Resources, Conservation and Recycling 55 (2011) 933–944

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Resources, Conservation and Recycling

journal homepage: www.elsevier.com/locate/resconrec

A system dynamics model for evaluating the alternative of type in construction

and demolition waste recycling center – The case of Chongqing, China
W. Zhao a,∗ , H. Ren a , V.S. Rotter b
a
Institute of Construction Management and Real Estate, Chongqing University, Chongqing, China
b
Department of Waste Management, Institute of Environmental Engineering, TU Berlin, Berlin, Germany

a r t i c l e i n f o a b s t r a c t

Article history: This paper presents a system dynamics computer model to evaluate alternative type of recycling center
Received 26 September 2010 under different policy and economy environments through comparison on the economic feasibility of
Received in revised form 24 February 2011 recycling centers and ratio of savings to costs in C&D waste management. A case study for the City of
Accepted 25 April 2011
Chongqing, China is selected. Simulated results show three key factors can contribute to the economic
feasibility of recycling and the ratio of savings to costs in C&D waste management: (a) profit; (b) unit
Keywords:
recycling cost; (c) extra revenue from location advantage (It was assumed that the mobile centers can
Construction and demolition waste
attain extra revenue from the location advantage compared with fixed recycling centers). The sensitive
System dynamics
Investment mode
analysis and comparison on ratios between public and private sector indicate that to achieve the opti-
Recycling center mum ratio of savings to costs, design of recycling centers and selection of governmental instruments are
determined by the priority list: (1) low extra revenue from location advantage; (2) low profit; (3) low
unit recycling cost. Meanwhile, the fluctuation of the three factors must be prior to achieve economic
feasibility of corresponding recycling centers.
Crown Copyright © 2011 Published by Elsevier B.V. All rights reserved.

1. Introduction • Which political and economic instruments as macro-control tools

Construction and demolition (C&D) waste is one of the largest
waste flows globally. In China, urban C&D waste has reached
30–40% of the total urban waste generation because of the large-
scale construction and demolition activities from the accelerated
urbanization and city rebuilding (Chui and Yang, 2006). However, in
China, the recycling lacks a central and stable intermediate between
waste generation and landfill like recycling centers to transform the
waste into recycled secondary construction materials. Unorganised
collection and subsequent sorting by waste pickers is an obstacle
for plant operators of construction materials. One key concern for
an operator of a recycling center is to assure the secure quantitative
and qualitative supply of recyclable waste materials.
In order to recycle waste especially inert materials (concrete,
brick, mortar) and achieve reasonable ratio of savings to costs
in C&D waste generation, the following questions are taken into
account:
assist the market oriented economy for recyclable materials?
(Tax, subsidy)
The objective of this paper is to develop a system dynamics
model of C&D waste management to evaluate the alternative type
of recycling center under different policy and economy options. The
economic feasibility of recycling centers and ratio of savings to costs
in C&D waste management are two main evaluation indicators in
the model. Since available data depend on the geographic location
of a recycling facility, the practical implementation is accessed by a
case study in the city of Chongqing, which is one of the fast-growing
regions in southwest China.
2. Data collection and method
2.1. Data collection

For this study, the data collection comprised three activities.

• Which type of recycling center is appropriate? (Fixed or mobile
recycling center, simple or advanced recycling center)
• Who invest in recycling center? (Public or private investors)
∗ Corresponding author. Tel.: +86 023 65120840.
E-mail address: zw7404@yahoo.com.cn (W. Zhao).
1. The data about generation and composition of waste in
Chongqing were collected from 66 construction and demolition
sites through questionnaires sent to contractors and inter-
viewing some of the municipalities and contractors as well as
Chongqing yearbook (yearbook is a large annual statistical pub-
lication compiled by Chongqing Municipal Bureau of Statistics. It

