The state and federal plan to ban exports of recyclable material could lead to a boom for Wagga's industrial and manufacturing sector, according to the council.
Decisions by countries such as China and Indonesia to halt Australian imports of used plastic and paper has prompted the Council of Australian Governments to search for a domestic solution.
Wagga council city strategy manager Tristan Kell said any ban on exports would improve the chances of establishing a processor in the region to turn used plastic, paper or glass into raw materials.
"What we'd hope to see (at the Bomen industrial area) is something that turns recycling that can be used to create things that add value to the region's economy," he said.
Mr Kell pointed to battery manufacturing as an industry that used innovation to allow "99.7 per cent" of materials from used car batteries to be recycled.
"We already see recycling in Bomen with lead and oil but to really maximise the 'full circle economy' we'll need to get better and learn how to use what we have previously been shipping off to add value," he said.
"It's something we are really exploring during the development of the special activation precinct."
The precinct is a state government initiative for an accelerated industrial planning zone at Bomen.
However, NSW Business Chamber Murray-Riverina manager Andrew Cottrill warned that a recycling exports ban could push up costs for all businesses.
"We are concerned for businesses, particularly in regional and rural areas, as waste disposal is a major cost," Mr Cottrill said.
"In the current environment, many councils are passing the costs on to businesses and we need a solution to the escalating cost issue.
"We would urge government to engage with industry to ensure a timely, effective and environmentally sound recycling process."
Mr Cottrill said establishing regional recycling processors could be part of the solution.
"It would be great, if it provides jobs and is an environmentally sound option," he said.
If a processing plant were built at Wagga, the availability of raw materials could also encourage greater investment of manufacturing in the Bomen industrial zone.
"That's what we want, that's a full circle economy and leads to other opportunities that other businesses can build on," Mr Kell said.
"Plastic recycling can provide the packaging and the bottling for food processing, and saves costs as everything is in the same precinct."
Mr Kell said Wagga's current and future freight connections could make it a collection point to process the region's recycling.
Australia's recycling industry is mostly limited to collection and sorting, with a majority of materials exported for industrial processing in other nations.
High labour costs, collapsing prices and import bans in Asia have encouraged some operators in capital cities to stockpile recyclable materials in warehouses.
Kurrajong Recyclers, which has the contract to collect recycling in Wagga City Council, has previously said China's import ban had a financial impact, with the disability employer having to pay for extra disposal.
The August 9 COAG meeting produced an agreement that "Australia should establish a timetable to ban the export of waste plastic, paper, glass and tyres, while building Australia's capacity to generate high value recycled commodities and associated demand".
State and federal political leaders have now asked their ministers work on a timetable to "maximise the capability of our waste management and recycling sector to...convert and recover waste".