Changing Government’s Role in Recycling

In his lead essay, Professor Munger states, “The organizations with the cheapest means of enacting change, and who have the last best chance to reconsider packaging of all kinds, whether it’s liquid, food products, or microwaves, are the manufacturers and retail distributors of the products we buy.”  I agree and would also add that consumers can enact change by the purchasing choices they make at the register, signaling to the producer their preferences.  In discussing the multiple cost scenarios for landfills, Munger says that maybe recycling does cost more than landfilling, but Munger forgets to mention one vital aspect:  Manufacturers can’t get enough recycled glass, plastic, aluminum, steel and paper. Americans are burying and burning valuable commodities that will likely lead to a scarcity sooner than we’d like to believe.[1]

A recent white paper asserted that Americans are burying 11 billion dollars’ worth of goods per year that could be used for remanufacture.[2]  Will we realize our error in the future, and be mining these pits to dig out the valuable commodities that were so easily discarded? 

As a legislator in Maine, I served on a committee that had jurisdiction over solid waste management for the state, and every year we heard moving testimony from homeowners who lived near landfills and incinerators. You name it, we heard about it: smells, blowing trash, fumes, leakage, excessive trucking.  We also heard from advocates pushing for increased recycling of the myriad products that are thrown “away.” 

Considering how little improvement state and local government has made to reduce the amount of materials going into these facilities, both groups likely felt that their concerns fell on deaf ears.  To make an actual impact, more funding for infrastructure is needed, for programs like away-from-home recycling and enhanced curbside collection.  Munger’s essay correctly asserts that we do not properly quantify the costs of landfills or incinerators, since we know that they are heavily subsidized by taxpayers, and if the true costs were known, people might take the easy route:  tossing their junk in the woods. So, what can be done to highlight the true costs of disposal? 

One policy tool that Maine has embraced in the last ten years is making a difference in bringing in additional needed funding and in raising diversion rates for specific products, accomplished through legislated producer-driven programs. These programs address products including electronic waste, mercury thermostats, automobile switches, batteries, cell phones, and compact fluorescent light bulbs.  Government is constantly struggling to pay for solid waste management through user fees and/or property taxes, and there is growing acceptance that the producer has a better ability to create change than many individuals doing things on their own.  We also know that if industry is driving or financing the program to recycle their products at the end of their life, they will likely find more efficiencies than government ever could to bring down costs as well as investing in ways to utilize the collected materials to remanufacture new products, bringing down supply costs and scarcity fears for manufacturers as well.  So far, these types of programs have kept millions of pounds of electronics as well as the toxic metal mercury out of landfills and incinerators.[3]  

A robust economy is great for many components of our society, but one downside is that all of the stuff people buy during these up times needs somewhere to go at the end of its life, and their growing management costs now make up a sizeable portion of a town’s or city’s budget.

I read Munger’s wrap up with great interest and head nodding.   He hits the nail on the head when he concludes, “At present, no one is responsible for disposing of packaging, and so the state does its fumbling best to try to solve the problem.  The solution is to reconsider responsibility for disposal, at the level of initial production.  A property rights system that assigns disposal responsibility, and ultimately liability, to the manufacturer would encourage the use of effective market incentives to reconceive the very nature of waste itself.  And that might be less wasteful than recycling old ideas that threaten to bury us under a mountain of garbage.”   In these statements, Munger brings clarity to the issue of who best to run and pay for these programs.  Whether he knows it or not, Munger is advocating for extended producer responsibility (EPR), a legislated form of product stewardship in which the producers of a product finance and manage the recycling of the product at end of life. Some businesses are using the term producer-driven recycling, so I will use them interchangeably here.  Ideal EPR programs are designed, driven, and financed by industry, leaving government in an oversight role.  Munger asserts that recycling itself is already subsidized, and he’s right:  by taxpayers.  In the form of EPR that I support, there are NO costs to the consumer at the time of disposal.  This addresses the fact that many people will choose to put something in the trash or throw it in the woods instead of paying a fee for disposal; take a ride through the woods in a rural area to see the proof. 