0921-3449/$ – see front matter. Crown Copyright © 2011 Published by Elsevier B.V. All rights reserved.
doi:10.1016/j.resconrec.2011.04.011
934 W. Zhao et al. / Resources, Conservation and Recycling 55 (2011) 933–944
Fig. 1. Basic element of system dynamics.
covers comprehensive data on Chongqing’s social and economic
development per year.) (Appendix A).
2. Concerning a advanced and mobile recycling center, data
concerning the fixed costs especially equipment costs and corre-
sponding certifications of recycling facilities were obtained from
various literature references and interviews with managers in
recycling centers in Netherlands, since there are no such C&D
waste recycling centers in China at this moment and thus no reli-
able cost data available. Data of operating costs like unit labor
cost were identified with reference to corresponding price in
2003 by Chongqing price information center (authority price
website). Most of the data were collected between May and
December 2007 (Appendix B).
3. Zhao et al. (2010) provided the data of other assumed recycling
centers.
Concerning currency, the exchange rate of D 1 = ¥ 10 (Septem-
ber, 2007).
2.2. System dynamics model and its application
System dynamics (SD), which was introduced by Jay Forrester in
the 1960s, provides effective tools for better understanding those
large-scale complex management problems. SD, being designed
based on system thinking, is a well-established methodology
for understanding, studying, visualizing and analyzing complex
dynamic feedback systems. It requires constructing the “causal loop
diagrams” or “stock and flow diagram” to form a system dynamics
model for applications (Dyson and Chang, 2005).
A stock and flow diagram is constructed by the building blocks
(variables) categorized as stocks, flows, connectors, and convert-
ers (Fig. 1). Stock variables (symbolized by rectangles) are the state
variables and stocks represent the major accumulations in the sys-
tem. Flow variables (symbolized by valves) are the rate of change
in stock variables and flows represent those inflow and outflow
of the stocks. Converters (represented by circles) are intermediate
variables used for miscellaneous calculations. Clouds are used to
indicate that the source or the drain of such a flow is outside the
model boundaries. Finally, the connectors (represented by simple
arrows) are the information links representing the cause and effects
within the model structure (Chaerul and Tanaka, 2008). An exam-
ple from waste management illustrates a stock and flow diagram
as follows.
The system dynamic approach can be summarized in the fol-
lowing five iterative steps illustrated in Fig. 2:
1. System dynamic problems start with research objective. Accord-
ing to the problem, which factor is important to be included and
which to be excluded are determined, and therefore used to find
the relevant system boundaries of the problem. An archetype
(the hypothesized behavior of the problem) and the time horizon
of interest must be identified.
2. A dynamic hypothesis is then developed in terms of a causal loop
diagram and stock and flow diagrams.
3. The model is then implemented for simulation.
Fig. 2. Modeling as an iterative process.
4. Testing can check feasibility and precision of model structure
and filter variables. Multiple feedback models are more sensitive
to the structure than the parameters. Meanwhile, the flexibility
of the modeling allows for testing the sensitivity of alterna-
tive model structures. Parameter sensitivity checks are useful
to decide how much effort should be dedicated to increasing the
precision of the parameters.
5. When reasonable confidence in the model is achieved, policy
analysis and design can take place. The results caused by change
of scenarios are automatically listed or described as graphs by
the software Vensim® or Stella® and thus compared to design
efficient policy.
All of these steps may require revision of previous steps (illus-
trated by gray arrows in Fig. 2). That might even include revision
of the initial problem definition. The system dynamics modeling
process is therefore highly iterative.
SD has been used in many areas including business systems
(Sterman, 2000), ecological systems (Grant et al., 1997; Saysel
and Barlas, 2001), social-economic systems (Forrester, 1969, 1971),
agricultural systems (Qu and Barney, 1998; Saysel et al., 2002),
political decision making systems (Nail et al., 1992), environmental
systems (Anand et al., 2005; Deaton and Winebrake, 2000; Dyson
and Chang, 2005; Guo et al., 2001; Georgiadis and Vlachos, 2004;
Karavezyris et al., 2002; Sudhir et al., 1997; Stave, 2003; Ulli-Beer,
2003). Within the waste management regime, Dyson and Chang
(2005) have developed system dynamics models for the prediction
of solid waste generation in an urban setting with a high potential
economic growth. Ulli-Beer (2003) developed a system dynamics
model to analyze the different local policy initiatives in solid waste
recycling based on a feedback theory about human behavior and
public policy. Karavezyris et al. (2002) developed a methodology to
incorporate qualitative variables such as voluntary recycling par-
ticipation. Sudhir et al. (1997) employed a system dynamics model
to capture the dynamic nature of interactions among the various
components in the urban solid waste management system.
A few studies have been published on strategies to achieve C&D
waste management. Kartam et al. (2004) investigated alternative
solutions to manage and control this major type of waste depend
on potential demand and limits of recycled materials, cost con-
sideration. Nunes et al. (2007) evaluated investment feasibility in
recycling centers by means of comparison between public and pri-
vate recycling centers. Duran et al. (2006) developed a model to
assess the economic viability of creating markets for recycled C&D
waste by considering source tax and subsidies. Wang et al. (2004)
studied the potential economic impact of such restriction on con-
struction contractors and C&D waste processors by model analysis
based on a spreadsheet-based systems and cost-benefit evaluation.
However, these studies are static models to regulate C&D waste.
 W. Zhao et al. / Resources, Conservation and Recycling 55 (2011) 933–944 935

C&D waste
generation

+ +
C&D landfill- Recycling
+ + - + + +
Land losses Savings of
Pollution +
Tax on landfill recycling
prevention costs Subsidy
+ Recycling costs +
+
-
+ Economic lossse
+ Regulation +
from landfill
enforcement

Fig. 3. Causal loop diagram of C&D waste management model.

