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Thus, several theoretical studies by economists show support for at least one kind of EPR policy over a non-EPR disposal fee. 2 “Bottle bill” deposit-refunds No distinction is made in the Fullerton and Kinnaman model, nor in the other theoretical models cited above, between their conceptual deposit-refund policy instrument and the real-world “bottle bill” deposit-refund that is used in several American states. Bottle bill deposit-refunds are collected (and refunded) downstream; typically, a fixed fee – the deposit – is charged to a consumer for purchase of a container of a given size, and that fee is given back to the consumer when the container is returned.
We present two economic incentive-based policy instruments here that may have the potential to spur DfE: tradable recycling credits and a DfE reward system. We then return to the issue of the cost of policy implementation. 1 Tradable recycling credits The studies by economists that I reference here do not look beyond tax and subsidy-based policy instruments. 11 Tradable recycling credits are similar in spirit to tradable emissions permits (Tietenberg, 1985). 12 A tradable recycling credit programme for electronics, for example, might work as follows.
This second option is, however, not addressed by literature. It is therefore difficult to say in what circumstances it would be better to use a tax/subsidy scheme or a tradable permit/ADF scheme. A point made by Ms. Walls is that the latter scheme provides incentives to design product for the environment (DfE). Because the costs of recycling an individual product are borne directly by the producer of that product, the producer has the incentive to redesign the product to bring those costs down.