Pays up for recycling, putting in right kind of paper (7)
I believe the answer is:
papyrus
'kind of paper' is the definition.
'pays up for recycling putting in right' is the wordplay.
'for recycling' indicates anagramming the letters.
'putting in' is an insertion indicator.
'right' becomes 'r' (common abbreviation).
'pays'+'up'='paysup'
'paysup' is an anagram of 'papyus'.
'papyus' enclosing 'r' is 'PAPYRUS'.
(Other definitions for papyrus that I've seen before include "Old African paper" , "Kind of paper used in old Egyptian manuscripts" , "old document" , "Ancient paper plant" , "Egyptian writing matter" .)