Concerning system dynamics application in C&D waste manage-
ment, Hsiao et al. (2002) only simulated materials flow of waste
concrete from construction and demolition wastes on basis of recy-
cling target set with system dynamics. There has been relatively
little research about C&D waste management strategy in system
dynamics.
3. System dynamics model for C&D waste management
The C&D waste management model is an abstract and concep-
tual model focused on selected elements and hypotheses of their
interactions. The dynamics of the model are determined by the
feedback loops in the causal diagram. A causal loop diagram for
this model is presented in Fig. 3. Each arrow indicates an influence
of one element on another. The hypotheses about these influences
are based on literature studies. The relationship between construc-
tion waste generation and GDP via floor area was established by
regression analysis. Recycling is required to separate recyclable
materials from general waste. The performance of the recycling
process depends on the economic feasibility of recycling centers
by means of subsidy, tax on landfill and increase in price of recy-
cled materials. Otherwise, untreated waste is directly carried to
C&D landfill. The increasing disposal will certainly result in land
losses, environment pollution and finally economic losses of land-
fill. Government will react when savings of recycling and economic
losses of landfill apply pressure on the government. Government
starts the imposition of taxes and use of subsidy especially in land-
fill and recycling to achieve economic feasibility of recycling waste.
After weighing up the total savings and costs of waste management,
regulation enforcement will be reappraised.
Assumptions underlying the model are described as following:
• Decisions of the waste producer and aggregate user are assumed
to be based on cost minimisation opportunities. This is a rea-
sonable assumption to make since most private contractors’
“behavior” usually lies on conditions of cost minimisation or
profit optimisation. With regarding the decision of the type of
materials to be used, quality assurance also is an important
influence. However since there is no recycled material quality
standards in China, it is necessary to refer to comprehensive
quality standard such as regulation form Germany, especially in
secondary aggregate.
• Aggregate users can only use quarried stone as coarse aggre-
gate or sand as fine aggregate from raw materials. The demand
of recycled aggregate is rather small due to no quality insur-
ance of recycled aggregate and low acceptance of aggregate
users in China. There are a lot of recycling methods and substi-
tuted materials as aggregates. For instance, utilization of steel
slag as aggregates for stone mastic asphalt (SMA) mixtures (Wu
et al., 2007). Lightweight aggregate using sewage sludge for non-
structural concrete is being developed and tested (Mun, 2007).
• There is impossibility of illegal dumping. This is an inherent limi-
tation of the model as evidence suggests illegal dumping existed.
In China, almost legal C&D landfill might be same as illegal
dumping without basic treatment equipments such as leachate
collection device. Stringent legislation such as the Urban Con-
struction Waste Management Regulations issued by the Ministry
of Construction of the People’s Republic of China in 2005 is cur-
rently resulting in lower levels of illegal dumping making this
assumption more realistic. Meanwhile, no reliable and available
data about C&D waste from illegal dumping were obtained.
• Public recycling centers are perfectly competitive. This implies
that the recycling center is not to attain profit. Namely, the prices
charged for C&DW going into the center and aggregate users’ pay-
ment need only cover the cost of recycling. This assumption is
realistic only if the government manages the recycling center. For
private investors, it is inevitable to keep an acceptable profit, fixed
capital investment and payback time period (means the period of
time required for the profit or other benefits from an investment
to equal the cost of the investment).
• Construction period of recycling centers are neglected. The
assumption implies if the market is created, the recycling centers
would be implemented without time delay.
• Every recycling center must achieve “Economies of scale”. Nunes
et al. (2007) showed that C&D waste processing flow with less
than 20 tonnes per hour (t/h) will probably not be financially
viable, due to low productivity and low prices of the processed
product. According to Duran et al. (2006), Nunes et al. (2007) and
Symonds (1999), a medium scale recycling facilities (100 t/h) ser-
vice each district to recycle approximate 200 thousand ton per
year. Another option is three mobile recycling centers (50 t/h)
in a district. It is supposed that all types of recycling center are
fixed with used equipments in the model. Since market for used
equipment is due to mining sector well developed, in this paper
used equipments are taken into account. Zhao et al. (2010) indi-
cated that recycling centers with used equipments have absolute
advantage on recycling costs. At present, the technology adapted
to Chinese circumstance for the recycling of C&D waste is simple
and labor intensive. In those projects, the required equipment
processes only the mineral fractions and a magnetic separator
removes the metallic fraction. The other fractions, excluding the
mineral and metallic ones, are removed by hand prior to the
crushing process. Meanwhile, the advanced recycling centers
(including crusher, magnet, windshifter, eddy current separa-
tion, screening, wet separation and manual separation) also are
considered in future trends of recycling centers. It will make
percentage of reject lower and attain higher revenue from high
quality of recycled productions.
• The uniform distances of transportation are assumed. Since the
locations of quarry, fixed recycling centers and C&D landfills are
normally built in suburb and exact distance between supply and
demand is quite difficult to be determined by different construc-
936 W. Zhao et al. / Resources, Conservation and Recycling 55 (2011) 933–944
tion sites or manufacture facilities of construction materials, the
constant distance between the fixed recycling center sites and
waste producers will be supposed to be the same distance as
transporting the C&D waste to landfill from construction site as
well. However, the mobile recycling centers can attain extra rev-
enue by decreasing the distance between recycling centers and
construction sites.
Having defined the key elements, these have to be quantified as
variables and their influences have to be formulated mathemati-
cally. The model is definitively determined when the parameters
and the start values for the state variables (stocks) have been spec-
ified. Fig. 4(a) and (b) shows a stock-flow diagram for the model
which was designed by using the Vensim® PLE software package.
The core elements in this model are described in Appendix A. The
core system equations contained in this model are presented below.
• C&D waste generation: According to predicted data from
Chongqing Academy of Population and Family planning, popula-
tion will be 33.78 M and 35.39 M in 2015 and 2038 respectively.
It is suggested the increase of population has a potential demand
for buildings. According to the regression analysis between GDP
and construction area, between population and construction area
respectively, although increase of population has a certain impact
on floor area of construction, high speed GDP is a main contrib-
utor to increase of construction area. It is more important that
population and GDP are proved to be linear correlation based
on the regression equation for estimation of construction area.
Eventually, floor area of construction is mainly determined by
the GDP (B D ). Based on the historical data from 1985 to 2007,
the regression equation (R2 = 0.849, F = 84.04) is formulated as
follows:
Floor area of construction = 1.611 + 1.66 ∗ GDP
In addition, the development of world economy showed that
increase rate of GDP of a country will be decrease, while the econ-
omy reaches a certain scale (Cai, 2006). According to the report
“Chongqing Urban Master Planning 2005–2020”, the economic
development of Chongqing will stride into economic level of a
medium-developed country.
Considering government planning, average increase rate of
Chongqing in the last 10 years and increase rate of GDP of a
medium-developed country, the corresponding GDP growth rate
of 11.47% and 6% are estimated from 2002 to 2020 and from 2021
to 2030 respectively.
In 2003, a regulation to prevent the overheated investment in
building by limiting the floor area of demolition was issued by Min-
istry of Construction. In the following three years, the average floor
area of demolition did not increase anymore. Thus, floor area of
demolition is arithmetic mean of data from 2002 to 2007 in this
model.
• The C&D waste composition and reuse rates are attained by
calculating the arithmetic mean of data from 38 construction
sites and 28 demolition sites respectively with different build-
ing structures. Considering reuse and recycling of waste on site,
the recyclable waste generation is estimated, for instance, steel:
Recyclable steel generation = construction waste
∗steel proportion ∗ (1 − reuse ratio of steel C) + steels ratio
∗demolition waste ∗ (1 − reuse ratio of steels D)
• Economic losses from landfill: Economic losses form landfill is con-
sisted of land economic loss based on price of local industrial land
and pollution prevention costs substituted by local sanitary land-
fill costs. It is noted that a sanitary landfill (including leachate and
odor collection devices) should be considered to substitute for the
existing C&D waste landfill, if there are mixed collection, manual
separation and C&D waste mixed with municipal solid waste in
China. Considering land loss per ton, economic losses per ton from
land is formulated:
Unit economic losses from land
1
=
mean depth ∗ density of rubble
∗local land price per m2 (3)
• Recycling cost per ton: Considering increasing operational costs
with inflation rate and fluctuant disposal costs of residue with
disposal fee of landfill increase and variable transportation costs,
the recycling cost per ton is divided into three parts, unit
capital cost (including depreciation, construction, rent of land,
financing), unit operating cost (including labor, energy, trans-
portation of recycling centers, maintenance, insurance, etc.) and
unit disposal cost (containing disposal and transportation of
residue).
Recycling cost per ton = unit capital cost + unit disposal cost
+ unit operating cost. (4)
• Gate fee to recycling center: Considering interaction in price
(1) between recycling and landfill, gate fee refers to C&D landfill
costs. The questionnaires in Chongqing indicate the gate fee
(about 80% of the landfill fee) is acceptable for waste producers.
Meanwhile, revenue from location advantage and tax on landfill
with reference to economic losses of landfill are considered in
establishment of gate fee.
Gate fee per ton = (landfill fee per ton ∗ 0.8 + tax on landfill)
+ decrease in transportation distance
∗unit transportation cost. (5)
• Subsidy in recycler: To provide financial support to recycling cen-
ter, subsidy is equal to difference between revenues (containing
gate fee and revenue of recycled aggregates), profit and recycling
costs.
Subsidy per ton =
recycling cost per ton + (landfill fee per ton + tax on landfill) ∗ percentage of reject
1 − anticipant profit ratio
− gate fee per ton − price of aggregates ∗ (1 − percentage of reject)
∗factor of price fluctuation. (6)
In addition, percentage of reject and factor of price fluctuation are
influenced by type of recycling centers. An advance recycling cen-
(2) ter can decrease reject rate and increase production price through
quality assurance. According to Kartam et al. (2004), factor of price
fluctuation, the price of recycled aggregates for concrete and for
blocks and bricks are about 1/2 and 1/5 of the price of natural
 W. Zhao et al. / Resources, Conservation and Recycling 55 (2011) 933–944 937

