WASHINGTON (March 28, 2022)—A new analysis released today by R Street Resident Fellow Philip Rossetti examines the effectiveness of deposit refund systems (DRS), also known as bottle bills, in which a fee is levied on the purchase of a recyclable product and is refunded at the time of deposit. Bottle bills have been around since the 1970s but haven’t changed much since and vary from state to state.

“DRS programs are more effective than curbside recycling at improving material reclamation rates,” said Rossetti. “While a central-planning mindset to simply mandate recycling through curbside programs may be appealing, it is unlikely to be as effective as a market-based program such as a DRS.”

A detailed analysis of state bottle bills reveals that covered materials have significantly higher recycling rates than materials that are not covered, which indicates that recycling choices may be directly attributable to the bottle bill. To reduce littering and environmental destruction, waste management is necessary as a public good and should be addressed through market-based policies when possible. In addition, recycling, especially of aluminum, is good for the environment and helps reduce demand for minerals from countries like China.

DRS programs work well and could be applied to other types of waste, such as electronics and other critical minerals. In instances where increased recycling would benefit the environment and reduce reliance on China and other strategic rivals, a market-based policy would yield the best outcome.

Read the full study here.

Three key points:

  1. Managing pollution is a hard task for the government because it usually costs people nothing to pollute, but people have to undertake some burden to avoid pollution. Due to these issues, a market-based recycling policy would result in less pollution.

  2. DRS (bottle bills) are an example of a market-based recycling policy, and research indicates states with bottle bills do recycle more.

  3. Fears about major impacts on affected industries should be tempered, as current deposit refund systems have negligible impacts on total materials consumption. Increased materials reclamation, can, however, improve the environment and reduce reliance on foreign suppliers.