Will Packaging Taxes Solve Waste Issues, or Escalate the Problem?

bottles ready for recycling

Photo via ShuttersStock.Com

Many environmentalists would say that packaging taxes (like
bottle bills) are the solution to low recycling rates and the packaging
waste problem. The way these programs work is that they charge packaging
companies a "tax" per unit produced as a "deposit" and then give that
deposit back to the consumer when they return the package to a center
(could be a supermarket or a recycling center). Currently there are
bottle bills in over 10 states and a number of Canadian provinces.

While all manufacturers should take full ownership over the entire
lifecycle of their product (especially their packaging) is forcing "bottle
bill type" laws the most optimal solution? In certain Canadian provinces
(such as BC), there are such programs for even non-recyclable packaging
waste including waxy milk/orange juice cartons and drink pouches. The
program is a government partnership and has shown 40-45% increases in the
total number of containers collected in BC. Bravo!

Here is where I see the disconnect: In the case of a such a program the
government charges a "tax" for each unit of packaging produced (for example, a
drink pouch). That money goes from the manufacturer into a fund (the cost
of which is probably passed along to the consumer as an increase in price
of the product). When the consumer returns the pouch they get the deposit
back. So far so good. Here's the catch: The difference between what is
produced and what is returned is kept by these funds as profit. Which
means that they are financially incentivised to collect as few packages as
possible since the fewer they collect the less money they have to give
back to the consumers that collect the pouches and in turn the more money
they keep for themselves.

If I were writing the laws I would suggest an alignment of financial
incentives to create an optimal system. Why not incentivize manufacturers
to create programs through which their packaging waste could be collected
and recycled (or upcycled) and then give incentives — perhaps similar to
the Kyoto carbon trading model since the creation of waste is akin to the
creation of carbon. For example, if you are Capri Sun and you create a
private collection program for drink pouches whereby you divert 25%
of your total packaging, you get transferable credits which could be sold to
other companies who diverted less. I have a feeling a program like this
would create a bigger environmental win and the right financial incentives
versus a tax where the economic incentives of the stakeholders are not

Disclaimer: It is important to note that my view is weighted in the
direction of the privatized solution since TerraCycle currently runs a
number of such highly successful programs for a number of packages
(including Capri Sun) through our national waste brigades.

Recyclebank.com is another example of a
private company creating a solution that is more effective than bottle
bills. In localities where Recyclebank has rolled out its program, they
have increased recycling rates from 10-20% to 80-90% all through a
privatized model of giving value to waste.

Guest blogger Tom Szaky is founder and CEO of TerraCyle, Inc.
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Britain Needs A 'Pay As You Throw' Tax
TreeHugger Forums: The Recycling Debate
Plastic Bag Fees: Tax the Poor to Feed the Ego of the Rich
EARTH TALK: Bottle Bill Bonus

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