Recycling Incentives

Timothy Taylor writes,

If we want people to be serious about recycling, having a policy of 5-10 cents for returning cans and bottles is likely to be a more effective tools than curbside recycling.

He points out that beverage companies are the bootleggers in the bootleggers-and-baptists coalition in favor of curbside recycling, because communities often use curbside recycling does not raise the cost of distributing beverages in bottles. For economics teachers, this is a three-fer: the concept of externality (how large is the externality created by putting bottles into garbage?), the use of prices to incent behavior, and public choice theory.

10 thoughts on “Recycling Incentives

  1. The city of Vancouver (where I live) does this. I don’t think that the results are quite what Mr. Taylor would expect.

    Basically, recycling has been effectively outsourced to the homeless/poor people. Most people don’t return their own cans/bottles. Instead, they are thrown out. We have homeless people who pick through the garbage and collect the cans for returns. They then take the cans to the grocery store to collect the deposits.

    Of course, the stores aren’t thrilled with masses of homeless people coming in and causing problems, so they have strict limits on how much can be recycled at any one time in an effort to direct them elsewhere.

    Personally, I’ve lived in Ontario, which does curbside recycling, and Vancouver which does deposit/return. Recycling in Ontario was so much easier, such that everyone did it. Arguably it became ingrained in the culture. All stores, restaurants, and pizza places would have recycling bins. But in Vancouver, most places only have garbage cans, and recycling is such a hassle that it becomes easier to just throw it out and let the homeless people deal with it.

    Of course, that’s just anecdote. You would have to look at the overall data to see which scheme actually ends up with more recycling.

  2. What Rohan said also holds in California, at least in bigger metro areas. Few people actually care about 5-10 cents, so the return fee essentially becomes funding for a homeless ‘jobs’ program. Homeless steal shopping carts to carry them (sometimes more than one, connected in a lovely shopping cart train) or tote giant bundles of cans around on their backs. It also combines with the curbside program in an interesting way i.e. homeless people noisily poaching the cans/bottles out of your curbside bins, or apartment-building side yards, at 3am. Good times.

    So a vote for the 5-10 cent return deposit, however economically clever it otherwise is, is also a vote for “I want vagrants constantly going around our city and residential neighborhoods rifling through trash cans and toting large amounts of cans in train or by hand”. In other words, it is a vote to make the Homeless Can Collector a permanent (if under-the-table) member of the civil service. Which may be fine, but just so you’re aware.

  3. I don’t want people to be serious about anything that doesn’t make economic sense. If you have to use force to get people to recycle, then maybe it’s not such a worthy goal. If recycling were an efficient way to manage resources the market would provide for it. We can see this in the market for steel recycling. Nearly all steel produced gets recycled without government force. You have to remember that whenever you advocate for the government to do something, you are advocating for putting people in steel cages if they don’t comply with or pay for what the government wants to do. Everything the government does boils down to this kind of force. In this case it would be food and drink producers would would be put in the cages for not charging a deposit.

  4. I live in Massachusetts, where we have both curbside recycling and beverage deposits. The deposits began something like 30 years ago and were 5 cents on carbonated beverage containers (no iced tea, no fruit juices or drinks, no waters, etc.) Neither the coverage nor the deposit has been increased since then. Perhaps the bootleggers have something to do with that :). One thing that has changed is that the state now gets all the unclaimed deposit money. So a lot of the deposit is a hidden tax on people who buy carbonated beverages.

    My impression is that 5 cents is not enough for a lot of people to bring their cans and bottles back to a store. Nor would 10 cents be. Especially with curbside recycling being as easy as it is now.

    There is a new wrinkle to this. My town (and many others) now has “toters.” Toters are large, squarish, wheeled garbage cans with attached, hinged, lids. They are lifted by a hydraulic arm on the trash or recycling truck, so the operator rarely has to get out of the driver’s seat, and there don’t have to be strong-backed young guys to throw the trash into the truck. In some other states, the arm weighs the toter and charges the resident accordingly. There is a toter for trash and a toter for recycling (different sizes and colors). Recycling is “single stream” so everything can just go in the recycling toter. The hinged lid makes scavenging a little harder, and removes any visual cues.

  5. “Single stream” means that plastic, metal, glass, and paper all go in the same toter.