The costs for these programs are borne by the producer, internalized similar to costs for worker’s compensation or building maintenance, and are incorporated into the price of the product at purchase.  The consumer pays, not the taxpayer. Consumers and taxpayers are usually the same people, but one would pay for recycling service according to their consumption.

So why the need for legislation to set up an EPR program?  At least two reasons are brought up by industry groups who are in support of EPR for their products:  1) With legislation, there are no free riders, so all producers of that product pay into the system, and 2) the need for state anti-trust exemptions for the areas where the producers will need to look at market share and sales figures together to determine each company’s percentage to pay for the system (although there will still remain competition among service providers).  Paint and battery trade associations are seeking legislation with these elements to set up their programs, and they assert that they are vital to increase the success and implementation of the programs.  The costs for producer-driven recycling programs are internalized into the costs of the product at purchase, shared with the consumer, not with the general rate or taxpayer as is the norm here in America. 

Unlike many politicians who stay in elected positions for years, I chose to leave the Maine Legislature and work in this policy area full time at Recycling Reinvented.  I am passionate about this idea of producer-driven recycling, and for the uniquely American version of EPR that my organization is working to advance for packaging and printed paper.  We are also funding a study that is charged with testing the assumptions regarding recycling costs now versus under the new system if enacted. We are using Minnesota for the target state.  The study will answer this question:  Can producers internalize the costs of recycling their products at end-of-life for a lower cost to consumers than our current system of financing recycling through user fees and property taxes?

Expansion of producer-driven, recycling programs would substantially increase recycling rates, reduce government spending, and use private sector efficiencies to reduce the overall cost of recycling.

The ultimate goal is to progress to a new recycling paradigm in the United States, highly accessible to all citizens and financed by industry through consumer purchases, not by the general taxpayer.  Although different EPR programs are used elsewhere around the world in over 38 countries, we are seeking a uniquely American approach.  This downsizing of government to create a more efficient system and get more materials back into manufacturing will reduce the public need for more incinerators or landfills.  Efficient recycling is an investment in our economy. 


Also from this issue

Editorial Note

Lead Essay

  • Michael C. Munger begins with the assertion that almost everything that’s said about recycling is wrong. Zero waste isn’t a good policy goal. Some things really do belong in the landfill. But which ones are they, and why? Munger offers a tour of the economics of trash burning, trash collection, landfill subsidies, and mandatory recycling. Along the way, he points out some of the irrational behaviors that flow from the “always recycle” message — irrational even when our highest priority is saving the environment.

Response Essays

  • Edward Humes argues that recycling is indeed economically efficient, and that pointing to occasional exceptions does not disprove the general rule. Still, he argues that recycling should be the last line of defense in our solid waste management strategy: Reductions in packaging, better incentives, and “pay as you throw” trash collection can all help solve the problem long before the recycling bin.

  • Melissa Walsh Innes argues in favor of “extended producer responsibility”—a public policy approach to solid waste that would assign landfill and other disposal costs to producers, not taxpayers. If this were done, corporations would seek out more efficient packaging, more comprehensive recycling methods, and other ways to economize on their use of disposal resources. Consumers would bear the costs in more expensive products, but only if they purchased the products in question. Consumers’ choices would drive producers to make market-based decisions that internalize and/or eliminate the externalities in question. Taxpayers would pay nothing extra, a key difference from many existing recycling programs.

  • Steven E. Landsburg argues that promoting recycling as a moral issue has a sinister cost: It encourages the public to view policy questions moralistically. When they do, they lose sight of tradeoffs, and the ability to compromise deserts them. If we absolutely must preach a morality, he says, let us preach the morality of respecting price signals. These will usually tell us when actions are efficient or inefficient. In short, we should encourage an ethos of respect for voluntary market outcomes.