The economics of waste

• The waste, resource recovery and contaminated land management sectors contribute over $3.3 billion to the New Zealand economy but waste inefficiencies are costing the country $222.8 million annually in avoidable disposal costs
• New Zealand’s material productivity was just 59% of the average of OECD countries (despite Kiwis consuming more materials per capita)
• An estimated 40 percent of waste sent to class 1 landfills is divertible and as a country we have a huge opportunity to improve waste management
• Carbon emission efficiencies would come with better disposal and management of waste, with future costs of abating emissions from waste estimated at $481 million
• The waste, resource recovery and contaminated land management sectors contribution to Aotearoa is even broader than environmental and economic benefits, and these contributions include reduced emissions and volunteer-driven community initiatives along with helping to address illegal dumping of rubbish, food waste, and air pollution from the burning of waste.

 

Effective management of waste, resource recovery, and management of contaminated land is crucial for protecting public health and the environment, and growing the economy 

Done well, waste management, resource recovery, and contaminated land management protect our environment. These economic activities across the sectors directly and indirectly support businesses and employment. The waste, resource recovery and contaminated land sectors contribute across the entire economy, supplying products, freeing up otherwise limited usable land and containing the effects of waste materials. 

 

Better economic information on the waste, resource recovery and contaminated land management sectors is needed

WasteMINZ commissioned NZIER to assess the economic contribution of the waste, resource recovery and contaminated land management sectors in Aotearoa New Zealand. The report aims to fill information gaps in quantifying the sectors’ economic impacts to inform policy development and investment, and provides a starting point for future research to build on to better understand and quantify the impacts, both positive and negative, across sectors.

Other countries have begun developing satellite accounts for the waste sectors, but this is unavailable in New Zealand. Satellite accounts would provide a more comprehensive picture of the various sector interactions and their contributions to the economy. 

We use official economic data to define the sectors’ industries and products

The sectors are broad in definition and capture various activities that are either not reflected in or separately identifiable within official economic datasets. Therefore, NZIER used established industry definitions to assess the economic contributions of the sectors.

The report assessed that the core waste collection, treatment and disposal services industry produced $2,415 million of direct output in 2020, which directly supported 7,200 jobs and $998 million of gross value added (gross value added represents the difference between the value of goods and services produce and the cost of the inputs used to produce them). Including flow-on indirect and induced effects to other industries and households, the total contribution rises to $6,048 million in output, $2,715 million in gross value added, and 20,150 jobs.

The sectors consist of more than just the core industry and can also include sector-related products supplied by a range of industries. When aggregating the economic activity across the sector-related industries and products, $3,342 million in direct output is generated annually. This directly supports $1,363 million in gross value added and around 10,400 jobs across the economy.

Compared with other countries, New Zealand has a low material productivity. For every tonne of material consumed, only USD1,475 of economic output is produced, whereas the OECD average is USD2,502 per tonne of material consumed. This suggests that more can be done to better utilise the material used in domestic production, which will help to lift productivity and reduce waste. 

 

The sectors also have a wider impact on other parts of the economy

Approximately 1.67 million tonnes of materials were diverted from class 1–4 landfills in 2024, but inefficiencies in waste diversion are costing the economy. An estimated 40 percent of waste sent to class 1 landfills is divertible, which results in estimated avoidable disposal costs of $222.8 million in 2022 alone. This represents a significant opportunity to keep materials circulating in our economy (avoiding the need to buy, extract or grow new materials), and reduce disposal costs and greenhouse gas emissions.

Waste also costs households. Local councils have increased their spending on solid waste management, reaching $629 million in 2023. Approximately 60 percent of domestic kerbside waste collection consists of organic material such as green waste and food scraps. Wasted food alone is estimated to cost the average household between $1,326–1,516 every year.

The sectors generate additional value through environmental management, reduced emissions, and volunteer-driven community initiatives. Addressing illegal dumping, food waste, and air pollution from open burning are critical areas for targeted intervention. Around 3.1 million tonnes of CO2-equivalent emissions in 2022 came from the disposal and management of waste, with methane accounting for 96 percent of the total. The future cost of abating these emissions is estimated at $481.1 million. 

Reducing the volume and types of waste going to landfills is a key priority for the government. Not only does this represent an opportunity for targeted emissions reductions, but it is also a way to reduce costs for businesses and improve productivity through more effective and efficient use of resources.