Reducing Marine Plastic Pollution: Policy Insights from Economics
Abstract
Marine plastic pollution is heavily driven by escaped plastic waste from land. Effectively reducing flows of plastic pollution into the oceans requires incentivizing efficient disposal decisions, discouraging production and consumption of products with low recyclability and reuse potential, and encouraging lower-impact, easily recyclable product and packaging designs. We examine the economic literature on waste management and integrated environmental policy to assess how particular policies target these individual pathways and can efficiently reduce flows of plastics into waterways. These policies include production/retail bans and standards, extended producer responsibility, price-based policies such as advance disposal fees and two-part instruments, and interventions grounded in behavioral economics and psychology. We also consider the applicability of these policies in coastal developing nations that often rely upon the informal sector for waste management services. We conclude by identifying important issues for future research.
Introduction
Marine plastic pollution (MPP) is a problem of growing concern for scientists and policymakers alike (Carney Almroth and Eggert 2019), yet economists have focused little attention on this issue. Nevertheless, there is a well-established economics literature on waste management and integrated environmental policy and numerous empirical case studies on reducing the use and increasing the recycling of plastics, which have policy relevance for MPP. This article, which is part of a mini-symposium on MPP,1 examines this literature and the role that economics can play in identifying potentially effective policies for mitigating MPP. We begin in the next section with a brief background on MPP. Then, based on insights from economic theory and empirical evidence, we discuss potential policies to address the problem of marine plastics. We conclude by identifying areas for future research.
Key Facts About MPP
We present a handful of key facts here to provide context and identify where policy interventions targeting MPP can be most fruitful. First, while the debris strewn on beaches and trapped in ocean currents captures public attention, it represents only 5 percent of annual MPP inflows (McKinsey and Company and Ocean Conservancy 2015). The inaccessibility of the majority of MPP implies that there is currently little prospect for cost-effective cleanup, suggesting that researchers and policymakers alike should primarily focus their attention on reducing future flows of plastic into the ocean.
Second, most plastic enters the ocean from land-based sources—usually via surface waters, wastewater, or wind (Worm et al. 2017). Although most plastic production occurs in the developed world, most MPP comes from developing nations, with more than 50 percent of estimated global plastic pollution originating from just five nations: China, Indonesia, the Philippines, Vietnam, and Sri Lanka (Jambeck et al. 2015). However, these statistics do not reflect the prominent role of Asian nations, especially China, in importing plastic waste from Organisation for Economic Co-operation and Development countries (Kellenberg 2015).
Third, 75 percent of land-based MPP stems from uncollected waste (McKinsey and Company and Ocean Conservancy 2015).2 The rest is due to poor waste management. This highlights the importance of improving waste collection systems. Plastic collection in the highest MPP countries is often performed by members of the informal sector through door-to-door collection, street picking, and dump site collection (Wilson et al. 2009; Ezeah, Fazakerley, and Roberts 2013). The informal waste sector has a high rate of product recovery for economically recyclable products. However, only 20 percent of plastic waste in high-MPP countries is of sufficiently high value to be privately gathered and recycled (McKinsey and Company and Ocean Conservancy 2015), suggesting a need for public policy to address the externalities from the remaining 80 percent.
These key facts underscore the importance of addressing the continuing inflows of MPP from developing coastal nations. In the next section we examine policies that target the interconnected problems of excessive production, consumption, and improper disposal of plastic consumer goods. We focus in particular on the need to improve the collection rates of plastic waste in countries with weak formal waste management infrastructure.3
Potential Policy Instruments
Addressing the “plastics problem” requires an integrated, life cycle perspective (Fullerton and Wolverton 1999, 2000; Walls and Palmer 2001) to encourage efficient disposal decisions at the end of the life cycle, discourage production and consumption of products with high social costs of disposal (i.e., “source reduction”), and encourage lower-impact, easily recyclable product designs (i.e., green design). There is a wide array of policies to address plastic production, consumption, and disposal (see table 1), and the merits of these policies are assessed in an extensive economic literature (e.g., Fullerton and Kinnaman 1995; Palmer, Sigman, and Walls 1997; Palmer and Walls 1997; Fullerton and Wu 1998; Fullerton and Wolverton 2000; Walls and Palmer 2001; Calcott and Walls 2005; Walls 2006; Acuff and Kaffine 2013). In the remainder of this section we discuss the advantages and disadvantages of a range of policies for addressing plastic pollution in coastal developing nations that contribute the most to MPP.
