Towards a circular economy with waste-to-resource system optimization

Motivated by mounting pressures to achieve environmental sustainability, and the emergence of online waste exchange platforms, in this work we propose an optimization-based framework for studying waste-to-resource formation in the industry. We first develop a linear programming market clearing model comprising self-interested agents participating in waste-to-resource trading. We then embed this in a bi-level capacity optimization problem under uncertainties in the agents' reserve prices, the goal of which is to maximize the economic savings achieved by waste-to-resource. We show that the resulting robust optimization models admit linear mixed integer programming formulations that can be readily computed using available solvers. Furthermore, we provide the formulas for applying an equitable levy and incentive scheme, to enable capacity cost-sharing among the agents. Numerical studies based on a case of organic waste streams demonstrate the usefulness of the proposed models in generating valuable insights for decision support in the design of waste-to-resource markets.