Economic Analysis of the Extended Producer Responsibility Movement:
Understanding Costs, Effectiveness, and the Role for Policy
International Forum on the Environment
Karen Palmer and Margaret Walls1
Resources for the Future
February 2002
Abstract
In many European countries and in Japan, an increasing number of products are subject to
“take-back” laws, under which producers are responsible for ensuring that their products or
packaging are collected from consumers and recycled at the end of those products’ useful
lives. This “extended producer responsibility” movement arose from a desire to reduce waste
disposal, relieve the burden on municipalities handling a growing volume of waste, and spur
so-called “design for environment” on the part of manufacturers.
In the United States,
policy-makers have thus far shunned this mandatory take-back approach for a more voluntary
effort. In addition, the focus on producers is muted somewhat in favor of an emphasis up and
down the product chain. The term “product stewardship” has grown in place of EPR. In this
study, we describe the wide range of both mandatory European-style EPR programs in place
and the voluntary efforts undertaken by industry in the U.S. We then assess, from an
economic efficiency standpoint, the rationale for giving producers a role in management of
end-of-life products. We reiterate the long-standing economic arguments for incentive-based
policies. And finally, we evaluate the voluntary programs and whether they have the potential
to achieve product stewardship objectives.
I.
Introduction
In 1991, the German government changed the face of solid waste policy in that
country, and began an international movement, by passing the first so-called product
“take-back” law. The 1991 Packaging Ordinance requires packaging manufacturers and
distributors to take back packaging from consumers and ensure that a specified
percentage of it is recycled. Manufacturers and distributors can meet their obligations
by joining a “producer responsibility organization” which handles collection and
arranges for recycling.
1
Contact: walls@rff.org; palmer@rff.org. We deeply appreciate the support of the Economic and Social
Research Institute of Japan and Resources for the Future. Responsibility for errors and opinions rests with the
authors.
The product take-back concept evolved in other countries into a broader
initiative known as “extended producer responsibility” (EPR). EPR is a policy concept
in which a producer’s physical and/or financial responsibility for a product is extended
to the post-consumer phase of the product’s life-cycle (OECD, 2001). EPR policies
include take-back mandates, as in Germany, but other types of instruments may also fall
under the EPR umbrella (Palmer and Walls, 1999).
EPR has taken hold in both Europe and Japan. A number of countries have
passed laws and the European Union has passed directives covering a wide range of
products. In the United States, however, there has been resistance to adopting
wholesale the EPR approach. The singular focus on producer responsibility has been,
not surprisingly, hotly contested by U.S. business interests. Furthermore, the idea of
replacing, or duplicating, the decentralized solid waste collection and recycling system
that exists in the U.S. with a centralized, mandatory system in which producers are
responsible for collecting and recycling their products at end-of-life has been viewed as
a Draconian change from the status quo.
Nonetheless, the U.S. Environmental Protection Agency, some state
governments, and a number of environmental groups have come to support some of the
ideas that lie behind the EPR concept. These ideas have evolved into a derivative of
EPR known variously as “extended product responsibility,” “shared product
responsibility,” and “product stewardship.” These notions share two characteristics that
differentiate them from extended producer responsibility: they assign responsibility up
and down the product chain, rather than solely on producers, and they address
environmental effects throughout the product life-cycle, rather than just at the postconsumer waste stage.
On its web site, the U.S. EPA gives the following definition of product
stewardship:
Product stewardship is a product-centered approach to
environmental protection. Also known as extended product
responsibility, product stewardship calls on those in the product life
cycle – manufacturers, retailers, users, and disposers – to share
responsibility for reducing the environmental impacts of products.2
2
See http://www.epa.gov/epr/about/index.html.
2
Despite these stated differences between product stewardship and the European
concept of EPR, in practice most product stewardship efforts have a major role for
producers. In fact, on the same web site, EPA goes on to say: “In most cases,
manufacturers have the greatest ability, and therefore the greatest responsibility, to
reduce the environmental impacts of their products.”
Product stewardship efforts in existence in the U.S. are primarily voluntary
programs, though they run the gamut from independent efforts at individual firms to
cooperative programs jointly run by industry, state and local governments, and nongovernmental organizations. And some state government policies, including legislated
product fees used to support recycling efforts, also help to promote the goals of product
stewardship.
This paper is divided into two parts. The first part is essentially descriptive. In
it, we describe the EPR and product stewardship movements in Europe, Japan, and the
United States, beginning with a brief account of activities in Europe and Japan,
followed by descriptions of the mostly voluntary programs in the U.S. We also look at
some legislated programs in some U.S. states that, while not labeled as product
stewardship per se, have the feature that producers are made responsible in some way
for end-of-life products. The second part of the study is an evaluation of product
stewardship and EPR. We present economic arguments for the use of policies to
address waste disposal externalities. We argue the virtues of “incentive-based” policies
and contrast them with so-called “command-and-control” approaches. We then discuss
voluntary approaches to environmental protection and their strengths and weaknesses,
with applications to voluntary product stewardship efforts. Finally, we present our
conclusions about the role for government policy in achieving the goals of EPR and
product stewardship.
Given the fairly broad definition of product stewardship that EPA is using, many
U.S. firms have voluntary programs in place that perhaps some observers would
classify as product stewardship. We limit ourselves to programs that, while they may
have ancillary environmental effects, have a primary focus on reducing post-consumer
solid waste and promoting recycling. And for the voluntary programs at private firms,
we limit ourselves to those programs that the firms themselves refer to as product
stewardship. Even imposing those limits, we still are not exhaustive in our survey of
existing U.S. programs. Our goal is to present a picture of the kinds of things that are
3
going on in the U.S. in this area and to the extent possible, evaluate the merits and the
shortcomings of the programs.
The short period of time that many programs have been operating and the lack
of data – particularly data on costs – from those programs that have been operating for a
number of years, makes an overall benefit-cost type of assessment essentially
impossible for us to do in this study. Moreover, as other authors have pointed out
(Tojo, Lindhqvist, and Davis, 2001), one needs to be extremely careful comparing
results across countries because of differences in how waste flows are defined and how
costs and recycling rates are calculated.
Our primary objective here is two-fold. First, we are interested in evaluating the
basic merits, from an economics and policy standpoint, of giving a role to producers in
end-of-life management of products. And second, we are interested in whether
voluntary programs – which seem far more feasible in a U.S. context than the
mandatory European approach – can achieve the goals of EPR and product stewardship.
We are also interested in understanding the role that incentive-based instruments could
play as either a part of an otherwise voluntary program or as a substitute for one.
Existing economics literature suggests that imperfections in recycling markets
provide one motivation for having producers involved in end-of-life management of
products. These imperfections block signals from reaching producers to design their
products to be more recyclable. This market failure is the primary motivation for
product stewardship but existing programs do not provide incentives for DfE. One
message from our work here is the designing programs that do provide these incentives
will be very difficult. We feel that it is very important that policymakers recognize this
and understand the inherent tradeoffs in any policies under consideration: low costs and
flexibility, on the one hand, and DfE incentives on the other. It is difficult to design
policy that does both. Having said this, however, we feel that exploring ways to design
product stewardship programs that provide explicit incentives for firms to engage in
DfE is important. We suggest two possibilities: a tradable recycling credits system and
a financial reward system.
We also suggest some basic rules of thumb for any product stewardship policy
or program to be successful. First, we feel it is essential that consumers be given
incentives to return their products for recycling. In general those programs that offer a
payment for items returned for recycling achieve a greater increase in recycling rates
than those that don’t. Second, consistent with the need to provide incentives to
4
consumers, we find that product stewardship programs need to have penalties on firms
for non-compliance. These are necessary to induce the firms to perform and to motivate
them to provide their own inducements for consumers to return products for recycling.
Third, although penalties for noncompliance are important, it is also important to give
firms flexibility in how they respond to policies. Such flexibility is a hallmark of lowcost incentive-based environmental policies, and we feel it is essential for cost-effective
product stewardship programs.
PART I.
II. EPR Initiatives in Europe and Japan
The original motivation for EPR in Europe – particularly for the Packaging
Directive in Germany – was to relieve the financial burden on municipalities of waste
management and to promote “design for environment” (DfE). The thinking was that
making producers take back and recycle their products would firstly, relieve
municipalities from collecting and disposing of those products – and most importantly,
incurring the cost of those activities – and secondly, give producers an incentive to
reduce packaging and design products with more recyclable packaging. In this section
of our paper, we describe a number of the EPR programs in Europe and Japan. In
section VI, we come back to this motivation for EPR and present out view of its merits.
II.A. The German Packaging Law. The German Ordinance on the Avoidance
and Recovery of Packaging Waste, passed in 1991, requires manufacturers and
distributors (the term used for retailers) to take back the packaging associated with the
products they sell. The requirements were phased in over three stages. As of December
1991, manufacturers and distributors have been required to take back all transport
packaging such as barrels, canisters, and pallets used during transport of goods from
manufacturers to distributors. As of April 1992, all distributors must take back
secondary packaging at the point of sale, and as of January 1993, distributors must take
back sales packaging.
The Ordinance sets recycling rate targets that vary across materials and currently
range from 60 to 75% (Schmid, 2001). Under the Ordinance, there are several
“responsible parties” — manufacturers of packaging; manufacturers of materials
intended for use in packaging; fabricators and assemblers of packaging articles;
commercial fillers; distributors selling packaged goods (i.e., retailers); and distributors
placing goods in packaging at the point of sale. These responsible parties may be
5
released from their responsibility for take-back by joining a “Producer Responsibility
Organization” or PRO. In response to this PRO provision in the law, industry designed
the now well-known “Green Dot” system. A non-profit firm, the Duales System
Deutschland (DSD), licenses its logo, the Green Dot, to companies for a fee, then
arranges for collection, transport, and recycling of all packaging that is marked with the
logo. The fees, which are usually paid by the “filler” – primarily the owner of the
product brand name – vary across materials and are assessed on product sales. The
fees currently range from 0.076 euro/kilogram ($0.03/pound) for glass to 1.508
euro/kilogram ($0.603/pound) for plastics.3 There are small additional fees based on
volume.
The DSD handles 92 percent of all packaging waste in Germany and since 1995
has allowed its Green Dot logo to be used in other countries. It does this through an
organization it founded in 1995, the "Packaging Recovery Organization Europe” (PRO
EUROPE), which grants the right to use the Green Dot trademark to national collection
and recovery systems in other European countries. The Green Dot is now being used
by about 70,000 licensees in 13 European countries and in Canada.
German policy-makers and government officials seem convinced that their
approach is the right one. According to most published reports, the amount of
packaging and packaging waste has been greatly reduced since the law was passed.
Schmid (2001) reports that 1.5 million fewer tons of packaging were on the market in
2000 than in 1991. Tojo, Lindhqvist, and Davis (2001) cite government and DSD
reports that claim that the recycling targets are met or exceeded for all materials. Most
studies also report some material substitution, away from plastics toward materials,
such as glass, that have lower licensing fees. In an interesting comparison of a typical
German city with a population of 200,000 with a similarly sized city in Japan, Ueta and
Koizumi (2001) found that while only 5 percent, by weight, of the household waste
stream in the German city in 1998 was comprised of plastics, that figure was more than
twice as high in the Japanese city. Glass, on the other hand, made up over 13 percent of
the German city’s household waste stream in 1998 but only 4.4 percent in the Japanese
city.4 In addition, there is reportedly more reuse of packaging in Germany, particularly
transport packaging. Refillable beverage containers are also common.
3
For more information about the DSD and its fees see http://www.gruener-punkt.de/.
This same study also reported that the German city generated approximately 15 percent less non-recyclable
waste per household than the Japanese city.
4
6
There have been problems with the German system, however. One problem has
to do with free riders in the system. There are two types of free riders: (1) packaging
without a Green Dot – from producers who do not join the DSD and pay the licensing
fee – often gets collected and recycled along with Green Dot packaging because
consumers mix it together, and (2) licensees sometimes put the logo on packaging for
which they have not paid fees, and non-licensees – i.e., producers who have not joined
the DSD – have used the Green Dot logo. Jaeckel (1998) reports that the first problem
leads to 20 percent of the waste handled by the DSD being non-Green Dot packaging.
A second problem with the system has to do with the monopoly nature of the DSD and
concerns raised by some firms that it sets licensing fees in a monopolistic manner.
