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

Several policy instruments are available that are aligned with the principles of EPR.
These include advance disposal fees, deposit refunds, product take-back and
recycled content standards. In accordance with Walls’ maxim that ‘the goal of EPR
policy should be …… to maximize social welfare’, these instruments can be used to
tackle negative externalities in an efficient manner. 49
Results from a number of theoretical economic studies have shown that using an EPR
instrument, namely a deposit-refund, can deliver reductions in waste more costeffectively
than when other instruments are applied in isolation. 50 The key reason for
this is the bringing together of output reduction and input substitution incentives
within one policy. In cases where illegal dumping is considered a problem, or where
recycling markets are not functioning well, EPR policies are considered to be
particularly effective in creating appropriate incentives for reducing waste. 51
A number of the key policy instruments, and variants of those instruments, that fall
under the EPR umbrella, as detailed by Walls, are summarised below: 52
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� Product take-back mandate and recycling rate target – Here the government
requires manufacturers and/or retailers to accept the return of products once
their useful life has ended. Such mandates are often combined with a
recycling or waste diversion target requiring each producer to meet a recycling
rate goal of, for example, 75% for its products. The German packaging law
works in this way; take-back is required and material-specific recycling rate
targets are set. Firms often form a ‘producer responsibility organisation’ (PRO)
to handle collection, arrange for recycling, and ensure recycling targets are
met in a cost-effective manner;
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However, beyond increasing take-back and recycling rates, it is not always
clear that such schemes actually impose a sufficient incentive on producers to
both reduce packaging, and design more recyclable products.
Fullerton and Raub 53 suggest that if the firm is only responsible for the private
cost of disposal, it does not internalise the full social marginal cost. They argue
49 M. Walls (2004) EPR Policy Goals and Policy Choices: What Does Economics Tell Us? In OECD
(2004) Economic Aspects of Producer Responsibility, Paris: OECD.
50 D. Fullerton and T. C. Kinnemann (1995), Garbage Recycling and Illicit Burning or Dumping, Journal
of Environmental Economics and Management, 29 (1); T. Dinan (1993) Economic Efficiency Effects of
Alternative Policies for Reducing Waste Disposal, Journal of Environmental Economics and
Management 25: 242–56; K. Palmer & M. Walls (1994) Materials Use and Solid Waste: An Evaluation
of Policies, Resources for the Future Discussion Paper 95-02, Washington: Resources for the Future.
51 M. Walls (2003) The Role of Economics in Extended Producer Responsibility: Making Policy Choices
and Setting Policy Goals, Resources for the Future Discussion Paper 03-11, Washington: Resources for
the Future.
52 M. Walls (2006) Extended Producer Responsibility and Product Design: Economic Theory and
Selected Case Studies, Resources for the Future Discussion Paper 06-08, Washington: Resources for
the Future.
53 D. Fullerton and A. Raub (2004) Economic Analysis of Solid Waste Management Policies, in OECD
(2004) Addressing the Economics of Waste, Paris: OECD