FOR IMMEDIATE RELEASE
February 12, 1997
Contact:
Michael Tebo
(202) 328-5019
[email protected]
DEPOSIT/REFUND FOUND TO BE MOST COST-EFFECTIVE
POLICY IN REDUCING MUNICIPAL WASTE
WASHINGTON, DC -- Researchers at Resources for the Future (RFF) have found a deposit/refund system to be the most cost-effective policy among those that rely on economic incentives to reduce municipal solid waste (MSW). They suggest that a modest reduction in recyclable wastes -- including glass, paper and plastic -- could be achieved if the federal government used a deposit/refund policy that charged the deposit fee to manufacturers of consumer products (for example, a beverage can manufacturer is charged a deposit on aluminum sheets). The subsequent refund would then be granted to collectors of recyclable materials.
RFF researchers find that this ideal deposit fee would be substantially less than current deposits charged to consumers under "bottle bills" in several U.S. states; would apply many more wastes than just beverage containers; and would provide incentives to consumers to reduce their consumption and increase their recycling because the deposit charge to manufacturers would be passed along to consumers.
In their study, "The Cost of Reducing Municipal Solid Waste," RFF's Karen Palmer and Margaret Walls, with UCLA's Hilary Sigman, evaluate three policies: advance disposal fees (ADFs), which are charged to manufacturers as a means to cover the disposal or recycling costs of the subsequent product; deposit/refunds, which place a fee, or deposit, on a product when it is purchased and then refund the deposit when the used product is returned for recycling; and recycling subsidies, which provide monetary support or discounts to manufacturing firms that use recyclable materials.
Numerous state and federal policies have been implemented or are under consideration to reduce the amount of MSW going to the nation's landfills. For example, 10 states have implemented deposit/refunds on beverage containers (often referred to as "bottle bills"); Senator James Jeffords (R-VT) introduced a bill (S.215) in January 1997 that would impose a nationwide 10-cent deposit fee on beer, soft-drink and water containers in states which have a beverage
container recovery rate of less than 70 percent; 13 states have mandated recycled content standards for newsprint; Hawaii and Florida have adopted ADFs; and a series of bills were introduced in the 104th Congress to establish recycling incentives for lead batteries, tires, newsprint, and oil.
To calculate the necessary fees for ADFs, deposit/refunds, and recycling subsidies to achieve moderate reductions in solid waste, Palmer, Walls & Sigman developed an economic model of waste generation and recycling for five materials -- aluminum, glass, paper, plastic, and steel -- that comprise 56 percent of MSW. Using price figures from 1990, they find that the fees that would be required to reduce waste disposal by 10 percent are $45-per-ton under deposit/refunds; $85-per-ton under advance disposal fees; and $98-per-ton under recycling subsidies. Deposit/refunds are found to be the most cost-effective policy alternative, researchers say, because they take advantage of opportunities to reduce waste through source reduction -- less production and consumption -- and recycling. ADFs and recycling subsidies rely only on source reduction or recycling.
Further, Palmer, Walls & Sigman conclude that a 7.5 percent reduction in solid waste could be achieved if the government priced deposit/refunds at $33-per-ton, the marginal social cost of a ton of MSW, which accounts for both the cost to dispose of waste at a landfill plus the often-unaccounted environmental and community nuisance costs of landfill operation. The latter externalities include: groundwater and soil contamination from toxic substances; highway wear-and-tear and noise; general unsightliness and odor; and the possible perception by nearby residents that the facility presents a health risk. This $33-per-ton cost would be equivalent to a deposit of $0.006-per-aluminum can; $0.024-per-steel can; $0.24-per-newspaper; and $0.024-per-plastic milk jug. By comparison, recent estimates indicate that consumers in states with "bottle bills" pay an average deposit of $0.023-per-container, which amounts to a $320-per-ton deposit for a typical steel can or one-gallon milk jug, and a $
RFF researchers emphasize that waste reduction policies need to be flexible because the opportunities for waste reduction vary significantly across materials. Their model predicts that paper and glass wastes may be reduced much more inexpensively than metals. As a result, setting policy goals for individual materials may cost considerably more than establishing a single disposal price for all materials and allowing the market to determine which materials can be reduced most inexpensively.
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