The one key question about the system is its costs. It is difficult to know the full
costs of the system and even more difficult to compare Germany’s approach to
managing packaging waste with that in other countries. In a 1997 study, the OECD
estimated that the total costs for a ton of material in the DSD system – i.e., a ton that is
collected and recycled by the DSD but would otherwise have been disposed of in a
landfill – is approximately 700 DM, or $404. With the DSD reporting a material
volume of 4.7 million tons in 1994, total costs equaled 3.3 billion DM in that year, or
$2.0 billion. The DSD estimates that of the total costs, 80 percent go to collection,
transport and sorting; of the remainder, 15 percent is plastic recycling subsidies. These
costs do not include costs to regulators overseeing the program, nor do they include
costs of producers outside the DSD system but who must still abide by the law. The
OECD study states that the 700 DM exceeds the costs of incineration in Germany and
“approaches costs for handling a ton of hazardous waste.”5 DSD licensing fees have
decreased in recent years and the costs of the program have decreased as well.
As we stated in the introduction, it is very difficult to compare costs across
countries. To put the $400 per ton figure into some context, however, we note that a
1999 study by the Institute for Local Self-Reliance, funded by EPA, analyzed 18
“successful” community recycling programs in the U.S. – programs that achieved high
rates of waste diversion and recycling. Total costs of waste diversion– including both
recycling and composting programs – ranged across the communities but the highest
cost was only $161 per ton.6
5
See OECD (1998), p. 36.
This community achieved a 40 percent waste diversion rate and 23 percent recycling rate. Other
communities did better and had lower costs (see ILSR, 1999). These are curbside recycling programs which,
6
7
II.B. Packaging EPR Programs in Other Countries. Several other European
countries followed the German lead in the early 1990s, developing packaging EPR
programs of their own. The Netherlands has a system that is slightly more voluntary
than the German one. So-called covenants, or negotiated agreements, are used
extensively in environmental policy in the Netherlands. The Packaging Covenant lays
out recycling, packaging reduction, hazardous materials reduction, and other goals;
companies then voluntarily sign up to specified goals that they have negotiated with
government. Once they sign up, the companies are legally bound to the terms of the
agreement. Responsibility for collection and transport of used packaging remains with
the local authorities in the Netherlands, unlike in Germany where the DSD operates
alongside municipalities collecting a separate waste stream from households. Like
Germany, though, a PRO is operating and ensuring that recycling targets are met.
Austria passed its packaging law in 1993 and its system is very similar to the
German one. Recycling targets are set, and a single PRO operates, charging license
fees to its members that are determined by the weight of packaging. Tojo, Lindhqvist,
and Davis (2001) report that other European countries with packaging EPR laws are
Finland, France, Norway, Sweden, Switzerland, and the U.K. The authors state that
published reports in Germany, Austria, the Netherlands, and Sweden show almost
universally high recycling rates for packaging in each of the countries.
In 1994, the European Union adopted the Packaging Directive, which sets out
recycling targets for packaging but allows each member country to decide how to go
about meeting the targets. At the end of 1999, the EU Commission submitted a review
reporting the experiences with the Packaging Directive thus far. This report concluded
that the recovery targets have already been achieved by all the Member States to whom
the target applied, four years before the end of the implementation period. On the basis
of this report, the Commission is currently working on an Amendment to the Directive.
Schnurer (2001) reports that EU working documents contain both a proposed increase
in the recovery quotas as a whole and a proposed increase in the targets for individual
packaging materials.
for the most part, recycle packaging from consumer products, but they also recycle newspapers and costs
usually cover yard waste collection and composting programs as well, something clearly not covered in the
DSD system. On the other hand, the costs do not cover the costs of recycling upstream packaging, such as
transport packaging, as in Germany. Thus the ILSR study costs cannot be strictly compared with the German
system. They are simply presented as a benchmark.
8
Like the European countries, Japan has also adopted a legislated EPR approach
for packaging. Packaging waste is viewed as a particular problem in Japan where it
makes up 60 percent of the total volume, and 20 to 30 percent of the total weight, of the
municipal solid waste stream (Clean Japan Center, 2001; Tanaka, 1998). The Container
and Packaging Recycling Law was passed in 1995. The law made manufacturers
responsible for meeting phased-in recycling rate targets for glass and PET bottles,
followed by targets for paper and plastic containers and packaging.7 The Japanese refer
to the targets as “voluntary.” For PET bottles, the rate is 50 percent by 2004; for glass
containers it is 80 percent by 2005. As in the Netherlands, local government in Japan
maintains responsibility for collection of packaging waste. However, industry is
responsible for, and pays for, recycling. A packaging PRO operates in Japan, the Japan
Container and Package Recycling Association. Okazawa (2001) reports that a 35
percent recycling rate was achieved for PET bottles in 2000, up from virtually zero
prior to passage of the law.
II.C. EPR Programs for Products Other than Packaging. EPR moved beyond
packaging in Europe and Japan in the 1990s to cover consumer batteries, electrical and
electronic equipment, and end-of-life vehicles. Austria, Belgium, Germany, Japan, The
Netherlands, and Switzerland all have mandated EPR programs for small consumer
batteries; some programs cover a wide range of batteries while some cover only nickelcadmium batteries (Raymond, 2001).
In September 2000, the European Union adopted a Directive on End-of-Life
Vehicles that incorporates the concept of EPR; the directive must be implemented by all
member states by April 2002. The Directive requires that all countries set up national
take-back and recycling systems for end-of-life passenger and light commercial
vehicles and that consumers be able to return vehicles for recycling without payment.
The Directive also states that by 2006, at least 85 percent of the average weight of an
end-of-life vehicle must be recovered, and at least 80 percent reused or recycled. By
2015 these recovery targets are increased to 95 percent (recovery) and 85 percent
(recycling).
Some European countries had already been moving ahead on EPR programs for
vehicles. Indeed, part of the reason for the EU directive, as with many EU directives,
was to harmonize laws, to some extent, across countries. Germany and The
7
Steel and aluminum cans, paper packs, and cardboard are not subject to the law. However, Okazawa (2001)
9
Netherlands established voluntary vehicle EPR programs in the mid-1990s. Germany
approached the vehicle problem first with the 1992 proposed Scrap Car Rule, which
more-or-less replicated the approach that the German government had taken with
packaging. The Rule mandated that producers take back cars from their last owners
“principally” free of charge and meet reuse or recycling goals that varied by material
and ranged from 20 percent for plastics to nearly 100 percent for steel. The auto
industry responded to the draft rule by greatly increasing recycling in an effort to show
the government that a voluntary approach could work. In March 1996, the government
dropped the Scrap Car Rule in favor of the “Voluntary Pledge Regarding the
Environmentally Compatible Management of End-of-Life Vehicles.” The German auto
industry agreed to set up a national infrastructure of certified dismantlers; ensured that
vehicles will be taken back free of charge; pledged to reduce the amount of automobile
shredder residue sent to landfills from the current 75 percent of the weight of a vehicle
to a maximum of 15 percent by 2002 and 5 percent by 2015, allowing incineration with
energy recovery as an option; and pledged to redesign vehicles with an eye toward
recycling.
As they did for packaging, The Netherlands signed a negotiated agreement with
industry for end-of-life vehicle take-back and recycling. The binding agreement was
entered into by vehicle importers in the Netherlands in 1994 and establishes a
government-imposed advance disposal fee to help fund recycling. Veerman (2001)
reports that the fee is currently 40 euro (approximately $35) and is paid by consumers
when they buy a new vehicle. It was originally paid by importers into a fund managed
by the PRO that was established by importers and other actors in the product chain in
the Netherlands, the Auto Recycling Nederland (ARN). The ARN manages the
financing, take-back, and processing, of end-of-life vehicles.
Waste electrical and electronic equipment (WEEE) has received a great deal of
attention in recent years with several countries passing EPR laws addressing these
products. The Netherlands has two different systems for WEEE: household appliances,
televisions, and stereos (so-called “white and brown” goods) are handled in one way
while IT equipment (computers, printers, fax machines, copiers, and telephones) is
handled in another.8
reports that manufacturers “voluntarily” recycle these materials.
8
Household appliances include small items such as coffee makers, toasters, irons, and the like, as well as
dishwashers, washers, and dryers.
10
Fees ranging from zero on small products to $15 for refrigerators and some TVs
are charged on products at point-of-sale; those fees are collected and managed by the
PRO (NVMP) which arranges for transportation and recycling of the products. As with
packaging, municipalities handle most of the collection; however, retailers are required
to take back an old product when selling a new one.9 Recovery and reuse targets were
negotiated with industry and vary across products, ranging from a high of 75 percent for
refrigerators down to 45 percent for small appliances (Ministry of Housing, Spatial
Planning and the Environment, 1998). All of the items are banned from landfills and
incinerators. The EPR law covering white and brown goods in The Netherlands has
been in effect since June 1998.
The main difference between the white/brown goods program and the IT
program in the Netherlands is the way that funds are raised by the PRO to pay for
recycling. White and brown goods are assessed a fee up-front, but the costs of
recycling IT-equipment is covered by payments made in arrears by manufacturers and
importers after the products have been processed. This means that processors separate
products by brand name and assess fees on individual producers based on the cost of
recycling each producer’s products. As far as we know, this is the only EPR program
that works in this way.
According to the European Union (2000), Denmark, Sweden, Austria, Belgium
and Italy have already passed EPR laws on WEEE, and Finland and Germany are
expected to do so. Switzerland has a program as well, as does Norway, which is not a
member of the European Union. The products covered in these programs vary slightly
across countries, and the systems work slightly differently as well. However, in all of
these countries a PRO collects fees up-front on products sold and uses the fees to pay
for recycling. Local government is involved in collection in all of the countries but the
mandatory “old for new” retail trade-in provision in the Netherlands also exists in
Sweden and Switzerland. Italy, Norway, and Belgium have mandated recycling rate
targets; Switzerland and Sweden have set no specific numerical requirements.10
In 2000, the European Union passed its WEEE Directive. The Directive
mandates that member countries have systems for take-back and recycling of WEEE
that allow consumers to exchange old products for new ones; that allow holders of
9
In the Netherlands, ninety percent of white/brown goods are handled through the municipal collection system
and only 10 percent through retailer take-back.
10
We are unclear, at this point, whether targets exist in Denmark or Austria.
11
items collected from consumers to bring those items in for recycling free of charge; that
ensures that producers collect WEEE from sources other than private households (and
be permitted to collect from households if they so desire); and that reaches a WEEE
collection target of 4 kilograms per household per year by 31 December, 2005. The
Directive also sets recycling rate targets for specific types of WEEE. These targets
range from 50 percent up to 75 percent and must be met by 31 December 2005.11
The Japanese passed the Household Electric Appliances Recycling Law in 1998.
The law, which came into effect in April 2001, covers air conditioners, refrigerators,
washing machines, and TVs and sets recycling rate targets of 50 to 60 percent for these
items. It requires retailers to collect and transport the appliances to transfer stations;
municipalities may also collect and transport. Unlike the European systems, Japan’s
law requires consumers to pay end-of-life fees. These fees currently range from 500 to
2,500 yen for collection and from 3,500 to 4,600 yen for recycling; thus, the total fee
for collection and recycling, in U.S. dollars, would range from approximately $22 to
$53. Once items are collected and transported to recycling facilities, producers are
responsible for recycling. Tanabe (2001) reports that end-of-life fees were decided
upon to encourage consumers to extend the lives of their products; in Japan, it is typical
for consumers to buy new household appliances before the old ones have physically
worn out.
Taiwan also has an EPR program for WEEE; it covers computers, household
appliances, and air conditioners. Unlike the European programs, in Taiwan the
government is more involved in the financing of the system. It assesses fees on
producers, which cover collection, transport, and recycling; it then distributes these fees
to local government to pay for recycling. Collection is handled by local government.
III. Voluntary Product Stewardship Initiatives
In contrast to Europe and Japan, the approach to product stewardship in the
United States has been largely voluntary. Firms, acting individually and collectively,
have initiated a host of programs designed to promote product recycling and, in some
cases, design for environment (DfE). These initiatives can be categorized into three
types: firm-level programs, industry-wide programs and multi-stakeholder efforts
11
The lower target holds for small appliances such as irons and toasters, for consumer equipment such as TVs,
video recorders, and radios, and for electric tools and toys. The higher target applies to large household
appliances such as washers, dryer, refrigerators, and microwaves.
12
involving industry, government, environmental groups and others. In this section we
describe several programs in each category. In a subsequent section we provide a more
general evaluation of these efforts and highlight differences among the programs.
III.A. Firm-Level Product Stewardship Initiatives
Nike’s Reuse a Shoe Program
In 1993 Nike began an athletic shoe recycling program it calls “Reuse a Shoe.”
Under this program Nike collects and grinds up defective and post-consumer athletic
shoes to make a material known as Nike Grind that is then used to produce athletic
surfaces including tennis and basketball courts, tracks, fields and playground surfaces.