Fig. 4. (a) Vensim flow diagram of the system dynamics model of C&D waste management system. (b) Vensim flow diagram of the system dynamics model of C&D waste
management system.

aggregates to encourage the construction industry to utilize recy-
cled products. Revised subsidy in the model means that subsidy is
not taken into account when tax is enough to support economic fea-
sibility of recycling C&D waste or economic feasibility of recycling
may be achieved without any economic instruments.
• Recyclable waste: Recycling C&D waste is likely to occur when
revenues (including gate fee, revenue of recycling aggregates
and subsidy) exceed recycling costs and profit. Meanwhile, the
actual profit ratio exceeds anticipant profit ratio after achiev-
ing economic feasibility of recycling waste determined by control
938 W. Zhao et al. / Resources, Conservation and Recycling 55 (2011) 933–944

Current situation Recycled materials

300 B eur 10.15
2
2
12 M ton 2 1 1 3
2 1 2 6
4
2 7.618 3
5
2 1 4
2
1 2 5 6

M ton
1 4 3
1
150 B eur 2 6
1 5.078 2
2 1 3 5
6 M ton 2 2 6
2 1 3 5
2 2 6
2 2 2 3
2 1 3
1 2.539
1 5 4
1 6 1
1
0 B eur 1 1
1
0 M ton 0
1 4 5 6 1 4 5
2002 2006 2010 2014 2018 2022 2026 2030 2002 2006 2010 2014 2018 2022 2026 2030
Time (Year) Time (Year)
Recycled materials : Current(2,3) Recycled materials : Current(1,3)
GDP : current 1 1 1 1 1 1 1 1 1 1 1 1 B eur Recycled materials : Current(2,4)
1
Recycled materials : Current(0,3)
4
2 5
Total waste generation : current 2 2 2 2 2 2 2 2 M ton Recycled materials : Current(1,4) 3 Recycled materials : Current(0,4) 6 6

Fig. 5. GDP and waste generation in Chongqing. Fig. 6. Simulated recycled materials for a time horizon of 29 years.

variables in the model.

 recycling cost per ton

1− > anticipant profit ratio. (7)
gate fee per ton + factor of price fluctuation ∗ price of aggregates ∗ (1 − percentage of reject)

