Cheaper Recyclables Collections

Interested in doing a science project, Max and I went to the alley to collect a 2 liter plastic bottle from the recyclables bin. I had put the bottle in the bin the day before but could not find it that day. I also noticed the beer and wine bottles were missing, but the paper and cardboard were still there.  The common factor in the missing items was the California Redemption Value tax, and the next day the mystery was completely solved, when I saw two people in the alley collecting bottles from the bins.

The California Redemption Value (CRV) like other deposit charges, and the Oregon Bottle Bill that preceded it, were largely intended to decrease roadside trash and increase recycling rates. They are very effective because of the economic principle that people respond to incentives. If there is enough of a benefit to either not throwing a bottle away, or picking it up after it has been discarded, the bottle will not end up in the trash or the roadside. The same thing happens on the beach, where bathers will intentionally leave aluminum cans behind because they know someone will pick them up.

These deposit charges are a classic market solution, and are an excellent way for the government to shape society. Rather than trying to jail or fine people who litter, governments can use financial incentives to encourage the desired behavior. This mechanism is also know as “internalizing negative externalities” or a Pigovian Tax.

The incentive works, and it works very well. I doubt that the recycling collection on my street gets anything except paper. I’d expect that this effect results in the recycling program being lees financially viable, since people are removing the most valuable recyclables from the program and claiming the CRV  and recycling value for themselves. We could get upset about this, and make trash picking illegal, or we could use the effect to make recycling programs more effective.

One possible improvement would be to add a redemption value for all recyclables and replace recycling bins with low, wide bins that make it easier for trash pickers to remove items, which would allow governments to eliminate collection of recyclables. This scheme would require adding the CRV to all recyclable containers, which would raise the price of many products, making it politically unpopular, and many progressives would oppose the plan because it encourages the poor to take on a low wage job. But despite these hurdles, employing incentives is one of the most powerful ways for governments to encourage socially valuable behavior.