Want to recycle more? Try utilizing the market more
For most people, recycling is a bit like flossing. It’s something you know you should do, but at least in the short term offers little tangible benefit. Economists, helpful as ever, might even point out that recycling is less in your interest than flossing, since the benefit that comes from you sorting your recyclables is shared by everybody while you bear all the hassle yourself.
To account for this, governments have tried a variety of methods to keep the hassle of properly disposing of waste to a minimum. Usually, these policies are focused on trying to make the cost of recycling or waste management easier—a trash barrel on every corner—or punishing litterers—fines for dumpers—but as recycling growth has stalled it seems these policies are hitting their limit. However, research is showing more and more that leveraging the power of the market can yield better outcomes in materials reclamation.
When waste management policies were taking hold in the 1970s amidst a surge of disposable, single-use containers for food and beverage products, a handful of states adopted the novel idea of a “deposit refund system,” (DRS) more commonly known as a “bottle bill.” These states theorized that more people would recycle and properly dispose of waste if they paid a fee for a container that was then refunded to them upon returning it. Decades later, the verdict is in, and states with DRSs outperform other states on recycling by a wide margin. Some politicians are even pushing for a DRS at the federal level to expand on the success of DRS states. But the debate is still not settled as to if DRSs are good policy, and that’s where some recent research from the R Street Institute (RSI) comes in.
The impact of a DRS can come down to a number of factors in favor or against the policy. The DRS might entail some economic impact that exceeds its benefits, it is possible that it is not the cause of high recycling rates but merely a symptom of recycling culture, and there’s still an outstanding question of whether just mandating more recycling would lead to better outcomes. As national recycling rate improvements have stalled and calls for a “circular economy” are growing, it is worth examining if select policies can achieve environmental objectives at a lower cost.
Conventional economic wisdom dictates that market-based policies—as in policies where behavioral change is induced by price signals, competition and dispersed individual choice—are more efficient because they capture opportunities that a mandate would not incentivize. In plain terms, if someone feels like they are getting more money out of the behavior change than with the status quo, they change their behavior. RSI found evidence of this in noting that when Oregon increased its DRS fee, recycling rates increased, suggesting that recycling rates are responsive to the market and not merely explained by culture or other non-market phenomena.
Furthermore, RSI compared the recycling rates of successful curbside recycling programs and the rate of materials reclamation for DRSs and found that for materials most commonly used for beverage containers—and likely to fall under a DRS—recycling rates were still higher under the DRS than the curbside program. This is likely because curbside recycling is only convenient for the subset of the population that has easy access to residential recycling, as well as the fact that a lot of recyclable materials are utilized and disposed of outside the home.
But even though DRSs seem to work, and work better than curbside programs, a complaint that cannot—and should not—be readily dismissed is that such a program acts as a tax on any product that uses a container falling under the DRS. The RSI research examined the impact of the DRS on consumption and found that, ironically, states with DRSs consume more recyclable material than non-DRS states. This challenges the notion that DRSs seriously impact the profitability of producers that utilize DRS-covered materials—beverage producers being the big ones.
The salient takeaway is that even though waste management policies, including recycling, function through non-market programs like subsidies or waste-related mandates, there is still a big role for allowing the market to incentivize desired outcomes. To get the cleanest possible environment, utilize the power of the free market to the greatest extent possible.