Bronx Ecology: Blueprint for a New Environmentalism, by Allen Hershkowitz. Island Press, 2002, 281 pages.

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Saving the Bronx Ecosystem

by Jane S. Shaw

The Bronx Community Paper Company was going to be a $500 million world-class recycled-paper plant, built on an old railyard site in the South Bronx of New York City. It would not only recycle wastepaper but also rehabilitate the location to the highest environmental standards and use reclaimed sewage water instead of fresh water. It was going to be community-based and provide living wage jobs in an area that prosperity had passed by. The plan was praised by Bill Clinton and Al Gore and won the interest of the architect-luminary Maya Lin, whose designs for the plant were included on the New York Times list of the top ten architectural highlights of 1998.

The entrepreneur behind this paper mill was not a businessman, but a senior scientist for the litigation-oriented environmental group, the Natural Resources Defense Council (NRDC). As it turned out, the Bronx Community Paper Company was never built. No spade of earth was turned. As the familiar adage says, "Success has many fathers, but failure is an orphan." That may be why Bronx Ecology has received little attention. Published in November 2002, the book does not appear to have been reviewed in a major publication. Yet it is a fascinating story and the story is mostly about hubris.

You can't help but admire Allen Hershkowitz. He had spent years trying to push recycling through regulations, laws, and lawsuits. After Congress failed to enact a national recycling act in 1992, he shifted directions. Still convinced that recycling makes sense both environmentally and economically, Hershkowitz set out to prove this claim by building a massive, environmentally pristine recycled-paper mill. "I was excited about the idea of building bridges with traditional adversaries," he writes, "of getting to know more people in industry and working with them, of bringing their formidable resources and profit motive to our cause." He worked on the project for nearly eight years.

Hershkowitz's project, although exceedingly ambitious, did have strengths. He was able to find a paper company in Sweden (where, he says, recycling is much further along than in the United States) that had a subsidiary in the United States willing to operate the plant. He enlisted Maya Lin (designer of the Vietnam Memorial) to integrate the collection of buildings in an environmentally pleasing way. And he linked up with a Bronx community development group to help ease the permitting process and achieve his goal of serving a community that needed jobs.

But the project died, and this book is its obituary. It's written a little oddly, combining excruciating detail about parts of the project with light touches over others. The reader is never specifically told the sequence of events that led to failure, just that shortly before all the papers were to be signed, the project could not muster sufficient funding. Instead of being humbled by his experiences, Hershkowitz ends the book with upbeat advice on how environmentalists should work with the private sector, just as though the project had been a complete success. (Some sections of the book may have been written before the project failed and were not changed.)

Hershkowitz does identify some of his mistakes and the people who let him down. One of his biggest errors, he tells us, was to give ownership of the company to the Banana Kelly Community Improvement Association. One can hardly disagree with his hindsight. How he could have turned over a pioneering, highly sophisticated, $500 million project to a small community group with little apparent accountability, I do not know. Although numerous problems arose from this arrangement, the crippling one was a scandal publicized in the New York Post. Banana Kelly's executive director was charged with using the organization's funds for personal expenses and channeling a $1 million grant to a friend, who apparently didn't do anything constructive for the project. (Hershkowitz never details the subsidies the project received, but implies that they were substantial.)

Second, New York City changed mayors. The project depended on contracts with the city government for New York's wastepaper. Rudolf Giuliani was less enthusiastic about the project than his predecessor had been and more open to campaign contributions from major waste haulers who wanted to keep getting the wastepaper that would otherwise go to BCPC.

Third, in what Hershkowitz views as typical modus operandi in New York City, a construction firm sued NRDC and others for $80 million, on grounds that they had given the firm some right to a role in the project and then reneged. Although the suit was ultimately dismissed, its potential impact forced NRDC to remove itself from the project. According to Hershkowitz, the absence of NRDC's advocacy was fatal.

As the book progresses, Hershkowitz shares some other reasons. The Swedish paper company and its U.S. subsidiary changed ownership and the new leadership backed out. Hershkowitz was forced to revise his game plan. Instead of relying on a paper company as the designer and operator, he went to a construction firm/developer, Morse Diesel International. Hershkowitz says that Morse Diesel designed a plant that was so big that it couldn't be financed.

An outside observer such as myself quickly sees other errors. One is Hershkowitz's naive and exaggerated view of recycling's blessings. Hershkowitz should have read the broader literature on recycling, not just his own rosy descriptions. Scholars such as William Rathje (University of Arizona) and Clark Wiseman (Gonzaga University) and reporters such as John Tierney (New York Times) have poked holes in optimistic claims about recycling. They would have warned him that the demand for recycled products, including paper, is limited. Equally important, a big plant requires a steady supply of wastepaper in a market that is notoriously volatile. Both supply and demand may depend on political factors.

Failing to take these (and other) criticisms seriously, Hershkowitz was blind to the peculiarities of the market affecting recycled paper in New York. Once completed, his plant would have disturbed market forces that were already handling the problem of wastepaper, and these competitors weren't going to sit around and lose their markets without a fight. Add to that the fact that New York City is known for corruption, especially in construction, and that the supply of wastepaper was dependent on a politically-mandated recycling program that could easily change as the political winds shifted. Also contributing problems were unions, which destroyed Hershkowitz's hope that there would be living wage jobs for South Bronx residents. (Local people were kept out.)

More fundamentally, Hershkowitz should have learned more about markets before stepping in with both feet. Hershkowitz refers to the "ruthless" market at least four times in this book. Yet he doesn't seem to understand either how ruthless market competition can be or the social benefits that come from that ruthlessness. Competition forces owners to search for lower-cost ways to provide customers with products they want at prices that no other company can consistently undercut.

The social benefits of this market competition are innovation and less waste of resources. The resulting efficiency (when it occurs throughout the economy) leads to prosperity, even though the production processes and output may not have all the characteristics that would be desirable in an ideal world. Rather than heed the messages of the market, Hershkowitz clung to his prior assumptions about how beneficial recycling paper would be and assumed that people would be willing to pay for virtually unlimited environmental remediation, even under adverse conditions such as those found at an abandoned industrial site in New York City.

Entrepreneurs can overcome many problems, and all over the world entrepreneurs are looking for lower-cost ways to dispose of waste, as they have done for hundreds of years. Sometimes these efforts lead to new products, new markets, and profits. Yet even on a small scale, the goal is challenging. The main reason is that virgin raw materials such as paper and plastic are plentiful not primarily because of government subsidies, as Hershkowitz claims (repeating discredited myths). Rather, the economic system for producing them is efficient. Competition keeps costs low and entrepreneurs continue to find new ways to stretch limited raw materials and to find new ones. Recycling has a place, but a $500 million paper mill in the midst of politically corrupt New York City put together by neophytes in business and owned by the Banana Kelly Community Improvement Association was pretty much beyond the pale from the start.

How much more would Allen Hershkowitz have done for society if he had started small, exploring a more limited recycling project, to see what worked! A tiny plant producing newsprint somewhere in, say, Missouri could have tested his hypotheses, identified strengths and weaknesses, and might have provided real benefits. But such a project would not have received presidential praise, would not have won government subsidies, and would not have earned a profile for Hershkowitz in the New Yorker. When your goals are grandiose — no matter how wasteful of resources — people pay attention. Until you fail.

© Copyright 2008, Liberty Foundation

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