| Policy instrument | Description | Examples |
|---|---|---|
| Bans | Prohibit production or sale of certain items | Plastic bags and straws |
| Standards | Stipulate minimum/maximum thresholds for product content | Recycled content standards |
| Taxes, fees | Charge a producer or disposer of a product for its production or disposal, where the charge varies in the quantity of externality (e.g., plastic) produced/disposed | Taxes on virgin materials, volumetric garbage taxes, product taxes/fees (e.g., fees on plastic bags), advance disposal/recycling fees |
| Subsidies | Provide payment or tax concessions to consumers or producers for pollution reduction | Subsidies for recycling plastic waste or recycled content |
| Combined tax and subsidy (i.e., two-part instruments) | Pair taxes on producers or consumers with subsidies for proper disposal | Deposit–refund systems (i.e. “bottle bills”) |
| Extended producer responsibility (EPR) | Shifts product life-cycle costs to producers through take-back mandates. Intended to foster materials recycling and cradle-to-cradle design | German green dot program; voluntary and mandated take-back programs for electronic waste |
| Behavioral interventions | Promote the voluntary adoption of proenvironment behavior in societies through nonprice and nonregulatory means | Information campaigns, “nudges” |
Production/Retail Bans or Content Standards
Several countries (e.g., Morocco, Rwanda) and a number of U.S. cities have banned retail distribution of single-use plastic bags (Wagner 2017), and Seattle and San Francisco prevent restaurants from distributing plastic straws. Although economists often dismiss bans as inefficient and difficult to enforce, bans may be efficient when the marginal benefits of the good are small and the marginal social costs associated with its production/use or improper disposal are high. We are not aware of empirical studies of the benefits and costs of plastic bans, but they may be economically justified for some single-use plastics because the foregone benefits to consumers are minimal due to the availability of close substitutes (i.e., paper bags or paper straws) and the low value of single-use plastics as recyclables. Given the preponderance of marine debris from single-use food service items (Ocean Conservancy 2018), bans could substantially reduce MPP. However, plastic content–based bans across a broader range of consumer goods may not be economically justified.4
Standards that limit the quantity of particular polymers in products or that mandate a minimum threshold of recycled or recyclable content encourage the upstream design and production of “green” products. However, by ignoring downstream opportunities for source reduction, standards are less cost effective than the more comprehensive policies discussed below (Acuff and Kaffine 2013) and typically require additional policies to achieve the first-best outcome (Palmer and Walls 1997).
Price-based Policies
There are several price-based policies that can be used to influence plastics production and disposal.
A fee on waste disposal
The simplest policy, which provides both source reduction and waste disposal incentives, is a fee on waste disposal that reflects the full social costs of disposal. This fee is often implemented through volumetric pricing (e.g., a charge per bag) of curbside garbage service. While ‘pay as you throw’ pricing may be effective in some jurisdictions (Dijkgraaf and Gradus 2004), it requires highly competent utilities to monitor and enforce the policy at the household level as well as strong formal enforcement or cultural norms to discourage illegal dumping or fouling of curbside recycling (Fullerton and Kinnaman 1995; Kim, Chang, and Kelleher 2008)—conditions that are unlikely to hold for many high-MPP countries.
Advance disposal fees
A more feasible price-based policy levies a tax or fee on final goods based on their social costs. These “advance disposal fees” (ADFs) can be assessed either on producers or on consumers as a visible surcharge at the point of sale.5 If these fees are differentiated according to the marginal disposal costs of the embedded materials (e.g., by the weight of particular polymers), then they provide producers with both source reduction and green design incentives.6 ADFs through point-of-sale charges for disposable plastic bags have become popular in a number of countries (Convery, McDonnell, and Ferreira 2007; Dikgang, Leiman, and Visser 2012; Rivers, Shenstone-Harris, and Young 2017) and U.S. municipalities (Wagner 2017).
Two-part instrument policies
Two-part instrument policies pair an ADF with a subsidy to consumers or firms when the good (or its packaging) is properly disposed of, thus promoting both source reduction and responsible disposal (Fullerton and Wolverton 1999, 2000). Such a “deposit–refund” policy can mimic the outcome of a disposal tax without encouraging illegal dumping (Dinan 1993; Fullerton and Kinnaman 1995)7 and has several advantages for addressing plastic waste in high-MPP countries. First, it provides a stable incentive (in contrast to volatile and often low scrap prices) for consumers to sort and dispose of plastic waste in systems without curbside recycling. It also increases the incentive for informal waste sector workers to extract a wider array of plastics from unsorted waste, while providing supplementary income for the working poor (Ashenmiller 2009, 2011) and potentially reducing petty crime (Ashenmiller 2010).
