an alternative to subsidising recycling?

Jun 03, 2013

Having just read "Recycling: can it be wrong when it feels so right?" on Cato Unbound , and having laughed at myself for also wasting my time separating the trash that our city burries in landfills anyway, I tried to think of the suggested solution. How can we devise a system as is suggested in the article:

A property rights system that assigns disposal responsibility, and ultimately liability, to the manufacturer would encourage the use of effective market incentives to reconceive the very nature of waste itself

One thought I had was imposing an excise tax on products whose packaging might go to waste, either by being burried in a landfill or by requiring an undue amount of resources in order to recycle. But there is no way to figure out what the right amount of tax is in order not to distort incentives involved. One other way would be to mandate that all product packaging may be returned to the retailer who sold the package. But for customers to do this they must have an incentive. This could be, for example, a refund on the excise tax. Of course a retailer should be able to choose to recycle the returned packaging and consequently gain an exception to the tax.

And it could also be kind of like a Value Added Tax but in reverse. The tax for every returned amount of packaging must be refunded by the original supplier to the person or company who is returning it, who must refund the tax to the person that they sold the item to next, all the way down to retail level and the end-consumer. And the sum of the unrefunded taxes that remain can be used to combat illegal dumping, whether via policing or subsidised landfills.

Any comments welcome!