]. “Decouple the use of natural resources and the environmental impacts of economic growth,” 2011, ONU-UNEP

[9]. “Europe 2020,”the EU’s growth strategy for the next decade.