Further to my previous post on this subject, I have subsequently realised that the updated waste arisings' forecasts published by Defra this month were in fact already out of date when Defra published them.
We now know that the 'revised February 2013' forecasts (published in October 2013) has been updated/superseded by this version, which has been produced to support the decision to remove central government support for Norfolk.
At first glance this seems slightly puzzling, as the forecasts for arisings in the new version are higher than the old numbers. Surely this (on it's own) would increase the case for supporting Norfolk? Apparently not.
My personal view remains that these forecasts are a bit on the low side, but at least they're moving in the right direction. My central forecast is towards the upper end of Defra's range, but at least they don't look completely out of kilter with one another.
Monday 28 October 2013
Tuesday 22 October 2013
WRAP once again ignores prices
I see via MRW that WRAP has published its latest report on consumer behaviour. In it we find the startling revelation that consumers may be willing to consider trade-in business models for their unwanted goods, i.e. they'd be happy if someone is willing to pay them for their old rubbish. And other similar insights.
The report seems bemused by the fact that people would be willing to consider some of these models (repair or rental also feature as alternatives to purchase) in theory but not in practice. To me this leads to the obvious questions, how much would people in reality be willing to pay for different (e.g. repair) models? Is this cheaper than buying new?
But this doesn't seem to be considered by the report. (I may have missed it whilst skimming.)
We know that people in the UK are expensive relative to stuff. This means that in the modern consumer world it is usually now cheaper to buy a replacement product than it is to hire someone to repair it. This is a good thing. It is a sign of progress and tells us that consumers are able to afford a huge range of luxuries denied to them in the past.
I have noted before that WRAP research often ignores the central role of prices in delivering market solutions. An extraordinary oversight.
I am reminded of Oscar Wilde's line that a cynic is "a man who knows the price of everything and the value of nothing". Although in this case WRAP knows the 'value' of everything and the price of nothing.
Maybe I'm just a cynic.
The report seems bemused by the fact that people would be willing to consider some of these models (repair or rental also feature as alternatives to purchase) in theory but not in practice. To me this leads to the obvious questions, how much would people in reality be willing to pay for different (e.g. repair) models? Is this cheaper than buying new?
But this doesn't seem to be considered by the report. (I may have missed it whilst skimming.)
We know that people in the UK are expensive relative to stuff. This means that in the modern consumer world it is usually now cheaper to buy a replacement product than it is to hire someone to repair it. This is a good thing. It is a sign of progress and tells us that consumers are able to afford a huge range of luxuries denied to them in the past.
I have noted before that WRAP research often ignores the central role of prices in delivering market solutions. An extraordinary oversight.
I am reminded of Oscar Wilde's line that a cynic is "a man who knows the price of everything and the value of nothing". Although in this case WRAP knows the 'value' of everything and the price of nothing.
Maybe I'm just a cynic.
Friday 18 October 2013
Defra arisings forecasts on the low side
I see via MRW that Defra has made the unfortunate decision to pull the plug on PFI credits for Norfolk in yet another tortuous twist for that particular project. (Credits having already been pulled once by a previous Secretary of State and then reinstated.)
Defra has published analysis underpinning this decision which includes forecasts for waste arisings through to 2020. At first glance these seem too optimistic in terms of the degree to which post-recession falls in arisings will persist going forward. My central estimate of future household arisings is above the upper limit to the range considered by Defra, while my central estimate for commercial and industrial streams is towards the upper end of Defra's range.
This would imply that Defra's assumptions are biased towards lower future arisings than I would expect. On the face of it, this could undermine the subsequent analysis which concludes that we will comfortably meet the targets without supporting the Norfolk facility. (It may of course go ahead even without the credits.)
In my mind, basing future forecasts on recent historic trends when we have just been through an exceptional period of recession-induced falls in arisings and have no way of separating cyclical and structural impacts is conceptually flawed at best and dangerously naive at worst.
Defra has published analysis underpinning this decision which includes forecasts for waste arisings through to 2020. At first glance these seem too optimistic in terms of the degree to which post-recession falls in arisings will persist going forward. My central estimate of future household arisings is above the upper limit to the range considered by Defra, while my central estimate for commercial and industrial streams is towards the upper end of Defra's range.
This would imply that Defra's assumptions are biased towards lower future arisings than I would expect. On the face of it, this could undermine the subsequent analysis which concludes that we will comfortably meet the targets without supporting the Norfolk facility. (It may of course go ahead even without the credits.)
In my mind, basing future forecasts on recent historic trends when we have just been through an exceptional period of recession-induced falls in arisings and have no way of separating cyclical and structural impacts is conceptually flawed at best and dangerously naive at worst.
Tuesday 8 October 2013
New WRAP research exaggerates food waste value
I see via Edie that WRAP has published some new research examining the lost 'value' of food and packaging waste in UK supply chains (i.e. from the business sector as opposed to households). This comes to the staggering conclusion that around £7 billion is being lost to UK plc which, if addressed, could provide a significant injection to the economy through increased investment/exports/something else.
The first issue I have with the estimate is that they use average costs for estimating the 'value' of the lost food and packaging. It would be fairer and more accurate to use marginal cost data for ingredients and production costs, although I appreciate it would have been more difficult to get hold of this information.
Similarly they have included lost profit and capital expenditure in their estimates (12% of the total). This is a bit cheeky as capital spend is a fixed cost (and shouldn't be included in marginal cost estimates, as above) while absent profit is by definition not a cost (profit = revenues - costs).
So straight away we can see that their cost estimates are higher than they should be.
But the biggest issue I have with the associated headlines and rhetoric around lost opportunities for investment/the economy is that WRAP assumes that all of this 'value' can be captured at zero cost. This is utterly preposterous. The behaviour of the relevant economic agents tells us that this is not the case. Otherwise they would be doing it.
For WRAP to assume that all this waste is 'avoidable' and therefore able to be captured at zero cost is nonsense.
The first issue I have with the estimate is that they use average costs for estimating the 'value' of the lost food and packaging. It would be fairer and more accurate to use marginal cost data for ingredients and production costs, although I appreciate it would have been more difficult to get hold of this information.
Similarly they have included lost profit and capital expenditure in their estimates (12% of the total). This is a bit cheeky as capital spend is a fixed cost (and shouldn't be included in marginal cost estimates, as above) while absent profit is by definition not a cost (profit = revenues - costs).
So straight away we can see that their cost estimates are higher than they should be.
But the biggest issue I have with the associated headlines and rhetoric around lost opportunities for investment/the economy is that WRAP assumes that all of this 'value' can be captured at zero cost. This is utterly preposterous. The behaviour of the relevant economic agents tells us that this is not the case. Otherwise they would be doing it.
For WRAP to assume that all this waste is 'avoidable' and therefore able to be captured at zero cost is nonsense.
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