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An economic analysis of the Packaging waste Recovery Note System in the UK

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  • Matsueda, Norimichi
  • Nagase, Yoko
Abstract
In order to cope with the increasing scarcity of final dump sites for household wastes, the UK recently introduced an environmental policy targeted at the firms that produce and sell products that generate packaging wastes. This policy requires such businesses to hold predetermined numbers of tradable credits called “Packaging waste Recovery Notes” (PRNs). This article provides insights into the economic implications of such a policy through a simple analytical model of a recyclable product and the PRN markets. Our analysis yields two particularly interesting results. First, an increase in the required recycling rate dampens the output and landfill waste levels, while the effect on the level of recycling activities is ambiguous. Second, an increase in the landfill tax always leads to an increase in the landfill waste. We also discuss how the socially optimal landfill tax in the presence of the PRN market should be chosen.

Suggested Citation

  • Matsueda, Norimichi & Nagase, Yoko, 2012. "An economic analysis of the Packaging waste Recovery Note System in the UK," Resource and Energy Economics, Elsevier, vol. 34(4), pages 669-679.
    • Handle: RePEc:eee:resene:v:34:y:2012:i:4:p:669-679
    DOI: 10.1016/j.reseneeco.2012.06.001
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    1. Don Fullerton & Wenbo Wu, 2002. "Policies for Green Design," Chapters, in: Don Fullerton & Thomas C. Kinnaman (ed.), The Economics of Household Garbage and Recycling Behavior, chapter 5, pages 102-119, Edward Elgar Publishing.
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    3. Walls, Margaret & Palmer, Karen, 2001. "Upstream Pollution, Downstream Waste Disposal, and the Design of Comprehensive Environmental Policies," Journal of Environmental Economics and Management, Elsevier, vol. 41(1), pages 94-108, January.
    4. Ino, Hiroaki, 2011. "Optimal environmental policy for waste disposal and recycling when firms are not compliant," Journal of Environmental Economics and Management, Elsevier, vol. 62(2), pages 290-308, September.
    5. Don Fullerton & Thomas C. Kinnaman, 2002. "Garbage, Recycling, and Illicit Burning or Dumping," Chapters, in: Don Fullerton & Thomas C. Kinnaman (ed.), The Economics of Household Garbage and Recycling Behavior, chapter 2, pages 49-62, Edward Elgar Publishing.
    6. Margaret Walls & Paul Calcott, 2000. "Can Downstream Waste Disposal Policies Encourage Upstream "Design for Environment"?," American Economic Review, American Economic Association, vol. 90(2), pages 233-237, May.
    7. Fleckinger, Pierre & Glachant, Matthieu, 2010. "The organization of extended producer responsibility in waste policy with product differentiation," Journal of Environmental Economics and Management, Elsevier, vol. 59(1), pages 57-66, January.
    8. Calcott, Paul & Walls, Margaret, 2005. "Waste, recycling, and "Design for Environment": Roles for markets and policy instruments," Resource and Energy Economics, Elsevier, vol. 27(4), pages 287-305, November.
    9. Markus Lehmann, 2004. "Voluntary Environmental Agreements and Competition Policy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 28(4), pages 435-449, August.
    10. Michael Barrow, 2003. "An Economic Analysis of the UK Landfill Permits Scheme," Fiscal Studies, Institute for Fiscal Studies, vol. 24(3), pages 361-381, September.
    11. מחקר - ביטוח לאומי, 2006. "Summary for 2005," Working Papers 29, National Insurance Institute of Israel.
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    Cited by:

    1. Hirotaka Kumamaru & Kenji Takeuchi, 2023. "The recycled content of plastic products: estimating the impact of a recycling law on the input mix," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 25(3), pages 355-376, July.
    2. Wolfram Berger & Yoko Nagase, 2018. "Waste management regulation: policy solutions and policy shortcomings," Scottish Journal of Political Economy, Scottish Economic Society, vol. 65(3), pages 205-223, July.
    3. Massarutto, Antonio, 2014. "The long and winding road to resource efficiency – An interdisciplinary perspective on extended producer responsibility," Resources, Conservation & Recycling, Elsevier, vol. 85(C), pages 11-21.
    4. Mansikkasalo, Anna & Lundmark, Robert & Söderholm, Patrik, 2014. "Market behavior and policy in the recycled paper industry: A critical survey of price elasticity research," Forest Policy and Economics, Elsevier, vol. 38(C), pages 17-29.
    5. Eugénie Joltreau, 2022. "Extended Producer Responsibility, Packaging Waste Reduction and Eco-design," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 83(3), pages 527-578, November.
    6. Göran Finnveden & Tomas Ekvall & Yevgeniya Arushanyan & Mattias Bisaillon & Greger Henriksson & Ulrika Gunnarsson Östling & Maria Ljunggren Söderman & Jenny Sahlin & Åsa Stenmarck & Johan Sundberg & J, 2013. "Policy Instruments towards a Sustainable Waste Management," Sustainability, MDPI, vol. 5(3), pages 1-41, February.
    7. M. Dubois & J. Eyckmans, 2015. "Efficient Waste Management Policies and Strategic Behavior with Open Borders," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(4), pages 907-923, December.
    8. Patrik Söderholm & Tomas Ekvall, 2020. "Metal markets and recycling policies: impacts and challenges," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 33(1), pages 257-272, July.

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    More about this item

    Keywords

    PRNs; Recycling; Landfill tax; Comparative statics;
    All these keywords.

    JEL classification:

    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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