E-Waste: Does the Informal System Do It Better?

In our extensive research into the informal waste systems of Shanghai over the last year, we have recently begun to explore the inner workings of a specific branch of this system: the e-waste stream. As the fastest growing waste stream, with over 16Mt generated in Asia, e-waste is hazardous, complex and costly to treat. It is also incredibly valuable with a thriving economy set up around it.

During our fieldwork, we spoke to the e-waste collectors on the streets of Shanghai and visited informal collection sites to gain a better understanding of how this system works. While conversations surrounding electronic waste disposal in China are focused on the need to tackle informality in e-waste collection and formalize the system, the conversations taking place among informal collectors paint a very different picture.

One collector told us that he thought the informal system was more environmentally friendly than the formal one in terms of how it keeps many of the materials circulating in the economy for longer as opposed dismantling them straight away. Based on this comment, we investigated further into the strengths of the informal system that led us to discover steps earlier on in the collection process are surprisingly efficient and allow for a greater number of materials to be recovered, reused, and resold than through the formal system.

What we found challenged our initial perceptions and shed light on a much more complex, highly developed system with a number of actors in the chain. The informal network comprises thousands of informal collectors built on personal relationships, fixed pricing structures and swapping points.

Ewaste Truck Shanghai
A truck full of E-waste from Ningbo outside TES-AMM Recycling Factory in Shanghai Photo Credit: Collective Responsibility

Strengths of the Informal System

Shanghai’s five formal e-waste collection sites face competition on the collection of the five e-waste types covered in the government WEEE fund, that is; TV’s, air-conditioners, refrigerators, washing machines and personal computers.

Efficiency of Collection

The main strength of the informal system is in collecting small quantities of e-waste, including individual units such as washing machines, air conditioners, and TV’s from the doorsteps of consumers. This collection takes place across the city, in every neighborhood and community. Formal collectors have difficulty in accessing the e-waste supply can only process e-waste in large quantities, lacking the manpower and efficiency of the informal sector.

“Every day we go to the residential neighborhoods and collect the e-waste. Then, from 6-8pm we take all the things we’ve collected to a bigger collection site. There is an area there that has a manager who deals with dismantling and another that deals with second-hand resale.
– Mr Sun, an informal e-waste collector in Shanghai

It’s Profitable

In the informal system, each actor makes a small profit on the item every time it changes hands, culminating at the larger collection sites where the final trading takes place before it transported to the outskirts of the city to be dismantled or sent to neighbouring provinces to be handled. The profits from the informal system provide a way to earn a living for the thousands of migrant workers in Shanghai who move to the city and make a living off of this system.

For the formal system, government subsidies through the WEEE fund only cover five items. E-waste outside of these categories is not subsidized which makes it unprofitable for large formal recycling centers to collect and dispose of. It also means that people will get a higher price for electronic items outside of these five items by selling it through the informal system. The subsidies also do not cover logistics costs for transporting the e-waste, limiting the ability of the formal system in terms of its capacity to collect the waste.

Segregating and Deploying Resellable / Reusable

At the last stage in the informal collection process, the collected e-waste is taken to a larger site in Shanghai and traded. Through the trading process the waste gets categorized into reusables or for dismantling, with people at the site well known among the collectors as being responsible for one or the other. By contrast, the e-waste coming into the formal system is usually not separated for the parts that are reusable or units that can be repaired, and goes directly to be dismantled regardless of the condition it is in. This is mainly because to keep costs low, the formal system relies on a high volume of electronic items coming into the recycling factory.

“If they’re [the informal collectors] not actually doing the dismantling part and causing pollution, then there’s nothing wrong with it. It’s just a second-hand reselling system, even if it is through informal channels. ”
– Kevin Chie, TES-AMM Corporation

Where the Formal System Wins

The strengths of the formal system, such as TES-AMM Shanghai lie in the end-processing of e-waste where more of the valuable materials can be extracted by skilled workers using environmentally friendly techniques.

The recovery of valuable materials such as gold, which accounts for over half the revenue from e-waste, silver, platinum, as well as rare earth metals found in almost all consumer electronic devices is much more efficient in the formal system and an increased recovery of these valuable rare earth metals is important due to their increased scarcity and because they are difficult and costly to mine.

On the contrary, the primitive dismantling techniques used in the informal end-processing of e-waste is harmful to both the people handling it and the environment. In the e-waste village of Guiyu, Guangzhou Province, metals are extracted under hazardous conditions, and e-waste is burnt in the open causing toxins to leach into the soils and water systems.

Bridging the Systems

Rather than a clear-cut full formalization of the e-waste collection system, there is enormous potential for the two systems to interplay, forming an integrated system.

The interaction of the two systems could take place at the point after the e-waste has been collected and categorized via the informal system. The formal system could buy this end of life e-scrap from the informal collectors at a slightly higher price than what they get from the informal truck drivers. This would require additional subsidies from the government across a larger number of e-waste types.

Promoting the formalization of informal workers in this sector is also key. China could look to initiatives in India that are being set up to help e-waste workers formalize, such as the NGO Chintan Environmental Research and Action Group. This is but one example of the mutual gains in bridging the formal and informal economies: the informal economy can retain its jobs and income, and the formal sector can access higher volumes of e-waste.

There is a huge opportunity to rethink how the two systems interact in taking positive steps towards closing the loop on e-waste. Follow our continuing research into e-waste collection systems over the coming months as we work towards a deeper understanding of the challenges and opportunities in this sector.

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