The idea is similar to the green bins. Many cities offer recycling bins now and they come just like the garbage man and take the recycling to the center and the city makes the money on it. This is the same concept, but instead of plastics we are going to recycle all items that can contribute to a successful compost pile. Fruit peels and cores and other biodegradeable material would be picked up in a bin similar to that of the recycling bin. Employees that run the pile would sort the biodegradeable trash and create large compost piles. After the piles biodegrate the soil or dirt that is enriched with nutrients would be bagged just like soil you buy at home depot and sold in local grocery and home improvement stores. Local governments could generate new incomes and cut down on garbage dump sites and contribute new and enriched soil that could be used by businesses or homes to grow plants and trees. Everyone would benefit from this plan.
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While the spirit and idealism of your post is admirable I find a number of implantation problems with your idea.
One - Getting people to sort their trash is difficult, and hiring workers to do so is costly. On top of that most people wouldn't sort the trash correctly, any paper with ink would leech into the system and make it unusable for growing food.
Two - High cost, this idea was actually implanted in the 1950's on the west coast and was eventually stopped due to the high cost of maintaining the large compost piles. Also we all know that selling soil is just not a high revenue market. The cost to create the soil is much higher then the revenue it generates.
Three - Poor use of land. A city of 11 million people like New York would need an inordinate amount of land that would have no other use then composting. Obviously, land is a valuable commodity, even if put the compost in New Jersey!
Four - Recycling has never been a profitable business, and the sad fact is that many cities have stopped cut these programs due to high cost and a lack of buyers for recycled paper.
Now if you could developed a machine that could somehow squeeze the organic material out of city garbage we might have some potential, except so much household garbage is highly toxic.
In the region of France where I live this actually done. Households can deliver "green waste" (cut lawn, branches, uprooted plants, ...) to collection points, not more than 10 km from their home. The material is then cenmtrally composted and sold to partly finance collection %& composting. Intersting enough, individual houseowners can now get a small composter for their own garden paid by the scheme. Maybe a sign that it is not working so well, after all.
In the UK, this is actually illegal! Apparently, the community composting networks that sprouted up around the country had generated some sort of health hazard. It makes me laugh that someone actually wrote a law that says something like "more than two households co-operating over processing vegetable waste constitutes an offence". People still do it there though.
In Victoria, British Columbia, where I live, city organised compost is just a basic service from the city government. See Saanich Garden Waste.
And, they pick up fallen leaves from the roadside every fall.
We do this in Anchorage, Alaska. People bring lawn clipping, scrap brush, anything bio-degradable. Horse owners bring their manure. There's also a glass reusing machine on site. They grind up the glass into a powder that is used industrially as........well I forget, but they use it to sand-blast stuff I think.
The land is provided free by the city but otherwise the operarion is totally private. The land is not very usable for much else as it is largerly clay and so it will liquify in an earthquake.
http://www.uaf.edu/coop-ext/compost/anchorage.html
We already have this system in my part of the UK, compostable waste going into a green bin, and thence to a municipal compost heap. Mcontribution is to ask WHY NOT use the organic material collected to generate methane and thence electricity - you could add in all of the human, cow and pig poop that you could collect as well, and do away with a lot of smells. End result, virtually free liquid manure, compost dry safe and odourless to sell to gardeners, and less CO2 in the atmosphere.