• Total saving in C&D waste management: Increasing the cost of

landfill by the imposition of taxes and reducing the cost of using 4. Results and discussion
the recycling center by the use of subsidies as well as low profit,
make the creation of markets for recycled C&D waste more viable. 4.1. Model testing
In turn, these result in an increase of savings caused by recycling
in a public sector. Expression (8) measures the savings that can It is necessary to make sure whether the model dynamically
be accrued. reflects the relationship among the variables, and in what extent
the model fits actual situations. A key variable, floor area of con-
struction is taken as an example. Simulated values versus historical
Total saving in C&D waste management observations of floor area as well as simulated errors from 2002 to
= ((landfill fee per ton + tax on landfill − gate fee per ton) 2006 are listed in Table 1. Obviously, simulated results reflect the
+ (1 − factor of price fluctuation) ∗ price of aggregates steady growth of floor area of construction during this period. And
∗ (1 − percentage of reject) the errors between simulation and real values vary from 26% to
− (gate fee per ton + factor of price fluctuation 0.9%.
∗ price of aggregates) ∗ revised profit ratio))
∗ recyclable waste + (decrease in transportation distance 4.2. Scenarios
∗ unit transportation cost) ∗ recycled materials
(8) The paper considered the following various types of recycling
centers based on three policy environments (current situation
without any economic instruments, subsidy to achieve economic
• Transportation costs: According to the assumption of same dis- feasibility of recycling C&D waste, tax on landfill with reference to
tance, transportation costs contain costs for distance from waste economic losses from landfilling).
producers to mobile recycling centers when transportation costs Scenario 0 (a fixed recycling center with elementary equipments
of residue have been considered in recycling costs. including one crusher, one screen-set, one loader): Suppose the
fixed and simple recycling centers with the capacity of 100 t/h
are chosen, the control variables are listed as following: unit
Transportation costs = unit transportation cost capital cost = 0.5 D /t; unit operating cost = 0.4 D /t; percentage of
reject = 20%; decrease in transportation distance = 0; factor of price
∗total waste generation
fluctuation = 20%.
∗transportation distance to recycling. (9) Scenario 1 (a mobile recycling center with elementary equip-
ments including one crusher, one screen-set, one loader): For the
mobile and simple recycling centers with the capacity of 50 t/h, the
control variables are listed as following: unit capital cost = 0.8 D /t;
• Total costs in C&D waste management: Total costs in C&D waste unit operating cost = 0.9 D /t; percentage of reject = 20%; decrease in
management contain costs in recycling, transportation, landfill as transportation distance = 5; factor of price fluctuation = 20%.
well as difference between subsidy and tax. Scenario 2 (a mobile recycling center with advanced equipments
including one crushers, one screeners, one loaders, magnet, wind-
shifter, eddy current separation): For the mobile and advanced
Total costs in C&D waste management = recycling centers with the capacity of 50 t/h, the control variables
are listed as following: unit capital cost = 1.2 D /t; unit operating
costs in landfill + costs in recycling + subsidy − income from tax
cost = 1.2 D /t; percentage of reject = 10%; decrease in transportation
+ transportation costs. (10) distance = 5; factor of price fluctuation = 50%.
 W. Zhao et al. / Resources, Conservation and Recycling 55 (2011) 933–944 939

Table 1
Simulated errors of floor area of construction.

Year 2002 2003 2004 2005 2006

Historical values (M m2 ) 47.11 49.40 51.68 51.55 53.09

Simulated values (M m2 ) 34.65 38.43 42.66 47.37 52.61
Error (%) 26.46% 22.19% 17.45% 8.12% 0.90%

Scenario 3 (a private recycling center): The acceptable profit rate Ratio of the savings to costs
is 30% of revenue by interviewing private investors of recycling 5.353 3
54
centers in Netherlands. 6
3

Scenario 4 (a public recycling center): For government, the profit 3.474 4

5

rate is 0, since government pays more attention on costs for land 6

5
loss, environment pollution and material depletion in C&D waste 4
3
1.595
management. 4 6
6 5 3
64 3 4
Combination of the scenarios is described as an abbreviation of 21 34 5 6 21 3 5 1 2 1 2
-0.2834 1 2
scenario number like current (0, 3). It means that the fixed and 1 2
simple recycling centers with the capacity of 100 t/h are involved 1
2
-2.162
in the model in the case of private investment and absence of gov-
2002 2006 2010 2014 2018 2022 2026 2030
ernmental instruments. Time (Year)
Ratio of the savings to costs : Current(2,3) 1 1 1 1 1 1
Ratio of the savings to costs : Current(2,4) 2 2 2 2 2 2
Ratio of the savings to costs : Current(1,4) 3 3 3 3 3 3
4.3. Results Ratio of the savings to costs : Current(1,3) 4 4 4 4 4
Ratio of the savings to costs : Current(0,3) 5 5 5 5 5
Ratio of the savings to costs : Current(0,4) 6 6 6 6 6
Computer projections of GDP and waste generation in
Chongqing are shown in Fig. 5. The GDP increases from 19.9 B D Fig. 7. Ratio of the savings to costs in C&D waste management without economic
instruments.
in 2002 to 264.6 B D at the end of the simulation. If the constant
average rates of waste composition and reuse from 2002 to 2007
are considered, the maximum of waste generation will be 11.3 Mt of recycled aggregates as road construction or backfill. The sim-
in 2030. ple recycling centers have more savings on material depletion,
Fig. 6 shows the comparison of the simulation of recycled mate- since they can produce recycled aggregates as backfill or road con-
rials without economic instruments. C&D waste can be recycled in struction instead of natural aggregates. The high price of recycled
2002 under current (2, 4) and current (1, 4). They indicate that the aggregates for concrete produced by the advanced recycling cen-
simple or advanced and mobile recycling centers which built by ters reduces this part of savings, although total costs are further
public investor can achieve economic feasibility when extra rev- reduced by decrease in transportation costs and disposal costs of
enue from location advantage (It was assumed that the mobile resides in recycling centers. Furthermore, according the formula-
centers can attain extra revenue from the location advantage com- tion of savings, high profit margin occupied by investor further
pared with fixed recycling centers) is enough. Current (0, 4) that reduces the savings. In addition, the costs of recycling of simple
means the simple and fixed recycling centers by the public and cur- mobile recycling centers, current (1, 3) and current (1, 4) surpass
rent (2, 3) represents the advanced and mobile recycling centers advanced recycling centers, current (2, 3) and current (2, 4) after
owned by private investors, are viable in 2007 and 2008 respec- 2020, since disposal costs of waste residues play a more and more
tively. For current (2, 3), extra revenue from location advantage and important role in recycling costs in case of gradually increasing
high income from high quality of recycled productions, weaken dis- landfill fee.
advantage on recycling costs. For current (0, 4), no profit is a main Figs. 9 and 10 represent a similar trend of ratio as Fig. 7. The sim-
contributor to economic feasibility of recycling. Other types of recy- ple and fixed recycling centers by private investors are better than
cling center, current (0, 3) and current (1, 3) occur in 2010 and the others from 2011 and 2018 under subsidy and tax respectively.
2011 respectively. The fixed recycling centers without advantage The ratio under tax is rather low compared with two other policy
on recycling costs from economy of scale or the mobile recycling environments, since the revenue from high gate fee caused by tax
centers without enough location advantage, result in delay of eco-
nomic feasibility. With capacity of fixed recycling centers enlarge,
Costs in recycling
period of feasibility will be further shorten. The gap of two parallel
164.31
curves after 2011 comes from difference in percentage of reject of
recycling centers. 4 6

