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California’s 2003 Statewide Diversion Rate

This page informs interested parties about the the overall statewide diversion rate calculation for 2003. This information was first released at the March 16, 2004, Board meeting by Mark Leary, Executive Director of the California Integrated Waste Management Board.

2003 Diversion Rate--47 Percent

Summary

California's statewide diversion rate dropped to 47 percent in 2003, down from 48 percent in 2002. While statewide disposal increased by 2.3 million tons, estimated diversion increased by only 1.6 million tons. One reason for the increase in disposal may be the increase in construction activity, a factor that does not seem to be reflected by the Board-approved Adjustment Method (AM), the formula used to estimate total generation. Construction activity has been important in the recent economic recovery, showing strong growth the last few years. The economic factors used in the AM, however, have shown little or no growth. Additionally, e-commerce activity continues to increase, up considerably in 2003, and this potentially has a negative impact on the taxable sales and employment figures that are used in estimating generation.

Background

Each year the Board's Diversion, Planning and Local Assistance Division (DPLA) reports on statewide progress toward the diversion goals of the Integrated Waste Management Act of 1989. Prior to 1997 the statewide diversion rate estimate was typically available in late spring. This was due to the Disposal Reporting System (DRS) schedule and availability of information provided by other state agencies. Because concerns were raised about this delayed reporting, starting in 1997 staff made efforts to ensure earlier, more uniform diversion rate estimates. The statewide diversion rate estimates are now based on the Federal Fiscal Year (FFY--October 2002 through September 2003) to provide an estimated diversion rate as close to the beginning of each year as possible.

Analysis

Construction Activity

Statewide disposal increased by 6 percent from 2002 to 2003. This is the largest increase in statewide disposal since the Integrated Waste Management Act of 1989 was enacted. There are several potential explanations for this increase. Staff analysis shows that there is a strong relationship between disposal tonnage and construction activity, as measured by construction employment and residential building permits (permits). The construction industry was one of few California sectors that actually showed a net gain in employment during FFY 2003. While overall industry employment declined slightly, construction employment increased about 2 percent (Figure 1). Since 1999, construction employment has increased 17 percent, while overall employment has increased by only 3 percent (Figure 2). The other major construction indicator, permits, also increased substantially in 2003. During 2003, the number of permits authorized increased 17 percent. Since 1999, permits have increased 35 percent (Figure 3).

While disposal tonnage reflects the increased construction activity, the factors used to estimate generation may not. To estimate generation, staff uses the AM, which includes population, total employment, and taxable sales (adjusted for inflation using Consumer Price Index). As shown in Figure 1 and Figure 2, construction employment has increased at a much higher rate than total employment in recent years. Therefore, total employment may not reflect the impact of increased construction activity on the waste stream. Taxable sales only reflects retail sales of taxable items, and therefore excludes most construction related activities. Population increases in some jurisdictions may reflect the increased construction activity. However, Figure 4 shows that statewide population did not increase at an unusually high rate this year--certainly not at the same rate as construction activity. Therefore, it appears that the AM waste generation estimate would not accurately reflect waste generation during years with unusually high construction activity.

E-Commerce

Another factor that may have an impact on the accuracy of the statewide diversion rate is e-commerce. According to U.S. Department of Commerce, nationwide estimated retail e-commerce sales increased by 27 percent in FFY 2003, compared to a 4 percent increase in total retail sales. While it is difficult to estimate e-commerce sales figures for California, they are likely to be increasing at a faster rate than taxable sales. The State Board of Equalization (BOE) reports a 1.8 percent increase in taxable sales for FFY 2003. As with construction activity, the increase in e-commerce activity impacts disposal, and may be responsible for some of the increased disposal tonnage. Taxable sales data does not include e-commerce sales, and therefore its impact on the waste stream is not reflected in the AM generation estimate. If e-commerce continues to increase, taxable sales may become less reliable at predicting changes in waste generation.

Further Research

Staff has started discussions with faculty from the Economics Department at California State University, Sacramento (CSUS), to determine whether, given changes in what drives the economy, the AM accurately estimates changes in waste generation over time, and whether there may be additional factors that could improve the ability of the AM to estimate changes in waste generation over time. Staff is also requesting additional contract money to continue working with CSUS to determine if a new model for estimating waste generation can be developed. The Board approved the contract proposal at its March 16, 2004 meeting.

Calculation Methodology

The purpose of AB 939 was to conserve resources and extend landfill capacity, not to penalize jurisdictions for increases in population or economic growth. Thus, when population and the economy grow, jurisdictions will not automatically fail to meet the diversion goals. The impacts of demographic and economic changes on the waste stream must be considered when calculating diversion rates. By incorporating these demographic factors, the AM allows comparisons between years regardless of the changes in population and economics.

The first step in performing the calculation was to determine the 2003 statewide waste generation tonnage. Generation is the total amount of waste disposed and diverted. To arrive at this number, we estimated the statewide base year (2000) generation tonnage, taking into account new jurisdiction base years. Next, we estimated 2003 generation using the AM, which uses changes in population and the economy since 2000 to estimate changes in statewide generation since 2000. Using the AM, 2003 estimated statewide generation was approximately 75.7 million tons.

The next step was to determine 2003 statewide disposal. Disposal is the total amount of waste that is landfilled, exported out of the state, and transformed. However, since statewide transformation is less than 10 percent of total estimated generation, transformation was excluded from total disposal and, thus, counted as diversion. The Disposal Reporting System (DRS) tracks the amount of waste disposed by each jurisdiction in the state. However, because DRS data has not been received from some counties for 2nd and 3rd quarters of 2003, BOE data was used to fill the gaps. After combining the disposal tonnage from these data sources, 2003 total disposal is 39.9 million tons. Dividing this number by statewide generation, we arrived at a disposal rate of 53 percent. To determine the 2003 diversion rate we subtracted disposal (53 percent) from generation (100 percent) to get 47 percent. Approximately 35.8 million tons were diverted from landfills in 2003. For details, please see Table 1.

Figure 1: Percent Change in Employment by Industry, 2002-2003*

Bar graph showing percent change in employment in California, by industry sector, for 2002-2003
Source: California Employment Development Department
*Federal Fiscal Year: Oct.1-Sept.30

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Figure 2: Percent Change in Employment by Industry, 1999-2003*

Bar graph showing percent change in employment in California, by industry sector, for 1999-2003
Source: California Employment Development Department
*Federal Fiscal Year: Oct.1-Sept.30

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Figure 3: Authorized Residential Building Permits: 1999-2003*

Bar graph tracking increase in building permits issued in California from 1999-2003.
Source: California Department of Finance
*Federal Fiscal Year: Oct. 1-Sept. 30

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Figure 4: Statewide Annual Percent Change in Population, 1991-2003

Line graph tracking percent change in California population each year since 1991.
Source: California Department of Finance

Return to current year diversion rates memo to view previous years' statewide diversion rates.

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Last updated: September 8, 2009
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