In short: no. One-time-use paper, like newspaper, is generally bad for the environment. Even if it is not really, really bad, it is definitely not good.
Paper production, of course, causes a great deal of deforestation. And even recycled paper (which most newspaper comes from, I believe) consumes a great deal of energy in the transportation and recycling processes. It may be hard to believe, but paper is the number one waste material produced in the United States, weighing in at 28.2% of all material waste in 2009, according to the Environmental Protection Agency. Much of that paper is recycled, but at what energy costs? Paper mills that recycle paper often use and create a great deal of polluting byproducts, including fossil fuels.
That being said, a material newspaper is not as bad for the environment as many other materials. It biodegrades relatively quickly in soil without generating much pollution, unlike, say, plastics. Unfortunately, most unrecycled waste paper ends up in land-fills, where it cannot biodegrade.
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