(RiskMetrics Group) - An August 1 article describes the unintended consequences of what should be a success story:California’s ambitious e-waste disposal program. By offering cash to firms who collect and dismantle old computers and TVs, the state has also “built a magnet for fraud totaling tens of millions of dollars, including illegal material smuggled in from out of state,” writes Tom Knudson of McClatchy Newspapers.

Despite its problems, the California program has helped keep 840 million pounds of monitors and TVs out of landfills, according to McClatchy’s research. Domestic dismantling of e-waste is an important step towards stopping an ugly global trade in discarded electronics. While shiny new gadgets flow from Asia to customers in the US and Europe, old ones are shipped back to developing nations, where poor people perform the toxic task of stripping minerals from the machines.

Consumers, regulators and investors have called for electronics manufacturers and retailers to better manage e-waste, but the most destructive practices tend to be performed by individuals and small firms outside the formal economy. In this context, California’s in-state recycling model may still prove instructive, especially as developing nations begin to generate more of their own e-waste.

For more on the RiskMetrics article, visit: http://blog.riskmetrics.com/esg/2010/08/e-waste-trade.html