Nike gives the material to five different sports surface manufacturers that have paid a
licensing fee for using the Nike logo on the surfaces they produce. The revenues from
the licensing fees are used by Nike to donate sports surfaces to non-profit organizations
and communities around the world.12
The Nike Grind program recycles just over 2 million shoes per year.13 Most of
the shoes that are recycled are defective shoes that cannot be sold in the market place.14
The rest are used shoes that consumers have returned to one of the 55 retail outlets in 16
states that accepts shoes for recycling or to Reuse-A-Shoe collection events run by
schools, community organizations or community solid waste programs. Nike will
accept any brand of athletic shoe as long as they do not have metal cleats or other metal
parts. There is no charge for the service.
The effectiveness of this program in reducing disposal of athletic shoes in the
United States is difficult to evaluate. Nike sold roughly 80 million pairs of shoes in the
U.S. in the fiscal year that ended in May 2001.15 If all of the 2 million shoes recycled
are post-consumer shoes, the program yielded a recycling rate of approximately 2.5
12
See discussion of Reuse-A-Shoe program at http://www.nikebiz.com/environ/reuse.shtml.
Personal communications, Jim Goddard.
14
Exactly how many of the 2 million shoes recycled each year are post consumer and how many are defective
shoes from manufacturing facilities is unclear. Nike officials cannot – or at any rate, do not – provide that
information.
15
These numbers are estimated based on total revenues from shoe sales reported in the Nike Inc. Annual
Report on Form 10-K (August 2001). Total revenues from sales of footwear in the U.S. were $3,208 million;
if the average wholesale price of shoes is approximately $40 per pair, then the total quantity of shoes sold in
the U.S. is approximately 80 million pairs. All of the post-consumer shoes currently reprocessed by the Nike
Reuse-A-Shoe program come from the United States.
13
13
percent in fiscal 2000/01. If only half were post-consumer – and this is still probably an
optimistic assumption – the recycling rate would be 1.25 percent.16
This low recycling rate is not surprising given the spotty geographic coverage of
the collection system and the lack of incentives for consumers to return shoes for
recycling. Even consumers who live near a collection point are probably not aware of
the program. There is also little incentive for consumers to go to the trouble of taking
shoes in for recycling when disposal is easy and essentially free in most communities.
Nike claims that its program has led the company to redesign its shoes to be more
recyclable. They have also started a major initiative to reduce the use of toxic
substances in their shoes, beginning with the elimination of PVCs in most of their
products beginning in January 2002.17
Nike’s Reuse-A-Shoe program is unique within the footwear industry.
However, several computer manufacturers have started take-back programs to help
reduce disposal and increase recycling of used computer equipment. These programs
are described below.
IBM’s PC Recycling Service
On November 14, 2000, IBM started its PC Recycling Service. This service is
available to residential or small business computer users in the United States who are
interested in recycling a single (or small number) of PCs. The service costs $29.99 and
for that price the customer receives a box (26” x 26” x 26”) for shipping the equipment,
a pre-paid UPS label addressed to Envirocycle, the electronics recycler under contract
with IBM, and packing instructions. The box will hold a 15 inch monitor, a printer, a
computer and a keyboard. IBM will accept computers made by any manufacturer. To
recycle a computer, one must pack it up according to the instructions, affix the UPS
shipping label to the box and deliver it to the nearest UPS office.18
When Envirocycle receives the equipment, they evaluate it to determine if it is
suitable for donation to charity. IBM has an arrangement with Gifts in Kind
International (GIKI) to provide them with PCs that are of reasonably recent vintage
(currently a Pentium I or higher) and in good working order for donation to nonprofit
16
Even this recycling rate is not strictly correct since consumers can recycle shoes from any manufacturer, not
just Nike, through the Reuse-A-Shoe program. In 2000 Nike’s share of the U.S. shoe market was 39%
(Business Wire, 2000). See http://www.snowboardnetwork.com/sports/athletic_footwear_market_share.htm.
17
For more about Nike’s PVC free pledge see www.nike.com (accessed January 27, 2002).
18
Pick up by UPS can be arranged, but at an additional charge.
14
organizations throughout the world. If a computer is deemed suitable for donation, the
customer who sent in that computer will receive a receipt describing the equipment that
was donated that can be used for income tax purposes.19 Otherwise, the customer will
receive a receipt indicating that his or her PC has been recycled.
IBM promotes this service primarily on its web page, either to people who are
shopping for a new PC, or to residential consumers or small businesses who are looking
for a way to recycle their old PCs.20 The $29.99 fee covers the cost of shipping the
equipment and recycling it. IBM sells roughly 200 units of this service per month.21
Hewlett Packard
Hewlett Packard also offers a computer hardware recycling service to residential
and business computer owners through its Planet Partners Product Take-back Program.
Unlike IBM, HP does the recycling itself rather than contract with an independent
recycler. Customers use a web interface accessible at www.hp.com/go/recycle to sign
up for the service which includes pickup, transportation and evaluation of their
equipment. Equipment from any manufacturer is accepted. Equipment that is deemed
usable will be donated to charity and other equipment will be recycled. Under HP’s
program consumers do not receive a receipt regarding the fate of their equipment.
The price for the service varies by type of equipment as shown in Table 1. The
prices range from $13 for a handheld device to $34.00 for a laser printer or piece of
network equipment.22 This price includes pick up of the equipment, transport and
assessment for donation or recycling of equipment not suitable for donation.
Compaq
Compaq Computer does not have its own computer recycling program, but it
does participate in a program called the Electronic Take-Back Program that is run by
United Recycling Services of West Chicago, Illinois.23 Under this program, which is
19
For more information on this program see www.ibm.com/ibm/environment/
For several years IBM has been recycling obsolete computer equipment that was leased to large business
customers. Under this program, IBM has been able to reap some economies of scale in computer recycling
and to realize some value from reclaiming parts and materials from old computers and finding new uses for
them. In 2001, leases accounted for 35 % of all hardware sales by IBM. (Bloomberg News 2002).
21
Personal communication, Rhea Hale.
22
A box including a PC, a monitor and a laser printer would cost $76.00 reflecting a discount applied to orders
containing multiple pieces of equipment. For more information about pricing of shipments containing
multiple pieces of equipment see https://warp1.external.hp.com/recycle/hardware_id.asp.
23
See http://www.unitedrecycling.com/takeback/main.html for more information on this program.
20
15
Table 1.
Prices for HP’s Planet Partners Product Take-back Program
Type of Equipment
ink printer
laser printer (includes fax machines)
all in ones (copiers)
PCs (no CRTs, includes laptops and
keyboards)
monitors (CRTs, flat panel terminals)
scanners
handhelds (PDAs, calculators)
network equipment
Price
$17.00
$34.00
$30.00
$21.00
$29.00
$21.00
$13.00
$34.00
similar to the IBM program in many ways, customers pay $27.99 to recycle used
personal computer equipment. The price covers the cost of a prepaid UPS shipping
label to United, assessment for reusability and donation and recycling costs.24
Customers also receive a certificate for a 6 – 9% discount on future purchases of
selected Compaq equipment. This service is available for residents of Illinois,
Wisconsin, Indiana, Missouri, Minnesota, Michigan and Iowa only.
Gateway
Gateway computers has a two-part program that provides incentives for
purchasers of new Gateway computers to either trade in, donate or recycle their old
computers.25 Under the first option, Gateways Trade-In service, a customer who
purchases a new PC from Gateway has the option of trading his or her old PC in
exchange for its average market value on the computer resale market.26 Only those
computers that are of sufficiently recent vintage to be valuable in the secondary market
are eligible for the Trade-In service. Under the second option, Gateway will provide a
credit of up to $50 for a computer that has been donated to a charity or sent for
recycling. In order to get the credit, customers need to furnish a receipt indicating that
the equipment was donated or recycled and provide information on how to contact the
charity or recycler to verify what has taken place. The credit ranges between $25 for a
monitor or CPU by itself to $50 for a complete system.
24
With this service, customers are responsible for supplying the box.
This program is described at http://www.gateway.com/home/programs/tradein_recycle.shtml.
26
For more information, see http://www.gateway.com/home/programs/tradein_faq.shtml.
25
16
Dell Computer Corporation
Dell Computer Corporation does not have any type of program to promote PC
recycling, but they do offer several services to provide consumers with other
alternatives to disposal for used computer equipment.27 These include a trade-up
program, an on-line auction for used PCs and a donation program. The Dell trade-up
program is very similar to Gateway’s Trade-In service. Users of this service will get a
credit based on the value of the computer they are trading in toward the purchase of a
new Dell computer. Any brand of computer is acceptable, although it must be of
sufficiently recent vintage to have value on the secondary market.
The on-line auction is a forum where participants can post the specifications of
their old computer equipment and offer it up for sale to the highest bidder. This service
is similar to E-bay and other more general on-line auction services, but it is specialized
in computer equipment.
Dell’s computer donation program is a partnership with the National Christina
Foundation (NCF), an organization that donates computers to training and educational
organizations that service individuals with disabilities and economically disadvantaged
individuals. This program is administered by NCF who collects the information on the
computer specifications, identifies a recipient for the equipment and arranges shipment
if the donor does not choose to do so.28 Donors are provided with a receipt listing the
market value of their equipment to use for tax purposes.
Sony, Panasonic and Sharp
These companies have similar programs designed to facilitate the recycling of
electronics products. All three companies are most active in the state of Minnesota,
which is not surprising given that this state is at the forefront in the United States in
developing and promoting product stewardship programs. (See discussion below of
Minnesota’s “Plug into Recycling Program”.)
In October of 2000, Sony began a 5-year partnership with Waste Management to
promote electronics recycling in Minnesota.29 Under this partnership, Sony electronics
products are accepted for free for recycling during certain hours (in particular Saturday
27
For more information see http://www.dell.com/html/us/segments/dhs/dell_exchange.htm.
For more information on the donation program see http://www.cristina.org/dsf/dell.ncf.
29
For more information see Sony Press Release at
http://www.sel.sony.com/SEL/corpcomm/news/corporate/108.html.
28
17
hours when waste transfer stations are not busy30) at a number of Waste Management
facilities located throughout the southern part of the state. Electronic products made by
other manufacturers are also accepted for recycling at the Waste Management facilities,
but a fee is charged for recycling of those products. In the first seven months of the
program, almost 5000 pounds of product had been recycled.31 This represents just
about 1 pound of equipment for every 227 persons living in the counties of Minnesota
where the Waste Management Facilities are located.
Sony, Panasonic and Sharp partnered with Asset Recovery Corporation in a
series of electronics collection events held in the St. Paul–Minneapolis area of
Minnesota in April 2001 and again in the fall (Asset Recovery Corp., 2001). Each of
these three companies paid for transport and recycling of any of its own equipment
returned for recycling while customers paid for the recycling of equipment from other
manufacturers. The fees charged for other equipment at the first event ranged from $5
to $25, with console TVs, stereos, and copiers charged the highest fees.32
During these collection events, nearly 41 tons of electronic equipment were
collected for recycling, roughly 1 pound for every 18 people in the St. Paul/Minneapolis
metropolitan region. Items collected at the kick-off event, were analyzed in detail in
terms of composition, manufacturer, vintage and other factors. The collection event at
this location was responsible for over 6 tons of material, just over 30 percent of which
was manufactured by one of the three participating manufacturers.33 At subsequent
events, an average of 6 percent of collected equipment was manufactured by one of the
sponsors of the event. The rest was paid for by people returning the equipment.
Panasonic and Sharp have also agreed to pay for the recycling of their
equipment collected through the Hennepin County electronics recycling program.
Under this program, Hennepin County, which has run a drop off recycling program for
electronic waste for many years, is responsible for disassembly of equipment and
transporting it to ARC. ARC is then responsible for recycling the components, using
the payments from Panasonic and Sharp.
30
Personal communication, Tony Hainault.
See the Minnesota Office of Environmental Assistance Web site at
http://www.moea.state.mn.us/plugin/sonyevents.cfm.
32
Fees differed across the different collection events and in some locations were disaggregated across products
(personal communication, Ryan Laber, September 2001).
33
ARC expects that this high percentage of equipment from participating partners was probably due to the
much higher publicity that this particular event received in which the names of the participating partners were
highly publicized. The role of the partner companies was less prominently promoted in the other events.
31
18
Best Buy
Best Buy, a national chain of retail stores specializing in electronic products,
also has an electronics recycling program.34 Under this program, Best Buy sponsored
10 electronics collection events at different locations throughout the U.S. in the summer
and fall of 2001.35 All but two of these events were held at Best Buy retail stores and
some of the events were co-sponsored by manufacturers including Toshiba America
Inc. and Panasonic.