Traditional deposit–refund policies such as “bottle bills” pose implementation challenges because of the need to minimize the administrative costs of the refund while maintaining adequate enforcement. One alternative is to direct payments to licensed regional waste aggregators in the formal waste management sector, who have an incentive to pass some portion of this payment to waste pickers—an idea proposed by Fullerton and Wolverton (2000). This allows for better monitoring of plastic waste flows.
A first-best deposit–refund program requires either a competitive recycling market that pays a fee tied to a material’s recyclability or a similarly tailored deposit and refund (Calcott and Walls 2000; Fullerton and Wu 1998). Although the multitude of polymers and product forms and the high costs of separation make this infeasible, second-best deposit–refund policies are still possible (e.g., Calcott and Walls 2000, 2005; Ino 2011). One approach would be to establish a binary refund structure based on the volume of plastics that is 1) collected but placed in either controlled landfills or incinerated due to lack of recyclability or 2) successfully recycled (Calcott and Walls 2000, 2005). Linking the refund solely to the final status of the waste minimizes monitoring and enforcement costs. Upfront deposits on products or packaging could be levied based on the weight of the plastics and should equal the expected subsidy paid upon disposal of a product. Adjusting the deposit over time to reflect a product’s revealed recyclability would provide firms with upstream incentives for green design.
Extended Producer Responsibility
Extended producer responsibility (EPR) refers to a range of policies intended to shift the responsibility for the postconsumer stage of a product’s life cycle to the producer in hopes of providing incentives for green design. A core feature of EPR is a take-back mandate that requires producers (individually or through a collective producer responsibility organization) to assume responsibility for the collection, recycling, and/or disposal of waste associated with their products.8 Given the transaction costs of individual responsibility, current EPR programs for plastics primarily adopt a collective responsibility approach (Walls 2006). Most EPR programs have been implemented in industrialized nations, particularly in the European Union. However, Taiwan has implemented an extensive EPR program (The Economist 2018a), and it may be feasible in other middle-income nations with strong central institutions (e.g., China).
The wide range and complexity of EPR designs make it difficult to draw general conclusions about their efficacy or cost-effectiveness. Critics note that the core of collective EPR is essentially an advance disposal fee with a recycling standard (Walls 2006). This means the green design incentives associated with EPR take-back provisions are lacking and are instead achieved through separate product design standards (Sachs 2006).
Behavioral Interventions
Research in psychology and behavioral economics has highlighted the role of social and psychological factors (beyond conventional economic incentives) in influencing pro-environmental behavior (Kinzig et al. 2013). Social norms—rules “governing an individual’s behavior that third parties other than state agents diffusely enforce by means of social sanction” (Ellickson 2001)—are especially useful for influencing plastic purchase and disposal decisions.
Appeals to social norms can be effective when the appeal is tied to an important aspect of an individual’s social identity (Akerlof and Kranton 2000) or the behavior of individuals in similar circumstances (Goldstein, Cialdini, and Griskevicius 2008). Social norms can also be influenced by “norm entrepreneurs” (Kubler 2001) through advertising campaigns, information blitzes, appeals from respected figures,9 or subtle ‘nudges’ (Sunstein and Thaler 2009) to make desired behaviors more convenient in ways that are minimally coercive. For example, California recently prohibited restaurants from providing plastic straws to consumers unless they ask for them. Another nudge is the use of small fees for plastic disposables. Using the Toronto plastic bag levy as an example, Rivers, Shenstone-Harris, and Young (2017) argue that the behavioral impact of these fees is unrealistically large relative to the economic incentive, suggesting that they serve primarily as a reminder to receptive consumers of a social norm. Similar results were recently found in suburban Washington, D.C., where a $0.05 tax on disposable bags reduced use by 40 percent (Homonoff 2018).
Economic incentives can complement norm-based messaging and even foster virtuous “tipping point” equilibria when there are fixed costs of adopting new behaviors—for example, widespread adoption of recycling (Viscusi, Huber, and Bell 2012). However, the interaction of behavioral interventions and economic incentives remains poorly understood, and it is possible that they may interact in ways that negate the individual effectiveness of each instrument (Gneezy, Meier, and Rey-Biel 2011).
Conclusions and Priorities for Future Research
Significant reductions in plastic outflows can be achieved in high-MPP countries by addressing both the design and production decisions of producers and the consumption and disposal decisions of consumers in a way that is tailored to the realities of local institutions, social norms, and markets for recyclables. The increased demand for local environmental quality often observed in transition economies suggests that there are likely to be large reductions in MPP as these nations invest in their waste management infrastructures. Public policy has a substantial role to play in accelerating these transitions. Environmental economists are well positioned to help influence this process through their research. Our review suggests that there are several important areas where economic research can help inform the design of effective MPP mitigation policies.
