The Economics of E-Waste

The modern human society is hooked on electronic devices. As a result, there is an ever-increasing stream of televisions, computer screens, mobile phones, and cameras which are being thrown out since consumers want to upgrade to a newer version. This is generating a new type of waste called e-waste or electronic waste.

In this article, we will have a closer look at what e-waste is as well as what can be done to tackle the e-waste problem in a manner that forces the economic and environmental systems to work in harmony.

How Big is the E-Waste Problem?

The number of electronic devices proliferating our daily lives have increased by heaps and bounds. Some experts predict that there are now more electronic devices in the world than there are humans! As a result, the amount of electronic waste being produced is mind-boggling. For instance, it is estimated that more than 50 million tonnes of e-waste are being generated annually. This means that the weight of all the e-waste produced in only one single year is equal to the weight of 50 Eiffel towers! Also, this tsunami is likely to continue. It is estimated that more than 120 million tonnes of e-waste will be produced every year after 2050!

To make matters worse, only about 20% of the e-waste is recycled. More than 80% of electronic waste is simply dumped away. This means that it is either dumped away in landfills or burned at incineration sites! Either way, the pollution caused is catastrophic and has a massive impact on the people living in the surrounding areas. This is the reason why most of this waste is sent to developing countries where it is disposed off, under less regulation. Developing nations have also started waking up to the menace of e-waste. Recently Malaysia has shipped back a lot of e-waste that landed upon its shores under false pretences. As of 2019, close to 67 countries have already created laws which detail exactly how the e-waste problem should be handled.

Tackling the E-Waste Problem

  • Better Recycling: As stated above, less than 20% of the devices thrown away are used for recycling. This is mostly because of the government policies which do not support recycling and reuse of materials. The reality is that one tonne of e-waste contains more gold than one tonne of gold ore! Hence, recycling is inherently economically viable because of the precious metals that electronic devices contain. The problem is that at the present moment, there is no supply chain in place which enables the collection of e-waste in one place. At the present moment, the waste is scattered in many locations. Hence, collecting them is the most expensive part of the recycling process, which makes the entire system unviable. More tax incentives by the government to companies who operate e-waste recycling facilities as well the development of a reverse logistics system would go a long way towards solving the e-waste problem and converting it into an opportunity.
  • Device as A Service Model: Another major hurdle to resolve the e-waste problem is the planned obsolescence model that many electronic device companies have been following for a long time. Under this model, they purposely make the products less durable. By doing so, they ensure that the same customer requires the same products more often. As a result, their sale increases. The bottom line is that these electronic companies want to make more money and do not mind wasting natural resources in the process. For this problem to be solved, a system needs to be designed wherein companies manufacturing electronic goods can make more money by repairing goods instead of replacing them. This will get their incentives aligned with the environment and help solve the e-waste problem.
  • The device as a service model can help electronic goods companies to make more money without wasting resources. Under this model, instead of selling the device, outright companies can provide the device to their customers for a monthly fee. As a result, if a device breaks down earlier than expected, it would not be the customer who would have to shell out money to replace the device. Instead, the electronic manufacturing company would have to do so. The monthly fee should be set in such a manner that the total cost of ownership does not change for the customers. Hence, they would be indifferent to switching from an ownership-based model to a rental model.
  • Now since the companies make money by renting devices, they would want their devices to last as long as possible. This will discourage them from producing devices which break down early. Hence, companies will start using better quality material to create devices in the first place. Also, they will start regular repairs and maintenance, which would enable the device to last longer. By slightly tweaking the economic model, the problem can be solved. The customers will not lose any money since the cost of ownership would remain the same. The manufacturers would continue to profit as much as before. However, the e-waste problem will be solved drastically cutting pollution in the developing world.

The e-waste problem is definitely huge in size as well as the geographical scale. However, it is important that the problem is also seen as an opportunity. This change in mindset is required so that entrepreneurial creativity is used and e-waste is handled in a manner which is good for the economy as well as for the environment.


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The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.


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