The list of items accepted at these events included computers, monitors, printers,
fax machines, televisions, stereos, camcorders, cellular phones and VCRs. Most of the
items were accepted for free, but there was a $10 charge for monitors and a $15 charge
for televisions.
For each event Best Buy had a contract with a recycler who was responsible for
taking items from consumers, placing them in their own trucks and transporting the
equipment to their recycling facility. The Rechargeable Battery Recycling Corporation
(see below) also attended several of the events to reclaim rechargeable batteries for
recycling. A local charity also attended each event to cull out those pieces of
equipment, generally computers, printers or scanners, that were in good enough
working order to be reusable.36
Four events were held in Minnesota, the corporate home of Best Buy and the
state with perhaps the longest history of electronics recycling programs for consumers.
Two of the Minnesota events ranked at the top of the ten events in terms of number of
participants and total weight of equipment collected. The third highest ranked event in
terms of total number of participants and amount collected was the one held in
Framingham, Massachusetts. Higher than average participation in Massachusetts is not
surprising given that disposal of CRTs at municipal solid waste incinerators and
landfills is prohibited in that state. The fourth highest participation rate was at an event
held in Skokie, Illinois. At this event residential consumers were not charged for
dropping off monitors or TVs as the cost of recycling these items was subsidized by the
local solid waste agency. In total, across all events, 286 people participated, bringing in
34
This program is managed for Best Buy by e-4 partners, a Minnesota consulting firm. For more information
about the Best Buy program see http://www.e4partners.com/homepage.htm.
35
An event scheduled to be held in Frederick, Maryland in mid September was postponed until spring due to
the September 11 terrorist attacks.
36
The charities did not take any monitors except at the Chicago area collection event. (Conroy 2001)
19
25,724 pounds of equipment (see http://www.e4partners.com/homepage.htm), or
approximately 90 pounds per participant.
III.B. Industry-led Coordinated Initiatives
Rechargeable Battery Recycling Corporation
In 1994 the manufacturers of recycled batteries and of products that use those
batteries established the Rechargeable Battery Recycling Corporation (RBRC) to
manage an industry-wide recycling program This program was established because 8
states had already passed laws requiring take-back of Ni-Cd batteries and others were
considering doing so (Fishbein, 2001). To avoid having to comply with different laws
in different states, the industry set up the RBRC, a non-profit corporation to operate the
battery take back and recycling program. Prior to 1996 the RBRC ran pilot collection
programs in selected states including Minnesota and New Jersey. In 1996, RBRC
began a national program to collect rechargeable Ni-Cd batteries. The program spread
to Canada in 1997 and in 2001 the RBRC added Nickel Metal Hydride (Ni-MH),
lithium ion (Li-ion) and small sealed lead batteries to its program.
The RBRC is funded through a system of licensing fees. The RBRC licenses
battery manufacturers to place its seal on the battery cells it produces indicating that the
batteries can and should be recycled through the RBRC program at the end of their
useful lives. The program charges participating manufacturers a licensing fee based on
the weight of the battery cell and the cell type (Millard, 2001). Thus, the RBRC
operates very much like the DSD in Germany and the RBRC logo serves much the
same purpose as the Green Dot logo. The RBRC estimates that over 90 percent of the
rechargeable Ni-Cd batteries sold in the United States are included in the program.
More than 320 companies are paying to apply the RBRC seal to their batteries, but no
seal is required to return a rechargeable battery to an RBRC collection site.
The RBRC currently has arrangements with nearly 35,000 collection sites in the
United States. Over 90 percent of all collection sites are at retail stores. The other sites
are operated by communities, other public agencies or licensees themselves. All of the
collection boxes and bags and promotional material are supplied and paid for by RBRC.
Collection sites ship the collected batteries to regional consolidation centers at no cost
and RBRC pays all recycling costs. The batteries are recycled under contract with
Inmetco.
20
Battery returns and recycling have not grown in line with RBRC’s expectations.
In a 1998 report, RBRC projected that it would recycle over 8 million pounds of Ni-Cd
batteries in 2000 and that the rechargeable battery recycling rate for the United States
and Canada would increase from 15%, its level in the mid 1990s, to 35% by 2000.37 In
fact, RBRC reports that 3.5 million pounds of Ni-Cd batteries were collected for
recycling in 2000 and they estimate that collections will total just over 3.7 million for
2001 (Millard, 2001). RBRC does not report battery recycling rates and has not done
so since 1998. However, if earlier forecasts of Ni-Cd battery disposal for 2000 and
2001 are roughly correct,38 and assuming that 90% of all Ni-Cd batteries are in the
RBRC program, then the associated recycling rate for RBRC participating Ni-Cd
batteries for 2000 and 2001 would be just around 14%, slightly below the 15% rate
estimated for 1995.39
The RBRC spent a total of $6.7 million in 2000; this includes $2.7 million on
recycling and almost this same amount on public education and marketing. In the same
year, $8.8 million in licensing fees were collected. Although we do not have explicit
information on it, free-riding is likely to be a problem with the RBRC system. All
batteries, even those without the logo, are accepted at RBRC collection sites and are
recycled, while only battery manufacturers that choose to join the system pay the
licensing fees.
The Alberta Lubricating Oil Material Recycling and Management Regulation
The oil industry in the western Canadian provinces of Alberta, British
Columbia, Saskatchewan, and Manitoba run a program to encourage the recycling of
used motor oil, oil containers, and oil filters. In the late 1980s, the environmental
problem caused by improper disposal of used oil rose to the forefront in western
Canada. At the request of the Canadian Council of Ministers of Environment, the oil
industry set up a task force to address the problem. In 1993, the Western Canada Used
Oil/Container/Filter Industry Task Force was formed to coordinate efforts to reduce
Fishbein (2001) has a table that shows RBRC’s 1998 projections of Ni-Cd battery recycling in the United
States and Canada through 2005.
38
This is a big assumption. The RBRC numbers from 1998 assume that total poundage of Ni-Cd batteries
entering the waste stream increases at an average annual rate of 9.5 % between 1995 and 2000 and then
remains roughly flat after that.
39
Since RBRC actually collects batteries made by non-participating manufacturers at its collection sites, the
denominator in the recycling rate should probably be the total pounds of Ni-Cd batteries entering the waste
stream rather than RBRC licensees’ batteries.
37
21
disposal of used oil and to develop a consistent program across provinces. What
resulted was an industry-run program in which first sales and imports of motor oil, oil
containers, and oil filters are subject to a tax, referred to as an Environmental Handling
Charge (EHC). Authorized collectors and transporters of used oil are paid what is
called a Return Incentive (RI) for every liter, container, and filter that is collected and
transported to an authorized processing or re-refining center. The program is run
separately in each province. Alberta's and Saskatchewan's programs began in 1997,
with Manitoba's following in April 1998.
An interesting feature of this program is that even though the refund incentives
are paid to authorized collectors and transporters, generators of used oil, including doit-yourself oil changers, farmers and others are actually benefiting from the refund
incentives. In the case of both used oil and used oil filters, the collectors have paid
generators up to 37% of the refund incentive for turning in their used oil and 35 percent
of the return incentive for oil filters (McCormack, 2000). This system thus provides
incentives to downstream consumers even though the return incentive payment
explicitly created by the system is only paid to authorized collectors. This pass-through
suggests that it is possible to set up an “upstream” deposit and refund system and still
have the private market, on its own, provide incentives downstream.
The Vehicle Recycling Partnership
In some industries, collection of post-consumer items poses less of a challenge
than it does in others. Approximately 95 % of the 11 million vehicles that are retired
from service each year in the United States make it into the recycling system. In this
system, dismantlers disassemble the car, salvage usable parts for resale, remove
hazardous materials and components such as batteries, oil filters and tires and send the
rest for shredding. Typically after shredding, the iron, steel and non-ferrous metals
(representing about 75% of the weight of the car) are recycled and the remaining
“fluff,” which includes shredded seat cushions and carpet, is landfilled (Pace and
Giallorenzo, 2001).
In 1991, a bill was introduced in the U.S. House of Representatives that was
seen by the auto industry as the potential forerunner to mandatory recycling (Davis,
1997). At around the same time, legislation was being proposed in Germany and
discussed in other European countries. In response to these perceived threats, the three
major U.S. automakers, GM, Ford, and Chrysler, formed the Vehicle Recycling
22
Partnership (VRP). The VRP promised to improve recycling technologies and find
ways to recycle the non-metal components of a car. The group performs research into
ways to improve the recycling process, especially for non-metal components, and ways
to promote use of recyclable and recycled materials in new car design. It has developed
a new method for removing fluids from cars during the dismantling process that greatly
reduces the time needed to perform this function. The Vehicle Recycling Development
Center — a joint project between the three auto makers and the Automotive Recyclers
Association, the American Plastics Council and the Institute for Scrap Recycling
Industries — is also dismantling different models of cars and developing a data base
regarding components in different vehicle models to help dismantlers sort vehicle
components for recycling.
For a while, Saturn and Ford had take-back and recycling programs for plastic
bumpers. Ford entered into an agreement with a recycler to purchase plastic made form
recycled bumpers; Saturn had its own take-back and recycling program. It is unclear
whether these programs are still in operation.
III.C. Joint Efforts Among Industry, Government and Other Stakeholders
Minnesota Electronics Recycling Initiative
In 1999, the Minnesota Office of Environmental Assistance (MOEA) initiated
the first large scale public/private effort to learn more about the costs and feasibility of
electronics recycling (Hainault, 2001; Hainault et al., 2001). Sony, Panasonic, Waste
Management’s Asset Recovery Group and the American Plastics Council co-sponsored
this effort which was called “Plug into Recycling.” MOEA selected local groups to run
a variety of different types of collection events including single-event drop-offs, ongoing drop-offs, collection at retail stores and curbside collection. All types of
electrical and electronic equipment -- essentially anything with a cord or a battery -was eligible for collection under the program. There was no charge to consumers for
dropping off items. The program sponsors paid for transport and processing of
recyclables and provided some financial support to communities for promotion of the
events.
This project had five primary objectives: to explore economies of scale in
collection and recycling, to evaluate high-end recycling of CRT glass and engineering
plastics, to evaluate the costs of recycling materials, to increase privately funded
electronics recycling and to identify infrastructure needs and compare the costs of
23
different approaches to collection. In order to achieve these objectives the collectors
and the recycler were asked to keep track of the quantities of different types of
equipment that were collected, of the costs of collection and processing and to survey
the people who brought equipment to collection sites. Roughly 9,000 people
participated in the 64 events in the summer and fall of 1999 and 7,639 of those replied
to the participant survey. A total of 575 tons of electronic equipment, just under one
pound per person in the region served by the events, was collected.40
Some of the best data available on recycling electronics was gathered in this
effort and it is publicly available. Some of the important findings are as follows.
 The participation rate for the collection events sponsored by the
program was less than 1% -- i.e., 9,000 participants out of 1.3 million
people estimated to be served by the events.
 Televisions and computer monitors accounted for 76% of the
equipment collected. The remaining 24% was split into 7%
household electronics, 12% consumer electronics and 5% CPUs.
 Collection events at retail stores were the best attended.
 Packaging of material was found to be important to preventing
breakage. Packaging also contributed non-trivially to the weight of
the material delivered to the recycler. In addition to the 575 tons of
electronic equipment, l,125 tons of packing material (shrink wrap,
pallets and metal roll-off boxes) was also delivered to the recycler.
Most of this material could be reused, but its weight contributed to
the costs of transporting the material.
 The program was costly. Collection costs were roughly $288 per ton
of material collected and just under $18.60 per participant.
Collection costs per participant were 35% below average at the retail
store events due to the high level of participation at those events.
 The net costs of transporting, processing and marketing reusable and
secondary materials was $160 per ton (cost net of revenues from
sales of reusable or secondary materials). Nearly 40% of the latter
cost was attributable to transportation from collection points to the
recycling center.
 Together collection and transport account for roughly 75% of the net
costs of collection, transport and recycling averaged across all types
of equipment collected in this project.
40
The study estimates that roughly 1.3 million people were served by these events.
24
Carpet Stewardship Memorandum of Understanding
In 2000, representatives from the states of Minnesota, Iowa and Wisconsin, the
U.S. EPA, non-governmental organizations (NGOs) and the carpet industry joined with
carpet retailers and materials suppliers to form the Midwestern Workgroup on Carpet
Recycling. Members of this group signed a memorandum of understanding in January
2001 that included two key provisions. The first was a commitment to create an
independent organization, funded by industry, to be responsible for the collection and
recycling of discarded carpet.41 The second was an agreement to continue meeting to
develop a set of “negotiated outcomes” to serve as goals for reuse and recycling of
carpet for the next ten years.