  6. Also in MA, and I can point to several other economic/financial aspects.

    We switched from a land-fill with separated recycling bins to a curb-side pickup with split recycling stream about ten years ago. (Split means paper separated from metals/plastic/glass.) Since the switch happened on one weekend, this is a controlled experiment where there were only three changes:
    - land-fill and recycling bins changed to curb-side
    - four separate bins to split stream
    - annual fee to per bag fee.
    The result was a dramatic increase in recycling percentage and decrease in general waste.

    The most likely explanation is user convenience and immediately visible cost savings. Split curbside recycling is a lot more convenient than multi-way separated bins. A dollar per bag fee lets the effort to reduce bag count provide an immediately visible savings.

    The convenience argument got strengthened when the rules were changed on plastic. Instead of type 1 and 2 plastic, the split became metals/containers and paper. Any kind of container was accepted. Recycling percentage increased again, although not nearly as much.

    From a municipal finance perspective this is all an effort in cost minimization. General waste disposal is $X/ton for collection and disposal. Various recycling options cost $Y1/ton, $Y2/ton, etc. The choice of recycling option affects both the general waste tonnage and recycling tonnage. It’s informed guesswork to pick the mix with lowest cost. Regular changes in recycling technology and commodities markets affect the cost of recycling. Recycling makes good financial sense for the selected because for paper, metals, and containers Y is significantly less than X.

  7. I could not find the article but there is some technology that is able to separate and count out the different types of material at the pick-up of the Recycling bin. My thoughts are have the exact same system that any other business has for Recycling metal with this technology. The local waste people can charge a pick-up/ processing fee but count the weight of each material type for each customer. After that you get a monthly credit to your property taxes based on whatever the average rate was for a given commodity.

    The reason I like this better than a fixed payment is because of course markets prices come into play on human behavior. Also takes care of the homeless problem, thirdly renewable items like Paper which are completely idiotic to recycle (we ship it to China to process after which they ship the recycled paper back to use plus we can grow new paper trees in less than a 20 year growing cycle) people would stop recycling because you would actually be paying money to recycle paper. So I have no issues with Recycling if the market rates actually pay for the extra handling/recycling cost. Other wise, throw it away.

  8. Arnold,

    What are the externalities associated with throwing away bottles? Buying the bottle is a private transaction. Paying someone to take the bottle away is also a private transaction. What is the common, unpriced resource being consumed?

    It seems like this is a case of competitive resource bidding- my wanting a plastic bottles raises the price you pay for plastic bottles (and perhaps this also applies to landfill space). But that’s not an externality- that’s classic scarcity.

    Taking your tagline seriously, perhaps I should assume that you meant this teaches about externalities since it is *not* an externality- you are pointed out the policy error.

  9. In 1998, Reason Magazine published an article on the great urbanologist, Jane Jacobs whose ideas on recycling need to be explored further. She disliked central planning, and preferred to leave trash collection and recycling to a multitude of entrepreneurs as opposed to our predominately government-controlled socialized recycling that is usually performed by a single monopoly appointed by fiat.

    Jacobs did not … propose that the family be forced to separate its trash. Indeed, she implied that this would defeat the purpose of the enterprise. “The aim must be to get all the wastes possible into the system–not only those that are already valuable at a given stage of development, but also those that are only beginning to become useful and those that are not yet useful but may become so,” she writes. “A type of work that does not now exist is thus necessary: services that collect all wastes, not for shunting into incinerators or gulches, but for distributing to various primary specialists from whom the materials will go to converters or reusers.”

    An interesting idea. But trying it means allowing the new work to grow from the old work. That cannot happen if garbage collection is socialized, or if the government contracts with a single private company to do the job. It can happen if households hire people to haul away their refuse. At first, the private haulers might give the garbage to landfills; as opportunities to sell different sorts of trash develop, they’d diversify, much as homeless people collect cans for profit in places with deposit law. Except, of course, that the trash collectors would be responding to an actual market incentive, not one jerry-rigged by the state.

  10. Or just adopt the Germany beer bottle market strategy (traditional beers, not the throwaway like Becks) and have something like a $2 per bottle return fee .. I’m pretty confident they have a 90%+ return rate. I paid for many a bar tabs in my youth helping “clean up” around closing time as the drunks stumble out and leave their bottles :)

    Basically the problem here in the USA is the low cost; it effectively becomes a nuisance tax and an extremely marginal one at that.

    Also I’m not against “vagrants” doing this for money (I live in Hawaii, we have the same problem) … at least it’s a honest living for them.