International Review of Waste Management Policy - Department of ...

16.0 Deposit Refund Systems - International
16.1 Outline of Policy
“A deposit-refund system is the surcharge on the price of potentially polluting
products. When pollution is avoided by returning the products or their residuals, a
refund of the surcharge is granted.” OECD, Glossary of Statistical Terms. 318
A deposit refund system encourages the return of the materials into an organized
recycling or reuse process. The producers can finance that process through a fraction
of the deposit, or to ensure that the deposit paid is the same as that received, those
subject to the deposit scheme can pay a separate payment for the administration of
the scheme.
Drinks containers are the most common target of deposit refund systems, though
economic theory suggests that the schemes could be applicable to hazardous
materials and other waste streams, subject to transaction costs being minimised (see
Annex 2.0). The systems can encourage recycling and / or reuse where otherwise it is
easy to dispose of containers with the residual waste. The same policy mechanism
can also be used to target difficult to dispose of, or hazardous, items to ensure that
these do not reach the residual waste stream. This can be considered a waste
prevention policy as it reduces the hazardousness of materials in the waste stream.
Non-drinks container examples include:
297
� Batteries (Swedish Östhammar example) and car batteries (Germany); 319 and
� Tyres (Maine, USA).
Finally, some countries, e.g. Sweden make use of vehicle scrapping charges, which
discourages the dumping of vehicle bodies in rural areas and ensures that cars are
returned to registered scrapping destinations at the end of their life. 320
16.2 Economic Rationale for Deposit Refund Schemes
Deposit refund schemes are a particular form of product tax/recycling subsidy. In
such programmes, also known as ‘bottle bill’ programmes, consumers pay a deposit
(tax) on a container at the time of purchase. This should, in theory, be set at the extra
social cost of improper disposal over the net recycling cost (assuming there is already
an Advance Disposal Fee (ADF) on the manufacturer equal to the net recycling cost).
This means that if the product is improperly disposed of, that individual pays the
318 http://stats.oecd.org/glossary/detail.asp?ID=594
319 http://www.eeb.org/activities/waste/EEB-mini-brief-deposit-schemes-for-Batteries-March2004.pdf
320 The (sometimes temporary) scrapping charges which have become popular across nations in the
context of the current economic decline have their precedent in the more permanent schemes which
some countries employ to ensure that end-of-life vehicles are returned to an appropriate recycler.
International Review of Waste Policy: Annexes