After the initial agreement was signed, a newly constituted working group, the
Negotiated Outcomes Group, began meeting in March of 2001. This group included
representatives from a larger set of state governments, the federal government,
manufacturers of fiber and carpet, and environmental NGOs. This group developed a
list of goals for disposition of post-consumer carpet by 2012 that include a reuse goal of
3-5%, a recycling goal of 20-25% percent, and caps on the use of waste carpet as fuel in
cement kilns (maximum of 3%) and in waste-to-energy facilities (maximum of 1%).
These caps are subject to modification if greater use of waste carpet in these two energy
applications is deemed necessary to encourage collection of used carpet and if the
environmental consequences of increased incineration of carpet are deemed acceptable.
These goals are enumerated in the Memorandum of Understanding (MOU) on Carpet
Stewardship, signed by members of this group. The MOU took effect in January 2002.
The MOU also commits the carpet industry to establishing a third party
organization that is responsible for meeting these recycling and reuse goals. This
group, the Carpet America Recovery Effort (CARE) will be responsible for enhancing
the used carpet collection infrastructure and for assessing the industry’s progress in
achieving the goals set out in the MOU. The carpet industry is responsible for
providing the funding required to meet the goals of the Negotiated Outcomes Group.
The MOU also establishes a time-line for evaluating progress toward meeting the MOU
goals and for establishing new goals for future time periods.
41
Wilt and Hickle (2001), p. 5.
25
National Electronics Product Stewardship Initiative
A multi-stakeholder effort similar to the recently completed carpet initiative is
currently underway for electronics products. This effort, known as the National
Electronics Product Stewardship Initiative, or NEPSI, brings together representatives
from over 20 state governments, the U.S. EPA, electronics manufacturers, retailers,
recyclers and non-governmental organizations. This group seeks to develop a system to
maximize collection, reuse and recycling of used electronics and to provide incentives
for environmentally friendly changes to product design including source reduction,
reduced use of toxics, increased use of recycled inputs and making products that are
easier to recycle. The group began meeting in July 2001 and hopes to reach an
agreement on how best to achieve its goals by the end of 2002 (see
http://www.nepsi.org).
IV. Government Policies to Promote Product Stewardship
Although most of the product stewardship programs in the United States are
voluntary efforts, there are some state laws and regulations that are designed to
encourage greater involvement by producers or retailers or both in the management of
products at the end of their useful lives and in particular, in assuming financial
responsibility for recycling products. These include state laws regarding disposal and
recycling of tires, batteries, and used motor oil. Some of these laws or regulations
speak directly to the role of producers and retailers while others are more indirect.
Examples of some of these laws are discussed below.
Tires
According to the Scrap Tire Management Council, thirty-seven states ban
disposal of whole tires in landfills, although over 80% of these states allow landfill
disposal of shredded tires. Thirty four states have advance disposal fees, ranging from
$0.25 to $5.00 per tire, on new tire sales which are collected and managed either by the
tire dealer, the tire wholesaler or by the state.42 The funds accumulated from these fees
are generally used to finance a variety of waste tire management activities including
promoting recycling, promoting the use of tire-derived fuels and funding the clean-up of
existing scrap tire piles. Unlike other consumer products, initial tire collection is not
42
Details on the fees charged by states can be found at http://www.rma.org/scraptires/pdf/scraptire_leg.pdf.
26
difficult because most people are willing (even eager) to leave their old tires at the
dealers when they purchase new ones. Where the system can fall apart is getting tire
dealers to recycle or dispose of tires in a responsible manner. Funds collected by the
dealers can help to cover the costs of responsible management of the used tires that are
returned to them. Across the country, recovery of scrap tires for use as fuel or new
products, such as asphalt and flooring material, is growing. Of the 270 million used
tires generated in 1998, 177.5 million (or almost 66%) were recovered. By 2000, scrap
tire generation had grown to 273 million, and 196 million, or nearly 72%, were recycled
or sold to fuel markets.
Lead Acid Batteries
Thirty-seven states have adopted some form of legislation governing disposal
and recycling of lead acid batteries. Many of these states have adopted a variation of
the model battery recycling law developed by the Battery Council International. This
law includes an explicit ban on disposal of lead-acid batteries and a deposit on all
battery sales not accompanied by a trade-in. Ten states have a battery deposit, usually
between $5 and $10, that must be paid on all new lead acid batteries that are purchased
without a trade-in of a used battery.43 In most states, part or all of this deposit will be
refunded if a used battery is brought back to the store within 30 days of the purchase.
Retailers are required to ensure that the used batteries that they take back are recycled.
The recycling rate for lead-acid batteries is close to 96%. The favorable economics of
reclaiming lead from spent batteries is undoubtedly contributes to this high rate, but the
deposit-refund programs also appear to help. Prior to the establishment of the
programs, the recycling rate was approximately 85%.
Used Motor Oil
In 1991, California passed the Oil Recycling Enhancement Act, which is
administered by the California Integrated Waste Management Board (CIWMB). This
act was designed to discourage illegal disposal of used oil. Under the act, oil
manufacturers must pay a fee of $0.16 per gallon of lubricating oil sold in California to
the Waste Management Board. This fee is then refunded in full on a per gallon basis to
used oil collection programs certified by the state, including curbside programs and
43
Information on state fees is found at http://www.batterycouncil.org/states.html.
27
collection centers, for every gallon of oil that is returned for recycling. These programs
must collect used oil from the public at no charge and offer the $0.16 per gallon fee to
consumers who bring in used oil to be recycled. The program has resulted in a 150%
increase in the total quantity of oil being recycled in the state over the 7 year period
from 1993 to 2000 (CIWMB, 2001).
Summary
The policies reviewed above represent just a sample of the growing number of
laws and regulations that states are adopting to limit disposal and promote recycling of
different products. We highlight the above programs because they place some financial
responsibility on producers by assessing up-front fees, and in some cases, they require
retailers or other collectors of used products to guarantee that products are recycled.
One interesting feature shared by most of hese programs is the inclusion of some
type of financial incentive to promote collection and recycling. In the next section, we
argue that such incentives are key features of successful programs. The discussion
centers on the use of incentive-based policies and how they might be structured to
encourage DfE and promote producer responsibility.
PART II.
V. Incentive Based Instruments Versus Command-and-Control
Environmental economists generally advocate the use of economic incentivebased, or market-based, instruments to internalize environmental externalities such as
those associated with waste disposal. Incentive-based (IB) instruments are
characterized by the use of financial incentives provided to market participants to
reduce an environmental externality – i.e., to reduce a side-effect from production or
consumption that is not accounted for in private market transactions. A clearer picture
of what is an IB instrument arises when we offer the contrast of "command-andcontrol" (C&C) instruments. C&C approaches to environmental problems include
design standards that require firms to use a particular control technology, performance
standards that specify a maximum amount of pollution from each polluter (or pollution
per unit of some input or output), or outright bans on the use of something (e.g., lead in
gasoline or CFCs). Obviously, command-and-control options provide incentives of a
sort. They are necessarily accompanied by penalties for noncompliance, so polluters
28
have an incentive to comply to avoid the penalty.44 The key distinction between IB and
C&C approaches lies in the flexibility of the former relative to the latter and the
potential cost savings this flexibility brings about. We elucidate these points by
comparing emissions taxes with regulatory standards.
The quintessential incentive-based environmental policy is the Pigovian
emissions tax. An emissions tax is one levied per unit of emissions and paid by each
polluter on all its emissions. To provide proper incentives to reduce the environmental
externality it is important that the tax be levied on emissions – i.e., on the externalitygenerating activity and not on some related thing such as output. And to be a true
Pigovian tax, the tax rate must be equal to the marginal environmental costs of those
emissions at the social optimum. The social optimum is the level of pollution where the
extra benefit to society from eliminating another unit of the pollutant is exactly equal to
the extra cost. Another policy option with many of the same features of the Pigovian
tax is marketable pollution permits. If the number of permits issued by the government
is set to generate the socially optimal level of pollution, then the permit price is exactly
the same as the Pigovian tax.45
These IB options have several advantages over C&C policies. First, a tax or
equivalent marketable permit system is the least cost way of achieving any given
reduction in pollution, including one that differs from the social optimum because it
brings about more pollution abatement from producers who find it relatively easy to
abate and less from those for whom abatement is difficult. Second, a pollution tax has
what are often called "dynamic efficiency" effects. Because polluters pay the tax on all
units of pollution, they have an incentive to develop cheaper and more effective ways of
reducing their pollution, since doing so reduces their costs.46 Emissions standards or
technology-based standards do not similarly reward efforts to do better than the
standard. Third, recent research suggests an added benefit from environmental taxes
over command-and-control approaches: the revenues generated from such taxes can be
44
The penalty could take the form of a monetary fine or it could take the form of shutting operations down for
a period of time while a problem is fixed.
45
In a world of uncertainty about the costs of abatement, there can be differences in the outcomes with taxes
and permits (see Weitzman (1974) for the classic treatment of this problem; Baumol and Oates (1988) have a
good explanation in Chapter 5).
46
Under the SO2 allowance trading program in the U.S., electric utilities and their suppliers have lowered
their costs of reducing SO2 emissions through innovations in coal switching and blending and cost-reducing
improvements in flue gas desulfurization equipment (see Burtraw, 1996, for discussion).
29
used to reduce other distortionary taxes such as income taxes (Bovenberg and de Mooij,
1994; Parry, 1995; Bovenberg and Goulder, 1996).
Despite these desirable properties of Pigovian taxes, there may be many
circumstances in which they are infeasible. Hazardous and solid waste disposal may be
two examples. Because of the relative ease of disposing illegally of one's waste,
charging a price – i.e., a Pigovian tax – for disposal could have unwelcome
repercussions. The tax would necessarily have to be accompanied by a penalty for
illegal dumping, but enforcement of illegal dumping laws can be difficult and costly.
Systems that charge for solid waste collection and disposal – so-called “pay as you
throw” (PAYT) programs – are becoming more common in the U.S. These programs
typically charge a fee per bag or per container thus giving households the incentive to
reduce the amount they dispose of.47 Most evidence thus far suggests that illegal
dumping has not been a problem in most PAYT communities. If the fees charged in
these programs were higher, however, it could be a problem.
Several studies by economists suggest an alternative IB policy for solid waste
that has many of the desirable features of a Pigovian tax without the attendant illegal
disposal problem: a product tax coupled with a recycling subsidy (see, for example,
Dinan, 1993; Fullerton and Kinnaman, 1996; Palmer and Walls, 1997; Calcott and
Walls, 2000). This combination of policy instruments has the two features of a
Pigovian tax that make it an optimal policy: an output reduction effect and an input
substitution effect.48 The product tax and recycling subsidy give firms the incentive to
both produce less output and substitute recycled inputs for virgin inputs in production.
If the tax and subsidy are weight-based, producers have the incentive to downsize
products and if the tax and subsidy vary by material, the policy encourages material
substitution.
The product tax/recycling subsidy policy is sometimes referred to as a "depositrefund." In traditional deposit-refund, or "bottle-bill," programs, consumers pay a
deposit (tax) on a container at the time of purchase and receive a refund (subsidy) equal
47
Linderhof, et al. (2001) report on weight-based pricing used in a Dutch community. According to Allers
(2002), a co-author of that study, illegal dumping was monitored carefully by the town and was found to be
“minimal, but not nonexistant.” Several other communities in The Netherlands are also considering weightbased pricing.
48
For good discussions of the output and substitution effects, see Spulber (1985) and Fullerton (1997).
30
to their initial deposit when they return the container to a designated collection center.
The lead-acid battery programs described above are similar to bottle bills.49
An approach with similar results for recycling and solid waste but probably
lower administrative costs is something we refer to as an "upstream combined
tax/subsidy (UCTS)."50 In Palmer, Sigman, and Walls (1997), the UCTS combines a
tax (i.e., deposit) on produced intermediate goods such as aluminum ingot, rolls of a
specific grade of paper, and sheets of steel, with a subsidy (i.e., refund) granted to
collectors of recyclables such as used beverage cans, old newspapers, and so forth, who
subsequently sell the goods for reprocessing. Although the tax and subsidy are not
levied directly on consumers, consumers would feel the effect through higher product
prices and if the tax is levied per pound, consumers can be expected to adjust their
purchasing behavior toward lighter-weight products.
The Western Canada used oil program described above is an example of a
UCTS. The environmental handling charge is the upstream tax and the return incentive,
paid to collectors of used oil, is the subsidy. As we pointed out in our discussion of that
program, collectors have passed on some of the return incentive to final consumers who
return their used oil.
