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The Recovery Paradox

The Recovery Paradox appears if the provider of a waste disposal service can sell or use the waste with a profit. The disposal-enterprise no longer acts as supplier of a serviceonlyit also is a supplier for recovered resources.

The waste-industry facesa new concept of success. The disposal "service" is not only the one which can efficiently meet the needs of the provider of waste it is a production plant too. Equipped with modern recycling plants, the disposal enterprise can transform parts of the waste into valuable new resources. Preconditions for trading with waste as a good. Each production is a joined production. While manufacturingunintended output occurs,this can be a byproduct or waste. Goal of an efficient ecological and economical useofresources is the reduction of waste and maximizing the material ina production process. These materials are reused and recycled waste.

•	The transformation of waste into byproducts has to takes place directly within the joint production. No waste occurs due to an internal recycling plant.

•	A production plant takes the "waste" and recycles it, if necessary. By doing so the plant produces a good which is no more "waste" as defined in the AWG but can be sold on the market.

•	A disposal enterprise collects the waste and prepares it for further use. It might still be waste depending on legal definitions.

Newpotentialsalsorequire closer cooperationin waste management.Marketsthat were previouslyrelatively clearsplitinsalesandprocurement managementbegin to merge. Recognizing the business profit chance of the waste, companies gain the opportunityof diversification. In contrast, wasteproducersnoted thatinstead of the previouswastetheyproducepotentiallyvaluable raw materials. They are no longer seen as customers only but also as suppliers. Competitors who previously were acting just as clients enter the market and the scope of decision of waste companies is decreasing. On the other hand, the scope of waste managementcompaniesis also increasing, as it opens uppotentiallyprofitablealternatives to the currentdisposalofmaterials. Waste management companies will not be willing to pay for materials, which have been treated as waste but could generate a profit if the materials are still useful. Nevertheless the customer has to pay a disposal fee, even if the materials may have a value. It turns out that for transactions with waste it is not obvious anymore from the beginning who is the supplier and who the customer.

The recovery paradox can seriously complicate the relationship in waste management, especially if both parties see themselves in the same role, e.g. as supplier. Although the Austrian Waste Management Act (AWG) defines at which step waste converts to useful material, it is possible that the transformation could happen mentally. When transformation to a useful material begins at the receiving company, it is very difficult for companies who try to sell their waste as a product. Resolving the complexity of recovery paradox The recovery paradox evokes complexity, which has to be reduced. It is necessary that on both sides, waste producer and waste management company, a productive management measure to market waste could be done. Simplifying through resolving opposites of “obtaining or sales” In that first simplifying step we can distinguish through abstraction different terms (waste producer, buyer and waste remover) to characterize the exchange of performances of waste throughout the necessary communication process. Today not only the performance (such as product, waste and service of waste disposal) is important, also actorsand their role as supplier and/or consumer are important. In that case a company, which offers a service, can also be the one who is “obtaining”. Or the other way round a company asking for service can be the “selling” one. It is always the question who is supplier or demander and who is expecting a consideration and how much. So it could be the one who sells the waste or the one who is receiving the waste. Therefore it is important to consider the transition of obtaining to sales as a continuum and to decide in individual cases weather one is obtaining or selling. Simplifying through resolving opposites of “service or payment in kind” A further simplifying can be done by ignoring differentiation between a service (provision of waste disposal service by waste management company) and payment in kind (provision of inset resource of waste producer). This is possible with an information economic model: Principal-agent relation. In case of recovery paradox it’s not possible to say who is the agent or principal, especially if now money is used for transaction. The mutual dependence is shown when at the same time the one, who is receiving the waste (principal), is ensuring the disposal of waste (so as an agent). While the producer of waste (agent) offers raw materials to his costumer, but simultaneous buying a waste disposal service- so he is also a principal. In that case it is senseless to distinguish between a service and payment in kind.

Conclusion

The change of waste management from being a refuse disposal industry to a primary producing platform is a huge challenge for existing waste management companies. If they push innovations of recycling and exploitation forward, they make the market attractive and motivate previous consumers to a forward integration. The conclusion to be drawn from this, is called recovery paradox, which is a challenge for all waste management companies to secure their market position. The prevention against the existing uncertainty and intensification of competition is either to shorten the effect of recovery paradox or even not to let it come into effect. If it is the reason that sales for previous waste are higher, it is necessary to go without short term maximization of profits and giving way in financial claim for waste disposal service. Therefore the market position can be saved. The transaction-model is helping by reviewing transaction, taking place under recovery paradox, and to find optimal solutions for each situation.

Literature: Abfallrahmenrichtlinie (2008) Richtlinie 2008/98/EG des Europäischen Parlaments und des Rates vom 19. November 2008 über Abfälle unr zur Aufhebung bestimmter Richtlinien. AWG (2002) Bundesgesetz über eine nachhaltige Abfallwirtschaft (Abfallwirtschaftsgesetz 2002), BGBl. I Nr. 102/2002 i.d.F. vom 14.Juli 2012. Biergans, B. (1992) Zur Entwicklung eines Marketingadäquaten Ansatzes und Instrumentariums für die Beschaffung, 4. Aufl. Köln: Fördergesellschaft Prod.-Marketing. Gelbmann, U. &Klampfl-Pernold, H. (2010) Applying life-cycle oriented tools for analyzing the sustainability od a regional waste management ssystem. UN Regional Development Dialogue 31, 153-166 Gelbmann, U. (2001)Externe Abfallbewältigung im Business-to-Business-Bereich, Entwicklung eines marketingorientierten Ansatzes und Instrumentariums, 1. Auflage, Deutscher Universitäts-Verlag GmbH, Wiesbaden Gelbmann, U. (2010) Müll ist Materie am falschen Ort. Zum Verwertungsparadox in der Abfallwirtschaft. In: Wagner Anslem (ed.) Abfallmoderne. Zu den Schmutzrändern der Kultur.Münster: LIT Verlag, 97-112.