Certain requirements must be met for recycling to be economically feasible and environmentally effective. These include an adequate source of recyclates, a system to extract those recyclates from the waste stream, a nearby factory capable of reprocessing the recyclates, and a potential demand for the recycled products. These last two requirements are often overlooked—without both an industrial market for production using the collected materials and a consumer market for the manufactured goods, recycling is incomplete and in fact only collection.
However, comparing the market cost of recyclable material with the cost of new raw materials ignores economic externalities—the costs that are currently not counted by the market. Creating a new piece of plastic, for instance, may cause more pollution and be less sustainable than recycling a similar piece of plastic, but these factors will not be counted in market cost. A life cycle assessment can be used to determine the levels of externalities and decide whether the recycling may be worthwhile despite unfavorable market costs. Alternatively, legal means (such as a carbon tax) can be used to bring externalities into the market, so that the market cost of the material becomes close to the true cost.
The amount of money actually saved through recycling depends on the efficiency of the recycling program used to do it. The Institute for Local Self-Reliance argues that the cost of recycling depends on various factors around a community that recycles, such as landfill fees and the amount of disposal that the community recycles. It states that communities start to save money when they treat recycling as a replacement for their traditional waste system rather than an add-on to it and by "redesigning their collection schedules and/or trucks."
Every year, millions of tons of materials are being exploited from the earth's crust, and processed into consumer and capital goods. After decades to centuries, most of these materials are "lost". With the exception of some pieces of art or religious relics, they are no longer engaged in the consumption process. Where are they? Recycling is only an intermediate solution for such materials, although it does prolong the residence time in the anthroposphere. For thermodynamic reasons, however, recycling cannot prevent the final need for an ultimate sink.
The glass, lumber, wood pulp, and paper manufacturers all deal directly in commonly recycled materials. However, old rubber tires may be collected and recycled by independent tire dealers for a profit.