An important question about the UCTS, however, and the one most relevant to
our discussion of EPR and product stewardship, is whether such a policy – or any IB
policy – could provide incentives for improving product recyclability. The main
impetus for producer take-back and EPR is to spur this kind of DfE. In developing
these programs in the first place, government policy-makers in Europe thought that by
making producers responsible for products at end-of-life, they would have the incentive
to design those products to be more recyclable.
Before we discuss IB policies, however, it must be pointed out that in current
take-back programs, the incentives for DfE are largely muted because of the way the
programs are implemented. Individual producers do not recycle their own products at
49
Bottle bill programs generally have fairly high administrative and transaction costs associated with them
because bottles must be returned to a collection center such as a supermarket; the supermarket then must sort
the containers by brand; and brand distributors then pick up the sorted containers for recycling. The California
beverage container recycling program uses a more limited network of parking lot redemption centers where
consumers can return their containers for a refund. This system limits the processing costs imposed on
beverage retailers. Lead-acid batteries are not sorted by brand and in many cases, returning batteries is not
inconvenient since consumers are having a new battery installed by a mechanic anyway.
50
The UCTS described here is similar to the “two part instrument” advocated by Fullerton and Wolverton
(1999). They envision a combination tax on “dirty production” and subsidy to recycling or “clean production”
that can be implemented upstream in the production process to avoid transaction costs.
31
end-of-life, nor do they pay the cost of recycling their own products. PROs arrange
collection and recycling of all firms’ products jointly, thus an individual firm has little
incentive to redesign its products since the costs are borne by the firm itself while the
benefits are reaped by everyone.
Calcott and Walls (2000; 2001) explore the DfE issue in some detail in a
theoretical model that incorporates producers making design choices that affect product
recyclability. They find that, if recycling markets work perfectly – i.e., if recyclers pay
consumers for products and the prices they pay vary with the degree of product
recyclability – then either a Pigovian tax on disposal or a UCTS can yield a first-best,
efficient level of waste disposal, recycling, and design for environment. If however,
recycling markets do not work perfectly – more specifically, if it is too difficult and
costly for recyclers to pay prices for recyclable materials that vary with their degree of
recyclability – then a first-best outcome cannot be reached. Calcott and Walls argue
that there is probably some “sand in the gears” of recycling markets preventing
attainment of the first-best. It is costly to collect and transport recyclables, and it is
difficult for recyclers to sort products by their degree of recyclability and pay
consumers a price based on that degree of recyclability. Curbside collection programs
are good examples: households simply toss a variety of items in the bin – PET bottles
alongside aluminum cans – and are not paid individually for these items. Indeed, they
are not paid at all. It is this missing market – or imperfect market, in any case – that
provides an economic justification for the producer take-back movement.
Calcott and Walls find that a constrained, second-best, optimum can be reached
with IB instruments, however. They show that the constrained optimum can be reached
with a UCTS in which the product tax takes on one of two rates depending on whether
the product is recyclable enough to be accepted by processors – i.e., processors do not
incur a loss if they recycle it. The tax on products that do not reach that recyclability
threshold is the standard Pigovian tax and thus can be viewed as an “advance disposal
fee.” Products that meet the threshold receive a subsidy when they are recycled that is
equal to the tax paid up-front. Calcott and Walls (2001) also find that there is a second
set of instruments that also yields the constrained optimum: a single tax/subsidy
combined with a Pigovian tax on disposal. Thus, if illegal dumping is not a problem, it
is feasible to have a UCTS along with the disposal fee and yield the second-best
outcome.
32
In the Calcott and Walls models, the constrained optimum is the best outcome
that can be achieved given the transactions costs in recycling markets. Although the
authors do not compare their IB instruments with a possible take-back, or other
mandatory program, it is fair to say that a take-back program in which individual
producers must collect their own products from millions of consumers and have them
recycled would be very costly. The more typical outcome – one in which a PRO
collects licensing fees from member firms that vary by material and weight and then
ensures that recycling rate standards are met -- ends up having incentive effects much
like the UCTS. The licensing fees are similar to the up-front product taxes and the
recycling rate standards provide incentives similar to (though not exactly the same as
nor necessarily as strong as) the recycling subsidy.51
An alternative to the UCTS that might be more effective in promoting DfE
would be a tradable recycling credit system. Tradable recycling credits are similar in
spirit to tradable emission permits mentioned above. An even better analogy might be a
renewable energy portfolio standard.52 Under a renewable energy portfolio standard,
electricity producers are required to either produce a minimum portion of their
electricity using renewable energy sources such as wind or solar or hold credits showing
that another renewable generator has produced the requisite amount of energy.
A tradable recycling credit program for electronics, for example, might work as
follows. Every manufacturer or importer would be required to meet a recycling rate
target for its products. The target could be an overall weight target, such as 50% of the
weight of the product must be recycled, or a set of specific targets by component
material type. Producers could do the recycling themselves or they could pay a recycler
to do it. With an overall weight target, any time a pound of a particular producer’s
material is recycled, a recycling credit is granted to that firm by the recycler.53
Recyclers would be required to keep track of what they recycled by brand. At the end
51
The incentives created by a recycling rate standard are stronger when there is a financial penalty associated
with failure to achieve the standard, or conversely, a reward payment for achieving or exceeding the standard.
52
For more information on Renewable Portfolio Standards see Clemmer, Nogee and Brower (1999).
53
This approach is different from the approach described in the report, “Tradable Certificates for Recycling of
Waste Electrical and Electronic Equipment” produced by Environmental Resources Management for the
European Commission. Under the ERM scheme, credits are awarded to the company that pays for the
recycling of the electronic equipment and not to the company that originally produced or imported the
equipment. In this type of scheme, recyclers do not keep track of exactly which firms’ products they are
recycling. The costs of such a scheme might be lower than the one we describe but so are the incentives for
DfE.
33
of the year, producers must show that they have met the recycling target or hold enough
credits that they’ve purchased from others to comply with the target.
Designing and implementing a tradable recycling credit scheme raises several
issues and challenges. These include questions about how collection might work and
the effect of different collection schemes on incentives for DfE; how to incorporate
incentives for product downsizing and waste minimization; how to address hazardous
components of products; and how to deal with long-lived products such as electronics
and vehicles.54
Another possibility worth exploring might be a combination of a UCTS with a
system of financial rewards for the attainment of particular design objectives. Both a
reward system and a tradable recycling credits scheme – and virtually any system with
strong incentives for DfE – have the potential to be very costly to implement because of
the necessity of tracking individual firms’ products through the system. In our opinion,
there is no way around this problem. Thus, there seem to be critical trade-offs that
policy-makers need to consider when deciding on policy options: simplicity and
flexibility coupled with minimal incentives for DfE, on the one hand, versus complexity
and high administrative and monitoring costs combined with sharp DfE incentives, on
the other. More research is needed on the potential for IB policies with strong DfE
incentives.
Given this policy dilemma, as well as the reluctance in the U.S. to adopt the
European approach, we turn to an assessment of the voluntary programs we described
above. Do they have the potential to achieve some of the goals of product stewardship
and EPR? What are some of the key issues that need to be addressed to make voluntary
programs work? Do voluntary programs have the incentives that we argued in this
section are critical to the design of a cost-effective policy? We address these issues in
the next section.
VI. Evaluating Voluntary Environmental Programs
Although there has been no analysis by economists of voluntary product
stewardship programs, there is a fairly substantial literature on voluntary environmental
programs of other types, primarily those initiated by environmental regulators. The
54
Insights into some of these questions may come from analyzing the existing UK Packaging Recovery Notes
system to determine what the pros and cons of that system are and the extent to which the desirable features of
34
U.S. EPA has supported a number of voluntary efforts and pollution prevention
initiatives over the past couple of decades. Examples include the 33/50 program, the
WasteWi$e program, the Energy Star program, and Project Excel. In this section of our
paper, we present some arguments drawn from the literature for why firms may enter
into these programs and discuss what types of outcomes these programs have achieved
or might be expected to achieve given their features. We then draw some lessons for
voluntary product stewardship programs.
VI.A. Examples of Voluntary Environmental Programs
The literature analyzes firm participation in several different voluntary programs
run by EPA. EPA’s Waste Wise program is a program to reduce solid waste generation
either by participants or their customers. The program is open to a wide range of
organizations including firms, schools, hospitals, non-profits and local governments.
Under the program, organizations set their own waste reduction goals and then develop
systems for evaluating progress toward that goal. EPA provides technical assistance to
help organizations achieve their goals and free publicity and public recognition of the
achievements of participating organizations. In 2001, the seventh year of the program,
more than 1,100 organizations participated in the program.
EPA’s Green Lights program began in 1991.55 The goal of this program was to
reduce greenhouse gas emissions from electricity generation by increasing the
efficiency of lighting systems used by businesses. Firms study their lighting use and
then promise to upgrade the lighting systems in their facilities as long as it is costeffective to do so. The EPA provides information and technical assistance to
participants. As of 1998, there were over 2,500 partners who had reduced their energy
use by 4.7 billion kilowatt hours per year (Videras and Alberini, 2000).
EPA’s 33/50 program, launched in February of 1991, had a goal of reducing
releases and transfers of 17 priority toxic chemicals tracked in the Toxics Release
Inventory (TRI)56 by 33% from 1988 levels by 1992 and by 50% by 1995. Firms were
that system might be transferable to a tradable recycling credit system for electronic equipment, batteries, tires
or other products.
55
In the late 1990s this program was merged into EPA’s Energy Star program. Energy Star was originally a labeling
program for equipment that met certain energy efficiency goals set by EPA, but this program has expanded to include
certification of the energy efficiency of facilities such as office buildings and schools.
56
The Toxics Release Inventory requires manufacturing and other firms with more than 10 employees to
report on-site releases and off site transfers of over 600 hazardous chemicals.
35
solicited for participation in the program based upon the volume of their releases and
transfers of toxic substances; EPA solicited firms with the highest levels of releases
most actively. Participants were asked to commit to particular levels of reductions of
toxic chemicals. Nearly 1,300 firms volunteered to participate in the program and,
collectively, they met the goal of 50% reduction in 1994, a year earlier than scheduled
(U.S. EPA 1999).
Project XL is a voluntary program established by EPA in 1995 to give firms the
opportunity to negotiate agreements that would replace specific regulatory requirements
in exchange for improved overall environmental performance by the firm. Examples
include waiving requirements for obtaining new permits for air emissions for every
process change in a facility in exchange for a facility-wide cap on total emissions where
the cap is set tighter than the baseline level (Blackman et al., 2001). As of late 2000,
there were 50 XL projects that had either been approved or were underway or in
development (U.S. EPA, 2000).57
VI.B. Motives for Participation in Voluntary Programs
The economics literature identifies several motives firms might have for
participating in voluntary environmental programs (Videras, 2001; Videras and
Alberini, 2000; Lyon and Maxwell, 1999; Reinhardt, 1999). Many of these motives
could also apply to industry-run environmental initiatives including product stewardship
programs. These motives include

cost reduction;

appealing to environmentally-conscious customers;

preempting future government regulation;

relief from existing regulation;

gaining a competitive advantage in the marketplace; and

facilitating collusion among firms in the industry.
Below we discuss each of these motivations with regard to environmental
voluntary programs in general and how they might relate to the product stewardship
movement, in particular.
57
Roughly 20 of these 50 projects involve local government or government agencies and not private firms.
36
Lower costs. The idea that reducing emissions, waste or use of hazardous
substances will help to reduce costs is something that continues to be popular with
environmental advocates and even with some academics (Porter and van der Linde,
1995). The suggestion that there is no trade-off between higher costs and lower
emissions or waste certainly has its appeal. However, as Reinhardt (1999) points out,
two conditions must hold for environmental volunteerism by firms to be cost reducing.
First, there needs to be an obstacle to firms minimizing costs such as a market
imperfection, an information asymmetry or a government intervention. Otherwise, if
markets were perfectly competitive, firms would already need to be minimizing costs to
stay in business. Second, the action that firms take under the voluntary initiative needs
to either change the costs or benefits of some of the firm’s activities or change the
information flow to workers in the firm.
The evidence that improved environmental performance actually reduces costs
is largely anecdotal and the role of the various market imperfections suggested by
Reinhardt in contributing to these results has not been analyzed empirically. Voluntary
programs could reduce costs of environmental compliance when offered as an
alternative to command and control programs as in the case of Project XL. However,
one study by Boyd (1998) suggests that firms are rejecting some opportunities for
reducing their emissions or use of hazardous substances – so-called pollution prevention
initiatives -- because after some study or small scale experimentation, these efforts
revealed themselves unlikely to be profitable.
