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UBC Theses and Dissertations

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UBC Theses and Dissertations

The economics of resource recovery : the case of lubrication oil King, Janice Ilene Norman


Environmental concern and the possibility of energy shortages have drawn attention to means for recovering material and energy resources from waste products. The focus of this thesis is on the application of cost-benefit analysis as a methodological technique for evaluating the economics of resource recovery: namely used lubrication oil. The study initially focuses on the general concern of the economics of resource recovery. This is undertaken primarily by a review of existing literature. An investigation of cost-benefit analysis as advanced by Pearce, Pearce and Dasgupta, Canadian Treasury Board Secretariat, Winch, Nath, Anderson, and Settle, to name a few, reveal a comprehensive and systematic framework for the evaluation of public investment alternatives. Items for inclusion in the analysis are all costs and benefits to every member of, a defined society whose welfare would be affected by the project if implemented. Many goods and services do not enter into the market system, causing difficulty in deriving monetary values for some of the components, especially environmental concerns. For example, the case study reveals two areas: 1) benefit of pollution abatement stemming from resource recovery of used lubrication oil, and 2) costs associated with the improper disposal of the waste products from the recycling process of used lubrication oil. An attempt is made to apply the cost-benefit framework to the case of lubrication oil recycling in the province of British Columbia. Adequate quantitative data were not available, particularly on the social costs and benefits, to fully employ the cost-benefit technique, therefore restricting the analysis in that only an identification of costs and benefits was prepared. When quantification of costs and benefits is not possible, a detailed description of the unquantifiable items indicates to the decision maker the extent of the components. Included in this study is a presentation of the environmental impacts of used oil disposal. The limitations of the cost-benefit analysis as an evaluation technique arise because of limited information and data needed to evaluate, in monetary terms, environmental improvement. Future research could involve a "simulation" of the market to determine a plausible shadow price that gives an indication of what the market price of the item would have been if it had been normally traded. A determination of the price that consumers would be willing to pay for the benefits of pollution control with the knowledge that some pollution would be produced by the recycling activity would aid the analyst in placing values on the costs and benefits.

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