The Economic Damages of MPP
First, aside from a small literature on the lost welfare from debris on beaches (Smith, Zhang, and Palmquist 1997; Leggett et al. 2018), there has been little research on the broader economic damages from MPP. These damages include the quantified market and nonmarket welfare effects of plastics through their effects on populations of harvested marine species and species with significant conservation value (e.g., seabirds and turtles). However, there first needs to be progress in the ecotoxicology of marine plastics (da Costa et al. 2016; Galloway and Lewis 2016; Alava et al. 2017) to establish the necessary biophysical modeling linkages. Further research is also needed on the effects of MPP on human health through the bioaccumulation of polymers (Rochman et al. 2015) and associated toxins such as flame retardants (Noziglia et al. 2018).
Waste Management Policies for the Informal Waste Sector
The design of effective policies for MPP mitigation also requires a better understanding of the structure and functioning of the informal waste management sector, especially concerning waste pickers’ decisions and their relationship to the network of middlemen in the formal and informal waste sectors. More broadly, there is a need for research on how incentive-based policies for waste management can be customized to the developing nation context to improve collection rates, reduce escape rates for plastics, and improve the livelihoods of vulnerable workers (Wilson et al. 2009). Much of the theoretical literature assumes circumstances that rarely exist in the developing world (e.g., curbside collection of trash or recycling) and ignores how the informal sector could be incorporated into such systems (cf. Gnonlonfin 2017).
International Trade in Recyclables
Research on international trade in recyclable materials is also important for developing MPP policies (Copeland 1991; Kellenberg 2015). Wealthy nations have relied heavily on exporting low-value recyclable materials, including plastics, to developing nations, particularly China. However, this trade pattern was recently disrupted by China’s effective ban on plastic and mixed paper imports (The Economist 2018b). Research is needed on the short-run implications of these newfound trade frictions for domestic markets for recyclables (Kaffine 2014) and the ultimate fate of plastic waste (recycling versus incineration versus landfilling) and its escape into the marine environment. Research is also needed on the long-run impacts of trade actions on fostering innovation toward “circular economy” practices that design products based on their potential for reuse and recycling. Finally, research is needed to determine how domestic waste management policy should change in nations that were previously large-scale exporters of plastic recyclables.
Acknowledgments
This paper is based on presentations and discussions at a symposium on Marine Plastic Pollution in a Circular Perspective, held at the 6th World Congress of Environmental and Resource Economists, June 26, 2018, in Gothenburg, Sweden, with support from Region Västra Götaland, the Volvo Foundation, Centre for Sea and Society University of Gothenburg, and the Swedish International Development Cooperation Agency (Sida). U.R.S. also wants to thank the Pew Charitable Trusts for support for his plastic pollution economics project.
Notes
1 Carney Almroth and Eggert (2019) provide an overview of the sources and impacts of MPP and discuss some of the policy challenges.
2 This estimate excludes contributions to microplastic pollution from wastewater treatment plants. The contribution of wastewater effluent to global MPP has not been quantified. Wastewater treatment technologies in developed nations capture most plastic particles (Carr, Liu, and Tesoro 2016). However, the scale of wastewater discharges and potentially less effective technologies may make wastewater treatment in developing nations an important source of MPP.
3 We do not consider the final disposal method for collected plastic—whether it be recycling, landfilling, gasification, or other disposal options—but we acknowledge the specific social costs and technical challenges reflected in each disposal option.
4 One limitation of bans is that substitutes may have higher social costs than the banned goods. For example, retailers may provide customers with thicker plastic bags that are just over the threshold for “reusable” (Wagner 2017).
5 The reduced salience of taxes levied at the register relative to those included in the upfront price suggests that source reduction may be increased by fees levied on producers (Chetty, Looney, and Kroft 2009).
6 Although the revenues can be used to fund recycling efforts, the fee itself does nothing to encourage proper disposal by consumers.
7 The fee could be levied either on producers or importers of products or on consumers at the point of sale. However, the administrative costs of the latter option may be significantly higher and prone to evasion unless there is a robust infrastructure for assessing sales taxes (Dinan 1993).
8 Producer responsibility is usually coupled with individual or collective recycling rate targets. For example, the United Kingdom uses tradable recycling credits to allocate recycling obligations (Matsueda and Nagase 2012).
9 One well-known and effective example is the “Don’t Mess with Texas” antilittering campaign of the 1980s (Mclure and Spence 2006).
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