Product Differentiation. Firms may engage in environmental volunteerism to
make their products more appealing to “green” consumers and thus increase their
profits. Reinhardt points out that this strategy will only work if consumers are willing
to pay for the environmental attribute in question, if there is credible information about
this environmental attribute available to consumers, and if there is some protection
against imitators.
Opportunities for successful product differentiation of this type
appear to be limited, but further study is needed to better understand when such
activities are likely. The empirical literature reviewed by Lyon and Maxwell (1999)
suggests that green consumerism does not play a big role in voluntary initiatives to
reduce toxic emissions, those that have been subject to the most study.58 They go on to
suggest that the desire to attract talented employees who care about environmental
37
performance or environmentally conscious investors may also be motivators for
environmental volunteerism.
Preempt Regulation. Firms may also engage in voluntary environmental
actions to preempt future regulation. The creation of the RBRC by the rechargeable
battery industry provides an example. When RBRC was created, eight states had
already passed laws requiring retailers and manufacturers of products that contain
rechargeable batteries to take back those batteries for recycling or proper disposal and
many more states were considering following suit (Fishbein et al., 2000). Members of
industry, envisioning a patchwork of regulations across different states, decided to
establish the national voluntary RBRC program that focused exclusively on recycling.
Participation in NEPSI by electronics producers is likely motivated, in large
part, by a desire to prevent states from adopting take-back legislation – particularly
legislation that differs in different states.
Dawson and Segerson (2000) find that voluntary agreements to achieve an
industry-wide cap on emissions in order to prevent government from imposing an
emissions tax are sustainable despite incentives for firms to free ride on the efforts of
other firms. However, they show that the social costs of pollution control under these
agreements tend to be higher than with an emissions tax and suggest that the
transactions costs of the tax regime must be high to justify the voluntary approach on
welfare grounds.
Maxwell, Lyon and Hackett (1998) show that when the political costs of
organizing citizens to influence environmental policy are taken into account, it can be
welfare enhancing to have firms engage in voluntary abatement activities. By allowing
themselves to be preempted, consumers will have more resources to devote to other
activities while, at the same time, total abatement will be higher than it would have been
in the absence of a voluntary program.59
On the other hand, when legislators allow negotiated regulations to preempt
new laws, the outcome could include very weak regulations. Work by Segerson and
Miceli (1998) suggests that if regulators are not motivated to maximize social welfare
and have been delegated the authority to negotiate regulatory agreements that could
substitute for legislation, then these negotiated agreements could reduce welfare.
58
They point out, however, that these factors may be more important motivators for environmental initiatives
of other types.
38
Regulatory Relief. Short of actually attempting to preempt regulation, a firm
may also use a voluntary action as a means of demonstrating to the regulator that it is
improving its environmental performance and is therefore, perhaps, worthy of some
regulatory or compliance relief. Empirical research by Videras and Alberini (2000)
suggests that the desire to demonstrate improved environmental performance was an
important driver of firm participation in EPA’s 33/50 program. This motivation seems
particularly relevant for firm-level voluntary initiatives and less so for industry-level
programs where it may be difficult for a firm to distinguish itself from others in this
regard.
Competitive Advantage. Firms may also use environmental voluntary programs
to gain an advantage over current or potential competitors. For example, a firm may
undertake a voluntary program to demonstrate that achieving a particular environmental
objective or imposing a particular constraint is not costly and thereby raise the chances
that what the firm did voluntarily will become mandatory for its competitors. DuPont
pursued such a strategy in the case of CFCs, a substance invented by DuPont that was
shown to contribute to ozone depletion. Prior to any regulatory requirement to do so,
DuPont announced that it would stop producing CFCs and that it had developed
substitutes for this substance, thereby facilitating the worldwide ban on use of CFCs.
Industry-wide voluntary programs may also be a way of raising the costs of all firms in
the industry and thus reducing entry by new competitors or limiting the ability of
smaller firms to compete. Reinhardt (1980) suggests that the chemical industry’s
Responsible Care initiative might be an example of such a program. This program
developed by the Chemical Manufacturers Association calls on member firms to
comply with behavioral codes designed to reduce the probability of an accidental
release and to improve relations with surrounding communities.
Facilitate Collusion. Industry-wide product stewardship initiatives could
provide a means to support collusion in an industry. Videras (2001) argues that if
participants in a voluntary pollution prevention agreement commit to report emissions
and if emissions are directly related to output, then a voluntary agreement could be used
to support collusion in the product market. Voluntary agreements also provide
opportunities for frequent contact and, in some cases, standardization of technologies,
59
This result holds unless corporate efforts to lobby policymakers reduces the marginal effectiveness of
lobbying by citizens or environmental groups.
39
both of which can help to facilitate coordination of pricing strategies among would-be
competitors.
VI.C. Outcomes of Voluntary Environmental Programs
Specific voluntary programs and the potential of the voluntary environmental
movement in general could be evaluated along a number of different dimensions: (1)
how well the program performed relative to ex ante expectations, (2) the extent to
which the program reduced emissions or to which it improved the environment, (3) the
cost or cost-effectiveness of the program and (4) the implications of the program for
social welfare. In practice, the few evaluations that exist focus on the first item with
attention sometimes given to the middle two. Few studies of actual programs attempt to
measure implications for social welfare, although the theoretical literature on
volunteerism does have some lessons to offer in this regard.
The performance of EPA voluntary programs relative to their ex ante goals is a
mixed bag. The 33/50 program met its goal of a 50% reduction in releases and transfers
of included chemicals a year ahead of schedule and exceeded its goal for the target year
of 1995. While both participants and non-participants in the 33/50 program contributed
to this reduction in total emissions, EPA (2000) notes that reductions of chemicals
included in 33/50 exceeded those of other TRI substances not included in the 33/50
program, suggesting that the program was an important factor in bringing about these
decreases. Project XL, on the other hand, has had difficulty attracting participants,
particularly participants prepared to propose innovative approaches to environmental
controls, an important goal of the program. The goal for this project was to attract 50
programs by the end of 1996, but as of late 1999, only 15 projects had been approved
(Blackman et al., 2001). For other projects, such as the Green Lights program it may be
difficult to ascribe results to the program per se because firms that may have been
planning to install energy efficient lighting without the program – for cost saving
reasons – may have done so under the program to get the related publicity.
Environmental outcomes from these programs can be more difficult to assess,
both due to problems with identifying the baseline and with attributing improvements to
a specific voluntary program. The fact that releases of other TRI listed chemicals not
included in 33/50 were declining over the same time period suggests that disclosure
requirements under TRI could be responsible for some of the improvements attributed
40
to 33/50.60 For XL projects, improvements to the environment beyond the status quo
are a necessary component for project approval and thus assuming that baseline
environmental releases are estimated accurately, projects approved under this program
will have a positive effect on the environment.
Few of these programs have been assessed in terms of total costs or costeffectiveness. Firms that participate in Project XL have reported reduced costs of
environmental compliance. However, the program itself can impose substantial
transaction costs on firms. Blackman and Mazurek (2000) find that the early projects
approved under project XL had high transactions costs due to the cost of interacting
with EPA. Transaction costs were highest for those projects that involved complicated
proposals to cap emissions from multiple facilities or to allow trading across different
pollutants. These costs combined with the program requirement that innovative
pollution control solutions be transferred to other facilities – preventing the innovative
firm from capturing the benefits of its innovation – may have contributed to low
volunteer rates. This research did find that interacting with stakeholders did not
contribute as much to transaction costs as some had thought it would.
Much less is known about how specific voluntary programs affect social
welfare. Blackman and Boyd (2000) find that although allowing firms to have facilityspecific tailored regulation, as happens under Project XL, always increases consumer
surplus and environmental outcomes, it could reduce producer surplus and therefore
social welfare in oligopolistic settings by creating opportunities for inefficient firms to
steal market share from efficient firms. However, if the firms that participate in XL are
market leaders (as is generally the case) or monopolists, then welfare increases
unambiguously with a tailored regulation program. An important assumption here is
that the cost savings to firms outweigh the transaction costs of participating in the
program or else firms would not elect to participate.
More generally, the theoretical literature on corporate environmentalism offers
four insights on the welfare implications of voluntary environmental programs (Lyon
and Maxwell, 1999). First, the literature suggests that while environmental
volunteerism by firms to attract green consumers typically may be welfare enhancing, it
need not be and is unlikely to yield the social optimum. Second, environmental
volunteerism to preempt stricter environmental regulation of firms will, except in
60
An alternative explanation might be that the 33/50 program had effects that spilled over to other chemicals.
41
certain cases, provide benefits to both consumers and producers. Third, when they are
beneficial to society, voluntary programs are generally more of a complement than a
substitute to government regulation because, even when they are welfare enhancing,
they rarely achieve the social optimum. Fourth, if environmental volunteerism is
leading regulators to weaken standards or to adopt tighter regulations than necessary
resulting in artificially high prices, consumers will suffer.
VI.D. Implications for Product Stewardship Programs
Several of the factors that motivate corporate environmentalism in general also
play a role in motivating product stewardship initiatives specifically. In addition, other
factors specific to product stewardship may also play a role. Different factors motivate
firms to initiate their own product stewardship programs from those that influence firm
participation in industry-level or multi-stakeholder initiatives. As with other private
environmental initiatives, a firm’s motivation can have important implications for the
social welfare consequences of product stewardship activities.
Firm-Level Initiatives. Initiatives at the individual firm level appear likely to be
influenced by one of at least three different factors:

desire to reduce cost or directly increase profits,

desire to appeal to green consumers, and

“learning by doing” – i.e., learning about the costs and feasibility of takeback and recycling activities in anticipation of future regulations or to
simply evaluate market opportunities.
One factor that appears unlikely to be important here is the desire to obtain
regulatory relief from existing regulations, because there are few regulations currently
applied to firms that are directly related to the goals of product stewardship.
Preempting future regulations or legislation is a possible motivator but more likely for
the industry-wide initiatives, as we explain below.
In certain cases, cost reduction or direct profit enhancement may be an
important motivator for certain product stewardship initiatives. For example, IBM
currently leases about 35% of all hardware that it sells and is actively and profitably
recycling equipment that is returned at the end of those leases (Bloomberg News, 2002).
In 2001, the recycling side of this business had a higher profit margin than the computer
leasing side. Customers also receive a share of the money that IBM receives from
recyclers, generally in the form of lower lease rates. This business-only program is
42
profitable in part because of the large volumes of equipment that can be collected,
which helps to lower the per unit collection costs. In contrast, IBM’s PC Recycling
Service costs $29.99 per box of equipment shipped for recycling and a substantial part
of that fee is attributable to the high costs of collecting used computers one at a time.
The carpet industry’s motivation for entering into their negotiated agreement
arose, in large part, from a desire to get reliable feedstocks of secondary fibers for use
in manufacturing new carpet. Making new carpet from secondary rather than virgin
materials is apparently cost-effective, but the industry had trouble getting enough
secondary material through traditional collection and recycling systems.
The desire to appeal to green consumers is clearly a factor in a number of
programs such as Nike’s Reuse-A-Shoe program and several take-back or recycling
services for used personal computers.61 In Nike’s case, they appear to have
distinguished themselves among their competitors in the athletic footwear business as
they are the only company currently offering a take-back program for shoes (although
collection sites are limited). In the case of personal computers, however, there are
several programs available from a variety of computer companies. This suggests that
perhaps another motive may be operating here since Reinhardt’s condition of barriers to
imitation does not appear to hold.
In anticipation of future regulation or a future voluntary product stewardship
agreement among producers in their industry, firms may be offering their own programs
to learn more about costs and feasibility of certain approaches to collecting and
recycling end-of-life products. This desire to learn is clearly part of the motivation for
IBM’s PC recycling service, Sony and Panasonics electronics recycling program with
ARC and Best Buy’s electronics recycling program as well. Many of these firm-level
programs are producing information that is proprietary to the firms, and as such, will
affect primarily each firm’s ability to respond to new programs or regulations.
The best publicly available information on the costs of these programs comes
from the Minnesota “Plug into Recycling Program.” We discussed their findings in
section III.C. above. Clearly, Minnesota and its partners undertook the program to
study and understand the costs and effectiveness of a wide-range of collection and
recycling programs.
61
From Nike Web site and personal communications with Jim Goddard of Nike and Rhea Hale of IBM.
43
Industry-level and Joint Stakeholder Initiatives. Firm participation in industrywide initiatives and stakeholder processes tend to be motivated by a different set of
factors. These factors may include

preempting future regulation,

instilling a competitive advantage, or perhaps

facilitating collusion.