Fig. 7 indicates that current (0, 4) could be taken as an appro- 123.23 3

5

priated option from 2007 in the case of absence of economic

M eur

2
instruments. Current (0, 3) will be also a good choice due to
82.15 1
the same profit margin as current (0, 4) after 2010. However, 4
3 6
for current (0, 4), government must provide annual average of 2 5
1
about 34.42 MD for the fixed recycling centers until 2030 (Fig. 8). 41.07
3
4
If government has no enough financial resources especially for 2 1 6
1 2 3 4 5
1 2 3 4 5 6
developing countries, only the simple and fixed recycling cen- 2 3 2 3 4 5 6
0 6
ters by private investors might be taken into account from 2010. 1 5 6 1 4 5
2002 2006 2010 2014 2018 2022 2026 2030
According to Eq. (8), the difference on ratios between the sim- Time (Year)
ple and fixed and mobile recycling centers mainly comes from the Costs in recycling : Current(2,3) 1 Costs in recycling : Current(1,3) 4
decrease in savings caused by extra income of the mobile recycling Costs in recycling : Current(2,4)
Costs in recycling : Current(1,4)
2
3
Costs in recycling : Current(0,3)
Costs in recycling : Current(0,4) 6
5
6
centers. Eventually, the advanced recycling centers are not consid-
ered especially under high profits and a large potential demand Fig. 8. Costs in recycling under absence of economic instruments.
940 W. Zhao et al. / Resources, Conservation and Recycling 55 (2011) 933–944

Ratio of the savings to costs 6

5 34
5.353 4 21
4
6
3 4.5 2 5
13
35 5
3.474 4
1 4 3
6 3 2
5 5 4
4
1.595
3 1 32
5
45 6 43
65 3 1.5 42 1
5 6 3 4 3 25
21 3 54 6
12
3 4
1 2 4 3 51
-0.2834 1 2 5 4 21
1 2 12 43 513 2
1 2 0
1 2008 2012 2016 2020 2024 2028
-2.162 2
Time (Year)
2002 2006 2010 2014 2018 2022 2026 2030
Ratio of the savings to costs : sensitive analysis (a) 1 1 1 1
Time (Year) Ratio of the savings to costs : sensitive analysis (b) 2 2 2 2
Ratio of the savings to costs : subsidy(2,3) 1 1 1 1 1 1 Ratio of the savings to costs : sensitive analysis (c) 3 3 3 3
Ratio of the savings to costs : subsidy(2,4) 2 2 2 2 2 2 4 4 4 4
Ratio of the savings to costs : subsidy(1,4)
Ratio of the savings to costs : sensitive analysis (d)
3 3 3 3 3 3 5 5 5 5
Ratio of the savings to costs : subsidy(1,3) 4 4 4 4 4 Ratio of the savings to costs : sensitive analysis (e)
Ratio of the savings to costs : subsidy(0,3) 5 5 5 5 5
Ratio of the savings to costs : subsidy(0,4) 6 6 6 6 6
Fig. 12. Sensitive analysis of unit capital cost range (0.3, 0.7 D /t).

Fig. 9. Ratio of the savings to costs in C&D waste management with subsidy on
recycling.
ratios from 2008. Tax on landfill eventually results in the difference
on ratios of two curves by 2027 through decrease of costs caused
Ratio of the savings to costs by increase in income from tax.
6
56
4
3 4.4. Sensitive analysis
3.75 6
5
4 Eq. (8) and in Eq. (7) showed that, unit recycling cost and extra
1.5 5
6 revenue from location advantage are two main contributors to the
4 economic feasibility of recycling center and savings of waste man-
6 3
-0.75 4
5 agement. However, mobile center lacks capacity flexibility due to
3
5 6 the transportation of the facility and finally loses cost advantage
5 6 3 4 1 2
1 2
5 6
-3 1 2 3 4 2 3 4 1 2 1 2 1 2 1 from the scale of economy. Meanwhile, advantage on location of
2002 2006 2010 2014 2018 2022 2026 2030 mobile recycling center can weaken disadvantage of recycling cost
Time (Year) by attaining high gate fee, if it is a mobile plant temporarily located
Ratio of the savings to costs : tax (2, 3)
Ratio of the savings to costs : tax (2, 4)
1
2
1
2
1
2
1
2
1
2
1
2
at a large construction site. On the contrary, processing capacity of
Ratio of the savings to costs : tax (1, 4)
Ratio of the savings to costs : tax (1, 3)
3 3 3 3 3 3 a fixed center is flexible to enlarge in design stage, depending on
4 4 4 4 4
Ratio of the savings to costs : tax (0, 3)
Ratio of the savings to costs : tax (0, 4)
5 5 5 5 5 the requirement of region and the scale of economy. However, con-
6 6 6 6 6 6
sidering noise, dust pollution and zoning restrictions, fixed center
Fig. 10. Ratio of the savings to costs in C&D waste management with tax on landfill. site is far away from center. It results in further increase in trans-
portation costs. To evaluate impact of the two factors on the ratio
on landfill, is not transformed into saving, whereas into profit of of savings to costs and feasibility, sensitive analysis is conducted
investors (Fig. 10). in the model. The appropriate option, current (0, 3) and a potential
Comparison on ratios with different economic instruments from option, current (1, 3) are taken as examples. The variable ranges
2002 to 2030 shows that the public fixed recycling centers and pri- of the two factors are from −40% to 40% of initial value. For cur-
vate fixed recycling centers without economic instruments are an rent (0, 3), sensitive analysis (a, b, c, d, e) represent five results
appropriate option from 2008 to 2010 and after 2010 respectively based on different unit capital costs (0.3, 0.4, 0.5, 0.6, 0.7 D /t) respec-
(Fig. 11). Although subsidy (0, 4) and subsidy (0, 3) have the same tively. For current (1, 3), sensitive analysis (f, g, h, i, j) mean other
ratio as current (0, 4) and current (0, 3), the fixed recycling centers five results based on different location advantages (3, 4, 5, 6, 7 km)
under subsidy are not considered due to no impact of subsidy on respectively.
Fig. 12 shows that the unit capital cost has almost no influ-
ence on the ratio, since dominated capital costs will be replaced
Ratio of the savings to costs by variable costs in the future with share of variable costs increase.
35
5.353 4 Decrease in unit capital cost of 40% and 20% results in 1 year and
12
6
5 2 year ahead of the initial feasibility respectively. Increase of 20%
3.442 4
2 3 or 40% delays feasibility for 1 year. The impact of extra revenue
1
4
5 6 on the ratio and feasibility is distinct compared with the sensitive
1 2
1.532
2 4
5 analysis of the unit capital cost (Fig. 13). Increase in distance of 20%
5 1 3
2 5 1 2 4 and 40% leads to the feasibility period of 2 and 3 years in advance
21 54 4 6
-0.3781
3
and decrease in ratio. Although decrease in location advantage of
6 40% brings about the delay period of 1 year, the corresponding ratio
3
-2.288
3 6 3 6 is highest than others, since savings occupied by private investors
2002 2006 2010 2014 2018 2022 2026 2030 is decreasing by means of profit from 2008 to 2017. The results of
Time (Year) more advantage location attribute to decrease in savings from extra
Ratio of the savings to costs : Current(0,4)
Ratio of the savings to costs : subsidy(0,4)
1
2
1
2
1
2
1
2
1
2
1
2
revenue exceeding decrease in transportation costs from location
Ratio of the savings to costs : tax (0, 4)
Ratio of the savings to costs : Current(0,3)
3
4
3
4
3
4
3
4
3
4
3 advantage. After 2017, ratios of more advantage location surpass
Ratio of the savings to costs : subsidy(0,3)
Ratio of the savings to costs : tax (0, 3) 6
5
6
5
6
5
6
5
6
5
6
the ratios of disadvantage location, and are increasing, because the
savings of transportation costs play a more and more important
Fig. 11. Comparison on ratios from 2008 to 2030. role.
 W. Zhao et al. / Resources, Conservation and Recycling 55 (2011) 933–944 941

