“Reduce, reuse, recycle,” The motto of the resource conservation crowd, and a mantra for the environmentally conscious. The fact is that resources are scarce by their very definition. The sources of some can be renewed via natural means, but the availability of others is fixed.  Each time we consume a nonrenewable resource, we are decreasing the availability of that resource for all future generations. It has been asserted that it is duty of all conscious consumers to reduce their waste, reuse what they can, and whenever possible recycle their waste so that the raw materials of their products can be reused in future products. The concept being if we can’t make more, we must make do.

However, reclaiming the raw materials from the products we consume is not without costs. Energy is required to ship, process, and distribute the reclaimed materials and labor is required to collect the materials, run the machines, and market the products. And while these resources hold a certain market value, that value rarely considers demand of future generations. The result is an under valuation of the market value of recycling.

BC’s Eco fee attempts to fund reclamation of the raw materials by charging the cost of the reclamation in the price of the product. Each time a consumer purchases a product with recyclable potential, a small fee is added at the retail level that is then reallocated to the recycling firms to subsidize the cost of the recycling process. Of course not all products are recycled equally, the cost to benefit ratio varies across products and forms. To address this inconsistency, the assignment of tax rate has been deferred to a specific steward associated with the recycling for each of eight product sets (for the complete list of products and their associated stewards see link). These stewards assess a product and attempt levy a fee associated with reclamation cost for all of the recyclable materials within the products. In example, a box of cereal might have a fee for the box and a separate fee for the bag within, a drill would have separate fees for the internal wiring and the outer case. This allows the price each product to accurately represent the holistic cost of reclaiming its raw materials at the end of its useful life. The fee ranges from as little as a fraction of a cent on paper products and aluminum cans to $10 for certain household appliances. The goal is to keep the cost feasibly low and generate revenue on a not for profit basis with the stewardship groups responsible to annual reports, financial statements and third party audits.

This policy is not without its opposition. The nature of this tax is recessive. With the increase in the price of a wide range of products, the poor stand to bear a greater income proportional burden then the wealthy. Moreover, the revenue generate will not be distributed to the low income in a way to reduce this burden. The entire fee goes to the stewardship agency to pay for the cost of recycling, whether the product is recycled or not.

The program is also seen by some as overly complex with excessive administrative costs and redundancies between the various stewardship groups. There is no regulation as to how the fees are reported on the retail front. As it stands the fee is listed at the manufacturer’s discretion, causing transparency issues for consumers. However the intricacy of the policy does encourage recycle friendly products and innovations. By allowing the fee to be so product specific, recycle minded firms gain a competitive advantage. Read more about public perception of BC’s Eco Fees here.

This policy is still in its infancy, so it difficult to pass judgment on its merits. It will most certainly decrease the marginal cost of the recycling process, allowing firms to feasibly recycle materials with an intrinsically higher marginal cost of reclamation, increasing the amount of material that can be recycled economically. The goal of this policy is to encourage recycling rates in BC, and by all measures it most likely will. The question to address is at what cost?  There are uncertainties as to the full cost to households and firms today and into the future, and what potential benefits they stand to gain. The success of this policy will take decades before it can be justly measured.

Still have questions? Check Consumer Protection BC for more information. Look here for more resources.

Posted: 03|8|13 at 6:01 pm. Filed under: Uncategorized.
Comment | Trackback