As Maxwell, Lyon and Hackett (1998) point out, organizing a push for a new
environmental regulation is costly to consumers. Firms can help to deter these efforts
by offering to voluntarily advance the environmental goals and both groups could end
up better off as a result. Having been affected by the spread of mandatory take-back
regulations in Europe, consumer electronics firms and firms in other industries are
eager to prevent the adoption of such costly regulations in the United States. Moreover,
they do not want to see fundamentally different approaches adopted in different states.
As a result they have joined in efforts such as the RBRC, the Carpet Stewardship MOU,
and NEPSI to provide a voluntary program that might substitute for regulation.
Voluntary product stewardship initiatives do not appear, on the surface, to be
driven by a desire to promote more stringent environmental regulation of firms as a
barrier to entry. Nonetheless, an agreement could have this effect even without
promoting regulation. For example, there is currently almost universal participation by
U.S. carpet manufacturers and fiber suppliers in the Carpet Stewardship MOU. Under
this MOU, carpet manufacturers and their suppliers are responsible for the financial
support of CARE, the industry PRO, and of its collection and recycling efforts. Even
though this is a voluntary agreement, there would be substantial pressure on any firm
attempting to enter the carpet manufacturing business in the US to join in this
agreement and to contribute financially to the effort. The added costs of fulfilling this
implicit obligation could be enough to make an entrant think twice about entering, to
the benefit of all existing firms in the industry.62
Participation in voluntary industry-wide agreements can also provide an
opportunity for facilitating collusion among firms. As Videras (2001) points out, this
approach is more likely to be effective when the voluntary agreements relate to limiting
44
emissions, emissions are directly related to output, and emissions are required to be
reported. Product stewardship initiatives promoting greater collection and recycling of
end-of-life equipment do not speak directly to limiting inputs to production – as
emissions usually do – and thus production per se and thus may be less effective as a
means of promoting collusion than the kinds of agreements studied by Videras.
However, being parties to such agreements can provide opportunities for firms to get
together to set fees to cover collection and recycling costs and other program
parameters that could have an unnecessarily adverse effect on consumers to the benefit
of producers.
Moreover, care must be taken in how the PRO is set up and what maximizing
behavior we can expect from it. If the PRO can exert monopoly power in recycling
markets, this can be detrimental to social welfare.
VII. Conclusions and The Role for Government
In this study, we reviewed the burgeoning EPR programs in Europe and Japan
and the voluntary product stewardship efforts in the United States. We described the
economic justification for intervention in waste markets and for policies that provide
incentives for some kind of producer involvement in management of end-of-life
products. The justification for producer involvement comes not from some notion of
fairness or the “polluter” pays principle, as some have argued, nor does it come from a
desire to reduce the financial burden on local governments dealing with waste
management. These are, for the most part, distributional issues and not issues of
efficiency or cost-effectiveness. Rather, the justification comes from the fact that
imperfectly functioning recycling markets prevent economic signals from being
transmitted back to producers to make their products more recyclable – i.e., to engage in
an efficient level of “design for environment.” Even with Pigovian taxes on waste
disposal or equivalent output taxes coupled with recycling subsidies, a less than
efficient amount of DfE takes place.
Having said this, however, we must emphasize that EPR programs as they exist
in Europe, with third party organizations handling collection and recycling jointly for
all firms in the industry, provide only weak DfE incentives, at best. And although cost
62
Wood, tile, and laminate flooring are substitutes for carpet, however, and would act as a constraint on the
extent of monopolistic pricing behavior that could be practiced by carpet manufacturers as a result of limiting
entry into the industry.
45
information is spotty, most evidence and our own intuition about the programs suggests
that they are costly. Administrative costs, the costs of setting up and running the PRO,
and the costs of dual collection systems are just three reasons why this is likely to be so.
Certainly, a national EPR program in the U.S. covering a wide range of products would
be a very Draconian change from the status quo.
European take-back programs all operate with a PRO, however, because firmspecific take-back would be prohibitively expensive. In fact, it would be very difficult
to design a policy that is flexible and low cost to implement that also provides efficient
incentives for DfE. In our opinion, policymakers in the U.S. and elsewhere need to
openly recognize the difficulty in designing such a policy. And they need to
acknowledge the trade-offs that exist between flexibility and low costs, on the one hand,
and increased DfE, on the other. We feel it may be impossible to design a program that
“does it all.”
What then should policymakers do? We feel that a great deal of progress can be
made with some of the simpler and more flexible policies that we propose and that are
currently used for some products; that further study of the DfE issue is warranted; and
that a few rules of thumb apply to any policies or programs. We lay out these rules of
thumb first.
VII.A. Success “Rules of Thumb”
First, in order to have a substantial impact on recycling rates and waste
diversion, product stewardship programs or policies need to provide incentives for
consumers to return their products for recycling. Incentives can take several forms
including banning disposal, establishing convenient collection sites, and providing
refunds for returned items or allowing returns in lieu of deposits on replacement
products. These are incentives that are explicitly targeted at consumers. Incentives for
consumers could also filter down from producers and recyclers. For example, if
recyclers were subsidized, as they would be in our proposed “upstream combined
tax/subsidy” system or as they are in the western Canada used oil program, the recyclers
should have an incentive to increase the volume of materials they get from consumers.
Actually charging consumers for recycling services, as many of the computer
company programs do, particularly when consumers have access to free legal disposal,
is unlikely to increase recycling by much. Programs that merely make free collection
available, like the RBRC program, may not be enough to overcome the hassle costs of
46
getting products back to these collection sites and the virtually zero cost of throwing the
item in the trash.
Second, product stewardship programs or policies need penalties for noncompliance to give firms an incentive to perform. Environmental programs backed by
legislation or regulations generally do this – legislation has the force of law behind it
and regulations are usually accompanied by penalties for noncompliance. But
voluntary agreements generally have neither of these things. Firm-level voluntary
programs are easily dropped by firms if the economy slows or if other issues take
priority. Industry-level or multi-stakeholder programs may be more difficult for firms
to abandon, but firms will be more likely to stick to the agreement if they face a
substantial penalty than if they do not. Moreover, if firms face penalties for nonperformance, they will have a stronger incentive to provide inducements for consumers
to return their products for recycling. The option of dropping out is one of the
drawbacks of the voluntary approach and a potential barrier to the success of voluntary
product stewardship programs.
It might be possible to overcome this barrier by using self-regulation such as
exists in some segments of the financial services industry. The National Association of
Securities Dealers (NASD), for example, regulates securities dealers and is responsible
for testing of dealers, examining securities firms to ensure compliance with federal
securities laws, and reviewing sales and advertising literature. The Maloney Act of
1938 gave legal authority to an industry-run regulatory board and the SEC authorized
the NASD to fill that role in 1939. How a similar system might work for enforcing
compliance with a voluntary product stewardship program is an important topic for
future research.
Third, although penalties for noncompliance are critical, this does not mean that
all firms should be required to do the same thing, either in a legislated program or a
voluntary one. For example, an industry-wide recycling rate target should not be met
by forcing each individual firm in the industry to meet the target. Allowing flexibility
across firms is the motivation for the tradable recycling credit system we suggested in
section IV. Such a system could be legislated or it could be part of a voluntary system.
If a tradable credit approach were adopted for carpet, for example, the carpet PRO,
CARE, could set up a system where each manufacturer would receive a recycling credit
each time a ton of its carpet was recycled. Such a system would provide incentives for
manufacturers to provide refunds for returned carpet and to find ways to make their
47
carpet more recyclable. Flexibility across firms is a hallmark of incentive-based
approaches to environmental protection. In addition to a tradable credit system, the
UCTS we proposed above is another IB approach that provides flexibility across firms.
All firms face the same tax rates and all recyclers the same subsidy rates for a particular
product, but the choices made in response to these rates are likely to vary across firms
and across recyclers.
In addition to these rules of thumb, we offer some concluding thoughts about
DfE concerns and about voluntary programs.
VII.B. Design for Environment
At the beginning of this section, we emphasized that designing a policy with
incentives for DfE would be difficult. We feel it is important to understand, however,
that the extent of the DfE concern varies by product type. For some products, design is
not a major issue. Packaging and other short-lived consumer products, for example,
might be perfectly suited to a UCTS. The tax and subsidy should be set on a per-pound
basis and perhaps vary across materials. Products and packaging would be downsized
as a result and some material substitution could occur. Moreover, as Calcott and Walls
(2001) explain, the policy would spur producers to make items somewhat more
recyclable in order to reach the threshold at which recycling becomes profitable. So
some DfE is encouraged by the policy.
For products such as electronic equipment, consumer appliances, and
automobiles, on the other hand, product redesign could be a critical part of reaching
waste reduction goals in a cost-effective way. At the same time, though, DfE is a more
complicated concept for these products. How electronics products, for example, should
be redesigned to be more recyclable is not an easy thing for producers themselves to
figure out, much less poorly informed government policymakers. As we stated above,
studying how a tradable credit system might work for these products would be a fruitful
avenue for future research. Another possibility, currently unexplored either in theory or
practice, would be to institute some kind of reward systems for producers that improve
their product designs. Such a system could operate in conjunction with a simpler UCTS
or other incentive-based approach. How difficult it would be for government
policymakers or regulators to pick winners in such a system is an empirical question
and one that would likely vary by product.
48
VII.C. Issues with Voluntary Programs
Since European-style mandated EPR is unlikely in the U.S. and government
policies such as the UCTS are not currently on the agenda, the question remains
whether the voluntary initiatives that we are seeing more and more of hold any promise
for achieving product stewardship goals.
We feel that firm-run voluntary programs are unlikely to be a very effective
approach to achieving overall product stewardship goals. First, as mentioned above,
firm-level programs are easily abandoned if they become too costly or if other issues
take precedent within the firm. These programs generally have high collection costs,
low participation rates and are not particularly cost-effective due to a single firm’s
inability to exploit economies of scale, particularly when dealing with residential
consumers. Theoretical analysis also suggests that voluntary programs rarely yield the
social optimum.
These programs do provide opportunities for firms to learn about the costs of
collecting and recycling the products they make, however, and about bottlenecks in the
collection and recycling system. Producers may also learn from working with recyclers
about cost-saving changes that they can make in their product design. The potential for
these types of lessons depends on the costs of recycling, the volume of material that
firms are getting back from consumers, and whether the producer is indeed even
interested in learning about recycling its products.
Voluntary efforts that involve collaboration among firms in an industry or
collaboration among firms and other stakeholders, such as government and
environmental groups, hold more promise than independent efforts by individual firms.
These arrangements, such as the Carpet Product Stewardship MOU, have the potential
for a bigger impact on product disposal and recycling because a larger segment of the
market is covered. As a result, there is a greater possibility for realizing economies of
scale in collection, transport and processing of recyclables. For these voluntary
programs to be effective, most firms in the industry must be participating to reduce free
riding, and as we mentioned above, the programs need to have some binding sanctions
on firms for not achieving the recycling goals of the agreement, or conversely, some
strong incentives for firms to behave in a way that advances the recycling and design
for environment goals.
A potential problem with joint collaborative efforts by industry, however, is that
they might facilitate collusion among firms to raise prices and engage in other
49
monopolistic behavior, either in product markets or markets for secondary materials.
Participation in a voluntary product stewardship arrangement provides opportunities for
firms to get together and share information that could be used to impel collusion.63
Moreover, the agreement itself can act as a serious barrier to entry into the industry.
VII.D. Summary
In summary, some of the goals of product stewardship are laudatory; in
particular, spurring producers to design for environment may be a key way to get waste
reduction at the lowest cost, particularly for some products such as electronics,
appliances, and vehicles. The political reality in the United States is currently that
voluntary programs are more likely than mandatory ones. Whether such programs can
succeed at reducing waste in a cost-effective manner depends on many factors. We feel
that the single over-riding factor for determining success, in either voluntary or
mandatory programs, is the extent of the incentives provided within the system.
Incentives for consumers to return products and/or for recyclers and producers to collect
those products from consumers are key. Incentives for firms to participate in the system
are also important, as are incentives for firms to reduce product weight and size and at
least to some extent, redesign products to be more recyclable. And finally, the system
should provide incentives for recyclers to recycle more. Economic instruments such as
the UCTS or a tradable recycling credit system could help to create the right types of
incentives for participants throughout the product lifecycle and, at the same time, offer
flexibility that helps to minimize the cost to society of reducing waste and increasing
recycling of consumer products.
63
Note that this is not just an issue for voluntary programs, as some of the mandatory take back programs
established in Europe have been subject to challenges on anti-trust grounds related both to the exercise of
market power in the product market and in the recycling market.
50
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