By Mitchell Knauf
By 1948, with the establishment of world trade organizations like the GATT, IMF, and World Bank, globalization took off in developing nations. Importing tariffs and trade barriers began to fall and Western economies observed a potential to grow. As Third World nations dropped their trade borders and companies of developed nations started to focus on profits and efficiency, firms began setting up plants in other countries. With additional pressure on the strict observation of human rights and a growing concern for the environment in developed nations, American industries were forced to pay a minimum wage and endure the costs of their pollution to the environment. By the 1980s the pressure for cost minimization and an increase in free trade from the WTO presented the companies from developed nations with an obvious choice: they could either continue their processes in America, bogged down by strict laws and a slow, expensive bureaucratic system, or they could push their production abroad and outsource their manufacturing to companies of other nations where the law enforcement was less stringent and the restrictions much looser. Many large companies began to move over the border into Mexico and into Southeast Asia, where they could turn a higher profit.
An attraction to the worst regulated nations became a “race to the bottom” as countries like China set low standards and inevitably bore the environmental costs that ensued. Traditionally, America exported environmental pollutants like nuclear waste and by-products of electricity like “nitrogen oxides, sulfur dioxide, and gaseous mercury” to China because of its particularly absent government regulations. In particular, the dumping of electronic waste, one of the fastest growing waste streams, has found its way into Asia unchecked. China, the leading importer of e-waste, suffers significant environmental and health impacts that are only getting worse without the promised government intervention. To solve this problem developing nations and businesses need to factor in the costs of environmental degradation by implementing new laws and increasing corporate and consumer expenditures.
China’s admission into the WTO creates many new opportunities for the economically booming nation, yet it also allows easy exploitation from developed countries. By lowering China’s economic borders, the free trade agreement has allowed the good in with the bad. The deficiency in human rights and environmental concerns pose growing threats to the developing cities of China, where the majority of citizens endure health problems due to the lack of government intervention and regulation. For instance, Ted Smith, a senior strategist with the California-based Silicon Valley Toxics Coalition, observes that although Chinese law forbids the importation of e-waste, “the central government… has been unable or unwilling to address it.” This lack of government regulation leads to exploitations by Western countries, which constantly obtain more and more electronic waste. The short lifetime of the technology in electronics leads to a greater problem in consumption, where consumers tend to buy new products and dispose of perfectly usable ones. This consumerism cycle has quickly become an intricate part of American culture and displays an increasing need for e-waste disposal. As this cycle merges with the cost efficiencies of sending e-waste abroad, firms see the great advantage of sending their garbage to developing nations where the problems cannot be seen.
With the need for American firms to dispose of 2.6 million tons of e-waste each year, corporations perceive exportation as a way to cut costs and increase profits. Although most European countries have ratified the ban against e-waste exports through the Basel Convention, the United States has only signed the Convention and not yet ratified it. This essentially means that e-waste exports are only illegal under the Resource Conservation and Recovery Act, and as long as an American firm exports waste with the intention to recycle it, it can do so legally. With this e-waste exportation loophole, many firms choose to send their waste abroad to countries like China, India, and Kenya. China receives the most e-waste of any country, collecting 70% of the 20-50 million tons of electronic waste produced globally each year. American firms ship this waste for extremely low rates, even though the Environmental Health Perspectives estimates that 25%-75% of it is useless and unrecyclable. The firms of developing nations greet these shipments with open arms since some of the materials fetch high prices, leaving a comfortable margin for profit. Although up to 75% may be waste, the risk is worth the reward when some of the shipments, which cost around $5,000, contain one part that sells for $15,000. In addition, many importers and exporters, knowing full well that most of the e-waste cannot be recycled, bargain the amount of processors that end up on a shipment to reduce uncertainty. Industry monitor Ted Smith encountered a U.S. exporter who mentioned “that all that was needed to get shipments past Chinese customs officials was a crisp $100 bill taped to the inside of each container.” With practices like these occurring on a regular basis, many American companies see e-waste exportation as the norm. This leads more and more corporations to feel comfortable sending their waste abroad where the recycling regulations do not exist. As these actions become commonplace most firms will be forced to export their e-waste, whether they want to or not, in order to cut costs and maintain competition with each other. This dangerous cycle has already embedded itself into American companies, where “50-80 percent of the waste collected for recycling is being exported in this way.”
