An economic analysis of joined costs and beneficial effects of waste recycling

Much research has been done throughout the world to determine the economic and ecological profitability of waste utilization as a substitution for raw materials. Unfortunately, Poland has no sufficient solutions in this field. The deficiency of solutions impedes the work of groups of specialists in various fields involved with the rational planning of recycling. This research seeks to offer a simple unified framework to study the key economic features of the use of waste as substitute for nonrenewable resources in production in Poland and other countries. The purpose of this paper is to develop a model to obtain some key insights about the cost-effectiveness and define certain parameters which determine the effectiveness of production plants dedicated for processing waste into useful products. A plant's productive possibilities can be described by the production function which is determined empirically. In this model, the emphasis is put on plant functioning and is dependent on the amount of work destined for the production in fixed units, technical maintenance costs of the work fixture in fixed units (e.g. machines', cars' operating costs etc.), and the amount of modified waste. In order to calculate these costs, we need to consider the issue of precise measuring the overhead costs in order to maximize profitability of this kind of measures allocation so that the profit will be the highest. The task of measuring overhead (costs) comes down to finding the maximum of the production function. This research presents the mathematical model and provides some key insights about the profitability of the plants dedicated for processing waste into secondary materials. In this research, we also determined the maximum of the profit function and assess when the recycling plant will bring the profit and when it is the highest.