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

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� Recycling investment tax credits – In this case, government gives a credit on
income taxes to anyone who invests in recycling infrastructure. Effectively this
is a direct subsidy to capital.
2.4 Summary
The above discussion focuses on some of the key issues confronting policy makers
who might seek to implement a policy that is ‘optimal’ from the economic perspective.
There are considerable problems with seeking to design such a policy configuration,
many of which have been touched upon above.
In essence, however, the suggestion is that the workings of the market can be
harnessed to deliver environmental benefits. Some lessons are the standard ones:
insofar as possible, markets should be made to operate more efficiently by
internalising externalities. However, here, first best solutions, particularly where the
matter of waste prevention are concerned, are not so obviously available owing to the
information needs, and the absence of any clear hope, at least for the foreseeable
future, of multilateral externality taxes (which, in any case, would be fiendishly difficult
to design such that they were genuinely reflecting externalities).
The issue of policy design is a complex one. In Walls’ words: 56
Identifying, designing, and implementing cost-effective environmental policies
is no small job. Accomplishing this goal when multiple environmental
objectives are on the table, when it is vital that the policy spur DfE [design for
the environment], and when some markets, such as recycling markets,
function poorly is even more difficult.
This is the challenge which faces the existing study – to focus on the relevant
objectives, and the necessary policies required to deliver these.
56 M. Walls (2004) EPR Policy Goals and Policy Choices: What Does Economics Tell Us? In OECD
(2004) Economic Aspects of Producer Responsibility, Paris: OECD.
International Review of Waste Policy: Annexes