American businesses also choose to send their e-waste abroad because the disposal of it in an environmentally friendly way would cost “10 times as much.” Furthermore, domestic e-waste poses a secondary threat that China cannot ignore. “China now produces more than 1 million tons of e-waste each year,” explains Jamie Choi, a toxics campaigner with Greenpeace China in Beijing. “That adds up to roughly 5 million television sets, 4 million fridges, 5 million washing machines, 10 million mobile phones and 5 million personal computers.” This demonstrates how the current economic boom in China will continue to produce a steady increase in domestic e-waste that only adds to the problems of importation.
As all this e-waste comes into China, it brings with it the harmful toxins and chemicals that are embedded deep within the microchips and plastics. Large piles of e-waste stack high in Chinese cities like Guiyu, Guangzhou, and Shantou, where underprivileged Chinese men, women, and children pick through the rubbish and sort the trash from the valuable metals. The people who own these recycling businesses force these workers to sort the valuable materials, including gold, lead, tin, copper, iron, and plastic, in ways that leave the air polluted and the water contaminated with highly toxic polybrominated diphenyl ethers (PBDEs) and lethal brominated flame-retardants. Workers burn plastics and douse metals in acidic mixtures in order to separate certain materials, leaving behind significant pollutants and toxins. The Guiyu province in China, one of the main areas for disposal, has encountered a number of environmental and health consequences. Kevin Brigden, from the Greenpeace Research Laboratories, tested streams in this province and found “acid baths leaching into them” with a strong enough pH “to disintegrate a penny after a few hours.” The pollution of the water sources in this area forces people to buy bottled water that they can safely drink and bathe in. This puts a huge financial burden on these poverty-stricken towns and significantly changes their way of life.
Professor Huo Xia of the Shantou University Medical College conducted more tests as well. She discovered after testing 165 children in Guiyu that 82% of them had blood/lead levels of more than 100, with the highest levels in children of parents who dealt with e-waste. International health experts consider anything above 100 unsafe. High levels of lead in young children can impact IQ and the development of the central nervous system. In addition to these health concerns, a local doctor proclaimed that for those who work or worked with e-waste a higher than normal miscarriage rate occurs and more handicapped babies are born. These are avoidable effects that significantly deteriorate the lives of these rural populations and no one is stepping in to educate or prevent their causes. On top of these issues, since up to 75% of the e-waste is unusable, large dumpsites tend to build up that are not properly constructed or correctly maintained. “Chemicals, including mercury, fluorine, barium, chromium, and cobalt, that either leach from the waste or are used in processing,” consequently leak into the ground and the surrounding environment due to the lack of infrastructure. Experts assert that “contamination can take decades to dissipate and long-term health effects can include kidney and nervous system damage, weakening of the immune system, and cancer.” This information does not justify a cause and effect relationship between working with e-waste and being less healthy due to a lack of concrete evidence and experimental work. It does however show a strong correlation between the two, where those who do work with e-waste are more susceptible to these negative consequences, which pose an enormous threat to their health and their environment.
In order to put an end to the dangerous effects of electronic waste and to dispose of it safely, two critical actions need to be implemented. In America, the government should force firms to take responsibility for their products by internalizing their costs and pass better legislation under the Basel Convention in order to minimize the detrimental consequences of e-waste. This solution will not take full effect overnight, but by applying the fundamental processes over the course of the next few years, e-waste could be a problem of the past, allowing thousands of individuals a humane way of life.
