The price of byproducts: Distinguishing co-products from waste using the rectangular choice-of-technologies model

Abstract

The reuse or sale of byproducts is widespread throughout the global economy. Such byproducts are deemed co-products, while unused byproducts are considered waste. This distinction becomes less clear for waste products that can be turned into useable co-products, creating methodological problems for those studying reuse of byproducts using life cycle assessment, material flow analysis, and input-output analysis. Expanding upon the Rectangular Choice-of-Technologies (RCOT) framework (Duchin and Levine, 2011), this paper presents an approach for associating byproducts from the production process of a primary commodity with a distinct technology. This new RCOT method endogenously defines byproducts as co-products or waste depending on the technological and economic capacity to utilize them. By comparing the prices of utilized co-products to unused wastes, this framework provides an explicit way to relate these three concepts while also illustrating how changing economic conditions can change wastes into co-products, and vice-versa. We present a numerical example of this new method for distiller’s grains byproducts from ethanol production.