Ratio of the savings to costs • To achieve the maximum of ratio of savings to costs, the appro-
5.5 2
1 priate type of recycling centers and economic instruments are
5
4
3
determined based on the priority list by sensitive analysis and
4.125
5
2
1 comparison on ratios between public and private sector: (1) low
4
3
2 extra revenue from location advantage; (2) low profit; (3) low
5
1
2.75 4
3 unit recycling cost. However, the fluctuation of the three factors
2
1
3
2
4
5 must be prior to achieve economic feasibility of corresponding
5
1
1.375
2
3
4 recycling centers.
4
3 1
5
1
2
2
3 4
5
4 5
0 To achieve economic feasibility of recycling centers in
2
1 3 1
2008 2012 2016 2020 2024 2028 Chongqing and maximum of ratio of savings to costs, it could be
Time (Year)
Ratio of the savings to costs : sensitive analysis (f) 1 1 1 1
recommended:
Ratio of the savings to costs : sensitive analysis (g) 2 2 2 2
3 3 3 3
Ratio of the savings to costs : sensitive analysis (h)
Ratio of the savings to costs : sensitive analysis (i) 4 4 4 4 4
• To avoid great burden on financial expenditure, a few public
Ratio of the savings to costs : sensitive analysis (j) 5 5 5 5 5 recycling centers built initially by government would be used
as laboratory for establishment of technical regulations and the
Fig. 13. Sensitive analysis of location advantage range (3, 7 km).
norms for secondary and recycled materials from 2008 to 2010.
Private investors are allowed to enter recycling industry after
2010. Government might sell these recycling centers to private
investors and encourage private investors to invest on recycling
centers.
5. Conclusion and recommendation • According to the priority of the factors, a price system for gate
fee of recycling centers is established by the Price Bureau to
A system dynamics model of C&D waste management is devel-
limit the extra revenue. To prevent over-competition and con-
oped to evaluate the alternative types of recycling center under
trol profit, number of recycling centers should be controlled by
different economic instruments in a developing country. A case
licence of construction based on local circumstances in case of
study of the City of Chongqing in China presented its unique
high-speed increase in the market penetration rate of recycled
solutions based on the simulation outputs. Interactions among sev-
products. Considering the scale of economy and location advan-
eral elements involved in C&D waste management are examined
tage, the larger mobile recycling center should be considered
dynamically with the Vensim® software package. The simulated
based on local circumstance (including quantity of waste gen-
results show that waste generation will be up to 11.3 Mt in 2030
eration, service radius, transportation of mobile recycling, etc.).
with sustainable growth of GDP. In the candidates of recycling
In addition, once market access has been secured and recycled
centers, the public fixed recycling centers with the capacity of
aggregates have gained wide acceptance in the market, recycling
100 t/h and these recycling centers owned by private investors
centers with superfluous capacity or capacity under breakeven
without economic instruments are better than the others from
point may accept feedstock of potential provider “mono landfill”
2008 to 2010 and after 2010 respectively by the comparison on
(for possible future recovery like inert materials).
ratios of savings to costs based on different scenarios and eco-
nomic instruments. Although high profit of advanced recycling
Acknowledgements
centers can achieve economic feasibility in advance, the high
profit occupied by investors is not transformed into the finial sav-
Authors are thankful to European Commission (Asia-Link-
ings of recycling and eventually leads to lower ratio than the
Project “Human resources development fro the improvement
other types of recycling centers. The ratio of savings to costs in
and protection of environment in Asia”. Project No. CN/ASIA-
waste management and economic feasibility are more sensitive
LINK/025 (110–744)) for providing financial support to undertake
to extra revenue from location advantage than to unit recycling
this research work. Meanwhile, Project No. CSTC, 2010CE0111
cost. From the simulations and related analysis, we conclude as
supported by the Chongqing social science program. Project No.
follows:
CDJSK10 01 64 supported by the Fundamental Research Funds for
the Central Universities.
• Three key factors can contribute to the economic feasibility of
recycling and the ratio of savings to costs in C&D waste manage-
Appendix A.
ment: (a) profit; (b) unit recycling cost; (c) extra revenue from
location advantage.
Variables and parameters index.
942 W. Zhao et al. / Resources, Conservation and Recycling 55 (2011) 933–944