Firms can take the first step to reduce the risks of e-waste by removing the worst chemicals and toxins from their products in order to make them safer and easier to dispose. Apple serves as a great example that demonstrates the ability to save money while “going green.” Apple completely eliminated the use of cathode ray tube technology and adopted liquid crystal displays, which reduced the lead content in laptops from “484 grams to 1 gram.” Not only do the LCD screens provide a more enhanced and clearer picture to its customers, but it also saves them money since they “last twice as long as CRTs, cost less to replace,” and provide “monetary energy savings” through “energy efficiencies.” The environmentally friendly company also “phased out hexavalent chromium and the brominated flame retardant decabromodiphenyl ether,” a toxin commonly found in computers that is “feared to have adverse health and environmental effects.” Although Apple stepped up with the use of higher quality metals and design innovations, firms like Dell, Gateway, Hewlett Packard, and Lenovo still ship cathode ray tube displays today. Many firms can still save money by incorporating these changes that impact the environment in a helpful way. Other simple changes, like switching to recycled plastic, often reduce costs and help the environment as well. For example many companies in the past did not utilize recycled plastic because it was far more expensive, but with the “supply of oil and natural gas [becoming] limited and more expensive, prices for virgin [plastic has] soared.” With prices for new plastics high, switching to recycled plastic not only helps the environment, it also reduces the expenditures of the company. By changing the materials used in their products, companies will make disposal safer and the costs for recycling less expensive.
Although this will help to some extent, firms could significantly improve this e-waste situation by reusing and refurbishing their electronic equipment as well. Reuse of materials found in old computers and electronics will be the most realistic big step that corporations can take. Through reusing and refurbishing there will “be a diminished demand for new products, their commensurate requirement for virgin materials, larger quantities of pure water, and electricity for associated manufacturing” as well as “less packaging per unit, availability of technology to wider swaths of society due to greater affordability of products, and diminished use of landfills.” Reusing electronics will not only reduce harmful waste to deal with, but its also presents a much more cost efficient way to tackle the problems of e-waste.
Yet in order to eliminate the detrimental risks in both the developed and developing parts of the world, the most effective measure would be to pass significant legislation. With developed nations like the United States ratifying the Basel Convention or passing comparable legislation, the exportation of e-waste will significantly decrease and a domestic recycling infrastructure will be implemented. By forcing companies to take responsibility for their products throughout their lifecycles, America will eliminate many of its problems with e-waste. This solution will undoubtedly force companies to change their production strategies, creating a cleaner environment and greater global efficiency. Passing such legislation will create a new e-waste processing industry, where new companies will form, new jobs will open, and new ideas will surge. By creating a market for e-waste, new firms will attempt to make money through recycling or reusing electronic garbage and greater efficiency will be achieved through the implementation of new inventions and innovations. Economics show that any market tends to move as close as possible to productive and allocative efficiency. By adding the costs of waste to firms this efficiency will extend to the disposal of e-waste.
One does not need to look far to see examples of how making e-waste disposal a business issue creates solutions that work. Nations like Switzerland use e-waste collection points and electronic stores as free disposal sites for customers. In the EU, governments use programs like the Extended Producer Responsibility in order to make equipment manufacturers financially or physically responsible for their equipment at the end of its use. EPR internalizes the costs of e-waste and provides an incentive for innovative equipment design with less costs and liabilities. Therefore, ratifying the Basel Convention will force the United States to construct a sufficient infrastructure, and by initially using the government to subsidize the new market for e-waste disposal, a new industry will rise up with motivations to create the most efficient green design. By removing toxic chemicals, reusing old materials, and passing significant legislation that will force the creation of a recycling infrastructure, the United States will considerably lessen pollution in Asia and North America. This serves in the best interest of not only Asia and the rest of the world, but the US as well.
With the United States government burdening businesses with the costs of their product disposals, many objections will be made. New laws pertaining to business responsibilities will receive sufficient criticism because many firms believe that social accountability should be encouraged but not regulated, especially when the harmful effects occur in other countries. Yet firms need to realize that the problems of our neighbors are becoming our own. Estimates say that East Asia contributes “about 15 percent of local emissions in the U.S. and Canada.” Pollution has already started to pass over the Pacific Ocean, covering a length of 10,000 miles to arrive in the US. Satellite data confirms that “4.5 teragrams, nearly 10 billion pounds, of pollution aerosol reaches North America annually from East Asia” and that it travels through the “atmosphere in as little as one week.” Hongbin Yu, an associate research scientist at NASA, explains “this is a significant percentage at a time when the US is trying to decrease pollution emissions to boost overall air quality [because] any reduction in our emissions may be offset by the pollution aerosols coming from East Asia.” This migration of toxins will only get worse over time since pollution over the past several years has only increased in the East Asian countries. With the implementation of a new e-waste processing industry through the ratification of the Basel Convention, firms will indirectly decrease the pollution in domestic communities. By halting the exportation of metals and plastics to countries like China where they emit toxins into the air when burned improperly, a decrease in air pollution will occur domestically and overseas.
In addition, firms need to consider the increasing profits that come from “going green.” Current increases in environmental awareness among consumers equate to rewards for environmentally friendly firms. By distinguishing one’s brand from another through proactively addressing social problems like e-waste disposal, firms gain tremendous customer support and a competitive advantage. Prospective lucrative businesses exist in this new industry as well, where new innovations can create sudden fortunes for entrepreneurs. And although the inconveniences of changing chemicals may appear as a lingering cost in the present, using new materials can actually cut costs in the future. Steve Kleynhans, research vice president of IT research company Gartner, affirms that “the costs of going green are usually recovered with 12 to 18 months and do not significantly add to companies’ current operating costs.” With this strong monetary incentive and the natural innovation and inventions that the market attracts, new technologies and equipment will act as profit savers for e-waste producers.
Unfortunately no solution will completely avoid the economic burdens of bettering the environment. The monetary costs must be placed upon someone, be it the government, the customer, or the company. In order to get this new infrastructure and industry up and running the government should help subsidize some of the new costs that will make electronic products easier to reuse, as well as set up some collection points for consumer waste. In addition, companies could create a rebate system with their products, where customers pay slightly more for their merchandise, but regain the money when they return their purchases to collection sites or the electronic stores. This system would stimulate financial motivation to recycle e-waste properly and cost firms nearly nothing as long as they made the rebate cost significant. As firms and consumers adapt to this new disposal system, the government can gradually withdraw its original subsides, placing the costs on either the firms or its customers based on profitability. This solution spreads the cost over all three stakeholders, and as the government backs off completely it will serve solely as a regulator for the industry, maintaining its public collection points and making sure firms act accordingly. By actually creating a market with the e-waste infrastructure, the United States could eventually become more productive and efficient than the EU, which has had a system since 2003. The problem with their system is that the EPR (Extended Producer Responsibility) concept was implemented in a collective manner, therefore losing the competitive incentive for individual manufacturers to be rewarded for their green design. If the US government lays down strict and comprehensive legislation while keeping their hands off the business process, it will leave room for competitive advantage and the program will create superior innovation within a powerful new niche of the consumer electronics industry.
Today, the environmental costs realized through industrialization and quick resource consumption outweigh the monetary benefits gained by firms and consumers. The environment has taken a huge toll through the industrial revolutions of various developed and developing nations. By realizing this cost, the actions to include e-waste expenses as firms’ expenditures seem realistic and even necessary. Corporations need to perceive the environment as part of their costs and prevent further exploitations of the natural world to create a harmony between man and nature. They must begin to understand that the resources and environmental conditions that they abuse will begin to damage their firms in an abrupt fashion and harm the communities that they themselves live in. It is through this realization and our action that the environment will gain stability and the inevitable economic burden will not occur too hastily.
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