No. Variable name Unit Characterization Further information Initial

1 GDP growth rate % Parameter Chongqing year book 2007 11.47%

2 GDP growth MD Flow
3 GDP BD Stock Chongqing year book 2007 19.90
4 Floor area of construction M m2 Auxiliary variable
5 Construction waste per m2 t/m2 Parameter Questionnaires 0.03
6 Construction waste M ton Auxiliary variable
7 Brick proportion % Parameter Questionnaires 24.80%
8 Mortar proportion % Parameter Questionnaires 17.09%
9 Concrete proportion % Parameter Questionnaires 14.63%
10 Packaging materials proportion % Parameter Questionnaires 9.20%
11 Roofing material proportion % Parameter Questionnaires 2.28%
12 Steel proportion % Parameter Questionnaires 4.48%
13 Wood proportion % Parameter Questionnaires 15.92%
14 Other proportion % Parameter Questionnaires 10.52%
15 Reuse ratio of mortar % Parameter Questionnaires 50.28%
15 Reuse ratio of concrete % Parameter Questionnaires 17.07%
17 Reuse ratio of steel C % Parameter Questionnaires 91.21%
18 Reuse ratio of wood C % Parameter Questionnaires 53.17%
19 Reuse ratio of packaging materials % Parameter Questionnaires 67.66%
20 Reuse ratio of brick C % Parameter Questionnaires 30.97%
21 Reuse ratio of roofing materials % Parameter Questionnaires 21.41%
22 Reuse ratio of other % Parameter Questionnaires 8.97%
23 Steels ratio % Parameter Questionnaires 4.46%
24 Concrete ratio % Parameter Questionnaires 26.71%
25 Brick ratio % Parameter Questionnaires 41.83%
26 Wood ratio % Parameter Questionnaires 4.57%
27 Other ratio % Parameter Questionnaires 13.51%
28 Mortar % Parameter Questionnaires 9.33%
29 Reuse ratio of brick D % Parameter Questionnaires 31%
30 Reuse ratio of steels D % Parameter Questionnaires 45.23%
31 Reuse ratio of wood D % Parameter Questionnaires 22.19%
32 Floor area of demolition M m2 Parameter Construction ministry 2.67
33 Specific gravity t/m2 Parameter Questionnaires 1.49
34 Total waste generation M ton Auxiliary variable
35 Recyclable waste M ton Auxiliary variable
36 Unit disposal cost D /t Auxiliary variable
37 Unit transportation cost of disposal D /t Auxiliary variable
38 Unit capital cost D /t Parameter
39 Increase rate of cost % Parameter 5%
40 Increase in cost D /t Flow
41 Unit operating cost D /t Stock
42 Increase rate of aggregates % Parameter Questionnaires 20.65%
43 Increase of aggregates D /t Flow
44 Price of aggregates D /t Stock Questionnaires 1.6
45 Actual profit ratio % Auxiliary variable
46 Revised profit ratio % Auxiliary variable
47 Anticipant profit ratio % Parameter
48 Decrease in transportation distance km Parameter
49 Unit transportation cost D /km/t Parameter Questionnaires 0.34
50 Gate fee per ton D /t Auxiliary variable
51 Recycling cost per ton D /t Auxiliary variable
52 Costs in recycling MD Auxiliary variable
53 Subsidy MD Auxiliary variable
54 Revised subsidy per ton D /t Auxiliary variable
55 Subsidy per ton D /t Auxiliary variable
56 Percentage of reject % Parameter Recycling center in Netherlands
57 Income from tax MD Parameter
58 Percentage of supervision cost % Parameter 5%
59 Recycled materials M ton Auxiliary variable
60 Disposal M ton Auxiliary variable
61 Tax on landfill D /t Auxiliary variable
62 Mean depth m Parameter Chui and Yang (2006) 5
63 Land losses per ton m2 /t Auxiliary variable
64 Density of rubble t/m3 Parameter Chen et al. (2004) 1.7
65 Increase rate in land price % Parameter Website 9%
66 Increase in land price D /m2 Flow
67 Local land price per m2 D /m2 Stock
68 Unit economic losses from land D /t Auxiliary variable
69 Economic losses per ton D /t Auxiliary variable
70 Sanitary landfill cost per ton D /t Parameter Changshenqiao landfill in Chongqing 10
71 Costs in landfill MD Auxiliary variable
72 Landfill fee per ton D /t Stock Questionnaires 0.3
73 Increase in landfill fee D /t Flow
74 Increase rate in landfill fee % Parameter Questionnaires 20%
75 Factor of price fluctuation Auxiliary variable
76 Transportation distance to recycling km Auxiliary variable
77 Transportation costs MD Auxiliary variable
 W. Zhao et al. / Resources, Conservation and Recycling 55 (2011) 933–944 943

Appendix A ( Continued ).

No. Variable name Unit Characterization Further information Initial

78 Total costs in C&D waste management MD Auxiliary variable

79 Total savings in C&D waste management MD Auxiliary variable
80 Ratio of the savings to costs Auxiliary variable

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